Sabina Halder, Kolkata V. Income Tax Officer, Ward - 53(3), Kolkata, Kolkata

ITA 2515/KOL/2013

• Counselvise Citation: 251523514 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R AJINDRA PRASAD
• Assessee Lawyers: J M THARD
• Keywords: Business expenditure; Retrospective amendment
• Section: 194C

Judgement Text

I.T.A. NO . 2515 / KOL ./ 20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 2515 / KOL / 20 1 3 ASSESSMENT YEAR : 200 9 - 20 10 SABINA HALDER,.................. ...... .......... ........ . APPELLANT HALDER ENTERPRI SES, C - 519, RAMDASHATI, GARDEN REACH, KOLKATA - 700 024 [PAN : A ASPH 1621 E ] - VS. - INCOME TAX OFFICER,................................ ..... ..... . RESPONDENT WARD - 5 3 (3) , KOLKATA , AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, KOLKATA - 700 107 APPEARANCES BY: SHRI J.M. THARD, ADVOCATE , FOR THE ASSESSEE S H RI RAJINDRA PRASAD , JCIT, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JU LY 1 6 , 2 01 5 DATE OF PRONOUNCING THE ORDER : 03.08. 201 5 O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - XXXIII , KOLKATA IN APPEAL NO. 1 1 9 / CIT(A) - XXXIII/ITO,WARD - 53(3)/11 - 12 DATED 05 . 09 .20 1 3 IN CONFIRMING THE DISALLOWANCE OF RS.6,35,600/ - UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING BUSINESS OF ASBESTOS SHEETS AND ACCESSORIES. THE ASSESSEE HAS CLAIMED CARRIAGE CHARGES OF RS.6,35,600/ - WHICH HAS BEEN PAID TO M/S. PAHARPUR CARRIERS. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF RS.6,35,600/ - FOR THE REASON THAT THIS PAYMENT WAS MADE WITHOUT DEDUCTING OF TAX AT SOURCE UNDER SECTION 194C AND THEREAFTER DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE I.T. ACT, 1961. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE LD. I.T.A. NO . 2515 / KOL ./ 20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 2 OF 4 CIT(APPEALS), WHO ALSO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AND HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO M/S. PAHARPUR CARRIERS FOR TRANSPORTATION WORK. AS THE TDS WAS NOT DEDUCTED, THE RELE VANT EXPENDITURE OF RS.6,35,600/ - IS LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT M/S. PAHARPUR CARRIERS , OF WHICH ASS ESSEE S WIFE IS A PROPRIETOR, IS REGULARLY FILING ITS RETURN OF INCOME AND PAYING DUE TAXES THEREON. HE FURTHER SUBMITTED THAT IN VARIOUS JUDGMENTS, IT HAS BEEN HELD THAT IF THE DEDUCTEE/PAYEE HAS PAID THE TAX BY INCLUDING THE INCOME IN HIS RETURN OF INCOM E THEN NO RECOVERY OF ANY TAX CAN BE MADE FROM THE PERSON RESPONSIBLE FOR PAYING OF INCOME FROM WHICH HE FAILED TO DEDUCT INCOME TAX AT SOURCE FROM SUCH AMOUNT. LD. COUNSEL ALSO PLEADED THAT THE FACTS OF THE CASE ARE COVERED BY THE DECISION DATED 04.03.201 5 OF THE ITAT, SMC BENCH, KOLKATA IN ITA NO. 1905/KOL/2014 IN THE CASE OF SANTOSH KUMAR KEDIA VS. - ITO, WARD - 56(1), KOLKATA. 4 . ON THE OTHER HAND, LD. SR. D.R. RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 5 . I HAVE HEARD THE RI VAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE ALONG WITH T HE ORDERS OF TAX AUTHORITIES BELOW . I FIND FROM THE ARGUMENT MADE BY THE LD. COUNSEL FOR THE ASSESESE THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY F INANCE (NO. 2) ACT, 20 12 , WOULD APPLY IN THE INSTANT CASE. ACCORDING TO HIM, THE SECOND PROVISO IS CURATIVE IN NATURE INTENDED TO SUPPLY AN OBVIOUS OMISSION, TAKE CARE OF AN UNINTENDED CONSEQUENCE AND MAKE THE SECTION WORKABLE. SECTION 40(A)(IA) WITHOUT TH E SECOND PROVISO RESULTED IN THE UNINTENDED CONSEQUENCE OF DISALLOWANCE OF LEGITIMATE BUSINESS EXPENDITURE EVEN IN A CASE WHERE THE PAYEE IN RECEIPT OF THE INCOME HAD PAID TAX. ACCORDING TO HIM , IT HAS FOR LONG BEEN THE LEGAL POSITION THAT IF THE PAYEE H AS PAID TAX I.T.A. NO . 2515 / KOL ./ 20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 3 OF 4 ON HIS INCOME, NO RECOVERY OF ANY TAX CAN BE MADE FROM THE PERSON WHO HAD FAILED TO DEDUCT THE INCOME TAX AT SOURCE FROM SUCH AMOUNT. IN THE CASE OF GRINDLAYS BANK VS. - CIT REPORTED IN (1992) 193 ITR 457 (CAL.) DECIDED ON SEPTEMBER 5, 1989, IT WAS HELD BY THE HON BLE CALCUTTA HIGH COURT AS FOLLOWS AT PAGES 467 TO 470 OF THE REPORTS: - A POINT HAS BEEN MADE BY THE ASSESSEE THAT AS A RESULT OF THIS DEDUCTION, THE DEPARTMENT IS REALIZING THE TAX TWICE ON THE SAME AMOUNT. IT DOES NOT APPEAR THAT TH IS POINT WAS AGITATED BEFORE THE TRIBUNAL.. WE, HOWEVER, MAKE IT CLEAR THAT IF THE AMOUNT OF TAX HAS ALREADY BEEN REALISED FROM THE EMPLOYEES CONCERNED DIRECTLY, THERE CANNOT BE ANY QUESTION OF FURTHER REALISATION OF TAX AS THE SAME INCOME CANNOT BE TAXED TWICE. IF THE TAX HAS BEEN REALISED ONCE, IT CANNOT BE REALISED ONCE AGAIN, BUT THAT DOES NOT MEAN THAT THE ASSESSEE WILL NOT BE LIABLE FOR PAYMENT OF INTEREST OR ANY OTHER LEGAL CONSEQUENCE FOR THEIR FAILURE TO DEDUCT OR TO PAY TAX IN ACCORDANCE WITH LAW TO THE REVENUE (EMPHASIS SUPPLIED) 5.1. I AM OF THE VIEW THAT INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS CURATIVE AND IT HAS RETROSPECTIVE EFFECT W.E.F. 1 ST APRIL, 2005, BEING A DATE FROM WHICH SECTION 40(A)(IA) OF THE ACT WAS INSERTE D BY THE FINANCE (NO.2) ACT, 2004. IN VIEW OF THIS, I AM OF THE VIEW THAT MATTER NEEDS FRESH ADJUDICATION IN THE LIGHT OF THE FACT THAT THE ASSESSING OFFICER WILL CARRY OUT NECESSARY VERIFICATION IN REGARD TO RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENT IN COMPUTATION OF ITS INCOME AND VERIFICATION OF PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND ALSO FILING OF INCOME TAX RETURN BY THE RECIPIENT. IN TERMS OF THE ABOVE, THIS ASPECT ARGUED BY THE LD. COUNSEL IS RESTORED BACK TO THE FILE O F THE ASSESSING OFFICER AND ASSESSEE WILL PROVIDE ALL THE DETAILS IN TERMS OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST , 201 5 . SD/ - MAHAVIR SINGH ( JUDICIAL MEMBER) KOLKATA, THE 3 RD D AY OF AUGUST , 201 5 I.T.A. NO . 2515 / KOL ./ 20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 4 OF 4 COPIES TO : (1) SABINA HALDER, HALDER ENTERPRISES, C - 519, RAMDASHATI, GARDEN REACH, KOLKATA - 700 024 (2) INCOME TAX OFFICER, WARD - 53(3), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, KOLKATA - 700 107 (3) COMMISSIONER OF INCOME - TAX (APPEALS) , KOLKATA (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .