ACIT, Circle-33, Kolkata, Kolkata V. M/s Mitra Guha Builders (India) Co., Kolkata

ITA 1686/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1791 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: J M THARD
• Section: 143(3); 133(6); 194C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & HONBLE SHRI M.BALAGANESH, AM ] I.T.A NO. 1686/KOL/20 16 ASSESSMENT YEAR : 2011-1 2 ACIT, CIRCLE-33, KOLKATA -VS- M/S MI TRA GUHA BUILDERS (INDIA) CO. [PAN: AAFFM 2988 Q] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ARINDAM BHATTA CHARJEE, ADDL. CIT FOR THE REVENUE : SHRI J.M.THARD, ADVOCATE DATE OF HEARING : 09.01.2018 DATE OF PRONOUNCEMENT : 12.01.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKATA [IN SHORT THE LD CITA] IN APPEAL NO. 39/CIT(A)- 9/WD-33(3)/2014-15/KOL DATED 27.05.2016 AGAINST TH E ORDER PASSED BY THE ITO, WARD-33(3), KOLKATA [ IN SHORT THE LD AO] UNDER SEC TION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28.02.2014 F OR THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S 40(A)(IA ) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1686/KOL/2016 M/S MITRA GUHA BUILDERS (INDIA) CO. A.YR.2011-12 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A CIVIL CONTRACTOR AND HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2011-12 ON 30.9. 2011 DECLARING TOTAL INCOME OF RS 5,85,930/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE LD AO OBSERVED THAT THE ASSESSEE HAD MADE PAYMENT OF HIRE CHARGES AS UNDER: - A) B.M. CRANES SERVICES RS 2,25,012/- B) ESHWAR INFRATECH PVT LTD RS 10,42,097/- C) JAI DURGA TIMBER RS 40,49,187/- D) R.S.BAGGA RS 7,13,953/- E) BALAJEE TIMBER STORE RS 8,54,414/- ----------------------- RS 68,84,663 /- THE ASSESSEE WAS ASKED TO PRODUCE THE EVIDENCE OF D EDUCTION OF TAX AT SORUCE IN RESPECT OF HIRE CHARGES AS THEY WOULD GET ATTRACTED AS PER SECTION 194I OF THE ACT. THE ASSESSEE FILED ITS EXPLANATION ALONG WITH BILLS AN D STATED THAT THE ABOVE PAYMENTS WERE MADE TO THE ABOVE PARTIES MENTIONED IN SL.NO. B) TO E) FOR SUPPLYING MATERIALS AND ON WHICH THE VAT HAS BEEN CHARGED. THEREFORE THERE WA S NO NEED TO DEDUCT TAX AT SOURCE ON THE SAID PAYMENTS. IN RESPECT OF THE PARTY ME NTIONED IN SL. NO. A) ABOVE, THE ASSESSEE COULD NOT PRODUCE ANY EXPLANATION. THE L D AO HOWEVER FROM THE BILLS OBSERVED THAT ALL THE PAYMENTS WERE MADE FOR THE PU RPOSE OF HIRE CHARGES AND NOT FOR OUTRIGHT PURCHASES. ACCORDINGLY HE DISALLOWED THE HIRE CHARGES IN THE SUM OF RS 68,84,663/- U/S 40(A)(IA) OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 194I OF THE ACT. 3.1. THE LD AO ALSO MADE DISALLOWANCE OF RS 12,88,7 99/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF SITE SECURITY CHARGES FOR VIOLATION OF P ROVISIONS OF SECTION 194C OF THE ACT. 3.2. THE LD AO ALSO MADE DISALLOWANCE OF RS 2,60,16 3/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF RENT CHARGES FOR VIOLATION OF PROVISIONS OF SECTION 194I OF THE ACT. 3 ITA NO.1686/KOL/2016 M/S MITRA GUHA BUILDERS (INDIA) CO. A.YR.2011-12 3 3.3. THE LD AO ALSO MADE DISALLOWANCE OF RS 83,163/ - U/S 40(A)(IA) OF THE ACT IN RESPECT OF CAR HIRE CHARGES FOR VIOLATION OF PROVIS IONS OF SECTION 194C OF THE ACT. 3.4. THE LD AO ALSO MADE DISALLOWANCE OF RS 5,91,2 88/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF CAR HIRE CHARGES FOR VIOLATION OF PROVIS IONS OF SECTION 194C OF THE ACT. 3.5. THE LD AO ALSO MADE DISALLOWANCE OF RS 3,30,00 0/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF ANNUAL MAINTENANCE CHARGES, JOB CHARGES AND GENERATOR HIRE CHARGES FOR VIOLATION OF PROVISIONS OF SECTION 194C OF THE ACT. 4. BEFORE THE LD CITA, THE ASSESSEE FURNISHED THE PAN OF THE VARIOUS PAYEES TO WHOM PAYMENTS WERE MADE WITHOUT DEDUCTION OF TAX AT SOUR CE, DETAILS OF RECIPIENTS SUCH AS NAME AND THEIR ADDRESSES. THE ASSESSEE ALSO PLEAD ED THAT SINCE THE RESPECTIVE PAYEES HAD INCLUDED THE SUBJECT MENTIONED PAYMENTS MADE BY THE ASSESSEE AS INCOME IN THEIR RETURNS AND PAID TAXES THEREON. THE ASSESSEE FURNI SHED EVIDENCES IN THIS REGARD AND PLEADED THAT IN VIEW OF THE AMENDMENT MADE IN SECO ND PROVISO TO SECTION 40(A)(IA) OF THE ACT BROUGHT IN THE STATUTE BY THE FINANCE ACT 2 012, NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) OF THE ACT IN THE HANDS OF THE A SSESSEE PAYER. THE ASSESSEE ALSO FILED FORM 26A FROM FOUR PARTIES NAMELY (I) BALAJI TIMBER STORES ; (II) ESHWAR INFRATECH PVT LTD ; (III) JAI DURGA TIMBER TRADERS AND (IV) R.S.BAGGA. 5. THE LD CITA GRANTED PARTIAL RELIEF TO THE ASSESS EE BY OBSERVING AS UNDER:- 4.1. GROUND NO. 3 TO 9: I HAVE CAREFULLY CONSIDERE D THE SUBMISSIONS OF THE APPELLANT ALONG WITH IMPUGNED ASSESSMENT ORDER. AFTER GOING T HROUGH THE DECISIONS REFERRED BY THE APPELLANT I AGREE WITH THE SUBMISSIONS OF THE A PPELLANT THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE I.T.ACT WILL APPLY IN THE PRESENT CASE ALSO WHICH WAS INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01.04.20 13 WAS RETROSPECTIVE IN OPERATION AND WAS TO APPLY W.E.F. 01.04.2005 BEING THE DATE F ROM WHICH SUB-CLAUSE (IA) OF SEC. 40(A) WAS INSERTED BY FINANCE (NO.2) ACT, 2004. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD. R EPORTED IN 377 ITR 635 HAS TAKEN 4 ITA NO.1686/KOL/2016 M/S MITRA GUHA BUILDERS (INDIA) CO. A.YR.2011-12 4 THE VIEW THAT INSERTION OF SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE I.T. ACT IS RETROSPECTIVE AND WILL APPLY FROM 01.04.2005. IN THIS REGARD I FIND THAT THE APPELLANT HAS FURNIS HED NAME, ADDRESS AND PAN PARTICULARS OF THE RECIPIENTS OF PAYMENT BY THE AP PELLANT. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK TOWNSHIP PVT. LTD., IT IS HELD THAT THE APPELLANT IS ENTITLED TO THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. FURTHER, RESPECTFULLY FOLLOWI NG THE DECISIONS OF HONBLE KOLKATA ITAT IN THE CASES OF M/S VAS ELECTRONICS (I.T.A. NO . 662/KOL/2013- ORDER DATED 24.11.2015) AND M/S ABHOY CHARAN BAKSHI (I.T.A. NO. 1492/KOL/2015- ORDER DATED 06.04.2016), THE AO IS DIRECTED TO DELETE THE DISAL LOWANCES IN RESPECT OF FOUR PARTIES NAMELY (I) BALAJI TIMBER STORES (II) ESHWAR INFRATE CH PVT. LTD. (III) JAI DURGA TIMBER TRADERS AND (IV) R.S.BAGGA STEEL SHUTTERING PVT. LT D. BECAUSE APPELLANT HAVE SUBMITTED COPY OF FORM NO. 26A OF ABOVE MENTIONED P ARTIES, AND FOR BALANCE PARTIES AO IS DIRECTED TO VERIFY WHETHER RECIPIENTS HAVE IN CLUDED THE AMOUNT PAID BY THE APPELLANT IN THEIR RESPECTIVE RETURN OF INCOME AND ALSO PAID TAXES ON THE SAME BY CALLING INFORMATION U/S 133(6) OR U/S 131 OF THE IN COME TAX ACT, 1961. IN CASE THE RECIPIENT HAS SHOWN THE INCOME IN THEIR I.T. RET URN AND PAID TAXES, THE DISALLOWANCE U/S 40(A)(IA) SHOULD BE DELETED TO THAT EXTENT. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD DR ARGUED THAT THE DETAILS FILED BY THE ASSESSEE BEFORE THE LD CITA WERE ADDITIONAL EVIDENC ES AND THE LD AO WAS NOT GIVEN ANY OPPORTUNITY TO EXAMINE THE SAID DETAILS. MOREO VER, EVEN AS PER THE LD CITAS ORDER, THE PAYEES INCOME TAX RETURNS DETAILS WERE NOT GIVEN FOR ALL THE PERSONS. HENCE THE SAME REQUIRES VERIFICATION BY THE LD AO. SINC E THE LD CITA HAD DIRECTED THE LD AO TO EXAMINE ONE PARTY, LET ALL THE PARTIES BE EXA MINED BY THE LD AO WAS THE ULTIMATE ARGUMENT OF THE LD DR. IN RESPONSE TO THIS, THE L D AR VEHEMENTLY RELIED ON THE ORDER OF THE LD CITA. WE FIND THAT IN THE FACTS AND CIRC UMSTANCES OF THE CASE, THE ENTIRE MATTER REQUIRES VERIFICATION BY THE LD AO AS ADMITT EDLY HE WAS NOT GIVEN ANY OPPORTUNITY TO VERIFY THE ADDITIONAL DETAILS / EVID ENCES FILED BEFORE THE LD CITA BY THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO AGREE WITH THE ARGUMENTS ADVANCED BY THE LD DR THAT IN CASE IF THE ASSESSEE IS ABLE TO PRODUCE EVIDENCES TO PROVE THAT THE PAYEES HAD DISCLOSED TH E SUBJECT MENTIONED PAYMENTS MADE 5 ITA NO.1686/KOL/2016 M/S MITRA GUHA BUILDERS (INDIA) CO. A.YR.2011-12 5 BY THE ASSESSEE IN THEIR RESPECTIVE INCOME TAX RETU RNS AND PAID TAXES DUE THEREON, IF ANY, THEN THE ASSESSEE SHOULD NOT BE INVITED WITH T HE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE LEGISLATURE ALSO HAD TAKEN THIS ASPECT IN TO ACCOUNT BY BRINGING IN AN AMENDMENT BY FINANCE ACT 2012 BY INSERTION OF SECON D PROVISO TO SECTION 40(A)(IA) OF THE ACT THEREON. THIS SECOND PROVISO HAS BEEN HEL D TO BE RETROSPECTIVE IN OPERATION BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDM ARK TOWNSHIP PVT LTD REPORTED IN 377 ITR 635 (DEL) AND DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS TIRUPATI CONS TRUCTION GA NO. 2146 OF 2016 WITH ITAT NO. 287 OF 2016 DATED 23.8.2016. HENCE WE DEEM IT FIT AND APPROPRIATE TO REMAND THIS ISSUE TO THE FILE OF THE LD AO FOR VERI FICATION OF THE EVIDENCES SUBMITTED / TO BE SUBMITTED BY THE ASSESSEE IN LINE WITH THE SE COND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND IF IT IS SO PROVED, THEN NO DISALLOWANC E U/S 40(A)(IA) OF THE ACT COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO ADDUCE FRESH EVIDENCES IN SUPPORT OF ITS CLAIM. HENCE THE GROUND S RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12.01.2018 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 12.01.2018 SB, SR. PS 6 ITA NO.1686/KOL/2016 M/S MITRA GUHA BUILDERS (INDIA) CO. A.YR.2011-12 6 COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-33, KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700071. 2. M/S MITRA GUHA BUILDERS (INDIA)CO., 8/2, K.S.ROY ROAD, F-33, 3 RD FLOOR, KOLKATA- 700001. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S