ACIT, Nagercoil V. M/s. R.S. Wind Tech Engineers Pvt. Ltd., Nagercoil

ITA 2650/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4081 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOPI KRISHNA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2650/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE -1, NAGERCOIL VS M/S. R.S. WIND TECH ENGINEERS PVT. LTD., NAGERCOIL PAN: AAACR7743Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI GOPIKRISHNA, JCIT /RESPONDENT BY : SHRI N. DEVANATHAN, ADVOCATE /DATE OF HEARING : 03.05.2017 !' /DATE OF PRONOUNCEMENT : 10.07.2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-3, MADURAI DATED 13.06.2016 IN ITA NO.0045/2015-16 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S.250(6) R.W.S.143 (3) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERR ED IN DELETING THE 2 ITA NO.2650/MDS/2016 ADDITION MADE BY THE LD.AO INVOKING SECTION 40(A)(I A) OF THE ACT TOWARDS NON-DEDUCTION OF TAX AT SOURCE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF WINDMILL POWER GENERATION AND ITS MAINTENANCE, FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 30.09.2012, ADMITTING TO TAL INCOME OF RS.1,67,25,390/-. INITIALLY THE RETURN WAS PROCESS ION U/S.143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SC RUTINY UNDER CASS AND FINALLY ORDER WAS PASSED U/S.143(3) OF THE ACT ON 30.03.2015, WHEREIN THE LD.AO DISALLOWED INTEREST P AYMENT OF RS.50,04,848/- TO M/S. L & T FINANCE AND TATA FINAN CE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DUE TO NON-DEDUCTION OF TAX AT SOURCE. 4. ON APPEAL, THE LD.CIT(A) GRANTED RELIEF TO THE ASSESSEE BY DELETING THE ADDITION MADE BY THE LD.AO, BECAUSE TH E ASSESSEE HAD ESTABLISHED BEFORE HIM THAT THE RECIPIENT OF TH E INTEREST HAD INCLUDED THE SAME IN THEIR RESPECTIVE RETURN OF INC OME FILED IN COMPLIANCE WITH SECTION 139(1) OF THE ACT AND PAID TAX DULY. FURTHER THE ASSESSEE HAD ALSO PRODUCED THE REQUISIT E CERTIFICATE FROM THE QUALIFIED CHARTERED ACCOUNTANT AS PRESCRIB ED UNDER THE 3 ITA NO.2650/MDS/2016 ACT. THE GIST OF THE DECISION OF THE LD.CIT(A) IS R EPRODUCED HEREIN BELOW FOR REFERENCE 3.3. WITHOUT PREJUDICE TO THE ABOVE, THE REPRESENT ATIVE SUBMITTED THAT THE APPELLANT HAD ALREADY MADE THE PAYMENTS BY MEANS OF POST PAID CHEQUES AND NOTHING WAS OUTSTANDING AT TH E YEAR END AND, THEREFORE, U/S 40(A)(IA) IS NOT APPLICABLE AS IT CAN BE APPLIED ONLY IN RESPECT OF PAYABLE AMOUNT. THE REPRESENTATI VE CONTENDED THAT AS NOTHING WAS 'PAYABLE' AS ON 31.03.2012, NO DISALLOWANCE COULD BE MADE AS PER THE DECISION OF THE HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PRIVA TE LIMITED (357 ITR 642) IN WHICH IT WAS HELD THAT DISALLOWANCE U/S 40(A)(IA) COULD BE MADE ONLY IF THE AMOUNT WAS OUTSTANDING AS AT , THE END OF THE YEAR AS THE WORDS USED IN SECTION 40(A)(IA) IS 'PAYABLE' AND NOT 'PAID'. THE REPRESENTATIVE FURTHER RELIED ON TH E DECISION OF THE HON'BLE CHENNAI TRIBUNAL IN THE CASE OF M/S DEVENDR A EXPORTS PRIVATE LIMITED (2015) 038 ITR (TRIBUNAL) 0744 AND ALSO THE DECISION OF THE HON'BLE CHENNAI TRIBUNAL IN THE CAS E OF M/S NARAYANA MOORTHY TRAVELS (2015) 038 ITR (TRIBUNAL) 0592. 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESE NTATIVE. ADMITTEDLY, THE APPELLANT PAID INTEREST TO M/S L & T FINANCE LTD AND M/S TATA FINANCE LTD DURING THE YEAR WITHOUT DE DUCTION OF TAX AT SOURCE AND, THEREFORE, THE ASSESSING OFFICER DIS ALLOWED THE ENTIRE INTEREST CLAIMED U/S 40(A)(IA). HOWEVER THE SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED BY FINANCE ACT, 2 012 WITH EFFECT FROM 01.04.2013. THE HON'BLE AGRA TRIBUNAL RAJEEV K UMAR AGARWAL (CITED ABOVE) HELD THAT THIS AMENDMENT BEIN G BENEFICIAL TO THE ASSESSEE IS RETROSPECTIVE IN NATURE AND CONS EQUENTLY IT IS APPLICABLE TO EARLIER ASSESSMENT YEARS ALSO. THE AP PELLANT HAS FILED FORM NO.26A FROM A QUALIFIED CHARTERED ACCOUN TANT STATING THAT BOTH THE ABOVE PARTIES ARE ASSESSED TO INCOME TAX AND THEY HAVE FILED THEIR INCOME TAX RETURNS ON 29.09.2012 A ND PAID THE TAXES BY OFFERING INTEREST INCOME RECEIVED FROM THE APPELLANT, COPIES OF ANNEXURE OF FORM 26A ARE ENCLOSED TO THIS ORDER. IT IS SEEN FROM THE SAME THAT THE ABOVE COMPANIES HAVE PA ID THE TAXES DUE WITHIN THE DUE DATE OF FILLING OF RETURN U/S 13 9(1). IN THE 4 ITA NO.2650/MDS/2016 CIRCUMSTANCES, AS PER SECOND PROVISO TO SECTION 40( A)(IA), NO DISALLOWANCE CAN BE MADE AND CONSEQUENTLY THE ADDIT ION MADE BY THE ASSESSING OFFICER IS DELETED. 4.1. WITHOUT PREJUDICE TO THE ABOVE, AS THE ENTIRE INTEREST AMOUNT HAD BEEN PAID DURING THE YEAR ITSELF, DISALLOWANCE U/S 40(A)(IA) IS NOT CORRECT AS ONLY 'PAYABLE' AMOUNT CAN BE DISALLO WED. THE DECISIONS RELIED ON BY THE REPRESENTATIVE SUPPORT T HE CASE OF THE APPELLANT. I THEREFORE, DIRECT THE ASSESSING OFFICE R TO DELETE THE DISALLOWANCE ON THIS GROUND ALSO. 5. SINCE THE LD.CIT(A) HAS ALLOWED THE APPEAL OF T HE ASSESSEE FOLLOWING THE RATIO LAID DOWN IN THE DECIS ION OF THE TRIBUNAL (SUPRA), WE DO NOT FIND IT NECESSARY TO IN TERFERE WITH HIS ORDER. ACCORDINGLY WE HEREBY UPHOLD THE SAME. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED ON THE 10 TH JULY, 2017 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 10 TH JULY, 2017 JR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF