No obligation to deduct TDS when CIT not rejected Form No. 15G for delay in filing

No obligation to deduct TDS when CIT had not rejected Form No. 15G filed by the assessee on the ground of not being filed in time – ITAT

ABCAUS Case Law Citation:
ABCAUS 2821 (2019) (03) ITAT

The appeal in this case was filed by the assessee against the order of CIT(A) in upholding the order of the Assessing Officer (AO), making disallowance of interest paid on unsecured loans u/s 40(a)(ia)of the Income tax Act, 1961 (the Act).

The assessee firm was was a general merchant and commission agent. The case of assessee was taken up for scrutiny.

On verification of details and books of account, the AO observed that the assessee had paid interest on unsecured loans to different parties.

The assessee explained that it had filed declarations in Form No. 15G u/s 197A rwr 29C for payment withour deduction of tax at source, in respect of three persons in the office of Commissioner of Income Tax and also filed copies of the same before the Assessing Officer.

The Assessing Officer on verification observed that the assessee had failed to furnish the said Form No. 15G in respect of one party in the office of Commissioner of Income Tax, within stipulated time.

In respect of other two persons, the assessee failed to furnish any proof of filing the said forms.

In any case, according to the Assessing Officer, last date for filing the Form 15G with CIT was 7th of next month which was not adhered by the assessee. Hence, disallowance was made in the hands of assessee.

The CIT(A) upheld the same.

The Tribunal observed that the assessee was to pay interest to three different parties, who in turn, had submitted form No. 15G, requesting the assessee not to deduct tax at source out of interest payments.

The Tribunal further observed that under the provisions of the Act, a system is placed wherein the persons in receipt of certain payments and requested for non deduction of tax at source, where their income is below the tax limits; in such circumstances the persons have to furnish form No.15G, which in turn, have to be filed by the deductor before the Commissioner. The same have to be deposited by 7th of next month in which he had received the said forms.

The Tribunal noted that in the case of assessee, the said forms were filed on 9^th i.e. after the delay of about two days, which was very minor and condoned it in the totality of the facts and circumstances.

The Tribunal also pointed out that in any case, the Commissioner accepting the said form No. 15G had not rejected the said forms on the ground of not being filed in time. In such circumstances, there was no requirement to deduct tax at source out of interest payments made to the persons, who had filed form No. 15G.

Accordingly, the Tribunal deleted the disallowance made under section 40(a)(ia) of the Act.

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