GTFS Multi Services Limited, Kolkata V. DCIT, CIR-6, KOLKATA, Kolkata

ITA 1385/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0802 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Keywords: Non-deduction of tax; Revised return
• Section: 143(3); 139(5); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.1385/KOL/201 6 ASSESSMENT YEAR : 2007-08 GTFS MULTI SERVICES LIMITED -VS.- D.C.I.T. , CIRCLE-6, KOLKATA KOLKATA. [PAN : AACCG 1216 D] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOMNATH GHOSH , FCA FOR THE RESPONDENT : SHRI ARINDAM BHATTACHAR JEE, ADDL.CIT DATE OF HEARING : 05.12.2017. DATE OF PRONOUNCEMENT : 18.12.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 06.05.2016 OF CIT-(A)- 16, KOLKATA RELATING TO A.Y.2007-08. . 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF CONDUCTING VOCATIONAL TRAINING PROGRAMS AND ISSUING CO-ORDINATOR CERTIFIC ATE IN INSURANCE SECTOR. FOR A.Y.2006-07 AN ORDER OF ASSESSMENT U/S 143(3) OF TH E INCOME TAX ACT, 1916 (ACT) DATED 19.12.2008 DETERMINING THE TOTAL INCOME OF TH E ASSESSEE AT RS.3,52,59,430/- WAS PASSED BY THE AO. SUBSEQUENTLY THE AO NOTICED THAT THE ASSESSEE HAD PAID COMMISSION TO M/S. GOLDEN TRUST FINANCIAL SERVICES OF RS.1,93, 11,599/- ON WHICH TAX AT SOURCE AS REQUIRED U/S 194AH OF THE ACT OF RS. 10,83,381/- WA S NOT DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT ON OR BEFORE THE LAST DATE OF TH E PREVIOUS YEAR. THE TDS HAD BEEN DEDUCTED IN THE MONTH OF FEBRUARY, 2006 AND THEREFO RE TDS OUGHT TO HAVE BEEN DEPOSITED IN THE GOVERNMENT ACCOUNT ON OR BEFORE 31 .03.2006. THE ASSESSEE DEPOSITED THE TDS AMOUNT TO THE CREDIT OF THE GOVERNMENT ONLY ON 01.09.2006. SINCE THE TDS HAS NOT BEEN DEPOSITED WITHIN THE DUE DATE THE AO WAS O F THE VIEW THAT UNDER THE PROVISION 2 ITA NO.1385/KOL/2016 GTFS MULTI SERVICES LIMITED A.Y.2007-08 2 OF SECTION 40(A)(IA) OF THE ACT THE COMMISSION OF R S.1,93,11,599/- WHICH WAS CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM BUSINESS O UGHT TO HAVE BEEN DISALLOWED AND ADDED TO THE TOTAL INCOME. THE FAILURE TO DO SO WAS A MISTAKE APPARENT FROM THE RECORD AND THE AO IN EXERCISE OF HIS POWERS U/S 154 OF THE ACT PASSED AN ORDER DATED 16.05.2011 MAKING THE DISALLOWANCE OF THE COMMISSIO N PAYMENT AND DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.5,45,71,029/-. 3. UNDER SECTION 40(A)(IA) OF THE ACT IF ANY SUM IS DISALLOWED FOR FAILURE TO DEDUCT TAX AT SOURCE OR PAY THE SAME TO THE CREDIT OF CENT RAL GOVERNMENT AFTER DEDUCTING TAX AT SOURCE, THEN THE ASSESSEE WILL BE ENTITLED TO CLAIM THE SAID SUM AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT. IN THE PRESENT CASE THE TAX DEDUCTED AT SOURCE HAD BEEN PAID TO THE CREDIT OF THE GOVERNMENT ON 01.09.2006 FALLI NG WITH THE PREVIOUS YEAR RELEVANT TO A.Y.2007-08. THE ASSESSEE SHOULD THEREFORE GET DEDU CTION OF A SUM OF RS.1,93,11,599/- BEING COMMISSION PAID AS DEDUCTION IN COMPUTING THE TOTAL INCOME FOR A.Y.2007-08. UNFORTUNATELY THE ASSESSMENT FOR A.Y.2007-08 IN THE CASE OF THE ASSESSEE WAS COMPLETED BY AN ORDER U/S 143(3) OF THE ACT DATED 2 4.12.2009 AND THEREFORE THE ASSESSEE COULD NOT MAKE A CLAIM FOR DEDUCTION IN A.Y.2007-08 . THE ASSESSEE HOWEVER MOVED AN APPLICATION U/S 264 OF THE ACT BEFORE HONBLE C.I.T .-2, KOLKATA FOR A.Y.2007-08 PRAYING FOR ALLOWING THE COMMISSION EXPENSES AS DED UCTION IN COMPUTING THE TOTAL INCOME FOR A.Y.2007-08. THIS PETITION WAS TIME BARR ED AND THEREFORE THE CIT BY ORDER DATED 17.01.2003 DIRECTED THE ASSESSEE TO AVAIL RE MEDY U/S 154 OF THE ACT.RECTIFICATION OF ERROR APPARENT ON THE FACE OF THE RECORD.THE FOL LOWING WERE THE RELEVANT OBSERVATIONS OF CIT IN THE SAID ORDER : AS ALREADY MENTIONED IN THE FIRST PARAGRAPH OF THI S ORDER, THE PETITION U/S 264 IS A DELAYED PETITION. BEING TIME BARRED AND ASSESSEE HA VING AVAILABLE TIME U/S 154, THE PETITION IS U/S 264 IS REJECTED. 3 ITA NO.1385/KOL/2016 GTFS MULTI SERVICES LIMITED A.Y.2007-08 3 4. THEREAFTER THE ASSESSEE FILED AN APPLICATION FOR RECTIFICATION U/S 154 OF THE ACT BEFORE THE AO FOR A.Y.2007-08 PRAYING FOR ALLOWING THE EXPENDITURE OF COMMISSION AS DEDUCTION WHILE DETERMINING THE TOTAL INCOME FOR A. Y.2007-08. VIDE AN ORDER DATED 18.08.2013 THE AO DISMISSED THE APPLICATION HOLDING THAT THE MISTAKE IN QUESTION IS NOT APPARENT FROM RECORD. THE FOLLOWING ARE THE RELEVAN T OBSERVATIONS OF THE AO :- SUB :- RECTIFICATION PETITION FILED U/S 154 OF THE INCOME TAX ACT, 1961 FOR A.Y. 2007-08 -REGARDING PLEASE REFER TO THE ABOVE, AS PER RECORD AVAILABLE, YOU HAVE NOT CLAIME D THE DEDUCTION IN RESPECT OF EXPENDITURE OF COMMISSION OF RS. 1,93,11,599/- U/S 40(A){IA) FOR A.Y. 2007-08 AT THE TIME OF FURNISHING THE RETURN OF INCOME AND. A LSO DURING THE SCRUTINY PROCEEDING. AS IT IS NOT APPARENT FROM RECORD, IT C ANNOT BE RECTIFIED U/S 154 OF THE ACT, 1961.THEREFORE YOUR RECTIFICATION PETITION FIL ED ON 13.03.2013 IS BEING REJECTED. 5. AGGRIEVED BY THE AFORESAID ORDER THE ASSESSEE PR EFERRED APPEAL BEFORE CIT(A). THE CIT(A) FIRSTLY HELD THAT THE MISTAKE IN QUESTIO N CANNOT SAID TO BE APPARENT ON THE FACE OF THE RECORD. SECONDLY, THE CIT(A) HELD THAT THE ASSESSEE HAS NOT MADE THE AFIRESAID CLAIM BY FILING A REVISED RETURN OF INCOM E NOR HAD HE CLAIMED IN THE ORIGINAL RETURN OF INCOME. HE REFERRED TO THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS CIT 284 ITR 323(SC) AND HEL D THAT THE CLAIM MADE WITHOUT A REVISED RETURN CANNOT BE ENTERTAINED BY THE AO. FOR THE ABOVE REASONS, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HA S PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHO RITIES. THE LD. DR RELIED ON THE ORDER OF CIT(A). 4 ITA NO.1385/KOL/2016 GTFS MULTI SERVICES LIMITED A.Y.2007-08 4 8. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. THE PROVISION OF SECTION 40(A)(IA) OF THE ACT READS AS FOLLOWS :- SUB-CL. (IA) OF CL. (A) AS INSERTED W.E.F. 1ST APRI L, 2005 BY THE FINANCE (NO. 2) ACT, 2004 READS AS FOLLOWS : (IA) ANY INTEREST, COMMISSION OR BROKERAGE, FEES F OR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AM OUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED O R, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YEAR, OR IN THE SUBSE QUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTIO N 200 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BEEN DEDUCTED IN THE PR EVIOUS YEAR BUT PAID IN ANY SUBSEQUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCR IBED UNDER SUB-SECTION (1) OF SECTION 200, SUCH SUM SHALL BE ALLOWED AS A DEDUCTI ON IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAI D. 9. IT IS CLEAR FROM THE PROVISO TO SECTION 40(A)(IA ) OF THE ACT AS APPLICABLE FOR A.Y.2007-08 THAT DEDUCTION OF EXPENDITURE WHICH IS DISALLOWED FOR NON PAYMENT OF TDS SHOULD BE ALLOWED AS DEDUCTION IN COMPUTING TH E INCOME FOR THE PREVIOUS YEAR IN WHICH THE SAID TAX DEDUCTED OR DEDUCTIBLE AT SOURCE IS PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT. AS WE HAVE ALREADY SEEN THAT THE TAX I N QUESTION HAS BEEN PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT BY THE ASSESSEE ON 01.09.2006 FALLING WITHIN THE PREVIOUS YEAR RELEVANT TO A.Y.2007-08. THE ASSESSEE IS THEREFORE ENTITLED TO CLAIM DEDUCTION A.Y.2007-08. THERE CANNOT BE ANY DEBATE O R DISPUTE ON THIS POSITION. THEREFORE THE APPROACH OF AO OR CIT(A) WAS ERRONEOU S. 10. AS FAR AS THE PLEA OF THE ORDER OF CIT(A) REJEC TING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE REVISED RETURN OF INCOME HAS BE EN FILED BY THE ASSESSEE AND PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF GOETZE INDIA LTD. WE ARE OF THE VIEW THAT THE SAME IS NOT SUSTAINABLE . THE CIT(A) AS A FIRST APPELLATE 5 ITA NO.1385/KOL/2016 GTFS MULTI SERVICES LIMITED A.Y.2007-08 5 AUTHORITY HAS THE POWER TO ENTERTAIN A NEW CLAIM EV EN IN THE ABSENCE OF A REVISED RETURN OF INCOME. THE SUPREME COURT IN CASE OF GOETZE (IN DIA) LTD. (SUPRA) HAS CLARIFIED THAT 'THE DECISION WAS RESTRICTED TO THE POWER OF THE AS SESSING AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN, A ND DID NOT IMPINGE ON THE POWER OF THE APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INC OME-TAX ACT, 1961. THIS HAS BEEN INTERPRETED IN SEVERAL JUDICIAL PRONOUNCEMENTS AS A PPLICABLE EVEN TO THE FIRST APPELLATE AUTHORITIES. THE HONBLE DELHI HIGH COURT IN THE C ASE OF JAI PARABOLIC SPRINGS 306 ITR 42 (DELHI) HAS HELD THAT THE APPELLATE AUTHORITIES UNDER THE ACT, WERE FREE TO CONSIDER A CLAIM MADE BY AN ASSESSEE EVEN IN THE ABSENCE OF A REVISED RETURN OF INCOME AND THAT THE REQUIREMENT FOR FILING A REVISED RETURN OF INCO ME AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. (SUPR A) IS APPLICABLE ONLY WHEN A CLAIM IS MADE CONTRARY TO THE RETURN OF INCOME BEFORE THE AO . THE HONBLE DELHI HIGH COURT IN THE CASE OF BHARAT ALUMINIUM 163 TAXMAN 430J, HAS I NTER-ALIA RULED THAT ASSESSEE CAN FILE REVISED COMPUTATION IN THE COURSE OF ONGOING A SSESSMENT PROCEEDINGS UNDER THE ACT, WITHOUT MAKING RECOURSE TO REVISED RETURN, DESPITE THE FACT THAT TIME LIMIT FOR REVISING RETURN UNDER SECTION 139(5) HAD EXPIRED. IN THE LIG HT OF THE AFORESAID DECISIONS, WE ARE OF THE VIEW THAT THE CIT(A) WAS NOT RIGHT IN REFUSING TO ENTERTAIN AND ALLOW THE CLAIM OF THE ASSESSEE AS MADE IN ITS APPLICATION U/S 154 OF THE ACT. 11. FOR THE REASONS GIVEN ABOVE, WE ALLOW THE APPEA L OF THE ASSESSEE AND DIRECT THE SUM IN QUESTION TO BE ALLOWED FOR DEDUCTION IN COMP UTING TOTAL INCOME OF A.Y.2007-08. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 08.12.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.12.2017. [RG SR.PS] 6 ITA NO.1385/KOL/2016 GTFS MULTI SERVICES LIMITED A.Y.2007-08 6 COPY OF THE ORDER FORWARDED TO: 1.GTFS MULTI SERVICES LIMITED, S.B.MANSION, 16, R.N .MUKHERJEE ROAD, KOLKATA- 700001. 2. D.C.I.T., CIRCLE-6, KOLKATA. 3. C.I.T. (A)-16, KOLKATA. 4. C.I.T.-6, KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR. PRIVA TE SECRETARY HEAD OF OFFICE/DDO,, ITAT, KOLKATA BENCHES