ITO, Trichy V. M/s. R.M.K.Engineering Industries, Trichy

ITA 1072/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64337 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Retrospective amendment; Non-deduction of tax
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1072/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE INCOME TAX OFFICER, WARD IV(1), NO.44, WILLIAMS ROAD, CANTONMENT, TRICHY 620 001. (APPELLANT) V. M/S R.M.K. ENGINEERING INDUSTRIES, NO.8, SIDCO INDUSTRIAL ESTATE, THIRUVERUMBUR, TRICHY 620 014. PAN : AACFR6040F (RESPONDENT) APPELLANT BY : SHRI S. DASGUPTA, JCIT RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOC ATE DATE OF HEARING : 25.09.2012 DATE OF PRONOUNCEMENT : 25.09.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS FIRST GR IEVANCE IS THAT CIT(APPEALS) DELETED A DISALLOWANCE OF ` 23,43,460/- MADE BY THE A.O. UNDER SECTION 40(A)(IA) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), FOR NON-DEDUCTION/NON-REMITTANCE OF TAX DEDUCTED AT SOU RCE ON PAYMENTS MADE/CREDITED TOWARDS LABOUR CONTRACT. AS PER THE REVENUE, AMENDMENT TO SECTION 40(A)(IA) OF THE ACT, WHICH HA D COME INTO EFFECT 2 I.T.A. NO. 1072/MDS/11 ON 1.4.2010, COULD NOT BE CONSTRUED RETROSPECTIVELY . ITS SECOND GRIEVANCE IS THAT CIT(APPEALS) DELETED A DISALLOWAN CE MADE ON INSPECTION CHARGES AND ISO CONSULTATION CHARGES, FO R NON-DEDUCTION OF TAX AT SOURCE. 2. WHEN THE MATTER CAME UP BEFORE US, LEARNED A.R. SUBMITTED THAT INSOFAR AS THE FIRST ISSUE WAS CONCERNED, THIS TRIB UNAL IN THE CASE OF SRS AGRI FOODS V. DCIT (I.T.A. NO. 964/MDS/2012 DATED 8 .8.12) HAD CONSIDERED THE AMENDMENT MADE TO SECTION 40(A)(IA) OF THE ACT BY FINANCE ACT, 2010 AS RETROSPECTIVE IN OPERATION, FO LLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. V IRGIN CREATIONS (2012- TIOL-181-HC-KOL-IT). LEARNED D.R. FAIRLY ADMITTED THAT THE MATTER STOOD DECIDED IN FAVOUR OF ASSESSEE. AS FOR THE SECOND I SSUE, LEARNED A.R. SUBMITTED THAT IN VIEW OF THE DECISION OF SPECIAL B ENCH OF THIS TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT (2012) 16 ITR (TRIB.) 1 (SB), PAYMENTS HAVING BEEN EFFECTED BEFORE THE EN D OF THE RELEVANT PREVIOUS YEAR, DISALLOWANCE COULD NOT BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. 3. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IN RESPECT OF RETROSPECTIVITY OF THE AMENDMENT MADE TO SECTION 40(A)(IA) OF THE ACT, THROUGH FINANCE ACT, 2010, THIS TRIBUNAL A T PARAS 6 AND 7 OF ITS ORDER DATED 8 TH AUGUST, 2012, MENTIONED SUPRA, HELD AS UNDER:- 3 I.T.A. NO. 1072/MDS/11 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE PARTIES AND HAVE GONE THROUGH THE IMPUGNED ORDER PASSED BY THE CIT. WE HAVE ALSO EXAMINED THE JUDGEMENT RELIED ON BY THE CO UNSEL FOR THE ASSESSEE. IN ORDER TO DETERMINE WHETHER THE AMENDME NT HAS ITS APPLICATION WITH RETROSPECTIVE EFFECT OR NOT, IT IS NECESSARY TO EXAMINE THE AMENDMENT. THE SAID AMENDMENT HAS BEEN M ADE EFFECTIVE WITH EFFECT FROM 1.4.2010 BY THE FINANCE ACT, 2010. THE DIVISION BENCH OF THE HONBLE CALCUTTA HIGH COU RT IN THE CASE OF CIT VS. VIRGIN CREATIONS REPORTED AS 2012-TIOL-181- HC-KOL-IT RELYING ON THE JUDGEMENT OF THE HONBLE SUPREME COU RT OF INDIA IN THE CASES OF ALLIED MOTORS PVT. LTD. HAS HELD THAT THE PROVISIONS, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISI ON WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. 7. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. TRV GOLBAL TRADING (SUPRA) FOLLOWING THE JUDGEMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN C REATIONS(SUPRA) HAS HELD THAT THE RELEVANT AMENDMENT BROUGHT INTO T HE STATUE IS RETROSPECTIVE AND THEREFORE, ALL SUCH PAYMENTS OF TDS MADE BEFORE DUE DATE OF FILING OF THE RETURN WOULD BE OU TSIDE THE PURVIEW OF APPLICABILITY OF SECTION 40(A)(IA). WE ARE OF THE OPINION THAT THE CASE OF THE ASSESSEE IS COVERED BY THE JUD GEMENT OF THE HONBLE CALCUTTA HIGH COURT IN VIRGIN CREATIONS CAS E (SUPRA), AS WELL AS RESPECTFULLY FOLLOWING THE ABOVE ORDER OF T HE TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT PASSED UNDE R SECTION 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. FOLLOWING THE ABOVE ORDER OF THIS TRIBUNAL, WE DISM ISS THIS GROUND OF APPEAL OF THE REVENUE. 4. AS FOR THE DISALLOWANCE MADE FOR NON-DEDUCTION O F TAX AT SOURCE ON INSPECTION CHARGES AND CONSULTATION CHARGES, THESE AMOUNTS WERE ADMITTEDLY PAID DURING THE RELEVANT PREVIOUS YEAR. IN VIEW OF THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE C ASE OF MERILYN SHIPPING 4 I.T.A. NO. 1072/MDS/11 AND TRANSPORT (SUPRA), NO DISALLOWANCE COULD HAVE B EEN MADE ON PAID AMOUNT. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON TUESDAY, T HE 25 TH OF SEPTEMBER, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 25 TH SEPTEMBER, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), TIRUCHIRAPPALLI (4) CIT-II, TIRUCHY (5) D.R. (6) GUARD FILE