Haldia Municipality, Midnapore V. DCIT, Circle - 59(TDS), Kolkata, Kolkata

ITA 1349/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1076 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: S MONDAL
• Section: 40(a)(ia); 201(1)

Judgement Text

1 ITA NO. 1109 & 1348-1352/KOL/2016 HALDIA MUNICIPALITY, AY 2011-12 TO 2013-14 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 1109/KOL/2016 ASSESSMENT YEAR: 2011-12 & I.T.A. NOS. 1348 TO 1352/KOL/2016 ASSESSMENT YEARS: 2011-12 TO 2013-14 HALDIA MUNICIPALITY (PAN: AAALH0011J) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-59 (TDS), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 27.11.2018 DATE OF PRONOUNCEMENT 30.11.2018 FOR THE APPELLANT S/SHRI ANANDA SEN & S. MONDAL, AD VOCATES FOR THE RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM ITA NOS. 1109/KOL/2016 PREFERRED BY THE ASSESSEE IS AGAINST THE ORDER OF THE LD. CIT(A) -24, KOLKATA DATED 14.03.2016 FOR AY 2011-1 2 AND ITA NOS. 1348 TO 1352/KOL/2016 PREFERRED BY THE ASSESSEE ARE AGAINST THE SEPARATE ORDERS OF LD. CIT(A) -24, KOLKATA DATED 29.03.2016 FOR AYS. 2011-12 TO 2013-1 4. ASSESSEE ALSO FILED THREE APPEALS AGAINST THE ORDER OF LD. CIT(A) IN RESPECT OF CONFI RMING THE PENALTY IMPOSED U/S. 271C OF THE OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT). 2. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE AS SESSEE BROUGHT TO OUR NOTICE THE FACT THAT THE AO (TDS) FOUND FAULT WITH THE ASSESSEE WHI CH IS A LOCAL AUTHORITY IN NOT DEDUCTING TDS AS PRESCRIBED BY LAW WHILE MAKING CERTAIN PAYME NTS. SO BY INVOKING SEC. 40(A)(IA) OF THE ACT THE AO DISALLOWED THE EXPENDITURE CLAIMED B Y THE ASSESSEE. THE LD. AR DREW OUR ATTENTION TO THE SECOND PROVISO TO SEC. 40(A)(IA) O F THE ACT READ WITH SEC. 201(1) OF THE ACT AND STATED THAT THE PARLIAMENT IN ITS WISDOM HAS PR OVIDED RELIEF FROM THE RIGOR OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IN CASE IF T HE PAYEE HAS REFLECTED THE INCOME IN ITS RETURN AND OFFERED IT TO TAX. ACCORDING TO LD. AR, ALL THE PAYMENTS ASSESSEE HAS MADE TO THE 2 ITA NO. 1109 & 1348-1352/KOL/2016 HALDIA MUNICIPALITY, AY 2011-12 TO 2013-14 PAYEES HAVE BEEN DULY REFLECTED AS THEIR INCOME IN THEIR RESPECTIVE RETURNS AND HAS OFFERED TO TAX, THEREFORE, BY APPLICATION OF THE SECOND PROVIS O OF SEC. 40(A)(IA) OF THE ACT READ WITH SEC. 201(1) OF THE ACT, THE DISALLOWANCE WAS NOT WARRANT ED. HE ALSO DREW OUR ATTENTION TO PAGE NO. 3 OF THE PAPER BOOK WHEREIN WE NOTE THAT THE KO LKATA PORT TRUST HAS ALREADY ISSUED FORM NO. 26A CERTIFYING THAT IT HAD DULY INCLUDED THE AM OUNT IT RECEIVED FROM THE ASSESSEE HEREIN IN ITS RETURN OF INCOME. IN SUCH AS SCENARIO, WE D EEM IT FIT TO SET ASIDE THE IMPUGNED ORDERS OF LD. CIT(A) AND REMAND THE MATTER BACK TO THE FI LE OF AO (TDS) TO VERIFY AS TO WHETHER ALL THE PAYEES HAVE INCLUDED THE PAYMENTS MADE BY T HE ASSESSEE IN THEIR RESPECTIVE RETURNS AND IN CASE IF THEY HAVE DONE SO, THE DISALLOWANCE OF PAYMENT/EXPENDITURE INVOKING SECTION 40(A)(IA) OF THE ACT IS NOT WARRANTED. WE NOTE THA T THOUGH THE SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT WAS INSERTED BY FINANCE ACT, 2 012 W.E.F. APRIL 1, 2013, AND IT HAS BEEN HELD TO BE RETROSPECTIVE WITH EFFECT FROM APRIL 1, 2005, BEING THE DATE FROM WHICH SUB- CLAUSE (IA) OF SEC. 40(A) WAS INSERTED BY FINANCE ( NO.2) ACT OF 2004. FOR THAT RELIANCE IS ALSO PLACED ON THE DECISION OF THE HONBLE DELHI HI GH COURT IN CIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD. 377 ITR 635 (DEL) AND WE NOTE TH AT SIMILAR ACTION AS DIRECTED BY US (SUPRA) HAS BEEN UPHELD BY HONBLE JURISDICTIONAL H IGH COURT IN PCIT-8 VS. M/S. TIRUPATI CONSTRUCTION (GA 2146 OF 2016) DATED 23.08.2016. 3. SINCE THE OTHER THREE APPEALS ARE AGAINST THE PENALTY LEVIED U/S. 271C OF THE ACT FOR NON- DEDUCTION OF TDS, THE QUESTION TO INITIATE PEN ALTY ITSELF ARISES ONLY AFTER THE AO (TDS) DECIDES THE QUESTION AS TO WHETHER THE INVOCATION O F SEC. 40(A)(IA) IS WARRANTED FOR NON- DEDUCTION OF TDS, WHEN 2 ND PROVISO TO SEC. 40(A)(IA) READ WITH SEC. 201(1) OF THE ACT IS COMPLIED WITH BY THE PAYEES AND THAT DECISION AO (T DS) HAS TO FIRST COMPLETE IN ACCORDANCE TO LAW, AS DIRECTED BY US SUPRA. THEREF ORE, PENALTY APPEALS ARE ALSO SET ASIDE TO THE FILE OF THE AO/JCIT TO DECIDE AFRESH AFTER DECI DING AS TO WHETHER DISALLOWANCE IS WARRANTED FOR NON-DEDUCTION OF TDS. 4. IN THE RESULT, ALL THE APPEALS BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBE R, 2018. SD/- SD/- (M. BALAGANESH) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30TH NOVEMBER, 2018 JD.(SR.P.S.) 3 ITA NO. 1109 & 1348-1352/KOL/2016 HALDIA MUNICIPALITY, AY 2011-12 TO 2013-14 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT HALDIA MUNICIPALITY, DR. B. R. AMBEDKAR BHAVAN, CITY CENTRE, HALIDA, PURBA MEDINIPUR, PIN-721657. 2 3 4 RESPONDENT DCIT, CIRCLE-59, KOLKATA CIT(A)-24, KOLKATA. (SENT THROUGH E-MAIL) 4. CIT, KOLKATA 5 DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR