The DCIT, Circle-6, Surat V. M/s. Dhara Enterprise, Surat

ITA 2222/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89256 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO. 2222/AHD/2011 % ) *)/ ASSESSMENT YEAR: 2005-2006 DCIT, CIR.6 SURAT. VS M/S.DHARA ENTERPIRSE C/O. SHIVANGI ENCLAVE OPP: MAHESHWARI, MOJE RUNDH SURAT DUMAS ROAD, SURAT. PAN : AAEFD 2636 H +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SHRI M.K. SINGH, SR.DR ASSESSEE(S) BY : NONE / DATE OF HEARING : 27/03/2015 / DATE OF PRONOUNCEMENT: 10 /04/2015 // O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER O F INCOME-TAX-IV, SURAT DATED 31/5/2011. 2. SOLE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A), SURAT HAS ERRED IN DELETING THE AD DITION OF RS.10,66,200/- MADE BY THE AO ON ACCOUNT OF EXPENSE S NOT DEDUCTIBLE DUE TO CONTRAVENTION OF SECTION 40(A)(IA ) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVIN G THAT EVIDENCE IN RESPECT OF PAYMENT OF TDS WITHIN PRESCRIBED TIME WA S NOT FURNISHED BY ITA NO.2222/AHD/2011 2 THE ASSESSEE IN RESPECT OF EXPENDITURE OF RS.10,66, 200/- PAID TO SUB- CONTRACTORS. HE, THEREFORE, OBSERVING THAT TDS COL LECTED FROM PAYMENTS MADE TO SUB-CONTRACTORS WAS NOT PAID WITHIN THE PRE SCRIBED TIME, DISALLOWED DEDUCTION FOR THE ENTIRE EXPENDITURE OF RS.10,66,200/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAD DEDUCTED TDS AND THE SAME WAS DEPOSITED TO THE GOVERNMENT AC COUNT AFTER THE END OF PREVIOUS YEAR BUT WITHIN THE DATE SPECIFIED FOR FILING OF RETURN U/S.139(1) OF THE ACT. THE RELATED EXPENSES WAS HE LD AS INADMISSIBLE UNDER SECTION 40(A)(IA) OF THE ACT BY THE AO AS HE WAS OF THE OPINION THAT AMENDMENT TO SECTION 40(A)(IA) BROUGHT ABOUT B Y FINANCE ACT, 2010 WAS EFFECTIVE FOR ASSTT.YEAR 2010-11 AND NOT RETROSPECTIVE IN NATURE. THE CIT(A) OBSERVED THAT THE ISSUE WAS DE CIDED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE ITAT RELIED UP ON BY THE ASSESSEE IN THE CASE OF MATRIX GLASS & STRUCTURE PVT. LTD., ITA NO.658 (KOL) OF 2010, BANSAL PARVAHAN (INDIA) P.LTD., 137 TTJ (MUM) 319 A ND KANUBHAI RAMJIBHAI, 135 TTJ (AHD) 364. NO CONTRARY DECISION HAS COME TO HIS NOTICE. HE, THEREFORE, FOLLOWING THE DECISION OF T HE TRIBUNAL HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION IN RESPECT OF EXPENSES FOR WHICH TAX DEDUCTED HAD BEEN DEPOSITED WITHIN THE TIME SPE CIFIED FOR FILING OF RETURN UNDER SECTION 139(1) OF THE ACT. 5. THE DR SUPPORTED THE ORDER OF THE AO. 6. NOTICE OF HEARING WAS SENT TO THE RESPONDENT-ASS ESSEE BY REGISTERED POST WITH ACKNOWLEDGMENT DUE ON 24.2.201 5 AND THE SAME WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES WIT H THE REMARK LEFT. THE BENCH WAS OF THE VIEW THAT THE APPEAL OF THE RE VENUE CAN BE DISPOSED OF IN THE ABSENCE OF RESPONDENT-ASSESSEE. THEREFORE, THE APPEAL WAS HEARD EX PARTE QUA THE RESPONDENT-ASSESSEE AND DISPOSED OF THE SAME AFTER CONSIDERING THE SUBMISSION OF THE DR. ITA NO.2222/AHD/2011 3 7. WE HAVE HEARD DR AND PERUSED THE ORDERS OF THE L OWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DIS PUTE THAT A SUM RS.10,66,200/- WAS PAID BY THE ASSESSEE TO THE SUB- CONTRACTORS ON WHICH THE ASSESSEE HAD DEDUCTED TDS BUT THE SAME WA S DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT BEFORE THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1) OF THE ACT. THE DISALL OWANCE OF THE EXPENDITURE OF RS.10,66,200/- WAS MADE BY THE AO IN VOKING THE PROVISIONS OF SECTION 40(A)(IA) ON THE GROUND THAT THE AMENDMENT MADE BY THE FINANCE ACT, 2010 WHICH ALLOWED PAYMENT OF T DS WITHIN DUE DATE OF FILING OF RETURN UNDER SECTION 139(1) WITHOUT IN VITING INVOCATION OF PROVISIONS OF SECTION 40(A)(IA) WAS PROSPECTIVE AND APPLICABLE W.E.F. 1.4.2010 ONLY, AND NOT APPLICABLE FOR THE YEAR UNDE R CONSIDERATION I.E. ASSTT.YEAR 2005-06. THE CIT(A) HAS ALLOWED APPEAL OF THE ASSESSEE BY FOLLOWING DECISIONS OF THE TRIBUNAL AS QUOTED ABOVE IN THIS ORDER AND HELD THAT THE AMENDMENT WAS RETROSPECTIVE IN NATURE . DR COULD NOT CITE ANY CONTRARY DECISION WHICH WAS IN FAVOUR OF THE RE VENUE. HE ALSO COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). 8. FURTHER, WE FIND THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS, ITA NO.302/2011 JUDGMENT DATE D 23.11.2011 HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) THAT AN ADD ITION UNDER SECTION 40(A)(IA) OF THE ACT CANNOT BE MADE IF THE PAYMENT OF TAX DEDUCTED AT SOURCE HAS BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IN THE PR ESENT CASE ALSO PAYMENT OF TDS HAS BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER SECTION 139(1) OF THE ACT, AND THEREFO RE, THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY TH E AO BY FOLLOWING THE ITA NO.2222/AHD/2011 4 DECISIONS OF THE TRIBUNAL. HENCE, WE CONFIRM THE O RDER OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 10 /04/2015