Durgapur Unemployed Engineers Industrial Co-operative Society Ltd., Kolkata V. ACIT, Circle - 1, Durgapur, Durgapur

ITA 2230/KOL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70429 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHT A P
• Assessee Lawyers: V N PUROHIT
• Keywords: Period of limitation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [ BEFORE SHRI R.C.SHARMA, HONBLE A.M. & SHRI MAHAVIR SINGH, HONBLE J.M. ] I.T.A. NO.2230/KOL/2010 ASSESSMENT YEAR :2005-06 DURGAPUR UNEMPLOYED ENGINEERS INDUSTRIAL CO-OPERATI VE SOCIETY LTD. (PAN:AAAAD 2235M) .. ( APPELLANT ) -VS- ACIT, CIRCLE-1, DURGAPUR .. ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 04.12.2013 DATE OF PRONOUNCING THE ORDER : 12.12.2013 APPEARANCES : FOR THE APPELLANT : SHRI V.N.P UROHIT, CA : FOR THE RESPONDENT : SHRI VARINDER MEHT A, CIT(DR) O R D E R PER SHRI R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) DATED 16.09, 2008 FOR THE ASSESSMENT YEAR 2005-06, IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT. THE FOL LOWING TWO GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE. 1. THAT THE C.I.T.(A), DURGAPUR HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,78,67,700/- U/S.40( A)(IA) ON GROUND OF LATE PAYMENT OF T.D.S. DEDUCTED THEREON. 2. THAT THE C.I.T.(A), DURGAPUR HAS FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.9,65,947/- BEING PAYMENT ON ACCOUNT OF LABOUR CHARGES ON GROUND THAT NO TAX WAS DEDUCTED THEREON. 2. THERE IS A DELAY IN FILING THE APPEAL. THE ASSES SEE HAS FILED AFFIDAVIT EXPLAINING THE REASONS FOR DELAY. WE HAVE GONE THRO UGH THE AFFIDAVIT AND HEARD RIVAL CONTENTIONS. THERE IS NO DISPUTE TO THE WELL- SETTLED LEGAL PROPOSITION THAT WHENEVER SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDER ATION ARE OPPOSED TO EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFERRED. O N EXAMINATION OF THE PAPERS AND THE REASONS STATED FOR DELAY, WE FOUND THAT DUE TO BONA FIDE MISTAKE AND INADVERTENCE, THE APPEAL COULD NOT BE FILED WITHIN THE PERIOD OF LIMITATION. KEEPING 2 ITA NO.2230/KOL/2010 DURGAPUR UNEMPLOYED ENGINEERS ASSESSMENT YEAR: 2005-06 IN VIEW THE INTEREST OF SUBSTANTIAL JUSTICE, WE CON DONE THE DELAY IN FILING THE APPEAL AND THE APPEAL IS NOW HEARD ON MERITS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PE RUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY DER IVING INCOME FROM EXECUTION OF CIVIL CONTRACT JOBS, RUNNING OF RESTAURANT, ETC. DU RING THE COURSE OF SCRUTINY ASSESSMENT, THE AO FOUND THAT THE ASSESSEE HAS CLAI MED EXPENDITURE ON SUB- CONTRACT AT RS.1,78,67,700/- ON WHICH NO TAX WAS DE DUCTED AT SOURCE, AS PER REQUIREMENT OF SECTION 194C(2) OF THE I.T.ACT. ACCO RDINGLY, THE AO DISALLOWED THE EXPENDITURE BY INVOKING THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE I.T. ACT. THE ORDER OF THE AO WAS CONFIRMED BY CIT(A) AND THE ASS ESSEE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THE AO HAS DISALLOWED THE PAYMENT MADE ON ACCOUNT OF SUB-CONTR ACT CHARGES BECAUSE OF NON- DEDUCTION AND PAYMENT OF TAX AT SOURCE BEFORE THE E ND OF THE FINANCIAL YEAR. HOWEVER, THE AO HAS ALSO OBSERVED THAT A CLAIM WAS MADE BEFORE HIM TO THE EFFECT THAT TAX HAS BEEN DEDUCTED AT THE TIME OF PAYMENT I N OCTOBER, 2005, WHICH WAS DEPOSITED TO THE CENTRAL GOVERNMENT ON 21.10.2005, I.E., BEFORE THE LAST DATE OF FILING THE RETURN. THE HONBLE CALCUTTA HIGH COURT IN CASE OF VIRGIN CREATIONS, VIDE ORDER DATED 6 TH MARCH, 2012, HAVE HELD THAT AMENDMENT MADE BY FINA NCE ACT, 2010 W.E.F. 01.04.2010 FOR PAYMENT OF TDS WAS RETRO SPECTIVE IN NATURE. ACCORDINGLY, IN RESPECT OF PAYMENTS ON WHICH TAX WA S DEDUCTED AT SOURCE AND ALSO PAID BEFORE THE LAST DATE OF FILING OF THE RETURN, NO DISALLOWANCE OF SUCH EXPENDITURE SHOULD BE MADE UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT. WHILE DECIDING SO, THE HONBLE HIGH COURT HAS CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF ALLIED MOTORS 224 ITR 677 AND ALOM EXTRUSIONS 319 ITR 306. AS THE ISSUE IN THE CASE IS SQUARELY COVER ED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE DIRECT THE AO TO ALLO W CLAIM OF DEDUCTION OF RS.1,78,67,700/-, AFTER VERIFYING THE ACTUAL DATE O F PAYMENT, WHICH IS STATED BY THE ASSESSEE AS 21.10.2005. IF THE AO FINDS THAT TDS HA S ALREADY BEEN DEPOSITED IN GOVERNMENT ACCOUNT ON 21.10.2005, WHICH DATE FALLS PRIOR TO THE DATE OF FILING THE 3 ITA NO.2230/KOL/2010 DURGAPUR UNEMPLOYED ENGINEERS ASSESSMENT YEAR: 2005-06 RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR U NDER CONSIDERATION, THE DISALLOWANCE, SO MADE, SHOULD BE DELETED. WE DIRECT ACCORDINGLY. 5. THE AO HAS ALSO DISALLOWED PAYMENT OF RS.9,65,94 7/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). THE AO OBSERVED TH AT ON EXAMINATION OF THE ASSESSEES BOOKS ACCOUNT IT WAS NOTED THAT A PART O F THE EXPENSES DEBITED TO THE P&L A/C UNDER THE HEAD LABOUR CHARGES, WAS INCURR ED ON MAKING PAYMENT TO LABOUR SUPPLIERS. ACCORDINGLY, THE TOTAL EXPENDITUR E TO THE TUNE OF RS.9,34,320/- WAS HELD TO BE NOT DEDUCTIBLE IN COMPUTING TOTAL IN COME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AS PE R THE PROVISIONS OF SEC. 40(A)(IA) OF THE I.T. ACT.61. THE ACTION OF THE AO WAS CONFI RMED BY THE CIT(A) AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WAS CONTENDED BY THE LD. A.R. THAT PAYMENT WA S MADE ON ACCOUNT OF LABOUR CHARGES THROUGH SARDARS. SINCE THE INDIVIDUA L PAYMENT WAS BELOW THE PRESCRIBED LIMIT, NO DISALLOWANCE SHOULD BE MADE. I N THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS GROUND BACK TO THE FILE OF TH E AO FOR EXAMINING AS TO WHETHER THE PAYMENT WAS MADE TO THE LABOURERS AND NOT ON AC COUNT OF CONTRACTUAL PAYMENT, AND TO DECIDE THE ISSUE AFRESH. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART, IN TERMS AS INDICATED HEREINABOVE. THIS ORDER IS PRONOUNCED IN THE COURT ON 12 TH DECEMBER, 2013. SD/- SD/- (MAHAVIR SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH DECEMBER, 2013 4 ITA NO.2230/KOL/2010 DURGAPUR UNEMPLOYED ENGINEERS ASSESSMENT YEAR: 2005-06 COPY OF THE ORDER FORWARDED TO: 1. DURGAPUR UNEMPLOYED ENGINEERS INDUSTRIAL CO-OPERATI VE SOCIETY LTD., CITY CENTRE, DURGAPUR-16. 2 ACIT, CIRCLE-1, DURGAPUR 3. THE CIT(A), 4. CIT, 5. DR, TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA TALUKDAR(SR.P.S.)