CA Certificate is a Material Evidence to allow Benefit of S. 40(a)(ia): ITAT [Read Order]

CA Certificate - ITAT - Taxscan

The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) in M/s. Shree Ganeshaya Trading Pvt. Ltd. Versus ITO, ruled that CA certificate is a material evidence to allow the benefit of Section 40 (a) (ia) of the Income Tax Act.

Ryan Saldanha and Chaudhary Arun Kumar Singh are the counsels appeared on behalf of Assessee and Revenue respectively. In instant case Assessee engaged in the business of trading in shares and commodities.

During the assessment proceedings Assessing officer while keeping in view provisions of Section 40(a)(ia) of the 1961 Act disallowed the two items viz; delayed pay-in-charges paid on account of non-clearing stock-brokers accounts in time and interest expenses on loan taken from a bank were not deducted at income tax at source.

Accordingly, AO disallowed the aforementioned items and added to the income of the Assessee on grounds of non-deduction of income tax at source while making these payments.

Aggrieved by the additions, Assessee preferred an appeal before CIT (A), authority rejected the contentions placed by Assessee and upheld that no income tax was deducted at source by the assessee while making the interest payment. However, both these additions as were made by the AO were sustained by CIT(A).

Aggrieved by the appellate order Assessee carried the matter before this tribunal, the counsel for Assessee raised a major contention that Chartered Accountant Certificate was filed before CIT (A) with respect to interest payment without deducting income tax at source.

The assessee also submitted that the said certificate was not accepted by the CIT (A) as additional evidence and the same rejected on the ground that certificate was obtained after filing the return of income and even after the assessment has done.

With regard to the payment of delayed pay in charges, counsel for assessee said that it is not an interest payment instead charges paid on delayed payment on the purchase of shares to brokers.

On the counterpart revenue relied on the decision of appellate authority. The bench comprising Vice President Joginder Singh and Accountant Member Ramit Kochar heard the rival contentions and perused the documents on records.

Finally, the bench observed as “We are of the considered view that the CA certificate filed by the assessee is a material evidence for adjudicating this issue and we admit the said additional evidence filed by the assessee in the interest of justice. However , contents of the said CA certificate was not verified by any of the authorities below and hence in the interest of justice and in fairness to both the parties, we are restoring the matter back to the file of the AO for necessary verification of the said CA certificate and thereafter if the contents of the CA certificate are proved to be correct , the AO is directed to grant relief to the assessee keeping in view second proviso to Section 40(a)(ia) in line with judgment of Hon’ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd., (2015) 61 taxmann.com 45(Del) We order accordingly.

The bench also declared that contention of assessee with respect to delayed payment to stock brokers cannot be accepted since making delayed payment of purchase consideration in fact ‘interest’ within meaning of Section 2(28A) of the 1961 Act and the assessee was required to deduct income-tax at source on such interest within the provisions of Section 194A of the Income Tax Act.

Subscribe Taxscan Premium to view the Judgment

 

taxscan-loader