TaxTMI 
TaxTMI 
2017 (10) TMI 1244
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....ed that the assessee had borrowed amounts and paid interest. The interest expenditure debited to P&L a/c was Rs. 4,68,79,147/- which consists of payment to following finance companies:. M/s. Diwan Housing Finance Ltd (DHFL) : Rs.2,80,91,495/- India Bulls Financial Services Ltd : Rs. 19,05,659/- HDFC Bank : Rs.1,64,74,479/- Corporation Bank CC A/c : Rs. 20,302/- The Assessing Officer observed that the interest paid to banks need not be subjected to TDS. However, for payments to private companies, TDS should have deducted by the assessee. AO opined that assessee should have deducted TDS on interest paid to M/s. India Bulls Financial Services Ltd Rs. 19,05,659/- and M/s. Diwan Housing Finance Ltd Rs. 2,80,91,495/-. 2.2 The Assesse submitted that they paid in cheques, it forming part of "EMI" and relied on special bench case of Merylin Shipping & Transport, the case of CIT Vs Janapriya Engineers Syndicate, ITA No.352/H/2014 order dated 24.06.2014 (A.P.HC) and SPR Publications Pvt Ltd Vs ACIT, ITA No.351/H/15 order dated 24.06.2015. Since these payments have been 'paid', hence need not be brought under section 40(a)(ia). 2.3 Rejecting t....
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....40(a)(ia) are not applicable. (iv) While taking such a view of the matter, Ld. CIT (Appeals) failed to consider circular No. 10/DV/2013 dated 16-12-2013 issued by the CBDT wherein it is clarified in no uncertain terms that provisions of section are applicable not only to the amounts payable as on 31st March of the relevant year but also to the amounts payable at any time during the year. (v) Ld. CIT(Appeals) ought to have appreciated that the clarification issued by the CBDT in the aforesaid circular is in conformity with the ratio of decisions in the case of Crescent Export Ltd., (216 Taxman 258) (Cal) and Sikandar Khan N Tunvar (357 ITR 312) (Guj). (vi) Ld. CIT(A) erred in law in taking note of the second proviso to section 40 (a)(ia) that where the assessee cannot be found in default u/s 201, no disallowance u/s 40(a)(ia) could be made when the said proviso was inserted w.e.f. 01-04-2013 in the statute and not applicable to the year under consideration. (vii) The appellant craves leave to add, delete, substitute, amend any grounds of appeal at the time of hearing. (viii) For these and other grounds that may be canvassed at the time of....
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....emed not to be an assessee in default in terms of the first proviso to sub-Section (1) of Section 201 of the Act, then, in such event, "it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso". The first proviso to s 210 (1) had been inserted to benefit the Assessee. It also stated that where a person fails to deduct tax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident had furnished his return of income u/s 139. No doubt, there was a mandatory requirement u/s 201 to deduct tax at source under certain contingencies, but the intention of the legislature was not to treat the assessee as a person in default subject to the fulfilment of the conditions as stipulated in the first proviso to s 201(1). The insertion of the second proviso to s 40(a)(ia) was also required to be viewed in the same manner. This again was a proviso intended to benefit the Assessee. The effect of the legal fiction created thereby was to treat....
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....rom which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004." The Court was of the view that the above reasoning of the Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso was declaratory and curative and had retrospective effect from 1st April 2005, merits acceptance. In that view of the matter, the Court was unable to find any legal infirmity in the impugned order of the ITAT in adopting the ratio of the decision of the Agra Bench, ITAT in Rajiv Kumar Agarwal v. ACIT. No substantial question of law arises in the facts and circumstances of the present case. The appeal was accordingly dismissed." 9.1. The coordinate bench has also decided similar issue in assessee's own case for AY 2010-11 in ITA No. 1319/Hyd/2011, order dated 28/11/2014 wherein the Bench has observed as under: 3. We do not find any merit in Revenue appeal as the Ld. CIT(A) directed assessee to furnish necessary certificates as per principles laid down by Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages P. ltd., (supra) wherein it w....