GOLDWIN MEDICARE LTD, MUMBAI V. ACIT (OSD) 2(1), MUMBAI

ITA 154/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4184 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA AGGARWAL
• Assessee Lawyers: DARSHIK SHAH
• Keywords: Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUM BAI BEFORE SHRI B.R. BASKARAN, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 154/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) GOLDWIN MEDICARE LTD. 2, DOCTOR HOUSE, 124, PERIN NARIMAN STREET, FORT, MUMBAI-400 001. / VS. ACIT (OSD)-2(1), MUMBAI. ./ ./PAN/GIR NO. AAACG 1418R ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI DARSHIK SHAH / RESPONDENT BY : MS. ANU KRISHNA AGGARWAL / DATE OF HEARING : 09/12/2015 !'# / DATE OF PRONOUNCEMENT : 06/04/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 4, DATED 23. 10.2012 WHEREBY CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF AO DATED 05.12.2011ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT 1. THE HON. COMMISSIONER OF INCOME TAX (APPEALS) - 4, GROSSLY ERRED IN CONFIRMING THE ADDITIONS AMOUNTING TO RS 6,00,000/- , BEING ADHOC PROVISION FOR COMMISSION AND BROKERAGE MADE DURING THE YEAR U NDER APPEAL, FOR NON- DEDUCTION OF TDS, UNDER THE PROVISIONS OF SECTION 4 0(A)(IA). 1.1 THE HON CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE PROVISIONS OF SECTION 194H DO NOT APPLY TO ADHOC PROVISIONS MADE IN THE F INANCIALS AS THE AMOUNTS HAVE NOT BEEN CREDITED TO ANY PERSON. ACCOR DINGLY, THE APPELLANTS HAVE RIGHTFULLY NOT DEDUCTED TDS AND THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. 1.2 THE APPELLANTS SUBMIT THAT THE ADDITION OF RS 6,00,000/- ARE PURELY ADHOC, AGAINST SETTLED PRINCIPLES OF LAW AND IS LIABLE TO BE SET ASIDE. 2. THE HON CIT(A) GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS 6,38,961/-BEING PAYMENTS 1 CREDITS TOWARDS COMMISSI ON AND BROKERAGE, ON ACCOUNT OF SHORT DEDUCTION OF TDS. 2.1 THE HON CIT(A) COMPLETELY IGNORED THE SUBMISSI ONS THAT THE APPELLANTS HAD ERRONEOUSLY DEDUCTED SHORT TOS IN SOME CASES. THE A PPELLANTS RESPECTFULLY SUBMIT THAT IT IS SETTLED LAW THAT THE PROVISIONS O F SECTION 40(A)(IA) APPLY TO NON DEDUCTION OF TOS AND NOT TO SHORT DEDUCTION. 3 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT 2.2 THE APPELLANTS RESPECTFULLY SUBMIT THAT THE AD DITION OF RS 6,38,961/- IS WITHOUT PROPER JUSTIFICATION, AGAINST SETTLED PRINC IPLES OF LAW AND IS LIABLE TO BE SET ASIDE. 3. THE APPELLANTS CRAVE LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS IN APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS E-FILED BY THE ASSESSEE COMPANY ON 27.09.2009 DECLARING TOTAL INCO ME OF RS.64,33,320/-. THE RETURN WAS DULY PROCESSED U/S 143(1) OF THE I.T. AC T. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE WERE ISSUED AND SE RVED ON THE ASSESSEE. LD. AO AFTER SEEKING THE REPLY FROM THE ASSESSEE HAD PASSE D THE ORDER OF ASSESSMENT DATED 05.12.2011 U/S 143(3) OF THE INCOME-TAX ACT, 1961 A ND COMPUTED THE TOTAL INCOME. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) PARTLY ALLOWED THE APPEAL BUT SUSTAINED THE DISALLOWANCE OF RS.6,38,961/- AND RS.6,00,000/- RESPECTIVELY. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESS EE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. 4 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT 4. AT THE VERY OUTSET, THE LD. AR REPRESENTING THE ASSESSEE SUBMITTED THAT HE DO NOT WANT TO PRESSED GROUND NO. 1, (1.1 & 1.2) AND T HEREFORE THE SAID GROUND IS DISMISSED AS NOT PRESSED. GROUND NO. 2 4.1 THE LD. AR REPRESENTING THE ASSESSEE SUBMITTED THAT THE ASSESSEE/APPELLANT COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF SURGICAL DRESSING AND THE ASSESSEE HAD MADE CERTAIN PAYMENTS ON ACCOUNT OF CO MMISSION AND BROKERAGE FOR WHICH THE ASSESSEE HAS SHORT DEDUCTION OF TAX AND A CCORDINGLY SHORT DEDUCTION OF TDS WHICH WAS DEDUCTED AND WAS CONSEQUENTLY DEPOSIT ED WITH THE GOVERNMENT. THE DETAILS OF THESE DEDUCTIONS HAVE ALREADY BEEN S UBMITTED BY THE ASSESSEE WITH THE AO. 3.2 HOWEVER, THE AO HAD DISALLOWED THE CORRESPONDIN G AMOUNT OF COMMISSION AND BROKERAGE WHEREAS THE ASSESSEE SUBMITTED THAT T HEY HAD ERRONEOUSLY DEDUCTED SLIGHTLY LOWER OR SLIGHTLY HIGHER AMOUNT OF TDS AND IT WAS FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 40(A) (IA) ARE NOT ATTRAC TED IN THE PRESENT CASE AS THE SAID PROVISION ARE ONLY ATTRACTED AND APPLIED, WHERE THE RE IS NO DEDUCTION OF TDS AND ARE NOT ATTRACTED ON ACCOUNT OF SHORT DEDUCTION OF TAX. THE SAID FACT WAS TOTALLY MISINTERPRETED BY THE CIT(A) WHILE DEALING WITH THE SAID GROUND. LD. AR ALSO RELIED UPON THE JUDGMENTS TITLED HEREIN BELOW:- 5 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT 1. HIGHLIGHT PICTURES (INDIA) (P.) LTD. VS ACIT [20 14] 49 TAXMANN.COM 187 (MUMBAI-TRIB.) 2. CIT VS. S.K.TEKRIWAL [2014] 46 TAXMANN.COM 444(C ALCUTTA) 3. THREE STAR GRANITES (P.)LTD VS. ACIT [2014] 49 T AXMANN.COM 578 (COCHIN-TRIB.) 4. ACIT VS. PANKAJ BHARGAVA [2013] 33 TAXMANN.COM 484 (DELHI TRIB.) 5. HERO MOTOCORP LTD. VS ACIT [2013] 36 TAXMANN.COM 103 (DELHI TRIB.) 6. APOLLO TYRES LTD. VS DCIT [2013] 35 TAXMANN.COM 593(COCHIN TRIB.) 7. DCIT VS CHANDABHOY & JASSOBHOY [2012] 17 TAXMANN .COM 158(MUM.) 8. NITIN M. PANCHAMIYA VS. ACIT [2012] 19 TAXMANN.C OM 200 (MUM.) 9. HINDUSTAN UNILEVER LTD. VS. ACIT [2012] 28 TAXMA NN.COM 142 (MUMTRIB.) 10. HINDUSTAN THOMPSON ASSOCIATES (P.) LTD. VS. ACI T [2012] 25 TAXMANN.COM 243(MUM.) 11. UE TRADE CORPN. (INDIA) LTD. VS. DCIT [2012] 28 TAXMNAN. COM 77 (DELHI) 3.4 ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S PASSED BY THE REVENUE AUTHORITIES. 4. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE IT IS NECES SARY TO EVALUATE THE ORDERS OF THE 6 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT CIT(A) WHEREIN THE SAID GROUND WAS DEALT WITH BY TH E CIT(A) AND THE SAME IS REPRODUCED AS UNDER: 6. THE FACTS OF THE CASE ARE THAT IN CERTAIN PAYME NTS ON ACCOUNT OF COMMISSION AND BROKERAGE, ASSESSEE HAS SHORT DEDUCT ED TAX AND ACCORDINGLY SHORT TDS DEPOSITED, THEREFORE, THE A.O . HAS DISALLOWED THE CORRESPONDING AMOUNT OF COMMISSION AND BROKERAG E, WHEREAS, ASSESSEE HAS CLAIMED THAT THE SECTION CLEARLY SPEAK S ABOUT NO TDS MADE OR NO TDS DEPOSITED AND, THEREFORE, PARTIAL TD S MADE OR PARTIAL TDS DEPOSITED, CASES ARE NOT COVERED UNDER THE SAID PROVISION. 7. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBM ISSIONS OF THE ASSESSEE. THE LANGUAGE USED IN SECTION 40(A)(IA) US ES THE WORD NO TDS MADE OR NO TDS DEPOSITED, BUT THAT IS INCLUSIVE OF THE CASES WHERE PARTIAL TDS HAS BEEN MADE OR DEPOSITED. OTHER WISE, ANYONE CAN MAKE FUN OF THE PROVISIONS OF SECTION 40(A)(IA) BY MAKING THE LEAST POSSIBLE TDS AND CLAIM THE PROTECTION THAT IT SI TH E CASE OF PARTIAL TDS MADE, BUT THAT COULD NEVER BE THE INTENTION OF THE LEGISLATURE AND, THEREFORE, THE CONTENTION OF THE ASSESSEE DESERVES TO BE REJECTED. IN RESULT, THE GROUND IS REJECTED. 4.1 AFTER ANALYISING THE AFORESAID PORTION OF THE C IT(A) WE HAVE NOTICED THAT THE CIT(A) HAS SIMPLY MENTIONED THAT THE PROVISION OF S ECTION 40(A)(IA) ARE ATTRACTED 7 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT EVEN IN THE CASE OF SHORT DEDUCTION OF TDS WHEREAS ON THE CONTRARY WE HAVE GONE THROUGH THE JUDGMENTS RELIED UPON BY THE LD. AR AND AFTER GOING THROUGH THOSE JUDGMENTS WE ARE OF THE FIRM VIEW THAT THE PROVISIO N OF SECTION 40(A) (IA) ARE ONLY ATTRACTED IN THE CASE OF NON DEDUCTION AND NON DEPO SIT OF TDS. WE HAVE NOTICED THAT SECTION 40(A) (IA) OF THE ACT CONTENTS TWO WIN GS I.E. NON DEDUCTION AND NON DEPOSIT OF TDS AND IT RENDERS ONLY THE DUTY TO DEDU CT THE TAX AND TO PAY TO GOVERNMENT ACCOUNT. AND IF THERE IS ANY SHORTFALL D UE TO ANY DIFFERENCE OF OPINION AS TO TAXABLE OF ANY ITEM OR TO THE NATURE OF PAYME NT FALLING UNDER VARIOUS TDS PROVISIONS, THEN THE PROVISIONS OF SECTION 40(A) ( IA) OF THE ACT ARE NOT ATTRACTED NO DISALLOWANCE CAN BE MADE U/S 40(A) (IA). IN THIS RE SPECT WE RELY UPON THE JUDGEMENTS OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. S.K. TEKRIWAL [2014] 46 TAXMANN.COM 444 (CALCUTTA) WHER EIN IT WAS HELD THAT: SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961- BU SINESS DISALLOWANCE INTEREST ETC., PAID TO RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE- IF THERE IS ANY SHORTFALL DUE TO ANY DIFFERENCE OF OPINION AS TO TAXABILITY OF AN Y ITEM OR NATURE OF PAYMENTS FALLING UNDER VARIOUS TDS PROVISIONS, ASSESSEE CAN BE DECLARED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201, BUT NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) [IN FAVOUR OF ASSESSEE]. 8 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT 4.2 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE HOLD THAT IN THIS CASE SINCE THERE IS DISPUTE OF SHORT DEPOSIT A ND NOT A DISPUTE OF NON DEPOSIT THEREFORE, THE PROVISIONS OF SECTION 40(A) (IA) ARE NOT APPLICABLE AND THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CI T(A) ARE NOT SUSTAINABLE IN THE EYES OF THE LAW. THEREFORE, THE PRESENT GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED AND THE AO IS DIRECTED TO DELETE THE DI SALLOWANCE. 5. GROUND NO. 3 IS GENERAL IN NATURE AND NEEDS NO S EPARATE ADJUDICATION IN VIEW OF THE DECISION ON ABOVE GROUNDS. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6TH APRIL, 20 16 SD/- SD/- ( B.R. BASKARAN ) (SANDEEP G OSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED : 06.04.2016 PS. ASHWINI 9 ITA NO. 154/MUM/2013 (A.Y. 2009-10) GOLDWIN MEDICARE LTD. VS. ACIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI