AGA Publications Limited, Hyderabad V. Dy.CIT, Circle-1(1), Hyderabad

ITA 249/HYD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6308 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PALLAVI AGARWAL
• Assessee Lawyers: P RAVI SESHAGIRI RAO
• Keywords: Retrospective amendment
• Section: 143(3); 201(1); 139

Judgement Text

ITA NO 249 OF 2013 AGA PUBLICATIONS LTD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.249/HYD/2013 (ASSESSMENT YEAR: 2009-10) M/S. AGA PUBLICATIONS LIMITED HYDERABAD PAN: AABCA 8511 G VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) HYDERABAD FOR ASSESSEE SHRI P. RAVISESHAGIRI RAO FOR REVENUE SMT. PALLAVI AGARWAL, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. IN TH IS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE DISALLOWANCES ON VARIOUS EXPENDITURE MADE BY THE AO U/S 40(A)(IA) OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH IS ENGAGED IN THE BUSINESS OF PUBLICATION OF NEWSPAPER, FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y 2009 -10 ON 30.09.2009 DECLARING TOTAL INCOME OF RS.2,60,60,171 . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE I.T. ACT, VARIOUS DETAILS WERE CALLED FOR AND ON PERUSAL OF THE SAME, THE AO OBSERVED THAT DATE OF HEARING: 17.08.2016 DATE OF PRONOUNCEMENT: 26.08.2016 ITA NO 249 OF 2013 AGA PUBLICATIONS LTD. PAGE 2 OF 4 THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE FRO M VARIOUS PAYMENTS, EVEN THOUGH THE TDS PROVISIONS ARE APPLIC ABLE TO THE SAME. THEREFORE, THE AO MADE DISALLOWANCE OF THE EX PENDITURE U/S 40(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE SAID DI SALLOWANCE AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT ALL THE EXPENDITURE WHICH H AS BEEN DISALLOWED BY THE AO AS WELL AS THE CIT (A) ARE THE PAYMENTS MADE BY THE ASSESSEE BY THE END OF THE RELEVANT FIN ANCIAL YEAR AND THERE WAS NO AMOUNT REMAINING AS PAYABLE AS ON TH E LAST DATE OF THE RELEVANT FINANCIAL YEAR. IN VIEW OF THE SAME, A CCORDING TO HIM, THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADD.CIT IN ITA NO.477/VIZAG/2008 DATED 14.03.2012 IS APPLICABLE TO THE CASE BEFORE US. FURTHER, HE HAS ALSO DRAWN OUR ATTENTION TO THE RETURNS OF INCOME OF THE RECIPIENTS FILED IN THE PAPER BOOK FILED BEFORE US TO DEMONSTRATE THAT THE RECIPIENTS HAVE ALSO OFFERE D THE INCOME TO TAX IN THEIR HANDS DURING THE RELEVANT A.YS. THEREFO RE, ACCORDING TO HIM, THE PROVISO TO SECTION 40(A)(IA) IS APPLICA BLE AND THE DISALLOWANCE U/S 40(A)(IA) CANNOT BE MADE. THE LEAR NED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT WHILE FILING THE PAPER BOOK , THE LEARNED COUNSEL FOR THE ASSESSEE HAS CERTIFIED THAT ALL THE RELEVANT DOCUMENTS WERE FILED BEFORE THE AO AND THE CIT (A). BUT WE DO NOT ITA NO 249 OF 2013 AGA PUBLICATIONS LTD. PAGE 3 OF 4 FIND ANY DISCUSSION ABOUT THESE DOCUMENTS IN THE OR DERS OF THE AO AND THE CIT (A). THE SPECIAL BENCH IN THE CASE O F MERILYN SHIPPING & TRANSPORT VS. ADD. CIT (SUPRA) HAS CLEAR LY HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICA BLE TO THE PAYMENTS ALREADY MADE BY THE ASSESSEE BY THE END OF THE RELEVANT FINANCIAL YEAR. FURTHER, THE SECOND PROVISO TO SECTI ON 40(A)(IA) PROVIDES THAT DISALLOWANCE U/S 40(A)(IA) CANNOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) OF THE ACT. THE FIR ST PROVISO TO SUB- SECTION (I) OF SECTION 201 PROVIDES THAT A PERSON W HO IS LIABLE TO MAKE TDS BUT FAILS TO DO SO, SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT, IF THE RECIPIENT HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 AND HAS OFFERED THE INCOME AND HAS PAID TAXES THEREON AND HAS FURNISHED A CERTIFICATE TO THIS EFFECT. THOUGH THESE PROVISIONS ARE STATED TO BE APPLICABLE WITH EFFECT FROM 1.4.2013, THE COORDINATE BENCH OF THIS TRIBUNA L AT BANGALORE IN THE CASE OF DCIT VS. ANANDA MARKALA RE PORTED IN (2014) 150 ITD 323 (BANG.) HAS HELD THAT THIS PROVI SO IS APPLICABLE WITH RETROSPECTIVE EFFECT. IN VIEW OF THE DOCUMENTS FILED BY THE ASSESSEE BEFORE US TO DEMONSTRATE THAT THE PAYEES H AVE OFFERED THE SAID INCOME TO TAX IN THEIR HANDS, WE DEEM IT F IT AND PROPER TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND R EMAND THE ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION AND VERIF ICATION OF THE DETAILS FILED BY THE ASSESSEE. IF THE AO FINDS THAT THE RECIPIENTS HAVE OFFERED THE SAID INCOME TO TAX IN THE RELEVANT A.Y, THEN NO DISALLOWANCE SHALL BE MADE IN THE CASE OF THE ASSES SEE. FURTHER, THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF MERILYN SHIPPING & TRANSPORT (SUPRA), WHICH HAS BEE N AFFIRMED ITA NO 249 OF 2013 AGA PUBLICATIONS LTD. PAGE 4 OF 4 BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD AND ALSO THE ORDER OF THE HON'BLE APEX COURT DISMISSING THE REVENUES APPEAL AGAINST THE S AME, WE ALSO HOLD THAT IF THE PAYMENTS ARE ALREADY MADE BY THE E ND OF THE RELEVANT FINANCIAL YEAR, NO DISALLOWANCE SHALL BE M ADE. 5. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 26 TH AUGUST, 2016. VINODAN/SPS COPY TO: 1 SHRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3-6-643, ST. NO.9, HIMAYATNAGAR, HYDERABAD 500 029 2 DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(1) HYDER ABAD 3 CIT (A)-II HYDERABAD 4 CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER