Sh. Reethu Singh Cheema, Patiala V. Addl. CIT, Patiala

ITA 1042/CHANDI/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0642 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Additional evidence; TDS
• Section: 40(a)(ia); 201(1); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , ! ' , $ % & ' ( , ' BEFORE: SMT.DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, A M . / ITA NO.1042/CHD/2016 / ASSESSMENT YEARS :2011-12 SHRI REETHU SINGH CHEEMA, # 59-B, BHADSON ROAD, SARABHA NAGAR, PATIALA. THE ADDL. CIT, PATIALA RANGE, PATIALA. ./ PAN: AEKPC8430Q /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADV. ! / REVENUE BY : SHRI MANJIT SINGH, SR. DR ' # $ /DATE OF HEARING : 25.02.2019 %&'( $ /DATE OF PRONOUNCEMENT: 27.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIALA (IN SHORT CIT(A) DATED 31.8.20 16 RELATING TO ASSESSMENT YEAR 2011-12, PASSED U/S 250(6) OF TH E INCOME TAX AT, 1961 (HEREINAFTER REFERRED TO AS AC T). 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING TH E ADDITION OF RS. 11.64.768 - FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF SURVEY CHARGES PAID APPLYING THE ITA 10 42/CHD/2016 A .Y 211-12 2 PROVISIONS OF SECTION 40(A)(IA) WHICH ARE NOT APPLICAB LE AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING T HE ADDITION OF RS. 69,11,040/- FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF BLASTING JOB PAYMENT S PAID APPLYING THE PROVISIONS OF SECTION 40(A)(IA) WH ICH ARE NOT APPLICABLE AND AS SUCH THE ADDITION UPHELD I S ILLEGAL, ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS-ON FACTS IN UPHOLDING THE ADDITION OF RS. 2,86,000/- FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF SOIL EXPENSES PAID APPLYING THE PROVISIONS OF SECTION 40(A)(IA) WHICH ARE NOT APPLICAB LE AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING T HE ADDITION OF RS. 12,73,7637- FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF HIRE CHARGES PAID APPLYING THE PROVISIONS OF SECTION 40(A)(IA) WHICH ARE NOT APPLICA BLE AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING T HE ADDITION OF RS. 2,34,8207- FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF SAFETY CHARGES PAID APPLYING THE PROVISIONS OF SECTION 40(A)(IA) WHICH ARE NOT APPLICA BLE AND AS SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY A ND UNJUSTIFIED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING TH E ADDITION OF RS. 1,13,84,4537- FOR ALLEGED NON DEDUCTION OF TDS ON ACCOUNT OF RENT PAID APPLYING THE PROVISI ONS OF SECTION 40(A)(IA) WHICH ARE NOT APPLICABLE AND A S SUCH THE ADDITION UPHELD IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 7. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LA W AND FACTS OF THE CASE AND IS, THUS, UNTENABLE. 3. ALL THE GROUNDS RAISED BY THE ASSESSEE RELATE TO DISALLOWANCE OF EXPENSES MADE U/S 40(A)(IA) OF THE ACT, ON ACCOUNT OF NON DEDUCTION OF TAX A SOURCE ON THE SAM E. ITA 10 42/CHD/2016 A .Y 211-12 3 4. BRIEF FACTS RELATING TO THE CASE ARE THAT THE AS SESSEE IS A CONTRACTOR DERIVING INCOME FROM CIVIL CONTRACT WO RK. THE A.O. HAD MADE DISALLOWANCE OF THE FOLLOWING EXPENSE S FOR FAILURE OF THE ASSESSEE TO MAKE TDS THEREBY BY INVO KING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT: 1. SURVEY CHARGES RS.11,64,768/- 2. BLASTING JOB PAYMENTS RS.69,11,040/- 3. SOIL EXPENSES RS. 2,86,000/- 4. HIRE CHARGES RS.12,73,763/- 5. SAFETY CHARGES RS.2,34,820/- 6. RENT RS.1,13,84,453/- THUS, DISALLOWANCE TO THE TUNE OF RS.2,12,50,844/- HAD BEEN MADE IN TOTAL. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.C IT(A) WHO AFTER CONSIDERING ASSESSEES CONTENTIONS ON ALL THE AFORESAID EXPENSES HELD THAT THE DISALLOWANCE HAD BEEN RIGHTLY MADE. 6. BEFORE US, THE LD. COUNSEL FOR ASSESSEE FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES D ATED 6 TH AUGUST 2018 CONTENDING THEREIN THAT THE ASSESSEE HA S RECEIVED CERTIFICATE OF ACCOUNTANT UNDER FIRST PROV ISO TO SECTION 201(1) OF THE ACT, CERTIFYING THE PAYMENT O F TAXES BY THE PAYEES ON BLASTING JOB AND MACHINERY RENT PAYM ENTS AND THE INCLUSION OF THE SAID AMOUNTS IN THEIR RETU RN OF INCOME. CERTIFICATES FROM 17 PARTIES RUNNING IN 3 4 PAGES WERE PLACED BEFORE US AS ADDITIONAL EVIDENCES. IT W AS CONTENDED THAT IN VIEW OF THE SAME NO DISALLOWANCE U/S 40(A)(IA) WAS WARRANTED WITH RESPECT TO THE SAID PA YMENTS. IT WAS FURTHER CONTENDED THAT THE SAME COULD NOT BE SU BMITTED ITA 10 42/CHD/2016 A .Y 211-12 4 EARLIER FOR WANT OF TIME AND IT WAS PLEADED THAT SI NCE THESE EVIDENCES WENT TO THE ROOT OF THE MATTER THE SAME B E ADMITTED FOR ADJUDICATION. 7. DURING THE COURSE OF HEARING BEFORE US,THE LD. C OUNSEL FOR ASSESSEE POINTED OUT THAT THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT HAD BEEN AMENDED BY THE FINANC E ACT, 2012 W.E.F. 1.4.2013 PROVIDING FOR NO DISALLOWANCE OF EXPENSES WHERE THE PAYEES HAD PAID TAXES ON THE SAM E AND CERTIFICATE OF AN ACCOUNTANT TO THIS EFFECT, AS PRE SCRIBED U/S 201(1) OF THE ACT, HAD BEEN FILED BY THE ASSESSEE. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THIS AMENDMEN T HAS BEEN HELD TO BE CURATIVE AND HENCE RETROSPECTIVE IN ITS APPLICATION IN VARIOUS DECISIONS OF THE I.T.A.T. AN D EVEN THE OF THE HON'BLE HIGH COURTS. THE LD. COUNSEL FOR ASS ESSEE THEREFORE, PLEADED THAT THE ADDITIONAL EVIDENCES NO W BEING FILED BY HIM, IN THE FORM OF CERTIFICATE OF AN ACCO UNTANT CERTIFYING PAYMENT OF TAXES BY PAYEES ON THE IMPUGN ED EXPENSES, BE ADMITTED AS ADDITIONAL EVIDENCES SINCE THEY WENT TO THE ROOT OF THE MATTER AND WERE ESSENTIAL F OR THE ADJUDICATION OF THE ISSUE AT HAND. 8. THE LD. DR DID NOT OBJECT TO THE SAME. 9. WE HAVE HEARD BOTH THE PARTIES AND FIND THAT TH E MATERIALITY OF THE ADDITIONAL EVIDENCES FOR ADJUDIC ATING THE ISSUE AT HAND RELATING TO DISALLOWANCE U/S 40(A)(IA ) HAS BEEN DULY DEMONSTRATED BY THE LD.COUNSEL FOR THE ASSESSE E. WE AGREE WITH THE LD. COUNSEL FOR ASSESSEE THAT NO DIS ALLOWANCE U/S 40(A)(IA) OF THE ACT IS WARRANTED WHERE THE ASS ESSEE ITA 10 42/CHD/2016 A .Y 211-12 5 DEMONSTRATES PAYMENT OF TAXES ON THE EXPENSES INVOL VED BY THE PAYEE BY FURNISHING NECESSARY CERTIFICATE OF AN ACCOUNTANT AS PROVIDED IN SECTION 201(1) OF THE ACT . WE ALSO AGREE WITH THE LD. COUNSEL FOR ASSESSEE THAT THE SA ID AMENDMENT TO SECTION 40(A)(IA), HAS BEEN HELD TO BE RETROSPECTIVE IN ITS APPLICATION. THE HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF PCIT -2,CHANDIGARH VS SH IVPAL SINGH CHOUDHARY IN ITA NO.558 OF 2017 DT.05-07-18 A ND IN THE CASE OF PR.CIT2 CHANDIGARH VS MOBISOFT TELESOLU TIONS PVT. LTD. IN ITA NO. 495 OF 2017 (O &M) DT.03-10-18 HAS HELD THE AFORESTATED AMENDMENT TO SECTION 40(A)(IA ) OF THE ACT TO BE RETROSPECTIVE. THE LD.DR HAS NOT BEEN ABL E TO CONTROVERT THE CONTENTIONS OF THE ASSESSEE IN THIS REGARD. WE THEREFORE ADMIT THE ADDITIONAL EVIDENCES FILED B Y THE ASSESSEE . FURTHER SINCE THE EVIDENCES NEED TO BE VERIFIED WE RESTORE THE ISSUE BACK TO THE A.O. TO VERIFY THE SAME AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- $ % & ' ( (DIVA SINGH) (ANNAPURNA GUPTA) , ' / JUDICIAL MEMBER * ' / ACCOUNTANT MEMBER $ /DATED: 27 TH MARCH, 2019 * * ITA 10 42/CHD/2016 A .Y 211-12 6 &) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE &) ' / BY ORDER, ! / ASSISTANT REGISTRAR