TaxTMI 
TaxTMI 
2022 (2) TMI 332
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....4,12,59,525/- made by the Assessing Officer by invoking the provisions of section 40(a)(ia) of the Income-tax Act, 1961 (hereinafter also called 'the Act'). 4. Succinctly, the facts of the case are that the assessee claimed deduction of interest amounting to Rs. 11,56,59,011/-. During the course of assessment proceedings, the AO observed that a sum of Rs. 4,12,59,525/- was paid by the assessee to non-banking financial companies without deduction of tax at source. On being called upon to explain the reasons for non-deduction of tax at source, the assessee tendered certain explanation. After considering the same, the AO disallowed Rs. 4.12 crore u/s. 40(a)(ia) of the Act. The ld. CIT(A) deleted the disallowance. 5. We have heard....
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....icate to this effect from a Chartered Accountant in the prescribed form. Such a certificate has to be issued in Form No. 26A by a Chartered Accountant. Thus, it is manifest that in order to be covered by the proviso, not only the above referred three conditions should be simultaneously fulfilled, but a certificate in the requisite form issued by a Chartered Accountant also needs to be furnished. It is only on fulfillment of the above conditions cumulatively that an assessee who has otherwise failed to deduct tax at source wholly or partly gets immunity from being treated as an assessee in default. Now turning to the language of section 40(a)(ia) of the Act at the material time, it provides for making disallowance of the expenditure on which....
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.... so as to qualify for the benefit conferred by the second proviso to section 40(ia). Despite that, the ld. CIT(A) deleted the disallowance by taking into account the certificates received from two or three parties confirming that the interest was offered to tax. Not only the certificates from all the payees were not furnished but such certificates were also not in the prescribed form or issued by a Chartered Accountant in terms of the first proviso to section 201(1). This being a case of violation of a procedural provision, we are of the considered opinion that it would be in the fitness of the things if the impugned order on this score is set-aside and the matter is restored to the file of AO for deciding it afresh as per law. Needless to ....
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..../-. The ld. CIT(A) deleted the addition by directing the AO to restrict such disallowance to Rs. 72.00 lakh after verification, being, the amount suo motu offered by the assessee during the course of assessment proceedings towards loan of Rs. 6.25 crore taken from ICICI bank for this project. 9. Having heard both the sides and gone through the relevant material on record, it is seen that the assessee has work-in-progress in respect of property at Bhosari and property at Hadapsar with closing balance at Rs. 23.90 crore. Admittedly, these two properties were not put to use during the year. Proviso to section 36(1)(iii) states that any amount of interest paid in respect of capital borrowed for acquisition of an asset shall not be allowed as....
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....ubmission that only a sum of Rs. 6.25 crore was taken as loan from ICICI bank for these two projects without actually examining the details and purpose of other loans. In view of these facts, we are unable to sustain the finding returned by the ld. CIT(A) in deleting the addition. The impugned order is, ergo, set-aside and the matter is remitted to the file of the AO for considering this issue afresh in terms of our discussion made above. Needless to say, the assessee will be allowed reasonable opportunity of hearing. 10. The next issue raised by the Revenue is against restricting the disallowance made u/s. 14A of the Act to Rs. 2,48,167/- as against Rs. 67,74,102/- made by the AO. Succinctly, the facts of this issue are that the assesse....