Disallowance of ₹7,24,937 Deferred Interest u/s 40(a)(ia) for TDS Non-Deduction: ITAT Deletes Addition on Payee’s Tax Certificate [Read Order]
While the CIT(A) upheld this disallowance, the Tribunal noted that the appellant submitted Form 26A and a certificate from the payee confirming that the interest had been offered for tax.
TDS - deduction - Taxscan
TDS - deduction - Taxscan
The Jabalpur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of ₹7,24,937 deferred interest under section 40(a)(ia) of Income Tax Act,1961, for Tax Deducted at Source (TDS) non-deduction on submission of the payee’s tax certificate.
Rajsila Stone Crusher,appellant-assessee, was engaged in manufacturing and trading of gitti and filed its income tax return electronically on 28.11.2012, declaring a total income of Rs. 1,87,510/-. The case was selected for scrutiny under CASS, and a notice under section 143(2) was issued on 19.08.2013 and served on 25.08.2013.
During assessment, the officer observed that the appellant had debited Rs. 7,24,937/- as “Deferred Interest” paid to M/s Tata Motor Finance Ltd. without deducting tax at source under section 194A, and disallowed the amount under section 40(a)(ia) of the Act.
Additional disallowances of Rs. 2,00,000/- were made on transportation, travelling, spare parts, and repair & machinery expenses. The total assessed income was computed at Rs. 11,12,447/-.
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On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the case by deleting all additions except the Rs. 7,24,937/- disallowance under section 40(a)(ia). Dissatisfied, the assessee approached the tribunal.
The sole ground of appeal challenged the disallowance of Rs. 7,24,937/- upheld by the Assessing Officer (AO ) under section 40(a)(ia) of the Act.
The assessee counsel argued that the CIT(A) had overlooked the facts in the remand report and wrongly rejected the application to admit additional evidence, including Form 26A and a certificate from M/s Tata Motor Finance Ltd. He maintained the submissions made earlier regarding the disallowance for non-deduction of tax at source.
The Departmental Representative opposed this, supporting the lower authorities’ orders, and submitted that the appellant had not provided the required certificate under section 201(1) of the Act.
A single member bench of Kul Bharat (Vice President) heard both parties and reviewed the records. The AO had added Rs. 7,24,937/- under section 40(a)(ia) for non-deduction of tax at source on interest paid to M/s Tata Motor Finance Ltd. He noted that the assessee could have submitted the accountant’s certificate during assessment, so the additional evidence filed before the CIT(A) was initially considered beyond Rule 46A.
However, the AO also recommended considering Form 26A and the certificate in the interest of justice, and this was not disputed by the Revenue. Since the payee confirmed that the interest had been offered for tax, the tribunal held that the CIT(A) should have admitted the evidence and granted relief, and directed the AO to delete the addition.
Accordingly,the appeal was allowed.
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