VINAYAK C. MALLYA, MUMBAI V. ITO WD 25(3)(4), MUMBAI

CO 206/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8135 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Assessment record

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 7348/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR :2007-08 THE ITO -25(3)(4), C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLOA COMPLEX, BANDRA (E), MUMBAI-400 051 / VS. SHRI VINAYAK C. MALLYA, A-309, SHREE GANESH GAURAV CHS LTD., RDP-6, SECTOR-3, MARKET ROAD, CHARKOP, KANDIVALI (W), MUMBAI-400 067 C.O. NO. 206/MUM/2012 (ARISING OUT OF I.T.A. NO. 7348/MUM/2010) ( ( ( ( ( / ASSESSMENT YEAR :2007-08 SHRI VINAYAK C. MALLYA, A-309, SHREE GANESH GAURAV CHS LTD., RDP-6, SECTOR-3, CHARKOP, KANDIVALI (W), MUMBAI-400 067 / VS. THE ITO -25(3)(4), C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLOA COMPLEX, BANDRA (E), MUMBAI-400 051 ') % ./ *+ ./PAN/GIR NO. : AKXPM2860R CROSS OBJECTOR .. APPELLANT IN APPEAL ), - / ASSESSEE BY: SHRI MANOJ KUMAR ./), 0 - / REVENUE BY : SHRI ISWAR RATHI 0 12% / DATE OF HEARING : 04.12.2012 34( 0 12% / DATE OF PRONOUNCEMENT : 7.12.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)-35, MUMBAI DT.12.8.2010 PERTAINING TO A.Y. 2007-08. ITA NO. 7348/M/2010 & C.O. NO. 206/M/12 2 2. THE SHORT ISSUE INVOLVED IN REVENUES APPEAL AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS WHETHER THE TAX DEDUCTED AT SOURCE BY THE ASSESSEE PAID ON OR BEFORE FILING OF THE RETURN WOULD BE COVERED BY SEC. 40(A)(IA) RESULTING INTO DISALLOWANCE OF THE P AYMENT AMOUNTING TO RS. 52,30,282/-. 3. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF UNDERTAKING MASS MAILING SERVICES WHICH INCLUDES PR INTING OF BROCHURES, SELECTION AND PROVIDING OF MAILING ADDRESSES, PACKI NG OF SAMPLES, ADVERTISEMENT MATERIALS AND BROCHURES AND TO DISPAT CH THE SAME TO VARIOUS PARTIES. THE RETURN FOR THE YEAR UNDER CON SIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED DATA ENTRY, MAILING, PRINTING & LABOUR CHARGES AT RS. 34,52,127/- AND COURIER CHARGES AT RS. 86,82,595/- AGAINST WHICH TH E APPELLANT CLAIMED TO HAVE PAID DATA PROCESSING CHARGES AT RS. 15,49,632/ - AND COURIER CHARGES AT RS. 64,14,175/- TO VARIOUS PERSONS. THE AO FURT HER OBSERVED THAT THE ASSESSEE HAS DEDUCTED TDS BUT THE SAME WAS NOT PAID INTO GOVERNMENT ACCOUNT WITHIN THE STIPULATED TIME. THE TOTAL AMO UNT AS CALCULATED BY THE AO COMES TO RS. 52,30,282/- ON WHICH THE TDS HAS BE EN MADE BUT THE SAME HAS NOT BEEN DEPOSITED INTO GOVT. ACCOUNT ON O R BEFORE 31.3.2007. THE ASSESSEE WAS SHOW CAUSED WHY THE PAYMENT OF RS. 52,30,282/- SHOULD NOT BE DISALLOWED IN THE LIGHT OF THE PROVIS IONS OF SEC. 40(A)(IA) OF THE ACT. THE ASSESSEE FILED A DETAILED REPLY EXPLA INING THE NATURE OF TRANSACTION AND CLAIMED THAT THE ASSESSEE WAS NOT L IABLE TO DEDUCT TAX AT SOURCE U/S. 194C(2) BUT YET IT DEDUCTED TAX AT SOUR CE AND THE SAME WAS DEPOSITED INTO GOVERNMENT ACCOUNT ON 18.4.2007. CO PIES OF NECESSARY CHALLANS AND LEDGER ACCOUNTS WERE SUBMITTED BEFORE THE AO. ITA NO. 7348/M/2010 & C.O. NO. 206/M/12 3 3.1 THE SUBMISSIONS OF THE ASSESSEE WERE REJECTED B Y THE AO WHO WAS OF THE OPINION THAT THE ASSESSEE WAS LIABLE NOT ONL Y TO DEDUCT TAX AT SOURCE BEFORE 31.3.2007 BUT AT THE SAME TIME, THE SAME WAS TO BE DEPOSITED BEFORE 31.3.2007 AND AS THE ASSESSEE HAS FAILED TO DISCHARGE THE LIABILITY, IT IS COVERED BY THE PROVISIONS OF SEC. 40(A)(IA) O F THE ACT AND ACCORDINGLY THE AO DISALLOWED THE ENTIRE PAYMENT O F RS. 52,30,282/-. 4. THE MATTER WAS CARRIED BEFORE THE LD. CIT(A).BEF ORE THE CIT[A] THE ASSESSEE RELIED UPON THE DECISION OF THE MUMBAI BENCH IN THE CASE OF BAPUSAHEB DHUMAL VS ACIT IN ITA NO. 6628/MUM/2009 D T. 25.6.2010 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT IF T HE TAX WAS DEDUCTED AT SOURCE IN THE MONTH OF MARCH AND PAID INTO GOVERNM ENT ACCOUNT BEFORE THE DUE DATE FOR FILING OF RETURN, NO DISALLOWANCE U/S. 40(A)(IA) COULD BE MADE. THE LD. CIT(A) WAS CONVINCED THAT SINCE THE ASSESSEE HAS DEPOSITED THE TAX BEFORE FILING THE RETURN OF INCOM E, IT IS NOT HIT BY THE PROVISIONS OF SEC. 40(A)(IA) AND DELETED THE DISALL OWANCE OF RS. 52,30,282/-. 5. THE REVENUE IS IN APPEAL AGAINST THIS FINDING OF LD. CIT(A) WHEREAS THE ASSESSEE HAS FILED CROSS OBJECTION SUPP ORTING THE ORDER OF THE LD. CIT(A). 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE R ELIED UPON THE ORDER OF THE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE HONBLE CALCUTTA HIGH COUR T IN ITA NO. 302 OF 2011 GA 3200/2011 DECIDED ON 23.11.2011. THE LD. C OUNSEL ALSO RELIED ITA NO. 7348/M/2010 & C.O. NO. 206/M/12 4 UPON THE DECISION OF MUMBAI TRIBUNAL C BENCH IN I TA NO. 1321/MUM/2009 AND SUBMITTED THAT THE TRIBUNAL HAS F OLLOWED THE DECISION OF THE HONBLE CALCUTTA HIGH COURT. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE RIVAL SUBMISSIONS. WE HAVE ALSO THE BENEFIT OF THE DECISION OF THE TRIBUNAL IN ITA NO. 1321/MUM/2009 (SUPRA). THE UND ISPUTED FACT ARISING OUT OF THE ASSESSMENT RECORD IS THAT THE AS SESSEE HAS DEDUCTED TAX BEFORE 31.3.2007. IT IS ALSO NOT IN DISPUTE THAT T HE SAME HAS BEEN DEPOSITED ON 18.4.2007. IT IS THE SAY OF THE AO TH AT THE TDS HAS TO BE DEPOSITED BEFORE THE DUE DATE AND IN THIS CASE, THE DUE DATE WAS 31.3.2007 WHEREAS IT IS THE SAY OF THE ASSESSEE THAT SINCE IT HAS DEPOSITED THE TDS ON OR BEFORE FILING THE RETURN, THE SAME SHOULD BE CON SIDERED IN THE LIGHT OF THE AMENDED PROVISIONS OF SEC. 40(A)(IA). A PERUSA L OF THE AMENDMENT BROUGHT U/S. 40(A)(IA) SHOW THAT THE SAME HAS BEEN BROUGHT INTO THE STATUTE WITH EFFECT FROM 1.4.2010. THE HONBLE CAL CUTTA HIGH COURT HAD THE OCCASION TO DECIDE WHETHER THE AMENDMENT SO BRO UGHT HAS A RETROSPECTIVE EFFECT WITH EFFECT FROM 1.4.2005. TH E HONBLE CALCUTTA HIGH COURT IN ITA NO. 302 OF 2011 (SUPRA) HAS HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. FOR THIS PROPOSIT ION, THE HONBLE CALCUTTA HIGH COURT RELIED UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. REPORTED IN 224 ITR 667 AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306. THE HONBLE CALCUTTA HIGH COURT ALSO RELIED UPON THE DECISION O F THE HONBLE SUPREME COURT REPORTED IN 82 ITR 570. THE TRIBUNAL IN THE CASE OF SHRI PIYUSH C. MEHTA VS ACIT IN ITA NO. 1321/M/09 HAS FO LLOWED THE DECISION OF THE HONBLE CALCUTTA HIGH COURT HAS HEL D THAT ANY PAYMENT OF ITA NO. 7348/M/2010 & C.O. NO. 206/M/12 5 TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVA NT TO AND FROM A.Y. 2005-06 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S. 139(1) OF THE ACT. RES PECTFULLY CONSIDERING THESE DECISIONS, WE FIND THAT IN THE INSTANT CASE, THE TAX HAS BEEN DEPOSITED ON 18.4.2007 WHEREAS THE RETURN WAS FILED ON 31.10.2007. IN THE LIGHT OF THE DISCUSSIONS MADE HEREINABOVE, WE H AVE NO HESITATION TO HOLD THAT THE ASSESSEE HAS DEPOSITED THE TAX ON OR BEFORE FILING THE RETURN WHICH FACT HAS NOT BEEN DISPUTED BY THE AO AND ACCO RDINGLY THE FINDINGS OF THE LD. CIT(A) ARE CONFIRMED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE C.O. FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.12.2012 . &5 0 4( % 6 7&8 7.12.2012 4 0 9 SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; 7& DATED 7.12.2012 . . ./ RJ , SR. PS ITA NO. 7348/M/2010 & C.O. NO. 206/M/12 6 &5 &5 &5 &5 0 00 0 .1! .1! .1! .1! :!(1 :!(1 :!(1 :!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. ./), / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. !<9 .1 , , / DR, ITAT, MUMBAI 6. 9= / GUARD FILE. &5 &5 &5 &5 / BY ORDER, /!1 .1 //TRUE COPY// > >> > / ? ? ? ? * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI