RAMAKRISHAN SETU, NAVI MUMBAI V. DCIT CIR 22(3), NAVI MUMBAI

ITA 2231/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5742 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR P DANIEL
• Keywords: Rectification of order; Audit objection; Retrospective amendment
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 2231/M/2012 ASSESSMENT YEAR: 2005 - 06 SHRI RAMAKRISH N AN SETU, PROP: - M/S. VISHAL CONSTRUCTION A - 11 , UNIQUE CO. OP. HSG. SOC., SECTOR 3, AIROLI, NAVI MUMBAI PAN: ADUPS8236K VS. DY CIT, CIRCLE 22(3), VASHI, NAVI MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. P. DANIEL, A.R. REVENUE BY : SHRI SANJEEV JAIN, D.R. DATE OF HEARING : 19.12. 201 3 DATE OF PRONOUNCEMENT : 31.01.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: 1. IN BRIEF, THE FACTS OF THE CASE ARE THAT THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED BY THE ASSESSING OFFI CER (HEREINAFTER REFERRED TO AS AO) DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.34 , 47 , 394/ - . HOWEVER , THE A O ON THE BASIS OF AUDIT OBJECTION TO THE EFFECT THAT TDS DEDUCTED BY THE ASSESSEE AGAINST THE PAYMENTS MADE TO THE CONTRACTORS WAS DEPOSITED B Y THE ASSESSEE BEYOND THE DATE PRESCRIBED UNDER SECTION 200 OF THE INCOME TAX ACT AND AS SUCH THE EXPENDITURE ON ACCOUNT OF SUCH PAYMENTS WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 40(A)(IA) OF THE ACT. THE AO THEREAFTER ENHANCED THE INCOME OF THE ASSESS EE INVOKING PROVISIONS UNDER SECTION 154 OF THE ACT WHICH ITA NO .2231/M/2012 SHRI RAMAKRISHNAN SETU 2 GIVES JURISDICTION TO THE INCOME TAX AUTHORITIES FOR RECTIFICATION OF MISTAKES APPARENT ON RECORD. 2. THE L D. C OMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)] THOUGH HELD T HAT THE INCOME COULD NOT BE ENHANCED BY THE AO ON THIS ACCOUNT UNDER SECTION 154 OF THE ACT AND SET ASIDE THE RECTIFICATION ORDER OF THE AO. HOWEVER , HE SUSTAINED THE ADDITIONS MADE BY THE AO INVOKING HIS OWN JURISDICTION UNDER SECTION 251(2) OF THE ACT WH ICH PROVIDES THAT THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER IN THE PROCEEDINGS BEFORE HIM NOT WITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE HIM BY THE APPELLANT. HE THEREFORE RELYING UPON SPECIAL BENCH DECISION OF THE ITAT IN THE CASE OF M/S BHARTI SHIPYARD PVT. LTD. ITA NO. 2404/MUM/2009 HELD THAT THE AMENDED SECTION 40(A)(IA) AS AMENDED VIDE F INANCE ACT 2010, WHICH PROVIDES THAT EXPENDITURE ON WHICH TDS WAS MADE BUT PAID IN THE GOVT. TREASURY BEFORE THE DUE DATE OF FILING THE R ETURN OF INCOME WILL BE AN ALLOWABLE DEDUCTION, IS PROSPECTIVE IN NATURE AND AS SUCH IS OPERATIVE W.E.F. 1.4.2010. SINCE THE INSTANT CASE OF THE ASSESSEE WAS PERTAINING TO A.Y. 2005 - 06, HENCE THE DEFAULT WAS COMMITTED BY THE ASSESSEE IN TERMS OF PROVISION S OF SECTION 200(1) OF THE ACT AND AS SUCH HE UPHELD THE ENHANCEMENT HOLDING THAT THE ASSESSEE DEPOSITED THE TDS BEYOND THE DATE PRESCRIBED UNDER SECTION 200 OF THE INCOME TAX ACT AND AS SUCH THE EXPENDITURE ON ACCOUNT OF SUCH PAYMENTS WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 40(A)(IA) OF THE ACT. BEFORE US, THE LD. REPRESENTATIVE OF THE ASSESSEE AT THE OUTSET HAS SUBMITTED THAT NOW THE POSITION OF LAW HAS BEEN SETTLED BY THE VARIOUS HIGHER COURTS THAT THE OPERATION OF AMENDED SECTION 40(A)(IA) IS RETRO SPECTIVE IN NATURE. HE HAS RELIED UPON VARIOUS CASE LAWS IN THIS RESPECT. IT CAN BE OBSERVED THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF BABULAL LODAYA VS. ITO IN ITA NO. 4681/MUM/2012 FOR A.Y. 2007 - 08 ITA NO .2231/M/2012 SHRI RAMAKRISHNAN SETU 3 DECIDED ON 27.02.2013, WHILE DEAL ING WITH THE MATTER OF APPLICATION OF AMENDED PROVISIONS OF SECTION 40(A)(IA), RELYING UPON THE AUTHORITY OF CALCUTTA HIGH COURT STYLED AS CIT VS. VIRGIN CREATIONS (GA 3200/2011 DATED 23.11.2011) HAS HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) MADE BY F INANCE ACT, 2010 IS TO BE APPLIED WITH RETROSPECTIVE EFFECT BEING CURATIVE IN NATURE, OBSERVING AS UNDER: '3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. AN AMENDMENT IS RETROSPECTIVE ONLY WHERE IT IS EXPRESSED TO BE SO OR BY NECESSARY I MPLICATION. THE LD. CIT(A) DID NOT FIND IT AS SO, SO THAT HE CONFIRMED THE DISALLOWANCE IN TERMS OF THE EXTANT PROVISION OF S.40(A)(IA). THIS ISSUE, HOWEVER, HAS TRAVELLED BEFORE THE HIGHER COURTS OF LAW. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS, EXERCISING ITS CIVIL APPELLATE JURISDICTION (IN GA 3200/2011 DATED 23/11/2011 COPY ON RECORD) HAS HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 IS TO BE CONSIDERED AS RETROSPECTIVE IN - AS - MUCH AS IT IS ONLY TOWAR D MITIGATING A HARDSHIP AND, THUS, IS TO BE CONSIDERED AS CURATIVE IN NATURE. IN SO DOING, THE HON'BLE HIGH COURT INVOKED THE PRINCIPLES EMPHASIZED BY THE APEX COURT IN THE CASE OF ALLIED MOTORS (P.) LTD. V. CIT (1997) 224 ITR 677 (SC) AND R.B.JODHA MAL KU THIALA V. CIT (1971) 82 ITR 570 (SC). IN VIEW THEREOF, WE FIND THE ASSESSEE'S CLAIM AS MAINTAINABLE. THERE IS NO FINDING BY EITHER OF THE AUTHORITIES BELOW OF THE PAYMENT OF THE TDS FOR RS.15,21,507/ - BY 10.10.2007, EVEN AS CLAIMED BY THE ASSESSEE BEFORE U S WITH REFERENCE TO TWO CHALLANS. SUBJECT TO THE SAID VERIFICATION, WE DIRECT THE ALLOWANCE OF THE ASSESSEE'S CLAIM TOWARD COMMISSION PAYMENT TO THE EXTENT HE EXHIBITS PAYMENT OF CORRESPONDING TDS BY THE DUE DATE OF FURNISHING THE RETURN FOR THE RELEVANT Y EAR. NEEDLESS TO ADD, TO THE EXTENT THE PAYMENT HAS NOT BEEN MADE, THE ASSESSEE RESERVES THE RIGHT TO CLAIM THE BALANCE COMMISSION IN THE YEAR OF PAYMENT OF THE CORRESPONDING TDS. THAT IS, THERE COULD NEITHER BE ANY DOUBLE ALLOWANCE OR DISALLOWANCE. WE DEC IDE ACCORDINGLY.' 3. IT CAN FURTHER BE OBSERVED THAT SIMILAR FINDINGS HAVE BEEN GIVEN BY THE HONBLE GUJ A RAT HIGH COURT IN THE CASE OF ROYAL BUILDERS ITA NO.520 OF 2012 DECIDED ON 11.02.2013 WHILE RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF H.S. MOHINDRA TRADERS. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED WITH THE ABOVE NOTED DECISIONS OF THE HONBLE HIGH COURTS AS WELL OF THE CO - ORDINATE BENCH OF THE TRIBUNAL. RESPECTFULLY FOLLOWING THE SAID DECISIONS, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THEREBY THE ADDITION MADE BY THE AO AND FURTHER CONFIRMED BY THE CIT(A) IS HEREBY ORDERED TO BE DELETED. ITA NO .2231/M/2012 SHRI RAMAKRISHNAN SETU 4 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01. 201 4 . SD/ - SD/ - ( D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.01. 201 4 . * KISHORE COPY TO: THE APPELLANT T HE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.