Assence Inc., Baroda V. The ADIT(Intl.Tax), Ahmedabad

ITA 1218/AHD/2012

• Counselvise Citation: 121820514 RSA 2012
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: VERTIK CHOKSHI
• Keywords: Audit objection
• Section: 143(3); 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1218/AHD/2012 ASSESSMENT YEAR :2005-06 ASSENCE INC SARABHAI MARG, BARODA [ PAN NO.AAECA 0708J ] V/S . ADIT (INTI. TAXN.), 4 TH FLOOR, NATURE VIEW BLDG., NR. H.K. HOUSE, ASHRAM ROAD, AHMEDABAD /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI VERTIK CHOKSHI, AR /BY RESPONDENT SHRI D.K. SINGH, SR-DR /DATE OF HEARING 02-08-2012 /DATE OF PRONOUNCEMENT 28-09-2012 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-GAANDHINAGAR ( CIT(A) FOR SHORT) DATED 27-03-2012 FOR THE ASSESSMENT YEAR (AY) 2005- 06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES FOR T HE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN REJECTING G ROUNDS NO.1 OF THE APPELLANTS APPEAL BEFORE HIM CHALLENGING THE VALID ITY OF THE RE- ASSESSMENT ORDER U/S. 147 R.W.S. 143((3) OF THE I.T . ACT DATED 09.02.2011 PASSED BY THE ADIT (INTI. TAXATION), AHM EDABAD. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THAT ENTIRE REASS ESSMENT HAS BEEN BASED UPON AUDIT OBJECTION, HENCE SAME IS REQU IRED TO BE QUASHED. ITA NO.1218/AHD/2012 A.Y. 2005-06 ASSENCE INC. V. ADIT(INTI. TAXN.) ABD PAGE 2 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES FOR TH E APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING DISAL LOWANCE OF EXPENDITURE U/.S. 40(A)(IA) OF THE IT ACT FOR RS.45 ,48,040 WHEN NO SUCH DISALLOWANCE WAS CALLED FOR. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES FOR TH E APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT GIVING DIRE CTION FOR ALLOWING EXPENDITURE DISALLOWED U/S 40(A)(IA) IN CURRENT YEA R IN SUBSEQUENT ASSESSMENT YEAR, THE YEAR IN WHICH TDS HAS BEEN PAI D BY APPELLANT. THE ASSESSING OFFICER MAYBE DIRECTED TO ALLOW SUCH EXPENDITURE AS ALLOWABLE EXPENDITURE IN SUBSEQUENT ASSESSMENT YEAR IF DISALLOWANCE MADE IN CURRENT YEAR IS UPHELD. 4. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE CHARGE OF INTEREST U/S. 234A, 234B AND 234C WHEN NO SUCH I NTEREST IS LEVIABLE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST. 2. THE FACTS OF THE CASE ARE THAT ASSESSMENT U/S. 1 43(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WA S FINALIZED ON 29-12-2008 DETERMINING TOTAL INCOME OF RS.1,17,06,858/- SUBSEQ UENTLY, ON THE BASIS OF AUDIT OBJECTION RAISED BY THE INTERNAL AUDIT PARTY, THE CASE WAS RE-OPENED U/S. 147 OF THE ACT AND THE PROCEEDINGS U/S. 147 R.W.S. 143(3) OF THE ACT WAS CONCLUDED THEREBY, AN ADDITION U/S. 40(A)(IA) OF TH E ACT WAS MADE. THE ASSESSEE FEELING AGGRIEVED BY THIS ORDER FILED AN A PPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE DISMISSED THE APPEAL. 3. NOW, THE ASSESSEE FILED SECOND APPEAL BEFORE US. 4. THE FIRST GROUND IS AGAINST THE REOPENING OF THE ASSESSMENT PROCEEDINGS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND OF APPEAL IS NOT PRESSED. IN VIEW OF THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE THIS GROUND IS TREATED TO BE NOT PRESSED. HENCE, THIS GROUND OF ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. 5. THE SECOND GROUND IS WITH REGARD TO DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT LD. AR SUBMITTED THAT THE ADDITION HAS BEEN MADE ON ACCOUNT OF NON- PAYMENT OF TDS DEDUCTED ON LABOUR PAYMENT AND PROFE SSION CHARGES. HE ITA NO.1218/AHD/2012 A.Y. 2005-06 ASSENCE INC. V. ADIT(INTI. TAXN.) ABD PAGE 3 SUBMITTED THAT ASSESSING OFFICER HAS MADE THE ADDIT ION U/S. 40(A)(IA) ON THE GROUND THAT TDS PERTAINING TO SUCH EXPENDITURE IS DEDUCTABLE AND DEDUCTED BEFORE FEBRUARY, 2005 BUT WAS PAID AFTER MARCH. HE SUBMITTED THAT LD. CIT(A) CONFIRMED THE ADDITION MAINLY ON THE GROUND THAT AS PER PROVISIONS APPLICABLE FOR THE YEAR, THE EXPENSES ARE NOT ALLOWABLE U/S. 4 0(A)(IA). HE SUBMITTED THAT LD. CIT(A) RELIED UPON THE DECISION OF HONBLE SPEC IAL BENCH RENDERED IN THE CASE OF BHARASTI SHIP YARD 132 ITD 53 (MUM)(SB). HE SUBMITTED THAT TDS PAYMENTS TO CONTRACTOR OF RS.4.57 LAKHS WAS DEDUCTE D ON 07-07-2004 WAS PAID ON 07-08-2005. SIMILARLY, IN THE CASE OF PROFE SSION FEE OF RS.91,040/-, THE TAX WAS DEDUCTED ON 07-02-2005 AND WAS PAID ON 26-0 4-2005. HE SUBMITTED BOTH TDS WAS THOUGH PAID AFTER FINANCIAL YEAR 2004- 05, BUT WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN. HE SUBMITTED THAT AMENDMENT IN THE PROVISIONS OF SECTION 40(A)(IA) WITH EFFECT FROM 1-4-2010 WOUL D BE APPLICABLE W.E.F.1-4- 2005. IN THE SUPPORT OF THIS CONTENTION, HE RELIED ON THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF M/S VIRGIN CREATIONS . HE ALSO RELIED UPON THE JUDGMENTS OF HONBLE CO-ORDINATE A BENCH IN CASE OF SHRI SURESHBHAI G PATEL VS. ITO IN ITA NO. 673/AHD/2010 FOR A.Y. 2006-07 AND IN THE CASE OF M/S ALPHA PROJECTS V. DCIT IN ITA NO. 2869/AHD/2011 DATED 23- 03-2012. HE SUBMITTED THAT ISSUE HAS BEEN DECIDED B Y THE HONBLLE CALCUTTA HIGH COURT AND FOLLOWED BY THE VARIOUS BENCHES OF T HE HONBE ITAT. THE ADDITION MADE CANNOT BE SUSTAINED. ON THE CONTRARY, LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND CASE LAWS CITED BY LD. AR. SINCE ISSUE HAS BEEN DECIDED BY VARIOUS JUDICIAL PRONOUNCEMENTS THAT THE AMENDMENT MADE BY THE FINANCE ACT 2010 IS RETROSPECTIVE IN NATURE AND WOU LD BE APPLICABLE WITH EFFECT FROM 1-4-2005. IN THIS VIEW OF THE MATTER, T HE CONTENTION OF THE LD. AR IS ACCEPTABLE. HOWEVER, FROM THE ORDERS OF AUTHORITIES BELOW IT IS NOT COMING OUT THAT WHEN THE TDS WAS DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT, IN THIS VIEW OF THE MATTER, THIS MATTER IS REMITTED BACK TO THE FILE OF ASSESSING ITA NO.1218/AHD/2012 A.Y. 2005-06 ASSENCE INC. V. ADIT(INTI. TAXN.) ABD PAGE 4 OFFICER TO VERIFY WHETHER TAX WAS DEDUCTED AND PAID BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME IN CASE, THE ASSESSEE HAS DEPO SITED THE TDS AMOUNT BEFORE THE DUE DATE OF FLING OF THE RETURN, THE AO SHALL DELETE THE ADDITION IN THE LIGHT OF THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA) AND FOLLOWED BY THE VARIOUS CO-ORDINATE BE NCHES. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. 7. THE THIRD GROUND IS AGAINST THE CHARGING OF INTE REST U/S. 234A/234B/234C. THIS ISSUE IS CONSEQUENTIAL IN NATU RE AND DISPOSED OF IN FAVOUR OF ASSESSEE. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.MOHAN ALANKAMONY) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP !' #- 28/09/2012 *+, - ../ ../ ../ ../ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ','.3 4 / CONCERNED CIT 4. 4- / CIT (A) 5. /78 ...3, .3 , *+, / DR, ITAT, AHMEDABAD 6. 8;< => / GUARD FILE. BY ORDER/ , /TRUE COPY/ ?/* '@ .3 , *+, - STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT ITA NO.1218/AHD/2012 A.Y. 2005-06 ASSENCE INC. V. ADIT(INTI. TAXN.) ABD PAGE 5 1) DATE OF TAKING DICTATION 21/09 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 21/09 4) DATE OF CORRECTION 24/09 5) DATE OF FURTHER CORRECTION 25/09 6) DATE OF INITIAL SIGN BY MEMBERS 26/09 7) ORDER UPLOADED ON 01/10 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 01/10