SHRI RAJESH KUMAR GOYAL, DURG(CG) V. THE DEPUTY COMMISSIONER OF INCOME TAX-1, BHILAI(CG)

ITA 126/BIL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3911 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAMDEO
• Assessee Lawyers: S R RAO
• Keywords: Retrospective amendment
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.126/RPR/2016 / ASSESSMENT YEAR : 2010-11 RAJESH KUMAR GOYAL, GOYAL ROAD LINES, SHOP 49/C, TRANSPORT NAGAR, DURG (C.G) PIN-491 001 PAN : AHLPG4794K ....... APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX-1, BUNGALOW-32/32, BHILAI (C.G.) / RESPONDENT ASSESSEE BY : SHRI S.R. RAO REVENUE BY : SHRI R.P. NAMDEO / DATE OF HEARING : 18.01.2019 / DATE OF PRONOUNCEMENT : 30.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-II, RAIPUR (C.G.) DATED 08.03.2016 FOR THE ASSES SMENT YEAR 2010-11 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DI SALLOWANCE OF RS.8,34,470/- MADE U/S.40(A)(IA) OF INCOME TAX- ACT 1961 OUT OF TRANSPORTATION CHARGES. 2 ITA NO. 126/RPR/2016 A.Y.2010-11 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE D ISALLOWANCE OF RS.1,71,904/- MADE U/S.40(A)(IA) OF INCOME TAX ACT, 1961 OUT OF INTEREST EXPENSES. 3. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS BAD IN LAW AND ON FACTS. 4. THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND, ALTER AND OMIT ALL OR ANY OF THE GROUNDS OF APPEAL WITH PERMISSION OF THE HON'BLE APPELLATE AUTHORITY. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS CONFIRMATION OF D ISALLOWANCE OF RS.8,34,470/- MADE U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) OUT OF TRANSPORTATION CHARGES AND CONFIRMATION OF DISALLOWANCE OF RS.1,71,904/- U/S.40(A)(IA) OF THE ACT OUT OF INTE REST EXPENSES. 3. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE VE HEMENTLY ARGUED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE CO- ORDINATE RAIPUR BENCH IN THE CASE OF RKP COMPANY, KORBA VS. ITO, IN ITA NO.106/RPR/2016 FOR THE ASSESSMENT YEAR 2010-11. 4. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANCE ON THE ORDERS OF THE SUB-ORDINATE AUTHORITIES. 5. WE HAVE PERUSED THE CASE RECORDS AND CONSIDERED TH E JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. WE FIND IN THE CASE OF RK P COMPANY, KORBA VS. ITO, IN ITA NO.106/RPR/2016 FOR THE ASSESSMENT YEAR 2010-11, THE ISSUE THEREIN WAS AS UNDER: THAT LEARNED CIT(A) ERRED IN LAW AS WELL AS ON FACT S WHILE CONFIRMING ADDITION OF RS.6,48,456/- UNDER SECTION 40(A)(IA) O N ACCOUNT OF INTEREST PAID TO NBFCS. THE TRIBUNAL, THEREAFTER, HELD AS UNDER: 3 ITA NO. 126/RPR/2016 A.Y.2010-11 4. WE FIND THAT HONBLE DELHI HIGH COURT HAS SPECIF ICALLY APPROVED THE STAND TAKEN BY A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF RAJEEV KUMAR AGARWAL VS ACIT [(2014) 149 ITD 363 (AGRA)], AND UPHELD THE ACTION OF THE TRIBUNAL IN FOLLOWING THE SAME. 9. . NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT M AY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN TH E RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSI ONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUB SCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN INTENDED CONSEQUEN CE TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT W ILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. A CCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTIO N 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETRO SPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) A CT, 2004. 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FI T AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER FOR FRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIFICATIONS REGARDING RELA TED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENTS IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND REGARDING FILING OF THE RELATED INCOME T AX RETURNS BY THE RECIPIENTS. WHILE GIVING EFFECT TO THESE DIRECT IONS, THE ASSESSING OFFICER SHALL GIVE DUE AND FAIR OPPORTUNI TY OF HEARING TO THE ASSESSEE, DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO. 5. IN EFFECT THIS, THEIR LORDSHIPS HAVE APPROVED TH E ACTION OF THE TRIBUNAL IN REMITTING THE MATTER TO THE FILE OF THE ASSESSIN G OFFICER WITH A DIRECTION TO ASCERTAIN WHETHER THE RECIPIENT HAS TAKEN INTO A CCOUNT RELATED PAYMENTS INTO COMPUTATION OF HIS INCOME AND OFFERIN G THE SAME TO TAX, AND, IF SO, DELETE THE DISALLOWANCE UNDER SECTION 4 0(A)(IA) IN RESPECT OF THE SAME. 6. WHEN, HOWEVER, WE ASKED THE LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHY WE SHOULD ALSO NOT REMIT THE MATTER TO TH E FILE OF THE ASSESSING OFFICER, WITH THE SAME DIRECTIONS, HE, ALONGWITH HI S SENIOR COLLEAGUE SHRI DARHAN SINGH, WHO HAPPENS TO BE THE CIT(A) AUTHORIN G THE IMPUGNED ORDER AND WHO WAS ON DUTY AS CIT(DR) BEFORE US, HAD THREE POINTS TO MAKE- FIRST, THAT THERE ARE DECISIONS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICERS STAND, BY WAY OF HONBLE KERALA HIGH COURTS DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT VS CI T [(2015) 63 TAXMANN.COM 99 (KERALA)]; SECOND, THAT EVEN IF INSE RTION OF SECOND PROVISO TO SECTION 40(A)(IA) CAN BE CONSTRUED AS RE TROSPECTIVE IN EFFECT, THE CORRESPONDING RULE IN THE INCOME TAX RULES 1962 IS NOT, AND HAS NOT BEEN HELD TO BE, RETROSPECTIVE, AND THE SECOND PROV ISO TO SECTION 40(A)(IA) CANNOT, THEREFORE, BE GIVE RETROSPECTIVE EFFECT; AN D, THIRD, THAT THERE IS NO DECISION ON THIS ISSUE BY HONBLE JURISDICTIONAL HI GH COURT AND, AS SUCH, THE STAND OF THE ASSESSING OFFICER CANNOT BE FAULTE D. 4 ITA NO. 126/RPR/2016 A.Y.2010-11 7. AS FOR HONBLE KERALA HIGH COURTS DECISION IN T HE CASE OF THOMAS GEORGE MUTHOOT (SUPRA), UNDOUBTEDLY, OUTSIDE THE JU RISDICTION OF HONBLE KERALA HIGH COURT AND OUTSIDE THE JURISDICTION OF H ONBLE DELHI HIGH COURT- WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF RESTROSPECTIV ITY OF SECOND PROVISO TO SECTION 40(A)(IA). IT IS THUS EVIDENT THAT VIEWS OF THESE TWO HIGH COURTS ARE IN DIRECT CONFLICT WITH EACH OTHER. CLEARLY, TH EREFORE, THERE IS NO MEETING GROUND BETWEEN THESE TWO JUDGMENTS. THE DIF FICULTY ARISES AS TO WHICH OF THE HONBLE NON JURISDICTIONAL HIGH COURT IS TO BE FOLLOWED BY US IN THE PRESENT SITUATION. IT WILL BE WHOLLY INAPPRO PRIATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PERCEP TIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINTS, AS SUC H AN EXERCISE WILL DE FACTO AMOUNT TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COURTS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASIC P RINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO, WITH OUR HIGHEST RESPECT OF BOTH THE HONBLE HIGH COURTS, ADOPT AN OBJECTIVE CRITERI ON FOR DECIDING AS TO WHICH OF THE HONBLE HIGH COURT SHOULD BE FOLLOWED BY US. WE FIND GUIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PRODUCTS LTD. [(1972) 88 ITR 192 (SC)]. HONBLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT 'IF TW O REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED'. THIS PRINCIP LE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HONBLE SUPREME COURT ITSELF. IN ANOTHER SUPREME COURT JUDG MENT, PETRON ENGG. CONSTRUCTION (P) LTD. & ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC), IT HAS BEEN REITERATED THA T THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. HONBLE SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIA TE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATU TE WHICH CAN BE CONSTRUED AS EXCEPTIONS TO THIS GENERAL RULE. IT HA S BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAXPAYER DOES NOT APPLY TO DEDUCTIONS, EXEMPTIONS AND EXCEPTIONS WHICH ARE ALL OWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPTION, LAID DOWN IN LI TTMAN VS. BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGA LORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (S C), HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN, 'IN CASE OF A MBIGUITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX-PAYE R DOES NOT APPLY TO A PROVISION GIVING TAX-PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARLY IMPOSING LIABILITY'. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APPLICATION. THE RULE OF RESOLVING AMBIGUITY IN FAV OUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAV OUR OF ASSESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL, AS H ELD IN THE MATTER OF STATE OF M.P. VS. DADABHOYS NEW CHIRMIRY PONRI HIL L COLLIERY CO. LTD. AIR 1972 (SC) 614. THEREFORE, WHAT FOLLOWS IS THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE AND LOOKING TO THE NATURE OF THE PROVISIONS WITH WHICH WE ARE PRESENTLY CONCERNED, THE VIEW EXPRESSE D BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK (SUP RA), WHICH IS IN FAVOUR OF ASSESSEE, IS REQUIRED TO BE FOLLOWED BY U S. REVENUE DOES NOT, THEREFORE, DERIVE ANY ADVANTAGE FROM HONBLE KERALA HIGH COURTS DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPR A). RESPECTFULLY, FOLLOWING THE DECISION OF THE CO-ORDINATE RAIPUR BENCH ON THIS ISSUE, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) A ND DIRECT FOR DELETION OF ADDITION MADE U/S.40(A)(IA) OF THE ACT BOTH ON ACCO UNT OF 5 ITA NO. 126/RPR/2016 A.Y.2010-11 TRANSPORTATION CHARGES AND ALSO INTEREST EXPENSES, ALLOWI NG THEREFORE, THE GROUNDS OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF JANUARY, 2019. SD/- SD/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / RAIPUR ; / DATED : 30 TH JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-II, RAIPUR (C.G). 4. THE PR. CIT-II, RAIPUR (C.G.) !'# $$%& , ' %& , ()* , / DR, ITAT, RAIPUR BENCH, RAIPUR. 6. #+,-. / GUARD FILE. // TRUE COPY // '0 / BY ORDER, $1 %* / PRIVATE SECRETARY ' %& , / ITAT, RAIPUR. 6 ITA NO. 126/RPR/2016 A.Y.2010-11 DATE 1 DRAFT DICTATED ON 18 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER