TMI Blog2017 (1) TMI 1688X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance under section 40A(2)(b) will be meaningless inasmuch as permitting the Revenue to tax the same income again at the same rate in the hands of the principal payer would amount to double taxation - proper course of action will be to remit the matter to the file of Assessing Officer for verification of factual aspect as to whether or not the said amount is brought to tax in the hands of the recipient at the same rate. If that be so, the disallowance will stand deleted. - ITA No.2713/Ahd/2013 Assessment Year: 2009-10 - - - Dated:- 25-1-2017 - Pramod Kumar AM P.K. Parikh for the appellant K. Madhusudan for the respondent ORDER 1. By way of this appeal the assessee appellant has challenged correctness of the order dated 19.09.2013, passed by the ld. CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009-10. 2. Although assessee has raised as many as seven grounds of appeal, there are only two grievances which require adjudication by me first, whether or not the learned CIT(A) was justified in upholding disallowance of ₹ 18,45,187/- under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h June 2016), it has been stated thus:- 2. To adjudicate on this appeal, only a few material facts need to be taken note of. During the course of the assessment proceedings, the Assessing Officer disallowed a sum of ₹ 6,48,456, being payment made to NBFCs on account of interest charges without deduction of tax at source, under section 40(a)(ia). Aggrieved, assessee carried the matter in appal, and relied upon, inter alia, Hon ble Delhi High Court s judgment in the case of CIT Vs Ansal Landmark Townships Pvt Ltd [(2015) 377 ITR 635 (Del)], but without any success. The assessee is not satisfied and is in further appeal before us. 3. We have heard the learned Departmental Representatives, perused the material on record and duly considered factual matrix of the case in the light of the applicable legal position. None has appeared for the assessee but as the issue in appeal is a short legal issue, set out in a narrow compass of facts, which can be disposed of even without the benefit of assistance from the assessee, we consider it appropriate to procced with the matter ex parte qua the assessee. 4. We find that Hon ble Delhi High Court has specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same to tax, and, if so, delete the disallowance under section 40(a)(ia) in respect of the same. 6. When, however, we asked the learned Departmental Representative as to why we should also not remit the matter to the file of the Assessing Officer, with the same directions, he, alongwith his senior colleague Shri Darhan Singh, who happens to be the CIT(A) authoring the impugned order and who was on duty as CIT(DR) before us, had three points to make- first, that there are decisions in support of the stand of the Assessing Officer s stand, by way of Hon ble Kerala High Court s decision in the case of Thomas George Muthoot Vs CIT [(2015) 63 taxmann.com 99 (Kerala)]; second, that even if insertion of second proviso to Section 40(a)(ia) can be construed as retrospective in effect, the corresponding rule in the Income Tax Rules 1962 is not, and has not been held to be, retrospective, and the second proviso to Section 40(a)(ia) cannot, therefore, be give retrospective effect; and, third, that there is no decision on this issue by Hon ble jurisdictional High Court and, as such, the stand of the Assessing Officer cannot be faulted. 7. As for Hon ble Kerala High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) SCC 21 and Novopan India Ltd. vs. CCE C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, in case of ambiguity, a taxing statute should be construed in favour of a tax-payer does not apply to a provision giving tax-payer relief in certain cases from a section clearly imposing liability . This exception, in the present case, has no application. The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. vs. Dadabhoy s New Chirmiry Ponri Hill Colliery Co. Ltd. AIR 1972 (SC) 614. Therefore, what follows is that in the peculiar circumstances of the case and looking to the nature of the provisions with which we are presently concerned, the view expressed by the Hon ble Delhi High Court in the case of Ansal Landmark (supra), which is in favour of assessee, is required to be followed by us. Revenue does not, therefore, derive any advantage from Hon ble Kerala High Court s decision in the case of Thomas George Muthoot (supra). 8. The second issue is with respect to the second proviso to Section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the Assessing Officer for limited verification on the aspect as to whether recipient of payment has included the same in his computation of business income offered to tax, and, if found to be so, delete the disallowance in question. With these directions, the matter stands restored to the file of the Assessing Officer. 5. Learned representatives fairly agreed that the issue is covered to the extent above and the matter can be remitted to the file of the Assessing Officer for the limited verification of the fact that the recipient has included the receipt from the assessee in the computation of income on which taxes have been paid. The assessee may obtain from the recipient concerned a certificate to this effect and file the same before the Assessing Officer. In this view of the matter, and with the consent of both the parties, the matter stands restored to the file of the Assessing Officer for limited verification as stated above. 6. As regards the second facet of disallowance i.e. under section 40A(2)(b) of the Act, I find that the issue is now covered in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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