M/s. H.B. Poojara, Ahmednagar V. Income-tax Officer,

ITA 1034/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9469 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 194C; 147

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1034/PUN/2015 / ASSESSMENT YEAR : 2006-07 M/S. H.B PO O JARA, VIVEK K. BHANDARI C/O. K.D. BHANDARI M.G. ROAD, OPP. STRAWBERRY MALL, AHMEDNAGAR 414001. PAN : AACFH8333H. . / APPELLANT V/S INCOME TAX OFFICER, WARD 1, AHMEDNAGAR. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI ACHAL SHARMA, ADDL.CIT / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 2, PUNE, DT.30.01.2015 FOR THE ASSESSMENT YEAR 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOME FROM CONTRACT BUSINESS IN PARTNERSHIP FIRMS. ASSESSEE FILED HIS RE TURN OF INCOME FOR AY. 2006-07 ON 31.03.2007 DECLARING TOTAL INCOM E / DATE OF HEARING : 04.01.2018 / DATE OF PRONOUNCEMENT: 12.01.2018 2 OF RS.8,10,810/-. THEREAFTER, THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.07.10.2008 DETERMINING THE TOTAL INCOME AT RS.13,10,810/-. THEREAFTER, IT WAS NOTICED THAT ASSESSEE HAD FURNISHED THE DETAILS OF UNSECURED LOANS AGGREGATING TO RS. 94,34,248/- AS AGAINST THE UNSECURED LOAN LIABILITY SHOWN IN BALANCE-SHEET AT RS.2,36,44,290/-. THEREFORE TO VERIFY THE GENUINENESS OF UNSECURED LOAN LIABILITY, THE CA SE WAS RE-OPENED U/S 147 OF THE ACT. THEREAFTER THE ASSESSME NT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DT.19.02.2 014 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,50,58,580/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD. CIT(A), WHO VIDE ORDER DT.30.01.2015 DISMISSED THE APPE AL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESS EE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE DISALLOWANCE DONE IS UNREASONABLE WHEREAS T HE AD-HOC ADDITION HAS BEEN DONE ALREADY. 2. THE DISALLOWANCE AND THE TAX AND INTEREST THEREO N SHOULD BE DELETED IN FULL. IT IS PRAYED THAT THE FACTS AND C IRCUMSTANCES OF THE CASE AT THAT TIME OF RETURN FILED AND PRESENT CONDI TION MAY PLEASE BE CONSIDERED THE GENUINENESS BE APPRECIATED AND NA TURAL JUSTICE BE ADMINISTERED BY ACCEPTING THE FACTS. THIS ADDIT ION IS UNREASONABLE AND UNWARRANTED. 3 . ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED. THE CASE RECORD FURTHER REVEALS THAT NOTICE FOR HEARING WAS ISSUED TO THE ASSESSEE ON VARIOUS OCCASIONS. ALL THESE NOTICES WERE RE TURNED WITH THE REMARKS ADDRESS NOT FOUND AND LEFT BY THE POSTAL AUTHORITIES. THE DETAILS OF WHICH ARE AS UNDER : 3 SL.NO. DATE OF HEARING NOTICE SENT ON RETURNED WITH REMARK 1 26.07.2017 29.05.2017 ADDRESS NOT FOUND 2 18.10.2017 03.08.2017 LEFT 3 01.01.2018 23.10.2017 LEFT THE ASSESSEE HAS ALSO NOT INFORMED ABOUT THE PRESENT A DDRESS. WE THEREFORE PROCEED TO DECIDE THE ISSUE EX-PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD.D.R. 4. AO ON PERUSING THE UNSECURED LOAN LIABILITY SHOWN IN THE AUDIT REPORT NOTICED THAT THE UNSECURED LIABILITY OF RS.2,36,44,290/- INCLUDED THE AMOUNT OF RS.1,42,47,768/- BEING ADVANCE RECEIVED AGAINST THE CONTRACT. ON FURTHER VERIFICATION IT WAS NOTICED THAT THIS ADVANCE WAS RECEIVED AGAINST CONTRACT FROM GARRISON ENGINEERING. IT WAS FURTHER SUBM ITTED THAT THE ADVANCE RECEIVED AGAINST CONTRACT WAS GIVEN T O M/S. OMKAR SAMB & ASSOCIATE AS A SUB-CONTRACT, THE AMOUNT WAS REFLECTED ON ASSET SIDE OF BALANCE-SHEET AS ON 31.03.2006 AND THAT ASSESSEE HAD ALSO DEDUCTED TDS OF RS.1,59,861/- FROM THE PAYMENT. AO ON PERUSING THE TAX AUDIT REPORT NOTICED THAT THOUGH ASSESSEE HAD STATED TO HAVE DEDUCT TDS OF RS.1 ,59,861/- BUT IT WAS SHOWN OUTSTANDING AS ON 31.03.2006, BEING THE YEAR END, AND WAS ALSO NOT PAID TILL 30.09.2007, BEING THE DUE DAT E OF FILING OF RETURN OF INCOME. AO THEREFORE WAS OF THE VIEW THAT FAILURE TO PAY TDS ATTRACTED THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. HE ACCORDINGLY MADE ADDITION OF RS.1,42,47,768/- BEING THE SUB-CONTRACT AMOUNT. AGGRIEVED BY THE ORDER OF AO, AS SESSEE 4 CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO BY HOLDING AS UNDER : 3.3 THE SUBMISSIONS MADE BY THE LEARNED COUNSEL OF THE APPELLANT ARE CAREFULLY EXAMINED IN THE LIGHT OF TH E PROVISIONS OF SEC. 40(A)(IA) AND FACTS OF THE CASE. THE FIRST CON TENTION OF THE APPELLANT IS THAT THE AMOUNT PAID TO M/S. OMKAR SAM B & ASSOCIATES IS ONLY AN ADVANCE AND THE PAYMENT WAS N OT CLAIMED AS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT OR OT HERWISE. THIS CONTENTION OF THE APPELLANT IS CONTRARY TO THE MATE RIAL PLACED ON RECORD. AS SEEN FROM A COPY OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR, THE AMOUNT OF RS.1,42,47,768/- WAS INCLUDED I N THE GROSS WORK CONTRACT RECEIPTS AND THEN REDUCED FROM THE GR OSS CONTRACT RECEIPTS OF RS.4,19,80,808/-. THE RELEVANT PART OF THE P & L A/C IS SCANNED AND REPRODUCED HEREUNDER FOR READY REFERENC E: LD.CIT(A) THEREAFTER REPRODUCED THE RELEVANT PART OF THE PROFIT AND LOSS ACCOUNT AND THEN NOTED AS UNDER : 3.3.1 THE ABOVE SCANNED IMPRESSION CLEARLY SHOWS T HAT AMOUNT IS CHARGED TO THE P & L A/C BY DEDUCTING THE SAME FROM GROSS CONTRACT RECEIPTS AND THEREFORE, IT IS NOT CORRECT TO SAY THAT THE AMOUNT WAS NOT CLAIMED AS EXPENDITURE. EVEN IN THE BOOKS OF ACCOUNT, THE AMOUNT RECEIVED FROM THE CONTRACTEE DE PARTMENT WAS SHOWN AS WORK RECEIPT AND FROM THE RECEIPTS, THE AM OUNT PAID TO THE SUB- CONTRACTOR WAS DEDUCTED. IF IT IS ONLY AN ADVANCE RECEIVED FROM THE CONTRACTEE DEPARTMENT AND IN TURN PAID AS ADVANCE TO THE SUB-CONTRACTOR AS CLAIMED BY THE APPELLANT, IT WOULD NOT HAVE BEEN SHOWN AS PART OF THE CONTRACT RECEIPTS IN THE P & L A/C OF THE APPELLANT. THE FACT THAT THE AMOUNT WAS DEDUCTE D FROM THE GROSS CONTRACT RECEIPTS IN THE P & L A/C AND TDS WAS MADE ON THE PAYMENT U/S.194C CLEARLY SHOWS THAT IT WAS AN O UTFLOW FROM THE GROSS CONTRACT RECEIPTS AND THIS FACT WAS ALSO REPORTED AT COLUMN 27 OF THE 3CD REPORT. WHEN THE T DS WAS MADE BY THE APPELLANT U/S 194C AND THE TDS WAS SHOW N AS PAYABLE UNDER THE HEAD 'PROVISIONS' IN THE BALANCE SHEET AS ON 31.03.2006, IT IS NOT A MERE TECHNICAL DEDUCTION OF TDS AS CLAIMED BY THE APPELLANT. 3.3.2 THE NEXT ARGUMENT OF THE APPELLANT IS THAT TH E AMOUNT TO THE SUB- CONTRACTOR WAS ALREADY PAID DURING THE YEA R AND NOT OUTSTANDING AND PAYABLE AS ON 31.03.2006 AND THEREF ORE PROVISIONS OF SEC. 40(A)(IA) ARE NOT ATTRACTED TO T HE AMOUNTS ALREADY PAID IN VIEW OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF CIT VS. M/S MERILYN SHIPPING & TRANSPORTS (146 TIJ 1). THIS CONTENTION IS ALSO NOT LEGALLY SUSTAINABLE. IN THE CASE OF MERILYN SHIPPING & TRANSPORTS, ITAT SPECIAL BENCH H ELD THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON 31ST MARCH OF E VERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW EXPENDITURE WH ICH HAS BEEN ACTUALLY PAID DURING PREVIOUS YEAR, WITHOUT DE DUCTION OF TDS. IN THE PRESENT CASE, THE SITUATION IS DIFFEREN T WHERE TAX WAS DEDUCTED AT SOURCE BUT REMITTED TO GOVT.ETC BELATEDLY AND IT IS NOT A CASE OF PAYMENT DURING THE YEAR WITHOUT DEDUCTION 5 OF TAX AT SOURCE AND THEREFORE THE DECISION OF SPEC IAL BENCH HAS NO APPLICATION TO THE PRESENT CASE. EVEN OTHERWISE, THE PROVISIONS OF SEC. 40(A)(IA) HAVE TO BE READ IN CON JUNCTION WITH CHAPTER XVII-B. CHAPTER XVII-B PROVIDES FOR DEDUCTI ON OF TAX AT SOURCE IN RESPECT OF CERTAIN PAYMENTS LIKE, PAYM ENTS TO CONTRACTORS/SUB- CONTRACTORS, RENT, INTEREST, COMMISSION ETC. THE SECTIONS IN CHAPTER XVII-8 COME INTO OPERATION ONCE THE AMOUNT IS CREDITED OR PAID TO THE ACCOUNT OF THE PAYEE, WHICH EVER IS EARLIER, AND IT DOES NOT PROVIDE AN EXCEPTION TO THE PAYMENT S MADE TO THE PAYEE DURING THE YEAR AND NOT OUTSTANDING AS ON 31S T MARCH. IF THE ARGUMENT OF THE APPELLANT THAT PROVISIONS OF SE E. 40(A)(IA) ARE APPLICABLE ONLY TO THE AMOUNTS CREDITED TO THE ACCO UNTS OF THE PAYEE AND PAYABLE AS ON 31 ST MARCH AND NOT TO THE AMOUNTS ALREADY PAID TO THE PAYEE DURING THE YEAR IS TO BE ACCEPTED, IT WOULD NOT ONLY MAKE A LIMB OF TDS SECTION, WHICH PR OVIDES FOR TDS AT THE TIME OF PAYMENT, REDUNDANT BUT ALSO LEAD TO ABSURD AND UNJUST RESULTS. IT IS A SETTLED RULE OF INTERPR ETATION THAT THE PROVISIONS OF A STATUTE MUST BE HARMONIOUSLY CONSTR UCTED AND AN INTERPRETATION SHOULD BE AVOIDED WHICH RENDERS OTHE R PROVISIONS OF THE ACT OTIOSE OR NUGATORY. IN THE PRE SENT CASE, AS PER THE BOOKS OF A/C, THERE WAS A LIABILITY FOR PAYMENT TO THE ABOVE PART IES AND AS A RESULT AMOUNT WAS PROVIDED IN THE BOOKS OF A/C AND THE AMOUNT WAS PAYABLE TO THE PAYEE. IT SO HAPPENED THAT THE APPELLANT DISCHARGED THE LIABILITY WHOLLY OR PARTLY BY MAKING THE PAYMENT DURING THE YEAR ITSELF. IF THE AMOUNT H AD NOT BEEN PAID DURING THE YEAR EITHER WHOLLY OR PARTLY, IT WO ULD HAVE REMAINED OUTSTANDING AT THE END OF THE YEAR AND STI LL SHOWN AS PAYABLE IN THE ACCOUNTS. THE ACT OF PAYMENT IS THE LAST STEP IN DISCHARGING ANY LIABILITY AND IT ARISES ONLY WHEN T HERE IS A LIABILITY TO PAY AND THE AMOUNT IS PAYABLE TO THE P AYEE. MERELY BECAUSE THE ENTIRE LIABILITY IS' DISCHARGED BY MAKI NG THE PAYMENT DURING THE YEAR ITSELF, IT CANNOT BE SAID T HAT THE LIABILITY IS NOT INCURRED AND THE AMOUNT IS NOT PAY ABLE IN THE INITIAL STAGE. IF THE AMOUNT IS NOT PAYABLE, THE QU ESTION OF PAYMENT TO THE PAYEE DOES NOT ARISE. THUS, THE EXPR ESSION 'PAYABLE' IN SECTION 40(A)(IA) IS A STAGE PRIOR TO PAYMENT AND COVERS 'PAID' ALSO ON WHICH TAX IS DEDUCTIBLE AT SO URCE UNDER CHAPTER XVIIB. IN THIS CONTEXT, REFERENCE CAN BE MA DE TO THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARKHAN N. TUNVAR (357 ITR 312) WHEREIN THE HC HAS CATEGORICALLY, HELD THAT SECTION 40(A)(IA) WOULD CO VER NOT ONLY TO THE AMOUNTS WHICH ARE PAYABLE AS ON 31ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY T IME. DURING THE YEAR, OF COURSE, AS LONG AS THE OTHER REQUIREME NTS OF THE SAID PROVISION EXIST AND THE DECISION OF THE SPECIA L BENCH OF THE TRIBUNAL IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS DOES NOT LAY DOWN CORRECT LAW. THIS LEGAL POSITION WAS ALSO CLARIFIED BY THE BOARD IN THE CIRCULAR DATED 16-12-2013, WHICH READS AS UNDER: IT HAS BEEN BROUGHT TO THE NOTICE OF THE BOARD THAT THERE ARE CONFLICTING INTERPRETATIONS BY JUDICIAL AUTHORI TIES REGARDING THE APPLICABILITY OF THE PROVISIONS OF SE CTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 ('THE ACT') W ITH REGARD TO THE AMOUNT NOT DEDUCTIBLE IN COMPUTING THE INCOM E CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION'. 2. SECTION 40(A)(IA) OF THE ACT READS AS UNDER : 6 .ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROY ALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO RESIDENT OR AMOUNTS PAYABLE TO A CONTRAC TOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK) , ON WHICH TAX IS DEDUCTABLE AT SOURCE UNDER CHAPTER XVI I-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCT ION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFI ED IN SUB SECTION (1) SECTION 139.. 3. IN THE CASE OF MERILYN SHIPPING & TRANSPORTS V. ADDL. CIT [2012] 20 TAXMANN.COM 244 (VISAKHAPATNAM) IT WAS HE LD BY SPECIAL BENCH OF ITAT, VISHAKHAPATNAM, THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD AP PLY ONLY TO THE AMOUNT WHICH REMAINED PAYABLE AT THE END OF THE RELEVANT FINANCIAL YEAR AND COULD NOT BE INVOKED TO DISALLOW THE AMOUNT WHICH HAD ACTUALLY BEEN PAID DU RING THE PREVIOUS YEAR WITHOUT DEDUCTION OF TAX AT SOURC E. THE ORDER OF THE SPECIAL BENCH HAS SINCE BEEN PUT UNDER INTERIM SUSPENSION BY THE ANDHRA PRADESH HIGH COURT. 3.1 THE HON'BLE CALCUTTA HIGH COURT AND HON'BLE GUJ ARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X, KOLKATA-XI V. CRESCENT EXPORTS SYNDICATE [2013] 33 TAXMANN.COM 250 (CALCUTTA) AND COMMISSIONER OF INCO ME- TAX-IV V. SIKANDARKHAN N TUNVAR [2013] 33 TAXMANN.C OM 133 (GUJARAT) RESPECTIVELY, HAVE HELD THAT SECTION 40(A)(IA) OF THE ACT WOULD COVER NOT ONLY THE AMOUNTS WHICH A RE PAYABLE AT THE END OF THE PREVIOUS YEAR BUT ALSO WH ICH ARE PAYABLE AT ANY TIME DURING THE YEAR. 3.2 THE HON'BLE HIGH COURTS HAVE FURTHER HELD THAT THE INTENTION OF THE LEGISLATION WAS TO DISALLOW CERTAI N TYPES OF EXPENSE, SUBJECT TO PROVISIONS OF CHAPTER XVII-B WH ICH AT PAYABLE AT ANY TIME DURING THE YEAR BUT NO TAX WAS DEDUCTED AT SOURCE OR IF DEDUCTED WAS NOT PAID WITH IN THE STIPULATED TIME. THERE IS NO SUCH CONDITION THAT AM OUNT SHOULD REMAIN PAYABLE AT THE END OF THE YEAR. 3.3 THE HON'BLE ALLAHABAD HIGH COURT IN CIT V. VEC TOR SHIPPING SERVICE (P.) LTD. [2013] 38 TAXMANN.COM 77 (ALLAHABAD) HAS AFFIRMED THE DECISION OF THE SPECIA L BENCH IN MERILYN SHIPPING THAT FOR DISALLOWANCE UNDER SEC TION 40(A)(IA) OF THE ACT, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID DURING THE YEAR. HOWEVER, THE DECISIONS OF THE HON'BLE GUJARAT AND CALCUTTA HIGH COURTS (SUPRA) WERE NOT BROUGHT TO THE ATTENTION OF THE HO N'BLE ALLAHABAD HIGH COURT. 3.4 IN THE CASE OF ACIT, CIRCLE 4(2), MUMBAI V. RIS HTI STOCK AND SHARES PUT. LTD . IN ITA NO. 112/MUM/2012, HON'BLE ITAT, MUMBAI IN ITS ORDER DATED 2-8-2013 HAS EXAMIN ED THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT (S UPRA) AS REGARDS TO SECTION 40(A)(IA) OF THE ACT AND CONCLUD ED THAT THE SAME WAS AN 'ORBITER DICTA' WHILE THE DECISIONS OF THE HON'BLE GUJARAT AND CALCUTTA HIGH COURT (SUPRA) WER E 'RATIO DECIDENDI. THE ITAT ACCORDINGLY APPLIED THE VIEW T AKEN BY THE HON'BLE GUJARAT AND CALCUTTA HIGH COURT AS RATI O DECIDENDI PREVAILS OVER AN ORBITER DICTA. 7 4. AFTER CAREFUL EXAMINATION OF THE ISSUE, THE BOAR D IS OF THE CONSIDERED VIEW THAT THE PROVISION OF SECTION 40(A) (IA) OF THE ACT WOULD COVER NOT ONLY THE AMOUNTS WHICH ARE PAYA BLE AS ON 31ST MARCH OF A PREVIOUS YEAR BUT ALSO AMOUNT S WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR. THE STATUTORY PROVISIONS ARE AMPLY CLEAR AND IN THE CON TEXT OF SECTION 40(A)(IA) OF THE ACT THE TERM 'PAYABLE' WOU LD INCLUDE 'AMOUNTS WHICH ARE PAID DURING THE PREVIOUS YEAR'. 3.3.3 IN THE LIGHT OF THE ABOVE DISCUSSION, THE CO NTENTION OF THE APPELLANT THA T PROVISIONS OF SEC. 40(A)(IA) OF THE I.T.ACT ARE ATTRACTED ONLY IN RESPECT OF SUMS , WHICH ARE 'PAYABLE' AT THE END OF THE YEAR AND NOT TO SUMS WHICH HAVE ALREADY BEEN PA ID, IS HELD TO BE WITHOUT ANY MERIT AND ACCORDINGLY REJECTED . 3.3.4 AS REGARDS THE CONTENTION OF THE APPELLANT THAT THE SUB CONTRACTOR (I.E.OMKAR SAMB AND ASSOCIATES) TO WHOM THE PAYMENTS WERE MADE DID NOT FINALIZE THE WORK AND DI D NOT PRODUCE THE ACCOUNTS IN RESPECT OF THE SAID PROJECT NOR COMPLETED THE WORKS ALLOTTED TO THEM; SUCH ISSUES AND DISPUTE S BETWEEN THE PARTIES ARE OF NO CONSEQUENCE TO THE ISSUE ON HAND WHEN THE AMOUNT WAS DEDUCTED FROM THE GROSS CONTRACT RECEIPT S IN THE P & L A/C AND CLAIMED AS EXPENDITURE FOR THIS YEAR. EVE N IF THE PROJECT WAS CANCELLED BY THE AUTHORITIES FOR THE NON PERFOR MANCE OF THE WORK IN MAY 2006, THE APPELLANT CANNOT BE ABSOLVED OF CONSEQUENCES OF BELATED REMITTANCE OF TDS UNDER SEC . 40A(IA) AS IT IS SUBSEQUENT EVENT AND IN ANY CASE THE APPELLANT H AS NOT PLACED ANY MATERIAL ON RECORD TO SHOW THAT IT REPAID THE AMOUNT RECEIVED TOWARDS EXECUTION OF CONTRACT TO THE CONTR ACTEE DEPARTMENT ON CANCELLATION OF CONTRACT IN QUESTION. IN SUCH CIRCUMSTANCES, THE CONTENTIONS RAISED BY THE APPELL ANT REGARDING DISPUTES WITH SUB-CONTRACTORS ETC. HAVE N O RELEVANCE TO THE ISSUE ON HAND AND ACCORDINGLY THE SAME ARE REJECTED. 3 . 3.5 FOR THE FOREGO I NG REASONS , EVEN ON MERITS THE AO I S JUSTIFIED I N I N VOK I NG THE PROVIS I ONS OF SEC . 40(A)(IA) TO THE I MPUGNED PAYMENT TO SUB-CONT R ACTOR AND THE ADDITION OF RS . 1,42,47,768/- MADE BY THE AO ON THIS GROUND DOES NO T CA LL FOR ANY I NTERFERENCE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.D.R. TOOK US THROUGH THE FINDINGS OF LD.CIT(A) AND SUPPORTED THE ORDER OF AO. 6. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT T O DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF 8 TDS. BEFORE LD.CIT(A), AN ARGUMENT WAS MADE BY THE ASSE SSEE THAT THE PAYMENT MADE TO SUB-CONTRACT WAS AN ADVANC E AND NOT DEBITED TO PROFIT AND LOSS ACCOUNT AND THEREFORE IT DID NOT FALL WITHIN THE AMBIT OF SEC.40(A)(IA) OF THE ACT. IT WAS FURTHER CONTENDED THAT EVEN OTHERWISE, SEC.40(A)(IA) OF THE ACT IS APPLICABLE ONLY TO THE EXPENDITURE PAYABLE AND NOT TO T HE PAYMENTS MADE TOWARDS EXPENDITURE ALREADY MADE DUR ING THE YEAR. WE FIND THAT LD.CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND REFERRING TO THE PROFIT AND LOSS ACCOU NT HAS GIVEN A CATEGORICAL FINDING THAT THE SUBMISSION OF THE ASS ESSEE WITH RESPECT TO THE AMOUNT PAID WAS AN ADVANCE AND NO T CLAIMED AS EXPENDITURE, IS CONTRARY TO THE FACTS AS THE AMOUNT WAS FIRST INCLUDED IN THE GROSS CONTRACT RECEIPTS AND THEREAFTER IT WAS REDUCED FROM IT AND THE LD.CIT(A) HAS ALSO REPRODUCED THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE TO SUPPORT HIS FINDIN GS. THEREAFTER ON THE ARGUMENT OF THE ASSESSEE THAT THE P ROVISIONS OF SEC.40(A)(IA) OF THE ACT ARE NOT APPLICABLE TO PAYMENTS ALREAD Y MADE DURING THE YEAR, LD.CIT(A) AFTER REFERRING TO THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKAND ARKHAN N. TUNVAR (2013) 33 TAXMANN.COM 133 (GUJ) NOTED THAT HON BLE GUJARAT HIGH COURT HELD THAT SEC.40(A)(IA) OF THE ACT WO ULD COVER NOT ONLY THE AMOUNTS WHICH ARE PAYABLE AT THE END OF THE PREVIOUS YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME D URING THE YEAR. HE THEREAFTER RELYING ON THE BOARD CIRCULAR UPHE LD THE ORDER OF AO. WE FIND THAT HONBLE APEX COURT IN THE CA SE OF PALAM GAS SERVICES VS. CIT (2017) 394 ITR 300 (SC) HAS HELD THAT THE WORD PAYABLE OCCURRING IN SEC.40(A)(IA) OF THE ACT NOT ONLY COVERS CASES WHERE THE AMOUNT IS YET TO BE PAID BUT ALSO 9 THOSE CASES WHERE THE AMOUNT HAS ACTUALLY BEEN PAID. BEFORE US, NO MATERIAL HAS BEEN PLACED ON RECORD BY ASSESSEE T O POINT OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). THUS, THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON 12 TH DAY OF JANUARY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH JANUARY, 2018. YAMINI '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-2, PUNE. CIT-I, PUNE. '#$ %%&',) &', / DR, ITAT, A PUNE; $+,-/ GUARD FILE. / BY ORDER , // TRUE COPY // // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.