The ITO, Ward-9(2), Ahmedabad V. Shri Anilbhai Laljibhai Patel, Ahmedabad

ITA 2035/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1547 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 31-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TUSHAR VAJA
• Keywords: Rectification of order; Retrospective amendment; Revised return
• Section: 194C

Judgement Text

I.T.A. NO . 2035 /AHD/ 20 1 3 ASSESSMENT YEAR: 200 5 - 06 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND RAJPAL YADAV JM ] I.T.A. NO. 2035 /AHD/ 20 1 3 ASSESSMENT Y EAR : 200 5 - 06 INCOME TAX OFFICER, WARD - 9(2), AHMEDABAD. .... .......... .APPELLANT VS. ANILBHAI LALJIBHAI PATEL , ............. . RESPONDENT PROP. O F JAY VIJAY CONSTRUCTION CO., 41, SAGAR BUNGLOWS, SOLA ROAD, NARANPURA, AHMEDABAD. [ PAN: A EVPP 5727 J ] APPEARANCES BY: ANIL KUMAR BHARDWAJ , FOR THE APPELLANT TUSHAR VAJA , FO R THE RESPONDENT D ATE OF CONCLUDING THE HEARING : MAY 19 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 23 RD , 201 6 O R D E R PER PRAMOD KUMAR AM : BY WAY OF THIS APPEAL , THE A SSESSING OFFICER HAS CHALLENG E D CORRECTNESS OF THE LD . CIT (A) S ORDER DATED 17.05.2013 IN THE MATTER OF ASSESSMENT UNDER SECTION 143 ( 3 ) OF THE INCOME TAX ACT , 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR, ON THE FOLLOWING GROUNDS : - 1 ) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XV, A HMEDABAD HAS ERRED IN L AW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.66,36,475/ - MADE U/S.40(A)(IA) OF THE ACT. 1A) THE LD. COMMISSIONER OF INCOME T AX (APPEALS) - XV, A HMEDABAD HAS ERRED IN LAW AND ON F ACTS IN HOLDING THAT THE AMENDMENT INTRODUCED BY FINANCE ACT 2000 IN SECT ION 40(A)(IA) OF THE AC T ARE CLARIFICATORY & HAVE I.T.A. NO . 2035 /AHD/ 20 1 3 ASSESSMENT YEAR: 200 5 - 06 PAGE 2 OF 4 RETROSPECTIVE EFFECT A ND HENCE NO DISALLOWANCE BE MADE U/S. 40(A)(IA) OF THE ACT, WHERE T.D.S. H A S BEEN P A ID BEFORE THE DUE DATE OF FILING OF R.O.I. 2. BRIEFLY STATED , THE RELEVANT FACTS ARE LIKE THIS. D URING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , THE A SSESSING OFFICER NOTED TH A T THE ASSESSEE HAS MADE VARIOUS PAYMENTS COVER E D BY SECTION 194C OF T HE ACT T O T HE TUNE OF RS.66 , 36 , 475 / - TO DIFFERENT PARTIES, ON WHICH THOUGH TAX HAS BEEN DEDUCTED AT SOU RCE THE PA Y MENT TO THE CREDIT OF GOVERNMENT ACCOUNT HAS BEEN MADE BEYOND THE PERMITTED TIME LIMIT , B U T , BEFORE FILING OF INCOME TAX RET U RN FOR THE RELEVANT YEAR . T HE A SSESSING OFFICER DISALLOWED THE S E PAYMEN T S BY INVOKING SECTION 40 (A)(IA) OF THE ACT. TH E ASSESSEE CARRIED THE MATTER IN APPEAL AND CONTENDED THAT THE DISALLOWANCE SHOULD NOT BE MADE INTER ALIA FOR THE REASON THAT IN ANY EVENT RECIPIENT OF TH E INCOME HAS ALREADY PAID TAXES AND THUS THERE IS NO PREJUDICE TO THE LEGITIMATE INTEREST OF THE R EVEN UE. IT WAS ALSO SUBMITTED THAT ONLY A DELAY IN MAKING THE PAYMENT OF TAX DEDUCT ED AT SOURCE BUT THEN THE AMENDMENT BY THE F INANCE A CT 200 8 IS RETROSPECTIVE IN EFFECT INASMUCH AS EVEN IF THE DEPOSIT OF TAX DEDUCTED AT SOU R CE WITH THE G OVERNMENT IS DELAYED BUT HAS MADE BEFORE FILING OF RETURN , THE DISALLOWANCE IS NOT WARRANTED. LD . C IT ( A ) UPHELD TH E GRIEVANCES SO R AIS E D BY THE ASSESS E E AND DELETED THE IMPUGNED DISALLOWANCE BY INTER ALIA OBSERVING AS FOLLOWS : - 5.2 GROUND N O.2 IS AGAINST THE DISALLOWANCE U /S . 40(A)(IA) OF THE ACT AND ADDITION OF RS.66,36,475 S / - . AS DISCUSSED BY A.O. IN THE ASSTT. O RDER THAT T HOUGH THE APPELLANT DEDUCTED TDS OUT OF THE VARIOUS EXPENSES AS REQUIRED U/S . 194C OF THE ACT BUT APPELLANT FAILED TO DEPOSIT THE SAME WITHIN DUE DATE/ TIME AS STIPULATED IN THE PROVISIONS OF SECTION 200(1) OF THE ACT AND THEREFORE CONSIDERED THE APPELLANT IN DEFAULT AS FAR AS PROVISIONS OF C HAPTER XVII B OF THE ACT. I N VIEW OF THIS, THE CORRESPONDING EXPENDITURE SO CLAIMED OF RS .6 6.3 6 .475/ - IN RESPECT OF VARIOUS PARTIES (DISCUSSED IN ASSTT. ORDER AS WELL AS IN THE EARLIER PARAS OF THIS ORDER) WAS DISALLOWED AND ADDED AS PER PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE APPELLANT DURING APPEAL PROCEEDINGS SUBMITTED THE LEGAL POSITION ON RELYING VARIOUS I.T.A. NO . 2035 /AHD/ 20 1 3 ASSESSMENT YEAR: 200 5 - 06 PAGE 3 OF 4 C ASE LAWS TO CONTEND THAT SUBSEQUENT AMENDMENT B ROUGHT BY THE FINANCE ACT 2010 IN THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WAS HELD AS CLARIFICATORY IN NATURE AND HENCE RETROSPECTIVE BENEFIT BE GIVEN TO APPELLANT FOR THE ALLOWABILITY OF EXPENDITURE FO R WHICH THE DEDUCTED T DS WAS PAID BEFORE FILLING THE RETURN OF INCOME WITHIN DUE DATE. I AM INCLINED TO ACCEPT THE CONTENTION OF APPELLANT, I HAVE PERUSED THE CASE LAWS AND I AM INCLINED THAT RATIO OF VARIOUS CASE LAWS RELIED ON BY APPELLANT I.E. KANUBHAI RAMJIBHAI VS. ITO (SUPRA), VIRGIN CREATION VS. CI T(SUPRA), ALPHA P ROJECT S OCIETY PVT. LTD. VS. DY. C. I.T (SUPRA) ARE DIRECTLY AND SQUARELY A PPLICABLE IN THE CASE OF APPELLANT . THE APPELLANT SUBMITTED THE DETAILS IN RESPECT O F DEDUCTION OF TDS OUT OF VARIO US EXPENDITURE AND RELEVANT CHALLAN OF TDS PAYMENT TO SUBSTANTIATE THE CONTENTION THAT SUCH TDS WAS DULY PAID BEFORE THE DUE DATE OF FILLING OF RETURN OF INCOME, IT IS THEREFORE, THE DISALLOWANCE AND ADDITION SO MADE BY A.O. ARE NOT JUSTIFIED AND SUSTAINAB LE. THE A.O. IS DIRECTED TO ALLOW SUCH EXPENSES OF RS.66,36,415 / - AND TO DELETE THE ADDITION SO MADE. THE APPELLANT GETS RELIEF ACCORDINGLY. AS EXAMINED DURING THE APPEAL PROCEEDINGS THAT APPELLANT THOUGH REVISED RETURN FOR SUBSEQUENT YEARS CLAIMED THE DED UCTION OF SUCH EXPENDITURE ON PAYMENT OF TDS IN THAT YEAR BASIS THEREFORE A.O . IS FURTHER DIRECTED TO EXAMINE THIS ASPECT WITH ATTACHED ANNEXURE OF THIS ORDER AND PASS NECESSARY RECTIFICATION ORDER TO AVOID DOUBLE DEDUCTION AND RECOVERY OF REFUND IF ALREAD Y ISSUED FOR WHICH AN AFFIDAVIT CUM INDEMNITY BOND OBTAINED AND PLACED ON RECORD. 3. THE ASSESSING OFFICER IS AGGRIEVED AND I S IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF T HE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE FIND THAT THE HON BLE JURISDICTIONAL H IGH C OURT IN THE CASE OF CIT VS . BMS P ROJECT S PVT. LTD. ( 2014 ) 361 ITR 195 (GUJ) HA S HELD TH A T THE AM EN D ME NT IN SECTION 40 (A)(IA) BY FI NANCE ACT 2010 HAS RETROSPECTIVE EFFECT AND ACCORDINGLY AS LONG AS THE ASS E SS E E HAS DEP OSITED THE TAX DEDUCTED AT S OURCE BEFORE TH E DUE DATE OF FILING RETURN, SECTION 40 (A)(IA) CANNOT BE INVOKED . W HEN SUCH ARE THE VIEWS OF HON BLE JURISDICTIONAL HIGH COURT, THE VE R Y FOUNDAT ION OF IMPUGNED DISALLOWANCE CEASE S TO BE LEGALLY SUSTAINABLE. IN ANY EVENT, IN THE PRESENT CASE I.T.A. NO . 2035 /AHD/ 20 1 3 ASSESSMENT YEAR: 200 5 - 06 PAGE 4 OF 4 THE RECIPIENT S HAVE DULY PAID TAX ON TH E INCOME AND EMBEDDED IN THE IMPUGNED PAYMENTS AND , THEREFORE , FOLLOWING TH E ESTEEM E D VIEWS OF THE HON BLE DELHI HIGH C OURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. ( 2015 ) 377 ITR 365 , NO DISALLOWANCE CAN BE MADE UNDER SECTION 40 (A)(IA) OF THE ACT FOR THESE PAYMENTS. 6. IN VIEW OF THESE DISCUSSION S AND BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSION ARRIV E D AT BY THE LD . C IT ( A ) AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, APPEAL IS DISMISSED. P RONOUNCED IN THE OPEN COUR T TODAY ON THE 23 RD DAY OF MAY , 2016 . SD/ - SD/ - RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 23 RD DAY OF MAY , 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TR IBUNAL AHMEDABAD BENCHES, AHMEDABAD