Anilkumar & Company V. The Income Tax Officer, Ward-1(1)

ITA/6004/2012

AI Insights

The case involves M/s. Anilkumar & Company, the appellant, contesting an order by the Income Tax Appellate Tribunal which reversed the decision of the Commissioner of Income Tax (Appeals) regarding disallowances made under Section 40(a)(ia) of the Income Tax Act, 1961 for the assessment year 2006-07. The primary legal contention was whether the payments made to M/s. Anand Ginning Factory and M/s. Nandavi Ginning Factory, for which TDS was deducted and deposited within the stipulated time, should be disallowed under the amended Section 40(a)(ia). The High Court found that the Tribunal did not correctly apply the amended law, which was intended to prevent such disallowances if TDS was paid within the prescribed time.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 794254 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-09-2013
• Assessment Year: misc
• Other Referred Cases: M/S. BHARATI SHIPYARD LTD. Vs. DCIT, Circle 3(1) Mumbai
• Laws Referred To: Income Tax Act, 1961, Finance Act, 2008
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMEET DESHPANDE
• Assessee Lawyers: S ANNAMALAI
• Keywords: Assessment Year 2006-07; Disallowance; Income tax appeal; Retrospective amendment; TDS
• Section: 40(a)(ia); 260A; 139(i)

Judgement Text

" ITA NO.6004/2012 1 IN THE HIGH COURT OF KARNATAKA GULBARGA BENCH DATED THIS THE 18TH DAY OF SEPTEMBER 2013 PRESENT THE HON’BLE DR. JUSTICE K. BHAKTHAVATSALA AND THE HON’BLE MRS. JUSTICE B S INDRAKALA INCOME TAX APPEAL NO.6004/2012 BETWEEN M/s. Anilkumar & Company, Cotton Merchants, Rep. by its Partner, Sri Anil Kumar Basheteppa, Annapanavar, Indi Road, Bijapur-586 101. Appellant (By Sri S Annamalai, Adv.) AND The Income Tax Officer, Ward-1(1), Devoor Building, Behind Godavari Hotel, Athani Road, Bijapur-586 101. Respondent (By Sri Ameet Kumar Deshpande, Adv.) --- ITA NO.6004/2012 2 This Income Tax Appeal is filed under Section 260A of the Income Tax Act, 1961, praying to frame substantial questions of law as stated and set aside the order of the Tribunal in ITA No.78/BANG/2011 dated 28.2.2012 for the assessment year 2006-07 at Annexure-A. This Appeal coming on for hearing this day, Dr. Bhakthavatsala, J., delivered the following: JUDGMENT The appellant/assessee is before this Court under Section 260A of the Income Tax Act, 1961, praying to set aside the order of the Tribunal dated 28.2.2012 pertaining to the assessment year 2006-07 in ITA No.78/BANG/2011 on the file of Income Tax Appellate Tribunal, “B” Bench at Bangalore. 2. Learned Counsel for the appellant submits that in view of amendment of Section 40(a)(ia) of the Income Tax Act, the Appellate Tribunal erred in setting aside the order dated 16.12.2010 made in ITA No.334/BGM/2008-09 on the file of Commissioner of Income Tax (Appeals), at Belgaum. He submits that the Tribunal erred in passing the impugned judgment following the decision rendered in the case of M/S. BHARATI SHIPYARD LTD. Vs. DCIT, Circle 3(1) Mumbai, on the file of ITAT, Mumbai Special Bench “B” in ITA No.2404/Mum/09 dated 9.9.2011. He submits that Section 40(a)(ia) was amended by Finance Act, 2008 with retrospective effect from 1.4.2005 and according to the ITA NO.6004/2012 3 amendment, if the TDS deducted during the previous year and paid before the due date for filing the return of income under Section 139(i) of the Income Tax Act, no disallowance can be made under Section 40(a)(ia) of the Income Tax Act. It is submitted that the appellant deducted the TDS amount on the 31st of March 2006 and deposited the same on 30.4.2006; as the assessment order is pertaining to the assessment year 2006-07 and in view of the amendment of Section 4(a)(ia), which was given retrospective effect from 1.4.2005, the Commissioner of Income Tax (Appeals) has rightly given the benefit, holding that the disallowance of `11,80,822/- made by the Assessing Officer was not correct and set aside the same, but the Appellate Tribunal erred in disturbing the order of the Commissioner of Income Tax (Appeals). 3. Learned Counsel for the respondent/Income Tax Officer submits that in view of amendment to Section 40(a)(ia) of the Income Tax Act, which was given retrospective effect from 1.4.2005, the impugned order of the Appellate Tribunal is not correct. 4. The substantial questions required to be answered in this Appeal are as under: ITA NO.6004/2012 4 (i) Whether the Tribunal is justified in law in disallowing payment of `9,43,057/- made to M/s. Anand Ginning Factory and `2,37,765/- to M/s. Nandavi Ginning Factory under Section 40(a)(ia) of the Income Tax Act, 1961 ? (ii) Whether the Tribunal is justified in reversing the order dated 16.12.2010 made in ITA No.334/BGM/2008-09 on the file of the Commissioner of Income Tax (Appeals) at Belgaum ? 5. The assessment order in question is pertaining to the case of the present appellant for the assessment year 2006-07. The Commissioner of Income Tax (Appeals), in view of the amendment made to Section 40(a)(ia) of the Finance Act, 2008, which was given retrospective effect from 1.4.2005, the disallowance of `9,43,057/- and `2,37,765/- made by the Assessing Officer was set aside. As against the order of the Commissioner of Income Tax (Appeals), the Revenue preferred an Appeal before the Income Tax Appellate Tribunal in ITA No.6001/2011 and the Tribunal erred in setting aside the order of the Commissioner of Income Tax (Appeals) and restoring the order of the Assessing Officer, without application of mind to the provision of law and facts of the case of the Assessee. ITA NO.6004/2012 5 6. For the reasons stated above, we answer the substantial questions of law formulated by us in favour of the appellant, holding that the Tribunal erred in disallowing payment of `9,43,057/- made to M/s. Anand Ginning Factory and `2,37,765/- made to M/s. Nandavi Ginning Factory, and reversing the order dated 16.12.2010 of the Commissioner of Income Tax (Appeals) at Belgaum. 7. In view of the above, Appeal is allowed and impugned order 28.2.2012 passed in ITA No.78/Bang/ 2011 on the file of Tribunal, at Annexure-A is set aside and the order dated 16.12.2010 made in ITA No. 334/BGM/2008-09 on the file of Commissioner of Income Tax (Appeals) at Belgaum, is restored. Sd/- Judge Sd/- Judge Bjs "