ITO, Ward - 32(2), Kolkata, Kolkata V. Sk. Safiuddin, Kolkata

ITA 1041/KOL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8142 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2011
• Court: TRIBUNAL
• Department Lawyers: A S MONDAL
• Assessee Lawyers: I BAN ERJEE
• Section: 143(3); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND ! ! ! ! , '# ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SANJAY ARORA, AM] $ $ $ $ / I.T.A NO. 1041/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2008-09 INCOME-TAX OFFICER, WD-32(2), KOLKATA. VS. SK. SAF IUDDIN (PAN: AUHPS2758N) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI A. S. MONDAL FOR THE RESPONDENT: SHRI I. BANERJEE DATE OF HEARING: 21.08.2012 DATE OF PRONOUNCEMENT: 21.08.2012 '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XIX, KOLKATA IN APPEAL NO. 94/CIT(A)-XIX/ITO,WD-32(2)/KOL/10-11 DATED 16.05.20 11. ASSESSMENT WAS FRAMED BY ITO, WARD-32(2), KOLKATA U/S. 143(3) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DA TED 22.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE ADDITION OF RS.76,84,000/- ON ACCOUNT OF PAYMENT O F EMBROIDERY, DESIGN AND STITCHING CHARGES WHICH WAS MADE AS PER PROVISION OF SUB CLAUSE (B) O F CLAUSE (IA) OF SECTION 40(A) READ WITH SECTION 194C OF THE ACT. FOR THIS REVENUE HAS RAIS ED FOLLOWING 2 EFFECTIVE GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A)-XIX, KOLKATA HAS ERRED IN DELETING THE ADDITION OF RS.76,84,000/- WH ICH WAS MADE AS PER PROVISION OF SUB CLAUSE (B) OF CLAUSE (IA) OF SECTION 40(A) READ WIT H SECTION 194C OF THE INCOME TAX ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XIX, KOLKATA HAS ERRED IN DELETING THE SAID ADDITION BY CONSIDERING THE AMENDMENT OF SECTION 40(A)(IA) OF THE INCOME TAX ACT BY FINANCE ACT, 2010 AS CURATIVE IN NATURE AND ALSO APPLIES TO THE EARLIER YEARS, THOUGH THE AMENDMENT OF THIS SECTION BY THE FINANCE ACT, 2010 WAS BROUGHT TO EFFECT FROM 1/4/2010. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE AO DISALLOWED THE SUM OF RS.76,84,000/- U/S. 40(A)(IA) OF THE ACT BEING THE PAYMENT OF EMBROIDER Y, DESIGN AND STITCHING CHARGES FOR THE REASON THAT THE ASSESSEE HAS FAILED TO PAY THE TAX DEDUCTED U/S. 194C WITH THE DUE DATE I.E. BY 31.3.2008. IN APPEAL BEFORE CIT(A), HE RESPECTFULL Y FOLLOWING THE DECISIONS OF ITAT, KOLKATA, 2 ITA 1041/K/2011 SK. SAFIUDDIN A.Y. 08-09 MUMBAI AND AHMEDABAD DIRECTED THE AO TO DELETE THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT SINCE IN THIS CASE ASSESSEE HAS DEDUCTED TAX ON THE LABOUR PAYMENT AND SAME WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 4. WE FIND THE UNDISPUTED FACTS ARE THAT THE ASSESS EE HAS PAID THE LABOUR CHARGES, DEDUCTED THE TAX U/S. 194C OF THE ACT, BUT PAYMENT OF TAX SO DEDUCTED WAS MADE ON 28.06.2008, WHICH IS BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U /S. 139(1) OF THE ACT. WE FIND THAT THE FACTS ARE NOT IN DISPUTE AND THIS ISSUE IS NOW SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE BY THE DECISION OF HONBLE CALCUTTA HIGH CO URT IN THE CASE OF CIT VS. VIRGIN CREATIONS IN ITAT NO.302 OF 2011, GA NO.3200/2011 D ATED 23.11.2011, WHEREIN HONBLE HIGH COURT HAS CONFIRMED COORDINATE BENCH DECISION OF ITAT IN ITA NO.267/K/2009 A BENCH, IN THE CASE OF VIRGIN CREATIONS VS. ITO DATE D 15.12.2010. TRIBUNAL HAS CONSIDERED THE DECISIONS OF MUMBAI BENCH OF THIS ITAT IN THE CASE OF M/S. BANSAL PARIVAHAN (INDIA) P. LTD. VS. ITO IN ITA NO.2355/MUM/10 AND OF AHMEDABAD BENC H B IN ITA NO. 3983/AHD/2008 FOR AY 2005-06 DATED 03.12.2010. TRIBUNAL CONSIDER ED THE AMENDMENT MADE IN THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2010 AS CURATIVE AND REMEDIAL IN NATURE BY HOLDING AS UNDER: AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT THOUGH THE LD. D.R. SUBMITTED THAT THE DECISIONS OF THE COORDINATE BENCHES ARE NOT BINDING AND THE KOLK ATA BENCHES MAY TAKE A DIFFERENT VIEW, SINCE MUMBAI BENCH AFTER ANALYZING THE PROVIS IONS OF SECTION 40(A)(IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME I NCLUDING THE SUGGESTION MADE BY THE INDUSTRY IN THE FORM OF REPRESENTATION IN THEIR PRE -BUDGET MEMORANDUM TO THE HONBLE FINANCE MINISTER AND BY APPLYING THE DECISION OF TH E HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD., HAS OBSERVED THAT THE PROVIS IONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ACT 201 0 THUS WERE RESULTING INTO UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUI NE HARDSHIPS TO THE ASSESSEES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PR OVISIONS BY DEDUCTING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S 139(1). IN ORDER TO REM EDY THIS POSITION AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEES B ELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIONS OF SECT ION 40(A)(IA) BY THE FINANCE ACT 2010. THE SAID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL/CURATIVE IN NATURE AS HELD BY HONBLE SUPREME COURT IN THE CASE OF ALL IED MOTORS PVT. LTD. (SUPRA) AND MOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THEREFORE WOUL D APPLY RETROSPECTIVELY W.E.F. 1ST APRIL, 2005. IN THE CASE OF R.B. JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE HONBLE SUPREME COURT THAT A PROVISO WHICH IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, RE QUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CA N BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUNT OF TAX DEDUCTED AT SOU RCE FROM THE FREIGHT CHARGES DURING THE PERIOD 01/04/2005 TO 28/02/2006 WAS PAID BY THE ASS ESSEE IN THE MONTHS OF JULY AND AUGUST 2006 I.E. WELL BEFORE THE DUE DATE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(A) ON ACC OUNT OF FREIGHT CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINA BLE AS PER THE AMENDMENTS MADE IN THE 3 ITA 1041/K/2011 SK. SAFIUDDIN A.Y. 08-09 SAID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEI NG REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION, WE FIND NO REASON TO DE VIATE FROM THE DECISIONS OF THE ITATS MUMBAI BENCH AND AHMEDABAD BENCH, IN THE ABSENCE OF A CONTRARY VIEW, EXCEPT THE OTHER BENCHES DECISION OR ANY OTHER HIGH COURT. THEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCHES (SUPRA), WE ALLOW THE GRO UND NOS. 1 TO 3 OF THE ASSESSEES APPEAL. 5. WE FIND THAT THE ABOVE VIEW OF THIS TRIBUNAL WAS CONFIRMED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA) BY HO LDING AS UNDER: WE HAVE HEARD MR. NIZAMUDDIN AND GONE THROUGH THE I MPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH T HE PRESENT APPEAL IS SOUGHT TO BE ADMITTED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEED S TO TAKE DECISION AS TO WHETHER SECTION 40(A) (IA) IS HAVING RETROSPECTIVE OPERATION OR NOT . THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND A PRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FA CTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED B Y THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CAS E OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECT IVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTIO N CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE S UPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. 6. ONCE THE ISSUE IS DECIDED BY HONBLE JURISDICTIO NAL HIGH COURT THAT THE AMENDMENT IN THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY F INANCE ACT, 2010 IS REMEDIAL AND CURATIVE IN NATURE AND TDS PAID ON OR BEFORE THE DUE DATE OF FI LING OF RETURN U/S. 139(1) OF THE ACT, DEDUCTION IN RESPECT TO THE AMOUNT ON WHICH TDS IS SO PAID, IS ALLOWABLE. IN THE PRESENT CASE THE ASSESSEE DEDUCTED TAX AND THE SAME WAS DEPOSITE D ON 28.06.2008 FOR THE AY 2008-09 THAT MEANS THE TDS WAS PAID BEFORE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT BY THE ASSESSEE, HENCE, WE ALLOW THE CLAIM OF ASSESSEE. T HIS ISSUE OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 8. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- ! ! ! ! , '# , (SANJAY ARORA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( /# /# /# /#) )) ) DATED: 21ST AUGUST, 2012 01 %2 3 JD.(SR.P.S.) 4 ITA 1041/K/2011 SK. SAFIUDDIN A.Y. 08-09 '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO, WARD-32(2), KOLKATA. 2 ,-*+ / RESPONDENT SK. SAFIUDDIN, C/O, MODERN ENTERPRISE S, 11/1B, MARQUIS STREET, KOLKATA-700 016. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA. 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, /ASSTT. REGISTRAR .