DCIT, Circle-2(2), Hyderabad, Hyderabad V. TA Infra Projects Ltd., Hyd, Hyderabad

CO 36/HYD/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2636 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: D SUDHEER CHANDER RAO
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.644/HYD/2016 ASSESSMENT YEAR 2008-2009 THE DCIT, CIRCLE-2(2) HYDERABAD. VS., M/S. TA INFRA PROJECTS LTD., HYDERABAD 16. PAN AABCT4110E (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.36/HYD/2016 ARISING OUT OF ITA.NO.644/HYD/2016 - ASSESSMENT YEAR 2008-2009 M/S. TA INFRA PROJECTS LTD., HYDERABAD 16. PAN AABCT4110E VS., THE DCIT, CIRCLE-2(2) HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MR. A. SITARAMA RAO FOR ASSESSEE : MR. D. SUDHEER CHANDER RAO DATE OF HEARING : 05.12.2016 DATE OF PRONOUNCEMENT : 05.12.2016 ORDER SHRI D. MANMOHAN, V.P. THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-2, HYDERABAD. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHE R THE CIT(A) IS CORRECT IN HOLDING THAT THE EXPENDITURE OF RS.1,40, 70,122 WHICH IS NOT PAYABLE AS ON 31.03.2008, THEREFORE, THE PROVIS IONS OF SECTION 40(A)(IA) IS NOT APPLICABLE BY FOLLOWING THE DECISI ON OF THE VIZAG SPECIAL BENCHS DECISION IN THE CASE OF M/S. MERYLI N SHIPPING PVT. 2 ITA.NO.644/HYD/2016 & C.O.NO.36/HYD/2016 M/S. TA INFRA PROJECTS LTD., HYDERABAD. LTD., WHEN THE SAID DECISION WAS SUSPENDED BY THE H ONBLE HIGH COURT OF A.P.? 1.1. THE CROSS-OBJECTION WAS FILED BY THE ASSESSEE-C OMPANY SUPPORTING THE STAND TAKEN BY THE LD. CIT(A). 2. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PIPES FOR WATER SUPPLY AND SEWAGE SC HEMES AND ALSO UNDERTAKES TURNKEY CONTRACTS IN INFRASTRUCTURE SECTOR. FO R THE YEAR UNDER CONSIDERATION, IT DECLARED TOTAL INCOME OF RS.3.6 2 CRORES AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. THE C ASE OF THE ASSESSEE-COMPANY WAS SELECTED FOR SCRUTINY AND ASSES SMENT WAS COMPLETED ON A TOTAL INCOME OF RS.10.55 CRORES. SUBSE QUENTLY, THE CASE WAS REOPENED UNDER SECTION 147 OF THE ACT AND DURING THE COURSE OF RE- ASSESSMENT PROCEEDINGS THE A.O. NOTICED THAT THE ASSESSEE DEBITED CERTAIN EXPENDITURE TOWARDS MANUFACTURING/SELLING/ADMIN ISTRATION EXPENDITURE ON WHICH TAX DESERVES TO BE DEDUCTED AT SOUR CE. THEREFORE, THE ASSESSEE WAS CALLED UPON TO PRODUCE PROOF OF DEDU CTION OF TAX ON THE SAID EXPENDITURE. IN RESPONSE THERETO, THE ASSESSEE SUBMITTED THAT IT HAD DEDUCTED TAX ON THE GROSS AMOUNT OF RS.28.08 CR ORES ONLY THEREBY, LEAVING A DIFFERENCE OF RS.1.40 CRORES ON W HICH TAX WAS NOT DEDUCTED AT SOURCE. WHEN CALLED UPON TO EXPLAIN THE R EASONS FOR NON- DEDUCTION OF TAX, IT WAS SUBMITTED THAT THE TDS PROVISIONS ARE NOT APPLICABLE ON CERTAIN EXPENDITURE. IT WAS ALSO CONTEND ED THAT THE ASSESSEE WAS FOLLOWING CASH BASIS FOR RECOGNISING I NTEREST INCOME DUE TO NON-AVAILABILITY OF THE GROSS INCOME FROM THE BANKS . 2.1. SINCE THE EXPLANATION OF THE ASSESSEE WAS NOT SAT ISFACTORY THE A.O. APPLIED THE PROVISIONS OF SECTION 40(A)(IA) O F THE ACT AND MADE AN ADDITION OF RS.1,40,70,122. AGGRIEVED, ASSESSEE C ONTENDED BEFORE THE LD. CIT(A) THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO THE EXPENDITURE PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE 3 ITA.NO.644/HYD/2016 & C.O.NO.36/HYD/2016 M/S. TA INFRA PROJECTS LTD., HYDERABAD. INVOKED TO DISALLOW THE AMOUNT WHICH HAVE ALREADY BEEN PAID DURING THE PREVIOUS YEAR. IN THIS REGARD, RELIANCE WAS PLACE D UPON THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS 136 ITD 23 (VIZ.) (SB). 2.2. IT MAY BE NOTICED THAT ASSESSEE-COMPANY HAS RAIS ED ANOTHER ISSUE WITH REGARD TO THE ADDITION TOWARDS DIFFER ENCE IN BANK INTEREST BUT THE SAME WAS NOT PRESSED BEFORE THE LD. CIT (A). THE LD. CIT(A) OBSERVED THAT THE DISALLOWANCE UNDER SECTION 40( A)(IA) OF THE ACT IS NOT MAINTAINABLE IN THE LIGHT OF DECISION OF ITAT SP ECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS (SUPRA) AND ACCORDINGLY DIRECTED THE A.O. TO DELETE THE DISALLOWANCE OF RS.1, 40,70,122. 3. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. THE ASSESSEE-COMPANY, ON THE OTHER HAND, FILED CROSS-OBJ ECTIONS WHEREIN IT WAS CONTENDED THAT THE LD. CIT(A) WAS JUSTIFIED IN FOLLO WING THE DECISION OF THE ITAT, SPECIAL BENCH IN THE CASE OF M/S. MERILY N SHIPPING & TRANSPORTS (SUPRA) BY VIRTUE OF THE CLARIFICATION ISSU ED BY THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT-II, HYD ERABAD VS., M/S. JANAPRIYA ENGINEERS SYNDICATE (ITT.NO.352 OF 2015 DA TED 24.06.2011) WHEREIN THE HONBLE COURT OBSERVED THAT UNTIL AND UNLE SS THE DECISION IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS (S UPRA) IS REVERSED BY THE HONBLE HIGH COURT IT IS BINDING ON ALL OTHER CO ORDINATE BENCHES OF THE TRIBUNAL. 4. WE HAVE HEARD THE LD. D.R. WHO STRONGLY RELIED UP ON THE ORDER PASSED BY THE A.O. AND SUBMITTED THAT THE EXPRESSI ON PAYABLE HAS BEEN INTERPRETED BY THE HONBLE CALCUTTA HIGH COUR T IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (GA.190/2013 ETC., D ATED 03.04.2013) AND THUS THE DECISION OF THE HONBLE CALC UTTA HIGH COURT SHOULD BE PREFERRED OVER THE DECISION OF THE ITAT, SP ECIAL BENCH, VIZAG. 4 ITA.NO.644/HYD/2016 & C.O.NO.36/HYD/2016 M/S. TA INFRA PROJECTS LTD., HYDERABAD. 5. ON THE OTHER HAND, THE REPRESENTATIVE OF THE ASSESSEE RELIED UPON THE GROUND URGED IN THE CROSS-OBJECTION WHEREIN IT IS STATED THAT THE HONBLE JURISDICTIONAL HIGH COURT CATEGORICALLY ME NTIONED THAT SO LONG AS THE DECISION OF THE ITAT, SPECIAL BENCH VIZAG IS NOT REVERSED BY THE JURISDICTIONAL HIGH COURT THE SAME DESERVES TO BE F OLLOWED BY ALL THE DIVISION BENCHES OF THE TRIBUNAL. IT ALSO DESERVES TO BE NOTICED THAT THE ITAT, HYDERABAD BENCHES HAVE CONSISTENTLY TAKEN A VIE W, IN THE LIGHT OF OBSERVATIONS MADE BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT- II, HYDERABAD VS. M/S. JANAPRIYA ENGINEERS SYNDICATE (SUPRA) WHEREBY THE VIEW TAKEN BY THE ITAT, SPECIAL BENCH, VIZAG HAS TO BE FOLLOWED. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE UPHOLD THE VIEW TAKEN BY THE LD. CIT(A) AND DISMISS THE APPEA L FILED BY THE REVENUE. CONSEQUENTLY, THE CROSS-OBJECTION FILED BY THE ASSESSEE WAS ALSO TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05. 12.2016. SD/- SD/- (S.RIFAUR RAHMAN) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED 05 TH DECEMBER, 2016. VBP/- COPY TO 1. THE DCIT, CIRCLE-2(2), ROOM NO.513, 5 TH FLOOR, SIGNATURE TOWERS, KODAPUR, HYDERABAD. 2. M/S. TA INFRA PROJECTS LTD., 6 TH FLOOR, TIRUMALA HEIGHTS, BEHIND SHOPPERS, BEGUMPET, HYDERABAD 16. 3. CIT(A)-2, HYDERABAD. 4. PR. CIT-2, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE.