Meera Roadlines Vs ITO (ITAT Raipur)
ITAT Raipur held that belated return of income filed by payee u/s. 139(4) satisfies the 1st proviso to section 201(1) of the Income Tax Act hence assessee cannot be treated as ‘assessee in default’.
Facts- The assessee firm had filed its return of income on 11.2019, declaring an income of Rs.87,490/-. The DCIT, CPC while processing the return of income took cognizance of the qualification by the Meera Road Lines Vs. ITO-2(1), Bhilai ITA No. 310/RPR/2024 chartered accountant of the assessee firm in his tax audit report, and disallowed u/s. 40(a)(ia) of the Act the interest paid by the assessee firm to NBFCs aggregating to Rs.8,39,753/-. The A.O observed that as the assessee firm had failed to deduct tax at source on the interest paid to the NBFCs, viz. (i) Cholamandalam Investment and Finance Company Ltd.; and (ii) HDB Financial Services Ltd., therefore, 30% of the interest expenditure was liable to be disallowed u/s. 40(a)(ia) of the Act.
CIT(A) upheld the disallowance u/s. 40(a)(ia). Being aggrieved, the present appeal is filed.
Conclusion- Held that as the “1st proviso” to Section 201(1) of the Act, inter alia, contemplates that the payee should have furnished his return of income u/s. 139 of the Act, therefore, I am of a firm conviction that the belated return of income filed by the respective payees u/s. 139(4) of the Act in the present case would duly satisfy the said pre-condition for triggering the concession therein contemplated for not treating the assessee-payer as an “assessee-in-default”. Accordingly, I am unable to concur with the CIT(Appeals), who had declined to allow concession of “1st proviso” to Section 201(1) of the Act and had rejected the claim of the assessee firm for not being treated as an “assessee in default”.
