M/s. Mitrata Construction, Surat V. The ACIT, Circle - 3, Surat

ITA 1989/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0959 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S B VAIDHYA
• Keywords: Retrospective amendment; Non-deduction of tax; Difference of opinion
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1989/AHD/2013 / ASSTT. YEAR: 2010-2011 M/S.MITRATA CONSTRUCTION 13, DHANMORA COMPLEX OPP: POLICE CHOWKI ADAJAN PATIA, SURAT. PAN : AANBFM 0625 J VS ACIT, CIR.3 SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : S.B. VAIDHYA REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 24/06/2016 / DATE OF PRONOUNCEMENT: 01/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-IV DATED 21.5.2013 FOR THE ASSTT.YEAR 201 0-11. 2. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.8,27,404/- WHICH WAS MADE BY THE AO WITH THE AID OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 13.10.2010 DECLARING TOTAL INCOME AT RS.26,80,29 3/-. THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AS A SUB- CONTRACTOR. IT HAS RECEIVED JOB WORK FROM A.K.PATE L (CONSTRUCTION) P.LTD. (PIPE LINE), SURAT. THE ASSESSEE WAS REQUIRED TO D EDUCT TDS AT THE RATE OF 2%, BUT IT DEDUCTED TDS AT THE RATE OF 1%. THE ASS ESSEE BEING SUB-CONTRACTOR ITA NO.1989/AHD/2013 2 OUGHT TO HAVE DEDUCTED TDS UNDER SECTION 194C AT TH E RATE OF 2%. SINCE THE ASSESSEE HAS NOT DEDUCTED TDS AS PER PRESCRIBED RAT E, THE LD.AO HAS DISALLOWED EXPENSES OF RS.8,27,404/-. APPEAL TO TH E LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. BEFORE THE TRIBUNAL, ON THE STRENGTH OF THE FOLL OWING DECISIONS, THE ASSESSEE HAS CONTENDED THAT IF THERE WAS SHORT DEDU CTION MADE BY AN ASSESSEE, THEN IT WOULD BE CONSTRUED THAT NO DEFAULT WAS COMM ITTED BY THE ASSESSEE AND DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT COU LD NOT BE MADE. I) CIT VS. S.K. TEKRIWAL, 260 CTR 0073 (HC)(CAL) II) APOLLO TYRES LTD. VS. DCIT, 60 SOT 0001 (COCHIN) (T RIB) III) EQUITY INTELLIGENCE (INDIA)(P.)LTD. VS. ACIT, 56 TA XMANN.COM 181; IV) THREE STAR GRANITES P.LTD. VS. ACIT, 49 TAXMANN.COM 578; V) DCIT VS. CHANDALBHOY & JASSOBHOY, ITA NO.0/MUM/2010 ALTERNATIVELY, IT WAS CONTENDED THAT THE PAYEE HAS RECOGNISED THE RECEIPTS AS INCOME AND NO DISALLOWANCE CAN BE MADE. ON THE OT HER HAND, THE LD.DR RELIED UPON THE ORDER OF THE AO. 5. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE DECISIONS REFERRED TO BY THE LD.COUNSEL FOR THE ASSESSEE, I AM OF THE OPINION THAT THESE ARE NOT AP PLICABLE ON THE FACTS OF THE ASSESSEE. IN THE CASE OF S.K.TEKRIWALA (SUPRA), TH E ASSESSEE HAS DEDUCTED THE TAX UNDER SECTION 194(C). THE AO WAS OF THE OPINIO N THAT THE ASSESSEE HAS TAKEN MACHINERY ON HIRE AND OUGHT TO HAVE BEEN DEDU CTED TAX UNDER SECTION 194 I WHERE THE TAXES ARE TO BE DEDUCTED FOR PAYMENT OF R ENT. ON ACCOUNT OF THIS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO, THE HONBLE COURT HAS HELD THAT THE ASSESSEE CANNOT BE HELD TO BE COMMITTED A DEFAULT FOR NON-DEDUCTION OF TAXES. IN THE PRESENT CASE, THIS IS NOT THE SITUATION. THE ITA NO.1989/AHD/2013 3 TDS WAS DEDUCTED UNDER SECTION 194C ONLY. BEING A SUB-CONTRACTOR, THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS AT THE RATE OF 2%. THERE CANNOT BE ANY DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO. IT IS PURELY A FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TDS ON A SIMP LE TRANSACTION UNDER THE RIGHT PROVISION. THEREFORE, AS FAR AS FIRST FOLD O F SUBMISSION IS CONCERNED, I DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD.COUN SEL FOR THE ASSESSEE. AS FAR AS SECOND FOLD OF CONTENTIONS IS CONCERNED, THE HONBLE DELHI HIGH COURT HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF CIT VS ANSAL LAND MARK TOWNSHIP P. LTD., IN TAX APPEAL NO.160 OF 2015. THE HONBLE COURT HAS OBSERVED THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS TO BE READ AS APPLICABLE WITH RETROSPECTIVE EFFECT. ACCO RDING TO THIS PROVISION, IF A PAYEE HAS FILED ITS RETURN OF INCOME DISCLOSING PAY MENT RECEIVED, THEN, THE ASSESSEE WOULD NOT BE CONSIDERED IN DEFAULT. IN TH E PRESENT CASE, INQUIRY TO THIS ANGLE HAS NOT BEEN MADE BY THE AO. THEREFORE, I REMIT THE ISSUE TO THE FILE FOR THE AO FOR RE-ADJUDICATION. IF PAYEE HAS INCLUDED THIS RECEIPT IN ITS RETURN, THEN, THE ASSESSEE SHOULD NOT BE TREATED IN DEFAULT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/08/2016