M/s H.S. Mohindra Traders, New Delhi V. ITO, New Delhi

ITA 2045/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3712 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-07-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: K R MANJANI
• Keywords: TDS
• Section: 40(a)(ia); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2045/DEL/2010 ASSESSMENT YEAR : 2007-08 M/S H.S. MOHINDRA TRADERS, 15 SWADESHI MARKET, SADAR BAZAR. PAN : AAACH2572H VS. ITO, WARD 39 (2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.R. MANJANI, ADVOCATE REVENUE BY : SMT. MONA MOHANTY, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER OF THE CIT (A) DATED 8 TH MARCH, 2010 FOR ASSESSMENT YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER:- LD. ITO AS WELL AS LD. CIT (A) HAVE ERRED IN SUSTAI NING ADDITION OF RS.12,63,265/-IN SPITE OF THE FACT THAT TDS IS DULY PAID ON 7.4.2007 I.E., MUCH BEFORE DUE DATE OF FILI NG OF THE RETURN AND ALSO BECAUSE AMOUNT OF RS.10,26,404/- IS NOT SPENT DURING THE YEAR BEING PART OF CLOSING STOCK A ND THEREFORE CANNOT BE HIT BY SEC. 40 (A)(IA) BECAUSE THIS MOUNT IS NOT CLAIMED AS EXPENDITURE. ORDER OF THE LD. CIT IS CONTRARY TO AIM OF THE AMEN DMENT WHICH IS TO GIVE BENEFIT TO TAX PAYER BUT STILL H E DOES NOT GIVE THE BENEFIT. SECONDLY, 40 (A)(IA) WILL HIT ONLY AM OUNT WHICH IS SPENT. SINCE RS.10,26,404/- IS NOT SPENT BEING PAR T OF THE CLOSING STOCK, CANNOT BE DISALLOWED. ITA NO.2045/DEL/2010 2 2. ON THE FOLLOWING EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE WAS REQUIRED TO DEDUCT TAX:- I) CLEARING CHARGES RS.351803/- II) FREIGHT CARTAGE INWARD RS.967732/- III) SHIPPING EXPENSES RS.1028527/- 3. ACCORDING TO THE ASSESSING OFFICER, THE TAX WAS REQUIRED TO BE DEDUCTED ON THESE EXPENDITURES IN THE MONTH OF FEBRUARY, 200 7 AND THE ASSESSEE HAD DEDUCTED TAX ONLY IN THE MONTH OF MARCH, 2007 AND T HE TAX DEDUCTED WAS PAID AT RS.28,417/- ON 9 TH APRIL, 2007 AND RS.698/- ON 12 TH JUNE, 2007. THE ASSESSING OFFICER RELYING ON THE PROVISIONS OF SECTION 40(A)( IA) IS OF THE OPINION THAT SINCE THE TAX WAS NOT DEDUCTED AND DEPOSITED WITHIN THE S TIPULATED TIME, THE AFOREMENTIONED EXPENDITURES COULD NOT BE ALLOWED DU RING THE YEAR UNDER CONSIDERATION. AS SUCH, THE DISALLOWANCE WAS MADE FOR AN AGGREGATE SUM OF RS.22,91,792/- AND THE RETURNED LOSS OF RS.2,51,690 /- WAS ASSESSED AT AN INCOME OF RS.20,40,101/-. BEFORE THE CIT (A) IT WA S PLEADED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS WRONG . THE ASSESSEE COULD DEPOSIT THE TDS UPTO THE DUE DATE OF FILING THE INC OME-TAX RETURN PRESCRIBED U/S 139 (1) AS THE TAX WAS DEDUCTED IN THE MONTH OF MAR CH, 2007 AND WAS ALSO DULY PAID BEFORE THE DUE DATE OF FILING THE RETURN. LD. CIT (A) HAS NOT ACCEPTED SUCH SUBMISSIONS OF THE ASSESSEE AND HAS UPHELD THE DISA LLOWANCE. THE ASSESSEE IS AGGRIEVED, HENCE, IN APPEAL. 4. THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICE R AND CIT (A) WERE REITERATED BEFORE US AND RELYING ON THOSE SUBMISSIO NS IT WAS SUBMITTED THAT THE DISALLOWANCE HAS WRONGLY BEEN UPHELD BY THE CIT (A) . 5. ON THE OTHER HAND, LD. DR RELYING ON THE ORDER O F THE ASSESSING OFFICER AS WELL AS THE CIT (A) PLEADED THAT THE DISALLOWANCE H AS RIGHTLY BEEN SUSTAINED BY THE CIT (A). ITA NO.2045/DEL/2010 3 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE UNDISPUTED FACTS AR E THAT THE TAX IN RESPECT OF ABOVE MENTIONED EXPENDITURES WAS DEDUCTED BY THE AS SESSEE IN THE MONTH OF MARCH, 2007 AND THE TDS SO DEDUCTED WAS PAID MUCH B EFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME AS PRESCRIBED IN SEC TION 139 (1) OF THE IT ACT, 1961 WHICH, IN THE PRESENT CASE, IS 30 TH SEPTEMBER, 2007. 7. SECTION 40(A)(IA) DESCRIBE THE CIRCUMSTANCES UND ER WHICH, IN CASE THE ASSESSEE FAIL TO DEDUCT AND DEPOSIT THE TAX, THE AM OUNT CAN BE DISALLOWED. FOR PROPER APPRECIATION OF THE STATE OF AFFAIRS, IT IS NECESSARY TO REPRODUCE THE RELEVANT PART OF SECTION 40 (A)(IA) WHICH READ AS U NDER:- SECTION 40 (A) (IA) : ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CON TRACTOR OR SUB- CONTRACTOR , BEING RESIDENT, FOR CARRYING OUT ANY W ORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WH ICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAI D. 8. ACCORDING TO THE AFOREMENTIONED SECTION, IF A PA RTICULAR ASSESSEE IN CASE OF PAYMENT OF INTEREST, COMMISSION, BROKERAGE, RENT OR ROYALTY, FEE FOR PROFESSIONAL SERVICES OR FEE FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNT PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BE ING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID IN FOLLOWING CONDITIONS:- I) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS S O DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE T HE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139; OR II) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. 9. THE READING OF THE ABOVE CLAUSE SHOWS THAT IF TH E TAX IS DEDUCTIBLE UNDER CHAPTER XVII-B AND THE SAID TAX HAS NOT BEEN DEDUCT ED OR AFTER DEDUCTION IT HAS ITA NO.2045/DEL/2010 4 NOT BEEN PAID, THEN, IF THE TAX IS DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR, THEN, THE LIABILITY OF THE ASSESSEE IS TO PAY THE S AME FOR THE ALLOWABILITY OF THE SAID EXPENDITURE ON OR BEFORE THE DUE DATE SPECIFI ED IN SUB-SECTION (1) OF SECTION 139. SUB-SECTION (1) OF SECTION 139 REGULATES THE DUE DATES OF FILING THE RETURN OF INCOME IN NORMAL CASES. THE DUE DATE OF FILING THE RETURN IN THE PRESENT CASE IS 30 TH SEPTEMBER, 2007. THE ASSESSEE IN THE PRESENT CASE HAS DEDUCTED TAX IN THE MONTH OF MARCH, 2007 AND IT HAS PAID THE SAID T DS BEFORE THE DUE DATE OF FILING THE RETURN. THEREFORE, THE DISALLOWANCE CAN NOT BE MADE U/S 40(A)(IA) AS THERE IS NO DEFAULT ON THE PART OF THE ASSESSEE OF NON-DEDUCTION OR NON-PAYMENT OF TDS IN ACCORDANCE WITH THE SAID PROVISION. THE DISALLOWANCE HAS WRONGLY BEEN UPHELD BY THE CIT (A) AND THE SAME DESERVES TO BE DELETED. ACCORDINGLY THE DISALLOWANCE IS DELETED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. . THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.07.20 10. SD/- SD/- [B.C. MEENA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 09.07.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES