M/s. Bharat Vijay Construction Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(1), Surat

ITA 1075/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0809 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Retrospective amendment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1075/AHD/2012 / ASSTT. YEAR: 2005-2006 BHARAT VIJAY CONSTRUCTION P. LTD. 202, NIRMAN BHAVAN MAJURA GATE SURAT 395 002. PAN : AABCB 1585 D. VS ITO, WARD-1(1) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI SATISH SOLANKI, SR.DR / DATE OF HEARING : 09/08/2016 / DATE OF PRONOUNCEMENT: 11/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD.C IT(A)-1, SURAT DATED 10.4.2012 FOR THE ASTT.YEAR 2005-06. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.26,14,727/- WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT THAT THE ASSESSEE- COMPANY WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OF GOVERNMENT WORK. THE ASSESSEE HAD MADE PAYMENT OF RS.26,14,727/- TO TWELVE PERSONS FOR GET TING THE WORK DONE DURING THE COURSE OF BUSINESS. THE ASSESSEE HAS DEDUCTED TAX AT RS.27,950/- THAT IS AT ITA NO.1075/AHD/2012 2 THE RATE IT WAS ADMISSIBLE. THE TDS RETURN WAS FIL ED ON 31.8.2005. THE ASSESSEE HAS MADE PAYMENT OF TAX ALONG WITH INTERES T REPRESENTING THE TDS ON 8.8.2005. THE CASE OF THE ASSESSEE IS THAT SECTION 40(A)(IA) HAS BEEN AMENDED BY INSERTION OF A PROVISO, AND IF THE ASSESSEE HAS MADE PAYMENT OF TAX BEFORE THE DUE DATE OF FILING OF THE RETURN, THEN, THE EXP ENDITURE CLAIMED OUGHT NOT TO BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. ON THE OTHER HAND, THE CASE OF THE AO IS THAT THE ASSESSEE FAILED TO PAY TAX BE FORE 31.5.2005, AND THEREFORE, IT IS NOT ENTITLED FOR THE DEDUCTION. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. IT IS BROUGHT TO MY NOTICE THAT THIS ASPECT HAS BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO. 680 OF 2014 IN THE CASE OF CIT VS. CHECKMATE SERVICES P.LTD. IN THIS CASE, THE HONBLE HIGH COURT HAS UPHELD THE ORDER OF THE ITAT, WHEREBY THE TRIBU NAL HAS DELETED THE ADDITION MADE WITH THE AID OF SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT TAXES HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. QUESTIONS FRAMED IN THIS REGARD BY THE HONBBLE HIGH COURT RE AD AS UNDER: (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN UPHOLDING THE DELETION OF DIS ALLOWANCE OF RS.19,39,017/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961 BY THE CIT(A) HOLDING THAT IF THE TDS PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, THEN THE SAME IS ALLOWABLE AS AN EXPENDITURE, WITHOUT CONSIDERING THE FACT THAT THE RELEVANT PORT ION OF THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BIL L, 2010 CLEARLY STATES THAT THE AMENDMENT TO SECTION 40(A)(IA) ALLO WING DEDUCTION FOR THE PAYMENT, ON WHICH TDS HAS BEEN MADE AND PAID IN TO GOVT. ACCOUNT BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF IN COME IS TO TAKE EFFECT RETROSPECTIVELY FROM 01.04.2010 AND WILL, ACCORDING LY, APPLY IN RELATION TO THE ASSESSMENT YEAR 201011 AND SUBSEQUENT YEARS? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN UPHOLDING THE DELETION OF DIS ALLOWANCE OF RS.19,39,017/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961 BY THE CIT(A) HOLDING THAT IF THE TDS PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF ITA NO.1075/AHD/2012 3 THE RETURN OF INCOME, THEN THE SAME IS ALLOWABLE AS AN EXPENDITURE, WITHOUT APPRECIATING THAT THE AMENDMENT IN SECTION 40(A)(IA) MADE BY THE FINANCE ACT, 2010 IS APPLICABLE RETROSPECTIVELY FROM 01.04.2010 I.E. A.Y. 2010-11 AND, THEREFORE, ITS RETROSPECTIVE APPL ICATION COULD NOT HAVE BEEN EXTENDED PRIOR TO 01.04.2010 SINCE FOR TH AT PERIOD ANOTHER RETROSPECTIVE AMENDMENT BROUGHT IN BY THE FINANCE A CT, 2008 W.E.F. 01.04.2005 WAS ALREADY APPLICABLE? (III) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ITAT WAS JUSTIFIED IN UPHOLDING THE DELETION BY THE CIT(A) OF DISALLOWANCE OF RS.19,39,017/- MADE BY THE ASSESSIN G OFFICER U/S 40(A)(IA) OF THE INCOME-TAX ACT, HOLDING THAT IF TH E TDS PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, THEN THE SAME IS ALLOWABLE AS AN EXPENDITURE, WITHOUT APPREC IATING THAT THE PROVISIONS OF SECTION 40(A)(IA) SUBSTITUTED BY THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01.04.2005 HAD NOT B EEN WITHDRAWN OR RESCINDED BY THE AMENDMENT BY FINANCE ACT, 2010 AND HENCE STOOD RIGHTLY APPLIED BY THE ASSESSING OFFICER? .. 5. THE HONBLE COURT IN PARA 3 TO 5 RECORDED THE FO LLOWING FINDING: 3. SO FAR AS QUESTION NOS. (I) TO (III) ARE CONCERN ED, THIS COURT VIDE ORDER DATED 11.8.2014 HAS HELD THE SAID QUESTIONS A GAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE AND THE APPEAL QUA TH E SAME WAS DISMISSED. THEREFORE, WE ARE CONCERNED WITH QUESTIO N NOS. (IV) TO 2(VI) IN THE PRESENT CASE. 4. LEARNED ADVOCATE FOR THE APPELLANT MR. PARIKH HA S CONTENDED THAT THE TRIBUNAL HAS COMMITTED ERROR IN RELYING UPON TH E SUBMISSIONS OF THE ASSESSEE AND NOT CONSIDERING THE FINDINGS OF THE AS SESSING OFFICER GIVEN IN THE ASSESSMENT ORDER. HE FURTHER CONTENDED THAT THE TRIBUNAL HAS COMMITTED ERROR IN IGNORING THE JUDGEMENT OF THIS C OURT CITED BY THE APPELLANT AND DISMISSING THE APPEAL. IN THAT VIEW O F THE MATTER, HE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IS REQUIRE D TO BE SET ASIDE. 5. WE HAVE HEARD LEARNED ADVOCATE MR. PARIKH FOR TH E APPELLANT AND LEARNED ADVOCATE MR. JAIMIN DAVE FOR THE RESPONDENT ASSESSEE. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS C OURT IN TAX APPEAL NO. 637 OF 2013 AND ALLIED MATTERS. LEARNED ADVOCAT E MR. JAIMIN DAVE HAS STATED THAT THEY ARE NOT KNOWING AS TO WHETHER ANY APPEAL IS ITA NO.1075/AHD/2012 4 PREFERRED AGAINST THE SAID DECISION AND HE HAS STAT ED THAT OTHER HIGH COURTS HAVE TAKEN DIFFERENT VIEWS WHICH WAS REFERRE D TO IN PARAGRAPH NO. 5.1 OF THE SAID ORDER. IN THAT VIEW OF THE MATT ER, WE ARE NOT INCLINED TO TAKE A DIFFERENT VIEW THAN TAKEN BY THIS COURT I N TAX APPEAL NO. 637 OF 2013 AND ALLIED MATTERS. IN THAT VIEW OF THE MAT TER, WE ANSWER QUESTION NOS. (IV) TO (VI) IN FAVOUR OF THE DEPARTM ENT AND AGAINST THE ASSESSEE. THE APPEAL IS ALLOWED TO THE AFORESAID EX TENT. 6. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONB LE HIGH COURT, I ALLOW THE APPEAL OF THE ASSESSEE AND DELETE DISALLO WANCE, BECAUSE, THE ASSESSEE HAS PAID TDS ALONG WITH INTEREST BEFORE TH E DUE DATE OF FILING OF THE RETURN. AS PER SECOND PROVISO APPENDED TO SECTION 40(A)(IA) OF THE ACT, DISALLOWANCE CANNOT BE MADE. 7. IN THE RESULT, APPEAL OF THE APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 TH AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 11/08/2016