Sri. Siraj V.E, Cochin V. The ITO, Cochin

ITA 147/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96728 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Section: 143(3)

Judgement Text

ITA NO . 147/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 147/COCH/2015 (ASST YEAR 2006 - 07 ) SHRI SIRAJ V E VALIYAVEETTIL ?XL/4553 MARKET ROAD KOCHI 682 003 VS THE INCOME TAX OFFICER WARD 2(1), RA NGE 2 KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AJNPS 1461K ASSESSEE BY SHRI ANIL D NAIR REVENUE BY SHRI K P GOPAKUMAR, SR DR DATE OF HEARING 06 TH OCT 2015 DATE OF PRONOUNCEMENT 07 TH OCT 2015 OR D ER PER GEORGE GEORGE. K. J M: THIS APPEAL A T THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 30.9.2014. THE RELEVANT ASSESSMENT YEAR IS 2006 - 07. 2 THERE IS A DELAY IN FILING THE APPEAL BY 38 DAYS. THE ASSESSEE HAS FILED A PETITION ACCOMPANIED BY AN AFFIDAVIT FOR CONDONAT ION OF DELAY IN FILING THE APPEAL. ON PERUSAL OF THE AFFIDAVIT FILED IN SUPPORT OF THE PETITION FOR CONDONATION OF DELAY, WE ARE OF THE OPINION THAT THE ASSESSEE WAS HAVING SUFFICIENT REASONS IN FILING THE APPEAL BELATEDLY. THEREFORE, WE CONDONE THE DELA Y IN FILING THE APPE AL AND PROCEED TO DISPOSE OFF THE MATER ON MERITS. ITA NO . 147/C/2015 2 3 THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ASSESSMENT ORDER WHICH HAD DISALLOWED A SUM OF RS. 31 L AKHS BY INVOKING PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS OF FILM RELEASE AND DISTRIBUTION. FOR THE RELEVANT ASSESSMENT YEAR, THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS. 7,56,853/ - . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT FIXING THE TOTAL INCOME OF RS. 38,97,500/ - . THE AO, BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT , DISALLOWED AN EXPENDITURE OF RS. 31 LAKHS BEING THE PAYMENT MADE TO ARTISTS WITHOUT DEDUCING TAX AT SOURCE. 5 ON APPEAL BEFORE THE CIT(A), THE ASSESSEE RELIED ON THE JUDGMENT IN THE CASE OF M/S CEE PEE GRANITES PVT LD AND THAT OF M/S VECTOR SHIPPING , WHERE THE SLP OF THE DEPARTMENT HA S BEEN DISMISSED. IT WAS CONTENDED THAT SINCE IN THIS CASE THE AMOUNTS HAVE ALREADY BEEN PAID, THEREFORE, PROVISIONS OF SECTION40(A)(IA) WOULD NOT BE APPLICABLE AS THE SAME APPLIES ONLY TO AMOUNTS PAYABLE AND NOT TO THE AMOUNTS ALREADY PAID. THE CIT(A) REJE CTED THE ABOVE CONTENTION AND DISMISSED THE APPEAL OF THE ASSESSE. THE RELEVANT FINDINGS OF THE CIT(A) READS AS UNDER: ITA NO . 147/C/2015 3 5.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIONS OF THE ASSESSEE AND THE LEGAL POSITION AS IT EXISTS . 5.3.1 THE HON ' BLE GUJ RAT HIGH COURT IN CIT VS . SIKANDER KHAN N. TUNVAR & OTHERS, ITA NO . 90E OF 2012 JUDGMENT DATED 02.05.2013 AND THE HON'BLE CAL CUTTA HIGH COURT IN CIT ' . IS. CRESENT EXPORT SYNDICATE - ITA NO.20 OF 2013 , G.A . NO.190 OF 2013 HAVE LA I D TOWN PROPOSITION THAT WHE RE THE ASSESSEE HAS FAILED TO DEDUCT THE TAX AT SOURCE AND DEPOSIT THE SAME WITHIN THE SPECIFIED PERIOD, THE EXPENDITURE RELATABLE TO SUCH DEDUCTION OF TAX AT SOURCE WOULD NOT BE ALLOWED AS DEDUCTION , WHILE COMPUTING THE INCOME OF THE ASSESSEE . ADMITTEDLY IN THE FACTS OF THE PRESENT CASE THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF THE PAYMENTS MADE TO THE ARTISTS OF RS. 31,00,0001 - . ASSESSEE HAS NOT FURNISH ANY CERTIFICATE U/S . 197 FOR NON DEDUCTION OF TAX AND HENCE AO IS CORRECT IN LAW IN MAKING THIS DISALLOWANCE. IT IS NOTICED THAT THE HON'BLE HIGH COURT OF CALCUTTA , VIDE ITS ORDER DATED 28 - 03 - 2013 IN THE CASE OF CIT VS . CRESCENT EXPORT SYNDICATE IN IT AT NO . 20/2013, HAS HELD THAT THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS IS NOT ACCEPTABLE. IT IS ALSO NOTICED THAT THE HON'BE HIGH COURT OF GUJARAT VIDE ITS ORDER DATED 02 - 05 - 2013 IN THE CASE OF CIT VS. SIKANDARKHAN N. TUNVAR (TAX APPEAL NO. 905/2012 & ORS . ) HAS HELD THAT THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS DOES NOT LAY DOWN THE CORRECT LAW . ACCORDINGLY, BOTH THE HIGH COURTS DID NOT APPROVE THE DECISION RENDERED BY THE SPECIAL BENCH IN THE ABOVE SAID CASE. 6 THE CIT(A) FURTHER ELABORATELY QUOTED THE ORDER OF THE COCHI N BENCH OF TH E TRIBUNAL IN THE CASE MIS . OR CH I D MA RI NE , ALAPPUZHA V S A CI T I N ITA N O . 8 0 2/COCH/2013 ( ORDER DA T ED 24 SEP T EMBE R, 2 0 14 ) . THE CIT(A) ALSO TOOK A N OTE OF THE AMENDMENT TO SECTION 40(A)(IA) BY FINANCE ACT 2012 W.E.F 1.4.2013 AND RELYING ON TH E JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S PRUDENTIAL LOGISTIC A N D TRANSPORTER VS I TO REPORTED IN 364 ITR 685, HELD THAT THE AMENDMENT TO SEC 40(A)(IA) IS ONLY PROSPECTIVE. ITA NO . 147/C/2015 4 7 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. AT THE VERY OUTSET, THE LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ISSUE WHETHER SECTION 40(A)(IA) WOULD BE APPLICABLE ONLY TO THE AMOUNTS OUTSTANDING/ PAYABLE AND NOT TO THE AMOUNT WHICH HAS ALREADY BEEN PAID , IS DECI DED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT IN ITA 278 OF 2014 ( JUDGMENT DATED 3,7.2015). THE LD DR PRESENT WAS DULY HEARD. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. THE ASSESSEE, IN THE GROUND OF APPEAL HAS ASSAILED THE INVOCATION OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT SOLELY ON THE GROUND THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS VS ACIT REPOR TED IN 136 ITD 23 (SB) IS APPLICABLE TO THE FACTS OF THE CASE. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS (SUPRA) HAD HELD THAT DISALLOWANCE U/S 40(A)(IA) IS TO BE RESTRICTED TO THE EXPENDITURE THAT IS PAYABLE AN D NOT TO BE EXTENDED TO COVER AN EXPENDITURE THAT HAS BEEN PAID. THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA) HAD CATEGORICALLY HELD THAT SECTION 40(A)(IA) DISALLOWANCE IS ALSO APPLICABLE TO THE EXPEN DITURE WHICH ARE PAID DURING FINANCIAL YEAR ALSO. THE RELEVANT FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA) READ AS FOLLOWS: ITA NO . 147/C/2015 5 17.ANOTHER CONTENTION THAT WAS PRESSED INTO SERVICE WAS THAT THE APPELLANTS HAD ALREADY PAID THE AMOUNT AND THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA),APPLICABLE ONLY IN RESPECT OF THE AMOUNT WHICH ITA.278/14 & CON CASES REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR, IS NOT ATTRACTED. THEREFORE, ACCORDING TO THE APPELLANTS, DISALLOWANCE CANNOT BE SUSTAINED. THIS CONTENTION WAS SOUGHT TO BE SUBSTANTIATED BY RELYING ON THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX V. VECTOR SHIPPING SERVICES (P)[(2013) 3S7 ITR 642(ALL)] . PRIMARILY, THIS CONT ENTION SHOULD BE ANSWERED WITH REFERENCE TO THE LANGUAGE USED IN THE STATUTORY PROVISION. SECTION 40(A)(IA) MAKES IT C L EAR THAT THE CONSEQUENCE OF DISALLOWANCE IS ATTRACTED WHEN AN INDIVIDUAL, WHO IS L I ABLE TO DEDUCT TAX ON ANY INTEREST PAYABLE TO A RESIDE NT ON WHICH TAX IS DEDUCTIBLE AT SOURCE, COMMITS DEFAULT . THE . LANGUAGE OF THE SECTION DOES NOT WARRANT AN INTERPRETATION THAT IT IS ATTRACTED ONLY IF THE INTEREST REMAINS PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. IF THIS CONTENTION IS TO BE ACCEPTED , THIS COURT WILL HAVE TO ALTER THE LANGUAGE OF SECTION 40(A) (IA) AND SUCH AN INTERPRETATION IS NOT PERMISSIBLE. THIS VIEW THAT WE HAVE TAKEN IS SUPPORTED BY JUDGMENTS OF THE CALCUTTA H I GH COURT IN CRESCENT EXPORTS SYNDICATE AND ANOTHER [ITAT 20 OF ITA . 27 8/14 & CON CASES 2013] AND THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V . SIKANDADARKHAN N TUNVAR [ITA NOS . 905 OF 2012 & CONNECTED CASES], WHICH HAVE BEEN RELIED ON BY THE TRIBUNAL. RESULTANTLY, WE DO NOT FIND ANY MERIT IN THE CONTEN TIONS AND QUESTIONS OF LAW ARE ANSWERED AGAINST T H E ASSESSEES. APPEALS ARE ONLY TO BE DISMISSED AND WE DO SO. 9 IN VIEW OF THE DICTUM OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA),WE HOLD THAT THE ORDER OF THE CI T(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. IT IS ORDERED ACCORDINGLY. 10 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF OCT 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 7 TH , OCT 2015 RAJ* ITA NO . 147/C/2015 6 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN