DCIT, Circle-16(2), Hyderabad, Hyderabad V. Pragati Green Meadows & Resorts Ltd., Hyd, Hyderabad

ITA 1508/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6169 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Section: 143(3); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1508/HYD/2016 ASSESSMENT YEAR: 2012-13 DY. COMMISSIONER OF INCOME- TAX, CIRCLE 16(2), HYDERABAD. VS. PRAGATI GREEN MEADOWS AND RESORTS LTD., HYDERABAD. PAN AACCP 5283 H (APPELLANT) (RESPONDENT) REVENUE BY : SMT. U. MINI CHANDRAN ASSESSEE BY : SHRI MURALI MOHAN RAO DATE OF HEARING 25-01-2017 DATE OF PRONOUNCEMENT 03-02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A) - 4, HYDERABAD, DATED 18/08/2016 FOR AY 2 012-13. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY FILED ITS RETURN OF INCOME FOR THE AY 2012-13 DECLA RING TOTAL INCOME OF RS. 6,92,020/-. IN RESPONSE TO THE NOTICES ISSUED U /S 143(2) AND 142(1), THE AR OF THE ASSESSEE APPEARED AND FILED T HE INFORMATION CALLED FOR. THE AO AFTER VERIFYING THE INFORMATION FILED BY THE ASSESSEE COMPANY COMPLETED THE ASSESSMENT BY MAKING ADDITION OF RS. 76,64,400/- AS DISALLOWANCE U/S 40(A)(IA) OF TH E IT ACT AND ASSESSED THE INCOME AT RS. 83,56,420/-. 2.1 THE AO OBSERVED THAT THE ASSESSEE HAS TAKEN LOA N FROM INDIA BULLS WHICH IS A PRIVATE INSTITUTION AND HAD PAID I NTEREST OF RS. 76,64,400/- ON THE SAME BUT TDS WAS NOT DEDUCTED ON THE INTEREST PAYMENT. AS THE ASSESSEE HAD NOT DEDUCTED TDS, THE INTEREST 2 ITA NO. 1508/H/16 PRAGATI GREEN MEADOWS AND RESORTS LTD., HYD. PAYMENT MADE IN FY 2011-12 TOWARDS LOAN TAKEN FROM INDIA BULLS WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE BY THE AO. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE AMOUNT OF RS. 76,64,400/- BEING THE INTEREST HAD BE EN PAID BEFORE THE CLOSE OF THE FY I.E. 31/03/2012, HENCE, NO AMOUNT O F LIABILITY IS SHOWN AS PAYABLE ON THE ISSUE. FURTHER, IT WAS SUBMITTED THAT AS THE AMOUNT HAD ALREADY BEEN PAID BEFORE 31/03/2012, THE PROVIS IONS OF SECTION 40(A)(IA) HAVE NO APPLICATION. REFERRING TO THE BA LANCE SHEET AND OUTSTANDING LIABILITIES, THE ASSESSEE SUBMITTED THA T NO OUTSTANDING AMOUNT IS THERE IN THE BOOKS AS ON THE CLOSING DATE OF THE FY. FURTHER, IT WAS SUBMITTED THAT FROM THE LEDGER ACCO UNT COPY OF M/S INDIA BULLS MAINTAINED IN ASSESSEES BOOKS IT HAD S HOWN AS THE INTEREST HAS ALREADY BEEN PAID. 3.1 THE ASSESSEE SUBMITTED THAT THE AO HAD MADE THE ADDITION U/S 40(A)(IA) IN ASSESSMENT U/S 143(3) OF THE ACT WHEN THE PROCEEDINGS HAVE NOT BEEN INITIATED AGAINST THE ASSESSEE U/S 20 1(1) AND EVEN WHEN THE ASSESSEE IS NOT DEEMED AS ASSESSEE IN DEFA ULT IN TERMS OF SECTION 201 OF THE ACT. IT WAS SUBMITTED THAT AS P ER THE PROVISIONS OF SECTION 40(A)(IA), IF AN ASSESSEE FAILED TO DEDUCT OR PAY TAX THEN HE SHOULD BE ASSESSED U/S 201(1) OF THE ACT IN TERMS O F CHAPTER XVII-B. IT WAS, THEREFORE, SUBMITTED THAT IN THE PRESENT CA SE THE AO HAD NOT TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT, HENCE, THE DISALLOWANCE MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) IS NOT IN ACCORDANCE WITH LAW AND THE SAME IS LIABLE TO BE DELETED. THE ASSESSEE, RELIED ON THE FOLLOWING CASE LAWS: 1. CIT VS. JANAPRIYA ENGINEERS SYNDICATE, ITTA NO. 352 OF 2014, DATED 24/06/2014. 2. MERILYN SHIPPING & TRANSPORTS VS. ACIT, 16 ITR A T (1)(VIZAG). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) OBSERVED THAT AS PER SECTION 40(A)(IA), THE AMOUNT S ARE TO BE 3 ITA NO. 1508/H/16 PRAGATI GREEN MEADOWS AND RESORTS LTD., HYD. DISALLOWED ONLY WHEN THEY ARE PAYABLE. THE CIT(A) R ELYING ON THE DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPOR T (SUPRA), DIRECTED THE AO TO VERIFY WHETHER THE SAID AMOUNTS WERE PAYA BLE AND ON WHICH TAX IS NOT DEDUCTED AND CONFIRM THE SAME AND IF THE AMOUNTS ARE ALREADY PAID, SECTION 40(A)(IA) IS NOT APPLICABLE. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE AO TO MAKE D ISALLOWANCE U/S 40(A)(IA) ONLY IN RESPECT OF AMOUNTS THAT ARE P AYABLE AND ON WHICH TAX IS NOT DEDUCTED AT SOURCE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF AO BE RESTORED. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WE FIND THAT SIMILAR ISSUE CAME UP FOR C ONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2010-11 AND 2011-12 IN ITA NOS. 663 & 664/HYD/2016 (WHEREIN THE AM IS A PARTY) VIDE ORDER DATED 08/12/2016 WHEREIN THE BENCH OBSERVED AS FOLLOWS: 6. WE HAVE HEARD LD. D.R. AS WELL AS THE LEARNED C OUNSEL APPEARING ON BEHALF OF THE ASSESSEE IN THIS REGARD. ADMITTEDLY IDENTICAL I SSUE WAS DECIDED BY THE ITAT, HYDERABAD BENCH, IN NUMBER OF CASES, IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE IN THE LIGHT OF OBSERVATIONS OF THE HONBLE JURISDICTIONAL HIGH COURT [IN THE CASE OF CITII, HYDERABAD VS., M/S. JANAPRIYA EN GINEERS SYNDICATE 371 ITR 439] WHEREIN THE COURT OBSERVED THAT UNTIL AND UNLESS TH E DECISION OF THE SPECIAL BENCH IS UPSET BY THIS COURT IT IS BINDING ON SMALL ER BENCHES AND COORDINATE BENCHES OF THE TRIBUNAL. IN ITA.NOS.1614, 1622, 162 3 & 1624/HYD/2012 DATED 19.01.2015 [IN THE CASE OF ACIT, CENTRAL CIRCLE-2, HYDERABAD VS., M/S. JANAPRIYA PROPERTIES PVT. LTD., HYDERABAD, WHEREIN ONE OF US IS A PARTY] THE TRIBUNAL HAS ANALYSED THE ISSUE AND CONCLUDED THAT SECTION 40(A) (IA) CANNOT BE INVOKED WHERE THE PAYMENTS WERE ALREADY MADE. THE RELEVANT PORTIO N OF THE ORDER IS EXTRACTED FOR IMMEDIATE REFERENCE : 5. HAVING REGARD TO THE DIRECTION GIVEN BY THE HON' BLE HIGH COURT, THE MATTER WAS POSTED FOR HEARING. THE LEARNED COUNSEL APPEARI NG ON BEHALF OF THE ASSESSEE PLACED BEFORE US THE FOLLOWING ORDERS OF T HE ITAT TO SUBMIT THAT THE HON'BLE ALLAHABAD HIGH COURT IN ITS DECISION IN THE CASE OF CIT V/S. VECTOR SHIPPING SERVICES PVT. LTD. (357 ITR 647) HAS TAKEN A VIEW ON THE ISSUE IN FAVOUR OF THE ASSESSEE IN CONSONANCE WITH THE VIEW TAKEN B Y THE ITAT VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND T RANSPORT (SUPRA), AND THE 4 ITA NO. 1508/H/16 PRAGATI GREEN MEADOWS AND RESORTS LTD., HYD. VIEW TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT WAS IMPLIEDLY AFFIRMED BY THE HON'BLE SUPREME COURT BY DISMISSING AN SLP SOUGHT B Y THE REVENUE, AND THUS THE VIEW TAKEN BY THE ITAT SPECIAL BENCH VISAKHAPAT NAM DESERVES TO BE FOLLOWED. (A) DECISION OF HYDERABAD BENCH A OF THE TRIBUNA L IN USHODAYA ENTERPRISES LTD. HYDERABAD V/S. DY. COMMISSIONER OF INCOMETAX C IRCLE 16(2), HYDERABAD (ITA NOS.676/HYD/2009 & 411/HYD/2010 DATED 7.1.2015 ) (B) DECISION OF MUMBAI BENCH A OF THE TRIBUNAL I N M/S. ARCADIA SHARE & STOCK BROKERS PVT. LTD., MUMBAI V/S. DY. COMMISSIONER OF INCOME-TAX, RANGE 4(1), MUMBAI (ITA NO.1871/MUM/2013 DATED 22.12.2014) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY A GREED THAT THE ITAT HYDERABAD BENCH CONSIDERED AN IDENTICAL ISSUE AND F OLLOWED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND T RANSPORT (SUPRA). 7. UPON HEARING THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THE DECISION OF THE ITAT SPECIAL BENCH IS BINDING ON THE TRIBUNAL, PARTICULARLY IN VIEW OF THE CLARIFICATORY ORDER PASSED BY THE HON'BLE HIGH COUR T OF JUDICATURE AT HYDERABAD IN THE INSTANT CASE, AND THUS, WE RESPECTFULLY FOLL OW THE DECISION OF SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND TRANSPORT S (SUPRA), AND HOLD THAT THE PROVISIONS OF S.40(A)(IA) CANNOT BE INVOKED WHERE T HE PAYMENTS WERE ALREADY MADE BY THE ASSESSEE. WE DIRECT THE ASSESSING OFFIC ER ACCORDINGLY. IN THE RESULT, APPEALS OF THE REVENUE INSOFAR AS THE ABOVE ISSUE I S CONCERNED, ARE HEREBY DISMISSED. 6.1. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE UPH OLD THE ORDER OF THE CIT(A) AND REJECT THE GROUND URGED BY THE REVENUE. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDEN TICAL TO THAT OF AYS 2010-11 & 2011-12 FOLLOWING THE DECISION OF THE COO RDINATE BENCH, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROU NDS RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 3 RD FEBRUARY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 3 RD FEBRUARY, 2017 KV 5 ITA NO. 1508/H/16 PRAGATI GREEN MEADOWS AND RESORTS LTD., HYD. COPY TO:- 1) DCIT, CIRCLE - 16(2), 2 ND FLOOR, B BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 2) M/S PRAGATI GREEN MEADOWS & RESORTS LTD., NO. 22 7 (MEGA CITY NO.)8-2-293/A/A/2 AND A/A/2/1, ROAD N O. 2, BANJARA HILLS, HYD. 3) CIT(A) - 4, HYDERABAD 4 PR. CIT 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE