ITO 24(1)(2), MUMBAI V. ZEENAT N SHAIKH, MUMBAI

ITA 13/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83730 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N PADMANABAN
• Assessee Lawyers: ARUN SAHU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 13/MUM/2013 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER-24(1)(2) VS. SMT. ZEENAT N. SHAIK C-13, ROOM NO. 608, 6TH FLOOR BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400051 CINEMA ENTERAINMENT, 1, GAONDEVI TEMPLE, NEW LINK ROAD, OSHIWARA JOGESHWARI (W), MUMBAI 400012 PAN - AVIPS4799M APPELLANT RESPONDENT APPELLANT BY: SHRI N. PADMANABAN RESPONDENT BY: SHRI ARUN SAHU DATE OF HEARING: 17.09.2014 DATE OF PRONOUNCEMENT: 17.09.2014 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE REVE NUE AND IT PERTAINS TO AY 2009-10. 2. FOLLOWING GROUNDS WERE URGED BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.36, 57,581/- MADE BY THE AO U/S. 40(A)(IA), OF THE ACT WHEN THE ASSES SEE FAILED TO DEDUCT TAX ON ROYALTY AND COMMISSION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION U/S. 40(A )(IA) HOLDING THAT AS PER THE BALANCE SHEET OF 31.03.09 NO AMOUNT WAS SHOWN PAYABLE ON ACCOUNT OF ROYALTY AND COMMISSION EXPEND ITURE. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE SET OUT IN BRIEF. DURING THE YEAR UNDER APPEAL THE ASSESSEE DECLARED INCOME FROM ROYALTY OF FILM CLIPPINGS AND FILM SONGS TO VARIOUS TELEVISION CHAN NELS AND OTHERS. ASSESSEE HAS ALSO PAID ROYALTY OF ` 23,33,876/- AND COMMISSION OF ` 13,23,705/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSE E WAS CALLED UPON TO ITA NO. 13/MUM/2013 SMT. ZEENAT N. SHAIK 2 FURNISH DETAILS OF THESE EXPENDITURE AND TAX DEDUCT ED THEREON. IN RESPONSE THERETO THE ASSESSEE SUBMITTED THAT THERE ARE MANY PARTIES TO WHOM COMMISSION WAS PAID AND EACH PAYMENT IS LESS THAN ` 20,000/- AND HENCE TAX WAS NOT DEDUCTED AT SOURCE. WITH REGARD TO PAYM ENTS MADE IN EXCESS OF ` 20,000/- EACH, IT WAS STATED THAT THE PARTIES HAVE ALREADY SHOWN THE COMMISSION AS THEIR INCOME IN THE RETURNS FILED BY THEM AND DEDUCTING TAX AT THIS STAGE MAY NOT SERVE ANY PURPOSE BECAUSE UPO N DEDUCTION THE SAME WILL HAVE TO BE CLAIMED AS REFUND BY THE OTHER PART Y WHICH WILL INVOLVE UNNECESSARY PAPER WORK. 4. THE AO WAS OF THE OPINION THAT PROVISIONS OF SECTIO N 40(A)(IA) ARE APPLICABLE IN THE INSTANT CASE SINCE ASSESSEE HAS N OT DEDUCTED TAX AT SOURCE AND ACCORDINGLY WORKED OUT THE DISALLOWABLE FIGURE AT ` 36,57,581/-. 5. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T IN RESPECT OF DEDUCTION OF TAX AT SOURCE THE AO RELIED MORE ON TH E RULES THAN THE CIRCUMSTANCES OF THE TRANSACTIONS AND IN THE PECULI AR CIRCUMSTANCE OF THE CASE SECTION 40(A)(IA) CANNOT BE INVOKED. DURING TH E COURSE OF HEARING ASSESSEE SUBMITTED THAT SECTION 40(A)(IA) CAN BE IN VOKED ONLY TO THE EXTENT OF EXPENDITURE PAYABLE AS ON THE BALANCE SHEET DATE AN D NOT FOR PAYMENT ALREADY MADE. IN THE ALTERNATIVE IT WAS ALSO CONTEN DED THAT THERE IS NO DEFAULT ON THE PART OF THE ASSESSEE IN RESPECT OF D EDUCTION OF TAX AT SOURCE. HE IS OF THE OPINION THAT THERE IS SUFFICIENT EVIDE NCE REGARDING THE PAYMENT SHOWN AS INCOME BY THE RESPECTIVE PARTIES (PAYEE) I N THEIR RETURN FILED AND SO THE ITO FAILED TO APPRECIATE THAT TAX CANNOT BE COLLECTED ONCE AGAIN BY THE DEPARTMENT IF IT IS ALREADY PAID BY THE PAYEE. IT W AS FURTHER REITERATED THAT NO EXPENDITURE WAS OUTSTANDING OR PAYABLE AS ON BAL ANCE SHEET DATE, I.E. 31.03.2009 FOR WHICH TDS HAS TO BE COLLECTED AND HE NCE SECTION 40(A)(IA) CANNOT BE INVOKED IN THE LIGHT OF THE ORDER OF THE ITAT SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS. 6. IN THE LIGHT OF THE DECISION OF THE ITAT SPECIAL BE NCH SUPRA THE LEARNED CIT(A) OBSERVED THAT THE PROVISIONS OF SECT ION 40(A)(IA) APPLIES ONLY TO AMOUNTS SHOWN AS PAYABLE ON THE DATE OF BALANCE SHEET WHEREAS IN THE ITA NO. 13/MUM/2013 SMT. ZEENAT N. SHAIK 3 INSTANT CASE THE AMOUNT WAS ALREADY PAID/CREDITED. HE THEREFORE SET ASIDE THE ADDITION MAD BY THE AO. 7. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. THE LEAR NED COUNSEL FILED A DETAILED WRITTEN SUBMISSION WHEREIN IT WAS SUBMITTE D THAT THE VIEW TAKEN BY THE ITAT SPECIAL BENCH (VIZAG) WAS APPROVED BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF M/S. VECTOR SHIPPING SERVICES (P) LTD. 38 TAXMANN.COM 77 AND HENCE THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT WAS FURTHER SUBMITTED THAT EVEN IF ANOTHER VIEW IS POSSIBLE THE VIEW FAVOURABLE TO THE ASSESSEE HAS TO BE TAKEN IN WHICH EVENT PROVISIONS OF SECTION 40(A)(IA) SHOULD NOT BE INVOK ED. HE HAS ALSO RAISED CERTAIN ALTERNATIVE CONTENTIONS WHICH NEED NOT BE C ONSIDERED AT THIS STAGE. 8. ON THE OTHER HAND, THE LEARNED CIT-DR RELIED UPON T HE ORDER PASSED BY THE AO. 9. IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT A BENC H IN THE CASE OF AMIT NARESH SINHA (ITA NO. 4154/MUM/2013 DATED 10.0 9.2014 WHEREIN ONE OF US IS A PARTY) WHEREIN THE BENCH HAD TAKEN T HE VIEW THAT IF AN AMOUNT IS PAID, DISALLOWANCE UNDER SECTION 40(A)(IA ) IS NOT PERMISSIBLE. RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED FOR IMMEDIATE REFERENCE:- 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE(DR) STAT ED THAT ORDER OF THE SPECIAL BENCH DELIVERED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA)HAS BEEN KEPT IN ABEYANCE OF THE HON'BLE ANDHRA PRADESH HIGH COURT, THAT THE HON'BLE GUJARAT HIGH C OURT HAD TAKEN A DIFFERENT VIEW. AUTHORISED REPRESENTATIVE (AR) SUPP ORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL BEFORE US. WE FIND THAT EXPENSES RELATED T O PROFESSIONAL FEES, ADVERTISEMENT AND MANAGEMENT WERE DEBITED IN P&L AC COUNT, THAT SAME WERE PAID. THEREFORE, IN OUR VIEW, NO DISALLOW ANCE U/S 40(A)(IA) OF THE ACT SHOULD BE MADE. WE FURTHER FIND THAT WHI LE DECIDING THE APPEAL IN THE CASE OF JANAPRIYA ENGINEERS SYNDICATE (I.T.T.A. NO. 352 OF 2014- DT. 24.06.2014) THE HON'BLE ANDHRA PRADESH HIGH COURT HAS CLARIFIED THE ISSUE OF INTERIM STAY GRANTED BY IT I N THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA). WE WILL LIKE TO REPR ODUCE THE RELEVANT PART OF THE SAID ORDER AND SAME READS AS UNDER: '4. WE ARE OF THE VIEW THAT UNTIL AND UNLESS THE DE CISION OF THE SPECIAL BENCH IS UPSET BY THIS COURT, IT BINDS SMAL LER BENCH AND COORDINATE BENCH OF THE TRIBUNAL. UNDER THE CIRCUMS TANCES, IT IS NOT OPEN TO THE TRIBUNAL, AS RIGHTLY CONTENDED BY MR. N ARASIMHA SARMA, LEARNED COUNSEL, TO REMAND ON THE GROUND OF PENDENC Y ON THE SAME ITA NO. 13/MUM/2013 SMT. ZEENAT N. SHAIK 4 ISSUE BEFORE THIS COURT, OVERLOOKING AND OVERRULING , BY NECESSARY IMPLICATION, THE DECISION OF THE SPECIAL BENCH. WE SIMPLY SAY THAT IT IS NOT PERMISSIBLE UNDER QUASI JUDICIAL DISCIPLINE' . FROM THE CLARIFICATION ISSUED BY THE HON'BLE HIGH C OURT, IT IS CLEAR THAT UNTIL AND UNLESS THE DECISION OF MARILYN SHIPPING & TRANSPORT (SUPRA) IS REVERSED BY THE COURT, IT IS BINDING ON ALL THE BEN CHES OF THE TRIBUNAL. WE FIND THAT HON'BLE COURT HAS HELD THAT JUDICIAL D ISCIPLINE MANDATES THAT THE DECISION OF THE SPECIAL BENCH HAS TO BE FO LLOWED BY OTHER BENCHES. AS ON TODAY, THE STAY ORDER GRANTED BY THE HONBLE COURT HAS BEEN VACATED AND THE ORDER OF THE SPECIAL BENCH IS BINDING ON OTHER BENCHES OF THE TRIBUNAL. THEREFORE, RESPECTFULLY FO LLOWING THE SAME, WE HOLD THAT THE FAA WAS JUSTIFIED IN FOLLOWING THE OR DER OF MARILYN SHIPPING & TRANSPORT (SUPRA). CONSIDERING THE FACTS OF THE CASE AND THE CLARIFICATION ISSUED BY THE HON'BLE ANDHRA PRADESH HIGH COURT ON 24.06.2014 IN THE CASE OF JANAPRIYA ENGINEERS SYNDI CATE, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASS ESSEE AND CONFIRM THE ORDER OF THE FAA . CONSISTENT WITH THE VIEW TAKEN BY THE COORDINATE BE NCH, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NO T CALL FOR ANY INTERFERENCE. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2014. SD/- SD/- ( D. KARUNAKARA RAO ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 17 TH SEPTEMBER, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 34, MUMBAI 4. THE CIT 24, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.