M/s.KK Rocks & Granites India P. Ltd, Trivandrum V. The DCIT, Cen Circle, Tvm, Trivandrum

CO 34/COCH/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9929 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANTHAM BOSE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Non-deduction of tax
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 46 /COCH/201 8 : ASST.YEAR 2008 - 2009 ITA NO. 47 /COCH/201 8 : ASST.YEAR 2009 - 2010 ITA NO. 48 /COCH/201 8 : ASST.YEAR 2010 - 2011 ITA NO. 49 /COCH/201 8 : ASST.YEAR 2011 - 2012 ITA NO. 50 /COCH/201 8 : ASST.YEAR 2012 - 2013 THE DY.COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE THIRUVANANTHAPURAM. VS. M/S. K.K.ROCKS & GRANITES INDIA PRIVATE LTD. TC - 13/1635, KOTTACKAL PATTOM THIRUVANANTHAPURAM PI N 695 004 PAN : AABCK6946R . (APPELLANT) (RESPONDENT) CO NO. 33 /COCH/201 8 : ASST.YEAR 2008 - 2009 CO NO. 34 /COCH/201 8 : ASST.YEAR 2009 - 2010 CO NO. 35 /COCH/201 8 : ASST.YEAR 2010 - 2011 CO NO. 3 6 /COCH/201 8 : ASST.YEAR 2011 - 2012 CO NO. 37 /COCH/201 8 : ASST.YEAR 2012 - 2013 M/S.K.K.ROCKS & GRANITES INDIA PRIVATE LTD. TC - 13/1635, KOTTACKAL PATTOM THIRUVANANTHAPURAM VS. THE DY.COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE THIRUVANANTHAPURAM. ( CROSS OBJECTOR ) (RESPONDENT) REVENUE BY : SRI.SANTHAM BOSE, CIT - DR ASSESSEE BY : SRI. T.M.SREEDHARAN, ADVOCATE DATE OF HEARING : 24 .09.2018 DATE OF PRONOUNCEMENT : 24 .09.2018 O R D E R PER BENCH THESE APPEALS BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A) DATED 23.10.2017 . THE RELEVANT ASSESSMENT YEARS ARE ITA NO. 46 / COCH /201 8 & ORS. M/S. K.K.ROCKS & GRANITES INDIA PVT.LTD. 2 2008 - 2009, 2009 - 2010, 2010 - 2011, 2012 AND 2012 - 2013. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS AND CROSS OBJECTIONS, WE DISPOSE OFF THE SAME BY THIS CONSOLIDATED ORDER. 2. THE FIRS T COMMON GROUND RAISED BY THE REVENUE, IN ALL ITS APPEAL S IS WITH REGARD TO THE DELETION OF ADDITION U/S 40(A)(IA) OF THE I.T.ACT FOR NON - DEDUCTION OF TAX ON ROYALTY PAID ON THE GROUND THAT THE RECIPIENTS OF ROYALTY HAVE RETURNED THE ROYALTY RECEIVED AS INCOME IN RESPECTIVE YEARS. 3. THE BRIEF FACTS OF THE CASE ARE THAT WHILE COMPLETING THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE INCOME - TAX ACT, THE ASSESSING OFFICER HAS MADE ADDITIONS U/S 40(A)(IA) OF THE I.T.ACT FOR THE ASSESSMENT YEARS AS FOLLOWS: - ASSESSMENT YEAR ADDITION (RS.) (ROYALTY) 2008 - 2009 63,00,00 0 2009 - 2010 54,25,000 2010 - 2011 2,18,58,128 2011 - 2012 72,00,000 2012 - 2013 2,75,75,702 3.1 ACCORDING TO THE ASSESSING OFFICER, THE SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01.04.2013 (ASSESSMENT YEAR 2013 - 2014) ONLY, HENCE, NO APPLICATION FOR THE YEARS UNDER CONSIDERATION. HOWEVER, THE CIT(A) DELETED THE ADDITION BY PLACING RELIANCE ON THE FOLLOWING JUDGMENTS ( I ) PUNJAB GOODS TR ANSPORT (P) LTD. V. ITO (2017) TAX ITA NO. 46 / COCH /201 8 & ORS. M/S. K.K.ROCKS & GRANITES INDIA PVT.LTD. 3 PUB (DT) 0116 (KOL.TRI.). ( II ) CIT V. ANSAL LAND MARK TOWNSHIP (I) (P) LTD. (2015) 377 ITR 635 (DELHI) ( III ) ITO V. DR.JAIDEEP KUMAR SHARMA (2014) 52 TAXMAN.COM 420 (DELHI - TRIB.) ( IV ) CIT V. RAJINDER KUMAR (2013) TAX PUB. (DT) 1875 (DELH I HC) ( V ) CIT V. ALOM EXTRUSION LTD. (2009) TAX PUB. (DT) 2109 (SC) - AND OBSERVED THAT SINCE THE RECIPIENT S OF THE INCOME, I.E., DIRECTORS, DECLARED THE SAME AS INCOME IN THEIR RESPECTIVE RETURNS AND PAID TAX ON THEM, THE DISALLOWANCE U/S 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE DOES NOT WARRANT. 4. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REVENUE HAS COME UP IN APPEALS BEFORE THE TRIBUNAL. THE DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT & ORS. [(2016) 287 CTR 101 (KER.)] WHEREIN THE COURT HAS HELD THAT ONCE IT IS FOUND THAT THERE WAS A FAILURE TO DEDUCT TAX AT SOURCE, THE FACT THAT THE RECIPIENT HAS SUBSEQUENTLY PAID THE TAX, WOULD NOT ABSOLVE THE PAYEE FROM THE CONSEQUENCE OF DISALLOWANCE. ON THE OTHER HAN D, THE LEARNED AR SUBMITTED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED WITH EFFECT FROM 01.04.2013 IS CURABLE IN NATURE, AND THEREFORE, APPLICABLE RETROSPECTIVELY. FOR THIS PURPOSE, HE RELIED ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CA SE OF ALLIED MOTORS PVT. LTD. V. CIT [(1997) ITR 677 (SC) AND CIT V. ALOM ENTERPRISES LTD. (2009) 319 ITR 306. HE ALSO RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. CALCUTTA EXPORT CO. [(2018) 404 ITR 654 (SC)] . ITA NO. 46 / COCH /201 8 & ORS. M/S. K.K.ROCKS & GRANITES INDIA PVT.LTD. 4 5. WE HAVE HE ARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ISSUE HAS COME UP BEFORE THE HONBLE SPREME COURT IN THE CASE OF CIT V. CALCUTTA EXPORT CO. (SUPRA) WHEREIN THE HONBLE APEX COURT HAS HELD THAT AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT SHOULD BE INTERPRETED LIBERALLY AND EQUITABLY AND SHOULD BE APPLIED RETROSPECTIVELY FROM THE DATE WHEN SECTION 40(A)(IA) OF THE I.T.ACT WAS INSERTED, SO THAT THE ASSESSEE COULD NOT SUFFER INTENDED AND DELETERIOUS CONSEQUENCES BEYOND WHAT THE OBJECT AND PURPOSE OF PROVISION MANDATES. HOWEVER, IN THE PRESENT CASE THE CIT(A) NOT AT ALL VERIFIED WHETHER THE RECIPIENTS OF THE ROYALTY HAVE DECLARED THE SAME IN THEIR RESPECTIVE RETURNS OF INCOME AND PAID TAX THEREON BEFORE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT. THEREFORE, WE REMIT THE DISPUTED ISSUE TO THE FILE OF THE CIT(A) TO CALL FOR REMAND REPORT FROM THE A.O. TO VERI FY WHETHER THE RECIPIENTS HAVE DECLARED THE ROYALTY IN THEIR RESPECTIVE RETURNS AND PAID TAX THEREON, AND DECIDE THE SAME ACCORDINGLY. 5.1 THIS ISSUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES FOR ALL THE IMPUGNED ASSESSMENT YEARS. 6. THE CROSS OBJECTI ONS FILED BY THE ASSESSEE ARE TO SUPPORT THE DELETION OF ADDITION MADE BY THE CIT(A) IN RESPECT OF NON - DEDUCTION OF TAX ON ROYALTY. SINCE WE HAVE REMITTED THE ISSUE TO THE FILE OF CIT(A) FOR FRESH CONSIDERATION, THE CROSS ITA NO. 46 / COCH /201 8 & ORS. M/S. K.K.ROCKS & GRANITES INDIA PVT.LTD. 5 OBJECTIONS FILED BY THE ASSESSEE BECOME INFRUCTUOUS. ACCORDINGLY, THE COS ARE DISMISSED AS INFRUCTUOUS. 7. THE OTHER ISSUE RAISED BY THE REVENUE IN ITA NO.49/COCH/2018 FOR ASSESSMENT YEAR 2011 - 2012 IS WITH REGARD TO THE DELETION OF ADDITION OF HIRING CHARGES PAID WITHOUT TDS WITHOUT ANY DISCUSSION BY ERRONEOUSLY CONFLATING THIS ISSUE WITH THE ISSUE OF NON - DEDUCTION OF TAX ON ROYALTY PAYMENT. SIMILARLY, IN ITA NO. 5 0/COCH/2018 FOR ASSESSMENT YEAR 2012 - 2013, WITH REGARD TO DELETION OF ADDITION MADE TOWAR DS CONCEALED INCOME BY ERRONEOUSLY CONFLATING THIS ISSUE WITH THE ISSUE OF NON - DEDUCTION OF TAX ON ROYALTY PAYMENT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE CIT(A) HAS NOT ADJUDICATED THE IMPUGNED ISSUES IN RESPECT OF ASSESSMENT YEARS 2011 - 2012 AND 2012 - 2013. HENCE, WE REMIT THESE TWO ISSUES TO THE FILE OF THE CIT(A) FOR DE NOVO CONSIDERATION. 9 . IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJ ECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF SEPTEMBER, 2018 . SD/ - SD/ - ( GEORGE GEORGE K ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN ; DATED : 24 TH SEPTEMBER, 2018 . DEVDAS* ITA NO. 46 / COCH /201 8 & ORS. M/S. K.K.ROCKS & GRANITES INDIA PVT.LTD. 6 COPY TO : - 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - III, KOCHI 4. THE CIT (CENTRAL) , KOCHI 5. THE DR, ITAT, COCHIN. 6. GUARD FILE. AR/ITAT - COCHIN