Sri Binod Kumar Gupta, Kolkata V. DCIT, CIR-34, KOLKATA, Kolkata

CO 52/KOL/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3247 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 194C

Judgement Text

1 ITA NOS.1095,1134 & 1135/KOL/2015 & CO NOS. 52-54/KOL/2015- BINOD KR. GUPTA, AYS 2010-11-2012-13 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA () BEFORE .., /AND . ' # $% % , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1095/KOL/2015 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-34, KOLKATA VS. BINOD KUMAR GUPTA (PAN: ADFPG7299H) APPELLANT RESPONDENT & C.O. NO.52/KOL/2015 IN I.T.A. NO. 1095/KOL/2015 ASSESSMENT YEAR: 2010-11 BINOD KUMAR GUPTA VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-34, KOLKATA APPELLANT RESPONDENT & I.T.A. NO. 1134/KOL/2015 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-34, KOLKATA VS. BINOD KUMAR GUPTA (PAN: ADFPG7299H) APPELLANT RESPONDENT & C.O. NO.53/KOL/2015 IN I.T.A. NO. 1134/KOL/2015 ASSESSMENT YEAR: 2011-12 BINOD KUMAR GUPTA VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-34, KOLKATA APPELLANT RESPONDENT & I.T.A. NO. 1135/KOL/2015 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-34, KOLKATA VS. BINOD KUMAR GUPTA (PAN: ADFPG7299H) APPELLANT RESPONDENT 3 ITA NOS.1095,1134 & 1135/KOL/2015 & CO NOS. 52-54/KOL/2015- BINOD KR. GUPTA, AYS 2010-11-2012-13 AO, THE ASSESSEE HAS NOT DEDUCTED TDS AND, THEREFOR E, THE AMOUNT IS DISALLOWABLE U/S. 194C OF THE ACT READ WITH SEC. 40(A)(IA) OF THE ACT AND THUS, HE DISALLOWED RS.36,30.299/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO ALLOW THE APPEAL OF THE ASSESSEE AND GAVE RELIEF TO THE ASSESSEE. AGGRIEVED, THE REVENUE IS BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THR OUGH THE RECORDS. WE NOTE THAT THE MAIN GRIEVANCE OF THE REVENUE IS THAT THE SECOND PR OVISO TO SECTION 40(A)(IA) OF THE ACT IS APPLICABLE ONLY FROM AY 2013-14 ONWARDS AND THE EFF ECT OF SECOND PROVISO CANNOT BE RETROSPECTIVE. WE NOTE THAT THIS ISSUE IS NO LONGE R RES-INTEGRA. THE HONBLE CALCUTTA HIGH COURT HAS UPHELD THE CONSISTENT VIEW OF THE TRIBUNA L THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS DECLARATORY AND CURATIVE AN D SO IS RETROSPECTIVE W.E.F. 01.04.2005. WE NOTE THAT THE RECIPIENTS IN THIS CASE I.E. M/S. DAMANI SHIPPING PVT. LTD. HAS INCLUDED THE PAYMENT MADE BY THE ASSESSEE IN ITS RECEIPTS AND DI SCLOSED THE INCOME THEREIN IN ITS RETURN OF INCOME FILED BY IT. THE LD. CIT(A) HAS MADE A F INDING THAT A CERTIFICATE ENDORSING THAT THE RECIPIENT M/S. DAMANI SHIPPING PVT. LTD. HAS IN CLUDED THIS PAYMENT IN QUESTION IN ITS RECEIPT AND DISCLOSED THE INCOME CONTAINED THEREIN. IN SUCH A SCENARIO, THE LD. CIT(A) HAS DIRECTED THE AO TO SATISFY HIMSELF AFTER PERUSING T HE CERTIFICATE ISSUED BY M/S. DAMANI SHIPPING PVT. LTD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). WE NOTE THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT, KOL-8 VS. M/S. TIRUPATI CONSTRUCTION IN GA NO. 2146 OF 2016 WITH I TAT NO. 287 OF 2016 DATED 23.08.2016 FOR AY 2009-10 WHEREIN THE HONBLE HIGH COURT UPHELD THE ACTION OF THE TRIBUNAL. THE TRIBUNAL IN THIS CASE WAS PLEASED TO SET ASIDE SIMILAR ISSUE TO THE FILE OF THE AO (I.E. DISALLOWANCE MADE U/S. 40(A)(IA) OF THE AC T) AND DIRECTED AO TO VERIFY WHETHER THE RECIPIENT HAS SHOWN IT AS ITS INCOME IN THE LIGHT O F THE APPLICABILITY OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND FOR DOING THAT, T HE TRIBUNAL RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD., WHEREIN IT HAS BEEN HELD THAT THE SECOND PROVISO TO SECTION 40 (A)(IA) OF THE ACT IS DECLARATORY AND CURATIVE. SINCE THE JURISDICTIONAL HIGH COURT HAS U PHELD THE ORDER OF THE TRIBUNAL WHEREIN 5 ITA NOS.1095,1134 & 1135/KOL/2015 & CO NOS. 52-54/KOL/2015- BINOD KR. GUPTA, AYS 2010-11-2012-13 IN THE SAME TAX BRACKET AND PAID THE SAME RATE OF T AX, THERE WAS NO QUESTION OF DIVERSION OF FUNDS BY PAYING HIGHER RATE TO SUBSIDIARY COMPANIES AND, THEREFORE, NO DISALLOWANCE CAN BE MADE U/S. 40A(2)(B) OF THE ACT. THUS, THE LD. AR H AS SUBMITTED THAT THERE IS NO QUESTION TO EVADE TAX BY PAYING INTEREST @ 15% TO THE RELATED P ARTY. THE LD. AR BROUGHT A CHART SHOWING THE DISALLOWANCE MADE FOR BINOD KUMAR GUPTA FOR AYS 2010-11 TO 2012-13 AS UNDER: ASSTT. YEAR INCOME RETURNED DISALLOWANCE OF INTEREST U/S. 40A(2)(B) 2010-11 RS.2,86,82,010/- RS. 1,93,332/- 2011-12 RS.4,10,54,143/- RS. 2,37,118/- 2012-13 RS.2,45,48,180/- RS. 1,78,437/- 9. THE LD. AR ALSO BROUGHT A CHART WHICH GIVES THE GROSS TOTAL INCOME OF THE LENDER/RELATED PARTIES, WHICH ARE AS UNDER: BINOD KUMAR GUPTA GROSS TOTAL INCOME OF ASSTT. YEAR : 2010-11 ASSTT. YEAR : 2011-12 ASSTT. YEAR : 2012-13 SMT. MADHU GUPTA SHRI VARUN GUPTA SHRI VIKASH GUPTA BNOD KUMAR GUPTA,HUF SHIBHA GUPTA RS. 36,11,139/- RS. 20,30,384/- RS. 9,54,036/- ---- ---- RS. 41,87,489/- RS. 19,00,777/- RS. 10,60,519/- ---- ---- RS. 35,27,569/- RS. 13,45,872/- RS. 19,41,651/- RS. 37,55,682/- RS. 11,32,413/- FROM A PERUSAL OF THE ABOVE CHART WE NOTE THAT THE LENDERS ARE FAMILY RELATIVES WHO ARE RELATED PARTIES ARE TAXED AT THE HIGHEST SLAB AS TH AT OF THE ASSESSEE. FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT, WE ARE OF THE VIEW T HAT ONCE THE ASSESSEE IS ABLE TO ESTABLISH THAT THE RECIPIENTS OF INTEREST ARE PAYIN G THE TAX AT THE HIGHEST RATE ON THEIR INCOME WHICH INCLUDES INTEREST RECEIVED FROM THE ASSESSEE, THEN NO DISALLOWANCE IS CALLED FOR U/S. 40A(2) OF THE ACT FOR WANT OF MOTIVE OF EVASION OF TAX. ACCORDINGLY, ON PRINCIPLE, WE ACCEPT THE CONTENTION OF THE LD. AR AND SET ASIDE T HE ORDER OF LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO AND THE AO IS DIR ECTED TO VERIFY THE RATE OF TAX AT WHICH THE RECIPIENTS OF INTEREST PAID ARE TAXED AND IF THE RA TE OF TAX PAID BY THE RECIPIENTS IS EQUIVALENT