ACIT, Chandigarh V. Sh. Shivpal Singh Chaudhary, Chandigarh

ITA 224/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5122 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Non-deduction of tax

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 224/CHD/2017 ASSESSMENT YEAR: 2012-13 THE ACIT, VS. SH. SHIVPAL SINGH CHAUDHARY, CIRCLE 4(1), CHANDIGARH CHANDIGARH PAN NO. AAKPC6883B (APPELLANT) (RESPONDENT) APPELLANT BY : MS. CHANDERKANTA RESPONDENT BY : NONE DATE OF HEARING : 22.05..2017 DATE OF PRONOUNCEMENT : 26.05.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 10.11.2016 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-2 [HEREINAFTER REFERRED TO AS CIT(A)], CHANDIGARH. 2. THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CI T(A) IN DELETING THE ADDITION OF RS. 95,31,276/- WHICH WAS MADE BY THE A SSESSING OFFICER U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT') ON ACCOUNT OF NON DEDUCTION OF TDS ON PAYMENT OF JOB WORK. 2 3. NONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE, HENCE, WE PROCEED TO DECIDED THE APPEAL ON MERITS EX PARTE OF THE ASSESSEE. 4. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE DURING THE YEAR DEBITED RS. 98,99,141/- ON ACCOUNT OF JOB WOR K, OUT OF WHICH RS. 95,31,276/- WAS PAID TO M/S JHANDU CONSTRUCTION COM PANY WITHOUT DEDUCTION OF TAX. THE ASSESSING OFFICER TOOK THE VI EW THAT THE SAID PAYMENT SHOULD HAVE BEEN MADE ONLY AFTER DEDUCTION OF TAX A T SOURCE AS PER THE PROVISIONS OF CHAPTER XVII B OF THE ACT. IN VIEW OF ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE, THE ASSESSING OFFICER DISALLO WED PAYMENT IN QUESTION U/S 40(A)(IA) OF THE ACT. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) CONTENDING THAT IN VIEW OF THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, PAYMENT SHOULD NOT HAVE BEEN DISALLOWED. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND GOING THROUGH THE EVIDENCE ON RECORD FOUND THAT ASSESSEE HAD FILED CO NFIRMATION FROM THE PARTY THAT THE PAYMENT MADE BY THE ASSESSEE TO M/S JHANDU CONSTRUCTION COMPANY HAD BEEN REFLECTED IN THEIR RETURN OF INCOM E. HE, RELYING ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL I N THE CASE OF AMAN CREATIONS IN ITA NO. 718/CHD/2016 VIDE ORDER DATED 19.7.2016, HELD THAT THE ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE IN THE LIGHT OF THE ABOVE STATED DECISION OF THE TRIBUNAL, WHEREIN, TH E TRIBUNAL WHILE RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT I N THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P). LTD [2015] 377 ITR 6 35 (DELHI) HAS HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS RETROSPECTIVE IN 3 NATURE. THE LD. CIT(A) ACCORDINGLY ALLOWED THE APPE AL OF THE ASSESSEE AND DELETED THE DISALLOWANCE ON THIS ISSUE. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE LD. CI T(A), THE REVENUE HAS COME IN APPEAL BEFORE US PLEADING THAT THE HON' BLE KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CIT (ITA NO. 278 OF 2014 REPORTED IN (2015) 63 TAXMAN. 99 (KERALA) HAS HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED W.E.F. 1.4.20 13 IS PROSPECTIVE AND NOT RETROSPECTIVE. IT HAS THEREFORE, BEEN PLEADED THAT THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE WAS NOT CORRECT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E ALSO GONE THROUGH THE RECORD. THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVENUE PERTAINS TO THE RETROSPECTIVITY OF THE SECOND PROVISO TO SECTIO N 40(A)(IA) OF THE ACT, WHICH READS AS UNDER:- PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILED TO DEDUCT THE WHOLE OR ANY PART OF TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTI ON 201, THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT S HALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. 7. THERE ARE TWO SET OF VIEWS ON THIS ISSUE OF THE HON'BLE TWO DIFFERENT HIGH COURTS OF THE COUNTRY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF 4 CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD (2015) 2 61 TAXMAN.COM 45 (DELHI) HAS HELD THAT THE ABOVE REFERRED TO SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS DECLARATORY AND CURATIVE AN D HAS RETROSPECTIVE EFFECT FROM 1.4.2005; WHEREAS THE HON'BLE KERELA HI GH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA) HAS HELD THAT THE SAID SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS PROSPECTIVE AND, TH EREFORE, THE PLEA THAT THE RECIPIENT HAS SUBSEQUENTLY PAID TAX, WILL NOT ABSOL VE PAYER FROM THE CONSEQUENCE OF DISALLOWANCE U/S 40(A)(IA) OF THE AC T. WE, FURTHER, FIND FROM THE IMPUGNED ORDER THAT THE CHANDIGARH BENCH O F THE TRIBUNAL IN THE CASE OF CIT VS. AMAN CREATIONS (SUPRA) HAS FOLLOW ED THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP P. LTD. (SUPRA). THE COORDINATE BENCH HAS ALSO CONSID ERED ANOTHER DECISION OF THE HON'BLE KERELA HIGH COURT IN THE CASE OF P RUDENTIAL LOGISTICS & TRANSPORT VS. ITO DATED 13.1.2014 IN (2014) 51 TAX MMAN.COM 426 (KERELA) WHEREIN THE HON'BLE KERELA HIGH COURT HAS HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS TO BE AP PLIED WITH PROSPECTIVE EFFECT. THE COORDINATE CHANDIGARH BENCH OF THE TRIB UNAL AFTER CONSIDERING BOTH THE DECISIONS (SUPRA) HAS OBSERVED THAT THE DE CISION OF THE HON'BLE DELHI HIGH COURT IS A LATER DECISION AND FURTHER TH AT IT IS WELL SETTLED LAW THAT IF TWO VIEWS ARE POSSIBLE, THE DECISION IN FAV OUR OF THE ASSESSEE, MAY BE FOLLOWED. THE IMPUGNED DISALLOWANCE WAS, THEREFO RE, ORDERED TO BE DELETED. THE LD. COUNSEL FOR THE REVENUE HAS NOT REFERRED TO ANY DECISION OF THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT ON T HIS ISSUE. NOW IT IS SETTLED LAW THAT IF TWO VIEWS IN REGARD TO THE INTE RPRETATION OF A PROVISION ARE POSSIBLE, THE COURT WOULD BE JUSTIFIED IN ADOPT ING THAT CONSTRUCTION 5 WHICH FAVOURS THE ASSESSEE. RELIANCE IN THIS RESPEC T CAN BE PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F COMMISSIONER OF INCOME TAX VS. V. VEGETABLE PRODUCT LTD. [1973] 88 ITR 192, MAURI YEAST INDIA PVT LTD V STATE OF U.P. (2008) 14 VST 259 (SC), BIHAR STATE ELECTRICITY BOARD AND ANOTHER VS. M/S USHA MARTIN I NDUSTRIES AND ANOTHER (1997) 5 SCC 289 AND HON'BLE BOMBAY HIGH COURT IN T HE CASE OF THE ADDITIONAL COMMISSIONER OF SALES TAX VS. M/S ANKIT INTERNATIONAL, SALES TAX APPEAL NO. 9 OF 2011 VIDE ORDER DATED 15.9.2011 . IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE, THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.05.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH MAY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR