Seven Star Electrodes Pvt Ltd., Pune V. ACIT, Pune

ITA 1649/PUN/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93785 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANT KUMAR LEUVA
• Assessee Lawyers: C V CHITALE
• Keywords: Revised return
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE M S SUSHMA CHOWLA , JUDICIAL MEMBER BEFORE M S SUSHMA CHOWLA , JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1649 /PN/201 2 ASSESSMENT YEAR: 2007 - 08 SEVEN STAR ELECTRODES PVT. LTD., GAT NO.286, NA NEKWADI, CHAKAN, KHED, PUNE . APPELLANT PAN: AACCS3610D VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE . RESPONDENT A PPELLANT BY : S HRI C.V. CHITALE RESPONDENT BY : SHRI HEMANT KUMAR LEUVA DATE OF HEARING : 2 7 - 0 5 - 201 5 DATE OF PRONO UNCEMENT : 29 - 0 5 - 201 5 ORDER ORDER PER SUSHMA CHOWLA, J M : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - V , PUNE DATED 18 . 11 .201 1 RELATING TO ASSESSMENT YEAR 2007 - 08 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE, HAS ERRED IN DISALLOWING THE EXPENDITURE OF RS.1,03,68,187/ - UNDER THE PRETEXT OF, SECTION 40(A)(IA) OF THE I NCOME TAX ACT,1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE, ERRED IN CONFIRMING THE DISALLOWANCE. 2. THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE, HAS ERRED IN DISALLOWANCE UNDER THE PRETEXT OF, SECTION 40(A)(IA) OF THE INCOME TAX ACT,1961 IN RESPECT OF THE PAYMENT TO WHICH THE SECTION IS INAPPLICABLE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE, ERRED IN CONFIRMING THE DISALLOWANCE. 3. THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 10, PUN E HAS ERRED IN MAKING ADDITION OF RS.17,33,679/ - UNDER THE PRETEXT THAT THERE IS SHORTFALL IN INCOME DECLARED IN SURVEY AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE, HAS ERRED IN CONFIRMING THE ADDITION. ITA NO . 1649 /PN/20 1 2 SEVEN STAR ELECTRODES P VT . LTD. 2 4. THE ORDER UNDER SECTION 143(3 ) DATED NOVEMBER 18, 2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE IS BAD IN LAW AND NEEDS TO BE CANCELLED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OR APPEAL. 3. THE ISSUE RAISED IN GROUNDS OF APPEAL NOS.1 AND 2 BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF EXPENDITURE OF RS. 1,03,68,187/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME FILED ON 31.10.2007 HAD DISAL LOWED AND ADDED BACK SUM OF RS.2,47,14,830/ - ON ACCOUNT OF TDS VIOLATIONS AS PER SECTION 40(A)(IA) OF THE ACT . HOWEVER, THE ASSESSEE LATER FILED REVISED RETURN OF INCOME ON 08.10.2008 AND REVERSED THE ENTIRE DISALLOWANCE MADE IN THE ORIGINAL RETURN OF INC OME TOTALING RS. 2.47 CRORES. THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO FURNISH THE COPIES OF CHALLANS OF TDS PAYMENTS ALONG WITH DETAILS OF THE SAME. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE TOTAL PAYMENTS PERTAIN TO LABOUR CHARGES P AYMENTS AND SINCE THE TDS ON IT WAS PAID LATE I.E. AFTER 31.03.2007 , THE SAME WAS DISALLOWED IN ORIGINAL RETURN OF INCOME. HOWEVER, W.E.F. 01.04.2007 , SINCE THE SAID SECTION 40(A)(IA) OF THE ACT HAD BEEN AMENDED I.E. FOR THE EXPENSES INCURRED IN THE MONTH OF MARCH, 2007 , WHERE THE TDS WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, THE SAME WOULD NOT BE DISALLOWED, HENCE, THE DISALLOWANCE EARLIER MADE WAS REVERSED BY FILING REVISED RETURN OF INCOME. THE ASSESSING OFFICER NOTED THAT THE AUDITO R IN THE TAX AUDIT REPORT HAD REPORTED THAT ON SUM OF RS.29,07,846/ - , TDS WAS NOT DEDUCTED AND HENCE, THE SAME WAS DISALLOWED IN VIEW OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . IN RESPECT OF THE BALANCE EXPENDITURE OF RS.2,18,06,984/ - , THE ASSESSEE CL AIMED THAT THE SAID EXPENDITURE WAS BOOKED IN THE MONTH OF MARCH, 2007 WAS FOUND TO BE INCORRECT AND CONSEQUENTLY, THE ASSESSING OFFICER WAS OF THE VIEW ITA NO . 1649 /PN/20 1 2 SEVEN STAR ELECTRODES P VT . LTD. 3 THAT THE EXPENDITURE TOTALING RS. 74,60,341/ - RELATED TO THE PERIOD PRIOR TO MONTH OF MARCH, 2007 AND TH E NON - DEPOSIT OF TDS BY 31.03.2007 WAS COVERED UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . IN RESPECT OF THE BALANCE THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . IN RESPECT OF THE BALANCE EXPENDITURE OF RS. 1.43 CRORES, SINCE THE ASSESSEE HAD DEPOSITED THE TDS BEFORE DUE DATE OF FILING THE RETURN OF INCOME, THE SAME WAS ALLOWED AS DEDUCTION IN THE HANDS OF THE ASSESSEE. THE ADDITION MADE BY THE ASSESSING OFFICER ON INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WAS UPHELD BY THE CIT(A), AGAINST WHICH, THE ASSESSEE IS IN APPEAL. 5. THE LEARNED AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ADMITTEDLY IN RESPECT OF THE EXPENDITURE OF RS. 29,07,846/ - , THE TDS WA S DEPOSITED LATE AND THE SAID EXPENDITURE IS TO BE DISALLOWED IN THE HANDS OF ASSESSEE. HOWEVER, IN RESPECT OF BALANCE EXPENDITURE OF RS.1 3,73,742/ - AND RS.60,86,599/ - , THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURNISHED THE ACCOUNTS EXTRACTS OF VARIOUS PARTIES AND POINTED OUT THAT THE SAID EXPENDITURE WAS BOOKED IN THE MONTH OF MARCH , 2007 THOUGH RELATED TO PERIOD PRIOR TO MARC H, 2007 . HOWEVER, THE TDS IN RESPECT OF THE SAID PAYMENT WAS DEPOSITED BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND PLAC ED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT , IT IS PROVIDED THAT WHERE ANY EXPENDITURE IS SUBJECT TO THE PROVISIONS OF TAX DEDUCTION AT SOURCE AND IN CASE, WHERE THE ASSESSEE HAS FAI LED TO DED UCT TAX AT SOURCE AND DEPOSIT THE SAME WITH THE TREASURY WITHIN STIPULATED PERIOD PROVIDED UNDER THE RESPECTIVE SECTIONS, THEN SUCH EXPENDITURE CANNOT BE ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE. FURTHER, THE PROVISIONS OF THE SUB - SECTION O F SECTION 40(A)(IA) OF THE ITA NO . 1649 /PN/20 1 2 SEVEN STAR ELECTRODES P VT . LTD. 4 ACT WERE AMENDED TO PROVIDE THAT IN CASES WHERE THE TAX WAS DEDUCTABLE AND WAS DEDUCTED IN THE LAST MONTH OF PREVIOUS YEAR AND WAS PAID ON OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS SPECIFIED IN SECTION 139(1) OF TH E ACT , DUE DATE OF FILING THE RETURN OF INCOME AS SPECIFIED IN SECTION 139(1) OF TH E ACT , THEN SUCH EXPENDITURE IS TO BE ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE. THE CASE OF THE ASSESSEE BEFORE US IS IN RESPECT OF TWO TYPES OF PAYMENTS. THE FIRST PAYMENT REFERRED TO BY THE ASSESSEE WAS IN RESPECT OF EXPENDITURE TOTALING RS. 29,07, 846/ - , ON WHICH THE TDS WAS PAID ADMITTEDLY ON 10.12.2007 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ADMITTED THAT THE SAID EXPENDITURE CANNOT BE ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE SINCE THE TDS WAS PAID AFTER THE DUE DATE OF FILIN G THE RETURN OF INCOME. WE HOLD SO. WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD AND CONFIRM THE ADDITION OF RS. 29,07,846/ - . 8. THE NEXT SET OF EXPENDITURE WAS TOTALING RS. 74,60,341/ - , WHICH ADMITTEDLY WAS BOOKED AS AN EXPENDITURE IN THE LAST MONTH OF PREVIOUS YEAR AND THE TDS IN RESPECT THEREOF WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. IN VIEW OF THE AMENDED PROVISIONS OF THE ACT, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO THE SAID CLAIM OF EXPENDITURE, WHERE THE TAX AT SOURCE HAD BEEN DEDUCTED AND PAID TO THE ACCOUNT OF TREASURY WITHIN EXTENDED PERIOD UPTO DUE DATE OF FILING THE RETURN OF INCOME. HOWEVER, THE NECESSARY DETAILS IN THIS REGARD ARE NOT AVAILABLE ON RECORD. CONSEQUENTLY, WE DI RECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE THAT IT HAD DEPOSITED THE AFORESAID TDS BEFORE DUE DATE OF FILING THE RETURN OF INCOME AND ALLOW THE EXPENDITURE IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL NOS.1 AND 2 RAISED BY THE ASSES SEE ARE THUS, PARTLY ALLOWED. 9. NOW, COMING TO THE ISSUE IN GROUND OF APPEAL NO.3 AGAINST THE ADDITION OF RS. 17,33,679/ - . ITA NO . 1649 /PN/20 1 2 SEVEN STAR ELECTRODES P VT . LTD. 5 10. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SURVEY 10. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE ACT ON 06.03.2007 , THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS.1 CRORE ON ACCOUNT OF SCRAP SALES. THE ASSESSING OFFICER NOTED ON THE PERUSAL OF RETURN OF INCOME THAT THE ASSESSEE HAD OFFERED INCOME FROM SCRAP SALE AMOUNTING TO RS. 82,66,321/ - AS A GAINST ITS OFFER OF RS.1 CRORE. IN REPLY, THE ASSESSEE EXPLAINED THAT ON THE SAID SCRAP SALES DECLARED, IT WAS LIABLE TO PAY EXCISE DUTY OF RS.13,49,064/ - AND VAT OF RS. 3,84,615/ - TOTALING RS.17,33,679/ - AND THE ADDITIONAL INCOME WAS OFFERED ON NET OF THE SAID EXCISE DUTY AND VAT. THE ASSESSING OFFICER ON THE OTHER HAND, WAS OF THE VIEW THAT IT WAS THE DUTY OF ASSESSEE TO PAY ALL THE APPLICABLE TAXES AND SUCH TAXES COULD NOT FORM PART OF THE INCOME AND HENCE, THE SHORTFALL OF RS.17,33,679/ - WAS ADDED AS I NCOME OF THE ASSESSEE. THE SAID ORDER OF ASSESSING OFFICER WAS CONFIRMED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. 11. ON THE PERUSAL OF RECORD, WE FIND THAT ADMITTEDLY, THE ASSESSEE HAD OFFERED SUM OF RS.1 CRORE AS ADDITIONAL INCOME ON SAL E OF SCRAP, DURING THE COURSE OF SURVEY CONDUCTED AT HIS PREMISES. THE ASSESSEE HAD SHOW N INCOME FROM SCRAP SALES AT RS. 82,66,321/ - IN ITS RETURN OF INCOME, AFTER DEDUCTING THE EXCISE DUTY OF RS.13,49,064/ - AND VAT OF RS.3,84,615/ - FROM THE SAID DECLARATI ON OF SALE OF RS.1 CRORE OF SCRAP SALES. IN CASES OF DECLARATION OF SALE, THE SAME ARE EXCLUSIVE OF THE EXCISE DUTY AND VAT AND IF THE SAME ARE INCLUSIVE OF THE ABOVE SAID DUTIES PAYABLE BY THE ASSESSEE, THEN ON THE OTHER HAND, THE ASSESSEE IS ENTITLED TO THE CLAIM OF SAID EXPENDITURE AS A DEDUCTION IN COMPUTING INCOME FOR THE YEAR UNDER CONSIDERATION. IN VIEW THEREOF, WE FIND NO MERIT IN THE ADDITION MADE BY THE ASSESSING OFFICER TOTALING RS.17,33,679/ - AND ITA NO . 1649 /PN/20 1 2 SEVEN STAR ELECTRODES P VT . LTD. 6 THE SAME IS DELETED. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 1 2 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER P RONOUNCED ON THIS 29 TH DAY OF MAY , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH MAY , 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) - V , PUNE ; 4) THE CIT - V, PUNE ; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. 6) GUARD FILE. BY ORDER //TRUE COPY// SENIOR PRIVA TE SECRETARY I.T.A.T., PUNE