ITO, Ludhiana V. Sh. Raghubir Moudgill, Ludhiana

ITA 1022/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6933 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: PANKAJ BHALLA VINAY KOHLI
• Keywords: Difference of opinion; Change of opinion
• Section: 194C; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI. SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1022/CHD/2016 ASSESSMENT YEARS: 2010-11 THE ITO VS. SH. RAGHUBIR MOUDGILL WARD -7(3), LUDHIANA 35-A, RAGHUNATH ENCLAVE BACKSIDE AGGAR NAGAR, LUDHIANA PAN NO. ADUPM6717H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. PANKAJ BHALLA VINAY KOHLI DEPARTMENT BY : SHRI. S.K. MITTAL DATE OF HEARING : 28/06/2017 DATE OF PRONOUNCEMENT : 28/08/2017 ORDER PER DR. B.R.R. KUMAR, AM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-3 LUDHIANA, DT. 11/09/2015. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO ON MERITS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WA S JUSTIFIED IN INVOKING JURISDICTION AND PASSING THE ORDER UNDER SECTION 15 4 OF THE INCOME-TAX ACT, 1961 WITHOUT POINTING OUT SPECIFIC MISTAKES IN THE EARLI ER ORDER PASSED UNDER SECTION 250(6) WHICH LED TO CHANGE OF OPINION AND DELETION OF DISALLOWANCE WHICH WAS SUSTAINED EARLIER. 2. WHETHER THE FACTS OF THE CASE OF PUNJAB STATE COOPE RATIVE FEDERATION OF HOUSING BUILDING SOCIETIES LTD. VS. DCIT, CIRCLE-4( 1), CHANDIGARH IN ITA 834/CHD/2011 DT. 31/05/2012 RELYING UPON WHICH THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED RELIEF TO THE ASSE SSEE ARE SIMILAR TO THE CASE OF THE ASSESSEE AND APPLICABLE TO THE CASE OF THE ASSE SSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME ON 15/10/2010 DECLARING TOTAL INCOME OF RS. 28,23,120/ - FOR THE AY 2010-11. THE ASSESSEE IS DERIVING INCOME FROM THE LABOUR CONTRAC TS. DURING THE COURSE OF ASSESSMENT THE AO OBSERVED THAT THE ASSESSEE HAD MA DE PAYMENTS FOR JOB WORKS CHARGES AMOUNTING TO RS. 196,90,000/-. FROM T HE COPY OF THE ACCOUNT 2 SUBMITTED, IT HAS BEEN FOUND BY THE AO THAT THE ASS ESSEE HAS MADE PAYMEN OF THESE CHARGES WITHOUT DEDUCTING TDS ON THE PAYMENTS MADE, WHEREAS THE SAME WAS SHOWN AS TDS PAYABLE ON THE MONTH END. 4. THE AO OPINED THAT THE SECTION 194C PROVIDES THA T THE TDS HAS TO BE DEDUCTED AT THE TIME OF MAKING SUCH PAYMENTS. THE A O INVOKED SECTION 194C(1) WHICH READS AS UNDER: 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO AN Y RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CAR RYING OUT FOR WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURS UANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAY MENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO- (I) ONE PER CENT WHERE THE PAYMENT IS BEING MADE OR CRE DIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II) TWO PER CENT WHERE THE PAYMENTS IS BEING MADE OR CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME-TAX ON INCO ME COMPRISED THEREIN.' 5. THE AO OBSERVED THAT SECTION 194C MAKES IT CLEAR THAT AT THE TIME OF PAYMENT TO BE MADE TO A CONTRACTOR, TDS HAS TO BE D EDUCTED FROM SUCH PAYMENT AND ONLY REMAINING AMOUNT HAS TO BE CREDITE D TO THE ACCOUNT OF THE CONTRACTOR EITHER IN CASH OR BY CHEQUE OR BY ANY OT HER MODE WHICHEVER IS EARLIER. SINCE THE ASSESSEE HAS FIRST MADE PAYMENT TO VARIOUS PARTIES FOR THE JOB WORK DONE BY THEM THROUGH CHEQUES ON VARIOUS DATES DURING THE MONTH AND THE TDS WAS SHOWN AS PAYABLE AT THE MONTH END. THE AO HELD THAT THE ASSESSEE HAS MADE PAYMENT TO THE PARTIES THROUGH CHEQUES BUT HAS NOT DEDUCTED TDS AT THE TIME OF PAYMENT. THE AO RELIED ON ITO VS. BHOOMI CO NSTRUCTION IN ITA NO. 601 (RJT.) OF 2012, DATED 08 TH FEB, 2013 AND HELD THAT TDS HAS TO BE DEDUCTED AT THE TIME OF CREDITING THESE PARTIES WITH THE PAYMENTS. 6. THE CIT(A) IN HER ORDER DT. 11/09/2015 UPHELD TH E ADDITION MADE BY THE AO. 3 7. DURING THE SUBMISSION BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT THE FACT OF BHOOMI CONSTRUCTIONS CASE ARE DISTINGUI SHABLE FROM THE ASSESSEES CASE. IN THE SAID CASE THE TOTAL DEDUCTION OF THE T AX WAS MADE ON 31 ST MARCH BY DEBITING THE ACCOUNT OF THE PAYEE, WHEREAS IN THE P RESENT ASSESSEES CASE, THE DEDUCTION OF TAX WAS MADE REGULARLY OUT OF THE BILL AMOUNT AT THE TIME OF CREDIT IN THE PAYEES ACCOUNT SINCE THE PAYMENT TO THE PAYE E WERE MADE PRIOR TO THE CREDIT OF THE TOTAL AMOUNT IN THE RESPECTIVE ACCOUN T OF THE PAYEES BUT IN THE SAME MONTH ITSELF THEN DEDUCTION OF TAX MADE AT THE TIME OF CREDIT AND NOT AT THE TIME OF MAKING PAYMENT DOES NOT AMOUNT TO NON C OMPLIANCE OF ANY PROVISION OF LAW RELATING TO DEDUCTION OF TAX AT SO URCE BECAUSE THE TAX IN ANY CASE WAS TO BE DEPOSITED IN THE GOVERNMENT ACCOUNT BY SEVEN DAYS OF NEXT MONTH OR OTHERWISE BEFORE THE DUE DATE OF FILING TH E RETURN OF INCOME. 8. DURING THE REMAND REPORT PROCEEDING THE AO REITE RATED THAT THE ASSESSEE MADE PAYMENT TO THE PARTIES WITHOUT DEDUCTING THE T DS ON PAYMENTS MADE WHEREAS THE SAME IS SHOWN AS TDS PAYABLE ON THE MON TH END. 9. THE LD. CIT(A) HAS CONFIRMED THE ADDITION ON THE GROUND THAT THE TDS LIABILITY ACCRUED AT THE END OF EVERY MONTH BEING C OTERMINOUS WITH THE ACCRUAL OF THE LIABILITY OF THE PRINCIPAL SUM. LATER THE LD . CIT(A) VIDE ORDER DT. 02/08/2016 HAS MODIFIED HER ORDER AND GIVEN RELIEF TO THE ASSE SSEE BASED ON THE JUDGMENT OF PUNJAB STATE FEDERATION OF HOUSING BUILDING SOCI ETIES LTD. VS. DCIT, CIRCLE 4(1) CHANDIGARH. 10. BEFORE US THE REVENUE TOOK UP TWO GROUNDS (A) W HETHER SECTION 154 DONE BY THE LD. CIT(A) IS CORRECT AND (B) WHETHER THE FA CT OF PUNJAB STATE COOPERATIVE FEDERATION OF HOUSING BUILDING SOCIETIE S LTD. VS. DCIT IS APPLICABLE TO THE ASSESSEE. 11. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. 4 12. IN SO FAR AS THE ISSUE IN THE GROUND NO 1. IS C ONCERNED IT HAS BEEN HELD THAT NON CONSIDERATION OF THE DECISION OF THE JURISDICTI ONAL COURT WOULD CONSTITUTE MISTAKE APPARENT FROM RECORD. SINCE THE DECISION OF THE JURISDICTIONAL ITAT WAS NOT CONSIDERED WHILE PASSING THE IMPUGNED ORDER UND ER SECTION 250(6) OF THE ACT IT CONSTITUTES A MISTAKE APPARENT FROM RECORD F OR WHICH THE APPROPRIATE REMEDY WOULD BE PASSING OF ORDER UNDER SECTION 154 OF THE ACT. THUS THERE IS NO MERIT ON THE GROUND TAKEN BY THE REVENUE. 13. REGARDING THE GROUND NO. 2 WHETHER THE FACTS OF THE CASE OF PUNJAB STATE COOPERATIVE FEDERATION OF HOUSING BUILDING SOCIETIE S LTD. VS. DCIT, CIRCLE-4(1), CHANDIGARH IN ITA 834/CHD/2011 DT. 31/05/2012 RELYI NG UPON WHICH THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED RE LIEF TO THE ASSESSEE ARE SIMILAR TO THE CASE OF THE ASSESSEE AND APPLICABLE TO THE CASE OF THE ASSESSEE IS CONCERNED, WE FIND THAT THE CASE IS SQUARELY APPLIC ABLE AND IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE JUDGMENT IN T HE ABOVE SAID CASE IS REPRODUCED HEREUNDER 17. THE SPECIAL BENCH OF MUMBAI TRIBUNAL IN DCIT V S.BHARTI SHIPYARD LIMITED (2011) 132 ITD 53 (MUMBAI) HAD HEL D THAT THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2010 TO PROVI SO TO SECTION 40(A)(IA) OF THE ACT, BY WAY OF SUBSTITUTED PROVISO WAS TO BE APPLIED W.E.F. 1.4.2010 AND WAS NOT RETROSPECTIVE I N NATURE. HOWEVER, THE HON'BLE CALCUTTA HIGH COURT IN CIT VS. VIRGIN CREATIONS (SUPRA) HAVE HELD THAT THE SAID AMENDMENT TO PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS RETROSPECTIVE IN N ATURE. 18 IN THE FACTS OF THE PRESENT CASE AND AS BROUGHT OUT BY THE ASSESSEE BEFORE US, THE ASSESSEE HAD DEDUCTED TAX A T SOURCE OUT OF PAYMENTS MADE TO CONTRACTOR TOTALING RS. 1,2 1,75,8 28/- WHICH WAS DEPOSITED BEFORE 8.7.2008. THE DUE DATE FOR.FILING RETURN OF INCOME OF THE ASSESSEE WAS 30.09.2008. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE CALCUTTA HIGH COURT IN CIT VS. VIRGIN CREAT IONS (SUPRA) AND VARIOUS BENCHES OF THE TRIBUNAL WE HOLD THAT ONCE T HE TAX HAS BEEN DEDUCTED AND DEPOSITED BY THE ASSESSEE BEFORE THE D UE DATE OF FILING RETURN OF INCOME, THERE IS NO MERIT IN DISAL LOWING THE EXPENDITURE RELATABLE TO SUCH TAX DEDUCTED AT SOURC E. THE ASSESSEE SUCCEEDS ON BOTH THE COUNTS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF EXPENDITURE OF RS. 1,0 1,33,953/-. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ARE THUS ALLOWED. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. 5 14. AS A RESULT, WE DO NOT FIND ANY COGENT REASON T O INTERFERE WITH THE ORDER OF THE LD. CIT(A) AS THE ORDER OF THE RECTIFICATION PA SSED IS BASED ON THE RATIO OF THE DECISION OF THE HONBLE JURISDICTIONAL PUNJAB & HAR YANA HIGH COURT IN CASE OF M/S PUNJAB STATE COOPERATIVE FEDERATION OF HOUSING BUILDING SOCIETIES. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED ON 28/08/2017 IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (DR. B.R.R. K UMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE