ACIT, CHENNAI V. Ennore Coke Ltd., CHENNAI

ITA 1921/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8171 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 31-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-08-2015
• Court: TRIBUNAL
• Department Lawyers: ANURAG SAHAY
• Assessee Lawyers: R SIVARAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NO. 1921/MDS/2015 / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-2(1), CHENNAI 34. ( /APPELLANT) V. M/S. ENNORE COKE LTD., NO.25, FLOWERS ROAD, 3 RD FLOOR, EGMORE BENEFIT SOCIETY BUILDING, CHENNAI 600 084. PAN AAACK1631Q. RESPONDENT) / APPELLANT BY : SHRI ANURAG SAHAY, CIT / RESPONDENT BY : SHRI R. SIVARAMAN, ADVOCATE ! / DATE OF HEARING : 31.12.2015 '# ! / DATE OF PRONOUNCEMENT : 22.01.2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 30 .3.2015. - - ITA 1921/15 2 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS THAT THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THA T THE DISALLOWANCE OF PRIOR PERIOD EXPENSES WAS MADE AS R EPORTED IN THE TAX AUDIT REPORT. 3. THE FACTS OF THE ISSUE ARE THAT THE EXPENDITURE OF `37,37,300/- WAS INCURRED IN THE EARLIER YEARS, BUT THE ACTUAL PAYMENTS TO THE PARTIES WERE MADE DURING THE CURREN T FINANCIAL YEAR RELEVANT TO THE CURRENT ASSESSMENT YEAR 2010-1 1, BY DEDUCTING AND REMITTING THE NECESSARY TDS( ` 35,61,074/-). SINCE THE ASSESSEE HAS NOT DEDUCTED ANY TDS IN THE YEARS OF INCURRENCE OF THESE EXPENSES, THE SAME WERE NOT CLA IMED AS EXPENDITURE IN THE RESPECTIVE YEARS. BASED ON THE ACTUAL DEDUCTION/REMITTANCE OF TDS, THESE EXPENSES ARE CLA IMED IN THE CURRENT YEAR. HOWEVER, SINCE THESE EXPENSES ARE P ERTAINING TO THE EARLIER YEARS, THE SAME WERE SHOWN AS PRIOR PER IOD EXPENSES IN THE ACCOUNTS FOR THE PURPOSE OF CLARITY. 3.1 AS PER THE PROVISIONS OF SEC.40(A)(IA) OF THE A CT, NO EXPENDITURE MENTIONED IN SECTIONS 30 TO 38 OF THE A CT ARE ALLOWABLE UNLESS THE NECESSARY TDS IS DEDUCTED AND REMITTED INTO THE GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DA TE TO FILE THE - - ITA 1921/15 3 RETURN U/S.139(1) OF THE ACT. THE PROVISIONS ALSO STIPULATE THAT THESE EXPENSES ARE ALLOWABLE ONLY IN THE YEAR IN WH ICH THE NECESSARY TDS IS DEDUCTED AND REMITTED INTO THE GOV ERNMENT ACCOUNT. THEREFORE, THE CIT(APPEALS) OBSERVED THAT IN THE INSTANT CASE, THOUGH THE ABOVE EXPENSES OF ` 37.37,300/- PER SE REPRESENT THE PRIOR PERIOD EXPENSES, THE SAME FALL UNDER THE SECOND LIMB OF THE PROVISIONS OF SEC.40(A)(IA), WHE RE THE EXPENSES ARE ALLOWABLE ON ACTUAL DEDUCTION AND REMI TTANCE OF TDS. SINCE, THE ASSESSEE HAS DEDUCTED AND REMITTED THE TDS ON THESE EXPENSES TO THE EXTENT OF ` 35,61,074/- ONLY DURING THE FINANCIAL YEAR 2009-10 AND THE SAME ( ` 35,61,074/-) BECOMES ELIGIBLE EXPENDITURE (DEDUCTION) IN THE PRESENT ASS ESSMENT YEAR 2010-11. ACCORDINGLY, THE CIT(APPEALS) DIRECTED TH E A.O. TO EXAMINE THE ASSESSEES CLAIM OF DEDUCTION AND REMIT TANCE OF TDS ON THE ABOVE PAYMENTS (PRIOR PERIOD EXPENSES) O F ` 35,61,074/- AND ALLOW THE SAME U/S.40(A)(IA) OF THE ACT. SUBJECT TO VERIFICATION, THE PRIOR PERIOD EXPENSES TO THE E XTENT OF ` 35,61,074/- ARE ALLOWED U/S.40(A)(IA) AND THE BALA NCE DISALLOWANCE OF ` 1,76,226/- IS CONFIRMED. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. - - ITA 1921/15 4 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE SUBMISSION OF THE LD. DR IS THAT SE C.40(A)(IA) OF THE ACT DOES NOT PERMIT TO ALLOW PRIOR PERIOD EXPEN SES. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT WHEN THE EXPE NDITURE ACTUALLY PAID IN THE ASSESSMENT YEAR UNDER CONSIDER ATION, IT IS ALLOWABLE ON ACTUAL PAYMENT BASIS IN VIEW OF THE SE COND LIMB OF PROVISO TO SEC.40(A)(IA) OF THE ACT. NO EXPENDITUR E MENTIONED IN SECTIONS 30 TO 38 OF THE ACT ARE ALLOWABLE UNLESS T HE NECESSARY TDS IS DEDUCTED AND REMITTED INTO THE GOVERNMENT AC COUNT BEFORE FILING OF RETURN U/S.139(1) OF THE ACT. THE PROVISIONS OF SEC.40(A)(IA) STIPULATE THAT THE EXPENSES ARE ALLOW ABLE ONLY IN THE YEAR IN WHICH THE NECESSARY TDS IS DEDUCTED AND REM ITTED INTO THE GOVERNMENT ACCOUNT. IN THE PRESENT CASE, THOUG H THE EXPENDITURE RELATING TO EARLIER PERIOD, ACTUALLY TD S MADE IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND IT IS ALLOW ABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IN VIEW OF THE SECOND LIMB OF SEC.40(A)(IA), WHICH READS AS UNDER: ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYA LTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT - - ITA 1921/15 5 SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PA ID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139:] PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFT ER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTIO N 139, [ THIRTY PER CENT OF ] SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID :] [ PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDAN CE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH S UM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDE R THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 , THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEE MED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INC OME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVI SO.] IN VIEW OF THE ABOVE, IT IS AN ALLOWABLE EXPENDITUR E. THE SAME VIEW HAS BEEN TAKEN BY THE COCHIN BENCH IN ITA NO.410/COCH/2014 DATED 12.12.2014 THE CASE OF M/S. TERMO PENPOL LTD. V. ACIT, WHEREIN IT WAS OBSERVED AS UNDER : 6. NOW COMING TO THE ALTERNATIVE CONTENTION OF TH E LD. COUNSEL FOR THE ASSESSEE THAT IT HAS TO BE ALLOWED IN THE YEAR IN WHICH THE TAX WAS PAID, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF PROVISOS TO SECT ION 40(A)(IA) AND 40(A)(I) THE DEDUCTION CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED IN THE YEAR IN WHICH THE TAX WAS ACTUALLY PAID BY THE ASSESSEE. THE LD. DR ALSO HAS NO OBJECTION TO ALLOW THE CLAIM OF THE ASSESSEE IN THE YEAR IN - - ITA 1921/15 6 WHICH THE TAX WAS ACTUALLY PAID BY THE ASSESSEE. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER SHALL VERIFY THE A CTUAL PAYMENT OF TAX BY THE ASSESSEE ON THE EXPENDITURE CLAIMED AND THEREAFTER ALLOW THE CLAIM IN THE YEAR IN WHICH THE TAX WAS ACTUALLY PAID. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL AS WELL AS THE PROVISIONS OF THE ACT, WE ARE INCLINED TO DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND OF JAN., 2016 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 22 ND JAN., 2016. MPO* ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF.