The ACIT, Circle-1(1)(2), Vadodara V. M/s. Hanumant Construction Pvt. Ltd., Vadodara

ITA 1835/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8250 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ACIT, CIR. 1(1)(2), VADODARA (APPELLANT) VS M/S. HANUMANT CONSTRUCTION PVT. LTD. GROUND FLOOR, PARWANI COMPLEX, CIVIL LINES, RAIPUR - 492001 PAN: AABCH7062D (RESPONDENT) REVENUE BY : S H RI SAURABH SINGH , SR. D . R. ASSESSEE BY: S H RI SURENDRA MODIANI , A.R. DATE OF HEARING : 09 - 04 - 2 018 DATE OF PRO NOUNCEMENT : 10 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOU NTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2010 - 11 , ARIS ES FROM ORDER OF THE CIT(A) - 1, VADODARA DATED 28 - 04 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GRO UNDS OF APPEAL : - 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CLT(A) ERRED IN ALLOWING THE DISALLOWANCE OF EXPENDITURE ON INTEREST U/S 40(A)(IA) MADE ON ACCOUNT OF FAILURE TO DEDUCT INCOME - TAX AT SOURCE, IN THE CASE OF M/S SUNDRAM FINANCE LTD, TO WHOM PAYMENT OF RS. 22,71,842/ - HAD BEEN MADE DURING THE YEAR UNDER CONSIDERATION. RELIANCE IS PLACED ON THE JUDICIAL PRONOUNCEMENT IN THE CASE OF PRUDENTIAL LOGISTICS & TRANSPORTS V. ITO[2O14] 51 TAXMANN.COM 426 (KER.). WHEREIN, IF THESE C OMPANIES HAVE PAID TAX ON THIS INCOME THEN THIS DISALLOWANCE IN THE CASE OF ASSESSEE STILL CAN'T BE AVOIDED. I T A NO . 1835 / A HD/ 20 16 A SSESSMENT YEAR 2010 - 11 I.T.A NO. 1835 /AHD/20 16 A.Y. 2010 - 11 PAGE NO ACIT VS. M/S. HANUMANT CONSTRUCTION PVT. LTD. 2 2. THOUGH THE TAX EFFECT IS BELOW THE PRESCRIBED LIMIT AS PER CIRCULAR 21/2015 DTD. 10.12.2015, THE SAID APPEAL IS COVERED UNDER EXCEPTION OF SUB CLAUSE (C) OF CLAUSE 8, OF THE CBDT CIRCULAR NO. 21/2015, DTD. 10.12.2015. 3. IN THIS CASE, ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 8 TH FEB, 2013 BY DETERMINING THE TOTAL INCOME AT RS . 1 , 62 , 50 ,0 04/ - . SUBSEQUENTLY , THE CASE WAS REOPE NED U/S. 147 OF TH E ACT ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED T DS ON PAYMENT OF INTEREST COMPONENTS TO THE NON - BANKING FINANCIAL INSTITUTIONS . ON SCRUTINY, THE ASSESSING OFFICER HAS NOTICED THAT AS SESSSEE HAS PAID AN AMOUNT OF RS . 54 , 47 , 348/ - AS IN TEREST TO THE NON - BANKING FINANCIAL INSTITUTIONS WI THOUT DEDUCTING TDS , THEREFORE, HE DISALLOWED INTEREST EXPENSE S TO T HE AMOUNT OF RS. 33 , 55 , 227/ - U/S. 40(A)(IA) OF THE ACT AFTER FINDING THAT OUT OF INTEREST PAYMENT OF RS. 54 , 47 , 348/ - AN A MOUNT OF RS. 20 , 92 , 121/ - HAVE BEEN PAID TO THE ICICI BANK LTD. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . HE HAS REFERRED THE AMENDMENT MADE IN THE PROVISION OF SECTION 40(A)(IA) BY THE FI NANCE ACT, 2012 AS PER WHICH THE SECOND PROVISO WAS INTRODUCED IN THE ACT. THE LD. CIT(A) HAS STATED THAT THE ASSESSEE HAS FILED CERTIFICATE IN FORM NO. 26A AS PRESCRIBED BY THE PROVISION OF FIRST PROVISO TO SUB - SECTION OF SECTION 201 CERTIFYING THAT NO N - BANKING NBFC M/S. SUNDRAM FINANCE LTD TO WHOM THE PAYMENT OF RS. 22 , 71 ,842/ - HAD BEEN MADE H AS PAID THE TAXES AND MADE COMPLIANCE WITH THE CONDITIONS LAID DOWN IN THE PROVISO OF SECTION 201 OF THE ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL ON RECORD CAREFULLY. THE ORIGINAL ASSESSMENT WAS COMP LETED U/S. 143(3) OF THE ACT ON 08/02/2013. SUBSEQUENTLY, THE CASE WAS REOPENED U/S. 147 OF THE ACT ON THE GROUND THAT NO TDS HAS BEEN MADE ON THE INTEREST COMPONENTS PAID TO NBFCS. CO NSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED RS. 54,47,348/ - U/S. 40(A)(IA) OF T HE ACT. THE LD. CIT(A) HAS ALLOWED RELIEF TO THE EXTENT OF RS. 22,71,842/ - IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) BY T H E FINANCE ACT 2012 AS PER WHICH I.T.A NO. 1835 /AHD/20 16 A.Y. 2010 - 11 PAGE NO ACIT VS. M/S. HANUMANT CONSTRUCTION PVT. LTD. 3 THE 2 ND PR OVISO OF ITS SUB - SECTION WAS INTRODUCED IN THE ACT. A FTER CONSIDERING THE ABOVE FACT, WE OBSERVE THAT NO DISALLOWANCE U/S. 40(A) SHOU LD BE MADE IN CASE THE PAYEE HAS PAID TAX IN VIEW OF THE AMENDMENT OF SECTION 40(A)(IA) BY THE FINANCE ACT. DURING THE COU RSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FURNISHED A CERTIFICATE FRO M M/S. SUNDRAM FINANCE LTD AS PRESCRIBED BY THE 1 ST PROVISO TO SUB - SECTION (1) OF SECTION 201 OF THE ACT DEMONSTRATING THAT M/S SUNDRAM FINANCE LTD HAD PAI D THE TAXES TO WHOM THE PA YMENT OF RS. 22,71,842/ - HAD BEEN MADE BY THE ASSESSEE. IN VIEW OF THE ABOVE W E ARE INCLINED WITH THE CONTENTION OF THE LD. CIT(A) THAT 2 ND PROVISO OF SECTION 40(A)(IA) BY THE F INANCE ACT HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE BY SEVERAL JURISDICTION AL PRONOUNCE M E NTS, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF LD. CIT(A) . ACCORDINGLY , THE APPEAL OF T HE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE O PEN C OURT ON 10 - 05 - 201 8 SD/ - SD/ - ( RA JPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 10 /05 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,