Shri Deepak Vishwanath Bhamare, Dhule V. ACIT Cir.3(1), Dhule

ITA 1237/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49915 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH DUBEY
• Section: 143(3); 142(1); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 1237/PN/2009 (ASSTT. YEAR : 2005-06) SHRI DEEPAK VISHWANATH BHAMARE , ... APPELLANT M/S SUNDARMADHAV CONSTRUCTIONS OPP BANK OF BARODA, DHULE 424001 PAN : NOT AVAILABLE V. ACIT, CIR.3(1), DHULE RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI MUKESH DUBEY ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED ORDER PASSED U/S. 2 63 OF THE ACT WHEREBY THE INCOME HAS BEEN ENHANCED BY THE LD CIT BY RS.27,25,853/-. 2. THE RELEVANT FACTS ARE THAT ASSESSMENT U/S. 143( 3) WAS FRAMED U/S. 143(3) ON 26.4.2007 AT A TOTAL INCOME OF RS. 18,58, 930/- ON VERIFICATION OF RECORD, THE LD CIT FOUND THAT THE ASSESSMENT ORD ER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSES SEE HAD FAILED TO DEPOSIT DEDUCTED TAX AT SOURCE OF RS. 49,570/- FROM PAYMENT S TO SUB-CONTRACTORS IN TIME INTO GOVERNMENT ACCOUNT. THE LD CIT WAS NO T SATISFIED WITH THIS CAUSE SHOWN BY THE ASSESSEE IN RESPONSE TO THE NOTI CE ISSUED U/S. 263 OF THE ACT AND INVOKED PROVISIONS U/S. 263 OF THE ACT AND HE ENHANCED THE TOTAL INCOME TO RS.27,25,853/- I.E. THE AMOUNT DISA LLOWED BY HIM. 3. IN SUPPORT OF THE GROUND, THE LD. A.R. SUBMITTED THAT ASSESSEE IS IN THE BUSINESS OF GOVERNMENT CONTRACTORS. DURING THE PERIOD, TOTAL GROSS RECEIPT RECEIVED BY HIM I.E. RS.2,62,49,567/- AND TDS ON IT OF RS.5,11,470/- (TOTAL TDS RS. 5,17,533/- WHICH INCL UDES RS. 6063/- ON ITA . NO.1237/PN/2009 SHRI DEEPAK V. BHAMARE, A.Y 2005-06 PAGE OF 5 2 BANK INTEREST) WAS MADE OUT. AS PER LD CIT, IN PA RA NO. 2 OF THE REVISIONAL ORDER, TOTAL SUB-CONTRACT RECEIPTS HAS B EEN SHOWN AT RS.45,98,192/- WHEREAS AS PER BOOKS OF ACCOUNT TO TAL OF SUB-CONTRACT RECEIPTS IS RS.47,45,192/-. HE SUBMITTED THAT BEFO RE THE A.O, THE ASSESSEE HAD GIVEN DETAILS OF SUB-CONTRACTS VIDE LE TTER DT. 5.2.2007 (PARA NO. 7). 3.1. THE LD. A.R SUBMITTED THAT THE TRANSFER ENTRY I.E. DEBITED SUB- CONTRACT EXPENSES, AS PER ACCOUNT WAS PASSED ON 31 ST MARCH 2005 AND ACCORDINGLY, TDS WAS MADE BY THE ASSESSEE ON THE P AYMENT AS PER SEC. 200(1) ON 31 ST MAY 2005 I.E. IN TIME. THE LD CIT HAS, HOWEVER, CONSIDERED THE PAYMENT OF ADVANCES AGAINST THEIR WO RK TO SUB- CONTRACTORS FOR TDS. THE LD CIT HAS WORKED OUT THI S ADVANCE AMOUNT AT RS.45,98,192/-. THE LD. A.R. SUBMITTED THAT AT THE TIME OF THE ADVANCE PAYMENT TO SUB-CONTRACTORS, THERE WAS NO SURETY OF COMPLETION OF THE CONTRACT. SECTION 40 OF THE ACT COMES INTO PICTUR E WHEN ANY AMOUNT HAS BEEN CLAIMED AS DEDUCTION WHILE COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS AND PROFESSION. IN THE CASE OF ASSESSEE, TDS HAS BEEN DULY MADE ON THOSE A MOUNTS TOWARDS SUB-CONTRACT EXPENSES, WHICH HAVE BEEN CLAIMED (DEB ITED) IN PROFIT AND LOSS ACCOUNT. THE QUESTION OF DISALLOWANCE DOES NO T ARISE IN THOSE AMOUNTS MADE IN ADVANCE TO SUB-CONTRACTORS WHICH HA VE NOT AT ALL BEEN CLAIMED (DEBITED) AS DEDUCTION IN THE PROFIT & LOSS ACCOUNT SINCE THEY WERE IN THE NATURE OF ADVANCES AND NOT THE ACTUAL E XPENSES. THE LD. A.R. SUBMITTED FURTHER THAT ON 31 ST MARCH 2005, THE SUB-CONTRACT ACCOUNT WERE FINALIZED AND ACTUAL EXPENDITURE WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AND ON THIS EXPENDITURE, TAX WAS DEDUCTED A S PER THE PROVISIONS OF INCOME TAX ACT 1961 AND WAS DEPOSITED IN GOVERN MENT ACCOUNT WITHIN STIPULATED TIME ON 31 ST MAY 2005. THE LD. A.R. POINTED OUT THAT IN THE ITA . NO.1237/PN/2009 SHRI DEEPAK V. BHAMARE, A.Y 2005-06 PAGE OF 5 3 CASE OF ASSESSEE, TDS HAS NOT BEEN MADE ON ADVANCES AS THE SAME WERE NOT IN THE NATURE OF EXPENSES AT THE TIME OF PAYMEN T BUT TDS HAS BEEN MADE AND PAID WITHIN THE DUE DATE I.E. 31 ST MAY 2005 AND SUB-CONTRACT EXPENDITURE WAS DEBITED TO THE PROFIT & LOSS ACCOUN T BY JOURNAL ENTRY. IN THIS REGARD, THE LD A.R. PLACED RELIANCE ON THE DEC ISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL VS. ACIT (2010) 40 SOT 361 (BOM) HOLDING THAT SINCE THE ASSE SSEE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E. MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DATE OF FILING OF THE RETURN U/S. 139(1), THUS IT IS COVERED UNDER CLAUSE (A) OF SEC . 40(A)(IA). THIS DECISION OF THE BOMBAY TRIBUNAL HAS BEEN FOLLOWED B Y PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SUPER HARYANA ROADWA YS V/S. ITO (ITA NO. 193/PN/2009) (ASSTT. YEAR : 2005-06) VIDE ORDER DAT ED 7 TH JANUARY 2011 (COPY SUPPLIED). 4. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE REVISIONAL ORDER IN QUESTION. 5. HAVING GONE THROUGH THE ASSESSMENT ORDER, WE FIN D THAT THE A.O WHILE FRAMING THE ASSESSMENT U/S. 143(3) VIDE ITS N OTICE ISSUED U/S. 142(1) ON 31 ST JANUARY 2007 HAD CALLED FOR DETAILS, BESIDES OTHE R ALSO REGARDING TDS RECONCILIATION WITH RECEIPT AND DETA ILS OF EXPENDITURE ON WHICH TDS WAS DEDUCTIBLE BY ASSESSEE AND THE PAYMEN T OF THE TDS MADE TO THE ACCOUNT OF CENTRAL GOVERNMENT. THE TDS CERTIFICATES FILED BY THE ASSESSEE ALONG WITH RETURN OF INCOME WERE COMP ARED WITH THE TDS CLAIMED IN THE RETURN OF INCOME. THE A.O HAS ALSO MENTIONED THE FURNISHING OF DETAILS REGARDING THE SUB-CONTRACT B Y THE ASSESSEE ON RECORD. THUS, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED HEREINABOVE, IT CANNOT BE SAID THAT THE ASSESSMENT ORDER IS ERRONEOUS ITA . NO.1237/PN/2009 SHRI DEEPAK V. BHAMARE, A.Y 2005-06 PAGE OF 5 4 AS THE A.O HAS NOT APPLIED HIS MIND ON THE ISSUE O F DEPOSIT OF DEDUCTED TAX AT SOURCE FROM PAYMENTS TO THE SUB-CONTRACTORS IN TIME INTO GOVERNMENT ACCOUNT . THE ASSESSMENT ORDER ALSO CA NNOT BE HELD PREJUDICIAL TO THE INTEREST OF REVENUE SINCE THE A SSESSEE HAD DEBITED THE SUB-CONTRACT EXPENSES AS PER ACCOUNT ANALYZED ON 31 ST MARCH 2005 AND MADE TDS PAYMENT AS PER SECTION 200(1) OF THE ACT I N TIME ON 31 ST MAY 2005. IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL V /S. ACIT (SUPRA) BEFORE THE MUMBAI BENCH, ALMOST SIMILAR FACTS WERE THERE. IN THAT CASE, ENTIRE PAYMENT TO CONTRACTORS WERE MADE IN THE MONT H OF MARCH 2005 AND TAX WAS DEDUCTED IN THE MONTH OF MARCH 2005 AND WAS DEPOSITED ON 21 ST SEPTEMBER 2005 BEFORE THE DUE DATE OF FILING OF RE TURN OF INCOME AS PER SECTION 139(1). THE A.O HAD ALLOWED THE DEDUCT ION IN RESPECT OF PAYMENT MADE DURING THE MONTH OF MARCH 2005 BUT DIS ALLOWED U/S. 40 (A) (IA) THE DEDUCTION IN RESPECT OF PAYMENTS WHICH WERE CREDITED AND MADE DURING THE PERIOD OTHER THAN THE MONTH OF MARC H 2005. THE ACTUAL DEDUCTION AND PAYMENT IS GOVERNED BY THE PROVISIONS OF SEC. 40(A)(IA) FOR DISALLOWANCE OF THE EXPENDITURE AND NOT BY THE PROVISIONS OF SEC. 194C OR ANY OTHER PROVISIONS OF CHAPTER XVIIB, HELD THE TRIBUNAL. IT WAS FURTHER HELD THAT AS PER PROVISIONS OF SEC. 40(A)(I A), IF THE TDS IS DEPOSITED WITH THE GOVERNMENT ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME,; THEN DEDUCTION WILL NOT BE DENIE D. PROVISIONS OF CHAPTER XVII ARE RELEVANT ONLY FOR ASCERTAINING DED UCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISIONS OF SEC. 40(A)(IA), HELD THE TRIBUNAL. S INCE THE ASSESSEE IN THAT CASE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E. MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DA TE OF FILING OF THE RETURN U/S. 139 (1), THE TRIBUNAL HELD THAT IT IS C OVERED UNDER CLAUSE (A) OF SEC 40(A)(IA). IN VIEW OF THIS DECISION OF THE T RIBUNAL, FOLLOWED BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. SUPER HA RYANA ROADWAYS V/S. ITA . NO.1237/PN/2009 SHRI DEEPAK V. BHAMARE, A.Y 2005-06 PAGE OF 5 5 ITO (SUPRA), WE DO NOT FIND INFIRMITY IN THE ASSESS MENT ORDER IN THIS REGARD. THUS, THE LD CIT WAS NOT JUSTIFIED IN TREA TING THE ASSESSMENT ORDER TO THIS EFFECT AS ERRONEOUS AS WELL AS PREJUD ICIAL TO THE INTEREST OF REVENUE UNDER THE PROVISIONS OF SEC. 263 OF THE ACT . WE THUS WHILE SETTING ASIDE ORDER PASSED U/S. 263 OF THE ACT IMPUGNED BY THE ASSESSEE BEFORE US, RESTORE THE ASSESSMENT ORDER ON THE ISSUE. THE GROUND IS ACCORDINGLY ALLOWED. 6. IN RESULT, APPEAL IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH JUN E 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH JUNE, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-1, NASHIK 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR