Case Law Details
ACIT Vs Manish Raichand Shah (ITAT Ahmedabad)
The present appeal has been filed by the Revenue against the order dated 22.01.2019 passed by the Commissioner of Income Tax (Appeals)-3, Ahmedabad, as against the Assessment order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2009-10.
2. The brief facts of the case is that the assessee is an individual and engaged in the business of trading in shares. For the Assessment Year 2009-10, the assessee filed its Return of Income declaring total income of Rs. 7,74,280/- and the assessment was completed u/s 143(3) of the Act on 30/12/2011 determining the total income of Rs. 7,96,661/-. Thereafter the case was reopened u/s 147 of the Act, the assessee did not comply to notice u/s. 148. The assessee was served with 143(2) and 142(1) notices however the assessee has not responded to the same. Hence an ex parte assessment order was passed making the disallowance u/s. 40(a)(ia) of Rs. 86,47,000/-, on container charges paid to Container Corporation of India without making deduction u/s. 194C of the Act. It is thereafter a rectification u/s 154 was made by the Assessing Officer by disallowing depreciation and RTO tax & insurance expenses of Rs. 23,20,000/- and 40(a)(ia) disallowance on interest expense of Rs. 14,95,961/- paid to NBFCs without making deduction as required u/s. 194A of the Act. Thus, the income of the assessee is determined as Rs. 1,32,59,620/-.
3. Aggrieved against the rectification order, the assessee filed an appeal before the ld. CIT(A). During the appellate proceedings, the Ld. CIT(A) called for Remand Report from the Assessing Officer and thereafter passed this impugned order allowing the assessee appeal as follows:
3.7. I have gone through the facts and the submission of the appellant carefully. Keeping in view the purpose behind the proviso inserted by the Finance Act, 2012 in section 40(a)(ia) of the Act, it can be said to be declaratory and curative in nature and therefore, should be given retrospective effect from 1-4-2005, being the date from which sub-clause (la) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 as held in the case of Ansal Landmark Township P. Ltd. [ITA 160/2015 Delhi High Court. Hon’ble Ahmedabad ITAT in the case of Forhberg Reality Pvt. Ltd. (ITA No. 2066/Ahd/2014) vide its order dated 12/12/2014 has directed A.O. to decide the issue as per decision of Hon’ble Delhi High court in the case of Ansal Landmark Township P. Ltd. (ITA 160/2015 Delhi High Court). Considering the above decisions, it is held that disallowance u/s 40(a)(ia) cannot be made if recipient has offered payment made by assessee as income in their hands. The Assessing Officer is directed to verify above facts and if it is found that payee has already offered above amount as income in their return of income, disallowance u/s.40(a)(ia) made by Assessing Officer would not survive.
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