Deloitte Hskins & Sells, Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 1546/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9943 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUL KUMAR
• Assessee Lawyers: M P SARDA
• Section: 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 13-9-10 DRAFTED ON: 13-9 -10 ITA NO. 1546 /AHD/ 2008 ASSESSMENT YEAR :2005-06 DELOITTE HASKINS & SELLS,C.AS. 31 NUTAN BHARAT SOCIETY, NR. M.K. HIGH SCHOOL, ALKAPURI, BARODA. VS. INCOME TAX OFFICER, WARD 2(1), AAYAKAR BHAVAN, NR. RACE COURSE CIRCLE, BARODA. PAN/GIR NO. : AADFD 2337G (A PPELLANT ) .. ( RESPONDENT ) APPELL ANT BY : SHRI M.P. SARDA. RESPONDENT BY: SHRI ANUL KUMAR, D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, BA RODA, DATED 18-3-2008. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL :- GROUND NO.1 READS AS UNDER :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS, ERRED ON AN ERRONEOUS UNDERSTANDING OF CASH S YSTEM OF ACCOUNTING, SUSTAINED THE DISALLOWANCE OF VARIOU S ON ACCOUNT PAYMENTS AGGREGATING TO `.1,43,65,000/- MA DE TO M/S. C.C. CHOKSHI & CO., BARODA (CCC) UNDER SECTION 40(A)(IA) OF THE ACT ALTHOUGH THE EXPENDITURE CLAIM ED PERTAINED TO THE CREDIT NOTE DATED 31.-03-2005 ISSU ED BY THE APPELLANT AND FROM WHICH TAX UNDER SECTION 194J OF THE ACT WAS DULY DEDUCTED AND PAID. GROUND NO.2 READS AS UNDER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW IN NOT APPRECIATING THAT BY VIRTUE OF RULE 30 OF THE INCOME TAX RULES,1962, IF THE AMOUNT CLAIMED AS EXPENDITURE IS CREDITED IN THE BOOKS AS ON THE CLOS ING DAY OF THE YEAR, THE TIME LIMIT FOR DEPOSITION OF TAX DEDU CTED IS TWO - 2 - MONTHS FROM THE YEAR END IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED. GROUND NO.3 READS AS UNDER. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN NOT APPLYING THE PRINCIPLE OF REASONA BLE CONSTRUCTION ENUNCIATED BY THE HON'BLE SUPREME COU RT ALTHOUGH IN THE APPELLANTS CASE, THE APPLICATION O F SECTION 40(A)(IA) OF THE ACT IS NOT FREE FROM DOUBT AND THE LITERAL CONSTRUCTION DEFEATS THE MANIFEST OBJECT AND PURPOS E OF THE ACT. 3. SINCE THE FACTS AND ISSUE INVOLVED IN ALL THE AB OVE GROUNDS ARE COMMON THEY ARE BEING CONSIDERED AND DECIDED TO GETHER AS UNDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DEDUCTE D TAX OF `.8,22,666/- UNDER SECTION194J ON PROFESSIONAL FEE OF `.1,59,42,610/- IN THE MONTH OF MARCH, 2005 AND DEP OSITED THE TAX SO DEDUCTED INTO THE CENTRAL GOVERNMENT ACCOUNT ON 31-5-2005. THE LEARNED ASSESSING OFFICER DISALLOWED THE EXPENS ES OF `.1,43,65,000/- BY INVOKING PROVISIONS OF SECTION 4 0(A)(IA) ON THE GROUND THAT THE TAX WAS DEDUCTIBLE IN THE MONTHS EA RLIER TO MARCH,2005. 5. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER. 6. BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT AS THE TAX WAS DEDUCTED IN THE MONTH OF MARCH, 2005 AND PAID ON 31-5-2005 I.E. MUCH BEFORE THE DUE DATE SPECIFIED UNDER SECTION 139(1) THEREFORE, THE RELEV ANT EXPENDITURE COULD NOT HAVE BEEN DISALLOWED BY INVOKING THE PROV ISIONS OF SECTION 40(A)(IA). - 3 - 7. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE RELIED UPON THE DECISION OF BOMBAY BENCH OF THE TRI BUNAL IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL VS. ACIT REPORTE D IN (2010) 43 DTR (MUMBAI) (TRIB) 374 AND THE DECISION OF DELH I BENCH OF THE TRIBUNAL IN THE CASE OF H.S. MOHINDRA TRADERS VS. I TO (2010) 43 DTR (DEL)(TRIB) 382. 8. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE ALSO CONTENDED THAT AMENDMENT BY THE FINANCE ACT, 2010 A LSO ACCEPTS THE ABOVE DECISIONS AND THE AMENDMENT MADE BY THE S AID FINANCE ACT BEING CURATIVE OR CLARIFICATORY THE SAME IS RET ROSPECTIVE IN NATURE. 9. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE FIND THAT SAME ISSUE AROSE BEFORE THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF H.S. MOHINDRA TRADERS (SUPR A) WHERE IT WAS HELD AS UNDER :- 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE UND ISPUTED FACTS ARE THAT THE TAX IN RESPECT OF ABOVE-MENTIONE D EXPENDITURES WAS DEDUCTED BY THE ASSESSEE IN THE MO NTH OF MARCH, 2007 AND THE TDS SO DEDUCTED WAS PAID MUCH B EFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME AS P RESCRIBED IN SECTION 139(1) OF THE I.T. ACT, 1961 WHICH, IN THE PRESENT CASE, IS 30 TH SEPTEMBER, 2007. 7. SEC. 40(A)(IA) DESCRIBES THE CIRCUMSTANCES UNDER WHICH, IN CASE THE ASSESSEE FAILS TO DEDUCT AND DEP OSIT THE TAX, THE AMOUNT CAN BE DISALLOWED. FOR PROPER APPRE CIATION OF THE STATE OF AFFAIRS, IT IS NECESSARY TO REPRODU CE THE RELEVANT PART OF SECTION 40(A)(IA) WHICH READS AS U NDER : SECTION 40(A)(IA) : ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SER VICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDEN T, OR AMOUNT PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHI CH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AN D - 4 - SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID. 8. ACCORDING TO THE AFOREMENTIONED SECTION, IF A PA RTICULAR ASSESSEE IN CASE OF PAYMENT OF INTEREST, COMMISSION , BROKERAGE, RENT OR ROYALTY, FEE FOR PROFESSIONAL SE RVICES OR FEE FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AM OUNT PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RES IDING, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED O R, AFTER DEDUCTION, HAS NOT BEEN PAID IN FOLLOWING CONDITION S : (I) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR , ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139; OR (II) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. 9. THE READING OF THE ABOVE CLAUSE SHOWS THAT IF TH E TAX IS DEDUCTIBLE UNDER CHAPTER XVII-B AND THE SAID TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION IT HAS NOT BEEN PA ID, THEN, THE LIABILITY OF THE ASSESSEE IS TO PAY THE SAME F OR THE ALLOWABILITY OF THE SAID EXPENDITURE ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. S UB-SECTION 1 OF SECTION 139 REGULATES THE DUE DATES OF FILING THE RETURN OF INCOME IN NORMAL CASES. THE DUE DATE OF FILING T HE RETURN IN THE PRESENT CASE IS 30 TH SEPTEMBER, 2007. THE ASSESSEE IN THE PRESENT CASE HAS DEDUCTED TAX IN THE MONTH OF M ARCH, 2007 AND IT HAS PAID THE SAID TDS BEFORE THE DUE DA TE OF FILING THE RETURN. THEREFORE, THE DISALLOWANCE CANN OT BE MADE UNDER SECTION 40(A)(IA) AS THERE IS NO DEFAULT ON T HE PART OF THE ASSESSEE OF NON-DEDUCTION OR NON-PAYMENT OF TDS IN ACCORDANCE WITH THE SAID PROVISION. THE DISALLOWANC E HAS WRONGLY BEEN UPHELD BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE SAME DESERVES TO BE DE LETED. ACCORDINGLY THE DISALLOWANCE IS DELETED. 11. WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US BY THE REVENUE TO SHOW THAT WHY THE ABOVE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL SHOULD NOT BE FOLLOWED BY US. WE THEREFORE, RESPECTFULLY FOLLOWING THE SAME HOLD THAT WHEN TAX WAS ACTUALLY DEDUCTED IN THE MONTH OF MARCH,2005 AND DEPOSITED W ITHIN THE TIME ALLOWED UNDER SECTION139(1) THEN THE RELEVANT EXPENDITURE IS NOT TO BE DISALLOWED UNDER SECTION 40(A)(IA). WE THEREFORE, DELETE THE DISALLOWANCE OF `.1,49,65,000/- AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. - 5 - 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 15 TH DAY OF SEPTEMBER, 2010. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTAN ACCOUNTAN ACCOUNTAN ACCOUNTANT MEMBER T MEMBER T MEMBER T MEMBER AHMEDABAD: ON THIS 15 TH DAY OF SEPTEMBER, 2010 COMPILED AND COMPARED BY : PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II,BARODA. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 13-9-10 ----------------- 2. DRAFT PLACED BEFORE AUTHORITY 14-9-10 -------- ----------- 3. DRAFT PROPOSED & PLACED 14-9-10 ------------- ------ JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 14-9-10 ------------ ---JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 15-9-10 ----------- --------- 6. KEPT FOR PRONOUNCEMENT ON 15-9-10 ----------- --------- 7. FILE SENT TO THE BENCH CLERK 15-9-10 -------- ------------ 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------