2016 (8) TMI 1129

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....company of Rs. 3,48,284/-inspite of the fact that assessee submitted form No. 26A prescribed under rule 31ACB issued by the NBFC companies stating that in respect of income received from assessee the same is included in their taxable income and thereby erred in not following provisions of law (S.201 of I.T. Act., 1961)." 2. Briefly the facts of the case are that the assessee has paid interest of Rs. 2,45,340/- to BMW Financial Services and Rs. 1,02,944/- to Tata Capital against car loan aggregating to Rs. 3,48,284/- during the year under consideration. As per AO, the TDS liability has arisen consequent upon the payment of interest and the assessee has failed to fulfil his obligation by deduct TDS on such payment, accordingly as per provi....

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.... subsequently paid tax will not absolve payee from consequence of disallowance u/s 40(a)(ia). Based on the facts as discussed above and in view of the decisions discussed as above, addition made by the AO, on account of disallowance of interest expenditure u/s 40(a)(ia), is sustained. Ground No. 2 is dismissed." 2.3 During the course of hearing, the ld. AR submitted that the limited point of dispute relates to disallowance made by ld. AO on issue of non-deduction of tax for payment made. The ld. AO has disallowed interest paid to NBFC amounting to Rs. 3,48,284/- as the same is interest on vehicle finance of TATA finance and BMW Finance and since TDS was not deducted at source u/s 194A of Income Tax Act, 1961. Section 40(a)(ia) was invoke....

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.... received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source. 2.6 The decision of Hon'ble Punjab and Haryana High Court in case of PMS diesel (supra) is in the context of applicability of provisions of section 40a(ia) to amount paid/payable during the financial year and thus doesn't support the case of the Revenue. 2.7 Regarding decision of Hon'ble Kerala High Court's decision in the case of Thomas George Muthoot(supra) and Hon'ble Delhi High Court in case of Ansal Land Township Pvt. Ltd. (supra), there are conflicting decisions on the issue of retrospectivity of second provisio to section 40a(ia). The....