A.Sulochana, Coimbatore V. ITO, Coimbatore

ITA 1548/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64404 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HPS L
• Keywords: Additional evidence
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.1548/MDS/2012 ASSESSMENT YEAR : 2009-2010 SMT. A.SULOCHANA PROPX. VENKAT SULOCHANA FURNITURE NO.163, 100 FEET ROAD GANDHIPURAM COIMBATORE 641 012 VS THE INCOME TAX OFFICER WARD II(1) COIMBATORE [PAN BYHPS 2250L] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.ARJUNRAJ, CA RESPONDENT BY : SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 16-10-2012 DATE OF PRONOUNCEMENT : 17-10-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER OF THE CIT(A)-I, COIMBATORE, DATED 8.6.2012. 2. GROUND NO.1 OF THE APPEAL IS GENERAL NATURE AND HEN CE, REQUIRES NO ADJUDICATION BY US. I.T.A.NO. 1548/12 :- 2 -: 3. GROUND NOS. 2 & 3 OF THE APPEAL ARE DIRECTED AGAINS T THE ORDER OF THE CIT(A) IN UPHOLDING THE DISALLOWANCE O F RENT PAYMENT OF ` 3,60,000/- AND ADVERTISEMENT EXPENSES OF ` 4,82,487/- U/S 40(A)(IA) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, MADE PAYMENT OF ` 4 LAKHS AS RENT TO SHRI SUDHIR PETER AND PAID ADVERTISEMENT EXPENSES OF ` 4,82,487/- TO M/S DINAMALAR, M/S GLOBAL MEDIA AND M/S VISION ADVERTIS ERS. THE ASSESSING OFFICER DISALLOWED DEDUCTION BECAUSE THE ASSESSEE HAD NOT DEPOSITED THE TDS DEDUCTED ON THESE PAYMENTS TO THE CREDIT OF THE CENTRAL GOVERNMENT ON OR BEFORE THE END OF THE FINA NCIAL YEAR ENDING ON 31.3.2009. 5. THE ASSESSEE, BEFORE THE CIT(A), CLAIMED THAT THE PAYMENT WAS MADE TO THE CREDIT OF THE CENTRAL GOVERNMENT OF THE TDS AMOUNT DEDUCTED ON THE ABOVE PAYMENTS ON 15.4.2009 AND IN VIEW OF THE AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) B Y THE FINANCE ACT 2010, IF THE TDS DEDUCTED DURING THE FINANCIAL YEAR ON PAYMENTS WHICH WERE LIABLE TO TDS WAS DEPOSITED BY THE ASSESSEE A FTER DEDUCTION TO THE CREDIT OF THE CENTRAL GOVERNMENT BEFORE THE DUE DATES SPECIFIED IN I.T.A.NO. 1548/12 :- 3 -: SUB-SECTION(1) OF SECTION 139, THEN NO DISALLOWANCE OF EXPENDITURE WAS TO BE MADE. THE ASSESSEE CLAIMED THAT THIS AMENDM ENT TO THE SECTION WAS PROSPECTIVE IN NATURE AND NOT RETROSPEC TIVE FROM 1.4.2005 AND WAS APPLICABLE TO THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR 2009-10. 6. THE CIT(A), FOLLOWING THE DECISION OF THE ITAT, MUM BAI, SPECIAL BENCH, IN THE CASE OF BHARATI SHIPYARD LTD VS DCIT, [2011] 11 ITR (TRIB) 599 (MUMBAI)(SB), HELD THAT THE AMENDMEN T BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS PROSPECTIVE AND HENCE, WAS APPLICABLE FROM ASSESSME NT YEAR 2010-11 AND THEREFORE, CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER IN DISALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSE E. 7. THE A.R OF THE ASSESSEE BEFORE US, HAS RELIED ON T HE DECISION OF CHENNAI D BENCH IN THE CASE OF R.S.SU RIYA VS DCIT(2010) 2 ITR (TRIB) 746(CHENNAI) AND THE DECISION OF THE T RIBUNAL IN THE CASE OF BANSAL PARIVAKAN (INDIA) LTD VS ITO (2011) 9 ITR (TRIB) 565 AND ALSO ON THE DECISION OF THE TRIBUNAL IN THE CASE OF KANUBHAI RAMJIBHAI VS ITO (2011) 44 SOT 264 AND SUBMITTED THAT IN THOS E DECISIONS, THE TRIBUNAL HAS HELD THAT THE AMENDMENT MADE BY THE FI NANCE ACT, 2010 WITH EFFECT FROM 1.4.2010 WAS RETROSPECTIVE IN NATU RE AND APPLICABLE I.T.A.NO. 1548/12 :- 4 -: FROM ASSESSMENT YEAR 1.4.2005 AND THEREFORE, THE AP PEAL OF THE ASSESSEE SHOULD BE ALLOWED ON THIS GROUND. 8. ON THE OTHER HAND, THE DR SUPPORTED THE ORDERS OF T HE LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS DISALLOWED DEDUCTION TO THE ASSESSEE FOR PAYMENT OF RENT OF ` 4 LAKHS AND PAYMENT OF ADVERTISEMENT EXPENSES OF ` 4,82,487/- AS THE ASSESSEE, AFTER DEDUCTING THE TDS ON THE SAID PAYMENTS, HAD NOT DEP OSITED THE AMOUNT TO THE CREDIT OF THE CENTRAL GOVERNMENT BEFO RE THE END OF THE FINANCIAL YEAR ON 31.3.2009 BUT WAS DEPOSITED BY TH E ASSESSEE ON 15.4.2009 WHICH WAS AFTER THE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2009-10. 10. ON APPEAL, THE CIT(A), FOLLOWING THE DECISION OF TH E MUMBAI TRIBUNAL, SPECIAL BENCH IN THE CASE OF BHARATI SHIP YARD LTD VS DCIT(SUPRA), HAS CONFIRMED THE ACTION OF THE ASSESS ING OFFICER HOLDING THAT THE AMENDMENT MADE TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH EFFECT FROM 1.4.2010 THAT TDS DEDUCTED FR OM PAYMENTS OF I.T.A.NO. 1548/12 :- 5 -: EXPENSES IF PAID BEFORE THE DUE DATE OF FILING OF R ETURN U/S 139(1) BY THE ASSESSEE THEN NO DISALLOWANCE OF THE SAID EXPE NDITURE SHOULD BE MADE BY THE ASSESSEE WAS PROSPECTIVE IN NATURE AND HENCE APPLICABLE FROM 1.4.2010 AND NOT TO EARLIER ASSESSMENT YEARS A ND THE ASSESSMENT YEAR IN THE CASE OF THE ASSESSEE WAS ASSESSMENT YE AR 2009-10. 11. WE FIND THAT THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS VIRGIN CREATIONS, ITAT NO.302 OF 2011, GA 32 00/2011, ORDER DATED 23.11.2011, HAS HELD AS UNDER: THE COURT: WE HAVE HEARD MR. NIZAMIDDIN AND GONE T HROUGH THE IMPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH THE PRESENT APPEAL IS SOUGHT T O BE ADMITTED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEEDS T O TAKE DECISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPEC TIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PER IOD APRIL 1 , 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY T HE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COUR T, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ALOM EXTRUSIONS L TD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECT IVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPR EME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY T O MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RET ROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. I.T.A.NO. 1548/12 :- 6 -: 12. RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE HON'BLE CALCUTTA HIGH COURT, WE HOLD THAT THE AMEND MENT MADE TO SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 20 10 THAT IF THE TDS MADE ON EXPENSES IS DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT ON OR BEFORE THE DUE DATE OF FILING OF R ETURN OF INCOME U/S 139(1) OF THE ACT THEN NO DISALLOWANCE OF THE E XPENDITURE SHOULD BE MADE, IS RETROSPECTIVE AND APPLICABLE FROM 1.4.2 005. HENCE, AS IT IS AN ADMITTED FACT BY BOTH THE PARTIES THAT THE ASSE SSEE HAS DEPOSITED THE TDS MADE ON PAYMENT OF RENT AND ADVERTISEMENT E XPENSES ON 15.4.2009 WHICH IS BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) FOR ASSESSMENT YEAR 2009-10, NO DISALLOW ANCE OF THE EXPENDITURE COULD BE MADE. WE, THEREFORE, SET ASI DE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE DISALLOWANCE. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 13. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) IN UPHOLDING INTEREST PAYMENT OF ` 54,000/- U/S 40(A)(IA) OF THE ACT. 14. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE MADE INTEREST PAYMENT OF ` 24,000/- AND ` 30,000/- TO SHRI T.V.DURAISAMY AND SHRI P.VENKATACHALAM RESPECTIVELY, TOTALING TO ` 54,000/-. AS NO I.T.A.NO. 1548/12 :- 7 -: TDS WAS DEDUCTED ON THESE PAYMENTS, THE ASSESSING O FFICER DISALLOWED THE SAME U/S 40(A)(IA) OF THE ACT. 15. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE SUBMITT ED THAT SHRI T.V.DURAISAMY DISCLOSED THE INTEREST INCOME IN HIS RETURN OF INCOME AND PAID THE TAXES AND THAT IN THE CASE OF S HRI P.VENKATACHALAM, HE HAS NO OTHER SOURCE OF INCOME A ND WAS NOT ASSESSABLE TO TAX AND THEREFORE, THE DEDUCTION OF T DS WAS NOT WARRANTED. THE CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER OBSERVING THAT THE A.R COULD NOT SUBSTANTIA TE HIS CAUSE FOR NOT DEDUCTING THE TDS AND THAT IN THE CASE OF SHRI P.VE NKATACHALAM THE ASSESSEE DID NOT PRODUCE FORM 15H IN SUPPORT OF HIS CLAIM. 16. BEFORE US, THE A.R REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS M ADE A PRAYER FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF T HE INCOME TAX APPELLATE TRIBUNAL RULES. HE SUBMITTED THAT THE AD DITIONAL EVIDENCES ARE COPY OF THE ACKNOWLEDGEMENT OF THE RETURN OF IN COME FILED BY SHRI T.V.DURAISAMY FOR ASSESSMENT YEAR 2009-10 DISCLOSIN G THE INTEREST INCOME RECEIVED FROM THE ASSESSEE AND COPY OF FORM 15H IN THE CASE OF SHRI P.VENKATACHALAM. HE SUBMITTED THAT THESE E VIDENCES COULD NOT BE SUBMITTED BEFORE THE ASSESSING OFFICER AND THE C IT(A) DUE TO THE I.T.A.NO. 1548/12 :- 8 -: MISTAKE OF THE A.R AND SUBMITTED THAT THE SAME SHOU LD BE TAKEN ON RECORD WHILE DECIDING THE APPEAL OF THE ASSESSEE. THE DR DID NOT OBJECT TO ADMITTING THE EVIDENCES AND THEREFORE, TH EY WERE ADMITTED. 17. THE DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS MADE INTEREST PAYME NT OF ` 24,000/- TO SHRI T.V.DURAISAMY AND ` 30,000/- TO SHRI P.VENKATACHALAM, TOTALING TO ` 54,000/- WITHOUT DEDUCTING TDS ON THE SAME. THERE FORE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF EXPENDITU RE OF ` 54,000/- ON ACCOUNT OF INTEREST BY INVOKING THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT. 19. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT SHRI T.V.DURAISAMY HAS SHOWN THE INCOME IN THE RETURN OF INCOME FILED BY HIM AND PAID TAXES THEREON AND THAT SHRI P.VENKATAC HALAM WAS NOT LIABLE TO INCOME TAX AS HE DID NOT HAVE ANY OTHER I NCOME EXCEPT THE INTEREST PAID BY THE ASSESSEE. THE CIT(A) REJECTE D THE ARGUMENT OF THE ASSESSEE ON THE GROUND THAT THE A.R OF THE A SSESSEE HAS NOT I.T.A.NO. 1548/12 :- 9 -: SUBSTANTIATED HIS CAUSE FOR NOT DEDUCTING THE TDS A ND CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 20. BEFORE US, THE ASSESSEE FILED COPY OF FORM 15G REC EIVED BY HER FROM SHRI P.VENKATACHALAM AND CONTENDED THAT AS THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX ON INTEREST OF ` 30,000/- PAID TO SHRI P.VENKATACHALAM, THE SAID EXPENSES COULD NOT BE DIS ALLOWED BY INVOKING SECTION 40(A)(IA) OF THE ACT. IN RESPECT OF THE BALANCE INTEREST OF ` 24,000/- PAID TO SHRI T.V.DURAISAMY, THE ASSESSEE CONTENDED THAT THE SAID PAYEE HAS ALREADY PAID TAX TO THE GOVERNMENT ON THIS INCOME AND HAS FILED HIS RETURN OF INCOME O N 2.11.2009 BY INCLUDING THE SAID INTEREST INCOME OF ` 24,000/-. 21. WE FIND THAT COPY OF FORM 15G WHICH WAS FILED BEFO RE US IN RESPECT OF INTEREST PAID OF ` 30,000/- TO SHRI P.VENKATACHALAM WAS NOT FILED BEFORE THE LOWER AUTHORITIES. WE, THEREFORE, SET ASIDE THIS PART OF THE GROUND OF APPEAL AND RESTORE THE SAME BACK TO T HE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO VERIFY FORM 15G AND IF ON VERIFICATION HE COMES TO THE CONCLUSION THAT THE A SSESSEE WAS NOT LIABLE TO DEDUCT TAX IN RESPECT OF INTEREST OF ` 30,000/-, THEN NO DISALLOWANCE OF THE SAID AMOUNT SHOULD BE MADE BY I NVOKING THE I.T.A.NO. 1548/12 :- 10 -: PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THUS, THIS PART OF THE GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 22. IN RESPECT OF THE REMAINING AMOUNT OF INTEREST OF ` 24,000/- PAID TO SHRI T.V.DURAISAMY, WE FIND THAT THE MUMBAI BENCH IN THE CASE OF ACIT VS DICGC LTD IN I.T.A.NOS.2361 AND 2524/MUM /2011, FOR ASSESSMENT YEARS 2007-08 AND 2008-09 VIDE ORDER DAT ED 2.3.2012 HAS HELD THAT EVEN IF PAYEE PAYS TAX ON PAYMENTS WHICH ARE LIABLE FOR DEDUCTION OF TAX AT SOURCE, THE PAYMENT WOULD STILL BE DISALLOWED U/S 40(A)(IA) OF THE ACT IN THE HANDS OF THE PAYER. WH ILE DOING SO, THE TRIBUNAL HAS DISTINGUISHED THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD VS CIT [2007] 293 ITR 226(SC) AND THE DECISION OF MUMBAI TRIBUNAL, SP ECIAL BENCH IN THE CASE OF MAHINDRA & MAHINDRA LTD VS DCIT [2009] 30 S OT 374(MUM)(SB) AND OBSERVED THAT THESE TWO DECISIONS WERE RENDERED IN THE CONTEXT OF SECTION 201(1) OF THE ACT AND PRI NCIPLES LAID DOWN THEREIN COULD NOT BE ADOPTED FOR THE PURPOSE OF INT ERPRETING SECTION 40(A)(IA) OF THE ACT. THEREFORE, RESPECTFULLY FOLL OWING THE ABOVE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN T HE CASE OF ACIT VS DICGC LTD IN I.T.A.NOS.2361 AND 2524/MUM/2011, FOR ASSESSMENT YEARS 2007-08 AND 2008-09, ORDER DATED 2.3.2012, W E CONFIRM THE ORDER OF THE CIT(A) IN DISALLOWING THE CLAIM OF INT EREST EXPENDITURE OF ` I.T.A.NO. 1548/12 :- 11 -: 24,000/- TO THE ASSESSEE. THUS, THIS PART OF THE GROUND OF APPEAL IS DISMISSED. THEREFORE, GROUND NO.3 OF THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED IN THE MANNER INDICATED ABOVE. ORDER PRONOUNCED ON WEDNESDAY, THE 17 TH OF OCTOBER, 2012, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 17 TH OCTOBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR