ORPAK SYSTEMS LTD, PUNE V. ASST CIT 10(3), MUMBAI

CO 59/MUM/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9871 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 26-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MAHAPATRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.6956/M/2010 ( AY: 200 7 - 20 0 8 ) ACIT 10(3), 451, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI 400 020. / VS. M/S. ORPAK SYSTEMS LIMITED, 615, SOUTH TOWER, SACRED WORLD, WANAWORIE, PUNE - 411 040. ./ PAN : AAACO8179P ( / APPELLANT) .. ( / RESPONDENT ) C.O.NO.59/M/2014 (AY 2007 - 2008) (ARISING OUT OF I.T.A. NO.6956/M/2010) M/S. ORPAK SYSTEMS LIMITED, 615, SOUTH TOWER, SACRED WORLD, WANAWORIE, PUNE - 411 040. / VS. ACIT 10(3), 451, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI 400 020. ./ PAN : AAACO8179P ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI SHARAD SHAH / REVENUE BY : SHRI S.K. MAHAPATRA, SR. DR / DATE OF HEARING :26.8 .2014 / DATE OF PRONOUNCEMENT : 26.8.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS INVOLVING THE ASSESSMENT YEAR 2007 - 2008. ITA NO.6956/M/2010 IS FILED BY THE REVENUE AND CROSS OBJECTION NO.59/M/2014 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 22, MUMBAI DATED 14.7.201 0. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE CONNECTED, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN 2 THIS CONSOLIDATED ORDER . APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING LINES. 2. FIRSTLY, WE SHALL TAKE UP ITA NO.69 56/M/2010 , WHICH IS FILED BY THE REVENUE AGAINST THE SAID ORDER OF THE CIT (A) - 22. IN THIS APPEAL, REVENUE RAISED THE FOLLOWI NG EFFECTIVE GROUND WHICH READ S AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN D ELETING THE DISALLOWANCE U/S 40(A)(IA) WITHOUT APPRECIATING THAT: (A) THE RELEVANT BILLS PERTAINED TO DECEMBER 2006, JANUARY 2007 AND FEBRUARY 2007 (B) AS PER ENCLOSURE 13D TO FORM NO.3CD, TDS WAS DEDUCTED IN THE SAID MONTHS BUT WAS PAID IN OCTOBER 2007; (C) THE CONTENTION THAT TDS WAS MADE IN MARCH, 2007 WAS JUST TO AVOID THE DISALLOWANCE U/S 40(A)(IA) AND WAS CONTRARY TO THE FACTS. 3. AT THE OUTSET, SHRI SHARAD SHAH, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUND AND MENTIONED THAT THE IS SUE INVOLVED IN THIS APPEAL RELATES TO THE APPLICABILITY OF 40(A)(IA) IN CONNECT WITH TDS PAYMENT. IN THIS REGARD, LD COUNSEL MENTIONED THAT THE ISSUE IS NOW STANDS COVERED IN FAVOUR OF T HE ASSESSEE BY THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN TH E CASE OF CIT VS. VIRGIN CREATIONS VIDE GA 3200/2011 (ITAT NO.302 OF 2011), DATED 23.11.2011 WHICH IS RELEVANT FOR THE PROPOSITION, AS PER THE AMENDMENT TO S ECTION 40(A)(IA) BROUGHT BY THE FINANCE ACT, 2010, THAT THE ASSESSEE HAS TIME TO REMIT THE PAYMENT TO THE GOVERNMENT ACCOUNTS ON OR BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME . FURTHER, LD COUNSEL ALSO BROUGHT OUR ATTENTION TO THE ORDER OF THE COORDINATE BENCH, ITAT IN THE CASE OF PIYUSH C. MEHTA VS. ACIT [2012] 52 SOT 27 (MUMBAI) AND MENTIONED THAT THE SAME IS RELEVANT FOR THE PROPOSITION THAT I N C A S E S O F THE PAYMENT OF TDS TO THE CREDIT OF GOVERNMENT ON OR BEFORE THE LAST DATE OF FILING OF RETURN , T H E C L A I M SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. THE SAID CASE OF PIYUSH C MEHTA (SUPRA) WAS DECIDED ON CONSIDERIN G THE DECISIONS IN THE CASE OF VIRGIN CREATIONS (SUPRA); CIT VS. GODAVARIDEVI SARAF 113 ITR 589 (BOM) AND SOME OTHER DECISIONS TO SUPPORT THE CASE IN THIS REGARD. THIS IS AN UNDISPUTED FACT THAT THE TDS IN QUESTION WAS PAID BEFORE THE DUE DATE FO R FILING THE RETURN OF INCOME. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND AFTER REMANDING THE MATTER TO THE FILE OF THE AO, CIT (A) DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. AS PER RECORDS, ASSESSEE MADE TDS BEFORE THE END OF THE FINANCIAL YE AR AS SUPPORTED BY THE ENCLOSURE 9A(1) 3 TO FORM 3CD AND THE SAME WAS PAID ON 19.10.2007 TO THE GOVERNMENT ACCOUNT I.E., BEFORE THE DUE DATE FOR FILLING OF THE RETURN OF INCOME. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED JUDGMENTS OF THE HONBLE HIGH COURTS AND THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDER OF THE CIT (A), WE FIND THE FOLLOW ING EXTRACTS ARE RELEVANT FOR WANT OF FACTS WHICH READ AS UNDER: FROM THE ABOVE REPORT OF THE AO IT MAY BE NOTED THAT THE AO HAS SIMPLY REITERATED THAT THE DECISION OF AO WAS BASED ON TAX AUDIT REPORT ENCLOSURE 13D. HE HAS NOT REBUTTED THE CONTENTION OF THE APPELLANT REGARDING ANNEXURE 9A(1) AND THE AFFIDAVIT FILED BY THE AUDITOR WHEREIN THE DATE OF CREDIT HAS BEEN MENTIONED AS 31.3.2007 AND ALSO THE FACT OF DEDUCTION OF TAX IN MARCH 2007 ITSELF. IT MAY BE NOTED HERE THAT APPELLANT IN HIS LETTER DATED 28 .10.2009 FILED BEFORE AO (WHICH HAS BEEN REPRODUCED BY AO ON PAGE 3 OF ASSESSMENT ORDER) HAD CLEARLY MENTIONED THAT TDS IS DEDUCTED ON 31 ST MARCH, 2007 AS PER ENCLOSURE 9A(1) TO FORM 3CD. IN VIEW OF THIS, THE CLAIM MADE BY THE APPELLANT APPEARS TO BE CORRECT . AS PER AMENDED PROVISION OF SECTION 40(A)(IA), THE TDS DEDUCTED IN THE MONTH OF MARCH IF PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, THE DEDUCTION HAS TO BE ALLOWED. IN THIS CASE, TDS IS MADE ON 31 ST MARCH, 2007 AND PAID ON 19.10.2007 I.E. , BEFORE DUE DATE OF FILING OF RETURN. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW DEDUCTION CLAIMED BY THE APPELLANT U/S 40(A)(IA) AFTER DUE VERIFICATION. 6. ON PERUSAL OF THE ABOVE EXTRACT, WE FIND THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF THE ACT. CONSIDERING THE SAME, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND THE SAME IS FAIR AND REASONABLE WHICH DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. C.O.NO.59/M/2014 (AY 2007 - 2008) (BY ASSESSEE) 8. THIS CROSS OBJECTION FILED BY THE ASSESSEE ON 18.3.2014 AGAINST THE ORDER OF THE CIT (A) - 22, MUMBAI DATED 14.7.2010. IN THIS CROSS OBJECTION, ASSESSEE RAISED THE FOLLOWING SOLITARY GROUND WHICH READS AS UNDER: EVEN IF IT IS CONCLUDED THAT THE RELEVANT BILLS WERE ACCOUNTED IN DECEMBER 2006, JANUARY 2007 AND MARCH 2007, AS THE AMOUNT OF TDS HAS BEEN DEPOSITED TO THE CREDIT OF CENTRAL GOVERNMENT IN OCTOBER 2007 I.E., BEFORE THE DUE DATE OF FILING OF INCOME TAX RETU RN, NO DISALLOWANCE SHOULD BE MADE U/S 40(A)(IA) IN VIEW OF THE CLARIFICATORY AMENDMENT TO SECTION 40(A)(IA). 4 9. AT THE VERY OUTSET, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT IN CASE THE APPEAL OF THE REVENUE IS DISMISSED, THE ADMITTANCE AND ADJUDICATIO N OF THE ISSUES RAISED IN THE PRESENT CROSS OBJECTION IS MERELY AN ACADEMIC EXERCISE. HE ALSO MENTIONED THAT THE CROSS OBJECTION IS FILED BELATEDLY WITH A DELAY OF 402 DAYS. 10. WE HAVE HEARD LD REPRESENTATIVES OF BOTH THE PARTIES ON THIS ISSUE. WE HAVE ADJUDICATED AND DECIDED THE APPEAL OF THE REVENUE IN THE ABOVE PARAGRAPHS OF THIS ORDER. ON CONSIDERING OUR DECISION GIVEN IN THE APPEAL OF THE REVENUE, WE ARE OF THE OPINION THAT THE CROSS OBJECTION IS DISMISSED AS NOT ADMITTED. ACCORDINGLY, THE GROUND RAISED IN THE CROSS OBJECTION IS DISMISSED. 11. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH AUGUST, 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 26/08/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI