M/s. Prakash Agro Mills, Ahmedabad V. The Income Tax Officer, Ward 12(1), Ahmedabad

ITA 1637/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0941 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 143(3); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJI T SINGH, ACCOUNTANT MEMBER M/S. PRAKASH AGRO MILLS, NR. OMKAR TEXTILE MEMCO, NARDOA ROAD, AHMEDABAD, PAN: AACFP0947R (APPELLANT /RESPONDENT ) VS THE ITO, WARD - 12(1), AHMEDABAD (RESPONDENT /APPEL LANT ) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 04 - 08 - 2 016 DATE OF PRONOUNCEMENT : 19 - 08 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE ASSESSEE AN D REVENUE FILED CROSS APPEAL S FOR A.Y. 2009 - 10 , AR ISE FROM ORDER OF THE CIT(A) - XX, AHMEDABAD DATED 02 - 04 - 2013 IN APPEAL NO. CIT(A) - XX/452/11 - 12 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO S. 1637 & 1874 / A HD/20 1 3 A SSESSMENT YEAR 200 9 - 10 I.T.A NO S. 1637 & 1874 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. PRAKASH AGRO MILLS 2 2. CASES CALLED TWICE. NONE APPEARS AT ASSESSEE S BEHEST DESPITE SERVICE OF NOTICE. THESE CASE FILES INDICATE THAT THE ASSESSEE HAS NEVER PUT IN APPEARANCE. IT IS ACCORDINGLY PROCEEDED EX - PARTE. 3. WE COME TO ASSESSEE S APPEAL FIRST CHALLENGING SECTION 40(A)(IA) DISALLOWANC E OF RS. 7,17,969/ - MADE BY BOTH THE LOWER AUTHORITIES QUOTING ITS FAILURE IN NOT DEDUCTING TDS ON THE AFORESAID INTEREST PAYMENTS . THERE DOES NOT APPEAR TO BE ANY DISPUTE ABOUT THE FACT THAT ASSESSEE HAS NOT DEDUCTED TDS IN QUESTION. ITS ONLY ARGUMENT IN COURSE OF THE LOWER APPELLATE PROCEEDINGS THAT IT WAS AN HONEST BELIEF ABOUT NON - APPLICATION OF TDS PROVISION. THE CIT(A) DECLINES THE SAME. 4. WE COME TO ASSESSEE S PLEADINGS NOW. ITS ONLY CASE MADE OUT THEREIN IS THAT ITS DEDUCTEE S NAMELY; M/S REL IANCE CONSUMER FINANCE, INDIABULLS CREDIT SERVICES AND TATA CAPITAL LTD HAVE ALREADY DECLARED THE IMPUGNED INTEREST INCOME WHICH RENDERS SECTION 40(A)(IA) AS NOT APPLICABLE. LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTS THE CIT(A) S ORDER AFFIRMING TH E IMPUGNED DISALLOWANCE. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS. THE LEGISLATURE IN SECTION 40(A)(IA) HAS INSERTED SECOND PROVISO VIDE FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013 ENVISAGING THEREIN THAT WHERE AN ASSESSEE FAILS TO DEDUCT WHO LE OR ANY PART OF TDS IN QUESTION BUT IT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT U/S. 201(1) OF THE ACT, IT SHALL BE DEEMED TO HAVE DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN BY THE RESIDENT PAYEE REFERRED TO IN THE I.T.A NO S. 1637 & 1874 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. PRAKASH AGRO MILLS 3 SAID PROVISO. A CO - ORDINATE BENCH IN RAJEEV KR. AGRAWAL VS. ADDITIONAL CIT ITA NO. 337/AGRA/2013 DECIDED ON 29 - 05 - 2013 HOLDS THE SAME TO BE OF CURATIVE NATURE HAVING RETROSPECTIVE EFFECT. HON BLE DELHI HIGH COURT IN ITA 160/2015 CIT VS. ANSAL LAND TOWNSHIP DE CIDED ON 26 - 08 - 2015 UPHOLDS THE SAME. WE ARE ACCORDINGLY OF THE OPINION THAT LARGER INTEREST OF JUSTICE WOULD BE MET IN CASE THIS ISSUE IS REMITTED BACK TO THE ASSESSING OFFICER TO CONDUCT NECESSARY VERIFICATION AS PER LAW FOR FINDING OUT AS TO WHETHER TH E ASSESSEE CAN BE HELD TO BE AS ASSESSEE IN DEFAULT OR NOT U/S.40(A)(IA), 2 ND PROVISION R.W.S. 201 OF THE ACT. THIS ASSESSEE S APPEAL 1637/AHD/2013 IS ACCEPTED FOR STATISTICAL PURPOSES. 5. WE COME TO THE REVENUE S CROSS APPEAL ITA 1874/AHD/2013 NOW SEEKI NG TO REVIVE SECTION 40(A) (IA) DISALLOWANCE/ADDITION OF RS . 58,70,819/ - MADE BY THE ASSESSING OFFICER AND DELETED IN THE LOWER APPELLATE PROCEEDINGS. THE CIT(A) FOLLOWS HIS REASONING IN PRECEDING ASSESSMENT YEAR TO ACCEPT ASSESSEE S CORRESPONDING GROUND AS UNDER: - 3.3. IDENTICAL ISSUE CAME UP FOR CONSIDERATION IN APPELLANT'S OWN CASE IN THE IMMEDIATELY PRECEDING A.Y. 2008 - 09. VIDE THE ORDER DTD. 04.07.2011 IN APPEAL NO. CIT(A) - XX/644/10 - L 1, MY PREDECESSOR HELD AS UNDER: - 3.1 (II) THIS ISSUE WAS DISCUSSED BY THE AO AT PARA - 4.1 OF THE ASSESSMENT ORDER. IT WAS HELD BY HIM THAT THE APPELLANT SHOULD HAVE DEDUCTED TDS ON THE FREIGHT PAYMENT MADE TO TRANSPORTERS AND SINCE IT WAS NOT DONE, THE PAYMENT WAS NOT DEDUCTIBLE IN COMPUTING THE INCOME. ACCORDINGLY, HE MA DE THE IMPUGNED DISALLOWANCE U/S.40(A)(IA). THE CONTENTIONS OF THE LEARNED AR IN THIS REGARD IN BRIEF ARE AS FOLLOW. THE APPELLANT MAINTAINED 'FREIGHT RECOVERABLE' ACCOUNT SEPARATELY, WHEREIN THE FREIGHT AMOUNT PAID TO TRANSPORTERS AND THE REIMBURSEMENT I.T.A NO S. 1637 & 1874 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. PRAKASH AGRO MILLS 4 OF FREIGHT AMOUNT RECEIVED WERE ENTERED; AS MAY BE SEEN FROM THE L.RS OF THE TRANSPORTERS THE CONSIGNOR IS ARMY SUPPLY CORE CFL, MUMBAI (A DIVISION OF ARMY PURCHASE ORGANISATION) AND THE CONSIGNEE IS THE RECEIVING SUPPLY DEPOT OF ARMY CORE (A DIVISION OF MIN ISTRY OF DEFENCE) ; THUS APPELLANT'S NAME DOES NOT APPEAR ON THE L .RS.; THERE IS NO CONTRACT BETW EEN THE APPELLANT AND THE TRANSPORTERS; IN ACCORDANCE WITH ACCOUNTING STANDARDS NO ENTRIES NEED BE MADE IN THE P & L ACCOUNT AS THE FREIGHT PAYMENT WAS NOT AN EXPENDITURE IN THE HANDS OF THE APPELLANT NOR THE AMOUNT REIMBURSED WAS APPELLANT'S INCOME; IF THE SAID AMOUNT IS REFLECTED IN THE P & L ACCOUNT IT WOULD IN FACT GIVE A DISTORTED PICTURE OF THE INCOME OF THE APPELLANT, SINCE THERE IS A TIME LAG BETWEEN THE PAYMENT OF FREIGHT AMOUNT AND GETTING IT REIMBURSED FROM THE APO; IN ACCORDANCE WITH PARA - 6.11 (A) OF THE TENDER, THE TRANSPORTATION CHARGES ARE TO BE REIMBURSED; IN THE SAME PARA, IT IS ALSO CLEARLY MENTIONED THAT TENDER SHOULD NOT INCLUDE COST OF TRANSP ORTATION; SINCE THE APPELLANT DID NOT DEDUCT THE FREIGHT AMOUNT PAID WHILE COMPUTING THE INCOME, THE QUESTION OF DISALLOWANCE U/S.40(A)(IA) DOES NOT ARISE. 3.1 (II I) AS CONTENDED BY THE LEARNED AR, THE ENTIRE AMOUNT OF FREIGHT PAID BY THE APPELLANT WAS TO BE REIMBURSED BY THE APO. THEREFORE, AO'S CONTENTION THAT THE APPELLANT SHOULD HAVE DEBITED AND CREDITED FREIGHT PAID AND FREIGHT REIMBURSED TO THE P & L ACCOUNT IS NOT CORRECT. I AM INCLINED TO ACCEPT THE APPELLANT'S CONTENTION THAT THE FREIGHT PAYMENT W AS NOT DEDUCTED WHILE COMPUTING THE INCOME AND THEREFORE, SECTION 40(A)(IA) IS NOT ATTRACTED IN THE APPELLANT'S CASE IRRESPECTIVE OF THE ISSUE WHETHER TDS WAS DEDUCTIBLE OR NOT ON THE PAYMENTS. IN ACCORDANCE WITH SEC.40(IA) AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME. IN THE INSTANT CASE APPELLANT DID NOT DEDUCT THE AMOUNT - WHILE COMPUTING THE INCOME. THEREFORE, INVOKING SECTION 40(A)(IA) DOES NOT ARISE. HENCE, IMPUGNED DISALLOWANCE IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. ' 3.4. FOLLOWING THE SAID ORDER IN THE APPELLANT'S OWN CASE FOR A.Y. 2008 - 09, I HOLD THAT THE AO IS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF RS.58,70,819/ - . THE DISALLOWANCE MADE BY THE AO IS DELETED. THIS GROUND OF APPEAL IS AL LOWED. I.T.A NO S. 1637 & 1874 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. PRAKASH AGRO MILLS 5 6. WE HAVE HEARD THE REVENUE. WE PUT UP A SPECIFIC QUERY ABOUT THE STATUS OF THE VERY ISSUE IN ASSESSMENT YEAR 2008 - 09. LD. DEPARTMENTAL REPRESENTATIVE EXPRESSES HIS INABILITY TO THROW LIGHT ON OUR QUERY AT THIS STAGE. WE ACCORDINGLY FIND NO REA SON TO INTERFERE IN THE CIT(A) S FINDINGS UNDER CHALLENGE BY ADOPTING JUDICIAL CONSISTENCY. IT IS MADE CLEAR THAT IN CASE THE REVENUE FILES ANY MATERIAL REGARDING IDENTICAL FINDINGS IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR AS TO HAVE NOT BECOME FINAL, I T SHALL BE AT LIBERTY TO SEEK MODIFICATION IN OUR INSTANT FINDINGS. WE AFFIRM LOWER APPELLATE ORDER SUBJECT TO THIS CAVEAT. ITA 1874/AHD/2013 FAILS. 7. THE ASSESSEE S APPEAL ITA 1 6 3 7/AHD/2013 IS ACC EPTED FOR STATISTICAL PURPOSES. THE REVENUE S CROSS APP EAL ITA 1874/AHD/2013 IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 08 - 201 6 SD/ - SD/ - ( AMARJI T SINGH ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 19 /08 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO S. 1637 & 1874 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ITO VS. M/S. PRAKASH AGRO MILLS 6 BY ORDER/ , / ,