ACIT, CHENNAI V. Shri G.Kuppuswamy, CHENNAI

ITA 1599/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61093 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB ADD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI (BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ) .. I.T.A. NO. 1599/MDS/2010 ASSESSMENT YEAR : 2006-07 ASST. COMMISSIONER OF INCOME TAX , BUSINESS RANGE VI, CHENNAI. PAN : ACPA (APPELLANT) V. SHRI G.KUPPUSWAMY, NOP.34,RATHNASABAPATHY STREET, OLD WASHTERMANPET, CHENNAI -21. PAN AAIPK 3509 R (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB ADD. C.I.T D R RESPONDENT BY : NONE DATE OF HEARING : 17.05.12 DATE OF PRONOUNCEMENT : 17.05.12 O R D E R PER N.S.SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX(A)-XI CHENNAI DATED 11.0 6.2010. ITA NO.1599/MDS/10 2 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER SECTION.40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TA X AT SOURCE BY THE ASSESSEE, IN RESPECT OF COMMISSION PAYMENT O F ` 26,57,957/- AND INTEREST PAYMENT OF FRS.13,35,756/- . 2.1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN COMING TO A CONCLUSION THAT THE AMOUNT OF DISALL OWANCE SHOULD BE RESTRICTED TO AMOUNTS SHOWN BY THE ASSESS EE AS OUTSTANDING. 2.2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) OUGHT TO HAVE APPRECIATED THAT AT ANY POINT OF TIME DURI NG THE YEAR WHEN THE ASSESSEE WAS UNDER OBLIGATION TO MAKE PAYM ENT TOWARDS AN EXPENDITURE, THE AMOUNT IS PAYABLE OR OUTSTANDING AT THAT POINT OF TIME. THUS, THE LIABILITY OF THE ASSESSEE TO DEDUCT TDS ARISES AT SUCH POINT OF TIME. 2.3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) FAILED TO APPRECIATE THAT THE PURPOSE OF SECTION 4 0(A)(IA) IS TO ENSURE PROPER COMPLIANCE TO TDS PROVISIONS UNDER SE CTION. 194A AND 194H AND THE INTERPRETATION GIVEN BY THE ITA NO.1599/MDS/10 3 COMMISSIONER OF INCOME TAX(A), IF IMPLEMENTED SHALL DEFEAT THE PURPOSE OF THE STATUTE. 2.4 IT IS SUBMITTED THAT THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF MOTHER INDIA REFRIGERATION IND USTRIES (P) LTD IS DISTINGUISHABLE FROM THE FACTS OF THE CASE. THE MADRAS TRIBUNAL DECISION IN THE CASE OF G F SECURITIES HAS NOT BECOME FINAL AND THE DEPARTMENT HAS GONE ON APPEAL BEFORE THE HONBLE HIGH COURT OF MADRAS. 2.5. IT IS FURTHER SUBMITTED THAT THE OTHER DECISIO NS RELIED UPON ARE NOT DECISIONS OF JURISDICTIONAL TRIBUNALS/COURT S AND THEY ARE NOT BINDING. 3 .FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A) MAY BESET ASIDE AND T HAT OF THE ASSESSING OFFICER RESTORED. 3. NOTICE OF HEARING WAS ISSUED TO THE RESPONDENT ASSESSEE BY REGISTERED POST WITH ACKNOWLEDGEMENT ISSUED ON 09.0 4.12 AND WAS SERVED ON THE ASSESSEE ON 10.04.12 AS EVIDENCED BY THE ACKNOWLEDGEMENT CARD OF THE POST OFFICE, WAS PLACED ON RECORD . THE ADVOCATE OF THE ASSESSEE, SHRI J. RADHAKRISHNAN FILED AN ITA NO.1599/MDS/10 4 APPLICATION FOR ADJOURNMENT STATING THAT HE WILL BE AWAY FROM CHENNAI AND WILL BE UNABLE TO REPRESENT THE MATTER FIXED FO R HEARING BEFORE THE TRIBUNAL AND PRAYED FOR ADJOURNMENT OF THE HEARING AFTER THREE WEEKS. WE FIND FROM THE RECORDS THAT NO VAKALATH NAMA HAS BEEN FILED BY SHRI J. RADHAKRISHNAN AS THE ADVOCATE FOR THE ASSES SEE AND ALSO THE REASON FOR SEEKING ADJOURNMENT IS NOT A PLAUSIBLE O NE.. THEREFORE, THE ADJOURNMENT APPLICATION WAS REJECTED. 4. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE BY THE DECISION OF VISAKHAPATNAM SPECIAL BENCH OF TRIB UNAL IN THE CASE OF MERILYAN SHIPPING & TRANSPORTS IN ITA NO.477(VIZ ) OF 2008 ORDER DATED 29 TH MARCH, 2012. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE DEPART MENTAL REPRESENTATIVE, WE FIND THAT THE ISSUE IN THE PRESE NT APPEAL IS THAT WHETHER THE SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPECT OF PAYABLE AMOUNT SHOWN IN THE BALANCE SHEET AS OUTSTANDING EX PENSES ON WHICH TDS HAS NOT BEEN DEDUCTED OR IT IS ALSO AP PLICABLE TO THE AMOUNT WHICH IS ACTUALLY PAID AND TAX IS NOT DEDU CTED UNDER THE ITA NO.1599/MDS/10 5 AFORESAID SECTION. WE FIND THAT THE VISAKHAPATNAM SPECIAL BENCH OF TRIBUNAL IN THE CASE OF MERILYAN SHIPPING & TRANSPO RTS IN ITA NO.477(VIZ) OF 2008 ORDER DATED 29 TH MARCH, 2012 HAS HELD AS UNDER:- D.MANMOHAN, VICE-PRESIDENT(MZ) I HAVE GONE THROU GH THE ORDERS PASSED BY THE LEARNED ACCOUNTANT MEMBER, SHRI S.V.MEHROTRA AS WELL AS THE LEARNED JUDICIAL M EMBER, SHRI MAHAVIR SINGH. I AM NOT ABLE TO PERSUADE MYSE LF TO AGREE WITH THE VIEW TAKEN BY SHRI S.V. MEHROTRA, ACCOUNTA NT MEMBER. I HAVE GONE THROUGH THE DETAILS REASONS GIVEN BY SH RI MAHAVIR SINGH WHILE COMING TO THE CONCLUSION THAT THE WORD PAYABLE USED IN SECTION 40(A)(IA) OF THE INCOME TAX ACT, 19 61 HAS TO BE GIVEN ITS NATURAL MEANING AND, GOING BY STRICT INTE RPRETATION, I AM OF THE FIRM VIEW THAT SECTION 40(A)(IA) OF TH E ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALL OW THE AMOUNTS WHICH ARE ALREADY BEEN PAID DURING THE PREV IOUS YEAR, WITHOUT DEDUCTING TAX AT SOURCE. I THEREFORE AGREE WITH THE VIEW TAKEN BY SHRI MAHAVIR SINGH, JM AND ANSWER THE QUES TION ITA NO.1599/MDS/10 6 ACCORDINGLY. IN THE ABOVE LISTED CASE IN THE LIGHT OF THE MAJORITY VIEW OF THE MEMBER CONSISTING OF THE SPECIAL BENCH. THUS, WE FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) IS SUPPORTED BY THE ABOVE DECISION OF THE VISAKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYAN SHIPPING & TRANSPORTS(SUPRA) TO WHICH THE DEPARTMEN TAL REPRESENTATIVE HAS ALSO AGREED. WE THEREFORE, DO N OT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX(A). IT IS CONFIRMED. THE GROUNDS OF APPEAL OF REVENUE ARE DISMISSED. 4. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 17 TH MAY, 2012 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH MAY, 2012. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA NO.1599/MDS/10 7