Janata Sahakari Bank Ltd., V. Deputy Commissioner of Income-tax,

ITA 1359/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1052 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1 3 5 9 /PN/201 6 / ASSESSM ENT YEAR : 20 08 - 09 JANATA SAHAKARI BANK LTD., 179, BHAVANI PETH, SATARA . / APPELLANT PAN: A AA JJ0029N VS. THE DY. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 3 . 0 8 .201 6 / DATE OF PRONOUNCEMENT: 26 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE A SSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , PUNE , DATED 1 8 . 0 3 .20 1 6 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.3,49,869/ - MADE BY THE A.O. INVOKING THE PROVISIONS OF S.40(A)(IA) OF THE ACT BUT IGNORING THE EFFECT OF INSERTION OF 2 ND PROVISO TO S .40(A)(IA) OF THE ACT. THE ADDITION BE DELETED. ITA NO. 1 3 5 9 /PN/20 1 6 JANATA SAH. BANK LTD. 2 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHEN THE PROVISIONS OF S.40(A)(IA) AND 2 ND PROVISO INSERTED IN THE SECTION HAD AN EFFECT THAT WHEN DEDUCTEE HAS NO TAXABLE INCOME THE DEDUCTOR HAS NO OBLIGATION TO DEDUCT ANY TAX. THE DEDUCTEES IN THIS CASE HAD NO TAXABLE INCOME. THE PROVISIONS OF S.40(A)(IA) WERE, THEREFORE, NOT APPLICABLE. THE ADDITION MADE BY A.O. AND CONFIRMED BY LD. CIT(A) BE DELETED. 3. THE ISSUE RAISED IN THE PRESENT APPEAL I S AGAINST THE ADDITION OF RS.3,49,869/ - MADE BY APPLYING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS CO - OPERATIVE BANK. THE ASSESSING OFFICER NOTED THAT IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAD DEBITED SUM OF RS.9,66,658/ - ON ACCOUNT OF COMMISSION PAID TO AGENTS OF PIGMY DEPOSIT COLLECTION. THE ASSESSEE WAS ASKED AS TO WHETHER APPROPRIATE TAX WAS DEDUCTED AT SOURCE AND TO FURNISH THE DETAILS. IN THE STATEMENT FURNISHED IN REPLY, THE ASSESSE E POINTED OUT THAT OUT OF TOTAL COMMISSION OF RS.9,66,658/ - , COMMISSION ON WHICH TDS WAS DEDUCTED WAS RS. 6,56,789/ - AND ON BALANCE OF RS. 3,09,869/ - , NO TAX WAS DEDUCTED AT SOURCE. IN THE FOOTNOTE TO THE STATEMENT, THE ASSESSEE CLARIFIED THAT THE ABOVE DIF FERENCE WAS MAINLY DUE TO THE CHALLANS BEING NOT SENT TO THE HEAD OFFICE BY THE RESPEC TIVE BRANCHES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE FOR THE CLAIM NOR HAVE CATEGORICALLY STATED THAT APPROPRIATE TDS WAS E FFECTED ON THE REMAINING AMOUNT OF RS. 3,09,869/ - . THUS, FOR NON - DEDUCTION OF TAX AT SOURCE ON REMAINING AMOUNT OF PIGMY AGENTS COMMISSION OF RS. 3,09,869/ - , ADDITION WAS MADE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 5. BEFORE THE CIT(A) , THERE WAS NO REPRESENTATION BY THE ASSESSEE AND IN THE ABSENCE OF SAME AND ANY FURTHER EVIDENCE BEING FILED BY THE ASSESSEE, THE CIT(A) UPHELD THE DISALLOWANCE OF RS. 3,09,869/ - . 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AND POINTED OUT TH AT IN VIEW OF INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, NO ITA NO. 1 3 5 9 /PN/20 1 6 JANATA SAH. BANK LTD. 3 SUCH ADDITION COULD BE MADE UNDER SECTION 40(A)(IA) OF THE ACT AT RS.3,49,869/ - . IT MAY BE POINTED OUT HEREIN ITSELF THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AS PER THE ASSESSMENT ORDER WAS MADE AT RS.3,09,869/ - AND NOT AT RS.3,49,869/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT IN VIEW OF INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHERE THE AMOUNT PAID TO INDIVIDUAL C OMMISSION AGENT WAS LOW, THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE AND HENCE, NO DEFAULT FOR NON - DEDUCTION. THE ASSESSEE HAS FILED LIST OF COMMISSION PAYMENTS TO PIGMY COLLECTIONS. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON TH E OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IN RELATION TO REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IN RELATION TO ALLOWANCE OF EXPENDITURE OF RS.3,09,869 / - . THE ASSESSEE BANK HAD CLAIMED EXPENDITURE OF COMMISSION PAID TO PIGMY COLLECTION AGENTS . THE TOTAL COMMISSION DEBITED TO PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER APPEAL WAS RS.9,66,658/ - , OUT OF WHICH TAX WAS DEDUCTED AT SOURCE OUT OF COMMISSION PAID TO THE EXTENT OF RS.6,56,789/ - . IN RESPECT OF BALANCE SUM OF RS.3,09,869/ - , NO EVIDENCE OF TAX DEDUCTED WAS FILED BEFORE THE ASSESSING OFFICER. HOWEVER, IN THE FOOTNOTE TO THE STATEMENT FURNISHED, WHEREIN THE ASSESSEE CLARIFIED THAT THE DIFFERENCE WAS D UE TO CHALLANS BEING NOT SENT TO THE HEAD OFFICE BY RESPECTIVE BRANCHES. IN OTHER WORDS, THE ASSESSEE CLAIMED THAT IT HAD DEDUCTED THE TAX AT SOURCE BUT HAD NOT RECEIVED THE CHALLANS FROM RESPECTIVE BRANCHES IN THIS REGARD. NOW, BEFORE THE TRIBUNAL, THE ASSESSEE HAS PUT IN ANOTHER PLEA THAT AFTER INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, THERE IS NO JUSTIFICATION FOR MAKING THE AFORESAID ADDITION. ITA NO. 1 3 5 9 /PN/20 1 6 JANATA SAH. BANK LTD. 4 9. THE FINANCE ACT, 2012 HAS INSERTED SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WH EREIN IT HAS BEEN PROVIDED THAT IN CASE WHERE THE PAYER WAS TO DEDUCT TAX AT SOURCE AND THE SAME HAS NOT BEEN DEDUCTED BY THE PAYER, BUT THE PAYEE HAS INCLUDED THE SAID AMOUNT AS ITS INCOME FOR THE YEAR AND HAS PAID TAXES, THEN NO DISALLOWANCE IS TO BE MAD E UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE WANTS THE SHELTER OF SAID SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT ON THE PREMISE THAT WHERE THE DEDUCTEE HAD NO TAXABLE INCOME, THERE WAS NO OBLIGATION ON THE ASSESSEE DEDUCTOR TO DEDUCT TAX AT SOU RCE, HENCE THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE PERUSAL OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CLEARLY ESTABLISHED THAT IN CASE CERTAIN PAYMENTS BEING MADE BY THE DEDUCTOR , WHERE THERE IS AN OBLIGATION TO DEDUCT TAX SOURCE UNDER VARIOUS PROVISIONS OF THE ACT, THEN FOR SUCH NON - DEDUCTION OF TAX AT SOURCE, THERE IS AN EMBARGO ON THE CLAIM OF DEDUCTION IN RESPECT OF SUCH EXPENDITURE , ON WHICH TAX HAS NOT BEEN DEDUCTED AT SOURCE. THE SAID PROVISIONS WERE INTRODUCED IN THE STATUTE IN ORDER TO KEEP A CHECK ON THE TAXABILITY OF VARIOUS PAYEES WHICH WERE RECEIVING REMUNERATION FROM DIFFERENT PARTIES AND WERE NOT PAYING TAXES. THE OBLIGATION WAS UPON THE BANK TO DEDUCT THE TAX AT SOURCE IN RESPECT OF COMMISSION PAID TO P IGMY DEPOSIT COLLECTIONS. THE PERUSAL OF DETAILS FILED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE TRIBUNAL REFLECTS THAT THE PAYMENTS HAVE BEEN PAID IN THE RANGE OF RS.12,000/ - TO RS.48,000/ - TO DIFFERENT PARTIES BY DIFFERENT BRA NCHES OF ASSESSEE BANK. WHERE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE AS REQUISITIONED UNDER THE PROVISIONS OF THE ACT, THE EXPENDITURE IS NOT TO BE ALLOWED AS DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE AMENDMENT BRO UGHT IN BY THE FINANCE ACT, 2012 IS OF NO HELP TO THE ASSESSEE SINCE UNDER THE SAID PROVISIONS, IT IS PROVIDED THAT IN CASE THE PAYEE OR THE RECIPIENT OF THE AMOUNT HAS INCLUDED THE AMOUNTS RECEIVED ON WHICH TAX HAD TO BE DEDUCTED, AS ITS INCOME IN ITS HAN DS, THEN THERE IS NO ITA NO. 1 3 5 9 /PN/20 1 6 JANATA SAH. BANK LTD. 5 DEFAULT FOR NON - DEDUCTION OF TAX AT SOURCE. IN CASE THE ASSESSEE CLAIMS THAT THE DEDUCTEE HAD NO TAXABLE INCOME, THEN ONUS WAS UPON THE ASSESSEE TO ESTABLISH SUCH A CLAIM. MERELY BECAUSE THE PAYMENTS MADE ARE SMALL BUT ABOVE THE SPEC IFIED LIMITS DOES NOT ESTABLISH THE CASE OF ASSESSEE THAT THE DEDUCTEE HAD NO TAXABLE INCOME. IN VIEW THEREOF, THE CLAIM OF ASSESSEE IS REJECTED AND THE ADDITION TO THE EXTENT OF RS. 3,09,869/ - IS CONFIRMED IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , PUNE ; 4. / THE PR. CIT 3 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE