Appeal partly allowed, delay condoned. Disallowance of interest remanded for further assessment. Additional ground dismissed.

The Tribunal partly allowed the appeal, condoning the delay in filing and remanding the issue of disallowance of interest component on EMI paid to NBFCs for further assessment based on additional evidence. The Tribunal dismissed the additional ground raised by the assessee regarding the retrospective application of the amendment to section 40(a)(ia).

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Issues:
1. Delay in filing the appeal by the assessee challenging the impugned order.
2. Disallowance of interest component on EMI paid to Non-Banking Financial Companies (NBFCs) under section 40(a)(ia) of the Income Tax Act.

Issue 1: Delay in filing the appeal:
The appeal was delayed by 1862 days, with the assessee attributing the delay to not receiving the impugned order and the Covid period. The Tribunal, after considering the reasons for delay and the submissions made, condoned the delay as unintentional and beyond the control of the assessee. The Tribunal emphasized the importance of substantial justice and granted the appeal to be decided on merits.

Issue 2: Disallowance of interest component on EMI paid to NBFCs:
The assessee, engaged in providing architectural services, filed its return of income declaring a total income of Rs. 46,00,720. During scrutiny, it was observed that interest on vehicle loans/other loans of Rs. 40,42,961 was claimed as expenses without deduction of tax at source. The Assessing Officer disallowed this under section 40(a)(ia) for non-deduction of tax at source. The Tribunal noted that though the assessee cited the second proviso to section 40(a)(ia), it failed to prove that NBFCs had paid income tax on the interest received. The Tribunal allowed additional evidence submitted by the assessee and remanded the issue to the Assessing Officer for further verification and adjudication. The Tribunal dismissed the additional ground raised by the assessee regarding the retrospective application of the amendment to section 40(a)(ia) introduced by the Finance (No. 2) Act, 2014, clarifying that the amendment is not applicable to the year under consideration.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, permitting the additional ground raised by the assessee for consideration and adjudication. The delay in filing the appeal was condoned, and the issue of disallowance of interest component on EMI paid to NBFCs was remanded for further assessment based on the additional evidence submitted. The Tribunal dismissed the additional ground raised by the assessee regarding the retrospective application of the amendment to section 40(a)(ia).

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