The Mumbai bench of Income Tax Appellate Tribunal (ITAT) quashed the order passed by the Commissioner of Income Tax (Appeals) for the disallowance of interest component on EMI paid to non-banking financial companies under section 40a(ia) of Income Tax Act, 1961.
M/s. Vivek Bhole Architects Pvt. Ltd, the appellant assessee was a private limited company and was engaged in the profession of providing architectural services. The assessee had filed an appeal against the impugned order, which was delayed by 1862 days due to circumstances beyond the assessee’s control and sought condonation of delay that there was sufficient cause for not filing the appeal within the limitation period.
The assessee appealed against the order passed by the commissioner against the disallowance of interest component on EMI paid to non banking financial companies under section 40(a)(ia) of the Income Tax Act, 1961.
During the time of hearing of this appeal, none appeared for the asseessee and Ms. Vranda U. Matkari appeared for the department.
The counsel for the department contended that the assessing officer disallowed the interest payment under Section 40(a)(ia) of the Income Tax on the basis that the assessee had failed to deduct tax at source.
The bench observed that second proviso to section 40(a)(ia) of the Income Tax Act provides that assessee had deducted and paid the tax on such sum on the date of furnishing of return of income and also produced additional evidence to prove that Reliance Capital Ltd had taken into account the sum received as interest in its return of income.
The two bench member comprising of Shri Sandeep Singh Karhail(Judicial) And Shri B.R. Baskaran (Accountant) restored the matter for re-adjudication while allowing the appeal.
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