ACIT, Circle-52, Kolkata, Kolkata V. Sri Manish Tewari, Kolkata

ITA 1260/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3200 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2012
• Court: TRIBUNAL
• Department Lawyers: K N JANA SR DR
• Assessee Lawyers: S S GUPTA
• Keywords: Retrospective amendment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1260/KOL/2012 ASSESSMENT YEAR:2009-10 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE- 52, AAYKAR BHAWAN DAKSHIN 2, GARIAHAT ROAD (S), KOLKATA 700 040 / V/S . SHRI MANISH TEWARI 4B, SAMILTON GREENS, 159A, N.S.C. BOSE, KOLKATA 700 040 [ PAN NO.ACLPT 7918 H ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI K.N.JANA, SR-DR /BY RESPONDENT SHRI S.S.GUPTA, FCA /DATE OF HEARING 11-06-2013 /DATE OF PRONOUNCEMENT 21-06-2013 /O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII, KOLKATA (CIT(A) FOR SHORT) IN A PPEAL NO. 136/CIT(A)- XXXIII/ACIT CIR-52 DATED 12-06-2012. THE ASSESSMENT WAS FRAMED BY ACIT, CIRCLE- 52, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 20-12-2011 FOR ASSESSMEN T YEAR (AY) 2009-10. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF EXPENDITURE OF PAYMENT TO SUB-CONTRACTOR BY ITA NO.1260/KOL/2012 A.Y. 2009-10 ACIT CIR-52, KOL V. SH. MANISH TEWAN PAGE 2 INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE AC T FOR LATE DEPOSIT OF TAX DEDUCTED AT SOURCE (TDS FOR SHORT). FOR WHICH, REVE NUE HAS RAISED FOLLOWING TWO EFFECTIVE GROUNDS:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LEARNED CIT(A)-XXXIII, KOL, HAS ERRED IN DELETING THE DISALLOWANCES OF EXPENDIT URE UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961 ON THE PREMISE THAT THE DECISION OF THE HONOURABLE CALCUTTA HIGH COURT INN THE CASE OF CIT V. VIRGIN CREATIONS, SANCTIONS RETROSPECTIVE APPLICATION OF THE AMENDED VERSION OF SECTION 40(A)(IA) OF THE I.T. AC T, IN THE CASE IN AS MUCH AS THERE IS NOTHING IN THE ACT EVIDENCING SUCH AMENDMENT HAVING RETROSPECTIVE EFFECT. II) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A)-XXXIII, KOL HAS ERRED IN ACCEPTING ASSESSEES CONTENTION THAT H E DEDUCTED TAX AT SOURCE (TDS) ON PAYMENTS MADE FOR RS.34,54,947/- AGAINST MATERIALS PURCHASED OWING TO IGNORANCE AND ERRONEOUSLY DEBITED THE SAME TO LABOUR CHARGES ACCOUNT. STRANGELY, THE CIT(A)-XXXIII, KOL, HAVE ACQUIESCED TO THIS QUEER V ERSION OF ASSESSEES STORY WITHOUT EXAMINATION OF ANY DOCUMENTS. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING O FFICER MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE AC T BY OBSERVING THAT ASSESSEE HAS MADE SEVERAL CONTRACT PAYMENTS FOR THE PERIOD U P TO FEB.09, ON WHICH TDS WAS DEDUCTED BUT WAS DEPOSITED IN BANK AFTER 31 ST MAR.09. THE ASSESSEE SUBMITTED BEFORE THE AO THAT ON THE EXPENDITURE OF SUB-CONTRACTUAL PAYMENTS OF RS.68,00,231/- WAS DEDUCTED IN MAR.09 BUT WAS DEPO SITED IN MAY 09. THIS FACT IS ADMITTED BY THE AO BUT HE MADE THE DISALLOWANCE ON THE PREMISE THAT THE PAYMENT OF TDS TO BE MADE ON OR BEFORE 31 ST MARCH09. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. CIT(A) DELETED THE DISALLOWANCE RELYING ON THE D ECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS IN GA NO. 3200 OF 2011 DATED 23-11-2011 VIDE PARA-4.2 BY OBSERVING AS UND ER:- 4.2 A THE TIME OF HEARING THE APPELLANT WAS ASKED TO PRODUCE DETAILS REGARDING DATE OF DEPOSIT OF TAX DEDUCTED AT SOURCE ON VARIOUS CON TRACTUAL PAYMENTS. THE APPELLANT HAS PROVIDED COPY OF TDS RETURN AND CHALLANS FOR TH E SAID PAYMENT. IT WAS INFORMED ITA NO.1260/KOL/2012 A.Y. 2009-10 ACIT CIR-52, KOL V. SH. MANISH TEWAN PAGE 3 THAT THE SAME WERE PRODUCED BEFORE THE ASSESSING OF FICER ALSO. ON GOING THROUGH THE SAME, IT IS SEEN THAT ALL THE DEPOSITS OF TDS HAVE BEEN MADE PRIOR TO THE DUE DATE OF FILING RETURN OF INCOME. THE PROVISO TO SECTION 40( A)(IA) AS IT EXISTED PRIOR TO AMENDMENT BY FINANCE ACT 2010 WAS AS UNDER:- PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TA X HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BUT PAI D AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX H AS BEEN PAID THEREAFTER AMENDMENT HAS BEEN MADE VIDE FINANCE ACT 2010 W.E.F. 01.04.2010, AFTER WHICH, THE SECTION 40(A)(IA) READS AS UNDER:- ANY INTEREST, COMMISSION OR BROKERAGE RENT ROYALTY FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT, F OR CARRYING OUT ANY WORK ( INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WOR K ) ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID IN A CASE WHER E THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIO US YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (I) OF SECTION 13 9. THE EFFECT OF THE ABOVE AMENDMENT IS THAT NOW IF TA X ID DEDUCTED AND DEPOSITED UPO TO THE DUE DATE OF FILING OF RETURN OF INCOME, DISALLO WANCE OF SECTION 40(A)(IA) IS NOT TO BE MADE. IT IS TRUE THAT AS PER FINANCE ACT 2010, T HIS AMENDMENT WAS MADE EFFECTIVE FROM 01.04.2010. HOWEVER, VIDE THE DECISION DATED 2 3.11.2011 IN THE CASE OF CIT, KOL.-XI VS. VIRGIN CREATIONS, ITA NO. 302/2011 , CALCUTTA HIGH COURT HAS HELD THAT AMENDMENT IN SECTION 40(A)(IA) IS HAVING RETROSPECT IVE EFFECT. RESPECTIVELY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT, I HOLD T HAT SINCE THE APPELLANT HAS DEDUCTED AND DEPOSITED TAX ON CONTRACTUAL PAYMENTS UNDER CON SIDERATION BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, DISALLOWANCE US. 40(A)( IA) IS NOT WARRANTED. THE DISALLOWANCE OF RS.58,00,231/- IS ACCORDINGLY DELETED . WE FIND THAT CIT(A) HAS DELETED THE DISALLOWANCE BY RELYING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA). WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. COMING TO SECOND ISSUE OF REVENUES APPEAL, WHIC H IS AGAINST THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF PUJA SUBS CRIPTION OF RS.3,300/-. ITA NO.1260/KOL/2012 A.Y. 2009-10 ACIT CIR-52, KOL V. SH. MANISH TEWAN PAGE 4 6 WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT CIT(A) HAS DELETED THE DISALLOWANCE BY RELYING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. BATA INDIA LTD. 201 ITR 884 (CAL) VIDE PARA-6.1& 6.2 BY OBSERVING AS UNDER:- 6.1 IN THE COURSE OF APPELLATE PROCEEDINGS IT WAS CONTENDED THAT SUCH EXPENSES ARE CUSTOMARY AND INCURRED FOR BUSINESS EXIGENCY. RELIA NCE WAS ALSO PLACED UPON DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BATA INDIA LTD. 201 ITR 884 (CAL), WHEREIN IT WAS HELD THAT:- IN THE FESTIVAL MONTHS, THE SHOPS IN THIS PART OF THE COUNTRY HAD TO PAY CONTRIBUTIONS TOWARDS COMMUNITY CELEBRATIONS TO KEE P THE YOUTHS IN THE NEIGHBORHOOD OF THE SHOP HAPPY TO ENSURE SMOOTH CON DUCT OF THE BUSINESS. THE EXPENDITURE COULD BE SAID TO BE AN EXPENDITURE REQUIRED TO MAINTAIN THE BUSINESS. 6.2 THE EXPENSES UNDER CONSIDERATION ALSO APPEAR TO BE OF THE NATURE DESCRIBED BY THE HONBLE HIGH COURT. RESPECTIVELY FOLLOWING THE DECI SION OF JURISDICTIONAL HIGH COURT, THE DISALLOWANCE OF RS.3,300/- IS ACCORDINGLY DELET ED. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AS HE R ELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BATA INDIA LTD. (SUPRA), WHICH IS SQUARELY COVERED IN FAVOUR OF ASSESSEE AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2013 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, *DKP DATE: 21 ST JUNE, 2013 !'# - ITA NO.1260/KOL/2012 A.Y. 2009-10 ACIT CIR-52, KOL V. SH. MANISH TEWAN PAGE 5 %%& %%& %%& %%& '& '& '& '& / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''%( ) / CONCERNED CIT 4. ) - / CIT (A) 5. &*+ %%%( , %( / DR, ITAT, KOLKATA 6. +,- ./ / GUARD FILE. BY ORD ER/ , 0/2 '3 %(,