Deputy Commissioner Of Income Tax circle - 7 (1) ((1), Bengaluru V. M/S United Steel International Pvt. Ltd, Bengaluru

ITA 1582/BANG/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1512 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Keywords: Set aside
• Section: 40(a)(ia); 201(1); 201; 40a(ia); 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.1582/BANG/2018 ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-7(1)(1), BENGALURU. VS. M/S UNITED STEEL INTERNATIONAL PVT. LTD., NO.32/1-2, CRECENT TOWER, CRECENT ROAD, HIGH GROUNDS, BENGALURU-560 001. PAN AAACU 9236 F APPELLANT RESPONDENT APPELLANT BY : SMT. R PREMI, JCIT (DR RESPONDENT BY : NONE DATE OF HEARING : 10.12.2019 DATE OF PRONOUNCEMENT : 11.12.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER : THE REVENUE HAS FIELD THIS APPEAL CHALLENGING THE ORDER DATED 7/3/2018 PASSED BY LD CIT(A)-7 BENGALURU AND IT REL ATES TO THE ASST. YEAR 2012-13. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DIRECTING THE AO TO DELETE INTEREST DISALLOWANCE MA DE U/S 40A(IA) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE, AFTER V ERIFICATION OF THE SAID INFORMATION. ITA NO.1582 /BANG/2018 PAGE 2 OF 6 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. EVEN T HOUGH THE CASE WAS POSTED FOR HEARING SEVERAL OCCASIONS HENCE WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE WITHOUT THE PRESENCE OF THE ASSESSEE. 4. WE HEARD THE LD DR AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN MINING PRODUC TS. DURING THE COURSE OF ASST. PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS PAID INTEREST OF RS.1.72 CRORES TO A SISTER CONCERN NAMED M/S UNITED MEGA BUILDERS WITHOUT DEDUCTING TAX AT SO URCE AS REQUIRED U/S 194A OF THE ACT. BEFORE AO THE ASSESSEE FURNIS HED A CERTIFICATE OBTAINED IN FORM NO.26A AS PER FIRST PROVISO TO SE C. 201(1) OF THE ACT AND ACCORDINGLY CLAIMED THAT THE PROVISIONS OF SEC. 40A(IA) SHOULD NOT BE APPLIED TO IT. THE AO TOOK THE VIEW THAT THE ABOVE SAID PROVISIONS SHALL APPLY ONLY W.E.F FROM ASST. Y EAR 2013-14 AND ACCORDINGLY REJECTED THE EXPLANATIONS GIVEN BY THE ASSESSEE. ACCORDINGLY HE MADE DISALLOWANCE OF RS.1.72 CRORES U/S 40(A)(IA) OF THE ACT. 5. THE LD CIT(A) NOTICED THAT THE BENGALURU BENCH O F TRIBUNAL HAS HELD IN THE CASE OF G SHANKAR VS. ACIT (ITA NO.1832/BANG/2013) DATED 10/10/2014 THAT THE SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT IS RETROSPECTIVE IN APPLI CATION W.E.F 1/4/2005. ACCORDINGLY, FOLLOWING THE ABOVE SAID DE CISION OF TRIBUNAL, THE LD CIT(A) DIRECTED THE AO TO CONSIDER THE CERTIFICATE IN FORM NO.26A FILED BY THE ASSESSEE, VERIFY THE FAC TS AND ALLOW THE DEDUCTION IF THE SAID AMOUNT HAS BEEN SHOWN AS REC EIPT BY M/S ITA NO.1582 /BANG/2018 PAGE 3 OF 6 UNITED MEGA BUILDERS IN ITS BOOKS OF ACCOUNTS AND O FFERED TO TAX IN THE PERIOD UNDER CONSIDERATION. 6. THE REVENUE IS AGGRIEVED BY THE DECISION SO REND ERED BY LD CIT(A). 7. THE LD DR SUBMITTED THAT THE LD CIT(A) DOES NOT HAVE POWER TO SET ASIDE THE ISSUE TO THE FILE OF AO. SHE FUR THER SUBMITTED THAT THE SECOND PROVISO TO SEC. 40(A)(IA) HAS BEEN INSER TED BY THE FINANCE ACT NO.2012 W.E.F 1/4/2013 AND HENCE IT SHALL APPLY ONLY FROM ASST. YEAR 2013-14. 8. WE NOTICED THAT THE APPLICABILITY OF SECOND PROV ISO HAS BEEN EXAMINED BY THE COORDINATE BENCH IN THE CASE OF G S HANKAR (SUPRA) AND THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL HAS BEEN EXTRACTED BY LD CIT(A) IN ITS ORDER AND THE SAME R EAD AS UNDER:- THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS RETROSPECTIVE IN APPLICATION W.E.F 01 APR 2005. AS PER THIS NEWLY INSERTED PROVISO, THE ASSESSEE IS REQUIR ED TO FILE FORM 26A AS PER RULE 31ACB OF THE IT RULES 1962 SO AS NOT TO BE HELD AS AN ASSESSEE IN DEFAULT AS PER PROVISO TO SECTION 201 OF THE ACT. AS HELD I N THE DECISION OF THE COORDINATE BENCH IN THE CASE OF S.M ANAND VS. ACIT (SUPRA), SINCE THE ASSESSEE IN THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2005-06, COULD NOT HAVE CONTEMPLATED THAT SUCH A COMPLIANCE WAS TO BE MADE, WE ALSO IN THE CASE ON HAND, REMIT THE MATTER TO THE FILE OF THE ASSESSING ITA NO.1582 /BANG/2018 PAGE 4 OF 6 OFFICER FOR AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY TO FILE FORM NO.26A AND VERIFICATION OF WHETHER THE SAID PAYEE HAS REFLECTED THE PAYMENT/RECEIPT IN HIS BOOKS OF ACCOUNT AND OFFERED THE SAME TO TAX IN THE PERIOD UNDER CONSIDERATION. 9. WE NOTICED THAT THE LD CIT(A) HAS FOLLOWED THE A BOVE SAID DECISION OF TRIBUNAL AND SINCE THE MATTER REQUIRES VERIFICATION HE HAS RESTORED THE SAME TO THE FILE OF AO. IT IS THE CONTENTIONS OF THE LD DR THAT THE LD CIT(A) DOES NOT HAVE POWER TO SET ASIDE THE MATTER TO THE FILE OF AO. SINCE THE CLAIM OF THE ASSESSEE REQUIRES VERIFICATION AT THE END OF AO, WE SET ASIDE THE SAI D ISSUE TO THE FILE OF AO AND THE SAME WILL REGULARIZE THE ORDER PASSED BY LD CIT(A). 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2019. SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH DECEMBER , 2019. /VMS/ ITA NO.1582 /BANG/2018 PAGE 5 OF 6 COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE ITA NO.1582 /BANG/2018 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED