The ITO, Ward-3(2), Baroda V. M/s. Niyati Construction, Baroda

ITA 1759/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8129 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD , BEFORE: SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1759/AHD/2015 ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2), 2 ND FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V S . M/S. NIYATI CONSTRUCTION, 26-D, BHAGIRATH SOCIETY, NEAR LISA PARK, SUBHANPURA, BARODA-390023 PAN NO. AACFN0411E (APPELLANT) .. (RESPONDENT) /BY REVENUE SHRI SAURABH SINGH, SR. D.R. /BY ASSESSEE SHRI TEJ SHAH, A.R. /DATE OF HEARING 25.05.2018 /DATE OF PRONOUNCEMENT 04.06.2018 O R D E R PER : RAJPAL YADAV, JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE TRIBUNAL AGAINST TH E ORDER OF LEARNED CIT(A)-5, VADODARA, DATED 06.02.2015 PASSED FOR A.Y . 2005-06. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE N OT IN CONSONANCE WITH RULE 8 OF ITAT RULES, THEY ARE DESCRIPTIVE AND ARGU MENTATIVE IN NATURE. 3. IN BRIEF, SOLITARY GRIEVANCE OF THE REVENUE IS T HAT DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH THE AID OF SECTION 40(A)(IA) FOR NON DEDUCTION OF TAXES AND ITS DEPOSITS IN THE GOVERNMENT ACCOUNT OUGHT HAVE N OT BEEN DELETED BY THE CIT(A) ITA NO. 1759/AHD/15 A.Y.2005-06 (DCIT VS. M/S. NIYATI CONSTRUCTION) PAGE 2 BY HOLDING THAT SECOND PROVISO APPENDED TO SECTION 40(A)(IA) BY FINANCE BILL, 2010 IS APPLICABLE WITH RETROSPECTIVE EFFECT. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM. IT HAS FILED ITS RETURN OF INCOME ON 28 TH OCTOBER, 2005 DECLARING TOTAL INCOME AT RS.1,12,08 2/-. THE ASSESSEE HAS DEBITED TWO AMOUNTS UNDER THE HEAD TRANSPORT EXPENDITURE AND SUB CONTRACT. IT HAS DEBITED A SUM OF RS.27,44,355/- T OWARDS TRANSPORT CHARGES WHEREAS RS.1,53,93,300/- ON ACCOUNT OF SUB CONTRACT PAYMENT . ACCORDING TO THE ASSESSING OFFICER, TDS ON THESE AMOUNTS OUGHT TO BE PAID BEFO RE 31 ST MARCH 2005 OR 7 TH APRIL, 2005 SINCE ASSESSEE FAILED TO MAKE THE PAYME NT, THEREFORE HE DISALLOWED RS.18,87,283/- OUT OF TRANSPORT CHARGES AND RS.1,27 ,16,933/- OUT OF SUB CONTRACT PAYMENTS. 5. ON APPEAL, LEARNED CIT(A) HAS DELETED THE DISALL OWANCE BY OBSERVING THAT AS PER SECOND PROVISO TO SECTION 40(A)(IA), IF AN ASSE SSEE MAKES THE PAYMENT BEFORE DUE DATE OF FILING OF THE RETURN THEN SUCH AMOUNT S HOULD NOT BE DISALLOWED TO THE ASSESSEE. THE DETAILED FINDING RECORDED BY THE CIT (A) IS WORTH TO NOTE WHICH READ AS UNDER: 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER. THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.27,44,355/- ON ACCOUNT OF TRANSPORT EX PENSES. THE ASSESSEE WAS ASKED TO EXPLAIN THE DETAILS AND WHETHER TDS WAS NO T DEDUCTED OR NOT. IT WAS SHOW CAUSED AS TO WHY ATE PAYMENT BE NOT DISALLOWED AS P ER SECTION 40(A)(IA) OF INCOME-TAX ACT. THE ASSESSEE SUBMITTED COPY OF TRAN SPORT EXPENSE DETAILS FROM WHICH IT REVEALS THAT OUT OF THE TOTAL AMOUNT OF RS .22,83,845/-, AN AMOUNT OF RS.3,96,562/- ONLY WAS CREDITED CM 31.03.2005. ACCO RDING TO THE ASSESSING OFFICER, FOR THIS AMOUNT OF RS.3,96,562/-, TIME UP TO 31.05.2005 WAS AVAILABLE FOR DEPOSITING THE AMOUNT OF TDS INTO THE GOVERNMENT AC COUNT. IN RESPECT OF THE BALANCE AMOUNT OF RS.18,87,283/- THE ASSESSING OFFI CER CONTENDED THAT SINCE THE AMOUNT WAS PAID OR CREDITED WELL BEFORE 31.03.2005 IN THE PARTIES ACCOUNT, THE AMOUNT OF TDS OUT OF THIS WAS REQUIRED TO BE DEPOSI TED PERIODICALLY BY 7 TH OF THE FOLLOWING MONTH. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS PAID THE ENTIRE AMOUNT OF TDS ONLY ON 04.05.2005. THUS, IN O PINION OF THE ASSESSING OFFICER, FOR THE AMOUNT OF RS.18,87,283/- THE ASSES SEE HAS FAILED TO DEPOSIT THE AMOUNT OF TDS INTO THE GOVERNMENT ACCOUNT WITHIN TH E STIPULATED TIME. THEREFORE, THE AMOUNT OF RS.18,87,283/- WAS DISALLOWED BY THE ASSESSING OFFICER AS PER SECTION 40(A)(IA) OF INCOME-TAX AND ADDED BACK TO T HE INCOME. FURTHER, THE ASSESSING OFFICER ALSO OBSERVED THAT T HE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,53,93,300/- ON ACCOUNT OF SUB-CON TRACT ACCOUNT. THE ASSESSEE ITA NO. 1759/AHD/15 A.Y.2005-06 (DCIT VS. M/S. NIYATI CONSTRUCTION) PAGE 3 WAS ASKED TO EXPLAIN THE DETAILS AND WHETHER TDS WA S NOT DEDUCTED OR NOT AND IT WAS SHOW CAUSED AS TO WHY LATE PAYMENT BE NOT DISAL LOWED AS PER SECTION 40(A)(IA) OF INCOME-TAX ACT. THE ASSESSEE SUBMITTED COPY OF S UB CONTRACT ACCOUNT FROM WHICH IT REVEALS THAT OUT OF THE TOTAL AMOUNT OF RS .1,53,93,300/- AN AMOUNT OF RS.30,95,405/-ONLY WAS CREDITED ON 31.03.2005. IN T HE OPINION OF THE ASSESSING OFFICER, FOR THIS AMOUNT OF RS.30,95,405/- TIME UP TO 31.05.2005 WAS AVAILABLE FOR DEPOSITING THE AMOUNT OF TDS INTO THE GOVERNMENT AC COUNT. IN RESPECT OF THE BALANCE AMOUNT OF RS.1,27,16,933/-, THE AMOUNT WAS PAID OR CREDITED WELL BEFORE 31.3.2005 IN THE ACCOUNT. AS SUCH THE AMOUNT OF TDS OUT OF THIS WAS REQUIRED TO BE DEPOSITED PERIODICALLY BY 7 TH OF THE FOLLOWING MONTH. HOWEVER, THE ASSESSING OFFICER HAS NOTED ASSESSEE HAS PAID THE ENTIRE AMOU NT OF TDS ONLY ON 04.05.2005. THUS, ACCORDING TO THE ASSESSING OFFICER, THE ASSES SEE HAS FAILED TO DEPOSIT THE AMOUNT OF TDS INTO THE GOVERNMENT ACCOUNT WITHIN TH E STIPULATED TIME IN RESPECT OF THE AMOUNT OF RS.1,27,16,933/-. THEREFORE, THE AMOU NT OF RS.1,27,16,933/- WAS DISALLOWED BY THE ASSESSING OFFICER AS PER SECTION 40(A)(IA) OF INCOME-TAX ACT AND ADDED BACK TO THE INCOME. FROM THIS FACTUAL MATRIX, IT IS CLEAR THAT THOUGH THERE IS LATE DEPOSIT OF TDS INTO GOVT. ACCOUNT, YET ENTIRE TDS IS DEPOSITED WELL BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. I AM IN AGR EEMENT WITH THE ID. AUTHORIZED REPRESENTATIVE THAT THE MATTER IS NOW COVERED BY TH E DECISION OF THE JURISDICTIONAL HIGH COURT. IN THE CASE OF COMMISSIONER OF INCOME-TAX VS B.M.S. PROJECTS (P.) LTD. [2014] 44 TAXMANN.COM 206 (GUJ.), HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER: 7. THE SECOND QUESTION PERTAINS TO ADDITION MADE U NDER SECTION 40(A)(IA) OF THE ACT BY THE ASSESSEE TO THE SUB-CON TRACTORS FOR THE PERIOD FROM APRIL 2004 TO FEBRUARY 2005 ON WHICH TDS HAS B EEN PAID ON 24TH MAY 2005. THIS ISSUE HAS ALREADY BEEN ADDRESSED BY THIS COURT IN THE CASE OF CIT V. GUJARAT NARMADA VALLEY FERTILIZERS CO. LT D. [2013] 35 TAXMANN.COM 638/217 TAXMAN 114 (GUJ.) AND IN TAX AP PEAL NO. 412/2013 & ALLIED APPEALS, WHEREIN, IT IS HELD THAT AMENDMEN T IN SECTION 40 (A)(IA) OF INCOME-TAX ACT BY THE FINANCE ACT OF 2010 HAS RETRO SPECTIVE EFFECT. REFERENCE NEEDS TO BE MADE TO A DECISION OF THIS CO URT IN TAX APPEAL NO. 706/2010 DECIDED 18TH JULY 2011. SINCE THE ISSUE IS ALREADY ANSWERED, THE PRESENT TAX APPEAL TIRES NO FURTHER CONSIDERATION.' SIMILAR VIEW HAS BEEN TAKEN BY THE HIGH COURT IN TH E CASE OF INCOME-TAX OFFICER VS SUN ENTERPRISES [2014] 41 TAXMANN.COM 431 (GUJ.) WH EREIN IT WAS HELD THAT WHERE ASSESSEE DEDUCTED TAX AT SOURCE WHILE MAKING PAYMEN TS TO CONTRACTORS AND DEPOSITED SAME WITH GOVERNMENT BEFORE DUE DATE OF F ILING RETURN OF INCOME UNDER SECTION 139(1), NO DISALLOWANCE U/S. 40(A)(IA) COUL D BE MADE IN RESPECT OF SAID PAYMENTS. THE FACTS OF THE PRESENT CASE ARE IDENTI CAL AND THERE IS NO REASON FOR ME NOT TO ACCEPT THE CONTENTION OF THE APPELLANT IN VI EW OF THE RETROSPECTIVE APPLICATION OF AMENDMENT TO SECTION 40(A)(IA) OF TH E ACT. RESPECTFULLY FOLLOWING THE RATIO OF THE JURISDICTIONAL HIGH COURT, GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT AND ENTIRE ADDITION MADE BY THE ASSES SING OFFICER IS DELETED. 6. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE REVENUE IN ITS GROUND HAS PL EADED THAT PROVISO APPENDED TO SECTION 40(A)(IA) PERMITTING THE ASSESSEE TO DEPOSI T THE TDS DEDUCTED BY IT BEFORE ITA NO. 1759/AHD/15 A.Y.2005-06 (DCIT VS. M/S. NIYATI CONSTRUCTION) PAGE 4 DUE DATE OF FILING OF THE RETURN HAS BEEN INTRODUCE D ON 01.04.2010 AND IT IS NOT APPLICABLE WITH RETROSPECTIVE EFFECT. IF IT IS NOT APPLICABLE WITH RETROSPECTIVE EFFECT THEN DEDUCTION OF THESE AMOUNTS ON WHICH TDS WAS DE DUCTED BY THE ASSESSEE WITHIN THE DUE DATE BUT NOT DEPOSITED IS NOT ADMISS IBLE TO THE ASSESSEE. ON THE OTHER HAND, THE STAND OF THE ASSESSEE IS THAT THIS PROVIS O IS APPLICABLE WITH RETROSPECTIVE EFFECT AND THEREFORE CIT(A) HAS RIGHTLY FOLLOWED IT . 7. A PERUSAL OF THE ORDER OF THE CIT(A) WOULD REVEA L THAT LEARNED FIRST APPELLATE AUTHORITY HAS PLACED ITS RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WHICH HAS HELD THAT THE P ROVISO APPENDED TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 IS APPLICABLE WITH R ETROSPECTIVE EFFECT. THEREFORE, WE ARE OF THE VIEW THAT LEARNED CIT(A) RIGHTLY CONS TRUED THE PROVISION AND RIGHTLY FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIG H COURT AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 04/06/ 2018 SD/- SD/- ( WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 04/06/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. !' / RESPONDENT 3. #$#%& ' ' ' / CONCERNED CIT 4. ' ' ' - / CIT (A) 5. ()*' ++%& , ' ' %& , $ / DR, ITAT, AHMEDABAD 6. *./ / GUARD FILE. BY ORDER/ , / ' # ' ' %& , $