Kudale Agro Goods Vs ITO (ITAT Pune)
ITAT Pune held that disallowance under section 40(a)(ia) of the Income Tax Act cannot be sustained interest income is already reflected in the return of the deductee and tax is already paid on the same. Accordingly, appeal allowed to that extent.
Facts- During the course of the assessment proceedings, AO found that the assessee has shown unsecured loan of Rs.4,79,21,411/- as on 31.03.2017 and paid total interest of Rs.13,06,833/- to four Non Banking Financial Companies (NBFCs) which was debited to the profit and loss account of the assessee. However, the assessee has not deducted TDS on the interest paid to these four NBFCs. Accordingly, AO made an addition of Rs.3,92,050/- on account of disallowance made u/s 40(a)(ia) of the Act.
CIT(A) dismissed the appeal and confirmed the finding of AO. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. held that where deductee being recipient of income has already paid taxes on amount received from deductor, the department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source.
