ITAT Restored Case to AO Regarding TDS Applicability u/s 194A on Financial Charges Paid for Car Loan

Samir Synthetics Mills Vs DCIT (ITAT Ahmedabad)

The issue under consideration is whether the disallowance u/s 40(a)(ia) is justified for non deduction of TDS u/s 194A on financial charges paid for car loan?

ITAT states that they have perused the provisions of section 194A of the Act pertaining of deduction of tax on payment of interest other than interest on securities. The Ld. counsel has neither demonstrated how the financial charges paid for car loan are not covered u/s. 194A of the Act , nor pointed out any specific exception prescribed in section 194(3) of the Act under which the payer of the interest on car loan was covered. However, the alternative contention of the ld. counsel that no TDS to be made if the payee has paid tax as per proviso to section 40(a)(ia) and the judicial pronouncements referred in his submission and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verification of the relevant material. Therefore, ITAT restore both the issues as supra to the file of the assessing officer for deciding afresh after examination/verification of the relevant material to be furnished by the assessee at the time of set aside proceedings. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes.

FULL TEXT OF THE ITAT JUDGEMENT

This assessee’s appeal for A.Y. 2010-11, arises from order of the CIT(A)-3, Ahmedabad dated 02-02-2016, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

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