Pure Information Technology Pvt. Ltd., Pune V. Asst.. Comm. of Income-tax, Pune

ITA 1368/PUN/2011

• Counselvise Citation: 136824514 RSA 2011
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1368/PN/2011 (ASSESSMENT YEAR : 2007-08) PURE INFORMATION TECHNOLOGY PVT. LTD. 251, BUDHWAR PETH, PUNE 411 002. PAN : AADCP6181H . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4, PUNE . RESPONDENT APPELLANT BY : MR. KISHORE PHADKE RESPONDENT BY : MR. ACHAL SHARMA DATE OF HEARING : 23-07-2013 DATE OF PRONOUNCEMENT : 29-08-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 25.08.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 29.12.2009 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE FIRST ISSUE RELATES TO A DIS ALLOWANCE OF RS.12,22,535/- OUT OF INTEREST EXPENDITURE WHICH HAS BEEN MADE BY INVOKING SECTION 40(A)(IA) OF THE ACT. IN BRIEF, THE FACTS ARE THAT IN THE RET URN OF INCOME FILED, ASSESSEE SUO MOTTO DISALLOWED INTEREST EXPENDITURE OF RS.12,22,535/- R EPRESENTING INTEREST PAYABLE TO EMBOSS TECHNOPRENEURS PVT. LTD. . THE DISALLOWANCE WAS MADE FOR THE REASON THAT THE INTEREST PAYABLE TO EM BOSS TECHNOPRENEURS PVT. LTD. WAS CREDITED AT THE YEAR END I.E. 31 ST MARCH 2007 AND THE CORRESPONDING TAX DEDUCTED AT SOURCE WAS REQUIRED TO BE DEPOSITED WITH THE STATE EXCHEQUER ON OR BEFORE 31.05.2007 AND INSTEAD ASSESSEE HAD DE POSITED THE REQUISITE TDS ON 08.11.2007, THEREBY RESULTING IN VIOLATION O F SECTION 40(A)(IA) OF THE ITA NO.1368/PN/2011 A.Y. 2007-08 ACT. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDIN GS, ASSESSEE POINTED OUT BEFORE THE ASSESSING OFFICER THAT THE FINANCE ACT, 2008 AMENDED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO PROVI DE THAT NO DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT COULD BE MADE IN RESPE CT OF EXPENDITURE INCURRED IN THE LAST MONTH OF THE FINANCIAL YEAR PROVIDED TH E CORRESPONDING TDS ON SUCH EXPENDITURE IS DEPOSITED IN THE STATE EXCHEQUER ON OR BEFORE THE DUE DATE FOR FILING OF RETURN SPECIFIED IN SECTION 139(1) OF THE ACT. ON THE BASIS OF THE AFORESAID RETROSPECTIVE AMENDMENT MADE IN SECTION 4 0(A)(IA) OF THE ACT, ASSESSEE SUBMITTED THAT DISALLOWANCE OF RS.12,22,53 5/- MADE IN THE RETURN OF INCOME WAS RENDERED ERRONEOUS AND THEREFORE NO SUCH DISALLOWANCE BE MADE. THE ASSESSEE POINTED OUT THAT DUE DATE SPECIFIED IN SECTION 139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2007-08 WAS 15.11.2007 AS E XTENDED BY THE CBDT NOTIFICATION DATED 31.10.2007 REPORTED AT 295 ITR ( ST.) 10 AND AS THE ASSESSEE HAD PAID THE REQUISITE TDS ON 08.11.2007, THE CORRESPONDING AMOUNT OF INTEREST EXPENDITURE OF RS.12,22,535/- WA S NOT TO BE DISALLOWED IN TERMS OF THE AMENDED PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 3. THE ASSESSING OFFICER REJECTED THE CLAIM ON THE GROUND THAT SUCH A CLAIM WAS NOT MADE IN THE RETURN OF INCOME AND THAT IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS. CIT, 284 ITR 323 (SC) SAID CLAIM WAS NOT ENTERTAINABLE. THE CIT(A) HAS ALSO UPHELD THE STAND OF THE ASSESSING OFFICER AGAINST WHICH TH E ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THERE WAS JUSTIFIABLE REASON WITH THE ASSESSEE TO RAISE T HE IMPUGNED CLAIM IN THE ASSESSMENT PROCEEDINGS AS SUBSEQUENT TO FILING OF T HE RETURN, SECTION 40(A)(IA) OF THE ACT WAS AMENDED WITH RETROSPECTIVE EFFECT AND THEREFORE THE PLEA RAISED BEFORE THE ASSESSING OFFICER WAS FOR BONA-FIDE CONSIDERATIONS. THE LEARNED COUNSEL POINTED OUT THAT IN ANY CASE THE CI T(A) HAS NO REASONS TO DISREGARD THE CLAIM ON THE BASIS OF THE DECISION OF THE HONBLE SUPREME COURT ITA NO.1368/PN/2011 A.Y. 2007-08 IN THE CASE OF GOETZE INDIA LTD. (SUPRA) WHICH MERE LY DEALT WITH THE POWER OF ASSESSING OFFICER TO ADMIT A FRESH CLAIM AND THE SA ME DID NOT IMPINGE ON THE POWER OF AN APPELLATE AUTHORITY TO CONSIDER A NEW C LAIM. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD. (200 8) 6 DTR (DEL) 233 AND ALSO THE JUDGEMENT OF THE HONBLE ALLAHABAD HIGH COURT I N THE CASE OF RAJ RANI GULATI VS. CIT (2012) 346 ITR 543 (ALL). 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE POINTED OUT THAT THE ASSESSING OFFI CER MADE NO MISTAKE IN DENYING THE CLAIM OF THE ASSESSEE BECAUSE THE SAME WAS NOT MADE BY WAY OF A REVISED RETURN OF INCOME AS MANDATED IN VIEW OF T HE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA L TD. (SUPRA). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. OSTENSIBLY, IN THE PRESENT CASE, THE DISALLOWANCE OF INTEREST EXPENDIT URE MADE BY THE ASSESSEE IN THE RETURN OF INCOME WAS NOT JUSTIFIED IN VIEW O F THE SUBSEQUENT AMENDMENT MADE TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2008. AT THE TIME OF FILING OF THE RETURN OF INCOME, THE DISALLOWANCE UN DER SECTION 40(A)(IA) OF THE ACT COULD BE AVOIDED BY DEPOSITING THE REQUISITE TD S CORRESPONDING TO THE INTEREST EXPENDITURE OF RS.12,22,535/- BEFORE 31.05 .2007 WHEREAS ASSESSEE HAD DEPOSITED THE SAME ON 08.11.2007. HOWEVER, SUBS EQUENT TO THE FILING OF RETURN OF INCOME, THE FINANCE ACT, 2008 AMENDED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WITH RETROSPECTIVE EFFECT TO S AY THAT IN CASE WHERE THE TDS CORRESPONDING TO AN EXPENDITURE CLAIMED IN THE LAST MONTH OF THE YEAR IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN S PECIFIED IN SECTION 139(1) OF THE ACT, SUCH AN EXPENDITURE WOULD NOT SUFFER THE D ISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. IN THE CASE OF THE ASSESSEE, FACTUALLY SPEAKING, THERE IS NO DISPUTE THAT THE REQUISITE TDS CORRESPONDING TO THE INTEREST EXPENDITURE OF RS.12,22,535/- HAS BEEN DEPOSITED BEFORE THE DUE DA TE FILING OF RETURN SPECIFIED UNDER SECTION 139(1) OF THE ACT FOR THE A SSESSMENT YEAR UNDER ITA NO.1368/PN/2011 A.Y. 2007-08 CONSIDERATION AND THEREFORE SUCH EXPENDITURE IS NOT HIT BY THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, AS RETROSPECTIVELY AM ENDED BY FINANCE ACT, 2008. 7. HOWEVER, THE CLAIM HAS NOT BEEN ACCEPTED BY THE INCOME-TAX AUTHORITIES ON THE GROUND THAT IT WAS MADE ONLY DUR ING ASSESSMENT PROCEEDINGS AND NOT BY WAY OF A REVISED RETURN OF I NCOME. THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE IND IA LTD. (SUPRA) HAS BEEN PRESSED INTO SERVICE BY THE INCOME-TAX AUTHORITIES. EVEN ASSUMING THAT THE ASSESSING OFFICER IS NOT ENTITLED TO GRANT A DEDUCT ION WHICH IS NOT CONTAINED IN THE ORIGINAL RETURN OF INCOME AND IS NOT CLAIMED BY WAY OF A REVISED RETURN OF INCOME, HOWEVER, THE APPELLATE AUTHORITIES, IN OUR VIEW, ARE ENTITLED TO CONSIDER THE CLAIM AND ADJUDICATE UPON THE SAME. THE HONBLE DELHI HIGH COURT IN THE CASE OF JAI PARABOLIC SPRINGS LTD. (SUPRA) AFTER TA KING INTO CONSIDERATION THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. (SUPRA) OBSERVED THAT THE DECISION OF THE HONBLE S UPREME COURT WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY TO ENTERTAI N THE CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN AND THE SAME DID NOT IMPINGE ON THE POWERS OF THE APPELLATE AUTHORITY. IN-FACT, THE AFO RESAID PROPOSITION HAS ALSO BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (P) LTD. (2012) 349 ITR 336 (BOM). THEREFORE, CONSIDERED IN THE AFORESAID LIGHT, WE FIND NO MERIT IN THE DECISION TAKEN BY THE CIT(A) TO DENY ASSESSEES CLAIM FOR ALLOWING DEDUCT ION OF RS.12,22,535/- REPRESENTING INTEREST EXPENDITURE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET- ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELE TE THE ADDITION OF RS.12,22,535/-. THUS ON THIS GROUND ASSESSEE SUCCEE DS. 8. THE NEXT GROUND RELATES TO ASSESSEES CLAIM FOR CREDIT FOR THE TAX DEDUCTED AT SOURCE ON ITS BEHALF. IN THE RETURN OF INCOME, ASSESSEE CLAIMED THE CREDIT FOR A SUM OF RS.10,01,484/- WHEREAS IN T HE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE REVISED ITS CLAIM TO RS.10,92, 033/- THEREBY ENHANCING ITS CLAIM FOR CREDIT OF TDS BY RS.90,549/-. THE SAI D CLAIM HAS ALSO NOT BEEN ITA NO.1368/PN/2011 A.Y. 2007-08 ADMITTED BY THE ASSESSING OFFICER AS WELL AS THE CI T(A) PRIMARILY FOR THE REASON THAT THE ENHANCED CLAIM WAS NOT MADE IN THE RETURN OF INCOME ORIGINALLY FILED. THE ASSESSEE HAD CLAIMED BEFORE T HE LOWER AUTHORITIES THAT THE CLAIM FOR CREDIT OF TDS WAS REVISED TO RS.10,92,033 /- AS THE ASSESSEE COULD OBTAIN CERTAIN TDS CERTIFICATES ONLY AFTER THE FILI NG OF RETURN. 9. IN OUR CONSIDERED OPINION, FOLLOWING THE PARITY OF REASONING ADOPTED BY US WHILE DEALING WITH THE GROUND OF APPEAL NO. 1 IN THE ABOVE PARAGRAPHS, IMPUGNED CLAIM OF THE ASSESSEE HAS BEEN UNJUSTLY SH UT-OUT BY THE LOWER AUTHORITIES. WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL VERIFY ASSESSEES CLAIM FOR ENHANCED CREDIT O F TDS AND ALLOW THE APPROPRIATE CREDIT AS PER LAW. THUS, ON THIS GROUND ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 29 TH AUGUST, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE