2024 (12) TMI 429

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....at on the facts and circumstances of the case and in law, the impugned order passed by the Ld. Assessing Officer ("AO") u/s 143(3) r.w.s 254 of the Income Tax Act, 1961 ("the Act") is arbitrary, bad in law and liable to be quashed. 2. That on the facts and circumstances of the case and in law, the Ld. A.O. erred in making a disallowance and Ld. CIT(A) erred in upholding the said disallowance u/s 40(a)(ia) of the Act qua payment of interest on loans made to finance companies amounting to Rs. 5,08,969/-. 3. Without prejudice, on the facts and circumstances of the case and in law, the total interest amount of Rs. 5,09,969/- disallowed by Ld. A.O. is erroneous. The amendment to Section 40(a)(ia) vide Finance Act 2014 mandates ....

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....unsel further submits that following this judgment subsequently the coordinate bench of Delhi Tribunal in the case of Priyamda Media & Infotainment Private Limited Vs. DCIT in ITA Nos. 7489/Del/2017 & 1598/Del/2020 dated 18.12.2023 also held that the disallowance u/s 40(a)(ia) is to be restricted to 30% only. 3. Ld. DR placed reliance on the orders of the authorities below. 4. Heard rival submissions, perused the orders of the authorities below and the decisions relied on. It is observed that the Assessing Officer while completing the assessment u/s 143(3) r.w.s. 254 of the Act dated 31.12.2018 disallowed interest of Rs. 5,08,969/- paid to Kotak Mahindra Bank on the loan obtained by the assessee for the reason that the assessee did no....

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....a) are mandatory in nature and non compliance/non deduction of tax attracts disallowance of the entire amount. Having said so, we will be failing in our duty if we do not discuss the amendment brought in by the Finance (No.2) Act 2014 with effect from 1.4.2015 by virtue of which proviso to section 40(a)(ia) has been inserted, which provides that if any such sum taxed has been deducted in any subsequent year or has been deducted during the previous year but paid after the due. date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of previous year, such sum shall be allowed as a deduction in computing the income of previous year, and further, section 40(a)(ia) has been substituted w....