THE ACIT, 3(1), Indore V. Shri Tanmay Jain, Indore

ITA 1542/IND/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9879 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 29-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Keywords: Business expenditure; Additional evidence; Reasonable cause; Difference of opinion; Non compliance
• Section: 143(3); 142(1); 194C; 147; 6; 139

Judgement Text

TANMAY JAIN I.T.A. NO. 1542/IND/16 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1542/IND/2016 ASSESSMENT YEAR:2008-09 ACIT - 3(1) , INDORE / VS. SHRI TANMAY JAIN, PROP. M/S. AFD PHARMASIA, AG-273, SCHEME NO.74-C, INDORE (REVENUE) (RESPONDENT ) P.A. NO. ACWPJ9045J REVENUE BY SHRI P.K.MI T RA , SR. DR RESPONDENT BY NONE DATE OF HEARING: 1 9 .09 .201 8 DATE OF PRONOUNCEMENT: 25 .09 .201 8 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL FILED AT THE INSTANCE OF REVENUE PERTAI NING TO A.Y. 2008- 09 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONE R OF INCOME TAX(APPEALS)-I, INDORE, (IN SHORT CIT(A)), VIDE A PPEAL NO. IT- 324/2015-16 ORDER DATED 08.09.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINA FTER CALLED AS THE ACT) FRAMED ON 31.07.2015 BY ACIT-3(1), INDO RE. TANMAY JAIN I.T.A. NO. 1542/IND/16 2 2. NONE APPEARED ON ASSESSEES BEHALF. CASE HEARD WITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESENTATIVE. REV ENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL; 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, INDORE HAS ERRED IN DELETING THE ADDITION /DISALLOWANCE OF RS.89,08,758/- U/S 40(A)(IA) OF THE I.T. ACT IN VIO LATION OF RULE 46A OF THE I.T. RULES BY ACCEPTING AN ADDITIONAL EVIDENCE PROD UCED BY THE ASSESSEE WHICH WAS NEVER FURNISHED BEFORE THE AO ALTHOUGH AM PLE OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE IN THE INTEREST OF NA TURAL JUSTICE AND AO WAS JUSTIFIED IN MAKING DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT, AS THE ASSESSEE HAS WITHOUT ANY REASONABLE CAUSE FAILED TO FURNISH DETAILS AND THE EVIDENCE OF TDS DEDUCTED. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE REC ORDS ARE THAT THE ASSESSEE IS A INDIVIDUAL DOING THE BUSINESS OF TRAD ING OF PHARMACEUTICAL PRODUCTS UNDER THE PROPRIETARY-SHIP OF M/S. AFD PHARMASIA. ASSESSMENT U/S 143(3) OF THE ACT WAS CO MPLETED ON 24.12.2010 ASSESSING INCOME AT RS.29,85,590/-. CAS E WAS REOPENED U/S 147 OF THE ACT OWING TO NON DEPOSIT OF TDS. NECESSARY INFORMATION CALLED BY ISSUING NOTICES U/S 142(1) OF THE ACT. REASSESSMENT WAS COMPLETED AFTER DISALLOWANCE OF RS.89,08,758/- U/S 40(A)(IB) FOR NON FURNISHING THE DETAILS WITH TANMAY JAIN I.T.A. NO. 1542/IND/16 3 REGARD TO DEDUCTION AND DEPOSIT OF TAX ON COMMISSIO N AND CONSULTANCY CHARGES. 4. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE LD.CIT (A) AND SUCCEEDED AS THE LD. CIT(A) APPRECIATED THE FACT TH AT THE ASSESSEE HAS PAID THE TAX DEDUCTED AT SOURCE ON 30.09.2008 I .E. ON THE DUE DATE FOR FILING OF RETURN OF INCOME U/S 139)1) OF T HE ACT. 5. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 6. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY A RGUED SUPPORTING THE FINDINGS OF LD. ASSESSING OFFICER. 7. WE HAVE HEARD CONTENTIONS OF LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD BEFORE US. REVENUES SOLE G RIEVANCE IS AGAINST THE FINDINGS OF LD.CIT(A) IN DELETING THE D ISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX ON C& F COMMISSION AT RS.87,73,748/- AND CONSULTANCY CHARGES AT RS.1,35,0 10/-. WE FIND THAT THE ASSESSEE DEPOSITED THE TAX DEDUCTED AT SOU RCE ON THE ALLEGED EXPENDITURE ON C&F COMMISSION AND CONSULTAN CY CHARGES ON 30.09.2008 I.E. BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE LD.CIT(A) APPRECIATED THIS FACT AND DELETED THE DISALLOWANCE OBSERVING AS FOLLOWS; 7. GROUND NOS. 3 & 4: THE E GROUNDS ARE DIRECTED A GAINST THE DISALLOWANCE OF C & F COMMISSION OF RS.87,73,748/-A ND CONSULTANCY TANMAY JAIN I.T.A. NO. 1542/IND/16 4 CHARGE OF RS.1,35,010/- TOTALING TO RS.89,08,758/- U/S 40(A)(IA) OF THE ACT. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED SUBMISSIONS OF THE APPELLANT ARE REPRODUCED AT PARA NO.3 ABOVE. TH E CRUX OF THE APPELLANT'S SUBMISSION WAS THAT THE ENTIRE TDS HAS BEEN DEDUCTED AND PAID INTO THE GOVERNMENT ACCOUNT AS UNDER:- SR. DATE AMOUNT CHALLAN BANK NAME & BSR NO. OF PAYMENT NO. CODE 1 31-05- 2008 281478.00 67417 HDFC BANK LTD., SOUTH TUKOGANJ BRANCH, INDORE BSR CODE-0510037 2 30-09- 2008 70761.00 56819 HDFC BANK LTD., (ONLINE PAYMENT) BSR CODE- 051 00308 3 30-09- 2008 8908.00 56669 HDFC BANK LTD., (ONLINE PAYMENT) BSR CODE- 05100308 7.1 FURTHER THE AO HAS NOTED THAT NO DETAILS WERE S UBMITTED BY THE APPELLANT IN RESPECT OF TDS DEDUCTED AND PAID AND A S PER AUDIT REPORT THE AUDITOR NOTED THAT THE APPELLANT HAS DEF AULTED IN MAKING TDS COMPLIANCES AND THE DETAILS ARE AS PER ANNEXURE -D. BUT THE ANNEXURE-D WAS NOT ENCLOSED WITH THE AUDIT REPORT A ND NOT PLACED ON RECORD BY THE APPELLANT. 7.2 FROM THE RECORD IT IS SEEN THAT COPY OF ANNEXUR E-D WAS ON RECORD ACCORDING TO WHICH THE FOLLOWING NON COMPLIANCES IN RESPECT OF TDS ON C&F COMMISSION AND CONSULTANCY CHARGES WERE NOTE D BY THE AUDITOR. 'CONSULTANCY CHARGES OF RS.L,32,000/- PAID TO MR. N EERAJ GUPTA DURING THE YEAR. TDS OF RS.3010/- DEDUCTED ON 31-03 -2008 AND PAID TANMAY JAIN I.T.A. NO. 1542/IND/16 5 ON 30-09-2008. TDS DEDUCTED AT THE RATE OF 2.28% IN STEAD OF 10.3%. TAX OF RS.L,82,174/- IS DEDUCTED ON COMMISSION OF R S.84,82,177/-. THE TAX IS DEDUCTED AT THE RATE OF 2.14% INSTEAD OF 10.3%. THE ENTIRE TAX WAS DEDUCTED A MARCH 31 ST AND DEPOSITED IN SEPTEMBER 30 TH 2008.' 7.3 FROM THE ABOVE IT IS THUS EVIDENT THAT ON RECOR D IT WAS ALREADY CERTIFIED BY THE AUDITORS THAT TDS ON BOTH COMMISSI ON AND CONSULTANCY CHARGE WAS DEDUCTED ON 31-03-2008 AND P AID 30-09- 2008 I.E. BEFORE THE DUE DATE OF FILING OF RETURN. HOWEVER, AUDITORS NOTED THAT THE RATE AT WHICH AS LOWER AND HENCE THE RE WAS SHORT DEDUCTION. APPELLANT HAS DURING APPEAL PROCEEDINGS ARGUED THAT NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT WAS CALLED FO R IN VIEW OF THE AMENDED PROVISIONS OF SECTION 40 (A)(IA) BY THE FIN ANCE ACT, 2010 WHICH HAS BEEN HELD TO BE REMEDIAL/CURATIVE IN NATU RE AND HENCE HAS RETROSPECTIVE APPLICATION AS HELD IN SEVERAL JUDICI AL PRONOUNCEMENTS AND FURTHER NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF SHORT DEDUCTION FOR WHICH PROPOSITION APPELLANT PLACED RE LIANCE ON THE DECISION IN THE CASE OF DCIT-11 (2) VS. CHANDABHOY & JASSOBHOY [2012] 17 TAXMAN.COM 158 (MUM.). 7.4 THE ARGUMENT OF THE APPELLANT THAT THE AMENDMEN T MADE BY THE FINANCE ACT 2010 WAS RETROSPECTIVE IN NATURE HAS BE EN FOUND TO BE SUPPORTED BY SEVERAL JUDICIAL PRONOUNCEMENTS AS IS EVIDENT FROM THE OBSERVATIONS OF THE ITAT MUMBAI C BENCH IN THE CASE OF M/S. PRATIBHA JV VS. THE DCIT IN ITA NO. 3923/MUM/2012 F OR THE A. Y. 2008-09 IN ITS ORDER DATED 25-09-:2013 THE RELEVANT PARA(S) ARE REPRODUCED AS UNDER: 'HE SUBMITTED THAT ACCORDING TO WELL ESTABLISHED LA W IF THE PAYMENT IS MADE BEFORE THE DUE DATE OF FILING THE RETURN THEN DISALLOWANCE CANNOT BE MADE. HE IN THIS REGARD REFERRED TO THE P APER BOOK IN WHICH COPIES OF THESE DECISIONS ARE ENCLOSED AS UND ER: TANMAY JAIN I.T.A. NO. 1542/IND/16 6 S. CONTENT PAGE NO. NO. 1 CIT VS. VIRGIN CREATIONS 1 2 CIT VS. MIS. JK CONSTRUCTION CO. 2-3 3 CIT VS. MR. RAJINDER KUMAR 4-16 4 PIYUSH MEHTA VI S. ACIT 17-25 5 MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD. VS ACIT 26-5 1 6 M/S. BANSAL PARIVAHAN (INDIA) PVT. LTD. VS. ITO 52-73 7 ITO VS. SK MOFIZUL ALI PURBA MEDINIPUR 74-77 8 M/S. DES:GNER EXPORTS VS. DCIT 78-8 1 9 SHRI KARIUBHAI RAMJIBHAI MAKWANA VS. ITO 82-92C 10 B.M.S. PROJECTS PVT. LTD. V/S. DCIT 93-105 11 RANA BUILDERS V/S. ITO 106-115 12 PUNJAB STATE CO- OPERATIVE FEDERATION OF HOUSING BUILDING 116-121 SOCIETIES LTD. VS. DCFT IN AFOREMENTIONED CASES IT HAS BEEN HELD THAT AMEND MENT MADE IN THE PROVISIONS BY FINANCE ACT, 2010 BEING REMEDIA L/ CURATIVE IN, NATURE HAVE RETROSPECTIVE APPLICATION. FOR THE SAKE OF BREVITY WE MAY REPRODUCE THE RELEVANT OBSERVATION OF MUMBAI TRIBUN AL IN THE CASE OF BANSAL PARIUAHAN. INDIA LTD, DECISION DATED 22/9/20 10 IN ITA NO.2355/MUM/2010. '28. THE ASSESSEE IN THE PRESENT CASE THUS HAD NOT ONLY DEDUCTED TAX AT SOURCE FROM THE PAYMENTS OF FREIGHT CHARGES MADE DURING THE PERIOD 1.4.2005 TO 28.2.2006, BUT THE TAX SO DEDUCT ED WAS ALSO ENTIRELY PAID BY HIM TO THE CREDIT OF THE GOVERNMEN T ALTHOUGH BEYOND THE DUE DATE AS STIPULATED IN SECTION 200 BUT BEFOR E THE DUE DATE OF FILING OF HIS RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION. THE RELEVANT TDS PROVISIONS THUS WERE SUBSTANTIALLY COM PLIED BY HIM AND HE WAS IN A POSITION TO ESTABLISH SUCH COMPLIANCE B Y FILING THE TANMAY JAIN I.T.A. NO. 1542/IND/16 7 REQUIRED DOCUMENTARY EVIDENCE ALONG WITH HIS RETURN OF INCOME. STILL HE WAS MADE TO SUFFER BY WAY OF A DISALLOWANCE OF F REIGHT CHARGES FOR WHICH HE WAS OTHERWISE ELIGIBLE FOR DEDUCTION GIVIN G RISE TO A HUGE DEMAND AS PER THE PROVISIONS OF SECTION 40(A)(IA) W HICH WAS NEVER THE LEGISLATIVE INTENTION BEHIND ENACTING THE SAID PROV ISIONS. THE PROVISIONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO T HE AMENDMENTS MADE BY THE FINANCE ACT 2010 THUS WERE RESULTING INTO UN INTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIP S TO THE ASSESSEES WHO HAD SUBSTANTIALLY COMPLIED WITH THE R ELEVANT TDS PROVISIONS BY DEDUCTING THE TAX AT SOURCE AND BY PA YING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S 139(1). IN ORDER TO REMEDY THIS POSITIO N AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSE E BELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PRO VISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT 2010. THE SAID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL! CURATIVE IN NATURE AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. (SUPRA) AND ALOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THERE FORE WOULD APPLY RETROSPECTIVELY W.E.F 1ST APRIL, 2005. IN THE CASE OF R.B. JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE HON'BLE SUP REME COURT THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CO NSEQUENCES AND TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREA TED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INT ERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CAS E, THE AMOUNT OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DUR ING THE PERIOD 01- 04-2005 TO 28-02-2006 WAS PAID BY THE ASSESSEE IN T HE MONTHS OF JULY AND AUGUST 2006 I.E. WELL BEFORE THE DUE DATE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A. O. ARID CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF FREIGHT CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE F INANCE. ACT, 2010 WHICH, BEING REMEDIAL! CURATIVE IN NATURE, HAV E RETROSPECTIVE APPLICATION. ACCORDINGLY, WE DELETE THE SAID DISALL OWANCE AND ALLOW TANMAY JAIN I.T.A. NO. 1542/IND/16 8 GROUND NO. 2 OF THIS APPEAL. 3. ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECISION S RELIED UPON BY LD. AR, AFTER HEARING BOTH THE PARTIES WE ARE OF THE OP INION THAT DISALLOWANCE CANNOT BE MADE IF THE DEPOSITS ARE MAD E BEFORE THE DUE DATE OF FILING THE RETURN AS DESCRIBED IN SECTION 1 39(1). AS THERE IS NO DISPUTE SO AS IT RELATES TO DATE OF DEPOSIT OF TAX AND THESE DATES ARE STATED IN THE REMAND REPORT ITSELF WE DIRECT THE AO TO DELETE DISALLOWANCE OF RS. 7,43, 955/- 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AFORESAID 7.5 THE ABOVE VIEW HAS ALSO BEEN TAKEN BY THE JURIS DICTIONAL I.T.A.T. IN THE CASE OF ACIT, 5(1) INDORE VS SHRI JAWAHARLAL AGRAWAL, INDORE IN ITA NO.204 & 205/IND/2011 FOR THE A.Y 2006-07 & 200 7-08 IN ITS ORDER DATED 31.08.2012. THE RELEVANT PARAS ARE RE PRODUCED BELOW: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBE RATED ON THE DECISIONS RELIED ON BY THE CIT DR IN THE CASE OF BH ARTI SHIPYARD, AS WELL AS THE DECISION OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATIONS. WE FOUND THAT VARIOUS BENCHES: OF THE TRIBUNAL HAVE DEALT WITH THE ISSUE OF ALLOWABILITY OF CLAIM OF DEDUCTION U/ S 40A(IA) DURING THE ASSESSMENT YEAR 2005-06 AND SUBS EQUENTLY, WHEREIN IT WAS HELD THAT IN VIEW OF THE DECISION OF HON'BLE KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATIONS AMENDMEN T BROUGHT IN BY THE FINANCE ACT,2010, WERE RETROSPECTIVE FROM 1.4.2 005. IN THE CASE OF PIYUSH C.MEHTA, I.T.A.T., MUMBAI BENCH. IN I.T. A. NO.1231/MUM/2009 VIDE ORDER DATED 11 TH APRIL, 2012 , HELD AS UNDER:- 17. IT CAN BE SEEN FROM THE ABOVE DECISION. OF TH E HON'BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT, BY THE FINANCE ACT,2010 AS AFORESAID WAS HELD TO BE TANMAY JAIN I.T.A. NO. 1542/IND/16 9 RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CO NSIDERED AS RETROSPECTIVE FROM 1.4.2005, THE EFFECT WILL BE THA T PAYMENTS OF TDS TO THE CREDIT OF THE GOVERNMENT ON OR BEFORE THE LA ST DATE FOR FILING RETURN OF INCOME U/S. 139(1) OF THE ACT FOR THE REL EVANT A Y HAVE TO BE ALLOWED AS DEDUCTION. ADMITTEDLY, IN THE CASE OF TH E ASSESSEE PAYMENTS WERE SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE DECISION. OF THE HON'BLE CALCUTTA HIGH COURT NO DIS ALLOWANCE COULD BE MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HON'BLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCEACT,2010 TO THE PROVISIONS OF SEC. 40(A) (IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE FROM 1.4.2005 OR THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION, THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTERNATIONAL (P) LTD. V. DY. CIT(2000) 69 TT J (DE L) 650, WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICIAL SYSTEM T HAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD T O THE HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN A UTHORITY HIGHER THAN THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIAL AUTHO RITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON-JURISDIC TIONAL HIGH COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN B Y THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GODAVARIDEV I SARA], 113 ITR 589(BOM). IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DECISIO N OF THE HORI'BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISION S OF SECTION 40(A)(IA).OF THE ACT, BY THE FINA.NCE ACT,2010 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FROM A Y 05-0 6 CAN BE MADE TO TANMAY JAIN I.T.A. NO. 1542/IND/16 10 THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFOR ESAID, THEN NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN MADE. AD MITTEDLY IN THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DED UCTED AT SOURCE BEFORE THE DUE DATE FOR FILING RETURN. OF INCOME UL S.139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSES SEE. ' 17. IN VIEW OF THE ABOVE DISCUSSION AND APPLYING TH E PROPOSITION OF LAW LAID DOWN IN THE ABOVE DECISION OF CALCUTTA HIG H COURT, WHERE PAYMENT TO THE GOVERNMENT TREASURY WAS ADMITTEDLY M ADE BEFORE LAST DATE OF FILING RETURN, THE SAME CANNOT BE DISALLOWE D U/S 40A(IA). ACCORDINGLY' ACTION OF THE CIT(A) IS UPHELD. 7.6 IN VIEW OF THE ABOVE AND THE FACT THAT THE APPE LLANT HAS PAID THE TAX DEDUCTED AT SOURCE ON 30-09-2008 WHICH IS THE D UE DATE FOR FILING OF RETURN IN THE CASE NO DISALLOWANCE IS WARRANTED. FURTHER IT IS TO BE NOTED THAT IN RESPECT OF CONSULTANCY CHARGES THE AM OUNT OF TDS WAS DEDUCTED IN THE MONTH OF MARCH 2008 ONLY AND HENCE THE DUE DATE FOR DEPOSITING THE SAME WAS OTHERWISE ALSO UP TO TH E DUE DATE FOR FILING OF RETURN. SIMILAR IS THE POSITION IN RESPEC T OF THE TDS ON C&F COMMISSION OF RS.L,43,736/-- WHICH ALSO PERTAINS TO THE MONTH OF MARCH 2008 AND HENCE WAS DUE TO BE DEPOSITED ON OR BEFORE THE DUE DATE FOR FILING OF RETURN AND THE SAME WAS DONE BY THE APPELLANT. IT WAS ONLY THE TDS OF RS.38,438/- ON C&FI COMMISSION WHICH WAS DEDUCTED UP TO 28-02-2008 THAT WAS COVERED BY THE A MENDED PROVISIONS. 7.7 AS REGARDS THE OTHER CONTENTION OF THE APPELLAN T THAT THERE CAN BE NO DISALLOWANCE U/S 40(A)(IA) IF THERE IS A SHORT D EDUCTION ALSO THE JURISDICTIONAL ITAT HAS ENDORSED THE VIEW TAKEN BY THE ITAT MUMBAI IN THE CASE RELIED ON BY THE APPELLANT. THE RELEVAN T PARA(S) OF THE OBSERVATIONS MADE BY THE ITAT INDORE IN THE CASE OF DCIT (CENTRAL), INDORE VS M/S SILVER REALITIES INFRASTRUCTURE PRIVA TE LIMITED, INDORE TANMAY JAIN I.T.A. NO. 1542/IND/16 11 IN ITA NO. 609JINDJ2013 FOR THE A.Y.2008-09 VIDE OR DER DATED 03-08- 2016 ARE REPRODUCED BELOW: THE ASSESSEE'S CASE FINDS SUPPORT FROM THE FOLLOWIN G PRONOUNCEMENT: 1. DISALLOWANCE U/ S 40(A)(IA) SHALL NOT BE MADE ME RELY BECAUSE TDS HAS BEEN DEDUCTED U/S 194C INSTEAD OF SECTION 194J ADIT, INTERNATIONAL TAXATION US. DRILLING SYSTEMS LLC (IT AT DELHI), ITA NO. 7511 DEL/2013, DATE- 09TH JANUARY,2015- . THE PROVI SIONS OF SECTION 40(A)(IA) OF THE ACT HAS TWO LIMBS ONE IS WHERE, IN TER ALIA, ASSESSEE HAS TO DEDUCT TAX AND THE SECOND WHERE AFTER DEDUCT ING TAX, INTER ALIA, THE ASSESSEE HAS TO PAY INTO THE GOVERNMENT A CCOUNT . THERE IS NOTHING IN THE SAID SECTION TO TREAT, INTER THIS EX PRESSION, 'ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIJ- B A ND SUCH TAX HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED I N SUB SECTION (1) OF SECTION 139. THIS SECTION 40(A)(IA) OF THE ACT REFE RS 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 THE TAXABILI TY OF THE ITEM OR THE NATURE OF THE PAYMENTS FALLING UNDER VARIOUS TDS PR OVISIONS THE ASSESSEE IN DEFAULT U/S 201 OF THE ACT AND NO DISAL LOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. 2. CIT VS S.K. TEKRIUIAL, 361 ITR 432(CALCUTTA HIGH COURT) BUSINESS EXPENDITURE- DISALLOWANCE- PAYMENTS SUBJECT TO DEDU CTION OF TAX AT SOURCE- PAYMENTS TO SUB-CONTRACTOR ASSESSEE DEDU CTING TAX AT SOURCE UNDER WRONG PROVISION RESULTING IN SHORT DED UCTION OF TAX- NO DISALLOWANCE- CAN BE MADE APPLYING SECTION 40(A) (IA)- INCOME TAX ACT, 1961 3. ACIT VS PANKAJ BHARGAVA,( 34 CCH 0035, DELHI TRI BUNAL) BUSINESS EXPENDITURE- ALLOWABILITY - AO HELD THAT A SSESSEE HAS DEDUCTED TAX AT SOURCE UNDER S 194C AT 1 PERCENT WH EREAS IT OUGHT TO HAVE BEEN DEDUCTED UNDER S 194J AT 10 PERCENT AND D ISALLOWED EXPENSES CLAIMED BY ASSESSEE-HELD, THIS APPEAL WAS SIMILAR TO ISSUE INVOLVED FOR AY 2008- 2009 AND IN THAT CASE AGAINST ORDER OF TANMAY JAIN I.T.A. NO. 1542/IND/16 12 COMMISSIONER OF INCOME TAX (APPEALS) DELETING IMPUG NED ADDITION UNDER S.40A(IA), DEPARTMENT HAD COME UP WITH APPEAL WHICH WAS DISMISSED-FOLLOWING PRECEDENT, ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS) WAS UPHELD AS ISSUE WAS SQUARELY COVERED IN FAVOUR OF ASSESSEE-REVENUE'S APPEAL DISMISSED. 4. TATA AIG GENERAL INSURANCE CO. LTD. VS INCOME TA X OFFICER(OSD)3(2),(43 SOT 0215, MUMBAI BENCH) TDS-UN DER S. 194D COMMISSION PAID ON REINSURANCE- INSURANCE COMP ANIES HAVE NOT PROVIDED ANY SERVICE OF SOLICITING OR PROCURING INSURANCE BUSINESS FOR THE ASSESSEE COMPANY-ON THE OTHER HAND, THE ASS ESSEE COMPANY HAS PROVIDED REINSURANCE TO THE INSURANCE COMPANY A ND IF THE REINSURANCE COMPANIES HAVE REDUCED THE PREMIUM DIRE CTLY FROM THE PREMIUM PAYABLE BY THE INSURED, SUCH A DEDUCTION WI LL NOT ATTRACT PROVISIONS OF S. 194D-GENERAL INSURANCE CORPORATION OF INDIA VS. ASSTT. CIT (2009) 125 TTJ (MUMBAI) 779: (2009) 29 D TR (MUMBAI)(TRIB) 505 : (2009) 28 SOT 453 (MUMBAI) FOL LOWED 5. DCIT-L1(2) VS. CHANDABHOY & JASSOBHOY(17 TAXMANN .COM 158, MUMBAI BENCH) BUSINESS EXPENDITURE-DISALLOWANCE UND ER S. 40(A)(IA)PAYMENT MADE TO CONSULTANTS ENGAGED BY CHA RTERED ACCOUNTANTS' FIRM-AO HELD PAYMENT MADE TO CONSULTAN TS ENGAGED BY CHARTERED ACCOUNTANTS' FIRM ARE IN NATURE OF FEES F OR PROFESSIONAL SERVICES AND ACCORDINGLY PROVISIONS OF S. 194J WOUL D ATTRACT AND SINCE ASSESSEE HAS NOT DEDUCTED THE TAX, DISALLOWED AMOUNTS CLAIMED OF RS.26,75,535/- U/S. 40(A)(IA) COMMISSIONER OF IN COME TAX (APPEALS) DELETED ADDITION MADE BY AO-HELD, ASSESSE E HAS EMPLOYED ABOUT 18 CONSULTANTS WITH WHOM IT ENTERED INTO AGRE EMENTS FOR A PERIOD OF TWO YEARS-THEY WERE PAID FIXED AMOUNTS WI THOUT ANY SHARE IN THE PROFIT-THESE CONSULTANTS ARE PROHIBITED FROM ANY PRIVATE ASSIGNMENTS AND WORKED FULL TIME WITH THE ASSESSEE FIRM-THERE WAS DEDUCTION OF TAX U/S 192 AND IN THEIR INDIVIDUAL AS SESSMENTS THESE PAYMENTS WERE ACCEPTED AS SALARY PAYMENTS-ENTIRE AM OUNT PAID FOR 18 CONSULTANTS IS ONLY AN AMOUNT OF RS.26,75,535/-, WHICH INDICATES TANMAY JAIN I.T.A. NO. 1542/IND/16 13 THAT THEY ARE IN EMPLOYMENT AND NOT PROFESSIONAL CO NSULTANTS- ASSESSEE HAS DEDUCTED TAX U/S 192-HENCE, S. 40(A)(I A) ALSO DO NOT APPLY AS THE SAID PROVISION CAN BE INVOKED ONLY IN EVENT OF NON DEDUCTION OF TAX BUT NOT FOR LESSER DEDUCTION OF TA X. 7.8 IN VIEW OF THE ABOVE EXTANT JUDICIAL POSITION THE DISALLOWANCE CANNOT BE UPHELD ON THIS COUNT ALSO. IN VIEW OF THE ABOVE THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT OF RS.89,08,7 58/- IS DIRECTED TO BE DELETED. RS.89,O8,75S/- DELETED. 8. AS A RESULT APPEAL IS PARTLY ALLOWED. 8. FROM PERUSAL OF DETAILED FINDINGS OF LD.CIT(A) AND ADMITTED PROVISION OF LAW AS HELD BY VARIOUS COURTS, WE FIND NO REASON IN THE FINDINGS OF LD.CIT(A) DELETING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT AS THE ASSESSEE HAS DULY DEPOSITED THE TAX DEDU CTED AT SOURCE ON THE ALLEGED EXPENDITURE OF RS.89,08,758/- ON AND BEFORE THE DUE DATE OF FILING OF INCOME U/S 139 OF THE ACT. APPEA L OF THE REVENUE IS DISMISSED. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25.09.20 18. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIALMEMBER ACCOUNTANTMEMBER TANMAY JAIN I.T.A. NO. 1542/IND/16 14 INDORE; DATED : 25/09/2018 /DEV COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE