THE ACIT, 2(1), Bhopal V. M/S. SHUBHALAY, Bhopal

ITA 118/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5644 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Reassessment proceedings
• Section: 143(3); 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 118/IND/2015 A.Y. : 2008-09. ACIT, M/S.SHUBHALAY, 2(1), VS BHOPAL BHOPAL APPELLANT RESPONDENT PAN NO. AAWFS9619P APPELLANTS BY : SHRI R.A. VERMA, DR RESPONDENT BY : NONE. O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 05.12.2014 FOR THE ASSE SSMENT YEAR 2008-09. DATE OF HEARING : 16. 0 3 .2016 DATE OF PRONOUNCEMENT : 16 .0 3 .2016 ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 2 2 2. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUND OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 5,09,108/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE INCOME-TAX ACT. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE I S A FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUI LDINGS. THE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME FOR ASS ESSMENT YEAR 2008-09 ON 21.10.2008 DECLARING INCOME AT RS. NIL AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT AT RS. 4 3,59,047/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTIC E U/S 143(2) OF THE ACT AND ASSESSMENT U/S 143(3) OF THE ACT WAS MADE ON 23.12.2010 DETERMINING TOTAL INCOME AT RS. 34,98,99 0/- BY DISALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 8 0IB(10) OF THE ACT. SUBSEQUENTLY, THE AO NOTICED THAT THE ASSE SSEE HAD INFACT CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT OF RS. 43,59,047/- AND THE AO HAD WRONGLY TAKEN THE FIGURE OF DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE ACT T O THE EXTENT ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 3 3 OF RS. 9,10,061/- ( RS. 43,59,047/- - RS. 34,48,98 6/- ). IT WAS ALSO NOTICED BY THE ASSESSING OFFICER FROM THE TAX AUDIT REPORT IN FORM NO. 3CD IN COLUMN NO.27 THAT THE ASS ESSEE HAD DEDUCTED LOWER TDS U/S 194J OF THE ACT OF RS. 4 9,428/- AND THE RATE OF TDS U/S 194J OF THE ACT WAS AT 10%. THUS, THE CONSULTANCY CHARGES OF RS. 4,94,280/- WAS DISALLOWA BLE U/S 40(A)(IA) OF THE ACT, WHICH WAS WRONGLY ALLOWED. TH EREFORE, THE AO AFTER RECORDING REASONS, INITIATED REASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S 148 OF THE ACT ON 16.12.2012. IN RESPONSE, THE ASSESSEE SUBMITTED THA T THE RETURN FILED BY THE ASSESSEE MAY BE CONSIDERED AS R ETURN IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT. T HE REASONS RECORDED U/S 148(2) OF THE ACT WERE ALSO PROVIDED T O THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS, WHEN THE A SSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE BALANCE DEDUCTIO N U/S 80IB(10) OF THE ACT OF RS. 9,10,061/- SHOULD NOT B E DISALLOWED, THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAD CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT OF RS. 43 ,59,047/- AND THE AO HAD DISALLOWED RS. 34,48,986/- ONLY AND, THEREFORE, THE BALANCE OF RS. 9,10,061/- MAY BE DIS ALLOWED. ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 4 4 HOWEVER, IT WAS SUBMITTED THAT THE ASSESSEE HAD CHA LLENGED THE DISALLOWANCE OF DEDUCTION U/S 80IB(10) OF THE A CT AND, THEREFORE, THE TOTAL CLAIM OF THE ASSESSEE U/S 80IB ) OF THE ACT OF RS. 43,59,047/- WAS DISALLOWED. SINCE, IN THE R EGULAR ASSESSMENT U/S 143(3) OF THE ACT, THE DISALLOWANCE U/S 80IB(10) OF THE ACT OF RS. 34,48,986/- ONLY WAS MAD E, THE AO MADE FURTHER DISALLOWANCE OF THE DIFFERENCE OF RS 9,10,061/-. REGARDING NON-DEDUCTION OF TDS ON THE CONSULTANCY C HARGES, WHEN THE ASSESSEE WAS ASKED TO EXPLAIN, IT WAS SUBM ITTED BY THE ASSESSEE THAT THE ACCOUNTANT OF THE ASSESSEE HA D DEDUCTED TDS ON CONSULTANCY CHARGES @ 5.15% AS AGAINST THE APPLICABLE RATE OF 10.30% BY INADVERTENT MISTAKE AN D, THUS, THREE WAS SHORT DEDUCTION TO THE EXTENT OF RS. 49,4 28/-. THE ASSESSEE HAD ALSO FURNISHED THE LEDGER ACCOUNTS OF ALL THE SEVEN PERSONS, TO WHOM CONSULTANCY CHARGES WERE PAI D. IT WAS SUBMITTED THAT ALL THE SEVEN PERSONS WERE INCOME TA X ASSESSEES AND THEY HAD FILED THEIR INCOME TAX RETUR NS FOR ASSESSMENT YEAR 2008-09 AND DECLARED THE INCOME OF CONSULTANCY CHARGES RECEIVED FROM THE ASSESSEE AND PAID TAX THEREON. IT WAS CONTENDED THAT NO DISALLOWANCE U/S 40(A)(IA) OF ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 5 5 THE ACT MAY BE MADE ON ACCOUNT OF INADVERTENT MISTA KE OF THE ACCOUNTANT FOR DEDUCTION OF TDS AT LOWER RATE. BUT THE AO DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS LIABLE FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE AO HAD CALCULATED THE DISALLOWANCE AT RS. 5,09, 108/- BASED ON 10.30% RATE OF TDS OF RS. 49,428/- ( 49,42 8 X 10.30 = RS. 5,09,108). ACCORDINGLY, THE AO DISALLOWED CON SULTANCY CHARGES EXPENSES TO THE EXTENT OF RS. 5,09,108/- U/ S 40(A)(IA) OF THE INCOME-TAX ACT, 1961. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER :- THE SECOND ISSUE INVOLVED IS REGARDING DISALLOWANC E U/S 40(A)(IA) OF THE ACT OF RS. 5,09,108/- OUT OF CONSULTANCY CHARGES. THE ADMITTED FACTS ARE THAT TH E ASSESSEE HAD PAID CONSULTANCY CHARGES TO SEVEN PERSONS AND THE ASSESSEE WAS LIABLE FOR DEDUCTION O F TAX AT SOURCE AS PER SECTION 194J OF THE ACT. HOWEVER, THE ASSESSEE HAD DEDUCTED TAX AT SOURCE @ 5.15% AS AGAINST THE APPLICABLE RATE OF 10.30 %. NOW, THE ISSUE IS WHETHER THE PROVISIONS OF SECTION ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 6 6 40(A)(IA) OF THE ACT ARE ALSO ATTRACTED IN THE ARE A OF SHORT DEDUCTION OF TAX AT SOURCE. THERE ARE A NUMBE R OF DECISIONS OF HON'BLE TRIBUNAL WHEREIN IT WAS HEL D THAT IF AN ASSESSEE HAD DEDUCTED THE TAX AT SOURCE, EVEN THOUGH AT A LOWER RATE, THEN DUE TO THE SHORTF ALL IN TDS, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CA N BE MADE. IT HAS BEEN HELD THAT PROVISIONS OF SECTIO N 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY WHEN EITHE R THE ASSESSEE HAD NOT DEDUCTED ANY TAX AT SOURCE OR IF THE TAX HAS BEEN DEDUCTED, SUCH TAX HAS BEEN PAID INTO THE GOVERNMENT ACCOUNT. THERE IS NOTHING IN TH E SAID SECTION FOR DISALLOWANCE WHERE THERE IS SHORTF ALL IN DEDUCTION OF TAX AT SOURCE. REFERENCE CAN BE MA DE TO THE FOLLOWING DECISIONS :- (I) DCIT VS. S.K. TEKRIWAL,(2011) 48 SOT 515 (KOLKATA I.T.A.T. ). (II) ITO VS. PREMIER MEDICAL SUPPLIES & STORES, (2012) 25TAXMANN.COM.171 (KOLKATA I.T.A.T. ) (III) DCIT VS. CHANDABHOY & JASSOBHOY,[2012] 17 TAXMANN.COM 158 (MUMBAI I.T.A.T. ). ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 7 7 IN VIEW OF THE ABOVE, SINCE THE APPELLANT HAD DEDUCTED TAX AT SOURCE ON THE CONSULTANCY CHARGES PAID TO ALL THE SEVEN PARTIES, THOUGH AT A LOWER RATE THAN THE APPLICABLE RATE, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS CALLED FOR. HENCE, THE DISALLOWANCE OF RS. 5,09,108/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT IS DELETED. 5. THE LD. DR RELIED UPON THE ORDER OF THE AO. 6. THE LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORD ER OF CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ORDER OF THE CIT( A) AS WELL AS CASE LAWS AND WE FIND THAT THE LD. DR COULD NOT BRING ANYTHING CONTRARY TO THE FINDING OF THE LD. CIT(A). WE, THEREFORE, UPHOLD THE ACTION OF THE LD. CIT(A). OUR INTERFERENCE IS NOT REQUIRED. ACIT,2(1), BHOPAL VS. M/S.SHUBHALAY, BHOPAL I.T. A.NO. 118/IND/2015 A.Y. 2008-09 8 8 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 16 TH MARCH, 2016. CPU* 16