Chhaganlal Shamlal Kirad, V. Deputy Commissioner of Income-tax,

ITA 1003/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1776 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-01-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK MESHR AM
• Assessee Lawyers: NIMIT GUJRATHI
• Keywords: Retrospective amendment
• Section: 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1003 /PUN/201 6 / ASSESSMENT YEAR : 20 0 6 - 07 CHHAGANLAL SHAMLAL KIRAD, 468, NANA PETH, PUNE 411002 PAN : ABUPK7868B ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX , CIRCLE 2, PUNE / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI NIMIT GUJRATHI REVENUE BY : SHRI ABHISHEK MESHRAM / DATE OF HEARING : 03 - 01 - 2019 / DATE OF PRONOUNCEMENT : 20 - 0 3 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 4 , PUNE DATED 24 - 02 - 2016 FOR THE ASSESSMENT YEAR 200 6 - 07 . 2 ITA NO . 1003/PUN/2016, A.Y. 2006 - 07 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS ENGAGED IN TRANSPORT BUSINESS UNDER THE NAME AND STYLE OF M/S. C.S. KIRAD. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29 - 11 - 2006 DECLARING TOTAL INCOME OF RS.10,51,150/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY . THE ASSESSING OFF ICER COMPLETED THE ASSESSMENT BY DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS.1,64,34,580/ - . ONE OF THE ADDITION MADE BY THE ASSESSING OFFICER WAS U/S. 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENTS TO THE TUNE OF RS.1,53,83,426/ - TO VARIOUS PARTIES AGAINS T TRUCK HIRING CHARGES. AGAINST THE SAID ADDITION THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL OF ASSESSEE. THE ASSESSEE THEREAFTER CARRIED THE ISSUE IN SECOND A PPEAL BEFORE THE TRIBUNAL IN ITA NO. 1488/PN/2009 FOR ASSESSMENT YEAR 2006 - 07. THE TRIBUNAL VI DE ORDER DATED 23 - 05 - 2012 RESTORED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE IN LIGHT OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT VS. ACIT REPORTED AS 136 ITD 23 (VI S AK.) . THE ASSESSING OFFICER THEREAFTER WHILE GIVING EFFECT TO THE ORDER OF TRIBUNAL SUSTAINED THE DISALLOWANCE OF RS.1,53,83,426/ - U/S. 40(A)(IA) OF THE ACT BY PLACING RELIANE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT STAYING THE DECISION OF SPECIAL BENCH AND CBDT CIRCULAR NO. 10/DV/2013 DATED 16 - 12 - 2013. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 28 - 03 - 2014 PASSED U/S. 143(3) R.W.S. 254 OF THE ACT, THE ASSESSEE FI LED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DISMISSED THE APPEAL OF ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE U/S. 40(A)(IA) OF THE 3 ITA NO . 1003/PUN/2016, A.Y. 2006 - 07 ACT. THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL WITHOUT PREJUDICE TO THE ORIGINAL GROUND RAISED ON MERITS OF THE ADDITION. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER : THE ASSESSEE SUBMITS THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS RETROSPECTIVE IN NATURE AND HENCE, IT IS APPLICABLE TO THE CASE OF THE ASSESSEE AND THEREFORE, NO DISALLOWANCE IS WARRANTED U/S. 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TAX O N THE AMOUNT PAID TO SUB CONTRACTORS ON ACCOUNT OF TRUCK HIRE CHARGES. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL ON THE ISSUE OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE BY WAY OF ADDITIONAL GROUND OF APPEAL IS SEEKING REMEDY UNDER SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY THE FINANCE ACT, 2012 W.E .F. 01 - 04 - 2013. THE LD. AR SUBMITTED THAT THOUGH THE SECOND PROVISO WAS INSERTED W.E.F. 01 - 04 - 2013 BUT THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P) LTD. REPORTED AS 377 ITR 635 HAS HELD THAT THE PROVISO IS DECLARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005. THE LD. AR IN SUPPORT HIS CONTENTIONS PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF TRIBUNAL IN THE CASE OF YAMAZAKI MAZAK INDIA PVT. LTD. VS. PR. COMMISSIONER OF IN COME TAX IN ITA NO. 153/PN/2016 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 28 - 10 - 2016. 4. ON THE OTHER HAND SHRI ABHISHEK MESHRAM REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE ISSUE IN APPEAL HAS BEEN DEC IDED AGAINST THE ASSESSEE BY VARIOUS HONBLE HIGH COURTS. THE CBDT AFTER CONSIDERING THE DECISIONS RENDERED BY VARIOUS HIGH COURTS HAS COME WITH THE CIRCULAR NO. 10/DV/2013 DATED 16 - 12 - 2013. THUS, THE GROUND RAISED BY THE ASSESSEE ON MERITS DESERVES TO B E REJECTED. 4 ITA NO . 1003/PUN/2016, A.Y. 2006 - 07 4.1 WITH RESPECT TO ADDITIONAL GROUND RAISED IN APPEAL , THE LD. DR SUBMITTED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) HAS BEEN INSERTED W.E.F. 01 - 04 - 2013 AND HENCE, THE SAME CANNOT BE APPLIED RETROSPECTIVELY. 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. THE ASSESSEE IN APPEAL HAS RAISED ADDITIONAL GROUND OF APPEAL FOR INVOKING SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. THE SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013. FOR THE SAKE OF COMPLETENESS AND READY REFERENCE THE RELEVANT EXTRACT OF SECTION 40(A)(IA) WITH NEWLY INSERTED PROVISO IS REPRODUCED HERE - IN - BELOW : 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [38], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, (A) IN THE CASE OF ANY ASSESSEE XXXXXXXXXX XXXXXXXXXX (IA) [ANY INTEREST, COMMISSION OR BROKERAGE,[RENT, ROYALTY,] FEES FOR PROFESSIONAL SERV ICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CH APTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139;] PROVIDED THAT XXXXXXXXXX PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. 6. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P ) LTD. (SUPRA) THE HON'BLE DELHI HIGH COURT HAS HELD THAT INSERTION OF PROVISO BY THE FINANCE ACT, 2012 IS DECLARATORY AND CURATIVE AND APPLIES RETROSPECTIVE LY WITH EFFECT FROM 1 ST APRIL, 2005. THUS, WE DO NOT FIND ANY IMPEDIMENT IN APPLYING SECOND PROVIS O TO SECTION 40(A)(IA) IN THE CASE OF PRESENT ASSESSEE. THE CO - ORDINTAE BENCH OF TRIBUNAL IN THE CASE OF YAMAZAKI MAZAK INDIA PVT. LTD. VS. PR. COMMISSIONER OF INCOME 5 ITA NO . 1003/PUN/2016, A.Y. 2006 - 07 TAX (SUPRA) HAS TAKEN A SIMILAR VIEW QUA RETROSPECTIVE APPLICABILITY OF SECOND PROVISO T O SECTION 40(A)(IA) OF THE ACT. THUS, IN THE LIGHT OF SECOND PROVISION TO SECTION 40(A)(IA) OF THE ACT , WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE OF DISALLOWANCE U/S. 40(A)(IA) BACK TO THE FILE OF ASSESSING OFFICER FOR NECESSARY VERIFICATION S . 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH DAY OF MARCH, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 20 TH MARCH, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 , PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 3 , PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE