NESTOR BUILDERS & DEVELOPERS PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 13(1)(1), MUMBAI

ITA 1060/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2494 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITRA
• Keywords: Condonation of delay; TDS
• Section: 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 1060 / MUM . /2018 ( ASSESSMENT YEAR : 20 12 13 ) NESTOR BUILDERS & DEVELOPERS PVT. LTD. 402, NESTOR COURT, BAJI PRABHU DESHPANDE MARG, VILE PARLE (W) MUMBAI 400 056 PAN AACCB5344F . APPELLANT V/S INCOME TAX OFFICER WARD 1 3 ( 1 )(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI MRUNAL PAREKH REVENUE BY : SHRI S.K. MITRA DATE OF HEARING 12 . 1 2 .201 8 DATE OF ORDER 08.03.2019 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 7 TH JUNE 217 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2 1 , MUMBAI , FOR THE ASSESSMENT YEAR 20 1 2 1 3 . 2 . THERE IS A DELAY OF 162 DAYS IN FILING THE PRESENT APPEAL. THE ASSESSEE HAS FILED APPLICATION DATED 11 TH DECEMBER 2018, SEEKING CONDONATION OF DELAY. FURTHER, THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT EXPLAINING THE REASON FOR DELAY. IT IS EXPLAINED BY THE ASSESSEE THAT 2 NESTOR BUILDERS & DEVELOPERS PVT. LTD. DUE TO OVERSIGHT OF THE PERSON CONCERNED HAND LING TAX ISSUES, THE APPEAL CO ULD NOT BE FILED ON TIME. SEEKING CONDONATION OF DELAY LEARNED AUTHORISED REPRESENTATIVE RELIED UPON A NUMBER OF DECISIONS AS REFERRED TO IN THE DELAY CONDONATION PETITION. 3 . THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSED CONDONATION OF DELAY. 4 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IN MY VIEW, ASSESSEE SHOULD HAVE BEEN MORE DILIGENT AND CAREFUL IN DEALING WITH TAX MATTERS. HOWEVER, AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED AUTHORISED REP RESENTATIVE, I AM INCLINED TO TAKE A LENIENT VIEW AND CONDONE THE DELAY IN FILING THE APPEAL. THEREFORE, THE APPEAL IS ADMITTED FOR ADJUDICATION ON MERIT. 5 . GROUNDS NO.1 AND 2, BEING GENERAL IN NATURE DO NOT REQUIRE ADJUDICATION. 6 . IN GROUND NO.3 AND 4, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF ` 4 ,37,979, UNDER SECTION 40(A)(I A) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 7 . BRIEF FACTS ARE, THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPER. FOR THE ASSESSMENT YEAR UNDER DISPU TE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER 3 NESTOR BUILDERS & DEVELOPERS PVT. LTD. 2012, DECLARING TOTAL INCOME OF ` 2,25,004. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD PAID PROFESSIONAL FEES OF ` 2,44,952, TO A.H. WADIA TRUST AND ` 1,93,027, TOWARDS INSTALLATION AND COMMISSION CHARGES WITHOUT DEDUCTING TAX AT SOURCE. THEREFORE, THE ASSESSING OFFICER CALL E D U P ON THE ASSESSEE TO EXPLAIN WHY THE DEDUCTION CLAIMED TOWARDS THE AFORESAID PAYMENTS SHOULD NOT BE DI SALLOWED UNDER SECTION 40(A)(I A) OF THE ACT. ALLEGING THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION, THE ASSESSING OFFICER DISALLOWED THE AMOUNT OF ` 4,37,979, U /S 40(A)(I)(A) OF THE ACT. 8 . THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY , HOWEVER, LEARNED COMMISSIONER (APPEALS) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 9 . T HE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE AMOUNT OF ` 2,44,952, PAID TO A.H. WADIA WAS TOWARDS REIMBURSEMENT OF EXPENDITURE INCURRED ON BEHALF OF THE ASSESSEE. FURTHER EXPLAINING , IT WAS SUBMITTED THAT THE SAID TRUST WAS THE OWNER OF A PLOT WHICH THE ASSESSEE HAD ACQUIRED FOR ONE OF ITS PROJE CTS. HE SUBMITTED , A.H. WADIA TRUST, BEING A PUBLIC TRUST REQUIRES APPROVAL OF CHARITY COMMISSION FOR ALIENATION OF PROPERTY. HE SUBMITTED , THOUGH THE TRUST OBTAINED AN APPROVAL OF THE CHARITY COMMISSIONER, HOWEVER, THERE WAS 4 NESTOR BUILDERS & DEVELOPERS PVT. LTD. AN ERROR IN DESCRIPTION OF THE PROPERTY IN THE ORDER OF THE CHA RITY COMMISSIONER WHICH REQUIRED MODIFICATION. HE SUBMITTED , AS PER THE PROVISIONS O F LAW, APPLICATION FOR APPROVAL/ MODIFICATION NEEDS TO BE MADE BY THE LAND OWNER. THEREFORE, THE ASSESSEE REQUESTED A.H. WADIA TRUST TO APPL Y FOR MODIFICATION WHICH THEY AGREED BUT SUBJECT TO REIMBURSEMENT OF LEGAL FEES PAYABLE TO THEIR LAWYERS AND ADVOCATES. HE SUBMITTED , SINCE THE PROFESSIONAL FEES WAS ACTUALLY PAID BY THE TRUST TO THEIR LAWYER AND THE ASSESSEE ONLY REIMBURSE D THE PAYMENT MA DE BY THE TRUST , NO DISA LLOWANCE UNDER SECTION 40(A)(I A) OF THE ACT CAN BE MADE. 10 . AS REGARDS THE BALANCE AMOUNT OF ` 1,93,027, PAID WITHOUT DEDUCTING TAX, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THESE PAYMENTS WERE MADE TOWARDS PURCHASE OF MATERIAL ON WHICH VAT HAS ALSO BEEN PAID. HE SUBMITTED , SINCE THE PAYMENTS MADE WERE TOWARDS PURCHASE OF MATERIAL, PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE. CONSEQUENTLY, PROVISI ONS OF SECTION 4 0(A)(I A) OF THE ACT IS ALSO NOT APPLICABLE. WITHOUT PREJUDICE TO THE AFORESAID SUBMISSIONS, LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, ASSESSEE HAS DEDUCTED TAX @2% AS PER SECTION 194C OF THE ACT ON THE PAYMENTS OF ` .1,93,027, HENCE, NO DISALLOWANCE UNDE R SECTION 40(A)(IA) CAN BE MADE. IN THIS CONTEXT, HE FURNISHED A CHART SHOWING THE DETAILS OF PAYMENT MADE AND TAX DEDUCTED. 5 NESTOR BUILDERS & DEVELOPERS PVT. LTD. 11 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , FACTUAL SUBMISSIONS MADE BY THE ASSESSEE REQUIRES VERIFICATION BY THE ASSESSING OFFICER, HENCE, THE ISSUE MAY BE RESTORED TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 12 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSING OFFICER HAS DISALLOWED THE PAYMENT MADE OF ` 2,44,962, TO A.H. WADI A TRUST AND ` 1,93,027, TO EXCELS IOR MOTOR AND ELECTRIC MECHANIC WORKS, ON THE REASONING THAT THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION BEFORE HIM FOR NON DEDUCTION OF TAX AT SOURCE. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS SUBMITTED THA T THE PAYMENT MADE TO A.H. WADIA TRUST IS ONLY IN THE NATURE OF REIMBURSEMENT, HENCE, WILL NOT ATTRACT THE PROVISIONS OF SECTION 194J OF THE ACT. AS REG ARDS THE PAYMENT MADE TO EXCELS IOR MOTOR AND ELECTRIC MECHANIC WORKS, IT WAS SUBMITTED THAT PAYMENTS WER E FOR PURCHASE OF MATERIAL ON WHICH VAT HAS BEEN PAID. IN MY CONSIDERED OPINION, IF THE ASSESSEE THROUGH PROPER DOCUMENTARY EVIDENCE CAN PROVE THAT THE PAYMENT MADE TO A.H WADIA TRUST IS IN THE NATURE OF REIMBURSEMENT OF PROFESSIONAL FEES PAID BY THE SAID TRUST ON BEHALF OF THE ASSESSEE NO DISA LLOWANCE UNDER SECTION 40(A)(I A) OF THE ACT CAN BE MADE. SIMILARLY, IF THE ASSESSEE THROUGH PROPER DOCUMENTARY EVIDENCE CAN PROVE THAT PAYMENT OF ` 1,93,027, TO 6 NESTOR BUILDERS & DEVELOPERS PVT. LTD. EXCELS IOR MOTOR AND ELECTRIC MECHANIC WORKS IS TOWARDS PURCHASE OF MATERIAL FOR THE LIFT ON WHICH VAT HAS BEEN PAID, NO DISA LLOWANCE UNDER SECTION 40(A)(I A) OF THE ACT CAN BE MADE. FURTHER, IF ASSESSEES CLAIM THAT THE AMOUNT OF ` .1,93,027 WAS SUBJECTED TO TDS @2%, IS FOUND TO BE CORRECT, NO DISALLOWANCE UNDER SECTION 40(A)(IA) CAN BE MADE. SINCE , THE AFORESAID CLAIM S OF THE ASSESSEE HAVE NOT BEEN FACTUALLY VERIFIED EITHER BY THE ASSESSING OFFICER OR BY LEARNED COMMISSIONER (APPEALS), I DEEM IT APPROPRIATE TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR FACTU ALLY VERIFYING ASSESSEES CLAIM AND DECIDING THE ISSUE IN ACCORDANCE WITH LAW KEEPING IN VIEW THE OBSERVATIONS MADE BY ME HEREINABOVE . THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 13 . IN GROUND NO.5, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF ` 89,110, T OWARDS INTEREST ON LATE PAYMENT OF TDS. 14 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON VERIFYING THE A NNUAL I NFORMATION R EPORT (AIR) NOTICED THAT AN AMOUNT OF ` 89,110 , HAS BEEN SHOWN AS INTEREST ON LATE PAYMENT. ALLEGING THAT THE ASSESSEE FA ILED TO FURNISH THE REQUIRED DETAILS AND REASONABLE EXPLANATION, THE ASSESSING OFFICER DISALLOWED THE AMOUNT OF ` 89,110, AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 15 . THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF 7 NESTOR BUILDERS & DEVELOPERS PVT. LTD. THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THOUGH AS PER AIR INFORMATION, AN AMOUNT OF ` 46,510, HAS BEEN SHO WN AS LATE PAYMENT INTEREST, HOWEVER, THE ASSESSING OFFICER HAS NOT VERIFIED WHETHER SUCH AMOUNT HAS BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO VERIFY THE DEMAND IF ANY RAISED BY THE TDS OFFICER AND ALLOW O PPORTUNITY TO THE ASSESSEE TO EXPLAIN THE ISSUE. 16 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE AMOUNT SHOWN IN AIR INFORMATION REPRESENTS INTEREST ON LATE PAYMENT OF TDS. HOWEVER , THE ASSESSEE HAS NOT DEBITED SUCH AMOUNT TO THE PROFIT & LOSS ACCOU NT. THAT BEING THE CASE, NO DISALLOWANCE OF THE INTEREST PAYMENT CAN BE MADE. 17 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , ASSESSEES CLAIM REQUIRES VERIFICATION BY THE ASSESSING OFFICER. 18 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS AND MATERIAL ON RECORD, THE ASSESSING OFFICER PURELY ON THE BASIS OF AIR INFORMATION HAS ADDED BACK THE INTEREST ON LATE PAYMENT OF TDS AMOUNTING OF ` 89,110. HE HAS NOT EXAMINED WHETHER THE ASSESSEE HAS DEBITED THE AFORESAID AMOUNT TO THE PROFIT & LOSS ACCOUNT AND WHAT IS THE NATURE OF PAYMENT. AS IT APPEARS, BEFORE LEARNED COMMISSIONER (APPEALS), THE 8 NESTOR BUILDERS & DEVELOPERS PVT. LTD. ASSESSEE HAS SUBMITTED THAT THE AMOUNT REPRESENTS TDS AS WELL AS INTEREST ON SHORT DEDUCTION OF TDS AND LATE PAYMENT OF TDS AMOUNT. IT IS ALSO THE CONTENTION OF THE ASSESSEE THAT THE AFORESAID AMOUNT WAS NOT DEBITED TO THE PROFIT & LOSS ACCOUNT AND CLAIMED AS EXPENDITURE. IN CASE, THE ASSESSEE HAS NOT CLAIMED THE AFORESAID AMOUNT AS DEDUCTION, NO DISALLOWANCE OF THE SAID AMOUNT CAN BE MADE. THEREFORE, I DIRECT THE ASSESSING OFFICER TO VERIFY ASSESSEES CLAIM AND IN CASE ASSESSEES CLAIM IS FOUND TO BE CORRECT, THE ADDITION SHOULD BE DELETED. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 19 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08.03.2019 SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.03.2019 9 NESTOR BUILDERS & DEVELOPERS PVT. LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI