Approcopp Engineering Pvt. Ltd., Jalna V. Assistant Commissioner of Income-tax,

ITA 1456/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0325 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Business expenditure; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 43B; 271(1)(b); 139; 92; 40(a)(ia); 43

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE SHRI R. P. TOLANI, JM / ITA NO.1456/PN/2015 ! '#! / ASSESSMENT YEAR : 2010-11 APPROCOPP ENGINEERING PVT LTD. BANSILAL KABRA, ADVOCATE, 20, 1 ST FLOOR, AMBIKA MARKET, JALNA, PIN-431203 PAN : AAFCA6160M . /APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, AURANGABAD . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SMT. SUMITRA BANERJI $ / ORDER PER R. P. TOLANI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER OF COMMISSIONER OF INCOME TAX (APPEAL)I, PUNE DATED 0 2.09.2015 FOR THE ASSESSMENT YEAR 2010-2011. THIS IS ASSESSEES APPEAL RAISING FOLLOWING GROUNDS: 1. ADDITION OF RS. 78025/- FOR INT. PAID ON MVAT, TDS & TDS/SERVICE TAX EXPENSES. / DATE OF HEARING :13.12.2016 / DATE OF PRONOUNCEMENT: 16.12.2016 ITA NO.1456/PN/2015 2 THE LD. ASSESSING OFFICER IS ERRED IN CONCLUDING THAT INTEREST PAID TOWARDS TDS, MVAT AND TDS & SERVICE TAX EXPENSES AR E PENAL AND NOT ALLOWABLE. THE LD. ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION OF RS. 100863/- BY DISALLOWING INTEREST PAID FOR DELAY IN PA YMENT OF MVAT, TDS AND TDS & SERVICE TAX FOR CARRIAGE OUTWARD WHICH ARE COMPENSATORY PAYMENT TO GOVT. AND ALLOWABLE U/S 28 OR 37 OF I.T ACT. 2. ADDITION OF RS. 545917/- FOR NON DEDUCTION OF TDS. THE LD. ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION OF RS. 545917/- SEC. 40 (IA) IS APPLICABLE FOR ANY INTERES T, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT AND NOT TO A MOUNTS ALREADY PAID. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE S ERVICE OF NOTICE. SINCE THE ISSUES IN QUESTION ARE COVERED IN FAVOUR OF THE ASSESSEE, THEREFORE, THE APPEAL IS DECIDED EX PARTE ACCO RDINGLY QUA ASSESSEE AFTER HEARING LD. DR. AND PERUSAL OF RECORD. 3. APROPOS GROUND NO. 1, FACTS ARE THAT THE ASSESSEE M ADE PAYMENT OF STATUTORY TAXES I.E TDS, MVAT, SERVICE TAX, BELATEDLY . FOR DELAYED PERIOD, ASSESSEE HAD TO PAY COMPENSATORY INTEREST IN PE RCENTAGE BASIS THOUGH TERMED AS PENALTY IN RESPECTIVE LAW. THE ASSESSEE S PAYMENT OF THESE AMOUNTS IS COMPENSATORY IN NATURE WERE CLAIMED AS BUSINESS EXPENDITURE. ON QUERIES ASSESSEE CLAIMED THAT MERE USE O F THE WORD PENAL WILL NOT ALTER THE ACTUAL NATURE OF PAYMENT BEING C OMPENSATORY IN NATURE TO COVER THE PERIOD OF DELAY IN MAKING THE TAX PAYMENTS. IT IS SETTLED LAW THAT THE COMPENSATION FOR DELAYED PERIOD OF PA YING TAXES WAS ALLOWABLE AS BUSINESS EXPENDITURE AND THE SAME WAS N OT FOR INFRACTION OF ANY LAW OR PUBLIC POLICY. BESIDES, THE PAYMENT O F TAX AND SUCH COMPENSATORY AMOUNT HAS BEEN MADE BEFORE THE DU E DATE OF FILING RETURN, CONSEQUENTLY THE EXPENDITURE WAS ALLOWABLE SECTIO N 43B OF THE I.T ACT. ITA NO.1456/PN/2015 3 4. THE LD. DR PLACED HIS RELIANCE UPON THE FOLLOWING JUDGMENTS:- 1. PAHARPUR COOLING TOWERS LTD V/S. CIT (244 CTR 502). 2. CIT V/S. MODIPON LTD (NO. 2) (334 ITR 106) 3. CIT V/S. RAJ & SAN DEEPS LTD. (293 ITR 12) 5. I HAVE HEARD THE LD. DR AND PERUSED THE MATERIALS A VAILABLE ON RECORD. THE IMPUGNED AMOUNT THOUGH REFERRED TO AS PENA LTY IS ACTUALLY INTEREST AND PAID FOR LATE PAYMENT OF TDS, MVAT IS COMPENS ATORY IN NATURE AND NOT FOR ANY INFRACTION OF LAW. BESIDES, PAYMENT H AS BEEN MADE BEFORE FILING OF RETURN OF INCOME. THE EXPENDITURE IS A LLOWABLE U/S 43 B OF THE I.T ACT. 6. IN VIEW OF THE ABOVE FACTS, I DELETE THE ADDITION OF RS. 10 0863/- AS RAISED IN GROUND OF NO. 1. THUS, THE GROUND NO. 1 OF THE A SSESSEE IS ALLOWED. 7. GROUND NO. 2, IS AS UNDER: THE LD. ASSESSING OFFICER IS NOT JUSTIFIED IN MAKIN G ADDITION OF RS. 545917/- SEC. 40 (IA) IS APPLICABLE FOR ANY INTERES T, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT AND NOT TO A MOUNTS ALREADY PAID. 8. LD. CIT(A) CONFIRMED THE SAME BY HOLDING THAT THE SOLE JUDGMENT OF HONBLE ALLAHBAD HC IN THE CASE OF VECTOR SHIPPING WAS OBITER DICTA IN NATURE AND NOT A BINDING PRECEDENT. I HAVE HEARD TH E LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN MY CONSIDERE D VIEW, THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF C IT V/S. VECTOR SHIPPING SERVICES (P) LTD ITA NO. 122 (2013) DECIDE D ON 02.07.2014 CITED BY LD. CIT(A) LAYS DOWN A BINDING PROPOSIT ION OF LAW AND NOT MERELY AN OBITER DICTA. REVENUE SLP AGAINST THIS JUDGMENT HAS BEEN DISMISSED BY HONBLE SUPREME COURT. IN VIEW THEREOF IS APPLICABLE TO ASSESSEES CASE AS BINDING PRECEDENT. FURTHER IT HA S BEEN HELD BY THE ITA NO.1456/PN/2015 4 SUPREME COURT IN THE CASE OF CIT V/S. VEGETABLES PRODU CTS LTD ( 88 ITR 192) THAT IF MORE THAN ONE VIEW IS POSSIBLE ON ANY ISSUE THEN THE VIEW FAVORABLE TO THE ASSESSEE SHOULD BE ADOPTED. FURTHER TH ERE HAS BEEN AMENDMENT IN SECTION 40(A)(IA) WHICH HAS BEEN HELD TO BE RE TROSPECTIVE IN NATURE. 9. IN VIEW OF THE ABOVE, THE TOTAL ADDITION OF RS.5,45,917 /- AS RAISED IN GROUND NO. 2 BY THE ASSESSEE IS ALSO ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.12.2016. SD/- (R. P. TOLANI) / JUDICIAL MEMBER / PUNE ; DATED : 16TH DECEMBER, 2016 SB $%&'()(# COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ! ! ' # $ / THE CIT(A)-I, AURANGABAD; 4. THE PR. COMMISSIONER OF INCOME TAX-1, AURANGABAD . 5. 6. %&' (()* + ! )* + , , - - .. / DR SMC, ITAT, PUNE; '/0 1 GUARD FILE. // TRUE COPY// $ / BY ORDER, (2 )3 / PRIVATE SECRETARY ! )* + / ITAT, PUNE