2022 (5) TMI 274 - AT - Income Tax

Supreme Court allows appeal due to pandemic delay, Tribunal admits additional evidence

Y.M. Motors Pvt. Ltd. Versus Asstt. Commissioner of Income Tax Circle–8 (3) (2), Mumbai

Y.M. Motors Pvt. Ltd. Versus Asstt. Commissioner of Income Tax Circle–8 (3) (2), Mumbai - TMI Issues:1. Delay in filing the appeal and condonation of delay.2. Disallowance under section 40(a)(ia) of the Income Tax Act on interest paid to Non-Banking Finance Companies (NBFCs).Issue 1: Delay in filing the appeal and condonation of delay:The assessee filed an appeal against the order dated 25.02.2020, passed by the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The appeal was delayed by 251 days. The assessee sought condonation of delay due to the pandemic situation in Mumbai, which affected the regular operation of the assessee's office. The Supreme Court's order extended the limitation for filing appeals, and based on this, the delay was condoned. The Tribunal heard the appeal on merits as there was no delay in filing it.Issue 2: Disallowance under section 40(a)(ia) on interest paid to NBFCs:The primary issue in this appeal was the disallowance under section 40(a)(ia) of the Act concerning interest paid to Non-Banking Finance Companies (NBFCs). The assessee, engaged in the sales and services of automobiles and spare parts, e-filed its return of income for the relevant year but failed to deduct TDS on interest payments to NBFCs. The Assessing Officer disallowed the interest amount under section 40(a)(ia) for non-deduction of TDS. In the appeal before the CIT(A), the assessee submitted certificates issued by the Accountant, but the disallowance was upheld.During the appeal hearing, the assessee sought admission of additional evidence, including Form no.26A certificates, which indicated that the NBFCs had considered the interest received while computing taxable income. The Tribunal admitted the additional evidence and directed the Assessing Officer to verify the details. If it is confirmed that the NBFCs included the interest in their income tax returns, relief should be granted to the assessee as per the second proviso to section 40(a)(ia). Consequently, the appeal was allowed for statistical purposes, and the order of the CIT(A) was set aside.In conclusion, the Tribunal addressed both the delay in filing the appeal and the substantive issue of disallowance under section 40(a)(ia) of the Income Tax Act. The decision to admit additional evidence and remit the issue to the Assessing Officer for further verification demonstrates a fair consideration of the facts and legal provisions involved in the case.