ACIT, CHENNAI V. S.P.Balasubramanyam, CHENNAI

ITA 1160/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8772 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V SREEKANTH
• Keywords: Reopening of assessment; Audit objection; Difference of opinion; Change of opinion
• Section: 40A(3); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.696 /MDS/2016 ' $ %$ / ASSESSMENT YEAR : 2006-07 S.P.BALASUBRAHMANYAM, NO.16, KAMDAR NAGAR, CHENNAI 600 034 VS. THE DEPUTY COMMISSIONER OF INCOME TAX, MEDIA CIRCLE I, CHENNAI. ./ I.T.A. NO.1160 /MDS/2016 ' $ %$ / ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 20(1) CHENNAI. &' / APPELLANT) VS. S.P.BALASUBRAHMANYAM, NO.16, KAMDAR NAGAR, CHENNAI 600 034 [PAN AADPB 4195J] ( ()&' /RESPONDENT) ASSESSEE BY : SHRI. Y. SRIDHAR, C.A. ()&' * + /RESPONDENT BY : SHRI. A.V. SREEKANTH, JCIT. * , / DATE OF HEARING : 14-07-2016 -.% * , / DATE OF PRONOUNCEMENT : 05-08-2016 ITA NO.696 & 1160/MDS/2016 :- 2 -: / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE CROSS-APPEAL FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY, IS DIRECTED AGAINST ORDER OF THE COM MISSIONER OF INCOME- TAX (APPEALS)-14, CHENNAI IN ITA NO.81/2011-12, DA TED 29.01.2016 FOR THE ASSESSMENT YEAR 2006-2007 PASSED U/S.143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFE RRED TO AS THE ACT). SINCE THE ISSUE IN THESE APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED, HEARD TOGETHER, AND DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, FIRST, WE TAKE U P ASSESSEE APPEAL IN ITA NO.696/MDS/2016 OF ASSESSMENT YEAR 2006-2007 FO R ADJUDICATION. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS (I) CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT AS ASSESSMENT IS BASED ON CHANGE OF OPINION (II) THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE U/S . 40(A)(IA) OF THE ACT AFTER GRANTING PARTIAL RELIEF TO THE EXTENT OF SHORT DEDUCTION OF TDS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PLAYBACK SINGER IN FILM INDUSTRY AND FILED HIS RETU RN OF INCOME ON 31.10.2006 ADMITTING A LOSS OF >2,81,33,449/- AND T HE ASSESSMENT ITA NO.696 & 1160/MDS/2016 :- 3 -: WAS COMPLETED U/S.143(3) OF THE ACT DETERMINING A L OSS OF >2,69,33,394/-. THE LD. ASSESSING OFFICER SUBSEQUE NTLY HAVING REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ISSUE D NOTICE U/S.148 OF THE ACT AND IN COMPLIANCE THE LD. AUTHORISED REP RESENTATIVE OF ASSESSEE FILED LETTER DATED 04.04.2011 TO TREAT THE ORIGINAL RETURN FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. FURTHER , THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND FURNISHED DETAILS. THE LD. ASSESSING OFFICER ON VERIFICATION OF THE FINANCIAL STATEMENTS AND TAX AUDIT REPORT U/S.44AB OF THE ACT FOUND THAT THE ASSESSEE IS A PROPRIETOR OF M/S. CAPITAL CINEMA AND THE ASSESSEE IS ENGAGED IN MOVIE PRODUCTION AND TAX WAS NOT DEDUCTE D IN RESPECT OF PAYMENTS. THE LD. AUTHORISED REPRESENTATIVE FILED LETTER DATED 05.12.2011 EXPLAINING THAT THE TAX IS DEDUCTABLE O NLY WHEN AMOUNTS ARE PAYABLE AND SHOWN AS LIABILITY AS ON 31 ST MARCH AND RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF TEJA CONSTRUCTION VS. ACIT (2010) 129 TTJ 57(HYD) (UO) AND CLAIMED THAT PROVISIONS TO SEC. 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. BUT THE L D. ASSESSING OFFICER DISTINGUISHED THE FACTS OF THE CASE AND IS OF THE OPINION THAT TDS HAS TO BE DEDUCTED WHEN AMOUNT IS CREDITED OR PAID. FUR THER, THE LD. ASSESSING OFFICER MADE DISALLOWANCE OF EXPENDITURE U/SEC. 40(A)(IA) OF THE ACT UNDER VARIOUS HEADS REFERRED AT PAGE 2 & 3 OF HIS ORDER ITA NO.696 & 1160/MDS/2016 :- 4 -: AGGREGATING TO >2,60,38,570/- AND PASSED ORDER U/S .143(3) R.W.S. 147 OF THE ACT DATED 07.12.2011. AGGRIEVED BY THE ORDE R, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX ( APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS AND E XPLAINED THAT THE ASSESSEE HAS INCURRED LOSS IN THE MOVIE PRODUCTION OF MAZHAI AND IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE LD. ASSES SING OFFICER HAS VERIFIED THE BOOKS OF ACCOUNTS, RECORDS AND MADE DI SALLOWANCE U/S.40A(3) OF THE ACT AND ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED. HENCE, THE ISSUE OF NOTICE U/S.148 OF THE ACT IS PURELY BASED ON THE CHANGE OF OPINION FOR NON DEDUCTION OF TDS AND THE DISALLOWANCE U/SEC.40(A)(IA) OF THE ACT >2,60,38,5 70/- IS BAD IN LAW. THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT ARE APP LICABLE ONLY ON THE PAYMENTS OUTSTANDING ON THE YEAR ENDING BUT NOT THE PAYMENTS ACTUALLY PAID DURING THE YEAR. THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) CONSIDERED THE GROUNDS, SUBMISSIONS OF TH E ASSESSEE, FINDINGS OF THE LD. ASSESSING OFFICER AND THE VALID ITY OF PROVISIONS OF SEC. 147 OF THE ACT. THE LD. AUTHORISED REPRESENTA TIVE ALSO FILED SUBMISSIONS ON THE REASSESSMENT PROCEEDING WITH JU DICIAL DECISIONS ITA NO.696 & 1160/MDS/2016 :- 5 -: AND THE CHANGE OF OPINION. FURTHER ON MERITS R EFERRED AT PAGE 4,5 & 6 OF COMMISSIONER OF INCOME TAX (APPEALS) ORDER AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT TD S WAS PAID BELATEDLY ON EXPENDITURE AND IN SOME CASES SHORT DE DUCTION AND NO DEDUCTION OF TAX. THE LD. COMMISSIONER OF INCOME T AX (APPEALS) OBSERVED THAT THE RE-ASSESSMENT PROCEEDINGS ARE BAS ED ON AUDIT OBJECTIONS/ AUDIT MEMO AND THE ARGUMENT OF THE ASSE SSEE ON THE JUDICIAL ASPECTS DOES NOT SUPPORT THE CASE AND DISM ISSED THE GROUND OF ASSESSEE ON VALIDITY OF RE-ASSESSMENT AND CONFIRMED THE REASSESSMENT ORDER OF LD. ASSESSING OFFICER AS VALID. 4.1 ON THE NEXT GROUND OF DISALLOWANCE U/SEC. 40(A) (IA) OF THE ACT, IT WAS SUBMITTED THAT IN ORIGINAL ASSESSMENT U /S.143(3) OF THE ACT THE DETAILS WERE VERIFIED AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE RELEVANT PARA OF ASSESSMENT ORDER DATED 26.12.2008 IN HIS ORDER AT PAGE 9 & 10. THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) ON VERIFYING THE DETAILS FURNI SHED BY THE ASSESSEE FOUND THAT OUT OF TOTAL DISALLOWANCE OF >2 ,60,38,570/- MADE IN THE RE-ASSESSMENT PROCEEDINGS >1,12,75,678/- WAS IN RESPECT OF DELAYED PAYMENT OF TDS AND >78,16,645/- IS DUE TO S HORT DEDUCTION AND THE BALANCE OF >69,46,247/- IS DUE TO NON DEDUC TION OF TAX. THE ITA NO.696 & 1160/MDS/2016 :- 6 -: ASSESSEE FILED STATEMENT OF TDS WERE TAX BELATEDL Y DEPOSITED WITH GOVERNMENT ON 12.05.2007 BEING AFTER DUE DATE OF FI LING OF RETURN U/S.139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2006- 07. IN RESPECT OF SHORT DEDUCTION OF TDS, THE LD. COMMISSIONER OF INC OME TAX (APPEALS) RELIED ON THE DECISION OF THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIWAL 361 ITR 432 WHEREIN IT WAS HELD AS UNDER:- IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE O F OPINION AS TO TAXABILITY OF ANY ITEM OR NATURE OF PAYMENTS FALLIN G UNDER VARIOUS TDS PROVISIONS, ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201 BUT NO DISALL OWANCE CAN BE MADE BY INVOKING PROVISIONS OF SEC. 40(A)(IA). RESPECTFULLY FOLLOWING THE ABOVE DECISION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION OF >7 8,16,645/- IN RESPECT OF SHORT DEDUCTION OF TAX AND PARTLY ALLOWE D THE APPEAL. AGGRIEVED BY THE ORDER THE ASSESSEE FILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF ASS ESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE ASSESSMENT AND APPELLATE PROCEEDINGS AND ALSO WRITT EN SUBMISSIONS FILED BEFORE COMMISSIONER OF INCOME TAX (APPEALS). THE MAIN CONTENTION OF THE ASSESSEE ON THE VALIDITY OF RE-AS SESSMENT U/S.147 OF THE ACT, AS IT WAS PURELY DUE TO CHANGE OF OPINIO N AND THE ORIGINAL ASSESSMENT U/SEC. 143(3) OF THE ACT WAS COMPLETED I N THE YEAR 2008. THE LD. ASSESSING OFFICER HAS NOT PROVIDED ANY REA SONS FOR REOPENING ITA NO.696 & 1160/MDS/2016 :- 7 -: BEFORE FINALIZING THE ASSESSMENT. THE LD. AUTHORIS ED REPRESENTATIVE FILED PAPER BOOK, WRITTEN SUBMISSIONS AND JUDICIAL DECISIONS SUPPORTING THE GROUNDS. TH LD. AUTHORISED REPRESENTATIVE ARGUE D THAT THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT SHALL NOT B E APPLICABLE TO THE ASSESSEE AS THERE IS NO OUTSTANDING AMOUNTS PAYABLE AS ON 31.03.2006 AND RELIED ON THE DECISION OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT 16 ITR (TRIB) (1) AND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND VEHEMENTLY OPPOSED TO THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORDS AND JUDICIAL DECISIONS. THE LD. AUTHORISED REPRESENTATIVE CONTENTION THAT THE RE-ASSESSMENT PROCEEDINGS IS BA D IN LAW BEING DUE TO CHANGE OF OPINION AND THE ASSESSEE HAS PROV IDED COMPLETE INFORMATION IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE SAME WAS VERIFIED AND REOPENING BY ISSUING NOTICE NOW AMO UNTS TO CHANGE OF OPINION AND FURTHER, THE REASONS FOR REOPENING WERE NOT PROVIDED. THE LD. AUTHORISED REPRESENTATIVE VEHEMENTLY ARGUED ON THE VALIDITY OF RE- ASSESSMENT PROCEEDINGS RELYING ON THE APEX COURT , HIGH COURT DECISIONS AND FILED PAPER BOOK. IN THE COURSE OF ARGUMENTS, THE LD. ITA NO.696 & 1160/MDS/2016 :- 8 -: AUTHORISED REPRESENTATIVE MENTIONED THAT, REQUEST W AS MADE TO THE LD. ASSESSING OFFICER BY LETTER DATED 04.04.2011 TO FURNISH THE REASONS FOR REOPENING OF ASSESSMENT AND THE DEPARTMENT HAS NOT COMPLIED. AT THE TIME OF HEARING THE LD. DEPARTMENTAL REPRESE NTATIVE PRODUCED COPY OF THE LETTER FILED FROM THE INCOME TAX RECO RDS AND THERE IS NO MENTIONING IN THE LETTER ASKING FOR REASONS RECORD ED FOR REOPENING. WHEN WE COMPARED THE LETTER DATED 04.04.2011 AS PER PAPER BOOK AT PAGE 125 AND THE LETTER PRODUCED BY THE LD. DEPARTM ENTAL REPRESENTATIVE FROM THE ASSESSING OFFICER RECORDS WITH SAME DATE THERE EXIST A DIFFERENCE AND AS PER THE COPY OF LET TER PRODUCED BY THE DEPARTMENTAL REPRESENTATIVE THERE IS NO REFERENCE O F SEEKING REASONS OF REOPENING OF ASSESSMENT BUT ONLY ASSESS EE REQUESTED TO CONSIDER THE RETURN FILED EARLIER FOR RE-ASSESSMENT AS RETURN FILED IN COMPLIANCE TO NOTICE U/S.148 OF THE ACT. WHEN THIS WAS CONFRONTED, THE LD. AUTHORISED REPRESENTATIVE COULD NOT GIVE AN Y CONVINCING REPLY FOR THE DIFFERENCE IN THE WORDINGS OF THE LETTER. IN OUR OPINION, IT IS ONLY MISREPRESENTATION OF FACTS WHICH CANNOT BE APP RECIATED BY THIS TRIBUNAL. WE FIND ON MERITS THAT THE LD. ASSESSING OFFICER HAS REOPENED ASSESSMENT AS THE ASSESSEE FAILS TO DEDUCT TDS ON PAYMENTS DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. FURTHER, THE LD. ASSESSING OFFICER AND CO MMISSIONER OF ITA NO.696 & 1160/MDS/2016 :- 9 -: INCOME TAX (APPEALS) HAVE MADE FINDINGS ON THE REA SONS OF REOPENING IN THEIR ORDERS. CONSIDERING THE APPARE NT FACTS, MATERIAL EVIDENCE AND FINDINGS OF THE LOWER AUTHORITIES, WE ARE OF THE OPINION THAT THE REOPENING OF ASSESSMENT IS IN ORDER AND DI SMISS THE GROUNDS OF THE ASSESSEE ON THE VALIDITY OF REOPENING OF A SSESSMENT AND UPHELD THE ORDER OF COMMISSIONER OF INCOME TAX (APP EALS) AND DISMISS THE ASSESSEE GROUND. 7.1 ON THE SECOND GROUND OF DISALLOWANCE U/S.40(A)( IA) OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE EXPLAINED T HE PROVISIONS AND RELIED ON THE DECISION OF M/S. MERILYN SHIPPING & TRANSPORTS (SUPRA) AND DREW OUR ATTENTION TO THE PAPER BOOK WERE THE ASSESSEE HAS FILED ASSESSMENT ORDER DATED 26.12.2008 AT PAGE 127. ON PERUSAL OF ORDER, THE THEN LD. ASSESSING OFFICER HAS DEALT ON THE PROVISIONS OF SEC. 40A(3) OF THE ACT AND THERE WAS NO MENTION ABOUT T HE PAYMENTS OR VERIFICATION OF TDS DEDUCTION AND THE LD. AUTHORISE D REPRESENTATIVE ALSO FILED COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET IN SUPPORT OF THE GROUNDS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS BIFURCATED THE IMPUGNED DISALLOWANCE IN THREE CATEGORIES (I) PAYMENT OF TDS WITH DELAY >1, 12,75,678/- (II) SHORT DEDUCTION OF TDS >78,16,645/- AND (III) BALA NCE OF >69,46,247/- NO TDS WAS EFFECTED. THE LD. COMMISS IONER OF INCOME ITA NO.696 & 1160/MDS/2016 :- 10 -: TAX (APPEALS) HAS DELETED THE ADDITION OF >78,16,64 5/- FOR SHORT DEDUCTION OF TDS AND FOR THE REMAINING DISALLOWANC E AMOUNT THE ASSESSEE IS BEFORE US. THE LD. AUTHORISED REPRESEN TATIVE FILED A STATEMENT OF DISALLOWANCE U/S.40(A)(IA) OF THE ACT IN RESPECT OF TWO PARTIES WERE THE AMOUNT DISALLOWED IS MORE THAN THE AMOUNT OUTSTANDING PAYABLE AS ON 31.03.2006 AND IN RESPE CT OF OTHER PAYMENTS TDS IS ALREADY PAID. THE LD. DEPARTMENTAL REPRESENTATIVE ALLEGED THAT THE ASSESSEE IS PRODUCING THIS INFORMA TION FOR THE FIRST TIME AND THE LD. ASSESSING OFFICER HAS NOT VERIFIE D THE OUTSTANDING PAYMENTS. CONSIDERING THE APPARENT. FACTS, FINDING S AND SUBMISSIONS IN PAPER BOOK, WE ARE OF THE OPINION THAT THE MATTE R HAS TO BE RE- EXAMINED BY THE LD. ASSESSING OFFICER IN LIEU OF SU BMISSIONS IN PAPER BOOK AND STATEMENT OF TDS FURNISHED IN THE TRIBUNAL . THEREFORE, WE REMIT THE DISPUTED ISSUE FOR LIMITED PURPOSE FOR V ERIFICATION BY THE LD. ASSESSING OFFICER AND THE ASSESSEE SHALL BE PROVIDE D WITH ADEQUATE OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE ON MERITS AND THE GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 8. NOW, WE TAKE UP DEPARTMENTAL APPEAL IN ITA NO.1160/MDS/2016. THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- ITA NO.696 & 1160/MDS/2016 :- 11 -: 2.1. THE LEARNED CIT(A) ERRED IN DELETING THE ADD ITION OF RS.78,16,645/- MADE INVOKING THE PROVISION OF SEC. 40(A)(IA). 2.2 THE LEARNED CIT(A) RELIED ON THE DECISION OF TH E HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. S.K.T EKRIWAL (361 ITR 432)(CAL). NO JURISDICTIONAL HIGH COURT DECISIO N ON THE ISSUE IS REFEREED. 2.3. THE ISSUE IS NQT SETTLED AND IS PENDING WITH V ARIOUS HIGH COURTS PRONOUNCING DIFFERING JUDGEMENTS. HENCE, CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL. 8.1 BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARG UED THE GROUNDS AND EXPLAINED THAT THE ACTION OF THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION IS NO T IN ACCORDANCE WITH LAW AND ALSO DECISION RELIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ARE NOT OF JURISDICTIONAL HIGH COURT. F URTHER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CALLED FOR REMAND REPORT OR ANY COMMENTS FROM THE LD. ASSESSING OFFIC ER BEFORE DELETING THE ADDITION AND PRAYED FOR ALLOWING THE A PPEAL. 8.2 ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIV E RELIED ON THE ORDERS OF THE COMMISSIONER OF INCOME TAX (AP PEALS) AND VEHEMENTLY OPPOSED THE GROUNDS. 8.3 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS. THE LD. DEPARTMENTAL REPRESENTATIVE CONTENTION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SHOULD ITA NO.696 & 1160/MDS/2016 :- 12 -: NOT HAVE DELETED THE DISALLOWANCE WERE THERE IS SHO RT DEDUCTION OF TDS. WE PERUSED THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT, THE ASSESSEE HAS DEDUCTED TDS WHICH IS NOT DISPUTED BY THE REVENUE BUT AT LOWER RATE AND REMITTED TO THE TREASURY OF THE G OVERNMENT. SIMILAR ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE CASE OF M/S. SWELECT ENERGY SYSTEMS LTD IN ITA NO. 1344/MDS /2012, ASSESSMENT YEAR 2008-09, DATED 20.11.2015 WHEREIN IT WAS HELD AT PAGE 5.3 AS UNDER:- 5.3 AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESS EE FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. COUN SEL HAS SUBMITTED THAT PROVISIONS OF SECTION 40(A)(IA) SHAL L NOT BE APPLICABLE IN RESPECT OF SHORT DEDUCTION OF TDS AND PRIME FACIE THE ASSESSEE IS FOLLOWING GOING CONCERN PRACTICE OF DEDUCTING TDS ON CONTRACT PAYMENTS AND RELIED ON THE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TE KRIWAL 260 CIT 0073 (CAL) AND ALSO ON THE DECISION OF ITAT D ELHI TRIBUNAL IN THE CASE OF ACIT VS. PANKAJ BHARGAVA IN ITA NO.5 9/DEL/2011, DATED 24 TH MAY, 2013 AND PLEADED FOR DELETION OF ADDITION. O N VERIFYING THE LEGAL POSITION, WE FIND THAT THE ADDI TION U/S.40(A)(IA) OF THE ACT CAN BE MADE IF BOTH THE C ONDITIONS ARE SATISFIED IN RESPECT OF APPLICABILITY OF TDS UNDER CHAPTER XVII B AND TAX WAS NOT DEDUCTED BY THE ASSESSEE. IN THE P RESENT CASE, THE ASSESSEE HAD DEDUCTED TDS AT A LOWER RATE , ON PERUSING THE CASE LAWS AND DECISIONS RELIED BY THE LD. COUNSEL. WE FOUND THAT EXPENSES ARE NOT LIABLE TO BE DISALLO WED U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF SHORT DEDUCT ION OF TAX AT SOURCE. THE ASSESSEE HAS FURTHER COMPLIED WITH BOTH THE LIMBS OF APPLICABILITY OF PROVISIONS BY DEDUCTING TDS ON PAYMENTS AND DEPOSITING THE SAME WITH THE GOVERNMENT, WHICH IS NOT DISPUTED BY THE ASSESSING OFFICER. WE ARE OF THE OP INION, THAT IF ANY DIFFERENCE IN STRATEGY OF TAXABILITY OR NATURE OF PAYMENT ARISES, IN SUCH CIRCUMSTANCES ALTERNATIVELY, THE ASSESSING OFFICER CAN TREAT THE ASSESSEE AS DEFAULTER U/S.201 OF THE ACT BUT NOT BY INVOKING PROVISIONS U/S.40(A)(IA) OF THE ACT. IT IS ALSO APPARENT FROM FACTS OF THE CASE THE ASSESSEE HAS DE DUCTED TDS ITA NO.696 & 1160/MDS/2016 :- 13 -: AND REMITTED TO THE TREASURY AND WE DIRECT THE AS SESSING OFFICER TO DELETE THE IMPUGNED ADDITION AND ALLOW T HE GROUNDS OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORD INATE BENCH, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE COM MISSIONER OF INCOME TAX (APPEALS) ON THIS GROUND AND WE DISMISS THE GRO UNDS OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 5TH DAY OF AUGUST , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 0 / DATED:05.08.2016 KV 1 * (',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 389 (',' / DR 2. ()&' / RESPONDENT 4. 5, / CIT 6. 9:$ ; / GF