TaxTMI 
TaxTMI 
2017 (12) TMI 749
X X X X Extracts X X X X
X X X X Extracts X X X X
....y is engaged in the business of real estate developer. For the assessment year under consideration, the assessee filed its return of income on 28th September 2012, declaring loss of Rs. 87,30,715. During the assessment proceedings, the Assessing Officer noticing that the assessee has not deducted tax at source on interest payment of Rs. 1,68,44,164, disallowed the payment made by invoking the provisions of section 40(a)(ia) of the Act while completing the assessment under section 143(3) of the Act on 30thMarch 2015. The assessee challenged the disallowance made under section 40(a)(ia) of the Act by filing an appeal before the first appellate authority. 3. The learned Commissioner (Appeals) while deciding the issue held that since the rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent order should not be revised. In response to the show cause notice issued under section 263 of the Act, it was submitted by the assessee that in respect of finance cost of Rs. 7,91,49,028 also, the provisions of section 40(a)(ia) of the Act would not be applicable as the recipient Macrotech Constructions Pvt. Ltd. has offered the amount as income in assessment year 2012-13. In this context, the assessee also submitted a copy of the certificate issued by the Chartered Accountant of the recipient company in form no.26A. It was submitted by the assessee, since, the recipient has offered the amount as income, the assessee cannot be treated as an assessee in default in terms of first proviso to section 201(1) of the Act, hence, no disallowanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cipient of the payment has offered the amount received as income in the return of income filed for the relevant assessment year and a certificate to that effect from a Chartered Accountant is furnished, then, even if no tax is deducted on the payment made, the payer will not be treated as assessee in default. Learned Authorised Representative submitted, second proviso to section 40(a)(ia) of the Act referring to the first proviso to section 201(1) also carves out an exception by providing for no disallowance under section 40(a)(ia) of the Act where the assessee is not deemed to be an assessee in default under the first proviso to section 201(1). He submitted, though, section 40(a)(ia) was introduced to the statue by Finance Act, 2012, w.e.f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-tax can be modified to the extent of issuing a direction to the Assessing Officer for the limited purpose of verifying whether the recipient has offered the amount in question as income in the return of income filed for the impugned assessment year. 6. Learned Departmental Representative submitted, though, the issue whether as per second proviso to section 40(a)(ia) of the Act is applicable to the assessee is a debatable issue and the assessee might have a strong case on the issue, however, the assessee has to satisfy the conditions of the first proviso to section 201)(1) of the Act. She submitted, unless the assessee satisfies the conditions of the first proviso to section 201(1), the provisions of second proviso to section 40(a)(ia) w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... finance charges has offered it as income in the return of income filed for the relevant assessment year, the assessee cannot be treated as an assessee in default under the first proviso to section 201(1), thereby, no disallowance under section 40(a)(ia) of the Act can be made in terms of second proviso to section 40(a)(ia) which will have retrospective effect. In principle, we agree with the contention of the learned Authorised Representative that in a case where the recipient has offered the payment received by him as income in the return of income filed for the relevant assessment year, then, the person making such payment cannot be treated as an assessee in default under section 201(1) of the Act as per the first proviso to the said pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f tax by the assessee on payment of finance charges of Rs. 7,91,49,028, nor has verified whether the recipient of such payment has offered it as income. Though, the learned Authorised Representative submitted before us that the assessee has furnished documentary evidence to demonstrate that the recipient of finance charges has offered it as income in the return of income filed for the impugned assessment year, however, the learned Commissioner of Income-tax in the impugned revisional order has recorded a finding of fact that neither the certificate from Chartered Accountant nor any other documentary evidence indicating the fact that the recipient of finance charges has offered it as income has not been produced by the assessee either before....