Ardee Hi-Tech Private Limited, Visakhapatnam V. Principal Commissioner of Income Tax, Visaqkhapatnam

ITA 11/VIZ/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1616 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEBAKUMAR SONOWAL
• Assessee Lawyers: R VENKATRAMAN
• Keywords: Opportunity of being heard; Tax effect
• Section: 43B; 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 11 /VIZ/ 201 8 ( / ASSESSMENT YEAR: 20 1 2 - 1 3 ) ARDEE HI - TECH PRIVATE LTD. DOOR NUMBER :9 - 30 - 4 BALAJI NAGAR, SIRIPURAM VISAKHAPATNAM [PAN : A A FCA9955L ] VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 1 VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI R.VENKAT RAMAN , A R / RESPONDENT BY : SHRI D EBA KUMAR SONOWAL , D R / DATE OF HEARING : 05 . 0 9 . 2018 / DATE OF PRONOUNCEMENT : 07 .0 9 .2018 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR. COMMISSIONER OF INCOME TAX (PR.CIT) - 1, VISAKHAPATNAM VIDE F.NO.PR.CIT - 1/VSP/263/3/2015 - 16 DATED 27.03.2017 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM 2. GROUND NOS. 1 AND 2 ARE NOT PRESSED BY THE LD.AR DURING THE APPEAL HEARING, THEREFORE GROUND NOS. 1 AND 2 ARE D ISMISSED AS NOT PRESSED. 3. GROUND NOS.3 TO 8 ARE AGAINST THE ORDER PASSED BY THE PR.CIT U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS ACT). IN THIS CASE, ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING THE TOTAL LOSS OF RS.45,12,981/ - ON 09.03.2015. SUBSEQUENTLY, THE LD. PR.CIT FOUND THAT THE ASSESSEE HAD DEBITED A SUM OF RS.9,02,287/ - TOWARDS THE INTEREST PAYMENT BUT NOT DEDUCTED THE TAX AT SOURCE. SIMILARLY, THE ASSESSEE ALSO DEBITED A SUM OF RS.9,14,594 / - TOWARDS THE SERVICE TAX PAYABLE FOR THE ASSESSMENT YEAR 2012 - 13. THE LD.CIT(A) OBSERVED THAT OUT OF THE SERVICE TAX, ONLY A SUM OF RS.3,95,274/ - WAS PAID BEFORE THE DUE DATE OF FILING THE RETURNS OF INCOME AND THE BALANCE AMOUNT OF RS.5,19,320/ - WAS RE MAIN ED UNPAID AND REQUIRED TO BE DISALLOWED AND ADDED BACK TO THE INCOME U/S 43B OF THE ACT . THE LD.PR.CIT OBSERVED THAT THE ASSESSING OFFICER (AO) HAS NOT EXAMINED THE ISSUE WHILE PASSING THE ASSESSMENT ORDER . THEREFORE, THE PR.CIT ISSUED SHOW CAUSE NOT ICE AND NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE SET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 09.03.2015 AND DIRECTED THE AO TO REDO THE ASSESSMENT AFRESH ON BOTH THE 3 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM ISSUES AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE LD.PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR BROUGHT TO OUR NOTICE WITH REGARD TO THE ISSUE OF INTEREST ON LOANS OF RS.9,02,287/ - , TH AT THE ASSESSEE HAS D EDUCTED THE TAX AT SOURCE ON THE INTEREST PAYMENT OF 6,60,159/ - AGAINST THE SUM OF RS.7,18,508/ - WHICH ATTRACT THE TDS. THE REMAINING AMOUNT OF RS.58,350/ - WAS ADDED BACK TO THE INCOME BY THE AO IN THE ASSESSMENT, THUS THE ASSESSMENT PASSED BY THE AO UNDE R SECTION 143(3) IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE AS SEEN FROM THE ASSESSMENT ORDER, THE AO HAS EXAMINED THE ISSUE WITH REGARD TO TH E TDS ON THE BORROWINGS AND OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED THE TDS ON A SUM OF RS.58,350/ - AND THE SAME WAS ADDED BACK TO THE INCOME U/S 40(A)(IA) OF THE ACT. AS PER THE DETAILS SUBMITTED BY THE LD.AR DURING THE HEARING, THE TOTAL AMOUNT OF I NTEREST PAID WAS RS.9,02,287/ - OUT OF WHICH FOR THE SUM OF RS.7,18,508/ - THE PROVISIONS OF SECTION 194A ARE APPLICABLE AND THE ASSESSEE HA D 4 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM DEDUCTED THE TDS ON THE PAYMENT OF RS.6,60,159/ - AND THE REMAINING AMOUNT OF RS.58,350/ - WAS DISALLOWED BY THE AO IN THE ASSESSMENT PROCEEDINGS. THEREFORE, THERE IS NO ERROR IN THE ASSESSMENT ORDER WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE, THE ORDER OF THE LD.CIT(A) PASSED U/S 263 ON THIS ISSUE IS SET ASIDE AND THE ASSESSEES APPEAL ON THIS GROUND IS ALLOWED. 6. THE NEXT ISSUE FOR TAKING UP THE CASE FOR REVISION U/S 263 IS SERVICE TAX PAYABLE. THE ASSESSEE HAS DEBITED A SUM OF RS.9,14,594/ - UNDER THE HEAD SERVICE TAX AND THE DETAILS OF THE SERVICE TAX DEBITED TO THE PROFIT & LOSS ACCOUNT , OUTSTA NDING AS AT THE END OF THE FINANCIAL YEAR, PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND THE REMAINING BALANCE TO BE PAID IS AS UNDER : ANALYSIS OF SERVICE TAX PAYABLE OF RS.9,14,594/ - SERVICE TAX PERTAINS TO F.Y.2011 - 12 510968 SERVICE TAX PERTAINS TO EARLIER YEARS 403626 914594 IT IS SUBMITTED THAT UP TO 31. 03.2011. SERVICE IT IS PAYABLE ONLY ON RECEIPTS BASIS. THUS. BALANCE OF RS. 403626 OUTSTANDING UP TO THE SAID DATE, THE SERVICE TAX WILL BE REMITTED AS AND WHEN IT IS RECEIVED FROM THE RESPECTIVE CUSTOMER. HENCE, RS.4,03,626 IS TO BE PAID ONLY ON RECEIPT OF THE SAID AMOUNT. IT IS ALSO SUBMITTED THAT N DISALLOWANCE IS CALLED FOR IN RESPECT OF RS. 4,03,626 AS IT PERTAINS TO EARLIER YEARS AND NOT RELEVANT TO THE ASSESSMENT YEAR 2012 - 13 5 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM BALANCE OUTSTANDING AS ON 31.03.2012 PERTAINING TO F.Y.2011 - 12 5,10,968 LESS : PAID BEFORE FILING OF THE RETURN 395274 BALANCE TO BE PAID ON THE DATE OF FILING OF THE RETURN 115694 6.1. FROM THE ABOVE, A SUM OF RS.1,15,694/ - REMAIN ED UNPAID UNDER THE HEAD SERVICE TAX LIABILITY. DURING THE APPEAL HEARING, THE LD.AR FAIRLY CONCEDED THAT THE UNPAID SERVICE TAX ATTRACTS THE DISALLOWANCE U/S 43B OF THE ACT AND THE AO HAS NOT VERIFIED ISSUE THEREFORE, THERE WAS AN ERROR IN THE ASSESSMENT ORDER PASSED BY THE AO U/S 143. HOWEVER, THE LD.AR ARGUED THAT THOUGH THERE WAS AN ERROR IN THE ASSESSMENT ORDER FOR NON - DISALLOWANCE OF UNPAID SERVICE TAX BUT THE SAME IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THE RETURN OF INCOME OF THE ASSESSEE RESULTED INTO LOSS AND EVEN AFTER MAKING DISALLOWANCE OF THE SERVICE TAX, THE TAXABLE INCOME WOULD BE NIL REDUCING THE LOSS. THEREFORE, THE LD.AR WAS OF THE VIEW THAT THE DISALLOWANCE WHICH REDUCES THE LOSS DOES NOT RESULT INTO POSITIVE INCOME AND CANNOT MAKE THE ASSESSMENT PREJUDICIAL TO THE INTEREST OF THE REVENUE, HENCE, REQUESTED TO SET ASIDE THE ORDER OF THE LD.PR.CIT AND ALLOW THE APPEAL OF THE ASSESSEE. 7. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDER OF THE LD.PR.CIT. 6 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS DEBITED A SUM OF RS.9,14,594/ - UNDER SERVICE TAX AND A SUM OF RS.1,15,694/ - REMAINED UNPAID AT THE END OF THE YEAR WHICH REQUIRED TO BE DISALLOWED UNDER SECTION 43B OF THE ACT.. THERE WAS NO DISPUTE THAT THE SAID AMOUNT ATTRACTS DISALLOWANCE U/S 43B OF THE ACT AND THE ISSUE WAS NOT VERIFIED BY THE AO. THE CONTENTION OF THE LD.AR THAT THE DISALLOWANCE OF A SUM OF RS.1,15,694/ - RESULTS INTO REDUCING THE LOSS AND FINA LLY DOES NOT RESULT IN POSITIVE INCOME AND THE SAME IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT ACCEPTABLE AND HAS POTENTIAL TAX EFFECT TO THE EXTENT OF INCOME UNDER ASSESSED . THEREFORE, NOT MAKING THE ADDITION OF UNPAID SERVICE TAX IS ERRON EOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND HENCE, WE UPHOLD THE ORDER OF THE LD. PR.CIT ON THIS ISSUE AND DISMISS THE APPEAL OF THE ASSESSEE. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7 I.T.A. NO . 11 /VIZ/201 8 M/S A RDEE HI - TECH PRIVATE LTD., VISAKHAPATNAM THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH SEP , 201 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 07 . 0 9 .2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE ASSESSEE - ARDEE HI - TECH PRIVATE LTD. , DOOR NUMBER :9 - 30 - 4 BALAJI NAGAR, SIRIPURAM , VISAKHAPATNAM 2 . / THE REVENUE THE PR.COMMISSIONER OF INCOME TAX - 1, VISAKHAPATNAM 3 . , , / DR, ITAT, VISAKHAPATNAM 4 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM