The Academy of Medical Science, Kannur V. DCIT, Kannur

ITA 222/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81393 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Section: 201(1)

Judgement Text

1 ITA NO.222/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 222/COCH/2014 (ASSESSMENT YEAR 2007-08) THE ACADEMY OF MEDICAL SCIENCE VS DY. CIT, CIR.1 PARIYARAM, KANNUR-670 503 KANNUR PAN : AABAT1085C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. DIVYA RAVINDRAN RESPONDENT BY : SHRI K.K. JOHN DATE OF HEARING : 18-11-2014 DATE OF PRONOUNCEMENT : 21-11-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), KOZHIKODE DATED 05-02-2014 AND PERTAINS TO ASSESSME NT YEAR 2007-08. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF RS.6.5 CRORES U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION O F TAX AT SOURCE. SIMILARLY DISALLOWANCE TO THE EXTENT OF RS. 40,188 TOWARDS AD VERTISEMENT CHARGES U/S 40(A)(IA) OF THE ACT HAS ALSO BEEN MADE. 2 ITA NO.222/COCH/2014 3. SMT. DIVYA RAVINDRAN, THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ASSESSEE HAS PAID LEASE RENTAL ON THE LAND AND BUILDING TAKEN ON LEASE FOR THE PURPOSE OF RUNNING THE MEDICAL COLLEG E WITHOUT DEDUCTING TAX. IN A PROCEEDING INITIATED U/S 201 AND 201(1A) OF TH E ACT, THIS TRIBUNAL FOUND THAT THE ASSESSING OFFICER HAS RIGHTLY RAISED THE DEMAND U/S 201 AND CHARGED INTEREST U/S 201(1A) OF THE ACT. ACCORDING TO THE LD.COUNSEL, THE ISSUE IN APPEAL IS WITH REGARD TO DISALLOWANCE U/S 40(A)(IA), THEREFORE, THE DISALLOWANCE OF EARLIER BENCH OF THIS TRIBUNAL MAY NOT BE APPLICABLE. 4. ON THE CONTRARY, SHRI K.K. JOHN, THE LD.DR SUBMI TTED THAT THIS TRIBUNAL IN THE CASE OF SMT. PRASANNA RADHAKRISHNAN DAWSON IN ITA NO.29/COCH/2013 ORDER DATED 07-06-2013 FOUND THAT T HE DECISION OF VISAKHAPATNAM SPECIAL BENCH OF THIS TRIBUNAL IN MER ILYN SHIPPING & TRANSPORTS 136 ITD 23 IS NOT APPLICABLE. THE JURIS DICTIONAL HIGH COURT IN M/S PRUDENTIAL LOGISTICS & TRANSPORTS ITA NO.01 OF 2014 FOUND THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS NOT APPLICAB LE FOR THE ASSESSMENT YEAR 2007-08. IN VIEW OF THE ABOVE, ACCORDING TO T HE LD.DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 40(A)(IA) IS A DEEMING PROVISION WHICH PROVIDES FOR DISALLOWANCE OF EXPEND ITURE IF IT IS OTHERWISE 3 ITA NO.222/COCH/2014 ALLOWABLE IN CASE THE ASSESSEE FAILED TO DEDUCT TAX . IN THIS CASE, ADMITTEDLY, THE PAYMENT OF RS.6.5 CRORES WAS MADE T OWARDS LEASE RENT OF THE LAND AND BUILDING ON WHICH TAX WAS NOT DEDUCTED AT SOURCE. THE PROCEEDINGS INITIATED U/S 201(1) & 201(1A) HAVE ALS O BEEN CONFIRMED BY THIS TRIBUNAL IN ITA NOS 206, 208 & 209/COCH/2013 D ATED 22-11-2013. THE JURISDICTIONAL HIGH COURT FOUND THAT THE SECOND PROVISO INTRODUCED BY THE PARLIAMENT WITH EFFECT FROM 01-04-2013 IS NOT A PPLICABLE FOR THE ASSESSMENT YEAR 2007-08. MOREOVER, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE RECIPIENT HAS PAID THE TAXES ON TH E AMOUNT RECEIVED BY THEM FROM THE ASSESSEE. IN THOSE CIRCUMSTANCES, T HIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 6. SIMILARLY, DISALLOWANCE OF EXPENDITURE OF RS. 40 ,188 TOWARDS ADVERTISEMENT CHARGES WAS MADE UNDER SECTION 40(A)( IA) FOR NOT DEDUCTING TAX AT SOURCE. BEFORE US ALSO THE POSITION REMAINS THAT NO TAX WAS DEDUCTED FROM THE AMOUNT PAID. THEREFORE, THE CIT( A) HAS RIGHTLY CONFIRMED THE ADDITION. WE UPHOLD HIS ORDER. 7. NOW COMING TO THE DISALLOWANCE OF RS. 23,230 TOW ARDS SUNDRY CREDITORS, IT IS NOT IN DISPUTE THAT THE ASSESSEE C OULD NOT FILE ANY DETAILS WITH REGARD TO SUNDRY CREDITORS. IN THE ABSENCE OF ANY DETAILS WITH REGARD 4 ITA NO.222/COCH/2014 TO CREDITWORTHINESS OF THE CREDITOR, GENUINENESS OF THE CREDITOR AND IDENTITY OF THE CREDITOR, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE AUTHORITY BELOW ON THE ISSUES AGITATED BEFORE THIS TRIBUNAL. ACCORDINGLY, THE ORDER OF CIT(A) IS CONFIRMED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST NOVEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 21 ST NOVEMBER, 2014 PK/- COPY TO: 1. THE ACADEMY OF MEDICAL SCIENCE, PARIYARAM, KANNU R 670 503 2. THE DY.CIT, CIR.1, KANNUR 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A), KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH