TMI Blog2022 (5) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Ltd., if the assessee is able to furnish similar details before the Assessing Officer, same shall be taken into consideration while deciding the issue as per law. As a result, ground No. 1 in assessee's appeal is allowed for statistical purpose. Disallowance u/s 40(a)(ia) of the Act on account of salary paid to Directors - HELD THAT:- In the present case, it is an undisputed fact that salary was paid to the Directors of the assessee company and the Directors had offered the same in the return of income filed. The only basis on which CIT(A) dismissed the appeal filed by the assessee on this issue was that the assessee has not furnished the certificate as required under first proviso to section 201(1) of the Act. As the assessee has now furnished the said certificate issued under Form No. 26A, we deem it appropriate to remand this issue to the file of Assessing Officer for necessary verification of the details furnished by way of additional evidence before us and decide the issue de novo as per law. As a result, ground No. 2 in assessee's appeal is allowed for statistical purpose. Disallowance under section 40(a)(ia) of the Act on account of rent paid - HELD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 40(a)(ia) of the Act on account of interest paid to various NBFC. 3. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee company is engaged in the business of transporters. For the relevant assessment year, the assessee filed its return of income on 29 September 2014 declaring total income at ₹ 13,86,163. During the course of scrutiny assessment proceedings, it was observed that the assessee has made payment of interest on loans amounting to ₹ 10,87,826 to L T Finance Ltd., Citi Corp Finance Ltd., Indiabulls Financial Services Ltd., Sundaram Finance Ltd. and SREI Equipment Private Limited, on which no tax at source was deducted by the assessee. The assessee was asked to show cause as to why interest expenses to NBFCs should not be disallowed under section 40(a)(ia) of the Act as the assessee has failed to deduct TDS on interest paid to such NBFCs during the year. In reply, assessee filed copies of some interest certificates regarding interest paid/payable to the aforesaid NBFCs but no explanation/reason/justification was submitted for non-deduction of TDS from interest payments to NBFCs. The Assessing Officer vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r authorities. 7. We have considered the rival submissions and perused the material available on record. In the present case, it has not been disputed that the assessee had availed loans from aforesaid NBFCs and on such loans interest was paid by the assessee. The Assessing Officer disallowed the interest payment under section 40(a)(ia) of the Act on the basis that assessee had failed to deduct tax at source while making the payment of interest to the NBFCs. However, second proviso to section 40(a)(ia) of the Act, inserted by Finance Act, 2012 w.e.f. 01.04.2013, provides that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter-XVII-B on any such sum but is not deemed to be an assessee in default on the first proviso to section 201(1), then, for the purpose of this sub-clause, it shall be deemed that assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. 8. From the facts available on record, it is evident that the assessee though has taken the plea on the basis of second proviso to section 40(a)(ia) of the Act, however, failed to establish or prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and has paid tax due on the income declared by him in such return of income. However, in the present case, the assessee has merely submitted copies of return filed by the Directors and has not furnished certificate from the accountant and thus has not complied with all the conditions of first proviso to section 201(1) of the Act. Accordingly, the CIT(A) dismissed the appeal filed by the assessee and upheld the disallowance made under section 40(a)(ia) of the Act. Being aggrieved, the assessee is in appeal before us. 12. During the course of hearing, learned A.R. referred to Form No. 26A issued by the accountant under the first proviso to sub-section (1) of section 201 of the Act in respect of salary paid to the Directors, filed by way of additional evidence before us. On the other hand, learned D.R. vehemently relied upon the orders passed by the lower authorities. 13. We have considered the rival submissions and perused the material available on record. In the present case, it is an undisputed fact that salary was paid to the Directors of the assessee company and the Directors had offered the same in the return of income filed. The only basis on which CIT(A) dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the material available on record. In the present case, it has not been disputed that as per the leave and license agreement the assessee was required to pay rent of ₹ 12,500 per month which comes to ₹ 1,50,000 per annum. The assessee neither during the course of assessment nor in the proceedings before us placed any cogent material on the basis of which it can be concluded that the rent was required to be paid separately to Mr. Pandharinath Mali and Mrs. Pratiksha Mali. Further, the assessee has not furnished any additional evidence to the effect that the payee have offered the rent income in the return of income and paid taxes thereon. Thus, as there is no dispute that as per leave and license agreement, assessee is required to pay ₹ 1,50,000 per annum which is below the threshold required for deducting tax at source on the payment of rent, we direct the Assessing Officer to delete the disallowance under section 40(a)(ia) of the Act to an extent of ₹ 1,50,000 covered by the aforesaid leave and license agreement. As a result, ground No. 3 raised in assessee's appeal is partly allowed. 18. The issue arising in ground No. 4, raised in assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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