Hall Offshore Limited v. ACIT, Range-12, New Delhi
[Citation -2019-LL-0903-59]

Citation 2019-LL-0903-59
Appellant Name Hall Offshore Limited
Respondent Name ACIT, Range-12, New Delhi
Court ITAT-Delhi
Relevant Act Income-tax
Date of Order 03/09/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags short deduction of tds • non-deduction of tds • violation of natural justice • interest income • payment to non-resident • disallowance of payment • assessee-inĀ­-default
Bot Summary: AO u/s 40(a)(ia) is bad in law and against the facts and circumstances of the case. Year 2010-11 in ITA No 2819/Del/2015 by order dated 25.1.2019 and for AY 2011-12 in ITA No. 5044/Del/2015 by order dated 18.8.2017. It is an admitted fact that it is not a case of non-deduction of TDS but it is a case of short deduction of TDS on foreign payments. In the case of S.K. Tekriwal, Hon ble High Court held that in the case of shortfall in deduction due to any difference of opinion as to the taxability of any item or nature of payments falling under various TDS provisions, the proper course for the revenue is to declare the assessee as an assessee in default u/s 201 of the Act but no disallowance can be made by invoking the provisions of Section 40(a)(ia) of the Act. In these circumstances, while respectfully following the said decision, we hold that it is not open for the revenue to disallow any amount u/s 40(a)(ia) of the Act and the addition is directed to be deleted. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 Draft dictated on 19.08.2019 Draft placed before author 20.08.2019 Draft proposed placed before the second member Draft discussed/approved by Second Member. Approved Draft comes to the Sr.PS/PS Kept for pronouncement on Date of uploading order on the website File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk.


IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER & SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA No.5069/Del/2016 Assessment Year: 2011-12 M/s Hall Offshore Limited, vs ACIT, Range-12, 25, Bazar Lane, Bengali Market, New Delhi. New Delhi. PAN: AAACH3144B Respondent Appellant Assessee by: Shri Somi Aggarwal, Advocate Department by: Shri Amit Katoch, Sr. DR Date of Hearing: 13.08.2019 Date of Pronouncement: 03.09.2019 ORDER PER NARASIMHA K. CHARY, JM Aggrieved by order of Commissioner of Income- tax(Appeals) -4, New Delhi{ CIT(A) } for Assessment Year 2011-12, assessee preferred this appeal on following grounds: 1. That having regard to facts and circumstances of case, ld. CIT(A) has erred in law and on facts in not deleting disallowance of Rs.39,38,400/- made by ld. AO u/s 40(a)(i) and further erred in directing ld. AO to verify claim and that too without observing principles of natural justice. 2. That in any case and in any view of matter, action of ld. CIT(A) in not deleting disallowance of Rs.39,38,400/- made by ld. AO u/s 40(a)(ia) is bad in law and against facts and circumstances of case. 2 3. That having regard to facts and circumstances of case, ld. CIT(A) has erred in law and on facts in confirming action of ld. AO in making addition of Rs.11,63,500/- on account of interest income. 4. That appellant craves leave to add, amend or delete any of grounds of appeal at time of hearing and all above grounds are without prejudice to each other. 2. At outset, at time of arguments, ld. AR submitted that Ground No.4 is general in nature, and that they are not pressing Ground No.3. Therefore, what remains for our adjudication are ground Nos. 1 & 2 in respect of Rs.39,38,400/- by making disallowance u/s 40(a)(ia) of Income-tax Act, 1961 ( Act ). On this aspect assessment order speaks that during course of assessment proceedings, ld. AO found that assessee made short deduction of TDS of Rs.7,87,680/- on foreign payments, deducted TDS at 4.22% instead of 20% and, therefore, total payment made by assessee to foreign party to tune of Rs.49,92,585/- proportionately was disallowed which comes to Rs.39,38,400/- u/s 40(a)(ia) of Act. 3. In appeal, ld. CIT(A) confirmed same. Assessee is, therefore, before us challenging same and placing reliance on decision of Hon ble Calcutta High Court in case of S.K. Tekriwal (2013) 260 CTR 73 (Cal) followed by coordinate benches of this Tribunal in case of ITO vs Quatro Mortgage Solution P. Ltd. for Asstt. Year 2010-11 in ITA No 2819/Del/2015 by order dated 25.1.2019 and for AY 2011-12 in ITA No. 5044/Del/2015 by order dated 18.8.2017. 4. It is admitted fact that it is not case of non-deduction of TDS but it is case of short deduction of TDS on foreign payments. Instead of 3 20% as opined by ld. AO, assessee effected TDS at 4.22% on payment of Rs.49,92,585/-. 5. In case of S.K. Tekriwal (supra), Hon ble High Court held that in case of shortfall in deduction due to any difference of opinion as to taxability of any item or nature of payments falling under various TDS provisions, proper course for revenue is to declare assessee as assessee in default u/s 201 of Act but no disallowance can be made by invoking provisions of Section 40(a)(ia) of Act. In these circumstances, while respectfully following said decision, we hold that it is not open for revenue to disallow any amount u/s 40(a)(ia) of Act and addition is directed to be deleted. 6. In result, appeal of assessee is allowed. Order pronounced in Open Court on 3rd September, 2019. Sd/- sd/- (PRASHANT MAHARISHI) (K.NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 3rd September, 2019 VJ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 Draft dictated on 19.08.2019 Draft placed before author 20.08.2019 Draft proposed & placed before second member Draft discussed/approved by Second Member. Approved Draft comes to Sr.PS/PS Kept for pronouncement on Date of uploading order on website File sent to Bench Clerk Date on which file goes to AR Date on which file goes to Head Clerk. Date of dispatch of Order. Hall Offshore Limited v. ACIT, Range-12, New Delhi
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