2015 (1) TMI 47 - AT - Income Tax

Tribunal Upholds Disallowance of Interest Payments for TDS Non-Deduction

Ashoka Auto Sales Ltd. Versus JCIT., Range – 4

The Tribunal upheld the disallowance of interest under section 40(a)(ia) of the IT Act for failure to deduct TDS on interest payments to Tata Capital Ltd. ... Application for rectification of mistake u/s 254 - Disllowance u/s 40(a)(ia) - non-deduction of TDS on interest paid to Tata Capital Ltd. - Held that:- Section 254(2) provides that the Appellate Tribunal may with a view to rectify any mistake apparent from record amend any order passed by it under sub-section (1) and shall make such amendment. It would clarify that the assessee admitted before the AO that TDS has to be deducted on payment of interest and the assessee admitted applicability of provisions of section 40(a)(ia) of the IT Act in the matter. The assessee in miscellaneous application also stated that the aforesaid decision of Allahabad High Court [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] came to their knowledge subsequently. Therefore, the assessee has failed to point out any mistake apparent from the record of the Tribunal. When on the last date of hearing, the ld. counsel for the assessee was asked to explain above legal position and the case was adjourned, he did not appear on the date of hearing to explain anything on the issue. It, therefore, appears that the assessee and their counsel have nothing to say in the matter and are not interested in prosecuting the aforesaid miscellaneous application. The same is, therefore, liable to be dismissed. - Decided against assesse. Issues:Disallowance of interest under section 40(a)(ia) of the IT Act due to non-deduction of TDS on interest paid to Tata Capital Ltd. and Tata Motor Finance Ltd.Analysis:The assessee challenged the disallowance of interest under section 40(a)(ia) of the IT Act for not deducting TDS on interest payments to Tata Capital Ltd. and Tata Motor Finance Ltd. The AO made the addition as the assessee admitted to not deducting TDS due to inadvertent mistake. The assessee contended that disallowance can only be made on expenditure payable at the end of the year, not on amounts already paid without deducting tax, citing a decision of the ITAT Special Bench. However, the CIT(A) found that the assessee admitted to not deducting the tax due, and the ITAT Special Bench decision was stayed by the High Court, making it inapplicable. Consequently, the addition was confirmed.The Tribunal dismissed the appeal, noting that the assessee admitted the applicability of section 40(a)(ia) and that the ITAT Special Bench decision, even if stayed, was not in favor of the assessee. The Tribunal emphasized that once a decision is stayed, it is no longer applicable. The appeal was dismissed as it lacked merit.Regarding a reference to a decision of the Allahabad High Court, the Tribunal found that the decision was not cited during the main appeal hearing, and the assessee failed to explain why it was not raised earlier. The Tribunal highlighted that it cannot review its own orders on debatable issues. Citing various High Court decisions, the Tribunal emphasized that a mistake must be obvious and easily correctable, not a debatable issue. As the assessee failed to point out any apparent mistake and did not address the legal position, the miscellaneous application was dismissed.In conclusion, the Tribunal dismissed the miscellaneous application of the assessee, as they failed to show any apparent mistake in the record or address the legal position. The Tribunal reiterated that it cannot review its own orders on debatable issues and emphasized the importance of clarity in rectifying mistakes.