Asst. CIT, Circle-1, Aurangabad V. M/s. Mulay Brothers Ltd., Aurangabad

ITA 1375/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8493 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Revised return
• Section: 14A; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1375/PN/2013 (A.Y: 2009-10) ACIT, CENTRAL CIRCLE, AURANGABAD APPELLANT VS. M/S. MULAY BROTHERS LTD., 2 ND FLOOR, TAPADIYA TERRACES, ADALAT ROAD, AURANGABAD. PAN: AABCM7161J RESPONDENT APPELLANT BY : SHRI B.C. MA LAKAR RESPONDENT BY : NONE DATE OF HEARING: 06.08.2014 DATE OF ORDER : 20.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL), AURANGABAD, DATED 29.04.2013 FOR A.Y. 2009-10 ON THE FOLLOWING GROUND S. 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION MAD E BY THE AO ON ACCOUNT OF SECTION 40(A)(IA) OF THE ACT. 2. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) WAS CORRECT IN DELETING THE AD DITION MADE BY THE AO ON ACCOUNT OF 40(A)(IA) OF THE ACT, IGNORING THE FACT THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WAS MADE RETROSPECTIVELY APPLICAB LE ONLY FROM A.Y. 2010-11 AND NOT EARLIER. 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT (A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY GROUNDS OF APPEAL. 2 ITA NO.1375 OF 13 M/S. MULAY BROTHERS LTD. 2. THE ASSESSEE IS A LIMITED COMPANY ENGAGED AS CIV IL CONTRACTOR. THE ASSESSEE HAS FILED RETURN OF INCOM E ON 30.09.2010 DECLARING TOTAL INCOME AT RS.NIL. THE A SSESSEE HAS FILED REVISED RETURN OF INCOME ON 01.04.2010 DECLAR ING LOSS OF (-) RS.52,30,877/-. THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF THE ASSESSEE AT RS.8,43,73,377/- BY MAKING ADDIT ION OF RS.8,96,04,254/-. THE DETAILS OF ADDITIONS MADE BY THE ASSESSING OFFICER ARE AS UNDER: PARTICULARS OF ADDITION AMOUNT RS. INTEREST ACCRUED ON FDR 1,90,311 DISALLOWANCE U/S 40(A)(IA) ON ACCOUNT OF DELAY IN DEPOSITING TDS DEDUCTED U/S 194C OF THE ACT 8,93,74,441 DISALLOWANCE U/S 14A R.W.RULE 8D 39,502 TOTAL INCOME 8,96,04,254 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF THE ASSESSEE ON TWO ACCOUNTS (I) FDR WHICH IS NOT SUBJE CT MATTER BEFORE US AND (II) ISSUE BEFORE US IS DISALLOWANCE OF RS.8,93,74,441/- U/S.40(A)(IA) OF THE ACT. HAVING CONSIDERED THE SAME, THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE . THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF THE REVENUE , INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELE TING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F SECTION 40(A)(IA) OF THE ACT. THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE A CT, 2010 WAS MADE RETROSPECTIVELY APPLICABLE ONLY FROM A.Y. 2010 -11 AND NOT EARLIER. ACCORDINGLY, THE ORDER OF CIT(A) BE SET A SIDE AND THAT OF ASSESSING OFFICER BE RESTORED. NONE HAVE APPEARED ON BEHALF OF THE ASSESSEE, SO THE MATTER IS BEING DECIDED EXPART E, ON THE BASIS OF ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTA TIVE AND MATERIAL ON RECORD. 3 ITA NO.1375 OF 13 M/S. MULAY BROTHERS LTD. 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAS MADE ADDITION OF RS.8,93,74,441/- BY INVOKING THE PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT. FOR THE SAKE OF CONVENIENCE, AMENDED SECT ION 40(A)(IA) BY FINANCE ACT, 2010 W.E.F. 01.04.2010 IS REPRODUCE D AS UNDER: 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SE CTION 30 TO (38), THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTE D IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PRO FITS AND GAINS OF BUSINESS OR PROFESSION (A) IN THE CASE OF ANY ASSESSEE- .. (IA) ANY INTEREST, COMMISSION OR BROKERAGE, (RENT, ROYALTY,) FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR, BEING RESIDENT FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI I-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, (HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED I N SUB- SECTION (1) OF SECTION 139:). 4.1 THE ASSESSING OFFICER HAS STATED THAT THE PAYME NT OF TDS, THOUGH MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, THE SAME WERE NOT IN ACCORDANCE W ITH THE DUE DATE OF PAYMENT OF TDS REQUIRED BY SECTION 194C. T HE ASSESSING OFFICER HAS, THEREFORE, DISALLOWED THE SAID EXPENDI TURE U/S.40(A)(IA) AS PER PROVISIONS OF SECTION 40(A)(IA ) AS EXISTED FOR A.Y. 2009-10 I.E. PRIOR TO THE AMENDMENT BY FINANCE ACT, 2010. THE ASSESSING OFFICER HAS FURTHER STATED THAT THE A MENDMENT IS PROSPECTIVE AND IS APPLICABLE FOR A.Y. 2011-12 AND ONWARDS AS HELD BY BHARTI SHIPYARD LTD. VS. DCIT (2011) 141 TT J 129 (MUM. SB). ON THE OTHER HAND, THE CLAIM OF THE ASSESSEE HAS BEEN THAT THE AMENDMENT TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 IS CLARIFICATORY AND HAS RETROSPECTIVE OPERATION. IN SUPPORT OF THE ABOVE CONTENTION, THE ASSESSEE HAS RELIED ON THE FO LLOWING DECISIONS: 4 ITA NO.1375 OF 13 M/S. MULAY BROTHERS LTD. (I) CIT VS VIRGIN CREATIONS, ITA NO.302 OF 2011, GA NO.3200 OF 2011, DATED 23.11.2011 (II) ALLIED MOTORS (P) LTD. VS. CIT (1997) 224 ITR 677 ( SC) (III) CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC ) (IV) BANSAL PARIVAHAN (INDIA) (P) LTD. VS. ITO (2011) 13 7 TTJ 319 (MUM) 4.2 FURTHER IN THE CASE OF ACIT VS. M.K. GURUMURTHY (2012) 32 CCH 049 (BANG.TRIB.), WHEREIN IT HAS BEEN LAID DOWN THAT ADDITION U/S.40(A)(IA) CANNOT BE MADE IF PAYMENT OF TAX DEDUCTED AT SOURCE HAS BEEN MADE BEFORE THE DUE DATE OF FILI NG THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE BA NGALORE BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESS EE BY FOLLOWING VIRGIN CREATIONS (SUPRA) BY THE HONBLE H IGH COURT OF CALCUTTA, WHEREIN THE ISSUE WAS DECIDED IN FAVOUR O F THE ASSESSEE BY OBSERVING AS UNDER: THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESS EE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEE N THE PERIOD APRIL 01, 2005 AND APRIL 28, 2006 AND THE SA ME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST, 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WA S UNDISPUTED. THE HONBLE HIGH COURT HAS LAID DOWN THE RATIO THAT THE DISALLOWANCE U/S 40(A)(IA) CANNOT BE MADE IF THE PAYMENT OF TDS HAS BEEN MADE BEFORE THE DUE DAT E OF FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION. 4.3 THE RATIO OF CALCUTTA HIGH COURT IN VIRGIN CREA TIONS (SUPRA) WILL PREVAIL OVER THE SPECIAL BENCH IN THE BHARTI S HIPYARD LTD. (SUPRA). IN VIEW OF ABOVE DISCUSSION, THE CIT(A) W AS JUSTIFIED IN HOLDING THAT THE DISALLOWANCE OF RS.8,93,74,441/- U /S.40(A)(IA) OF THE ACT MADE BY THE ASSESSING OFFICER WAS NOT JUSTI FIED BECAUSE THE ASSESSEE HAS MADE PAYMENT OF TAX DEDUCTED AT SO URCE BEFORE DUE DATE OF RETURN OF FILING INCOME FOR THE YEAR UN DER CONSIDERATION. A SIMILAR VIEW HAS BEEN TAKEN IN TH E FOLLOWING CASES: 5 ITA NO.1375 OF 13 M/S. MULAY BROTHERS LTD. I) CIT VS. OMPRAKASH R. CHOUDHARY IN TAX APPEAL NO.412/2013, DATED 22.11.2013 BY THE HONBLE HIGH COURT OF GUJARAT II) CIT VS. SANTOSH KUMAR SHETTY & OTHERS BY THE HONBLE HIGH COURT OF KARNATAKA (TS-460-HIGH COURT- 2014 (KARN) III) CIT VS. ORACLE SOFTWARE INDIA LTD. BY THE HONBLE D ELHI HIGH COURT (2007) 293 ITR 353 (DEL) UNDER THE FACTS AND CIRCUMSTANCES, THIS REASONED FI NDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF AUGUST, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE