×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal by the as essee is directed against the order dated 16.03.2018 of ld. CIT (A)-2, Jaipur for the assessment year 2014-15. The assessee has raised the following grounds :-
“1. In the facts and circumstances of the case and in law, the ld. CIT (A) has erred in confirming the action of ld. AO by disallowing sum of Rs. 27,65,853/- u/s 40(a)(ia) of Income Tax Act, 1961, on account of alleged non-deduction of TDS on payments made to Central Power Research Institute, as testing fee. The action of ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs. 27,65,853.
2. In the facts and circumstances of the case and in law, the ld. CIT (A) has erred in confirming the action of ld. AO by disallowing sum of Rs. 2,23,929/- u/s 40(a)(ia) of Income Tax Act, 1961, on account of alleged non-deduction of TDS on interest payments. The action of ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs. 2,23,929/-.
3. In the facts and circumstances of the case and in law, the ld. CIT (A) has erred in confirming the action of ld. AO by making an addition of Rs. 3,48,496/- on account of alleged difference between receipts as reflected in 26AS and receipts disclosed in statement of profit & loss. The action of ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 3,48,496/-.
4. the assessee company craves its rights to add, amend or alter any of the grounds on or before the hearing.”
Ground No. 1 is regarding disallowance of testing fee paid to Central Power Research Institute under section 40(a)(ia) of the IT Act for want of TDS.
2. The assessee company is engaged in the business of manufacturing of transformers, panels and other electrical items and execution of turnkey power projects. The assessee filed its return of income for the year under consideration on 30th September, 2014 declaring total income of Rs. 2,31,05,850/-. During the scrutiny assessment, the AO noted that the assessee has made payment of Rs. 27,65,853/- to Central Power Research Institute (CPRI) as testing fee on which TDS was required to be made under section 194C of the IT Act. However, the assessee has not deducted TDS in respect of the said payment. Accordingly, as per the provisions of section 40(a)(ia) of the Act, the same was disallowed. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed.
3. Before us, the ld. A/R of the assessee has submitted that the testing fees received by the Central Power Research Institute were part of the income of the said Institute and, therefore, in view of the second proviso to section 40(a)(ia), the recipient have already considered the amount for computing the income and has furnished its return of income under section 139 of the Act. He has further submitted that the assessee has obtained confirmation from Central Power Research Institute dated 07.11.2018 in this respect for which the assessee is seeking the leave of the Tribunal to file the same as additional evidence. The ld. A/R of the assessee has also filed an application under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 for admission of additional evidence. He has relied upon the decision of Hon’ble Delhi High Court in case of CIT vs. Text Hundred India (P) Ltd, 239 CTR (Del.) 263. Hence, the ld. A/R has submitted that in view of the confirmation issued by the Central Power Research Institute, no disallowance is called for under section 40(a)(ia) in respect of the payment made by the assessee. Thus he has pleaded that the case may be set aside to the file of the AO for limited purpose of verification of this factual po ition that the amount paid by the assessee was considered and included in the income of Central Power Research Institute.
4. On the other hand, the ld. D/R has relied upon the orders of the authorities below and submitted that despite sufficient opportunity given by the AO as well as by the ld. CIT (A), the assessee did not furnish any such evidence to show that the amount paid by the assessee to Central Power Research Institute was considered as part of the income. Further, the assessee did not raise such an issue before the authorities below.
5. We have considered the rival submissions as well as the relevant material on record. Since the assessee has now filed a Certificate issued by the Central Power Research Institute wherein it has been confirmed that the said Institute is approved under section 35 of the IT Act read with Rule 5C and 5D of the Income Tax Rules, 1962 in the category of Scientific Research Association and thereby exemption under section 10(21) of the IT Act is enjoyed by the Institute, we have confirmed the bills against which the assessee made the payments. Thus as per the said Certificate, the income in the hands of Central Power Research Institute s not at all chargeable to tax and, therefore, there was no requirement for deducting tax at source when the said income was exempt in the hands of the recipient. However, since the Certificate dated 07.11.2018 was not filed before the authorities below and it was not subjected to verification, therefore, in the facts and circumstances of the case and in the interest of justice, we admit the said Certificate as an additional evidence and set aside the issue to the record of the AO to verify the factual position as pointed out in the said Certificate and decide the same afresh after giving an opportunity of hearing to the assessee.
Ground No. 2 is regarding disallowance of interest payment of Rs. 2,23,929/- under section 40(a)(ia) for want of TDS.
6. During the year under consideration the assessee company made payment of interest of Rs. 2,23,929/- to various persons without deduction of TDS. The details of the payment of interest are as under :-