Asstt.Commissioner of Income tax, Cir.-2, Nagpur V. Shri Sastish J. Chaturvedi,(IHUF), Nagpur

ITA 15/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1694 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2013
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Difference of opinion
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 15/NAG./2013 ( ASSESSMENT YEAR : 201011 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE8, AMBEDKAR BHAWAN SEMINARY HILLS, NAGPUR 440 006 APPELLANT V/S SMT. SANDHYA RAJESH ASHTANKAR PLOT NO.132, DATTANIWAS RESHIMBAGH, NAGPUR RESPONDENT ASSESSEE BY : SHRI SANJAY THAKAR REVENUE BY : SHRI NARENDRA KANE DATE OF HEARING 20.08.2015 DATE OF ORDER 28.08 .2015 O R D E R PER SHAMIM YAHYA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE IMPUGNED ORDER DATED 18 TH OCTOBER 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS)II, NAGPUR, FOR THE ASSESSMENT YEAR 201011 , ON THE FOLLOWING REVISED GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT PROVISIONS OF SECTION 40(A)(IA) WILL NOT BE APPLICABLE WHERE THE ASSESSEE HAS DEDUCTED TAX AT SOURCE AT A RATE LOWER THAN THE APPROPRIATE RATE PRESCRIBED IN CHAPTERXVIIB. SMT. SANDHYA RAJESH ASHTANKAR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) DID NOT APPRECIATE THAT THE AMEN DMENT TO SECTION 194C INTRODUCED W.E.F. 1.10.2009, MADE THE ASSESSEE LIABLE TO DEDUCT TAX AT SOURCE ON CONTRACT PAYMENTS @ 2%. THE ASSESSEE HAVING DEDUCT TAX AT SOURCE @ 1% INSTEAD O F @ 2% HA FAILED TO COMPLY TO THE PROVISIONS OF SECTION 194 B Y NOT DEDUCTING TAX AT SOURCE AT THE APPROPRIATE RATES AN D THEREBY, VIOLATING THE PROVISIONS OF SE3CTION 40(A)(IA) WHIC H WAS RIGHTLY HELD BY THE ASSESSING OFFICER. 2. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ISSUE INVOLVED IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN CIT V/S S.K. TEKRIWAL, [2013] 260 CTR 73 (CAL.). THE LEARNED COU NSEL FOR THE ASSESSEE CONTENDED THAT AS PER THE EXPOSITION IN THIS CA SE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS PER MISSIBLE ONLY WHEN THERE IS NONDEDUCTION OF TAX. IN CASE OF SHORT DEDUCTION OF TDS, DUE TO APPLICATION OF DIFFERENT RATE, THIS PROVISION CA NNOT BE INVOKED. THE LEARNED COUNSEL CONTENDED THAT THE LEARNED CIT(A ) HAS ALSO ALLOWED THE ASSESSEES APPEAL BY FOLLOWING SIMILAR PROPOSITIONS FROM THE ORDERS OF THE TRIBUNAL, MUMBAI BENCHES, AND THE LE ARNED CIT(A) HAS ALSO FOLLOWED THE DECISION OF CALCUTTA HIGH COURT I N S.K. TEKREWAL (SUPRA). 3. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDER OF THE ASSESSING OFFICER. HOWEVER, HE COULD NOT CONTROVERT THE SUBMISSIONS THAT THE ISSUE IS COVERED IN FVAOUR OF THE ASSESSEE BY THE FORESAID DECISION OF THE HONBLE CALCUTTA HIGH COUR T CITED SUPRA. SMT. SANDHYA RAJESH ASHTANKAR 3 4. UPON CAREFUL CONSIDERATION, WE FIND THAT AS EXPOUNDE D BY THE HONBLE CALCUTTA HIGH COURT IN S.K. TEKRIWAL (SUPRA ), DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS NOT PERMISSIBLE IF THERE IS SHORT FALL IN DEDUCTION OF TDS. THE SAID SECTION HAS TO BE INVOK ED ONLY WHEN THERE IS NO DEDUCTION OF TAX. IN THIS CONNECTION, WE MA Y GAINFULLY REFER TO THE DECISION OF THE HON'BLE HIGH COURT AS UNDER: 'HERE IN THE PRESENT CASE BEFORE US, THE ASSESSEE H AS DEDUCTED TAX UNDER S. 194C(2) OF THE ACT AND NOT UNDER S. 194-1 OF THE ACT AND THERE IS NO ALLEGATION THAT THIS TDS IS NOT DEPOSITED WITH THE GOVERNMENT ACCOUNT. WE ARE O F THE VIEW THAT THE PROVISIONS OF S. 40(A)(IA) OF THE ACT HAS TWO LIMBS, ONE IS WHERE, INTER ALIA, ASSESSEE HAS TO DE DUCT TAX AND THE SECOND WHERE AFTER DEDUCTING TAX, INTER ALI A, THE ASSESSEE HAS TO PAY INTO GOVERNMENT ACCOUNT. THERE IS NOTHING IN THE SAID SECTION TO TREAT, INTER ALIA, T HE ASSESSEE AS DEFAULTER WHERE THERE IS A SHORTFALL IN DEDUCTIO N. WITH REGARD TO THE SHORTFALL IT CANNOT BE ASSUMED THAT T HERE A DEFAULT AS THE DEDUCTION IS NOT AS REQUIRED OR BY U NDER THE ACT, BUT THE FACTS IS THAT THIS EXPRESSION ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER-XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION HAS NOT B EEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SO (1) OF S. 139. THIS S. 40(A)(IA) OF THE ACT REFERS ONLY TO THE DUTY TO DEDUCT TAX AND PAY TO GOVERNMENT ACCOUNT. IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO TH E TAXABILITY OF ANY ITEM OR THE NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, THE ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT UNDER S. 201 OF THE ACT AND NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF S. 40(A)(IA) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) ALLOWING THE CLAIM OF ASSESSEE AND THIS ISSU E OF REVENUE'S APPEAL IS DISMISSED. 5. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL, THE A SSESSEE HAS DEDUCTED TAX @ 1% AS AGAINST 2%, WHICH WAS THE REQUIRE D RATE. IT SMT. SANDHYA RAJESH ASHTANKAR 4 CANNOT BE SAID THAT THE ASSESSEES CASE FALLS FOR DISA LLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT, AS PER THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT AS ABOVE. NO CONTRARY DECISION HAS BEEN PRODUCED BEFORE US. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISIO N AS ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A). THE GROUNDS RAISED B Y THE REVENUE ARE DISMISSED. 6. N THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2015 S D/ - MUKUL K. SHRAWAT JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 28.08.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A SSISTANT REGISTRAR ITAT, NAGPUR