Inayat Roadlines Company, Kolhapur V. Assistant Commissioner of Income-tax, Circle -2, Kolhapur

CO 47/PUN/2017

• Counselvise Citation: [2017] 119 COUNSELVISE.COM (IT) 3506 (ITAT-PUNE)
• Duration Of Justice: 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 17-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Question of law
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 1228 /P U N/201 5 / ASSESSMENT YEAR : 20 05 - 06 THE ASST . COMMISSIONER OF INCOME TAX CIRCLE - 2, KOLHAPUR . / APPELLANT VS. INAYAT ROADLINES COMPANY, 719, E - WARD, 3 RD LANE, SHAHUPURI, KOLHAPUR . / RESPONDENT PAN: AA AFI3096C . /CO NO. 47 /PUN/201 7 / ASSESSMENT YEAR : 20 0 5 - 0 6 (OUT OF ITA NO. 1228 /PUN/2015 ) INAYAT ROADLINES COMPANY, 719, E - WARD, 3 RD LANE, SHAHUPURI, KOLHAPUR / CROSS OBJECT OR PAN: AAAFI3096C VS. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE - 2, KOLHAPUR . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI MUKESH JHA, ADDL.CIT / DATE OF HEARING : 24 .0 8 . 201 7 / DATE OF PRONOUNCEMENT: 31 .0 8 . 201 7 2 ITA NO. 1228 /P U N/201 5 CO NO. 47 /PUN/2017 INAYAT ROADLINES COMPANY / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - 1&2, KOLHAPUR, DATED 02.06.2015 , RELATING TO ASSESSMENT YEAR 20 0 5 - 0 6 AGAINST ORDER PASSED UNDER SECTION 14 3(3) R.W. S. 263 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE ALSO FILED CROSS OBJECTIONS AGAINST THE APPEAL OF REVENUE. 2 . THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF B Y THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.1228/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO AMOUNTS PAYABLE OR OUTSTANDING AND NOT TO THE AMOUNTS ALREADY PAID DURING THE YEAR. 2. O N THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNO RING THAT, THE PROVISIONS OF SEC TION 40(A)(IA) HAVE TO BE READ IN CONJUNCTION WITH CHAPTER XVII - B R.W.S. 194C, WHICH PROVIDES FOR DEDUCTION OF TAX AT SOURCE, BY ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A CONTRACTOR OR SUB - CONTRACTOR, FOR CARRYING OUT ANY WORK ON HIS BEHALF, SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE PAYEE OR AT THE TIME, PAYMENT THEREOF, WHICHEVER IS EARLIER, DEDUCT TAX AT SOURCE AT THE RATES IN FORCE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THAT, THE PROVISIONS OF SEC. 40(A)(IA) R.W.S. CH. XVII - B, COMES INTO OPERATION ONCE THE AMOUNT IS CREDITED OR PAID TO THE ACCOUNT OF THE PAYEE, AND IT DOES NOT PROVIDE AN EXCEPTION TO THE PAYMENTS MADE TO THE PAYEE DURING THE YEAR AND NOT OUTSTANDING AS O N 31 ST MARCH. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT, THE EXPRESSION 'PAYABLE' IN SECTION 40(A)(IA) IMPLY A STAGE WHEN THE LIABILITY TO PAY' ARISES, WHICH IS ESS ENT IALLY PRIOR TO ACT UAL PAYMENT, AND COVERS 'PAID' ALSO, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE RATIO OF THE FOLLOWING DECISIONS, WHICH ARE IN CONFORMITY TO THE STAND OF THE DEPARTMENT. 3 ITA NO. 1228 /P U N/201 5 CO NO. 47 /PUN/2017 INAYAT ROADLINES COMPANY THE HON'BLE CALCUTTA HIGH COURT'S DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX, KOLKATTA - XI VS. CRESCENT EXPORTS SYNDICATE AND HON'BLE GUJARAT HIGH COURT'S DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX - I V VS. SI KANDARKHAN N TUNVAR, RESPECTIVELY. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THAT CBDT CIRCULAR NO.5/2005 DATED 15.07.2005 ISSUED TO EXPLAIN THE PROVISIONS OF FINANCE (NO. 2 ACT) 2004, WHICH CLARI FIES THE INTENTION BEHIND THE NEW PROVISIONS UNDER SECTION 40(A)(IA), AND NOWHERE IT IS STATED THAT PROVISIONS ARE APPLICABLE ONLY IF THE AMOUNT IF 'PAYABLE' AS ARGUED BY THE APPELLANT. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THAT CBDT CIRCULAR NO. 10 /DV/2013 (F.NO.279/MISC/M - 61/2012 - ITJ (VOL. II ) DATED 16TH DECEMBER,2013, WHICH CLARIFIES THAT IN THE CONTEXT OF SECTION 40(A)(IA) OF THE ACT THE TERM 'PAYABLE' WOULD INCLUDE 'AMOUNTS WHICH ARE PAID DURIN G THE PREVIOUS YEAR'. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE SETTLED RULE OF INTERPRETATION THAT THE PROVISIONS OF A STATUTE MUST BE HARMONIOUSLY CONSTRUCTED AND AN INTERPRETATION SHOULD BE AV OIDED WHICH RENDERS OTHER PROVISIONS OF THE ACT OTIOSE OR NUGATORY. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT, THE ARGUMENT TO THE EFFECT THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICA BLE ONLY TO THE AMOUNTS CREDITED TO THE ACCOUNTS OF THE PAYEE, AND PAYABLE AS ON 31 ST MARCH, AND NOT TO THE AMOUNTS ALREADY PAID, WOULD NOT ONLY RENDER THE PROVISIONS OF SECTION 194C, WHICH PROVIDES FOR DEDUCTION OF TAX AT THE TIME OF PAYMENT OR CREDIT, RE DUNDANT BUT ALSO LEAD TO ABSURD AND UNJUST RESULTS. 10. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) BE VACATED AND THAT OF THE ASSESSING OFFICER'S ORDER MAY BE RESTORED. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY THE ABOVE GR OUNDS RAISED, ANY OTHER GROUNDS AT THE TIME OF PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL WHICH MAY PLEASE BE GRANTED. 12. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A), KOLHAPUR BE VACATED AND THAT ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. TH E ASSESSEE IN CO NO.47/PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) WHO IN TURN PASSED THE APPEAL ORDER PREFERRED BEFO RE HIM AGAINST ASSESSMENT ORDER U/S.143(3) R.W.S 263 WHICH WAS ALLOWED BY HIM IS INFRUCT U OUS AND NOT SUSTAINABLE AS THE ENTIRE LITIGATION CENTERED ROUND THE ORDER U/S. 263 WHICH ULTIMATELY BECAME NON - EXISTENT AS IT WAS QUASHED AND SET - ASIDE BY THE HON'BLE TRIBUNAL. THE APPEAL OF THE REVENUE BEING NON - SUSTAINABLE BE DISMISSED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THIS CROSS OBJECTION BEING CROSS APPEAL OF THE RESPONDENT ASSESSEE RAISES A PURE QUESTION OF LAW WHICH, AS PER SETTLED LAW, CAN BE RAISED AT ANY STAGE OF THE LITIGATION. ACCORDINGLY THE CROSS - APPEAL BE ADMITTED FOR HEARING AND DISPOSED OF IN ACCORDANCE WITH THE PROVISIONS OF SETTLED LAW. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THIS CROSS - APPELLANT RESPONDENT ASSESSEE REQUESTS TO ALLOW TO RAISE ANY OTHER QUESTION OF FACT 4 ITA NO. 1228 /P U N/201 5 CO NO. 47 /PUN/2017 INAYAT ROADLINES COMPANY OR LAW THAT MAY COME UP BEFORE THIS HON'BLE TRIBUNAL DURING THE COURSE OF HEARING OF THE APPEAL. 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN HOLDING THAT THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS PAYABLE OR OUTSTANDING AND NOT TO THE AMOUNTS ALREADY PAID DURING THE YEAR. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE SAID ISSUE STANDS COVERED AGAINST THE ASSESSEE. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND, POINTED OUT THAT VIDE CROSS OBJECTIONS, THE ASSESSEE HAS RAISED THE ISSUE THAT THE APPEAL FILED BY THE REVENUE IS INFRUCTUOUS AND NOT SUSTAINABLE AS THE APPEAL IS PREFE RRED AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT AND THE TRIBUNAL HAS QUASHED AND SET ASIDE THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. HENCE, THE CONSEQUENT ORDER PASSED UNDER SECTION 143(3) R.W.S . 263 OF THE ACT IS NOT MAINTAINABLE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 263 OF THE ACT. THE TRIBUNAL IN ITA NO. 516/PN/2010, RELATING TO ASSESSMENT YEAR 2005 - 06, VIDE ORDER DATED 27.10.2010 HAD HELD THAT THE COMMISSIONER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND HENCE, THE ORDER PASSED BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT WAS QUASHED. THE PRESENT APPEAL IS FILED AGAINST THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER CONSEQUENT TO THE DIRECTIONS OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT. ONCE THE ORDER PASSED UNDER SECTION 263 OF THE ACT BY THE COMMISSIONER H AS BEEN QUASHED BY THE TRIBUNAL, THEN THERE IS NO SANCTITY IN THE CONSEQUENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT AND THE SAME 5 ITA NO. 1228 /P U N/201 5 CO NO. 47 /PUN/2017 INAYAT ROADLINES COMPANY IS NOT MAINTAINABLE. ACCORDINGLY, WE HOLD SO. CONSEQUENT THERETO, THERE IS NO MERIT IN THE ISSUE RAISED BY T HE REVENUE AGAINST DELETION OF QUANTUM ADDITION. THUS, A LLOWING THE CROSS OBJECTIONS FILED BY THE ASSESSEE , WE DISMISS THE APPEAL OF REVENUE IN THIS REGARD. 9 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AND THE CROSS OBJECTIONS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF AUGUST , 201 7 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST AUGUST , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLA NT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1&2, K OLHAPUR ; 4. / THE CIT - I/II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE