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Maha Lak shmi Rice Mill,Vill. & P.O. Bali cha k,P.S. Kh arag pu r, Di st. Mi dnapu r ( West) Vs. Additio nal Commi ssion er of Incom e Tax ...R espond ent Range-2,Midnapore
July, 11th 2012
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                   KOLKATA `A' BENCH, KOLKATA

             Before Shri Pramod Kumar (Accountant Member),
                and Shri George Mathan (Judicial Member)

                             I.T.A. No .: 17 2/ Kol. / 2012
                             Assessme nt year : 20 07-08

Maha Lak shmi Rice Mill,..................................App ellant
Vill. & P.O. Bali cha k,
P.S. Kh arag pu r, Di st. Mi dnapu r ( West)
[PAN : AAPFM 3 915 P]

Additio nal Commi ssion er of Incom e Tax ..............R espond ent

Appearances by:
Shri Soumitra Chowdhury & Shri T.K. Chakraborty, for the appellant
Shri Susanta Kumar Sinha, D.R., for the responde nt

Date of co ncluding t he hea ri ng         : July 09, 2012
Date of prono unci ng the o rde r          : July 09, 2012

                         O R D E R
Per Pramod Kumar :
1.   By way of this appeal, the assessee appellant has challenged

correctness of CIT(Appeals)'s order dated 27 t h January, 2010, in the

matter of assessment u/s. 143(3) of the Income Tax Act, 1961 for the

assessment year 2007-08, on the following grounds :-
          (1) For that the ord er of assessment as w ell as ord er of app eal i s bad
              in law an d sh ould not hold g ood in app eal.

          (2) For th at addition of Rs.4 ,66,874/- on account of n on-d educti on
              of t ax at source i s highly unjust and unfai r. It w as disallowed
              just o n a tech nical ground whi ch should not h old g ood i n
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2.    The short issue thus we are required to adjudicate is whether or

not the CIT (Appeals) was justified in upholding the disallowance of

Rs.4,66,874/-, which was made u/s. 40(a)(ia) of the Act.

3.    The material facts are not in dispute. During the course of

scrutiny assessment proceedings, the Assessing Officer noticed that the

assessee had paid interest of Rs.4,66,874/-, on unsecured loans, without

deducting tax at source u/s. 194A of the Act. It was for this reason that

the interest payment of Rs.4,66,874/- was disallowed by invoking the

provisions of section 40(a)(ia) of the Act. Aggrieved, assessee carried

the matter in appeal before the CIT(Appeals), but without any success.

The assessee is not satisfied and is in further appeal before us.

4.    We have heard the rival contentions, perused the material on

record and duly considered factual matrix of the case, as also the

applicable legal position.

5.    We find that it is an admitted position that the provisions of

section 40(a)(ia) r.w.s. 194A, on the facts of this case, have been

invoked in respect of interest actually paid by the assessee. A special

Bench of this T ribunal, in the case of Merilyn Shipping & Transports ­

vs.- ACIT (ITA No. 477/Viz./2008; order dated 29.03.2012), has held that

the provisions of section 40(a)(ia) can only be invoked in respect of the

amounts remaining payable at the year end, and not in respect of the

amounts actually paid. In this view of the matter, the CIT(Appeals) was

clearly in error in upholding invoke provisions of section 40(a)(ia) on

the facts of this case.
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6.     For the reasons set out above, we uphold the grievance of the

assessee and direct the Assessing Officer to delete the impugned

disallowance of Rs.4,66,874/-. The assessee gets the relief accordingly.

7.     In the result, the appeal of the assessee is allowed. The order is

dictated        and    pronounced      in    the   open     court   immediately                    upon

conclusion of hearing today on 9 t h day of July, 2012.

                    Sd/-                                        Sd/-
         George Mathan                                       Pramod Kumar
       (Judicial Member)                                  (Accountant Member)
Kolkata, the 9 t h day of July, 2012

Copies to :      (1)    Th e app ell ant
                 (2)    Th e respon dent
                 (3)    CIT
                 (4)    CIT(A)
                 (5)    Th e D ep artment al Rep resentativ e
                 (6)    Guard File

                                                                                      By order etc

                                                                   Assis tant Registrar
                                                         Income Tax Appe llate Tribunal
                                                              Kolkata benches, Kolkata
Laha/Sr. P.S.
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