M/s. Aadhyashakti Developers, Baroda V. The Income tax Officer,Ward-2(4), Baroda

ITA 114/AHD/2011

• Counselvise Citation: 11420514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: URVASHI SHODHAN A R
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMADABAD , , , , BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND .., ! '# '# '# '# SHRI T.R. MEENA, ACCOUNTANT MEMBER $%.. , &' ( & ! ) & ! ) & ! ) & ! ) ITA NO. 114/AHD/2011 ASSESSMENT YEAR :2007-08 M/S. AADHYASHAKTI DEVELOPERS MAHAVIR PARK, NR. SHIVANJALI SOC., B/H SAURABH PARK, GOTRI, BARODA V/S . ITO, WARD-2(4) BARODA. PAN NO. A ANFA7401J (APPELLANT) .. (RESPONDENT) *+ , - & / BY APPELLANT MS. URVASHI SHODHAN, A.R. ./*+ , - & /BY RESPONDENT SHRI J. P. JHANGID, SR. D.R. 0 , 1%' /DATE OF HEARING 13.02.2014 234 , 1%' /DATE OF PRONOUNCEMENT 21.02.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A)-II, BARODA, ORDER DATED 05.10.2010 FOR A.Y. 2007-08. T HE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THE ASSESSEE AS A DEFAULTER IN MAKING TDS AND CONFIRMIN G THE DISALLOWANCE MADE BY AN ASSESSING OFFICER OF ENTIRE EXPENDITURE RS.32,28,600/- FOR PAYMENT/BILL OF JALARAM CONSTRUC TION U/S. 40(A)(IA). 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS DISALLOWING THE ENTIRE EXPENDITURE RS.32,28,600/- O N WHICH TDS ITA NO. 114/AHD/2011 A.Y. 07-08 M/S. AADHYASHAKTI DEVELOPERS VS. ITO PAGE 2 RS.32.932/- IS MADE AND PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONSIDERING HE PLEA OF THE ASSESSEE THAT ASSESSEE COULD NOT MAKE T HE PAYMENT OF TDS AS TDS NO. WAS ISSUED IN THE MONTH OF MAY ONLY. ALL THE GROUNDS OF ASSESSEES APPEAL ARE REVOLVING AROUND NOT DEDUCTING TDS AND DISALLOWANCE MADE BY THE A.O. AT RS.32,28,600/- U/S. 40(A)(IA) OF THE IT ACT. 2. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVE LOPMENT AND CONSTRUCTION OF BUILDING. THE ASSESSEE HAS DEBITED CONSTRUCTION EXPENSES OF RS.32,28,600/-. THE A.O. WAS ASKED TO GIVE THE COM PLETE DETAILS AND DOCUMENTARY EVIDENCE IN SUPPORT OF EXPENSES AND ALS O DIRECTED TO GIVE THE DETAILS OF TDS DEDUCTED ON IT. THE ASSESSEE HAD GI VEN CONTRACT FOR CONSTRUCTION WORK TO JALARAM CONSTRUCTION, BARODA. THE ASSESSEE HAD MADE PAYMENT TO M/S. JALARAM CONSTRUCTION AT RS.11,65,00 0/- BETWEEN JULY 2006 TO FEBRUARY 2007 AGAINST CONSTRUCTION BILL OF RS.32,28 ,600/-, CREDITED IN HIS ACCOUNT ON 31.03.2007. THE ACCOUNT OF THE M/S. JAL ARAM CONSTRUCTION WAS DEBITED AT RS.32,932/- ON ACCOUNT OF THE TDS PROVIS ION. IT WAS FURTHER FOUND TO THE A.O. THAT TDS DEDUCTED WAS NOT PAID ON OR BE FORE 31 ST MARCH, 2007 AND THE SAID AMOUNT OF TDS WAS SHOWN AS LIABILITY IN TH E BALANCE SHEET. EVEN, THERE WAS NO EVIDENCE THAT ASSESSEE HAD PAID THIS T DS ON OR BEFORE DUE DATE OF FILING OF RETURN. AFTER CONSIDERING THE ASSESSE ES REPLY, THE A.O. HELD THAT THIS WAS THE VIOLATION OF SECTION 40(A)(IA) OF THE IT ACT. THUS, HE MADE ADDITION OF RS.32,28,600/- IN THE INCOME OF THE ASS ESSEE. ITA NO. 114/AHD/2011 A.Y. 07-08 M/S. AADHYASHAKTI DEVELOPERS VS. ITO PAGE 3 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDI TION BY OBSERVING AS UNDER: 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER. THE APPELLANT HAD MADE PAYMENT OF THE AMOUNT THROUGHOUT THE YEAR BUT DID NOT DEDUCT THE TAX AT THE TIME OF PAYMENT AS REQUIRED BY LAW. IT C LAIMED TO HAVE DEDUCTED TAX ONLY ON 31.03.2007. IN THE CASE OF APPELLANT TH E PROVISION OF LAW AS IT THEN EXISTED WOULD APPLY. LIABILITY TO DEDUCT TAX A ROSE ON THE DATE OF PAYMENT AND DATE OF DEDUCTION SHOWN ON 31.03.2007 I S NOT ONLY UNRELIABLE BUT IRRELEVANT. DUE DATE OF PAYMENT WOULD COUNT FRO M THE DATE OF PAYMENT OF THE AMOUNT. APPARENTLY THE APPELLANT HAD MADE THE PAYMENT IN T HE MONTH OF JULY ONWARDS, THERE IS NO QUESTION OF NOT DEDUCTING THE TAX AT THAT POINT OF TIME OTHERWISE IT WOULD BE PAID FROM APPELLANT'S OWN POCKET. IN THAT CASE THERE WOULD NO DATE FOR DEDUCTION AND ONLY RELEVANT DATE WOULD BE DATE OF PAYMENT. FOR EXAMPLE, THE ASSESSIN G OFFICER HAS NOTED THAT AN AMOUNT OF RS.1.10,OOP/- HAS BEEN CLAIMED IN THE NAME OF SHRI CHIMAN R. PATEL. FROM THE COPY OF LEDGER ACCOUNT IT IS SEEN THAT TH IS AMOUNT HAS BEEN PAID BETWEEN 20.06.2006 TO 18.10.20 06 IN 9 INSTALLMENTS BUT TDS IS SHOWN TO HAVE BEEN DEDUCTED AT RS.2,870/-ON 31.03.2007. IF THE FULL AMOUNT HAS BEEN ALREADY BEE N PAID PRIOR TO 31.03.2007 THERE IS NO QUESTION OF MAKING ANY DEDUC TION ON 31.03.2007 BECAUSE THERE IS NO AMOUNT AVAILABLE FOR MAKING, DE DUCTION. SIMILARLY IN THE CASE OF SHIV CONSTRUCTION RS.16,55,000/- (ACTUA L PAYMENT RS.19,55,000/-) WAS PAID BETWEEN 23.08.2006 TO 28.0 3.2007. WHEN THE FULL AMOUNT WAS PAID BEFORE 31.03.2007, HOW 'DEDUCT ION' COULD BE MADE ON 31.03.2007 IS NOT EXPLAINED. THIS IS THE POSITIO N IN OTHER CASES ALSO. IF THE AMOUNT HAS BEEN PAID FROM APPELLANT'S OWN POCKE T THEN AGAIN THERE IS NO QUESTION OF ANY 'DEDUCTION'. AND IN THAT CASE ON LY DATE OF PAYMENT WOULD BE RELEVANT WOULD BE CONSIDERED IN THE YEAR O F PAYMENT. IN VIEW OF THE THEN EXISTING LAW THE APPELLANT IS CLEARLY A DE FAULTER. THE ASSESSING OFFICER HAS RIGHTLY MADE THE DISALLOWANCE. ITA NO. 114/AHD/2011 A.Y. 07-08 M/S. AADHYASHAKTI DEVELOPERS VS. ITO PAGE 4 THE APPELLANT HAS ARGUED THAT THERE WAS DELAY IN PA YMENT BECAUSE TDS NO. WAS ISSUED ONLY IN THE MONTH OF MAY. THIS I S NO VALID GROUND FOR NON-DEDUCTION. MOREOVER, NO EVIDENCE HAS BEEN PRODU CED TO SHOW WHEN THE TDS NO. WAS APPLIED FOR. IT IS THE DUTY OF THE DEDUCTOR TO ACQUIRE THE REQUISITE NUMBER IN TIME. 4. NOW THE ASSESSEE IS BEFORE US. LD. A.R. ARGUED THAT ASSESSEE HAD MADE PROVISION FOR TDS ON 31.03.2007 AS PER LAW BUT TAN NO. WAS ALLOTTED ON 08 TH MAY, 2007 TO THE ASSESSEE. THEREFORE, IT COULD NO T BE DEPOSITED IN GOVERNMENT EXCHEQUER. THESE FACTS WERE ALSO SUBMIT TED BEFORE THE HONBLE CIT(A) AND IT WAS ALSO SUBMITTED THAT ASSESSEE HAD PAID TDS ON OR BEFORE DUE DATE OF THE RETURN FILED BY THE ASSESSEE FOR WH ICH NECESSARY EVIDENCES WERE ALSO ENCLOSED. AS PER PAGE NO.4 OF PAPER BOOK , THE ASSESSEE HAD CREDITED TDS ACCOUNT RS.32,932/- ON 31.03.2007 AND ACCOUNT OF JALARAM CONSTRUCTION HAD DEBITED ACCORDINGLY. AS PER PAGE NO.6 OF PAPER BOOK, THE ASSESSEE HAD PAID RS.32,932/- AS TDS ON 31.05.2007, WHICH WAS BEFORE DUE DATE OF FILING OF THE RETURN U/S. 139 OF THE IT ACT . SHE FURTHER RELIED UPON HONBLE ITAT B BENCH DECISION IN CASE OF M/S. J. K. CONSTRUCTION CO. VS. ACIT IN ITA NO. 523/AHD/2009 FOR A.Y. 2005-06 , WHEREIN TDS WAS PAID BEFORE ON OR BEFORE DUE DATE OF RETURN, WHICH WAS C HALLENGED BY THE REVENUE BEFORE THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 706 OF 2010 IN CASE OF CIT VS. M/S. J. K. CONSTRUCTION CO., ORDER DATED 18.07.2011 , WHEREIN REVENUES APPEAL WAS DISMISSED AND IT WAS HELD THAT ITAT COMMITTED NO WRONG AND WAS THEREFORE, ENTITLED TO SEEK DEDUCTION OF RS.32,94,149/- FROM THE INCOME WITH AMOUNT THE ASSESSEE HAD DEDUCTED FR OM PAYMENT OF ITA NO. 114/AHD/2011 A.Y. 07-08 M/S. AADHYASHAKTI DEVELOPERS VS. ITO PAGE 5 CONTRACTORS AND HAD ALSO DEPOSITED WITH REVENUE BEF ORE THE LAST DATE OF FILING OF RETURN. THUS, HE REQUESTED TO DELETE THE ADDITI ON. AT THE OUTSET, LD. SR. D.R. SUPPORTED THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. AS CO-ORDINATE BENCH AS WELL AS HONBLE GU JARAT HIGH COURT HAD DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE ON IDE NTICAL FACTS, THE ASSESSEE HAD CREDITED TDS ON 31.03.2007 BUT PAID ON 31.05.20 07 BEFORE THE DUE DATE OF RETURN I.E. 31.07.2007, THEREFORE, WE REVERSE TH E ORDER OF THE CIT(A). 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21.02.2014 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA &5 &5 &5 &5 , ,, , .16 .16 .16 .16 7&641 7&641 7&641 7&641 / COPY OF ORDER FORWARDED TO:- 1. *+ / APPELLANT 2. ./*+ / RESPONDENT 3. ## 1 ; / CONCERNED CIT 4. ;- / CIT (A) 5. 6? .1 , , / DR, ITAT, AHMEDABAD 6. A BC / GUARD FILE. BY ORDER/ &5 &, / # , )