TaxTMI 
TaxTMI 
2016 (5) TMI 619
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....on 29-09-2009 declaring total income of Rs. 4,29,900/-. The AO completed the assessment u/s.143(3) on 11- 04-2011 determining the total income at Rs. 5,23,342/-. The Ld. CIT examined the records and noted that the assessee has borrowed secured loans from Tata Finance and Tata Motors Ltd. for purchase of vehicles. The assessee during the year has paid interest to the tune of Rs. 17,45,830/- to the said non banking financial companies without deduction of tax as per the provisions of section 194A. Since tax was not deducted u/s.194A from the payment of interest to the tune of Rs. 17,45,830/-, therefore, the amount deserves to be disallowed u/s.40(a)(ia) of the Act. Since the AO has not disallowed the same, therefore, the order has become erro....
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....nce and nothing was payable on 31.03.2009 Refer: CIT vs. Vector Shipping Services Pvt Ltd Allahabad High Court 357 ITR 642 and Special Bench of Vishukhapatnam Tribunal in the case of M/s. Merilyn Shipping and Transport -136 ITD 23 4. On the facts and in the circumstances of the case and in the presence of contrary view taken by Gujarat High Court in CIT vs. Sikanderkhan Tunvar 33 taxmann.com 133 and in case of CIT vs. Cresent Export Syndicate Kolkatta High Court 262 CTR 525 suggesting very clearly that the interpretation of see 40(a)(ia) is capable of different interpretation and in that case view taken in favour of assessee needs to be accepted as held by Supreme Court in case of Vegetable Products Ltd. 88 ITR 19....
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....f the I.T. Act. He submitted that there was no amount payable at the end of the year to Tata Finance and Tata Motors Ltd., Therefore, in view of the various decisions prevailing at that time including the decision of Hon'ble Allahabad High Court in the case of Vector Shipping Services Pvt. Ltd., (Supra) and the decision of the Special Bench in the case of Merilyn Shipping and Transport (Supra) no disallowance u/s.40(a)(ia) is warranted. Even otherwise, when two views are possible, the view which is in favour of the assessee has to be adopted in view of the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd., (Supra). Therefore, the Ld.CIT is not justified in invoking jurisdiction u/s.263. 6. Referring to the deci....
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....has offered the relevant income and paid the taxes thereon the payer cannot be considered as defaulter within the meaning of section 201 of the I.T. Act. He submitted that there is hardly any reason to believe that the reputed companies such as Tata Finance and Tata Motors Ltd. have not offered the interest income in their return of income. Therefore, in that case also no disallowance is called for u/s.40(a)(ia) of the I.T. Act. 8. The Ld. Departmental Representative on the other hand heavily relied on the order of the Ld.CIT. He submitted that since the assessee has not deducted any tax u/s.194A from the interest paid to Tata Finance and Tata Motors Ltd., therefore, no disallowance u/s.40(a)(ia) was required which the AO has failed to d....
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....he provisions of sub-section 3 of section 194A. Tata Motors is Ltd. Company. As per record, the firm has taken loan from Tata Motor Ltd., and Tata Finance Ltd. Further, it is seen that the assessee firm has not deducted tax on interest payments made. Under the circumstances, I intend to disallow the interest payment Rs. 17,45,830/- under section 40a(ia) of the Act. Your submission for the proposed rectification may please be sent to this office on or before the aforesaid date." 10. We find the assessee vide letter dated 12-09-2012 had replied to the above rectification notice issued by the AO stating that each and every details/information which was necessary as well as asked by the AO to complete the assessment proceedings were provided....
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....) are attracted for non-deduction of tax u/s.194A from the payments made to Tata Finance and Tata Motors Ltd. is a debatable issue when the Ld.CIT invoked jurisdiction u/s.263 of the I.T. Act. 12. The Hon'ble Supreme Court in the case of Max India Ltd. (Supra) has held that every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the revenue. When the AO has adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the AO has taken one view with which Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. ....