Shri Jivrajbhai Devjibhai Patel, Ahmedabad V. The Income tax Officer, Ward-9(2), Ahmedabad

ITA 2479/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9368 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Keywords: Retrospective amendment
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D.AGRAWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 23/11/2010 DRAFTED ON: 23/11 /2010 ITA NO.2479/AHD/2008 ASSESSMENT YEAR : 2005-06 SHRI JIVRAJBHAI DEVJIBHAI PATEL PROP.OF RAJESH CONSTRUCTION CO. D/9, SWASTIK APARTMENTS BARRAAGE ROAD, VASNA AHMEDABAD VS. THE INCOME TAX OFFICER WARD-9(2) AHMEDABAD PAN/GIR NO. : AAMPP 2433 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : MS. URVASHI SHODHAN RESPONDENT BY: SHRI R.K. DHANISTA, SR. D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XV AHMEDABAD DATED 15/03/2008 PASSED FOR ASSESSMENT YEAR 2005 -06. 2. GROUND NO.1 1. UPHOLDING THAT DISALLOWANCE OF RS.55,38,375/- U/S.4 0(A)(IA), WHICH ARE INCURRED FOR THE PURPOSE OF THE BUSINESS AND EV EN WHEN EXPENSES OF RS.26,12,922/- HAVE BEEN INCURRED PRIOR TO 1 ST OCTOBER-2004. ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 2 - 2.1. BARE MINIMUM FACTS WHICH WE CONSIDER NECESSA RY TO MENTION AS EXTRACTED FROM THE CORRESPONDING ASSESSMENT ORDER P ASSED U/S.143(3) OF THE ACT, DATED 14/12/2007 WERE THAT THE ASSESSE E IN HIS INDIVIDUAL CAPACITY BEING A PROPRIETOR OF RAJESH CONSTRUCTION COMPANY IS WORKING AS A SUB CONTRACTOR. AS PER ASSESSING OFFICER CE RTAIN PAYMENTS HAVE BEEN MADE WITHOUT DEDUCTION OF TAX AT SOURCE. A LIST OF ALL THOSE PARTIES HAS BEEN MENTIONED IN THE ASSESSMENT ORDER. ON ACCO UNT OF THE INFRINGEMENT OF SECTION 40(A)(IA) OF THE ACT AN ADD ITION OF RS.80,69,564/- WAS MADE. THE MATTER WAS CARRIED BEFORE THE FIRS T APPELLATE AUTHORITY. BEFORE LEARNED CIT(APPEALS), IT WAS ADMITTED THAT T HE PAYMENTS TO SUB- CONTRACTORS WAS SUBJECT TO TDS BUT DEDUCTION WAS DO NE ON DIFFERENT DATES. TO SUBSTANTIATE A DATE-WISE AND PARTY-WISE D ETAILS HAVE ALSO BEEN PLACED ON RECORD. IN SOME OF THE CASES, TDS WAS PA ID ON 31/05/2005 AND IN FEW OTHER CASES THE PAYMENT WAS STATED TO BE MAD E ON 19/02/2008. IT HAS ALSO BEEN MENTIONED THAT IN REST OF THE CASES, TDS WAS DEDUCTED AND PAID ON 26/03/2008. 2.2. THE LEARNED CIT(APPEALS) HAS EXAMINED THOSE FA CTUAL ASPECT AND THEREUPON REPRODUCED THE DATES AS PER THE FOLLOWING COLUMN:- 11. ANNEXURE-A OF THE AR'S LETTER CLEARLY SHOWS THAT TDS ON PAYMENTS WHICH WERE MADE IN THE PERIOD BETWEEN 1.4. 2004 TO 30.9.2004 SHOULD HAVE BEEN PAID EVEN AS PER AMENDME NT, BY 31.3.2005, BUT THE CHART SHOWS THAT TDS WAS PAID TO GOVERNMENT ON 31.5.2005, 19.2.2008 AND 26.3.2008. THIS INCLUD ES THE TWO PAYMENTS MADE TO PARVATHAM CABS AND S.RAJA (SUMO) O F RS.1,39,937 ON WHICH NO TDS WAS DEDUCTED BUT IT SHO ULD HAVE BEEN DEDUCTED AND PAID AS PER EXPLANATION III (C) OF SECTION 194-C. ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 3 - THE PAYMENTS ON WHICH THE APPELLANT IS AT DEFAULT U /S.40(A)(IA) AS PER THE ANNEXURE-A ARE AS UNDER: AMOUNT AS PER COLUMN 10 OF ANNEXURE-A AMOUNT AS PER COLUMN 11 OF ANNEXURE-A AMOUNT AS PER COLUMN 12 OF ANNEXURE-A AMOUNT AS PER COLUMN 8 OF ANNEXURE- A RS.17,84,096 ON THIS TDS HAS BEEN PAID ON 31.5.05, THOUGH AS PER AMENDMENT, AS THE PAYMENTS HAD BEEN MADE BEFORE MARCH, 2005, TDS SHOULD HAVE BEEN PAID BY MARCH, 2005. THE DETAILS OF PAYMENTS ARE IN COLUMN 6 AND 7 OF ANNEXURE-A. RS.33,67,024 ON THIS TDS HAS BEEN PAID ON 19.2.2008, THOUGH AS PER AMENDMENT, AS THE PAYMENTS HAD BEEN MADE BEFORE MARCH, 2005, TDS SHOULD HAVE BEEN PAID BY MARCH, 2005. THE DETAILS OF PAYMENTS ARE IN COLUMN 6 AND 7 OF ANNEXURE-A. RS.2,47,318 ON THIS TDS HAS BEEN PAID ON 19.2.2008, THOUGH S PER AMENDMENT, AS THE PAYMENTS HAD BEEN MADE BEFORE MARCHD, 2005, TDS SHOULD HAVE BEEN PAID BY MARCH, 2005. THE DETAILS OF PAYMENTS ARE IN COLUMN 6 AND 7 OF ANNEXURE-A. RS.1,39,937 ON THIS NO TDS HAS BEEN DEDUCTED AT ALL BY THE APPELLANT. THUS, OUT OF RS.80,69,564, ADDITIONS MADE BY THE A O OF RS.17,84,096 PLUS RS.33,67,024 PLUS 2,47,318 PLUS R S.1,39,937 TOTALLING TO RS.55,38,375 ARE UPHELD. (THE DETAILS ARE AS PER ANNEXURE-A OF THIS ORDER). THE APPELLANT AS PER PROVISO TO SECTION 40(A)(IA) S HALL BE ALLOWED A DEDUCTION OF THIS AMOUNT IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TDS HAD BEEN PAID THAT I S IN THE PREVIOUS YEAR 2005-06 OF RS.17,84,096 AND OF RS.33, 67,024 AND RS.2,47,318 IN THE PREVIOUS YEAR 2007-08. 2.3. ON THE BASIS OF THE ABOVE DETAILS, LEARNED CIT (APPEALS) HAS HELD THAT SINCE ON THE AMOUNT OF RS.25,31,189/-, THE TDS WAS DEDUCTIBLE IN MARCH-2005 AND THE SAME WAS PAID ON 31/05/2005, I.E . BEFORE THE DATE OF FILING OF THE RETURN, THEREFORE, OUT OF THE AMBITS OF ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 4 - DISALLOWANCE AS PRESCRIBED IN THE PROVISO BROUGHT I NTO STATUTE VIDE AN AMENDMENT IN SECTION 40(A)(IA) OF THE ACT. HOWEVER, REST OF THE DISALLOWANCE WAS CONFIRMED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. WITH THIS BRIEF BACKGROUND, WE HAVE HEARD BOTH T HE SIDES AT SOME LENGTH. IN OUR CONSIDERED OPINION, NOW THIS ISSUE HAS TO BE DECIDED AS PER THE AMENDED PROVISIONS OF SECTION 40(A)(IA) TO BE R EAD WITH THE PROVISO ANNEXED TO THE MAIN SECTION. AS FAR AS THE QUESTI ON OF THE APPLICABILITY OF SECTION 40(A)(IA) IS CONCERNED, THE MATTER HAS A LREADY BEEN DECIDED BY ITAT MUMBAI BENCH B IN THE CASE OF BANSAL PARIVA HANR (INDIA) P.LTD. VS. ITO [2010] 8 TAXMANN.COM 40 (MUM.- ITAT) ORDER DATED 22/09/2010 (ITA NO.2355/MUM/10), WHEREIN VIDE PARA- 20, IT WAS HELD AS UNDER:- 20. THE ABOVE AMENDMENTS MADE BY THE FINANCE ACT 2008 THUS PROVIDED THAT NO DISALLOWANCE U/S.40(A)(IA) SHALL B E MADE IN RESPECT OF THE EXPENDITURE INCURRED IN THE MONTH OF MARCH IF THE TAX DEDUCTED AT SOURCE ON SUCH EXPENDITURE HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. WHILE PROP OSING THIS AMENDMENT, IT WAS EXPLAINED BY THE FINANCE MINISTER THAT THE TAX PAYER WILL NOW GET A TIME PERIOD OF SIX MONTHS FOR DEPOSITING THE TAX DEDUCTED AT SOURCE IN RESPECT OF EXPENDITURE IN CURRED IN THE MONTH OF MARCH SO AS TO ESCAPE THE DISALLOWANCE OF THE SAID EXPENDITURE U/S.40(A)(IA). THE FINANCE MINISTER AL SO MADE IT CLEAR THAT THIS PROPOSED AMENDMENT HAS TO BE GIVEN RETROS PECTIVE EFFECT FROM A.Y. 2005-06. THE ASSESSEES THUS WERE CLASSI FIED IN TWO CATEGORIES NAMELY; ONE THOSE WHO HAVE DEDUCTED THE TAX DURING THE LAST MONTH OF THE PREVIOUS YEAR AND TWO; THOSE WHO HAVE DEDUCTED TAX IN THE REMAINING ELEVEN MONTHS OF THE PREVIOUS YEAR. IT WAS PROVIDED THAT IN CASE OF ASSESSEES FALLING UNDER T HE FIRST CATEGORY, NO DISALLOWANCE U/S.40(A)(IA) SHALL BE MADE IF THE TAX DEDUCTED BY HIM DURING THE LAST MONTH OF THE PREVIOUS YEAR HAS BEEN PAID ON OR BEFORE THE DUE DATE OF FILING THE RETURN AS SPECIFI ED IN SECTION 139(1). IN THE CASES OF ASSESSEES FALLING UNDER SE COND CATEGORY, NO ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 5 - DISALLOWANCE U/S.40(A)(IA) SHALL BE MADE IF THE TAX DEDUCTED AT SOURCE IN THE FIRST ELEMENT MONTHS OF THE PREVIOUS YEAR HAS BEEN PAID ON OR BEFORE THE LAST DAY OF THE SAID PREVIOUS YEAR. 4. IN VIEW OF THE ABOVE DISCUSSION, WE HEREBY DIREC T THAT THE ASSESSING OFFICER SHALL NOW RE-DECIDE THE ISSUE OF DISALLOWANCE IN THE LIGHT OF THE PRINCIPLE LAID DOWN HEREINABOVE. 4.1. STILL, ONE MORE ISSUE HAS BEEN RAISED THAT WHE THER THE APPLICABILITY OF THE PROVISIONS CAN BE APPLIED IN R ESPECT OF EXPENDITURE PRIOR TO 10/09/2004 WHEN THE FINANCE AC T (NO.2), 2004 OBTAINED THE PRESIDENTIAL APPROVAL. EVEN THIS ASPE CT HAS ALSO BEEN DECIDED BY THE ITAT G BENCH MUMBAI IN THE CASE OF GOLDEN STABLES LIFESTYLE CENTER PVT. LTD. VS. CIT BEARING ITA NO.5145/MUM/2009 FOR ASSESSMENT YEAR 2005-06 ORDER DATED 30 TH SEPTERMBER-2010, WHEREIN VIDE PARA-11, IT WAS DECID ED AS UNDER:- 11. WE HEARD BOTH THE PARTIES. THIS IS SIMILAR TO THE PROVISIONS OF SECTION 43B, WHEREBY IN RESPECT OF CE RTAIN STATUTORY AND OTHER PAYMENTS DEDUCTION WAS TO BE AL LOWED ONLY ON ACTUAL PAYMENT. SEC. 43B WAS AGAIN AMENDED BY FINANCE ACT, 2003 W.E.F. 1.4.2004, WHEREBY THE BENE FIT OF PAYMENT TILL THE DUE DATE OF FILING RETURN WAS EXTE NDED TO ALL PAYMENTS COVERED BY SEC.43B. THIS AMENDMENT WAS AG AIN HELD TO BE RETROSPECTIVE IN NATURE BY THE APEX COUR T IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (319 ITR 306). THE AMENDMENTS WERE HELD TO BE CURATIVE IN NATURE AND H ENCE RETROSPECTIVE IN OPERATION. SIMILARLY THE AMENDMEN TS CARRIED OUT IN FINANCE ACT, 2008 IN SEC.40(A)(IA) FOR EXTEN DING TIME LIMIT FOR THE TDS TO BE MADE ON THE LAST MONTH WAS WITH RETROSPECTIVE EFFECT. THIS WOULD SHOW THAT THE AME NDMENT WAS ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 6 - CURATIVE IN NATURE BROUGHT INTO TO AMELIORATE THE H ARDSHIP CAUSED ON ACCOUNT OF NOMINAL DELAY IN PAYMENT OF TH E TDS. RESPECTFULLY APPLYING THE RATIO OF THE APEX COURT I N 319 ITR 306, WE ARE OF THE OPINION THAT AMENDMENT BROUGHT I N BY THE FINANCE ACT, 2010, WHICH TOTALLY REPLACES THE EARLI ER AMENDMENT AND EXTENDS THE TIME LIMIT FOR ALL TDS PA YABLE THROUGHOUT THE YEAR, HAS ALSO BEEN INTRODUCED AS A CURATIVE MEASURE AND THEREFORE WOULD APPLY TO EARLIER YEARS ALSO. WE THEREFORE DIRECT THE ASSESSING OFFICER NOT TO DISAL LOW THE EXPENDITURE (I) WHICH HAVE ACCRUED PRIOR TO 10.09.2 004 WHEN THE FINANCE ACT, (NO.2) 2004 GOT THE PRESIDENTIAL A PPROVAL, UPTO WHICH DATE THE PROVISIONS OF SEC.40(A)(IA) WIL L NOT BE APPLICABLE AND (II) EXPENDITURE IN RESPECT OF WHICH TDS HAS BEEN PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FI LING OF THE RETURN. HOWEVER, EXPENDITURE ON WHICH TDS HAS NOT BEEN PAID BY THE ASSESSEE REQUIRES TO BE DISALLOWED U/S. 40(A)(IA). 4.2. APPLYING THE ABOVE TEST TO THE FACTS AND THE D ATES OF THE PRESENT CASE, THE ASSESSING OFFICER IS HEREBY DIRECTED TO D ECIDE THE DISALLOWANCE AND THE APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) ON THE PRINCIPLES LAID DOWN HEREINABOVE BY THE RESPECTED C O-ORDINATE BENCH. AS FAR AS THE DETAILS OF THE PAYMENTS AND THE DATES OF DEDUCTION OF TAX, ARE NOT IN DISPUTE SINCE MADE AN ANNEXURE AS PART O F THE APPELLATE ORDER BY THE LEARNED CIT(APPEALS), THEREFORE AFTER DUE VE RIFICATION THE CLAIM CAN BE WORKED OUT . WITH THESE DIRECTIONS, WE HER EBY RESTORE THIS GROUND BACK TO THE STAGE OF THE ASSESSING OFFICER TO RE-DE CIDE ACCORDINGLY. FOR STATISTICAL PURPOSES, THIS GROUND OF THE ASSESSEE I S ALLOWED. 5. GROUND NO.2 2. IN UPHOLDING THE AD HOC DISALLOWANCE OF RS.46,314/- FOR PERSONAL USE OF VEHICLES, WHICH ARE INCURRED FOR THE PURPOSE OF BUSINESS. ITA NO.2 479/AHD/2008 SHRI JIVARJBHAI DEVJIBHAI PATEL VS. ITO ASST.YEAR - 2005-06 - 7 - 5.1. THE LEARNED AUTHORISED REPRESENTATIVE OF THE A SSESSEE HAS EXPRESSED NOT TO PRESS THIS GROUND, THEREFORE, THE SAME IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26/ 11 /2010. SD/- SD/- ( G.D.AGRAWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 26 / 11 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..24/11/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24/11/2010 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S26.11.10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 26.11.10 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER