Dy.CIT, Circle-1(3), Hyderabad V. M/s Balan Natural Food Private Limited, Hyderabad

ITA 1112/HYD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0301 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: M V ANIL KUMAR

Judgement Text

ITA NO.1112 OF 2014 BALAN NATURAL FOODS P LTD HYDER ABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1112 /HYD/2014 (ASSESSMENT YEAR: 2005-06) DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(3) HYDERABAD VS. M/S. BALAN NATURAL FOODS P LTD HYDERABAD PAN: AABCB 4779 M (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR FOR ASSESSEE : SHRI M.V. ANIL KUMAR DATE OF HEARING : 21.07.2015 DATE OF PRO NOUNCEMENT : 29 .07.2015 O R D E R PER SAKTIJIT DEY, J.M. THIS APPEAL BY THE DEPARTMENT IS AGAINST THE ORDER DATED 26.03.2014 OF THE LD CIT (A)-II HYDERABAD, DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF TH E ACT FOR A.Y 2005-06. 2. BRIEFLY, THE FACTS ARE ASSESSEE IS A COMPANY CAR RYING ON THE BUSINESS OF MANUFACTURING AND SALE OF FRUIT JUICES AND YOGURT DRINKS. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.1,47,34,861 . DURING THE ASSESSMENT PROCEEDINGS AO ON VERIFYING THE INFORMAT IONS SUBMITTED BY THE ASSESSEE NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION TOWARDS EXPENDITURE INCURRED ON ADVERTISE MENT IN ITA NO.1112 OF 2014 BALAN NATURAL FOODS P LTD HYDER ABAD PAGE 2 OF 5 VARIUS TYPES OF MEDIA FOR AN AMOUNT OF RS.70,23,333 . HE FURTHER NOTICED, THOUGH, ASSESSEE HAD DEDUCTED TAX WHILE MA KING PAYMENTS TOWARDS ADVERTISEMENT EXPENDITURE, BUT ASS ESSEE HAD NOT REMITTED TDS AMOUNT TO THE GOVT. A/C WITHIN THE TIME PRESCRIBED UNDER THE STATUTE. ACCORDINGLY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, AO DISALLOWED THE EXPENDITURE CLAIMED OF RS.70,23,333. 3. BEING AGGRIEVED OF SUCH DISALLOWANCE, ASSESSEE P REFERRED APPEAL BEFORE THE CIT (A). IN COURSE OF HEARING APP EAL BEFORE THE FIRST APPELLATE AUTHORITY, SPECIFIC PLEA OF THE ASS ESSEE WAS AS THE TDS AMOUNT WAS REMITED TO THE GOVT. A/C BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) FOR THE RELEVANT A.Y, N O DISALLOWANCE U/S 40(A)(IA) CAN BE MADE IN VIEW OF THE AMENDMENT MADE TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 W.E.F. 1 .4.2010. IT WAS FURTHER SUBMITTED, THE AFORESAID AMENDMENT MADE TO SECTION 40(A)(IA) WOULD APPLY RETROSPECTIVELY. IN SUPPORT O F SUCH CONTENTION, ASSESSEE RELIED UPON THE DECISION OF TH E HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN C REATIONS (GA NO.3200/2011 DATED 23.11.2011). LD CIT (A) AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE IN LIGHT OF THE DEC ISION OF THE HON'BLE CALCUTTA HIGH COURT DIRECTED AO TO ALLOW TH E ADVERTISEMENT EXPENSES, IF THE TDS DEDUCTED WAS REM ITTED TO THE GOVT A/C BEFORE DUE DATE OF FILING OF RETURN U/S 1 39(1). FINDING OF THE LD CIT (A) IS AS UNDER: 6.3 IT IS PERTINENT TO MENTION THAT IN CASE OF CI T VS. VIRGIN CREATORS G.A.NO.3200/2011 DATED 23.11.2011, THE HON'BLE CALCUTTA HIGH COURT HELD THAT THE AMENDMENT IS CLARIFICATORY IN NATURE. THEREFORE, IF THE ITA NO.1112 OF 2014 BALAN NATURAL FOODS P LTD HYDER ABAD PAGE 3 OF 5 TDS DEDUCTED, WAS PAID BEFORE THE DUE DATE TO FILE RETURN OF INCOME U/S 139(1), THE CORRESPONDING EXPENDITURE IS TO BE ALLOWED. THEREFORE, THE AO IS DIRECTED TO ALLOW THE ADVERTISEMENT EXPENSES ON WHICH TDS WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) . 4. BEING AGGRIEVED OF THE AFORESAID ORDER OF LD. CI T (A), DEPARTMENT IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATER IAL ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT ASSES SEE DURING THE YEAR HAS DEDUCTED TAX AT SOURCE ON PAYMENTS TOWARDS ADVERTISEMENT EXPENSES OF RS.70,23,333. IT IS ALSO EVIDENT THAT ASSESSEE ITSELF DISALLOWED AN AMOUNT OF RS.25,14,37 9 REPRESENTING TDS REMITTED AFTER EXPIRY OF THE DUE D ATE OF FILING OF RETURN U/S 139(1). ASSESSEE CLAIMED DEDUCTION ONLY IN RESPECT OF THE EXPENDITURE ON WHICH TDS WAS REMITTED TO THE GO VT. A/C BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. AS COULD BE SEEN, PROVISIONS OF SECTION 40(A)(IA) WAS AMENDED BY FINANCE ACT, 2010 W.E.F. 1.4.2010 PROVIDING THAT IF THE TDS AMOUNT IS REMITTED TO THE GOVT. A/C BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1), NO DISALLOWANCE U/S 40(A)(IA) CA N BE MADE. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA) WHILE INTERPRETING THE PROVISIONS OF SECTION 40(A)(IA) HAS HELD THAT THE AMENDMENT EFFECTED BY T HE FINANCE ACT, 2010 WILL APPLY RETROSPECTIVELY. 6. FOLLOWING THE AFORESAID DECISION OF THE HON'BLE CALCUTTA HIGH COURT, THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF ITA NO.1112 OF 2014 BALAN NATURAL FOODS P LTD HYDER ABAD PAGE 4 OF 5 CIT VS. PEC ELECTRONICS PVT LTD IN ITA NO.263 OF 20 13 DATED 12.07.2013 HELD AS UNDER: WITH REGARD TO THE NEXT QUESTION, THE TRIBUNAL BY FOLLOWING THE DECISION OF THE KOLKATA HIGH COURT IN CIT V/S.VIRGIN CREATIONS (GA.NO.3200/ 2011), WHEREIN IT HAS BEEN HELD THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) IS RETROSPECTIVE IN OPERATION AND CONSEQUENTLY IN RESPECT OF ANY PAYMENT TO TDS MADE BEFORE THE DUE DATE FOR THE FILING OF THE RETURN OF INCOME, TH E PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVOKED. THEREFORE, WE DO NOT FIND ANY REASON TO SEE THAT ANY FURTHER DECISION ON THIS POINT IS REQUIRED BY THIS COURT. 7. THUS, AS CAN BE SEEN THE PRINCIPLES DECIDED BY T HE HON'BLE HIGH COURT AS REFERRED TO HEREIN ABOVE IS, THE AMEN DMENT TO SECTION 40(A)(IA) PROVIDING THAT NO DISALLOWANCE CA N BE MADE IF THE TDS AMOUNT IS REMITTED TO THE GOVT. A/C BEFORE THE DUE DATE OF FILING RETURN U/S 139(1), IS RETROSPECTIVE IN OP ERATION. THAT BEING THE CASE, LD CIT(A)S FINDING BEING IN CONFOR MITY WITH THE PRINCIPLES LAID DOWN BY THE HON'BLE HIGH COURTS REF ERRED TO ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER. A CCORDINGLY, WE UPHOLD THE ORDER OF THE LD CIT (A) BY DISMISSING TH E GROUNDS RAISED BY THE DEPARTMENT. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. S D/ - S D/ - (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2015. ITA NO.1112 OF 2014 BALAN NATURAL FOODS P LTD HYDER ABAD PAGE 5 OF 5 VNODAN/SPS COPY TO: 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(3) HYDERAB AD 2. M/S. BALAN NATURAL FOODS PVT. LTD. 301 PADMAVATHI APARTMENT, AMEERPET, HYDERABAD 3. CIT(A) II HYDERABAD 4. CIT I HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER