ITO, Ward - 32(2), Kolkata, Kolkata V. Vivek Kedia, Kolkata

ITA 1040/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54693 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Retrospective amendment
• Section: 139

Judgement Text

, A , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA ( ) . . , , , , , , ) [BEFORE SRI S.V. MEHROTRA, A.M. & SRI MAHAVIR SING H, J.M.] ! ! ! ! / I.T.A NO. 1040/KOL/2011 '# $% / ASSESSMENT YEAR : 2008-2009 INCOME TAX OFFICER, WARD-32(2), KOLKATA -VS.- VIVEK KEDIA, KOLKATA (PAN : AESPK 3258 E) ( &' /APPELLANT ) ( ()&' / RESPONDENT ) FOR THE APPELLANT : SHRI S.K. ROY, D.R. FOR THE RESPONDENT : SHRI MIRAJ D. SHAH, A.R. * / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XIX, KOLKATA DATED 18.05.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL HAD FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,77,720/-. THE ASSESS MENT WAS COMPLETED AT A TOTAL INCOME OF RS.36,,45,030/-, INTER ALIA, MAKING FOLLOWING ADDIT IONS ON ACCOUNT OF NON-DEDUCTION OF TDS :- (A) ANNELLING CHARGES RS. 9,29,003/- (B) CARRIAGE INWARD RS.13,41,026/- (C) DELIVERY CHARGES RS. 5,25,976/- (D) WAREHOUSING EXPENSES RS. 2,33,171/- LD. CIT(APPEALS) DELETED THE DISALLOWANCES, INTER A LIA OBSERVING AS UNDER :- THUS, FROM THE CLAUSE (A) OF SECTION 40(A)(IA), IT IS APPARENT THAT WHERE THE TAX WAS DEDUCTIBLE AND WAS DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR AND THE AMOUNT SO DEDUCTED HAS BEEN PAID ON OR BEFO RE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, THE AMOUNT PAID/PAY ABLE SHOULD BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR TO WHICH SUCH PAYMENTS BELONGED TO AND THERE WOULD BE NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. PRIOR TO THE AMENDMENT IN SECTION 40(A)(IA) BY THE FINANC E ACT, 2008, THE DEDUCTOR WAS REQUIRED TO MAKE THE PAYMENT BEFORE THE EXPIRY OF THE TIME PRESCRIBED ITA NO. 1040/KOL../2011 2 UNDER SUB-SECTION (1) OF SECTION 200 TO COME OUT OF RIGORS OF SECTION 40(A)(IA) OF THE ACT. IN THE CASE OF APPELLANT, THOUGH THE PA YMENTS WERE MADE ON ACCOUNT OF ANNELLING CHARGES, CARRIAGE INWARD, DELIVERY CHA RGES AND WAREHOUSING CHARGES FROM THE MONTH OF APRIL, 2007 TO MARCH, 200 8, BUT HE HAS DEDUCTED THE TAX ON THE ENTIRE PAYMENT UNDER VARIOUS HEADS IN TH E MONTH OF MARCH, 2008 AND ALSO PAID THE SAME BEFORE THE DUE DATE SPECIFIED IN SECTION 139(1) OF THE ACT. IN VIEW OF ABOVE FACTS AND AMENDED PROVISIONS OF SECTI ON 40(A)(IA) OF THE ACT, I AM OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED IN I NVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO MAKE THE DISALLOWAN CES ON ACCOUNT OF ANNELLING CHARGES, CARRIAGE INWARD, DELIVERY CHARGES AND THE WAREHOUSING EXPENSES. 3. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON TH E ORDER OF ASSESSING OFFICER. 4. LD. COUNSEL FOR THE ASSESEE REFERRED TO THE LEDG ER ACCOUNTS OF RESPECTIVE EXPENSES AND POINTED OUT THAT TDS HAD BEEN MADE IN THE MONTH OF MARCH, 2008. HE SUBMITTED THAT THE AMOUNT HAD BEEN PAID BEFORE DUE DATE OF FILING OF R ETURN UNDER SECTION 139 OF THE ACT AND ON THIS COUNT, THERE IS NO DISPUTE. LD. COUNSEL FOR TH E ASSESEE SUBMITTED THAT THE ASSESSEES CASE IS COVERED BY CLAUSE (A) TO SECTION 40(IA) AS WAS SUBS TITUTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS OF THE CASE. THE FACTS ARE NOT DISPUTED. THE TDS HAD BEEN MADE IN THE MONTH OF MARCH, 2008 AND DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN. SECTION 40(A)(IA) PRE SCRIBES THE CIRCUMSTANCES UNDER WHICH, IN CASE THE ASSESSEE FAILS TO DEDUCT OR AFTER DEDUCTING TO DEPOSIT THE TAX, THE PAYMENTS CAN BE DISALLOWED. SECTION 40(A)(IA) AS IT STOOD PRIOR TO SUBSTITUTION BY THE FINANCE ACT, 2010 W.E.F. 01.04.2010 STOOD AS UNDER :- 40(A)(IA) :- ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 BY THE FINANCE ACT, 2008, W.E.F. 1.4.2005. (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE T HE DUE DATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139; OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. FROM BARE PERUSAL OF CLAUSE (A), IT IS EVIDENT THAT IF THE TAX WAS DEDUCTED IN THE LAST MONTH OF THE PREVIOUS YEAR AND PAID BEFORE THE DUE DATE PRES CRIBED UNDER SECTION 139(1) FOR FILING OF ITA NO. 1040/KOL../2011 3 RETURN, THEN DEDUCTION IS TO BE ALLOWED. CLAUSES (A ) AND (B) NOTED ABOVE HAD BEEN FURTHER SUBSTITUTED BY THE FINANCE ACT, 2010 W.E.F. 01.04.2 010 BY VIRTUE OF WHICH IF THE PAYMENT IS MADE BEFORE THE DUE DATE SPECIFIED UNDER SECTION 13 9(1) THEN NO DISALLOWANCE CAN BE MADE. THIS AMENDMENT HAS BEEN HELD TO BE PROSPECTIVE IN N ATURE BY THE DECISION DATED 09.09.2011 OF ITAT, SPECIAL BENCH, MUMBAI IN THE CASE OF M/S. BHA RATI SHIPYARD LIMITED VS.- DCIT [ITA NO. 2404/MUM./2009, ASSESSMENT YEAR 2005-06]. THERE FORE, PRIOR TO THIS AMENDMENT, THE DISALLOWANCES ON ACCOUNT OF NON-PAYMENT OF TDS ARE COVERED BY SECTION 40(IA) AS IT STOOD PRIOR TO AMENDMENT BY FINANCE ACT, 2010. THE PRESEN T APPEAL IS FOR ASSESSMENT YEAR 2008-09. THEREFORE, IT WILL BE GOVERNED BY THE AMENDED PROVI SIONS AS PER FINANCE ACT, 2008. WE FIND THAT THIS ISSUE IS ALSO COVERED BY THE DECISION DAT ED 09.07.2010 OF ITAT, NEW DELHI IN ITA NO. 2045/DEL./2010 FOR ASSESSMENT YEAR 2007-08 IN THE C ASE OF M/S. H.S. MOHINDRA TRADERS VS.- ITO, WHEREIN TRIBUNAL HAS OBSERVED AS UNDER :- THE UNDISPUTED FACTS ARE THAT THE TAX IN RESP ECT OF ABOVE MENTIONED EXPENDITURES WAS DEDUCTED BY THE ASSESSEE IN THE MO NTH OF MARCH, 2007 AND THE TDS SO DEDUCTION WAS PAID MUCH BEFORE THE DUE DATE OF FILI NG OF THE RETURN OF INCOME AS PRESCRIBED IN SECTION 139(1) OF THE IT ACT, 1961 IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO D EDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIF IED IN SUB-SECTION (1) OF SECTION 139 ..IF THE TAX IS DEDUCTED DURING THE LAST MONTH O F PREVIOUS YEAR, THEN, THE LIABILITY OF THE ASSESSEE IS TO PAY THE SAME FOR THE ALLOWAB ILITY OF THE SAID EXPENDITURE ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. 5.1. WE, THEREFORE, CONFIRM THE ORDER OF LD. CIT(AP PEALS). WE MAY FURTHER POINT OUT THAT LD. CIT(APPEALS) HAD ALSO RELIED ON THE AMENDMENT BY FI NANCE ACT, 2010 TREATING THE SAME AS CURATIVE IN NATURE. HOWEVER, AFTER THE DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF BHARATI SHIPYARD LIMITED (SUPRA), THE REASONING GIVEN BY TH E LD. CIT(APPEALS) IN PARA 4.3 AT PAGE 13 DOES NOT HOLD GOOD. HOWEVER, THE REASONING GIVEN IN PARA 4.2, AS REPRODUCED EARLIER, IS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/ 11/2011. + , - * 25/11/2011. SD/- SD/- [ MAHAVIR SINGH / ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 25/ 11/ 2011 ITA NO. 1040/KOL../2011 4 COPY OF THE ORDER FORWARDED TO: 1. SHRI VIVEK KEDIA, 6, MARQUIS STREET, KOLKATA-16. 2 ITO, WARD-32(2), 10B, MIDDLETON ROW, 2 ND FLOOR, KOLKATA-700 071. 3. COMMISSIONER OF INCOME-TAX (APPEALS)- ,KOLKATA 4. CIT, WB- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.