M/s Alishan Realcon Pvt. Ltd, Bhubaneswar V. ITO, Khurda

ITA 119/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0763 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 02-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: D K MOHANTY
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK (SMC) BENCH, CUTTACK . . . , SHRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 119/CTK/2010 / AS SESSMENT YEAR 2005 - 06 M/S.ALISHAN REALCON PVT. LTD., 262, SAHEED NAGAR,BHUBANESWAR PAN: AADCA 5451 D - - - VERSUS - INCOME - TAX OFFICER, KHURDA WARD, KHURDA. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SH RI D.K.MOHANTY, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, AR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER DT.11.2.2010 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR ASSESSMENT YEAR 2005 - 06 IN THE CASE OF THE ASSESSEE. 2. GROUNDS NO.1 AND 4 ARE GENERAL IN NATURE AND NEED NO SPECIFIC ADJUDICATION AND THEY ARE DISMISSED AS SUCH. 3. GROUND NO.3 RELATES TO ADD ITION OF 7,152 U/S.36(1)(VA) PERTAINING TO CONTRIBUTION TO EPF. AT THE TIME OF HEARING, NOTHING WAS ARGUED ON THIS GROUND BY THE LEARNED AR OF THE ASSESSEE. THEREFORE, GROUND NO.3 IS DISMISSED AS SUCH. I.T.A.NO. 119/CTK/2010 2 4. THE ONLY GROUND REMAINS TO BE CONSIDERED NOW IS GROUND NO. 2, WHICH RELATES TO DISALLOWANCE OF EXPENDITURE ON PAYMENT OF COMMISSION AMOUNTING TO 1,13,000 U/S.40(A)(IA) OF THE INCOME - TAX ACT,1961. 5. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE. THE ASSESSEE COMPANY IS MAINTAIN ING REGULAR BOOKS OF ACCOUNT IN THE COURSE OF BUSINESS CONFORMING TO THE PROVISIONS OF COMPANIES ACT. THE ASSESSEE IS ASSESSED TO INCOME - TAX SINCE ITS INCEPTION AND FILING RETURNS REGULARLY. THE RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED ON 31.10.2005 DISCLOSING TOTAL INCOME OF 2,10,792 ACCOMPANIED BY THE P & L ACCOUNT, BALANCE SHEET, SCHEDULES FORMING PART OF THE BALANCE SHEET, AUDITORS REPORT AS PER THE PROVISIONS OF THE INCOME - TAX ACT,1961. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE ALONG WITH ITS ACCOUNTANT APPEARED FRO M TIME TO TIME WITH RELEVANT BOOKS OF ACCOUNT, DOCUMENTS, LEDGER ACCOUNTS SUPPORTED WITH VOUCHERS FOR EXPENSES ETC., ON VARIOUS DATES. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER ADDED AN AMOUNT OF 2,15,177 TO THE TOTAL INCOME OF THE ASSESSEE , WHICH INCLUDES DISALLOWANCE OF PAYMENT OF COMMISSION OF 1,13,000 U/S.40(A)(IA) OF THE ACT . AGGRIEVED WITH THIS, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) AND GOT PART RELIEF. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNA L FOR FURTHER RELIEF . 6. NOW ADVERTING THE DISPUTE RAISED IN GROUND NO.3, THE RELEVANT FACTS ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF AMOUNT OF 1,13,000 PAID AS COMMISSION PAID TO BROKERS, WHO APPROACHES THE LAND OWNERS AND NEGOTIATED THE SALES O F LAND TO THE ASSESSEE BY THEM. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT I.T.A.NO. 119/CTK/2010 3 SOURCE THEREBY CONTRAVENED THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE INCOME - TAX ACT,1961. IN APPEAL, THE LEARNED CI T(A) CONFIRMED THE SAME. CHALLENGING THIS DISALLOWANCE, THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE THE TRIBUNAL THAT THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE ACT STATES THE AMOUNT PAYABLE BUT NOT PAID ALREADY. I N SUPPORT OF HIS CONTENTION HE RELIED ON THE FOLLOWING AUTHORITIES APART FROM THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE ACT. A ) M/S.NEW LIFE DIAGNOSTICS V.ITO IN ITA NO.284/CTK/2008 DT.31.8.2009 (COPY PLACED ON RECORD), B ) CIT V.MOTHER INDIA REFRIGE RATIONINDUSTRIES (P) LTD (1985) 48 CTR (SC) 176 : 155 ITR 711 (SC) C ) JAIPUR VIDYUT VITARAN NIGAM LTD. V. DCIT (2009) 123 TTJ (JP) 888 D ) M/S. TEJA CONSTRUCTIONS V. ACIT IN ITA NO.308/HYD/2009 DT.23.10.2009 (COPY PLACED ON RECORD) , AND E ) CBDT CIRCULAR NO. 5 OF 2005 DT.15.7.2005 [197 CTR (ST) 1]. IN ALL THESE DECISIONS, THE CONCLUSION REACHED BY DIFFERENT FORUMS IS THAT THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) APPLIES TO THE AMOUNTS PAYABLE BUT NOT PAID. IN THE PRESENT CASE ON HAND, THE AMOUNT HAS ALREADY BEEN PAID BY THE ASSESSEE ADMITTEDLY. THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) IS NOT AT ALL APPLICABLE FOLLOWING THE RULE OF LIBERAL CONSTRUCTION OF TAXING PROVISIONS. THEREFORE, THE LEARNED AR OF THE ASSESSEE SOUGHT DELETION OF THE DISALLOWANCE MAD E BY THE LOWER AUTHORITIES. CONTRARY TO THIS, THE LEARNED DR VEHEMENTLY ARGUED IN SUPPORT OF THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. 7. ON PERUSAL OF THE ABOVE STATED ORDERS OF THE TRIBUNAL AS WELL AS THE DECISIONS OF HONBLE SUPREME COURT AND THE C BDT CIRCULAR NO.5 OF 2005 DT.15.7.2005, I AM OF THE CONSIDERED VIEW THAT THE STAND TAKEN BY THE I.T.A.NO. 119/CTK/2010 4 ASSESSEE THAT THE TDS AS MENTIONED IN SECTION 40(A)(IA) IS ONLY ON AMOUNTS REMAINED PAYABLE BUT NOT THE AMOUNTS PAID ALREADY IS CORRECT . THEREFORE, RESPECTF ULLY FOLLOWING THE RULE OF PRECEDENCE, THE DISALLOWANCE MADE BY THE DEPARTMENTAL AUTHORITIES IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND HENCE, THE SAME IS HEREBY DIRECTED TO BE DELETED BY ALLOWING THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 09.03.2011 SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DATE: 09.03.2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.ALISHAN REALCON PVT. LTD., 262, SAHEED NAGAR,BHUBANESWAR. 2 / THE RESPONDENT: INCOME - TAX OFFICER, KHURDA WARD, KHURDA. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.