Case Law Details
JCIT Vs Karnataka Vikas Grameena Bank (ITAT Bangalore)
Conclusion: Disallowance of interest paid to persons who furnished Form 15 G and Form 15 H should not be made u/s 40a(ia) for non deduction of TDS as the requirement of filing of Form 15G and 15H with the prescribed authority viz., CIT was only procedural and that could not result in a disallowance u/s 40a(ia).
Held:During the assessment proceedings, AO noticed that assessee had paid total interest of Rs 411,29,54,190/- during the FY 2011-12. Out of the above a sum of Rs.80,49,49,266/- was interest paid above Rs.10,000/- to each of the depositors but no tax at source was deducted because the depositors had furnished Form No.15G/15H. AO was however of the view that apart from obtaining declaration in Form No.15G/H, assessee ought to have furnished those forms to CIT, within the prescribed period. Since assessee failed to do so, AO held that disallowance u/s.40(a)(ia) had to be made. AO therefore, disallowed interest expense of Rs.80,49,49,266 u/s.40(a)(ia). It was held following the decision of the Tribunal in assessee’s own case, disallowance of interest expenses u/s.40(a)(ia), to the extent of the disallowance relates to interest paid to persons furnished Form 15 G and Form 15 H to assessee should not be made u/s 40a(ia) as held by the Hon’ble Karnataka High Court in the case of Sri Marikamba Transport Co. The requirement of filing of Form 15G and 15H with the prescribed authority viz., CIT was only procedural and that could not result in a disallowance u/s 40a(ia). Thus, the dis allowance made by AO was deleted.
FULL TEXT OF THE ITAT JUDGEMENT
ITA No. 1391/Bang/2016 is an appeal by the Revenue against the order dated 31.3.2016 of Commissioner of Income-tax (Appeals), Hubli relating to the assessment year 2012-13. ITA No.1392/Bang/2016 is an appeal by the revenue against the order dated 24/3/2015 of Commissioner of Income-tax (Appeals), Hubli relating to the assessment year 2013-14. The Assessee has filed cross objection being C.O.107/ & 08/Bang/2017 for AY 2012-13 & 2013-14 respectively, against the very same orders of CIT(A) against which the revenue is in appeal. Since common issues are involved in these appeals, as well as cross-objections, these appeals and cross-objections were heard together. We deem it convenient to pass a common order.
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