ACIT, Circle-1(1), Hyderabad V. M/s Aditya Construction India Pvt ltd, Hyderabad

ITA 1492/HYD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6148 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 01-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: 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; 271(1)(b); 139; 143(3); 92; 40(a)(ia); 143(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA NO. 1492/HYD/2012 ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE -1(1) HYDERABAD VS. M/S ADITYA CONSTRUCTION INDIA PVT. LTD, HYDERABAD PAN AAFCA7323J (APPELLANT) (RESPONDENT) REVENUE BY : SMT. SUMAN MALIK ASSESSEE BY : SHRI K.A. SAI PRASAD DATE OF HEARING : 13-02-2017 DATE OF PRONOUNCEMENT : 17 -02-2017 ORDER PER G. PAVAN KUMAR, J.M.: THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A)-II, HYDERABAD VIDE ITA. NO. 0832/CIT(A)- II/2011-12, DATED 12-07-2012. THE REVENUE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS IN LA W AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN RESTRICTION OF THE DISAL LOWANCE MADE U/S 40(A)(IA) ONLY TO THE AMOUNTS PAYABLE AS O N THE END OF THE FINANCIAL YEAR. 3. THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DISALLOW ANCE MADE U/S 40(A)(IA) AS THERE IS NO DISTINCTION BETWE EN THE AMOUNTS PAID DURING THE YEAR AND THE AMOUNTS OUTSTA NDING AS FAR THE PROVISIONS U/S 40(A)(IA) ARE CONCERNED. 2 ITA NO. 1492/HYD/2012 M/S ADITY CONSTRUCTION IND PVT LTD., HYDERABAD. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN BUSINESS OF CONSTRUCTION AND SALE OF FLATS/VILLAS, FILED THE RETURN OF INCOME ON 30-09-2009 FOR THE A.Y. 2009-10 ADMITTING TOTAL INCOME OF RS. 38,65,221/- AND THE R ETURN OF INCOME PROCESSED U/S 143(1) OF THE IT ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND LD. AR OF THE ASSESSEE HAS APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS. 3. THE LD. A.O ON PERUSAL OF THE FINANCIAL STATEMEN TS FOUND THE ASSESSEE COMPANY HAS MADE INTEREST PAYMEN TS TO FINANCIAL INSTITUTIONS AND CONTRACT PAYMENTS AND HAS NOT DEDUCTED TDS UNDER THE PROVISIONS OF SEC 40(A)( IA) OF THE IT ACT BUT THE LD. A.O DISALLOWED INTEREST PAI D TO INDIA BULLS RS. 2,40,32,642/-, AND INTEREST PAID TO DHLF RS. 2,33,88,239/-, PAYMENTS TO CONTRACTS RS. 64,59,559/ - AND WITH OTHER ADDITIONS, THE LD. A.O PASSED ORDER U/S 143(3) OF THE IT ACT ON 30-12-2011. 4. AGGRIEVED BY THE ADDITION, THE ASSESSEE HAS FILE D AN APPEAL BEFORE THE CIT(A). 5. IN THE APPELLATE PROCEEDINGS THE LD.CIT(A) ON TH E ISSUE OF INTEREST PAYMENT TO THE FINANCIAL INSTITUT IONS FOUND THAT INTEREST COMPONENT IS PART OF THE EMI AN D THE PROVISIONS OF SEC. 40(A)(IA) OF THE IT ACT WERE NOT APPLICABLE AND RELIED ON THE DECISIONS OF THE COORDINATE BENCH IN THE CASE OF TEJA CONSTRUCTIONS AND THE SPECIAL BENCH DE CISION OF THE ITAT VISAKHAPATNAM IN THE CASE OF MARILYIN S HIPPING 3 ITA NO. 1492/HYD/2012 M/S ADITY CONSTRUCTION IND PVT LTD., HYDERABAD. & TRANSPORT VS ACIT IN ITA NO. 477/VIZ/2008 DATED 2 9-03- 2012 . WHERE IT IS HELD THAT SEC. 40(A)(IA) OF THE IT ACT IS APPLICABLE ONLY TO THE EXPENDITURE WHICH IS PAYABLE OR OUTSTANDING AS ON 31 ST OF MARCH OF EVERY YEAR AND THE PROVISIONS OF SEC. 40(A)(IA) OF THE IT ACT SHALL NO T BE EVOKED TO DISALLOW THE AMOUNTS WHICH HAVE ALREADY PAID DUR ING THE PREVIOUS YEAR WITHOUT DEDUCTION OF TAX. THE AS SESSEE SUBMITTED THE LEDGER ACCOUNTS INDIA BULLS AND DHLF WERE AMOUNTS ARE ACTUALLY PAID DURING THE PREVIOUS YEAR. WITH THESE OBSERVATIONS THE LD. CIT(A) FOUND THAT THE IN TEREST PAYMENTS CLAIMED IN PROFIT AND LOSS ACCOUNT AS ON 3 1-03- 2009 AND DELETED ADDITION. ON THE PAYMENTS TO CONT RACTS THE LD. CIT(A) RELIED ON THE TRIBUNAL DECISION AND DIRECTED THE A.O TO EXAMINE THE PAYMENTS AND PARTLY ALLOWED THE APPEAL. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED AN APPEAL CHALLENGING THE ACTION OF THE CIT(A ) IN RESTRICTING DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN RESPECT OF AMOUNT PAYABLE AT THE END OF THE FINANCIAL YEAR AND PRAYED FOR ALLOWING THE APPEAL. 6. THE LD. AR RELIED ON THE ORDERS OF THE CIT(A) AN D EXPLAINED THAT THE SPECIAL BENCH DECISION OF THE IT AT VISAKHAPATNAM IN THE CASE OF MARILYIN SHIPPING & TRANSPORT VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29- 03- 2012 IS BINDING ON THE CO-ORDINATE BENCH AND PRAYED FOR DISMISSAL OF THE REVENUES APPEAL 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND JUDICIAL DECISIONS THE ONLY SUBSTANTIVE GROUND ARGUED BY THE REVENUE BEING THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF PA YMENTS 4 ITA NO. 1492/HYD/2012 M/S ADITY CONSTRUCTION IND PVT LTD., HYDERABAD. MADE IN THE FINANCIAL YEAR WITHOUT DEDUCTION OF TDS AND NO AMOUNT WAS REMAINING OUTSTANDING AT THE END OF T HE FINANCIAL YEAR. THE LD. CIT(A) RELIED ON THE DECIS ION OF THE MARILYIN SHIPPING & TRANSPORT VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29-03-2012 CITED (SUPRA) AND GRA NTED RELIEF TO THE ASSESSEE AND WHERE THERE IS NO AMOUNT IS OUTSTANDING AT THE END OF THE ACCOUNTING YEAR / FIN ANCIAL YEAR DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT CANNO T BE APPLIED. THE ABOVE SAID DECISIONS WAS CONSIDERED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD., [38 TAXMANN.COM (ALL)] WHICH CONFIRMING THE SPECIAL BENCH DECISION, WE AGREE WIT H THE DECISION OF THE SPECIAL BENCH AS APPROVED BY THE HI GHER JUDICIAL FORUMS AND FOLLOW THE JUDICIAL PRECEDENT. WE ARE OF THE OPINION THAT THIS COORDINATE BENCH OF THE TR IBUNAL IS BIND BY THE DECISION OF THE SPECIAL BENCH. SIMILAR ISSUE WAS DEALT BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS M/S. JANAPRIYA PROPERTIES PVT. LTD. , IN ITA NOS. 1614 & 1622 TO 1624/HYD/2012 DATED 19-01-2015 HELD AT PARA 7 WHICH IS READ AS UNDER: 7. UPON HEARING THE RIVAL SUBMISSIONS, WE ARE OF T HE VIEW THAT THE DECISION OF THE ITAT SPECIAL BENCH IS BIND ING ON THE TRIBUNAL, PARTICULARLY IN VIEW OF THE CLARIFICATORY ORDER PASSED BY THE HONBLE HIGH COURT OF JUDICATURE AT HYDERABA D IN THE INSTANT CASE, AND THUS, WE RESPECTFULLY FOLLOW THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYIN SHIPPING & TR ANSPORT (SUPRA) AND HOLD THE PROVISIONS OF S. 40(A)(IA) CAN NOT BE INVOKED WHERE THE PAYMENTS WERE ALREADY MADE BY THE ASSESSE E. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. IN THE R ESULT, APPEALS OF THE REVENUE INSOFAR AS THE ABOVE ISSUE IS CONCER NED, ARE HEREBY DISMISSED. 5 ITA NO. 1492/HYD/2012 M/S ADITY CONSTRUCTION IND PVT LTD., HYDERABAD. 8. WE RESPECTIVELY THE FOLLOW THE COORDINATE BENCH DECISION AND FIND THE LD. CIT(A) HAS DEALT ON THE P ROVISIONS OF THE ACT AND JUDICIAL DECISIONS AND CONSIDERED TH E ASSESSEES EXPLANATIONS VIS-A-VAS FINDINGS OF THE A.O. AND ALLOWED THE APPEAL. ACCORDINGLY WE ARE NOT INCLINE D TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHELD THE SAME AND DISMISS THE REVENUES GROUNDS OF APPEAL. 9. IN THE RESULT THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) (G.PAVAN KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 17 TH FEBRUARY, 2017 KRK 1) M/S ADITYA CONSTRUCTION IND PVT LTD., C/O PLOT NO. A-12 CHANDRALOK COMPLEX, ROAD NO 12, FILM NAGAR, JUBIL EE HILLS, HYDERABAD. 2) ACIT, CIRCLE 1(1) HYDERABAD 3) CIT(A) -II, HYDERABAD 4) CIT-I HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE