DCIT, CHENNAI V. M/s. Altos Advisory Services Ltd., CHENNAI

ITA 1091/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61160 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANRIRUDH RAI
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENN AI BEFORE SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER .. ITA NOS.1091 & 1092/MDS./2011 ASSESSMENT YEARS:2005-06 & 2006-07 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), CHENNAI 600 034. VS. M/S.ALTOS ADVISORY SERVICES LTD., 29/20,KARPAGAMBAL NAGAR, IINF FLOOR, MYLAPORE, CHENNAI 600 004. PAN AACCA 4539 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANRIRUDH RAI, C.I.T D.R. RESPONDENT BY : SHRI S.SRIDHAR, ADVOCATE DATE OF HEARING : 05.06.12 DATE OF PRONOUNCEMENT : 05. 06.12 O R D E R PER ABRAHAM P.GEORGE ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE REVENUE AGAINST O RDERS DATED 11.03.2011 OF COMMISSIONER OF INCOME TAX(APPE ALS)-III, CHENNAI BY WHICH HE DELETED THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). ITA. 1091 & 1092 /MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE ENGAGED I N THE BUSINESS OF COMMODITY FUTURES TRADING HAD CLAIMED A SUM OF ` 2,98,58,410/- AND ` 3,95,60,296/- AS CONSULTANCY CHARGES IN THE IMPUGNED ASSESSMENT YEARS. FOR A REASON THAT A SSESSEE HAD FAILED TO REMIT TAXES WITHHELD BEFORE THE CUT-O FF DATE, CLAIM OF ` 2,98,58,410/- WAS DISALLOWED FOR ASSESSMENT YEAR 20 05- 06. FOR ASSESSMENT YEAR 2006-07, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR THE SAME REASON WAS ` 1,94,09,330/- ONLY, SINCE PART OF THE TAXES WITHHELD WERE REMITTE D WITHIN THE TIME. AS PER ASSESSING OFFICER, CONSULTANCY CHARGE S FELL WITHIN THE DEFINITION OF FEES FOR THE TECHNICAL SERVICES AND THEREFORE, ASSESSEE WAS OBLIGED TO DEDUCT TAX AND REMIT IT WIT HIN THE TIME LIMIT. 3. ASSESSEE MOVED IN APPEAL BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS) FOR BOTH THE ASSESSMENT YEARS. COMMISSIONER OF INCOME TAX (APPEALS) AGREED WITH TH E CONTENTION OF ASSESSEE WAS THAT SECTION 40(A)(IA) W AS APPLICABLE ONLY FOR EXPENDITURE, WHICH WAS DUE FOR PAYMENT AND SHOWN AS PAYABLE AT THE END OF THE RELEVANT PRE VIOUS YEAR. ACCORDING TO HIM, THE SAID SECTION COULD NOT BE APP LIED FOR EXPENDITURE ALREADY PAID DURING THE RELEVANT PREVIO US YEAR. IN THIS CASE, OUT OF THE TOTAL CONSULTANCY CHARGES OF ` 2,98,58,410/- DISALLOWED BY ASSESSING OFFICER FOR A SSESSMENT YEAR 2005-06, ONLY A SUM OF ` 13,05,251/- WAS OUTSTANDING DUES ON DATE OF THE BALANCE SHEET. IN OTHER WORDS, ACCORDING TO HIM BALANCE AMOUNT STOOD PAID. IN SO FAR AS ASS ESSMENT YEAR 2006-07 CONCERNED, COMMISSIONER OF INCOME TAX(APPEALS) NOTED THAT A SUM OF ` 28.64 LAKHS ALONE WAS ITA. 1091 & 1092 /MDS/11 3 OUTSTANDING ON THE END OF THE RELEVANT PREVIOUS YE AR AND BALANCE CONSULTANCY CHARGES WERE PAID WITHIN THE YE AR. HE THEREFORE, DIRECTED THE ASSESSING OFFICER TO DISALL OW ONLY THE SUMS WHICH WERE SHOWN AS OUTSTANDING AT THE END OF THE RELEVANT PREVIOUS YEARS FOR THE RESPECTIVE ASSESSME NT YEARS AND ALLOW THE CLAIMS, IN SO FAR AS THE PAID AMOUNTS WERE CONCERNED. 4. NOW, BEFORE US DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS) SUBMITTED THAT SECTION 40(A)(IA) COVERED NOT ONLY PAYABLE AMOUNTS BUT ALSO PAID AMOUNTS. PER CONTRA AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE MATTER STOOD COVERED IN FAVOUR OF ASSESSEE BY THE D ECISION OF SPECIAL BENCH OF TRIBUNAL IN THE CASE OF M/S.MERIL YN SHIPPING & TRANSPORTS [2012] 16 ITR (TRIB.) 1 (SB). 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HEARD THE RIVAL CONTENTIONS. AN OUR OPINION, THE MATTER STANDS DECIDED IN FAVOUR OF ASSESSEE BY THE DECISION OF SP ECIAL BENCH OF TRIBUNAL IN THE CASE OF M/S.MERILYN SHIPP ING & TRANSPORTS (SUPRA). IT WAS HELD BY THE SPECIAL BEN CH THAT SECTION 40(A)(IA) WAS ATTRACTED ONLY IN CASE OF AMO UNTS STANDING PAYABLE AT THE END OF THE PREVIOUS YEAR AN D NOT ON THE AMOUNTS PAID DURING THE YEAR. COMMISSIONER OF I NCOME TAX(APPEALS) HAD TAKEN VERY SAME VIEW, THOUGH PRIOR TO THE DECISION OF THE SPECIAL BENCH OF TRIBUNAL IN THE CA SE OF M/S.MERILYN SHIPPING & TRANSPORTS (SUPRA). WE THER EFORE, FIND ITA. 1091 & 1092 /MDS/11 4 NO REASON TO INTERFERE WITH THE ORDER OF COMMISSION ER OF INCOME TAX(APPEALS). 6. IN THE RESULT, THE APPEALS OF THE REVENUE FOR B OTH THE ASSESSMENT YEARS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON TUESDAY, THE 5 TH JUNE, 2012. SD/- SD/- ( V.DURGA RAO ) (ABRAHAM P.GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 5 TH JUNE, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 1091 & 1092 /MDS/11 5