August 2013
Karwat Steel Traders vs. ITO Income tax Appellate Tribunal Mumbai Bench “A”, Mumbai Before B. Ramakotaiah (A. M.) and Vivek Varma (J. M.) ITA No. 6822 / Mum / 2011 A Y 2008-09. Decided on 10.07.2013 Counsel for Assessee / Revenue: K. S. Choksi / Manoj Kumar
By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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Section 40(a)(ia) – No disallowance can be made merely on the ground of non filing of Form 15H / 15G to CIT as prescribed u/r 29C.
Facts:
The AO had disallowed interest paid to various parties amounting to Rs. 5.3 lakh u/s. 40(a)(ia) on the ground that the assessee had not filed Form 15H /15G to CIT as prescribed u/r 29C. On appeal, the CIT(A) upheld the order of the AO.
Held:
According to the tribunal, u/s. 40(a)(ia) the amount cannot be allowed as deduction only when tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction has not been paid. In the case of the assessee, since the assessee had received the prescribed forms viz., Form 15H / 15G, from the parties to whom interest was paid, there was no liability to deduct tax. For nonfurnishing of Form 15H / 15G to the CIT as prescribed under the Act, according to the tribunal, it may result in invoking penalty provisions u/s 272A(2)(f). Since no tax was deductible, the tribunal held that the provisions of section 40(a)(ia) were not applicable to the facts of the case and the interest paid was allowable as deduction. In coming to the above conclusion the tribunal also relied on the decision of the co-ordinate bench in the case of Vipin P. Mehta vs. ITO (2011) [11 taxmann.com 342 (Mum)].
