Manjeet Kumar HUF Prop. Rawalpindi Jewellers, Karnal V. ACIT, Haryana

ITA 2885/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8397 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P V GUPTA
• Keywords: Business expenditure; Retrospective amendment; TDS
• Section: 40(a)(ia); 201(1)

Judgement Text

PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: C: NEW DELHI) BEFORE SMT. BEENA A. PILLAI, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO: 2885/DEL/2016 (ASSESSMENT YEAR: 2011-12) MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS C/O. MANOJ MITTAL, ADVOCATE, 1126, SECTOR- 9 KARNAL VS ACIT CIRCLE- KARNAL PAN NO: AAAHM6578H APPELLANT RESPONDENT ASSESSEE BY : SHRI MANOJ MITTAL, ADV., SHRI MANJEET KUMAR, HUF REVENUE BY : SHRI P.V. GUPTA, SR. DR ORDER PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, GURGAON, [LD. CIT(A) FOR SHORT], DATED 01.03.2016, FOR ASSESSMENT YEAR (A.Y., FOR SHORT) 2011-12, ON TH E FOLLOWING GROUNDS: THE ASSESSMENT ORDER PASSED U/S 143 (3) BY THE ACIT , CIRCLE, KARNAL AND THE APPELLATE ORDER PASSED U/S 250(6) BY THE CIT(A)-2, GURGAON IS AGAINST LAW AND FACTS AND IS CHALLENGED ON THE FOLLOWING GROUNDS:- 1. THAT THE ACIT, KARNAL GROSSLY ERRED IN DISALLOWI NG AN AMOUNT OF RS. 6,53,532/- PAID AS INTEREST TO GE MONEY FINANCE (P) LTD. ON LO AN TAKEN FROM THEM. THE ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 2 OF 7 DISALLOWANCE OF THIS BUSINESS EXPENDITURE WAS MADE ON PRETEXT OF TDS NOT DEDUCTED ON THIS INTEREST AMOUNT. THE ASSESSE SUBMI TTED DETAILED SUBMISSIONS IN THIS REGARD ALONGWITH VARIOUS JUDGMENTS SUPPORTING THE ASSESSE, BUT THOSE WERE NOT CONSIDERED BY THE ASSESSING OFFICER. 2. THAT THE LEARNED CIT (A)-2, GURGAON ALSO ERRED I N CONFIRMING THE ABOVE DISALLOWANCE/ADDITION AND REJECTING THE APPEAL OF T HE APPELLANT ON THIS POINT. 3. THAT THE DISALLOWANCE/ADDITION MADE BY THE ACIT, KARNAL AND CONFIRMED BY THE LEARNED CIT(A)-2, GURGAON ARE LIABLE TO BE QUAS HED BY THIS HONBLE TRIBUNAL. 4. THAT THE DETAILED ARGUMENTS SHALL BE PUT FORTH B EFORE THIS HONBLE TRIBUNAL AT THE TIME OF HEARING OF THIS APPEAL. 5. THAT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE, THE ADDITION/DISALLOWANCE BE KINDLY QUASHED AND APPROPR IATE RELIEF BE KINDLY GIVEN TO THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, CHANGE OR MODIFY THE ABOVE GROUNDS OF APPEAL BEFORE THE SAME ARE DISPOSED OF. (B) VIDE ASSESSMENT ORDER DATED 29.03.2014, THE ASSESS ING OFFICER (AO, FOR SHORT) DISALLOWED ASSESSEES CLAIM ON INTEREST EXPENSES AM OUNTING TO RS. 6,53,532/- PAID BY THE ASSESSEE TO M/S G.E. MONEY FINANCE PVT. LTD. AND MAD E CORRESPONDING ADDITION TO ASSESSEES INCOME BY INVOKING THE SECTION 40(A)(IA) OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE UNDER SECTION 194A OF I.T. ACT. THE ASSESSEE TOOK THE PLEA BEFORE THE AO THAT EFFECT OF PROVISO INSERTED IN SECTION 201 BY THE FINANCE ACT, 2012 W.E.F. 01.0 7.2012 SHOULD BE GIVEN RETROSPECTIVELY, WHICH PROVIDES THAT ANY PERSON, INCLUDING THE PRINC IPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDAN CE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITE D TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT O F SUCH TAX, IF SUCH RECIPIENT I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139. I I) HAS TAKEN INTO ACCOUNT SUCH SUM FOR ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 3 OF 7 COMPUTING INCOME IN SUCH RETURN OF INCOME; AND III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE P ERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PR ESCRIBED. THE ASSESSEES PLEA TO TREAT SECOND PROVISO TO SECTION 201 OF I.T. ACT (INSERTED BY FINANCE ACT, 2012 W.E.F. 01.07.2012) AS HAVING RETROSPECTIVE EFFECT WAS REJECTED BY THE AO, BY HOLDING AS UNDER: 7. REGARDING RETROSPECTIVE EFFECT TO PROVISO TO SE CTION 201 INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.07.2012, IT IS CLEARLY WRITTEN ABOUT THE DATE FROM WHICH EFFECT IS TO TAKE PLACE FOR ANY LAW AND PROVISIONS CONTAINED WHEN IT IS SPECIFICALLY WRITTEN THAT THE EFFECT IS TO TAKE PLACE FROM SUCH DATE, THE EFFECT HAS TO BE APPLIED FROM SUCH DATE. EVEN OTHERWISE, WHEN NO DATE IS WR ITTEN ABOUT THE APPLICABILITY OF THE PROVISIONS OF ANY STATUTE, IT IS ASSUMED THAT I T WILL HAVE PROSPECTIVE APPLICATION, NOT RETROSPECTIVE. THERE ARE NO TWO VIEWS. (C) AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) [LD. CIT(A), FOR SHORT]. VIDE APPE LLATE ORDER DATED 08.03.2016; THE LD. CIT(A) DISMISSED ASSESSEES APPEAL ON THIS GROUND A ND HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT, INSERTED W.E.F 01.04.2013 BY FINANCE ACT, 2012 WAS NOT RETROSPECTIVE AND WAS NOT APPLICABLE FOR EARLIER ASSESSMENT YEARS . FOR THIS THE LD. CIT(A) RELIED ON DECISION OF HONBLE KERALA HIGH COURT ORDER DATED 1 3.01.2014 IN THE CASE OF M/S PRUDENTIAL LOGISTICS & TRANSPORTS VS. THE INCOME TAX OFFICER I N ITA NO. 1 OF 2014 {NOW REPORTED AT [2014] 364 ITR 689 (KERALA)} AND ORDER DATED 21.11. 2014 IN THE CASE OF THE KASARGOD DISTRICT CO-OPERATIVE BANK LTD. VS. DY. CIT, CIRCLE 1 KANNUR, IN ITA NO. 245/COCH/2014, {NOW REPORTED AT [2015] 55 TAXMANN.COM 442 (COCHIN- TRIB.)}. AGGRIEVED AGAIN, THE ASSESSEE HAS FILED THIS APPEAL IN INCOME TAX APPELL ATE TRIBUNAL (ITAT, FOR SHORT). ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 4 OF 7 BEFORE US, THE LD. COUNSEL FOR ASSESSEE SUBMITTED T HAT THE AFORESAID AMOUNT OF RS. 6,53,532/- HAS ALREADY BEEN ACCOUNTED FOR BY THE RE CIPIENT I.E. THE AFORESAID M/S G.E. MONEY FINANCE PVT. LTD. HE FURTHER CONTENDED THAT S ECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT SHOULD BE GIVEN RETROSPECTIVE EFFECT AND T HE ASSESSEE SHOULD BE ALLOWED ITS BENEFIT FOR THIS ASSESSMENT YEAR, I.E. FOR 2011-12 , ALTHOUGH, IT IS INSERTED W.E.F. 01.07.2012. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR ASSESSEE RELIED ON ORDER DATED 19.02.2016 OF ITAT, DELHI IN THE CASE OF HIN DUSTAN PLYWOOD COMPANY VS. ITO (ITA NO. 145/DEL/2014); ORDER DATED 29.05.2013, ITAT AGR A BENCH, IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ADDITIONAL COMMISSIONER OF INCOME TAX (ITA NO. 337/AGRA/2013); AND ORDER DATED 26.08.2015, HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (ITA 160/2015 , 161/2015). THE LD. COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE IS WIL LING TO PROVE TO THE SATISFACTION OF REVENUE AUTHORITIES THAT CONDITIONS NECESSARY FOR A VAILING THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT ARE FULFILLED BY THE ASSESSEE; AND ACCORDINGLY SUBMITTED THAT THE MATTER BE REMANDED TO THE AO FOR VERIFICATION I N THIS REGARD AND FRESH ORDER ON THIS ISSUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE (LD . DR, FOR SHORT) AGREED WITH THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MATTER BE REMANDED TO THE AO FOR VERIFICATION IN THIS REGARD AND FRESH ORDER ON THIS ISSUE. (D) WE HAVE HEARD BOTH SIDES PATIENTLY. WE HAVE PERUS ED THE MATERIALS AVAILABLE ON RECORD, CAREFULLY. WE HAVE CONSIDERED THE JUDICIAL PRECEDENTS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL FOR ASSESSEE. WE HAVE ALSO CONSIDERED THE JUDICIAL PRECEDENTS REFERRED TO IN THE AFORESAID ASSESSMENT ORDER 29.03.2014 AND THE A FORESAID IMPUGNED ORDER DATED ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 5 OF 7 08.03.2016 OF LD. CIT(A). UNDER SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT, THERE ARE STATUTORY PROVISIONS TO THE EFFECT THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS O F CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE F IRST PROVISO TO SUB-SECTION (1) OF SECTION 201; THEN, FOR THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL 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. THE QUESTION BEFORE US, IS WHETHER SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT IS PROSPECTIVE IN APPLICATION OR IS TO BE APPLIED RETROSPECTIVELY. ON THE AFORESAID QUEST ION BEFORE US, WE HAVE THE BENEFIT OF GUIDANCE FROM THE ORDER OF HONBLE DELHI HIGH COURT , IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P.) LTD. 377 ITR 635 (DELHI) IN WHIC H THE HONBLE HIGH COURT HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT IS DECLARATORY AND CURATIVE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005. REVENUES SP ECIAL LEAVE PETITION AGAINST THIS ORDER OF HONBLE DELHI HIGH COURT HAS BEEN DISMISSED BY H ONBLE SUPREME COURT IN CIT VS. ANSAL LANDMARK TOWNSHIP (P.) LTD. 242 TAXMAN 5 (SC). THE VIEW THAT SECOND PROVISO OF SECTION 40(A)(IA) OF I.T. ACT IS DECLARATORY AND CU RATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 01.04.2005 WAS ALSO TAKEN IN RAJEEV KUM AR AGARWAL VS. ADDL. CIT 149 ITD 363 (AGRA- TRIB.); AND IN DCIT VS. ESAOTE INDIA (NS) LTD. 172 ITD 299 (AHD.) AND HINDUSTAN PLYWOOD COMPANY VS. ITO (SUPRA). THE ISS UE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, IN VIEW OF THESE PRECEDENTS . THEREFORE, WE ALSO HOLD, RESPECTFULLY FOLLOWING THESES PRECEDENTS, THAT SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT IS CURATIVE IN NATURE AND HAS RETROSPECTIVELY. ACCORDINGLY, IN THE FITNESS OF THINGS, AND ALSO AS BOTH ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 6 OF 7 SIDES AGREE, THE DISPUTED ADDITION U/S 40(A)(IA) OF I.T. ACT IS REMANDED TO THE ASSESSING OFFICER FOR FRESH ORDER ON THIS LIMITED ISSUE AFTER NECESSARY VERIFICATION, HAVING REGARD TO SECTION 40(A)(IA) OF I.T. ACT, READ WITH FIRST PROV ISO TO SECTION 201(1) OF I.T. ACT AND ALSO READ WITH RULE 31 ACB OF INCOME TAX RULES, 1961 (I .T. RULES, FOR SHORT). BEFORE PASSING FRESH ORDER, THE AO WILL GIVE OPPORTUNITY TO THE AS SESSEE TO FURNISH NECESSARY MATERIALS IN SUPPORT OF CLAIM FOR BENEFIT UNDER SECOND PROVISO T O SECTION 40(A)(IA) OF I.T. ACT, READ WITH FIRST PROVISO TO SECTION 201(1) OF I.T. ACT AN D ALSO READ WITH RULE 31 ACB OF I.T. RULES. (D.1) BY WAY OF ABUNDANT CAUTION, WE CLARIFY THAT, ON WHE THER THE PROVISIONS ARE CURATIVE AND RETROSPECTIVE, WE HAVE EXPRESSED OPINION ONLY A BOUT SECOND PROVISO TO SECTION 40(A)(IA) OF I.T. ACT, BECAUSE THE DISPUTE BROUGHT BEFORE US IN THE PRESENT APPEAL IS ONLY REGARDING DISALLOWANCE UNDER SECTION 40(A)(IA) OF I .T. ACT. WE HAVE EXPRESSED NO OPINION REGARDING OTHER PROVISIONS UNDER I.T. ACT, SUCH AS SECTION 201(1A) AND SECTION 271C OF I.T. ACT, BECAUSE THE PRESENT APPEAL BEFORE US, IS NOT CONCERNED WITH ANY DISPUTES OTHER THAN DISALLOWANCE UNDER SECTION 40(A)(IA) OF I.T. A CT. (E) IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH DAY OF APRIL, 2019 SD/- SD/- S (BEENA A. PILLAI) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 .04.2019 BIDHAN /POOJA ITA NO.- 2885/DEL/2016. MANJEET KUMAR HUF PROP. RAWALPINDI JEWELLERS. PAGE 7 OF 7 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DIRECT ON COMPUTER 11.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER