Rajesh Subramanya, Kodaku V. ITO, Madikeri

ITA 1023/BANG/2011

• Counselvise Citation: 102321114 RSA 2011
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS SHENOY
• Assessee Lawyers: SUSAN THOMAS JOSE

Judgement Text

ITA.1023/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER I.T.A NO.1023/BANG/2011 (ASSESSMENT YEAR : 2007-08) SHRI. RAJESH SUBRAMANYA, MALLESHWARA ESTATE, P.B. NO.7, SHANIVARASANTHE POST, SOMWARPET TALUK, KODAGU DISTRICT .. APPELLANT PAN : ANBPS8466Q V. INCOME-TAX OFFICER,, WARD -1, MADIKERI .. RESPONDENT PAN : AAACW4514C APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCIT RESPONDENT BY : SHRI. SRINIVAS SHENOY, CA DATE OF HEARING : 09.08.2012 DATE OF PRONOUNCEMENT : 07.09.2012 O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE FOR TH E ASSESSMENT YEAR 2007-08 AGAINST THE APPELLATE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS), MYSORE, DATED.22.08.2011. TH E ONLY ISSUE BROUGHT BEFORE US FOR ADJUDICATION IS WHETHER THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE DIS ALLOWANCE MADE ITA.1023/BANG/2011 PAGE - 2 BY THE ASSESSING OFFICER U/S.40(A)(IA) OF THE IT AC T, 1961. THE RELEVANT GROUNDS READ AS UNDER : I) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HA S ERRED IN UPHOLDING THE DISALLOWANCE OF RS.11,28,611 /- MADE BY THE ASSESSING OFFICER U/S.40(A)(IA). II) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE FOUND THAT THE PROVISIONS OF 40(A)(IA) ARE NO T APPLICABLE TO THE PAYMENT OF RS.11,28,611/- MADE BY THE APPELLANT. III) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS AGAINST A HOST OF LEGAL DECISIONS. 02. THE BRIEF FACTS RELATING TO THE ISSUE BEFORE US ARE THAT WHILE FRAMING THE ASSESSMENT U/S.143(3) OF THE ACT, THE A SSESSING OFFICER NOTICED FROM THE LEDGER ACCOUNT RELATING TO QUARRY LEASE THAT THE ASSESSEE MADE PAYMENT TO THE FOLLOWING PERSONS AMOU NTING TO RS.11,28,611/- : 1. SRI. RAMESH .. RS. 3,06,338/- 2. SRI. D. S. MANJUNATHA GOWDA .. RS, 2,80,000/- 3. SRI. MANJUNATH .. RS. 5,72,273/- TOTAL .. RS.11,28,811/- THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSE E HAD NOT DEDUCTED TAX AT THE TIME OF PAYMENT TO CLAIM EXPENDITURE FOR DEDUCTION. HENCE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF RS.11 ,28,611/- AND ADDED BACK THE SAME TO THE INCOME RETURNED. AGGRIE VED, THE ASSESSEE ITA.1023/BANG/2011 PAGE - 3 MOVED THE MATTER IN APPEAL BEFORE THE FIRST APPELLA TE AUTHORITY WHO ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE IS STILL AGGRIEVED AND IS IN APPEAL BEFORE US ON THE GROUNDS OF APPEAL EXTRACTED ELSEWHERE. 03. THE ASSESSEE'S REPRESENTATIVE FILED A COMPILATI ON CONSISTING OF THE FOLLOWING : 1. ARGUMENT NOTES OF THE COUNSEL 2. COPY OF THE ASSESSMENT ORDER 3. COPY OF ORDER OF COMMISSIONER OF INCOME-TAX (APP EALS) 4. JAIPUR VIDYUT VITRAN NIGAM LTD V. DCIT 5. TEJA CONSTRUCTION LTD V. ACIT 6. MERILYN SHIPPING & TRANSPORTS V. ACIT 7. COPY OF AGREEMENT WITH MR. MANJUNATH 8. COPY OF AGREEMENT WITH MR. RAMESH 9. COPY OF PURCHASE ORDER OF RMC READYMIX P. LTD 10. COPY OF ORDER PLACED BY MAYTAS INFRA P. LTD 11. COPY OF PROFIT AND LOSS ACCOUNT 04. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE FACTS AND MATERIALS INCLUDING THE COMPILATION FILED BY TH E ASSESSEE'S REPRESENTATIVE. THE POINT AT ISSUE IS SQUARELY COV ERED BY THE DECISION OF THE SPECIAL BENCH OF VIZAG IN THE CASE OF MERLYN SHIPPING & TRANSPORTS V. ACIT (SUPRA). IN THAT DECISION, IT W AS HELD THAT THE WORD PAYABLE USED IN SECTION 40(A)(IA) OF THE ACT HAS TO BE GIVEN ITS NATURAL MEANING, AND GOING BY STRICT INTERPRETATION, SECTIO N 40(A)(IA) IS ITA.1023/BANG/2011 PAGE - 4 APPLICABLE TO ONLY EXPENDITURE WHICH IS PAYABLE AS ON 31ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AM OUNTS WHICH HAVE ALREADY BEEN PAID DURING THE PREVIOUS YEAR WITHOUT DEDUCTING TAX AT SOURCE. AS ALREADY OBSERVED ABOVE, THE ASSESSING O FFICER IN HIS ORDER HAS NOTED THAT THE ASSESSEE HAS CLAIMED THE EXPENDI TURE WITHOUT DEDUCTING THE TAX. HENCE, APPLYING THE RATIO OF TH E DECISION OF THE SPECIAL BENCH IN MERLYN SHIPPING (SUPRA), WE ARE AL LOWING THE ASSESSEE'S APPEAL. 05. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 07.09.2012. SD/- SD/- (N. V. VASUDEVAN) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT