ACIT, Cir.4, Pune, Pune V. Panse Autocomps Pvt.Ltd, Pune

ITA 155/PUN/2012

• Counselvise Citation: 15524514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: R D ONKAR
• Keywords: Retrospective amendment
• Section: 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.155/PN/2012 ASSESSMENT YEAR : 2008 - 09 ACIT, CIR.-4, PUNE VS. PANSE AUTOCOMPS PVT. LTD., 805, A-3 REVERIE, BHANDARKAR ROAD, PUNE (APPELLANT) (RESPONDENT) PAN NO. AABCP0249C APPELLANT BY: MS. ANN KAPTHUAMA RESPONDENT BY: SHRI R.D.ONKAR DATE OF HEARING : 10-04-2013 DATE OF PRONOUNCEMENT : 30-05-2013 ORDER PER R.S. PADVEKAR, JM:- IN THIS APPEAL THE REVENUE IS CHALLENGED THE IMPUGNED ORD ER OF LD. CIT(A)-II, PUNE DATED 28-10-2011 FOR THE A.Y. 2008-09. T HE REVENUE HAS TAKEN THE MULTIPLE GROUNDS HENCE, WE DISPOSED OF THIS APP EAL BY FRAMING THE ISSUES. 2. THE FIRST ISSUE IS DISALLOWANCE OF RS.50,01,000/- MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) OF THE INCOME-TAX ACT AND THIS ISSUE ARISE S FROM GROUND NOS. 1 TO 5. WE HAVE HEARD THE PARTIES. 3. THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURE AND SALE OF SHEET METAL PRESSING PARTS OF ASSEMBLIES IN THE AUTOMOT IVE SECTOR TO OEM CUSTOMER. THE ASSESSEE HAS TAKEN PREMISES ON RE NT FROM ITS SISTER COMPANY FOR THE SAID PURPOSE. THE ASSESSEE ALSO ENTERE D INTO LEAVE AND LICENSE AGREEMENT FOR THE USAGE OF FACILITY FROM 1 ST JANUARY 2008 TO 31 ST DECEMBER 2008 AT AN AGREED AMOUNT OF RS.16,67,000/- PER MONTH. THE SAID AGREEMENT WAS EXECUTED BEFORE THE YEAR END I.E. 31 ST MARCH, 2008 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THE ASSESSE E HAS DEDUCTED TAX IN THE LAST MONTH OF THE RELEVANT PREVIOUS YEAR I.E. IN THE MONTH OF 2 ITA NO.155/PN/2012, PANSE AUTOCOMPS PVT. LTD., PUNE MARCH, 2008 AND DEPOSITED THE SAID TAX BEFORE THE DUE D ATE OF FILING OF RETURN SPECIFIED IN SECTION 139(1) I.E. BEFORE 30 TH SEPTEMBER, 2008. 4. THE TDS HAS BEEN MADE U/S. 194(I) OF THE INCOME-TAX ACT. WE FIND THAT FINANCE ACT, 2008 HAS AMENDED SUB-CLAUSE (IA) TO SEC TION 40(A) OF THE ACT WITH EFFECT FROM 01-04-2005 BY GIVING LIBERTY TO T HE ASSESSEE IF TAX IS DEDUCTED IN LAST MONTH OF THE PREVIOUS YEAR, THEN TO PAY TAX ON OR BEFORE DUE DATE SPECIFIED IN SUB-SEC (1) OF SECTION 139 FOR FILING THE RETURNS OF INCOME. THE SAID AMENDMENT HAS BEEN CONSIDER ED BY THE ITAT, MUMBAI IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL V S. ACIT, RANGE-22(2), MUMBAI ITA NO. 6628/MUM/2009 DATED 25-06-2 010. IN THE SAID CASE THE ASSESSEE HAS DEDUCTED THE TAX ON 3 1-03-2005 AND DEPOSITED THE SAID TAX ON 21-09-2005 WHICH WAS BEFORE T HE DUE DATE OF THE FILING OF RETURN IN THE SAID CASE. THE OPERATIVE PART OF THE TRIBUNAL ORDER, ALLOWING THE CLAIM OF THE ASSESSEE IS AS UNDER: AS PER THE CLAUSE (IA) OF SUB-SECTION (A) OF SECTIO N (40) WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UNDER CHAPTER - XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NO T BEEN PAID THEN THE SAID DEDUCTION IS NOT ALLOWABLE. AS PER THE SUB -CLAUSE 'A' OF CLAUSE (IA) IF THE TAX IS DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DUE DATE OF FILING O F RETURN AS PER THE PROVISIONS OF SECTION 139(1) THEN SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHERE THE TAX IS DEDUCTED DURING PREVIOUS YEAR OTHER THAN THE LAST MONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFORE, THE CONDITIONS FOR ALLOWABILITY OF TH E DEDUCT ION IS PRESCRIBED UNDER SECTION 40(A) (IA) ITSELF AND PRO VISIONS OF CHAPTER -XVII AND SECTION 194C UNDER CHAPTER XVIIB AT THAT RE LEVANT POINT OF TIME ARE RELEVANT ONLY FOR THE PURPOSES OF ASCERTAININ G THE DEDUCIBILITY OF THE TAX ON THE PAYMENT . ONCE, THE NATURE OF PAYMENT IS FALLING UNDER THE PROVISIONS OF CHAPTER -XVII /VIIB THEN THE DISALLOWANCE U/S 40(A) (IA) SHALL BE AS PER THE CONDITION AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SE CTION 40(A) (IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN THE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CHAPTER-XVII BUT DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MONTH O F PREVIOUS YEAR BUT PAID AFTER THE DUE DATE U/S 139(1) OR DEDUCTED D URING THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT PA ID AFTER THE END OF THE SAID PREVIOUS YEAR THEN THE SAID SUM SHALL NOT BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREVIOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTION AND PAYMENT PRESCRIBED U/S C HAPTER XVII /XVIIB ARE APPLICABLE FOR DISALLOWANCE OF THE DEDUC TION 40(A)(IA) THEN THE PROVISIONS OF SECTION 40(A)(IA) WILL BE RENDERED AS MEANINGLESS, ABSURDITY AND ETIOS. AS PER THE PROVISIONS OF SECTIO N 40(A) (IA) THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITHER N O TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. BUT WH EN THE TAX IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY T HEN DEDUCTION 3 ITA NO.155/PN/2012, PANSE AUTOCOMPS PVT. LTD., PUNE IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS S O DEPOSITED. THEREFORE, IF THE PROVISIONS OF SECTION 194C WITH R ESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE APPLIED FOR THE DISALLOW ANCE U/S 40(A) (IA) THEN THERE WILL BE NO PURPOSE OR OBJECT FOR PR OVIDING THE CERTAIN CONDITIONS OF ACTUAL DEDUCTION OF TAX AND PAYMENT OF TAX U/S 40(A)(IA). IN OUR VIEW, THE PROVISIONS OF CHAPTER X VII ARE RELEVANT ONLY FOR ASCERTAINING THE DEDUCIBILITY OF THE TAX A T SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISIONS OF SECTION 40(A) (IA). SINCE IN THE CASE IN HAND WHEN THE ASSESSEE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DATE OF FILING OF THE RETURN U/S 139(1) THEN IT IS COVERED UNDER CLAUSE 'A' OF SE CTION 40(A)(IA). THEREFORE WHEN THE ASSESSEE'S CASE COVERED UNDER THE MAIN PROVISIONS OF EXISTING LAW THEN WE NEED NOT TO GO TO THE ISSUE OF PROSPECTIVE OR RETROSPECTIVE EFFECT OF THE AMENDMEN T IN THE PROVISIONS BY THE FINANCE ACT, 2010. AS REGARDS THE DECISION R ELIED UPON BY THE LEARNED DR WHEN THE PROVISO TO SECTION 40(A) (IA) IS NOT CONTRARY TO THE MAIN SECTION/ENACTMENT THEN THE SAID DECISION WILL NOT HELP THE CASE OF THE REVENUE. EVEN OTHERWISE WH EN THE CASE OF THE ASSESSEE FALLS UNDER THE MAIN PROVISIONS OF SECTION 40(A) (IA) THEN THE SAID DECISION RELIED UPON BY THE LEARNED DR IN THE CASE OF CIT V/S MADURAI MILS AND CO. LTD (SUPRA) IS NOT RELEVANT. A CCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE DEDUCTION OF THE ASSESSEE. 5. ADMITTEDLY, IN THE PRESENT CASE, THE ASSESSEE DEDUCT ED THE TAX IN THE MONTH OF MARCH, 2008 AND DEPOSITED THE SAID TAX BEFO RE 30 TH SEPTEMBER, 2008. IN OUR OPINION THE ASSESSEE IS SQUAREL Y COVERED BUT THE DECISION OF THE ITAT MUMBAI IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL (SUPRA). WE, THEREFORE, CONFIRM THE ORDER OF LD. CI T(A) AND DISMISS THE GROUND NOS. 1 TO 5. IN SUBSTANCE THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. THE NEXT ISSUE IS ADDITION OF RS.1,44,26,430/- WHICH WAS P RE-POND AND TAXED BY THE ASSESSING OFFICER IN THE PRESENT ASSESS MENT YEAR I.E. A.Y. 2008-09 WHICH WAS IN RESPECT OF EXTRA FREIGHT AND PAC KING CHARGES. THE ASSESSING OFFICER HAS OBSERVED THAT INCOME OF RS.1,44,2 6,410/- PERTAINS TO A.Y. 2008-09 WHICH HAS BEEN OFFERED TO TAX IN THE A.Y. 2009- 10. AS NOTED BY THE ASSESSING OFFICER THAT THE AUDITOR IN THE AUDIT R EPORT FOR A.Y. 2009-10 HAS ALSO MENTIONED THAT THE SAID AMOUNT PERTAINS TO PRIOR YEAR I.E. A.Y. 2008-09. THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT WHICH WAS IN RESPECT OF THE FREIGHT AND PACKING C HARGES PERTAINS TO F.Y. 2007-08 WHICH TATA MOTORS HAS AGREED TO COMPEN SATE TO THE ASSESSEE. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE EXPLANATION 4 ITA NO.155/PN/2012, PANSE AUTOCOMPS PVT. LTD., PUNE OF THE ASSESSEE AND GONE WITH THE AUDITORS REMARK AN D BROUGHT TO TAX THE SAID AMOUNT IN THE A.Y. 2008-09. 7. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A). THE ASSESSEE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF E.D. SASSON 26 ITR 27 AS WELL AS DECISION OF TH E ITAT PUNE IN THE CASE OF DANA INDIA PRIVATE LIMITED ITA NO. 375/PN/2 009 ORDER DATED 09-02-2011. THE LD. CIT(A) ACCEPTED THE CONTENTIO N OF THE ASSESSEE THAT THE NEGOTIATIONS CARRIED OUT BY THE ASSE SSEE WITH TATA MOTORS FOR OBTAINING THE PRICE INCREASE TO MITIGATE INCREME NTAL COST WAS APPROVED ONLY ON 27 TH AUGUST, 2008 WHICH FALLS IN A.Y. 2009-10 AND THEREFORE THE ACCRUAL INCOME HAVE EARNED IS RIGHTLY OFFER ED TO TAX IN A.Y. 2009-10. NOW THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE FACTS ARE NOT IN DISPUTE IN THIS CASE. T ATA MOTORS, ONE OF THE CUSTOMERS OF THE ASSESSEE SET UP UNIT IN THE UTT RANCHAL AND REQUESTED THE ASSESSEE TO SUPPLY COMPONENTS FROM PUN E TO UTTRANCHAL UNIT. THE ASSESSEE HAS TO BEAR AND ALSO TO INCUR INCREM ENTAL COST OF FREIGHT AND PACKING MATERIAL IN ALL THE SUPPLY OF THE PRODUC TS FROM PUNE TO UTTRANCHAL. THE PRICES WERE FIXED AND HENCE, ONLY AFT ER SEVERAL ROUNDS OF NEGOTIATION THE ASSESSEE SUCCEEDED IN GETTING REIMBURSEMENT OF INCREMENTAL COST INCURRED WHICH WAS APPROVED ON 27 TH AUGUST, 2008. 9. IN THE CASE OF E.D. SASSON (SUPRA) THEIR LORDSHIPS HAVE EXPLAINED THE WORDS ACCRUE AND ARISE AS UNDER: THE WORDS ACCRUE AND ARISE ALSO ARE NOT DEFINED I N THE ACT. THE ORDINARY DICTIONARY MEANINGS OF THESE WORDS HAVE GO T TO BE TAKEN AS THE MEANINGS ATTACHING TO THEM. ACCRUING IS SYNO NYMOUS WITH ARISING IN THE SENSE OF SPRINGING AS A NATURAL GROW TH OR RESULT. THE THREE EXPRESSIONS ACCRUES, ARISES AND IS RECEIVED HAVING BEEN USED IN THE SECTION, STRICTLY SPEAKING ACCRUES SHOU LD NOT BE TAKEN AS SYNONYMOUS WITH ARISES BUT IN THE DISTINCT SENCE OF GROWING UP BY WAY OF ADDITION OR INCREASE OR AS AN ACCESSION OR ADVANTAGE; WHILE THE WORD ARISES MEANS COMES INTO EXISTENCE OR NOTICE OR PRESENTS ITSELF. THE FORMER CONNOTES THE IDEA OF A G ROWTH OR ACCUMULATION AND THE LATTER OF THE GROWTH OR ACCUMU LATION WITH A TANGIBLE SHAPE SO AS TO BE RECEIVABLE. IT IS DIFFICULT TO SAY THAT THIS DISTINCTION HAS BEEN THROUGHOUT MAINTAINED IN THE A CT AND PERHAPS 5 ITA NO.155/PN/2012, PANSE AUTOCOMPS PVT. LTD., PUNE THE TWO WORDS SEEM TO DENOTE THE SAME IDEA OR IDEAS VERY SIMILAR, AND THE DIFFERENCE ONLY LIES IN THIS THAT ONE IS MOR E APPROPRIATE THAN THE OTHER WHEN APPLIED TO PARTICULAR CASES. IT IS CLE AR, HOWEVER, AS POINTED OUT BY FRY, L.J. IN COLQUHOUN V. BROOKS [THIS P ART OF THE DECISION NOT HAVING BEEN AFFECTED BY THE REVERSAL OF THE DECISION BY THE HOUSE OF LORDS] THAT BOTH THE WORDS ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THEY REPRESENT A STATE ANTERIOR TO THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE AND CONNOTE A CHARACTER OF THE IN COME WHICH IS MORE OR LESS INCHOATE. 10. IN THE PRESENT CASE, IT IS NOT DISPUTED THAT THE ASS ESSEES DEMAND/REQUEST FOR ENHANCEMENT OF FREIGHT CHARGES HAS B EEN ACCEPTED BY THE TATA MOTORS ONLY ON 27 TH AUGUST, 2008. HENCE, IN OUR OPINION THE RATIO IN THE CASE OF E.D. SASSON (SUPRA) IS SQUARELY A PPLICABLE TO THE FACTS OF THE ASSESSEES CASE. WE DO NOT FIND ANY REASO N TO INTERFERE WITH THE ORDER OF LD. CIT(A) DELETING THE ADDITION. WE ACCORD INGLY CONFIRM THE SAME AND RELEVANT GROUNDS TAKEN BY REVENUE ARE DISMISSED. 11. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-05-2013 SD/- SD/- (G.S. PANNU) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER RK/PS PUNE, DATED: 30 TH MAY, 2013 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - II , PUNE 4 THE C CIT , PUNE 5 THE DR, ITAT, A BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE