M/s. Shashi Jadhav Developers Pvt. Ltd., Nashik V. ACIT, Nashik

ITA 1342/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3281 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 30-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1342/PN/09 (ASSTT. YEAR 2005-06) M/S. SHASHI JADHAV DEVELOPERS PVT. LTD. 1 ST FLOOR, BUILDING NO., STADIUM COMPLEX, M.G. ROAD, NASHIK 422001 PAN NO. AAECS2413C .... APPELLANT VS. ACIT CIR-1, NASHIK . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI HEMANTKUMAR C. LEUVA ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-I, NASHIK DATED 17/09/2009 AND THE GROUNDS RAISED BY THE ASSESSEE ARE AS FOLLOWS:- 1. UNDER THE FACTS, CIRCUMSTANCES AND THE PROVISION S OF LAW, THE LEARNED CIT (APPEALS) ERRED IN RETAINING THE DISALL OWANCE OF INTEREST AT RS. 7,23,270/- U/S. 40(A)(IA), WITHOUT APPRECIATING THE FACT THAT, APPELLANT WAS NOT LIABLE TO MAKE TDS AND THE DEDUCTION CLAIMED WA S IN ACCORDANCE WITH THE MERCANTILE METHOD CONSISTENTLY FOLLOWED BY THE APPELLANT. THEREFORE, IT IS PRAYED TO CANCEL THE DISALLOWANCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A.O MADE DISALLOWANCE OF INTEREST OF RS. 7,23,270/- FOR NON DEDUCTION OF TDS. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE FOR THE REASONS GIVEN IN PARA 5 OF THE IMPUGNED ORDER WHICH READS AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT MADE BEFORE ME. TH E FIRST REASON STATED BY THE A.O FOR DISALLOWANCE OF INTEREST OF RS. 7,23 ,270/- IS THAT THE APPELLANT HAS NOT DEDUCTED OR PAID T.D.S. ON THE SA ID INTEREST. ON PERUSAL OF THE STATEMENT OF COMPUTATION OF INCOME FOR THE A .Y. 2005-2006, IT IS ITA NO. 1342/PN/09 A.Y 2005-06 PAGE 2 OF 2 NOTICED THAT THE SAID INTEREST PAYABLE TO SHREEKALA DEVELOPERS PVT. LTD. WAS CLAIMED AS DEDUCTION BY THE APPELLANT AT RS. 7, 14,160/- IT IS UNDISPUTABLE FACT THAT THE APPELLANT HAS NOT DEDUCT ED T.D.S ON THE AMOUNT OF INTEREST CLAIMED AS BUSINESS EXPENDITURE. SECTION 40(A)(IA) OF THE ACT WAS INTRODUCED IN THE STATUTE BY FINANCE (N O.2) ACT, 2004D TO ENSURE COMPLIANCE OF THE T.D.S PROVISIONS AND TIMEL Y PAYMENT OF TAX AT SOURCE. THEREFORE IT WAS PROVIDED THAT IN THE CASE OF NON-COMPLIANCE OF T.D.S. PROVISIONS, THE EXPENDITURE ON WHICH T.D.S I S DEDUCTIBLE IS TO BE DISALLOWED U/S. 40(A)(IA). THUS THE DISALLOWANCE U/ S. 40(A)(IA) HAS BEEN AVOIDED BY NOT PROVIDING THE SAME IN THE BOOKS OF A CCOUNTS AND BY CLAIMING THE EXPENDITURE IN THE STATEMENT OF COMPUT ATION OF INCOME. THE APPELLANT HAS ALTERNATIVELY CLAIMED THAT THE SAID I NTEREST DISALLOWED U/S. 40(A)(IA) FOR NON-PAYMENT OF T.D.S. SHOULD BE ALLOW ED IN THE YEAR OF PAYMENT OF T.D.S., I.E. A.Y 2006-07. IN VIEW OF TH E ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT THE A.O IS JUSTIFIED IN DI SALLOWING INTEREST U/S. 40(A)(IA) IN THE A.Y 2005-2006. HOWEVER, THE ALTERN ATIVE CONTENTIONS OF THE APPELLANT THAT THE SAID INTEREST DISALLOWED U/S . 40(A)(IA) FOR NON- PAYMENT OF T.D.S. SHOULD BE ALLOWED IN THE YEAR OF PAYMENT OF T.D.S. I.E., A.Y 2006-2007 IS ACCEPTED IN VIEW OF PROVISIONS OF SECTION 40(A)(IA). 3. DURING THE PROCEEDINGS, AT THE VERY OUTSET, LD. CO UNSEL MENTIONED THAT THE ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AND AG AINST THE ASSESSEE BY THE DECISION IN THE CASE OF DCIT VS. UMANG DAIRIES LTD. [2010] 36 SOT383(DELHI) REPORTED IN 36 SOT 383. CONSIDERING THE FAIR ADMISSION OF LD COUNSEL, WE FIND THAT THE GROUND RAISED IN THE APPEAL SHOULD BE DISMISSED . 4. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 08 TH OCTOBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH OCTOBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ACIT, CIR-1, NASHIK 3. CIT(A)-I, NASHIK 4. CIT-I, NASHIK 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE