ACIT, Jaipur V. MUGHAL INTERNATIONAL, Jaipur

ITA 211/JPR/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5152 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMAADDL
• Assessee Lawyers: SHRI P C PARWAL CA DHK
• Keywords: Retrospective amendment
• Section: 143(3); 147; 139

Judgement Text

- VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 211/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 THE ACIT CIRCLE- 5 JAIPUR CUKE VS. M/S. MUGAL INTERNATIONAL 4233, KALLAN NAWAB KI HAWELI JAGANNATH SHAH KA RASTA, RAMGANJ BAZAAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACFM 0948 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA,ADDL.CIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15 /07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-5, JAIPUR DATED 17-12-2015 FOR THE ASSESS MENT YEAR 2005-06 RAISING THEREIN FOLLOWING GROUND:- (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETIN G THE DISALLOWANCE U/S 40A(IA) OF RS. 41,30,000/- MADE BY THE AO DUE TO NOT DEPOSITING THE TDS AMOUNTING IN THE GOVT . ACCOUNT BEFORE DUE DATES AS PER PROVISIONS OF THE I .T. ACT. ITA NO. 211/JP/2016 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. MUGHAL INTERNA TIONAL, JAIPUR . 2 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED THE RETURN SHOWING LOSS OF RS. 19,75,350/- ON 31-10-2005. THE CASE OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE ACT ON 18-10-2007 AT NI L INCOME. THE CASE OF THE ASSESSEE WAS SUBSEQUENTLY REOPENED U/S 147 O F THE ACT. THE ASSESSEE FIRM DERIVES INCOME FROM MANUFACTURING AND EXPORT OF HANDMADE WOOLEN & SILK CARPETS AND DURRIES. THE AO DURING THE COURSE VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE O BSERVED THAT TDS AMOUNT OF RS.86,378/- ON THE PAYMENT OF RS. 41,31,300/- IN RESPECT OF JOB WORK WAS DEDUCTED BUT THE ASSESSEE FAILED TO DEPOSIT THE SAME IN CENTRAL GOVT. ACCOUNT BEFORE THE END OF THE F.Y. 2004-05. THEREFO RE, THE AO ASKED THE ASSESSEE TO GIVE EXPLANATION. THE AO EXAMINED THE A SSESSEE SUBMISSION AND FOUND THAT THE ASSESSEE HAS DEDUCTED THE TDS BU T THE SAME WAS NOT DEPOSITED IN THE GOVT. ACCOUNT WITHIN DUE DATES. AS PER THE PROVISIONS OF I.T. ACT, THE ASSESSEE SHOULD HAVE MADE THE DEDUCTI ON. HOWEVER, THE ASSESSEE HAS FAILED TO DO SO. HENCE, THE AO DISALLO WED THE EXPENSES AMOUNTING TO RS. 41.31 LACS U/S 40A(IA) OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE/ 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS DELETED THE DISALLOWANCE OF RS. 41.3 1 LACS MADE BY THE AO U/S 40(A)(IA) OF THE ACT BY OBSERVING AS UNDER:- ITA NO. 211/JP/2016 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. MUGHAL INTERNA TIONAL, JAIPUR . 3 2.3 I HAVE GONE THROUGH THE FACTS OF THE CASE, TH E ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. IT IS AN UNDISPUTED FACT THAT TDS CORRESPONDING TO THE JOB W ORK PAYMENT OF RS. 41,31,000/- WAS DEPOSITED ON 25-05-05 VIZ. BEFO RE THE DUE DATE SPECIFIED U/S 139(1). THE PROVISIONS OF SECTION 40( A)(IA) WERE AMENDED BY FINANCE ACT, 2010 W.E.F. 01-04-10 TO PRO VIDE THAT WHERE TAX DEDUCTED IS PAID BEFORE THE DUE DATE SPEC IFIED U/S 139 (1), NO DISALLOWANCE U/S 40(A)(IA) WILL BE MADE. SU BSEQUENTLY, THERE HAS BEEN A SLEW OF JUDGEMENTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HARISH CHANDRA AH UJA [2015] 125 DTR 184 (RAJ) WHEREIN THE SAID AMENDMENT IS HEL D TO BE OF CURATIVE NATURE THEREBY HAVING RETROSPECTIVE EFFECT FROM 01-04-05. IN THE JUDGEMENT CITED SUPRA, IT HAS BEEN HELD AS F OLLOWS:- IT CAN BE THUS SEEN THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 IS ONLY AN AMEND MENT IN CONTINUATION OF THE EARLIER AMENDMENT MADE IN THE F INANCE BILL 2008 WITH RETROSPECTIVE EFFECT FROM IST APRIL 2005. THE LEGISLATURE, WHILE EXTENDING THE TIME OF PAYMENT OF TDS DEDUCTED IN THE MONTH OF MARCH TILL DUE DATE OF FIL ING OF THE RETURN U/S 139(1) OF THE ACT, CONSIDERED THE APPARE NT DIFFERENCE WHERE AN UNINTENDED BENEFIT WAS GIVEN TO THE ASSESSEE WHO DEDUCTED THE ENTIRE YEARS TDS IN THE MONTH OF MARCH OF THE PREVIOUS YEAR WHICH WERE ELIGIBLE TO P AY TDS SO DEDUCTED TO THE GOVT. BY UE DATE OF FILING OF TH E RETURN U/S 139(1) OF THE ACT. HOWEVER, THE ASSESSEE WHO MAY HA VE DEDUCTED THE TAX IN EARLIER MONTHS BEGINNING FROM A PRIL TO THE END OF FEB. OF THE PREVIOUS YEAR, DID NOT GET S UCH BENEFIT OF EXTENDED TIME AND THUS THE SAME WORKED UNREASONA BLY FOR SUCH ASSESSEES, AND THEREFORE, IT CANNOT BE SAFELY HELD UPHOLDING THE CONTENTION OF THE RESPONDENTS THAT TO CURE SUCH DEFECT, AMENDMENT IN THE YEAR 2010 HAS BEEN BROUGHT AND THE BENEFIT OF EXTENDED TIME TO AVOID HARDSHIP WAS GIVEN TO THE ASSESSEE AND THEREFORE, AMENDMENT OF 2010 IS IN CONTINUATION TO THE AMENDMENT OF 2008 AND THEREFORE , CURATIVE IN NATURE AND THE SAME HAS TO BE HELD RETR OSPECTIVE I.E. WITH EFFECT FROM IST APRIL, 2005. 2.4 THE JURISDICTIONAL HIGH COURT HAS HELD THE AMEN DMENT TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 AS BEING WITH ITA NO. 211/JP/2016 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. MUGHAL INTERNA TIONAL, JAIPUR . 4 RETROSPECTIVE EFFECT FROM 01-04-05. THE SAME WILL B E APPLICABLE TO THE CASE OF THE ASSESSEE WHICH PERTAINS TO A.Y. 200 5-06. RESPECTFULLY FOLLOWING THE ABOVE EFFECT RULING THE DISALLOWANCE OF RS. 41,31,000/- MADE U/S 40A(IA) IS DIRECTED TO BE DELETED. 2.3 NOW THE REVENUE IS IN APPEAL BEFORE ME AND THE LD. DR DURING THE COURSE OF HEARING RELIED ON THE ORDER OF THE AO WIT H THE PRAYER THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 41.31 LACS U/S 40(A)(IA) OF THE ACT, MADE BY THE AO DUE TO NOT DE POSITING THE TDS AMOUNT IN THE GOVT. ACCOUNT BY THE ASSESSEE BEFORE DUE DATES AS PER PROVISION OF THE I.T. ACT. 2.4 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS DELETED THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN VIEW O F THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. HARISH CHANDRA (SUPRA). 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE SAID TDS ON JOB WORK CHARGES FOR THE MONTHS OF DEC. 2004, JANUARY, 2005 & FEB. 2005 WAS DEDUCTED BUT THE SAME WAS DEPOSITED ON 25-05-2005 AS MENTIONED B Y THE AO IN HIS ASSESSMENT ORDER . IT IS ALSO NOTED THAT THE PROVIS IONS OF SECTION 40(A)(IA) WERE AMENDED BY FINANCE ACT, 2010 W.E.F. 01-04-10 T O PROVIDE THAT WHERE TAX DEDUCTED IS PAID BEFORE THE DUE DATE SPEC IFIED U/S 139 (1), NO ITA NO. 211/JP/2016 THE ACIT, CIRCLE- 5, JAIPUR VS. M/S. MUGHAL INTERNA TIONAL, JAIPUR . 5 DISALLOWANCE U/S 40(A)(IA) WILL BE MADE. I FIND THA T THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE DECISION OF HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE CIT VS. HARISH CHANDRA (SUPRA) AN D HAS DELETED THE DISALLOWANCE OF RS. 41.31 LACS MADE BY THE AO U/S 4 0(A)(IA). CONSIDERING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. HARISH CHANDRA (SUPRA), I SEE NO INFIRMITY IN THE O RDER OF THE LD. CIT(A) ON THIS ISSUE WHICH IS SUSTAINED. THUS THE SOLITARY GROUND OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 15 /07/2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15/07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE- 5, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. MUGHAL INTERNATIONAL, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 211/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR