Elite Shipping Synergies Pvt. Ltd., CHENNAI V. ITO, CHENNAI

ITA 1031/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8390 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA PAL IRS JCIT
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Retrospective amendment
• Section: 201(1); 246

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 1031/MDS/2016 / ASSESSMENT YEAR : 2011-2012. M/S. ELITE SHIPPING SYNERGIES (P) LTD, NO.83/3, 2 ND FLOOR, DR. RANGA ROAD, MYLAPORE, CHENNAI 600 004. [PAN AABCE 4232C] VS. THE INCOME TAX OFFICER, SALARY WARD II(1) CHENNAI. ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. B. RAMAKRISHNAN, C.A. $% ! ' # /RESPONDENT BY : SHRI.SUPRIYA PAL, IRS, JCIT. & ' '( /DATE OF HEARING : 20-09-2016 )* ' '( /DATE OF PRONOUNCEMENT : 23-09-2016 ! / O R D E R PER SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: IN THIS APPEAL FILED BY THE ASSESSEE, IT HAS TAK EN EXTENSIVE GROUNDS RUNNING TO TWO PAGES. HOWEVER, EFFECTIVE G ROUNDS APPEAR AS RELIEF SOUGHT BY THE ASSESSEE AND THESE ARE REPRODU CED AS UNDER:- 1. THE DISALLOWANCE OF EXPENDITURE U/SEC. 40(A)( IA) BE DELETED. 2. THE DISALLOWANCE OF CLAIM OF ?2,12,489/- BEIN G THE MEDIAL AND LIFE INSURANCE PREMIUM OF THE MANAGING DIRECTOR BE DELETED. ITA NO.1031/MDS/2016. :- 2 -: 2. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF SHI PPING, CLEARING AND FORWARDING, CONSOLIDATION AND GROUPAG E SERVICES HAD INCURRED AN EXPENDITURE OF ?9,25,22,426/- UNDER THE HEAD FREIGHT AND CLEARING AND FORWARDING AND AN EXPENDITURE OF ?22, 54,374/- UNDER THE HEAD DELIVERY CHARGES. WHILE EFFECTING THESE PAYME NTS ASSESSEE HAS NOT DEDUCTED TAX AT SOURCES. THE LD. ASSESSING OFF ICER INVOKED PROVISION OF SEC. 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) AND MADE DISALLOWANCE OF THE ABOVE EXPENDITURE. AGGRIEVED, THE ASSESSEE MOVED AN APPEA L BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 3. MANY FOLD ARGUMENTS WERE TAKEN BY THE ASSESSEE BEFO RE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) INCLUDING A PL EA THAT THE PAYEE HAD FURNISHED THEIR RETURNS AND HAD SHOWN THE AMOUN TS RECEIVED FROM THE ASSESSEE AS PART OF THEIR INCOME IN SUCH RETUR NS. RELIANCE WAS ALSO PLACED BY THE ASSESSEE ON THE FIRST PROVISO TO SEC. 201(1) OF THE ACT INSERTED BY FINANCE ACT, 2012 WITH EFFECT FROM 1.7.2012 AND SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT, WHICH WERE INSERTED THROUGH FINANCE ACT, 2012 FROM 01.04.2013. CONTENT ION OF THE ASSESSEE WAS THAT THE ABOVE PROVISIONS HAD RETROSPE CTIVE OPERATION AND ONCE THE PAYEE HAD FILED THEIR RETURNS DISCLOSI NG THE PAYMENTS RECEIVED BY THEM FROM THE ASSESSEE AND HAD PAID TAX ES THEREON, ASSESSEE BEING THE PAYER COULD NOT BE TREATED AS A PERSON IN DEFAULT. ITA NO.1031/MDS/2016. :- 3 -: ARGUMENT OF THE ASSESSEE BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT IT WAS SAVED BY SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT. THE LD. CIT(A) SOUGHT A REMAND REPORT FRO M THE LD. ASSESSING OFFICER SINCE THE ASSESSEE HAD IN SUPPORT OF THE AB OVE CONTENTION, FILED A CERTIFICATE IN FORM 26A OBTAINED FROM THE PAYEE S HIPPING COMPANY. THE LD. ASSESSING OFFICER IN THE REMAND REPORT STAT ED THAT ASSESSEE DID OFFER EXPLANATIONS FOR NON DEDUCTION OF TAXES ON PA YMENTS TOTALING TO ?9,16,96,970/- AGAINST DISALLOWANCE OF ?9,47,78,800 /- MADE U/S.40(A)(IA) OF THE ACT. LD. ASSESSING OFFICER AL SO OPINED THAT AMENDMENT TO SEC. 40(A)(IA) AND SEC. 201(1)OF THE A CT WERE PROSPECTIVE AND DID NOT HAVE ANY APPLICATION SO FAR AS ASSESSEE THE WAS CONCERNED. 4. WHEN THE REMAND REPORT WAS PUT TO THE ASSESSEE, IT RELYING ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD 337 ITR 635 ARGUED THAT SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT WAS DECLARATORY AND CU RATIVE IN NATURE AND HAD RETROSPECTIVE EFFECT. HOWEVER, THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) PLACING RELIANCE ON THE HONBLE KERAL A HIGH COURT JUDGMENT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CIT (2015) 235 TAXMAN 246 HELD THAT SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT INTRODUCED BY THE FINANCE ACT, 2012 DID NOT HAVE RE TROSPECTIVE ITA NO.1031/MDS/2016. :- 4 -: OPERATION. HE UPHELD THE ORDER OF THE LD. ASSESSIN G OFFICER AND CONFIRMED THE DISALLOWANCE. 5. NOW BEFORE US, THE LD. AUTHORISED REPRESENTATIVE S TRONGLY ASSAILING THE ORDER OF THE LOWER AUTHORITIES BELOW SUBMITTED THAT WHEN THERE WERE DIFFERENT VIEWS EXPRESSED BY DIFFERENT H IGH COURTS OTHER THAN THE JURISDICTIONAL HIGH COURT, ASSESSEE COULD ALWAYS TAKE REFUGE ON THE JUDGMENT FAVOURABLE TO IT. FURTHER, ACCORDI NG TO LD. AUTHORISED REPRESENTATIVE VARIOUS CO-ORDINATE BENCH OF THE TRI BUNAL IN A NUMBER OF CASES HAD HELD THAT SECOND PROVISO OF SEC. 40(A) (IA) OF THE ACT OPERATED RETROSPECTIVELY. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND THE OR DERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT HONBLE DELHI HIGH COURT HELD SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT, INTROD UCED BY FINANCE ACT, 2012 TO HAVE RETROSPECTIVE OPERATION IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LIMITED (SUPRA) . IT IS ALSO SEEN THAT HONBLE KERALA HIGH COURT HAD TAKEN A APPOSITE VIEW IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA). LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD PREFERRED TO GO BY THE ORDER OF THE KERALA HIGH COU RT FOR A REASON THAT CONCERNED PROVISION WAS DISCUSSED IN THREADBARE BY THEIR LORDSHIP. ITA NO.1031/MDS/2016. :- 5 -: HOWEVER, IN OUR OPINION THIS CANNOT BE CITED AS A R EASON FOR NOT FOLLOWING A JUDGMENT IN FAVOUR OF THE ASSESSEE. UNL ESS AND UNTIL THE JURISDICTIONAL HIGH COURT JUDGMENT IS AVAILABLE, ON A POINT OF LAW ASSESSEE CAN ALWAYS FALL BACK ON A NON JURISDICTI ONAL HIGH COURT JUDGMENT WHICH IS FAVOURABLE TO IT. PLETHORA OF TR IBUNAL JUDGMENTS ARE ALSO AVAILABLE WERE IT WAS HELD THAT OPERATION OF S ECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT HAD TO BE CONSIDERED AS RETROS PECTIVE. FEW OF THE DECISIONS ARE MENTIONED HEREUNDER:- 1. DILIP KUMAR ROY VS. ITO (2016) 68 TAXMANN.COM 129 ( KOLKATA- TRIB) 2. NEW ALIGNMENT VS. ITO, (2016) 69 TAXMANN.COM 122 (K OLKATA- TRIB) 3. MITRA GUHA BUILDERS (INDIA) CO. VS. DCIT (2016) 65 TAXMANN.COM 243 (KOLKATA TRIB) 4. ITO VS. DR. JAIDEEP KUMAR SHARMA (2014) 52 TAXMANN. COM 420 (DELHI TRIB) 5. RAJEEV KUMAR AGARWAL VS. ADDL. CIT (2014) 45 TAXMAN N.COM 555(AGRA-TRIB) 6. ACIT VS. RAJA CHKRAVARTY (2015) 57 TAXMANN.COM 88 ( LUCKNOW TRIB) 7. R K P COMPANY VS. ITO (2016) 71 TAXMANN.COM 257(RAI PUR TRIB) 8. BRIJGOPAL MADHUSUDAN BHATTAD VS. ITO (2015) 61 TAX MANN.COM 266(NAGPUR TRIB) 9. DCIT VS. ANANDA MARAKALA (2014) 48 TAXMANN. COM 402 (BANGALORE TRIB) 10. NOVO NORDISK INDIA (P) LTD VS. DCIT (2015) 63 TAXMA NN.COM 351 (BANGALORE TRIB) 11. RUSABH DIAMONDS VS. ACIT (2016) 68 TAXMANN.COM 141 (MUMBAI-TRIB) ITA NO.1031/MDS/2016. :- 6 -: 12. ITO VS. DUDANI METAL AGENCIES (2016) 67 TAXMANN.COM 80 (RAJKOT-TRIB) WE, ARE THEREFORE OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN THIS CLAIM. 8. HOWEVER, WE FIND THAT THE LD. ASSESSING OFFICER IN THE REMAND REPORT MENTIONED ASSESSEES INABILITY TO PRODUCE EVIDENCE WITH REGARD TO PAYEE HAVING INCLUDED THE AMOUNT RECEIVED FROM T HE ASSESSEE IN THEIR RETURN ONLY TO THE FULL EXTENT. AS PER THE L D. ASSESSING OFFICER EVIDENCE FOR ?9,16,96,970/- ALONE WAS AVAILABLE OUT OF TOTAL DISALLOWANCE OF ?9,47,78,800/-. HENCE, WE DELETE T HE DISALLOWANCE OF ?9,16,96,970/- OUT OF THE TOTAL DISALLOWANCE OF ?9, 47,78,800/-. BALANCE DISALLOWANCE OF ?30,81,830/- IS SUSTAINED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 23RD DAY OF SEPTE MBER, 2016, AT CHENNAI. SD/- ( . ) (G. PAVAN KUMAR) $ % & / JUDICIAL MEMBER SD/- ( . ) (ABRAHAM P. GEORGE) ' % & / ACCOUNTANT MEMBER +& / CHENNAI , / DATED:23RD SEPTEMBER, 2016 KV - ' $'./ 0/' / COPY TO: 1. ! / APPELLANT 3. 1' () / CIT(A) 5. /45 $'6 / DR 2. $% ! / RESPONDENT 4. 1' / CIT 6. 57 8& / GF