ACIT, Bhubaneswar V. Metro Builders (ORISSA) Pvt. Ltd, Bhubaneswar

ITA 126/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4494 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 17-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2010
• Court: TRIBUNAL
• Department Lawyers: A K MOHAPATRADR
• Assessee Lawyers: D K SETHM SETH
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 126/CTK/2010 / ASSESSMENT YEAR 2006 - 07 ASST.COMMISSONER OFINCOME - TAX, CIRCLE 2(1), BHUBANESWAR. - - - VERSUS - METRO BUILDERS (ORISSA) PVT. LTD., PLOT NO.A/118, SAHEED NAG AR,BHUBANESWAR 751 007. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI A.K.MOHAPATRA,DR / FOR THE RESPONDENT: / SHRI D.K.SETH/M.SETH, AR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THE REVENUE IS IN APPEAL AGAINST ORDER DT.25.11.2009 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006 - 07. 2. THE APPEAL RAISES ONLY GROUND THAT THE LEARNED CIT(A) IS NOT JUSTIFI ED IN DELETING THE ENTIRE DISALLOWANCE MADE U/S.40(A)(IA) OF THE INCOME - TAX ACT,1961 AT 21,35,467 INSTEAD OF 8,90,520. 3. THE RELEVANT FACTS ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE MADE PAYMENTS OF 21,35,467 TO DIFFERENT SIX PARTIES AS DETAILED IN THE ASSESSMENT ORDER AS WELL AS THE FIRST APPELLATE ORDER. THE ASSESSING OFFICER FOUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE AT THE TIME OF MAKING SAID PAYMENTS EVEN THOUGH THE AMOUNT EXCEEDED THE PRESCRIBED LIMIT IN CONTRAVEN TION OF SECTION 194C OF THE I.T.ACT,1961. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE EXPENSES OF 21,35,467 I.T.A.NO. 126/CTK/2010 2 U/S.40(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL . THE LEANED CIT(A) CONSIDERING THE FACTS AS WELL AS THE SUBMISSIONS OF THE ASSESSEE, CAME TO CONCLUDE THAT THOUGH NO TDS HAS BEEN DEDUCTED IN THE EARLIER PART OF THE YEAR, THE SA ME HAS BEEN MADE GOOD BY DEDUCTING THE TDS IN THE LATER PART OF THE YEAR. HE WAS OF THE VIEW THAT UNDER THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IF TDS IS DEPOSITED WITHIN THE PREVIOUS YEAR THEN THE EXPENDITURE ON WHICH TDS WAS MADE CANNOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT. HE WAS FURTHER OF VIEW THAT IF ANY PAYMENT WAS MADE OR CREDITED IN THE MONTH OF MARCH THEN NO DISALLOWANCE CAN BE MADE IF THE TDS WAS DEPOSITED AT ANY TIME BEFORE THE DUE DATE OF FILING OF RETURN FOR THAT YEAR. ACCORDI NGLY, HE DELETED THE DISALLOWANCE OF THE EXPENSES OF 21,35,467 AGAINST WHICH THE REVENUE IS IN APPEAL HEREIN BEFORE THE TRIBUNAL. 4. THE LEARNED DR CONTENDED BEFORE US THAT AS PER THE PARTY - WISE EXPLANATION GIVEN BY THE ASSESSEE ITSELF AS NARRATED IN THE IMPUGNED ORDER CLEARLY SHOWS THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE BALANCE AMOUNTS AS MENTIONED IN THE IMPUGNED ORDER AGAINST EACH PARTIES. THEREFORE, ATLEAST THE LEARNED CIT(A) SHOULD HAVE DISALLOWED THAT PORTION OF THE AMOUNTS ON WHICH THE ASSES SEE HAS ADMITTEDLY NOT DEDUCTED THE TDS. THEREFORE, IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND ACCORDINGLY SOUGHT FOR SETTING ASIDE THE IMPUGNED ORDER BY ALLOWING THE APPEAL OF THE REVENUE. 5. ON THE OTHER HAN D, THE LEARNED AR OF THE ASSESSEE HAS CLARIFIED THIS ASPECT BY POINTING OUT THE OBSERVATION OF THE LEARNED CIT(A) AT PAGE 15 IN PARAGRAPH 2 THEREOF, WHEREIN IT WAS CATEGORICALLY MENTIONED THAT THAT PART I.T.A.NO. 126/CTK/2010 3 OF THE AMOUNT ON WHICH TDS WAS NOT MADE BY THE ASSESS EE IS THE AMOUNT TO BE PAID TO THE PARTIES AND THE CONCERNED FIGURE IS NOT CLAIMED AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT BUT HAS SHOWN AS PART AND PARCEL OF THE WORK - IN - PROGRESS WHICH AN BALANCE - SHEET ITEM. THEREFORE, THE LEARNED CIT(A) IS VERY MUCH CORRECT IN DELETING THE DISALLOWANCE MADE BY THE/ASSESSING OFFICER AS THE SAID PORTION OF THE EXPENDITURE WILL BE CLAIMED IN THE SUBSEQUENT YEAR WHEN THE WORK - IN - PROGRESS IS TAKEN INTO AND EXPENDITURE WILL BE DEBITED TO THE P & L ACCOUNT AGAINST INCOME. IN THIS VIEW OF THE MATTER, IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT THE LEARNED CIT(A)S ORDER IS VALID AND NOT SUFFERING FROM ANY INFIRMITY REQUIRING ANY INTERFERENCE. THEREFORE, HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF T HE REVENUE. 6. ON CAREFUL ANALYSIS OF THE ORDER OF THE LEARNED CIT(A) IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AND THE PROVISIONS CONTAINED IN SECTION U/S.40(A)(IA) OF THE ACT, IT IS FOUND THAT THE ASSESSEE HAS DEDUCTED THE TDS AGAINST PAYMEN TS MADE TO THE PARTIES AND REMITTED THE SAME TO THE DEPARTMENT WITHIN THIS YEAR. THE PORTION OF THE PAYMENTS THAT REMAINED DUE TO THE PARTIES RELATING TO THE EXPENDITURE AS SHOWN AS PART AND PARCEL OF WORK - IN - PROGRESS , WE ARE OF THE CONSIDERED VIEW THAT THAT CAN BE EXAMINED IN THE SUBSEQUENT YEAR OF THE ASSESSMENT WHEN THE SAID EXPENDITURE WILL BE CLAIMED IN THE P & L ACCOUNT AGAINST THE INCOME. AS CAN BE SEEN FROM THE RECORD, IT IS FOUND THAT THE BALANCE PAYMENTS TO T HE PARTIES ARE MADE IN THE SUBSEQUENT YEAR AFTER DEDUCTING THE TDS AND ACCORDINGLY THEY WERE PAID ALSO. THEREFORE, THE DISALLOWANCE OF THE EXPENDITURES CLAIMED BY THE ASSESSEE IS NOT ALL SUSTAINABLE FOR LEGAL SCRUTINY. THEREFORE, WE ARE OF THE CONSIDERED V IEW THAT THE DEPARTMENTAL APPEAL IS DEVOID OF MERITS AND HENCE, I.T.A.NO. 126/CTK/2010 4 THE SAME IS HEREBY DISMISSED AS THE PAYMENTS MADE DURING THE YEAR WERE MADE AFTER DEDUCTING THE TDS WHICH WAS ALSO PAID TO THE DEPARTMENT IN TIME AND THE BALANCE OF THE AMOUNTS WERE PAID TO TH E PARTIES IN THE NEXT FOLLOWING YEAR MAKING TDS AND PAID TO THE DEPARTMENT IN THE NEXT YEAR. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 4 TH APRIL, 2011 ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DAT E: 4 TH APRIL 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : ASST.COMMISSONER OFINCOME - TAX, CIRCLE 2(1), BHUB ANESWAR 2 / THE RESPONDENT: METRO BUILDERS (ORISSA) PVT. LTD., PLOT NO.A/118, SAHEED NAGAR,BHUBANESWAR 751 007. 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.