M/s. Sanjay Construction, Dehradun V. DCIT, Haridwar

ITA 1658/DEL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7871 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K UPADHYAYA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Principle of natural justice

Judgement Text

ITA NO. 1658/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1658/DEL/2012 A.Y. : 2008-09 M/S SANJAY CONSTRUCTION, 55/3, E.C. ROAD, DEHRADUN-248001 (PAN : AAYFS2740P) VS. DCIT, CIRCLE, HARIDWAR, D-29/30, INDUSTRIAL AREA, HARIDWAR - 249401 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. ASHWANI TANEJA, ADV. & SH. TARUN KUMAR, ADV. DEPARTMENT BY : SH. S.K. UPADHYAYA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, DEHRADUN DATED 22.11.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- I) THAT THE ORDER PASSED BY THE LD. DCIT, CIRCLE, HARIDWAR IS BAD IN LAW, AGAINST FACTS OF THE CASE, PRINCIPLES OF NATURAL JUSTICE AND WITHOUT JURISDICT ION. ITA NO. 1658/DEL/2012 2 II) THAT THE ADDITION IS MADE ON ACCOUNT OF INVOCA TION OF PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX AC T, 1961 WHEREBY THE WORD PAYABLE AND PAID HAVE NOT BEEN DIFFERENTIATED AND ADDITION HAS BEEN MADE ON EXPENDITURE UNDER THE HEAD HIRE CHARGES FOR PLA NT AND MACHINERY AND TRANSPORTATION CHARGES. III) THE APPELLANT RESERVES THE RIGHT TO ADD, ALT ER, AMEND OR DELETE ANY FURTHER GROUND OF APPEAL DURING THE COURSE OF APPEAL PROCEEDINGS. 3. IN THIS CASE AO OBSERVED THAT ASSESSEE HAD PAID MACHINERY HIRE CHARGES IN EXCESS OF ` 1,20,000/- EACH DURING THE P REVIOUS YEAR TO 8 PERSONS BUT HAD NOT DEDUCTED TAX AT SOURCE ON THES E PAYMENTS. ACCORDING TO HER, TAX WAS DEDUCTIBLE U/S. 194-I OF THE IT ACT AND, SINCE THAT WAS NOT DONE, THE ASSESSEE WAS CAUGHT WITHIN T HE MISCHIEF OF THE PROVISION OF SECTION 40(A)(IA) OF THE IT ACT. THE ENTIRE AMOUNT OF SUCH PAYMENTS, I.E. ` 58,62,467/- WAS ACCORDINGLY DI SALLOWED BY HER. 3.1 ASSESSEE SUBMITTED THAT DISALLOWANCE UNDER TH E PROVISIONS OF SECTION 40(A)(IA) COMES INTO PLAY ONLY IN CASES WH ERE THE AMOUNTS (ON WHICH THE TAX WAS DEDUCTIBLE AT SOURCE BUT WAS NOT DEDUCTED) REMAINS PAYABLE AT THE END OF THE PREVIOUS YEAR AND IT DO ES NOT APPLY IN CASES ITA NO. 1658/DEL/2012 3 WHERE SUCH AMOUNTS HAD ACTUALLY BEEN PAID. HOWEV ER, THE AO DID NOT ACCEPT THIS CONTENTION. 3.2 SIMILARLY, AO OBSERVED THAT ASSESSEE HAD CLAIME D DEDUCTION OF ` 70,65,485/- AS FAIR RENT OF TRANSPORTATION CHARGES. IT HAD PAID SUCH CHARGES TO 37 PARTIES IN EXCESS OF ` 50,000/- EACH BUT NOT DEDUCTED TAX AT SOURCE. THE TOTAL AMOUNT WAS OF SUCH PAYMENT W AS ` 66,38,879/-. THIS AMOUNT WAS DISALLOWED AND ADDED BACK U/S. 40(A) (IA) OF THE IT ACT. 4. UPON ASSESSEES APPEAL, LD. CIT(A) CONFIRMED THE ADDITION. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENTS RELIED UPON. LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US THAT THE MATTER NOW STANDS COVER ED IN FAVOUR OF THE ASSESSEE BY THE ITAT, SPECIAL BENCH, VISAKHAP ATNAM DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS, VISAKH APATNAM VS. ADDITIONAL COMMISSIONER OF INCOME TAX IN ITA NO. 477/ VIZ/2008 FOR A.Y. 2005-06. IN THIS CASE IT WAS HELD THAT THE WORD P AYABLE USED IN SECTION 40(A)(IA) OF THE IT ACT, 1961 HAS TO BE GIV EN ITS NATURAL MEANING AND, GOING BY STRICT INTERPRETATION, SECTION 40(A)( IA) OF THE ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH, OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AM OUNTS WHICH HAVE ITA NO. 1658/DEL/2012 4 ALREADY BEEN PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTING TAX AT SOURCE. 7. LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW, BUT COULD NOT CONTROVERT THE ABOVE EXPOSITION OF THE ITAT, SP ECIAL BENCH. UNDER THE CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW BY FOLLOWING THE ITAT, SPECIAL BENCH DECISI ON AS ABOVE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/6/2012. SD/- SD/- [R.P. TOLANI] [R.P. TOLANI] [R.P. TOLANI] [R.P. TOLANI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 15/6/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES