No Addition for Non-Deduction of Tax at Source on Interest Payment when Assessee obtained Form 15G before making Payment: ITAT [Read Order]

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The Income Tax Appellate Tribunal, Vishakhapatnam bench on 10th November 2017 ruled that no addition under the provisions of the Income Tax Act, 1961 can be made for Non-Deduction of tax at source on interest payment when assesse obtained form 15G before making the payment.

The assessee, before the Appellate Tribunal, has raised some issues including addition made by the A.O. u/s 40(a) (ia) of the Income Tax Act, 1961 for non-deduction of tax at source on the interest payment made to his wife Smt. N. Sarvari amounted to Rs.41,000/. According to him, he had collected form 15G from her. However the form was dated1.9.2010, whereas the interest was credited to her account on 31.3.2010 for the year ending 31.3.2010.

Since the assessee has neither collected form 15G nor deducted the tax at source as at the end of the year i.e. 31.3.2010, the A.O. held that the payment was hit by section 40(a)(ia) of the Act and accordingly made the addition.

Aggrieved by the order of AO, The assessee went on appeal before CIT (A) and they confirmed the addition made by AO and assessee carried the matter to the Tribunal.

During the tribunal proceedings the counsel for the assessee contended that the recipient of interest is his wife and her income is not subjected tax so the assessee has obtained form 15G and forwarded the same to the concerned CIT.

On contrary the Ld. D.R. relied upon the orders of the Ld. CIT (A).

The Tribunal, after hearing both the parties and perusing records, ordered that “Since the recipient of interest was not having taxable income, obtaining form 15G before making the payment would be sufficient compliance and hence, we hold that the addition u/s 40(a) (ia) of the Act does not attract, accordingly, we delete the addition made by the A.O. and set aside the orders of the lower authorities and allow the appeal of the assessee on this ground”.

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