The Income Tax Officer, Ward-6(3), Hyderabad V. Meli Ratna JV, Hyderabad

ITA 20/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4833 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PHANI KISHORE
• Keywords: Retrospective amendment
• Section: 43B; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.20/HYD/2013 ASSESSMENT YEAR 2009-2010 ITO, WARD 6(3) HYDERABAD. VS. MEIL RATNA JV HYDERABAD PAN AAPFM7621L (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K.C.DEVDAS (AR) FOR RESPONDENT : SHRI PHANI KISHORE (DR) DATE OF HEARING : 29.07.2013 DATE OF PRONOUNCEMENT : 21.08.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 25.10.2012 FOR THE ASSESS MENT YEAR 2009-2010. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASS ESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010 O N 30.09.2009, DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SEC URITY BY ISSUING NOTICE UNDER SECTION 143(2) AND 142(1) OF THE I.T. ACT, 19 61. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSE SSEE HAS ESTIMATED A SUM OF RS.25,43,17,766/- TOWARDS SUB-CONTRACT EXPENS ES. THOUGH THE SUM OF RS.28,81,420/- WAS DEDUCTED AT SOURCE AS TAX, IT WAS REMITTED TO THE GOVERNMENT ACCOUNT ON 7.4.2009. THE ASSESSEE CLAIME D THAT THE AMENDMENT TO SECTION 40(A)(IA) MADE BY THE FINANCE A CT, 2010 W.E.F. 1.4.2010 REQUIRING THE PAYMENT TO BE MADE ON OR BEFO RE THE DUE DATE UNDER SECTION 139(1) WAS RETROSPECTIVE AND THEREFORE, APP LICABLE TO THE ASSESSEE. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE RELYING ON THE DECI SION OF ITAT, MUMBAI BENCH IN THE CASE OF M/S. BHARATI SHIPYARD IN ITA.NO .2404/MUM/2009. THE ASSESSEE ALSO TOOK AN ALTERNATIVE PLEA THAT THE TDS PROVISIONS WERE NOT 2 AT ALL APPLICABLE TO THE TRANSACTION IN QUESTION. T HE ASSESSING OFFICER REJECTED THIS CLAIM ALSO AND DISALLOWED THE ENTIRE P AYMENT OF RS.25,43,70,766/- UNDER SECTION 40(A)(IA) OF THE AC T. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) HELD THA T THE CALCUTTA HIGH COURT IN CIT VS. VIRGIN CREATORS (GA NO. 3200/2011, DATED 23.11.2011) HAS HELD THAT THE AMENDMENT TO THE PROVISION WAS RETROSPECTI VE IN NATURE. THIS DECISION WAS FOLLOWED BY THE ITAT, AHMEDABAD BENCH I N THE CASE OF M/S. ALPHA PROJECTS SOCIETY P. LTD. VS. DCIT (ITA NO.2869/ AHD/2011, 23.3.2012) WHICH ALSO TOOK NOTE OF THE DECISION IN THE CASE OF M/S. BHARTI SHIPYARD (SUPRA). RESPECTFULLY FOLLOWING THESE DECISIONS, THE LEARNED CIT(A) HELD THAT THE AMENDMENT TO SEC. 40(A)(IA) PERMITTING THE DEDU CTOR TO REMIT THE TDS TO GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE UNDER SEC.139(1) IS RETROSPECTIVE, AND THEREFORE, APPLICABLE TO THE APP ELLANT FOR THE A.Y. 2009-10. ACCORDINGLY, THE CIT(A) ALLOWED THE APPEAL ON THIS I SSUE. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED BOTH IN LAW AND ON FACTS O F THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T THE AMENDMENT BROUGHT, IN BY FINANCE ACT, 2010 TO SECTI ON 40(A)(IA) IS EFFECTIVE FROM 1.4.2010 ONWARDS AND AS SUCH APPL ICABLE FROM ASSESSMENT YEAR 2010-11 AND SUBSEQUENT ASSESSMENT Y EARS. 3. THE LEARNED CIT(A) SHOULD HAVE RECOGNIZED THAT T HE INTENTION OF LEGISLATURE FROM THE NOTES ON CLAUSES AND MEMORANDU M EXPLAINING THE PROVISIONS OF FINANCE BILL, 2010 DOE S NOT PARTICULARLY INDICATE ANY RELAXATION IN THE PROVISI ONS RETROSPECTIVELY FROM ASSESSMENT YEAR 2005-06 ONWARD S. 4. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT TH E MUMBAI SPECIAL B BENCH IN THE CASE OF BHARATHI SHIPYARD VS. DCIT, CIRCLE 3(1), (ITA.NO.2404/MUM/2009 DATED 9.9.2011) HELD THAT THE AMENDMENT BROUGHT IN BY ASSESSMENT YEAR 2010-11 AND THE SAME CANNOT BE HELD TO BE RETROSPECTIVE FROM AS SESSMENT YEAR 2005-06. 5. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TI ME OF HEARING. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K.C.DE VDAS SUBMITTED THAT THE AMENDMENT BROUGHT IN BY FINANCE ACT, 2010 TO SEC TION 40(A)(IA) IS 3 APPLICABLE FROM 1.4.2010 ONWARDS AND AS SUCH, APPLI CABLE FOR THE ASSESSMENT YEAR 2010-2011 AND SUBSEQUENT ASSESSMENT YEARS. HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE, RELIED ON THE DECISIONS OF ITO VS. TARU LEADING EDGE (P) LTD. ITA.NO.3592/DEL/2011 DATED 22 .05.2012 AND ITO VS. ANILKUMAR & CO. 214 TAXMAN 202 (KAR). THE LEARNED CO UNSEL SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) HAVE RETRO SPECTIVE APPLICATION. 6. THE LEARNED COUNSEL FURTHER SUBMITTED THAT SINCE THE CALCUTTA HIGH COURT IN THE CASE OF CIT, KOL-XI, KOLKATA VS. VIRGI N CREATIONS VIDE ITAT.NO.302 OF 2011 DATED 23 RD NOVEMBER, 2011 AND KARNATAKA HIGH COURT IN THE CASE OF ITO VS. ANILKUMAR & CO. (KAR.) 214 T AXMAN 202 HAVE HELD THAT THE PROVISIONS OF SEC.40(A)(IA) HAS RETROSPECT IVE APPLICATION AND AS SUCH, THE SPECIAL BENCH DECISION IN THE CASE OF M/S. BHAR ATHI SHIPYARD VS. DCIT ITA.NO.2404/MUM/2009 DATED 09.09.2011 IS NOT APPLIC ABLE. 7. THE LEARNED D.R. POINTED OUT THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 HAS BEEN SPECIFICALLY MADE A PPLICABLE FROM THE ASSESSMENT YEAR 2010-11. THE INTENTION OF THE LEGISL ATURE AS GATHERED FROM THE NOTES ON CLAUSES AND THE MEMORANDUM EXPLAINING T HE PROVISIONS OF THE FINANCE BILL DOES NOT PARTICULARLY INDICATE ANY RELAXA TION IN THE PROVISION RETROSPECTIVELY FROM ASSESSMENT YEAR 2005-06. THE OBJE CTIVE SOUGHT TO BE ACHIEVED BY BRINGING OUT SECTION 40(A)(IA) IS THE AU GMENTATION OF THE TDS COLLECTIONS/COMPLIANCE. THE FACT THAT THIS PROVISIO N IS STILL CONTINUING IN THE ACT, PROVES THAT THE PARLIAMENT DID NOT CONSIDER IT EXPEDIENT TO REMOVE THE VIGOUR OF SECTION 40(A)(IA) PROJECTING ANY SO-CALLED HARDSHIP, WHICH IS ONLY THE SIDE EFFECT IN THE ATTAINMENT OF THE LARGER GOA L OF AUGMENTATION OF COMPLIANCE OF TDS PROVISION. 8. THE LEARNED A.R. RELIED ON THE JUDGMENT OF THE H ONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P.) LTD. VS. CI T (1997) 224 ITR 677 (S.C.) IN SUPPORT OF HIS CONTENTION THAT THE AMENDMENT HAV ING RETROSPECTIVE EFFECT FROM ASSESSMENT YEAR 2005-06. IN THIS CASE, THE QUES TION BEFORE THE HONBLE SUPREME COURT WAS WHETHER SUCH PROVISO INSERTED BY T HE FINANCE ACT, 1987 WHICH CAME INTO EFFECT FROM 1 ST APRIL, 1988 IS PROSPECTIVE OR RETROSPECTIVE FROM ASSESSMENT YEAR 1984-85, BEING THE YEAR OF INSER TION OF SECTION 43B. 4 THE HONBLE SUPREME COURT OBSERVED THAT THE PROVISO WAS INSERTED TO CURE UNINTENDED CONSEQUENCES AND MAKE THE SECTION WORKAB LE AND THEREFORE, FINALLY CONCLUDED THAT IT WAS RETROSPECTIVE. IT CAN, THEREFORE, BE EASILY SEEN THAT THE AMENDMENT TO SECTION 43B BY THE FINANCE ACT , 1987 HAS BEEN HELD TO BE RETROSPECTIVE ON THE GROUND THAT IT WAS MADE TO REMOVE UNINTENDED CONSEQUENCES OF THE SECTION AND TO MAKE IT WORKABLE , NOTWITHSTANDING THE FACT THAT SUCH PROVISO WAS INSERTED WITH EFFECT FRO M 1 ST APRIL, 1988. 9. WE HAVE HEARD BOTH THE PARTIES. WE FIND NO INFIR MITY IN THE ORDER OF THE CIT(A) AS THE CIT(A) HAS FOLLOWED THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA) WHEREI N IT HAS BEEN HELD THAT THE AMENDMENT TO PROVISION IS RETROSPECTIVE IN NATURE. WE ALSO PLACED RELIANCE ON THE DECISION OF AHMEDABAD BENCH IN THE CASE OF M /S. ALPHA PROJECTS SOCIETY P. LTD. VS. DCIT (ITA.NO.2869/AHD/2011, DATE D 23.3.2012). 10. WE ARE ALSO INCLINED TO FOLLOW THE DECISION OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT-IV, HYDERABAD VS. M/S. PEC ELECTRICALS PVT. LTD. SECUNDERABAD ITTA.NO.263 OF 2013 DATED 12.07.2013 W HEREIN THE HONBLE ANDHRA PRADESH HIGH COURT HELD THAT THE AMENDMENT T O SECTION 40(A)(IA) MADE BY THE FINANCE ACT OF 2010 IS RETROSPECTIVE IN NATURE. WE FIND THAT THE AHMEDABAD BENCH HAS TAKEN NOTE OF THE DECISION IN T HE CASE OF M/S. BHARATI SHIPYARD IN ITA.NO.2404/MUM/2009 AND FINALLY HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) PERMITTING THE DEDUC TOR TO REMIT THE TDS TO GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE OF FIL ING RETURN UNDER SECTION 139(1) IS RETROSPECTIVE AND THEREFORE, APPLICABLE T O THE ASSESSMENT YEAR 2009-10 AS IN THE PRESENT CASE. BEING SO, IF IT IS REMITTED WITHIN THE DUE DATE, THE ASSESSEE CLAIM TO BE ALLOWED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISPOSE D-OFF AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST, 2013. SD/- SD/- (CHANDRA POOJARI) (SMT. ASHA VIJAYAR AGHAVAN) ACCOUNTANT MEMBER JUDICIA L MEMBER HYDERABAD, DATE 21 ST AUGUST, 2013. VBP/- 5 COPY TO 1. ITO, WARD 6(3), HYDERABAD. 2. MEIL RATNA JV, PLOT NO.25, NAVNIRMAN NAGAR, ROA D NO.71, JUBILEE HILLS, HYDERABAD PAN AAPFM7621L 3. CIT(A)-IV, HYDERABAD. 4. CIT-III, HYDERABAD. 5. D.R. A BENCH, ITAT, HYDERABAD.