ITO, Tiruppur V. G.Manivannan, Tiruppur

ITA 1661/CHNY/2014

• Counselvise Citation: 166121714 RSA 2014
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C V PAVANA KUMAR
• Assessee Lawyers: N V BALAJI
• Keywords: Non-deduction of tax
• Section: 143(3); 201(1); 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1661/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER WARD I(4) TIRUPUR VS. SHRI G. MANIVANNAN NO.20/186-A THILAGAR NAGAR PUDU COLONY 15, VELAMPALAYAM TIRUPUR 641 642 [PAN AHQPM 5546A ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI C.V.PAVANA KUMAR, JCIT /RESPONDENT BY : SHRI N.V.BALAJI, ADVOCATE / DATE OF HEARING : 15-09-2014 ! / DATE OF PRONOUNCEMENT : 19-09-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 201 0-11, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCO ME-TAX(APPEALS)-II COIMBATORE, DATED 25.3.2014, PASSED IN I.T.A.NO.62/ 12-13 DELETING DISALLOWANCE OF ` 1,02,46,422/- U/S 40(A)(IA) IN PROCEEDINGS U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) MADE IN THE ASSESSMENT ORDER DATED 31.12.2012. I.T.A.NO.1661/14 :- 2 -: 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF KNITTING OF GARMENTS. THE ASSESSEE HA D FILED HIS RETURN ON 25.11.2010 ADMITTING INCOME OF ` 8,39,470/-. THE SAME WAS SUMMARILY PROCESSED. IN SCRUTINY, THE ASSESSIN G OFFICER FOUND THE ASSESSEE TO HAVE CLAIMED FABRICATION CHARGES OF ` 1,02,46,422/-. THE ASSESSEE HAD NOT DEDUCTED ANY TDS QUA THESE PAYMENT S. HE PLEADED THAT THE PAYEE IN QUESTION I.E M/S AMARESWARAA KNIT S PVT. LTD. HAD FILED ITS RETURN U/S 139 OF THE ACT, DULY ACCOUNTED THE AFORESAID PAYMENTS AS INCOME, PAID TAXES THEREUPON. HE ALSO SUBMITTED AN ACCOUNTANTS CERTIFICATE TO THIS EFFECT. THE ASS ESSEE RELIED ON 1 ST PROVISO TO SECTION 201(1) INSERTED BY THE FINANCE A CT, 2012 WITH EFFECT FROM 1.7.2012 AND CONTENDED THAT ONCE THE PAYEE HAD COMPLIED WITH THE CONDITIONS THEREIN, THE VERY PAYMENTS COULD NOT BE DISALLOWED. THE ASSESSING OFFICER HELD THAT THE AFORESAID PROV ISO WOULD APPLY ONLY WITH EFFECT FROM 1.7.2012 AND NOT IN THE IMPUGNED A SSESSMENT YEAR 2010-11. THIS RESULTED IN CONSEQUENTIAL DISALLOWAN CE/ADDITION OF ` 1,02,46,422/-. 3. THE ASSESSEE PREFERRED AN APPEAL. THE CIT(A) HAS DELETED THE IMPUGNED DISALLOWANCE/ADDITION BY OBSERVING AS UNDER: 6.0 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT AND THE MATERIALS AVAILABLE ON RECORD. F ROM THE EVIDENCE PRODUCED BY THE ASSESSEE IT IS NOTICED TH AT M/S I.T.A.NO.1661/14 :- 3 -: AMARESWARAA KNITS PRIVATE LIMITED WAS RECEIVED SUB CONTRACT AMOUNT AS PROPERLY REFLECTED THE SAME IN T HEIR PROFIT & LOSS ACCOUNT. SINCE THE RECIPIENT COMPANY HAD LO SSES THERE WAS NO TAX DUE FROM THE COMPANY. THE RECIPIENT COMPANY IE. AMARESWARA KNITS (P) LTD. HAS FILED THE IR RETURN U / S 139(1) ON 7/10/2010. THUS THE PAYEE HAS DISCHARGED ITS OBLIGATION UNDER THE INCOME TAX ACT AND NO TAX DUE ON THE RECEIPTS. THEREFORE, RELY ING ON THE JUDGEMENT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE AND THE AMENDMENT TO SECTION 40A(IA) I N FINANCE ACT 2010 READ WITH THE DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS PRIVATE LTD. AND CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS IT IS TO BE HELD THAT THE ASSESSEE CANNOT BE TREATED AS A DEFAULTER UNDER SE C TION 201 (1) OF THE INCOME TAX ACT. IT IS EVIDENT THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX ON THE PAYMENTS MADE T O M/S. AMARESWARAA KNITS (P) LTD. THE PROVISIONS OF TDS IS ONE OF THE MEANS OF COLLECTING TAX. IT IS ALSO T O BE NOTED THAT FINANCE ACT 2012 HAS MADE AN AMENDMENT TO SECTION 201 (1) TO THE EFFECT THAT THE DEDUCTEE HAS DISCHARGED THE TAX LIABILITY ATTRIBUTABLE TO SUCH RECEIPTS AND HAS FILED THE RETURN OF INCOME THE DEDUCTOR NEED NOT BE HELD TO BE AN ASSESSEE IN DEFAULT DESPITE FAILURE TO DEDUCT TAX AT SOURCE ON SUCH P AYMENTS. IN THIS PRESENT CASE IT IS OBSERVED THAT DEDUCTEE HAS INCLUDED THE PAYMENT IN ITS TOTAL INCO ME AND HAS ALSO FILED THE RETURN OF INCOME. IN EFFECT THE DEPARTMENT HAS NOT SUFFERED ANY REVENUE LOSS AND IN THE CIRCUMSTANCES THE AMENDMENT THOUGH PROCEDURAL IN NATURE, MADE EFFECTIVE FROM A S UBSEQUENT DATE SHOULD ALSO BE TAKEN TO BE APPLICABLE TO THE YEAR UNDER CONSIDERATION. THEREFORE THE APPEAL OF THE ASSESSEE IS ALLOWED. THEREFORE, THE REVENUE IS IN APPEAL. 4. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE REVENUE HAS NOT PLACED ANY EVIDENCE ON RECORD REBUT TING THE FACTUAL POSITION OF THE PAYEE(SUPRA) FILING ITS RETURN, DEC LARING THE VERY I.T.A.NO.1661/14 :- 4 -: PAYMENT AS INCOME, PAYING TAX AND ALSO THE NECESSAR Y ACCOUNTANTS CERTIFICATE ALREADY PLACED ON RECORD. IT ARGUES TH AT THE CIT(A) HAS ERRED IN RETROSPECTIVELY APPLYING THE 1 ST PROVISO TO SECTION 201(1) AND 2 ND PROVISO TO SECTION 40(A)(IA) INTRODUCED IN THE FI NANCE ACT, 2012 WITH EFFECT FROM 1.4.2013. WE FIND THAT THE AGRA B ENCH OF THE 'TRIBUNAL' IN SHRI RAJEEV KUMAR AGARWAL VS JCIT I.T .A.NO. 338/AGRA/ 2013 DECIDED ON 29.5.2014 HAS HELD BOTH THESE PROVI SO AS DECLARATORY AND CURATIVE LEGISLATIONS TO BE RETROSP ECTIVELY APPLICABLE IN ASSESSMENT YEAR 2007-08. THE REVENUE FAILS TO POIN T OUT ANY DISTINCTION ON FACTS. THUS, WE ALSO FOLLOW THE SA ID VIEW AND UPHOLD THE CIT(A)S FINDINGS. THE REVENUES GROUNDS ARE REJECTED. 5. THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 19 TH OF SEPTEMBER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 19 TH SEPTEMBER, 2014 RD %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF