×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.
09-01-2019, Win Information Technology, Section 40(a)(ia), Tribunal Hyderabad
This appeal filed by the assessee is directed against the order of CIT(A) – 5, Hyderabad, dated, 30/01/2017 for AY 2012-13.
2. Brief facts of the case are, assessee company engaged in the business of development of software, filed its return of income on 04/01/2013 disclosing an income of Rs. 2,37,22,810/-. The AO completed the assessment by disallowing the interest paid to Tata Capital of Rs. 3,11,519/- u/s 40(a)(ia) of the Income-tax Act, 1961 (in short ‘the Act’).
3. When the assessee preferred an appeal before the CIT()A), the CIT(A) upheld the disallowance following the decision of Hon’ble Kerala High Court in the case of Thomas George Muthoot Vs. CIT, 235 Taxman 246 (Kerala).
4. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising the following grounds of appeal:
“1. The order of the Learned Commissioner of Incometax (Appeals)-5, Hyderabad dated 30 January 2017 confirming the addition made by the Learned Deputy Commissioner of Income-tax, Circle - 17(2), Hyderabad ('Assessing officer' or 'AO') in disallowing the interest of Rs. 31,15,190/- paid to Tata Capital Limited under section 40(a)(ia) of the Income-tax Act, 1961 ('Act') for the subject AY is unsustainable both on facts and on law.
2. The order of the CIT(A) in holding that the amendment made to the provisions of section 40(a)(ia) by the Finance Act section 2012 w.e.f 1.4.2013 is prospective in operation by solely relying on the decision of the Hon'ble Kerala High Court in the case of Thomas George Muthoot vs. CIT [63 Taxmann.com 99] which is against the assessee and ignoring the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Landmark Townships Pvt. Ltd [377 ITR 635] which is in favor of the assessee is wholly unsustainable in law.
3. The CIT(A) erred in not following the recognized rule of construction in interpretation of statutes that if two reasonable constructions of a taxing provision are
possible, that construction which favours the assessee must be adopted. Therefore, the order passed is bad in law and to be quashed.
4. The CIT (A) erred in not disposing the additional evidence petition filed by the Appellant under Rule 46A of the Income Tax Rules 1962.
5. The Appellant denies its liability to interest under section 234B of the Act
The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.”
5. Before us, the ld. AR of the assessee relied on the order of coordinate bench of this Tribunal in the case of Smt. M. Sailaja Vs. ITO in ITA No. 354 and 428/Hyd/2013, order dated 02/01/2015 and Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd., 377 ITR 635 (Delhi).
6. On the other hand, ld. DR relied on the orders of revenue authorities.
7. Considered the rival submissions and perused the material on record. In the case of Smt. M. Sailaja (supra), the coordinate bench has held as under:
“21. Further liberalization of provisions of Section 40(a)(ia) was made through amendment brought by the Finance Act, 2012. With a view to liberalize provisions of Section 40(a)(ia) of the Act Finance Act, 2012 brought amendment w.e.f 01.04.2013 as under. The following second proviso shall be inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013 : "Provided further 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 under the first proviso to sub-section (1) of Section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso."
22. Since provisions of Section 40(a)(ia) as amended by Finance Act, 2012 is linked to Section 201 of the Act, in which proviso was inserted, it is necessary to look into those provisions which read thus: "Sec.201: (1) Where any person, including the principal officer of a company -
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
b) referred to in sub-section (1A) of Section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or