ACIT, Tirunelveli V. M/s. Kajah Enterprises, Tirunelveli

ITA 2966/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7796 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 18-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANGA RAJAN IRS
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI (CAMP : MADURAI) . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 2966/MDS/2016 / ASSESSMENT YEAR : 2012-2013. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, TIRUNELVELI. VS. M/S. KAJAH ENTERPRISES, 64, SOUTH CAR STREET, TIRUNELVELI 6 [PAN AACCK 3663J] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. RANGA RAJAN, IRS, JCIT. /RESPONDENT BY : SHRI. G. BASKAR, ADVOCATE /DATE OF HEARING : 15-02-2017 !' /DATE OF PRONOUNCEMENT : 15-02-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE REVENUE, IT IS AGGRIE VED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE DI SALLOWANCE MADE BY THE LD. ASSESSING OFFICER U/S.40A(IA) OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) FOR WANT OF DEDUCTION OF TAX AT SOURCE. ITA NO. 2966/MDS/2016 :- 2 -: 2. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOT ED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HAD PAID IN TEREST OF RS.78,66,589/- TO M/S. KODAK MAHINDRA FINANCE WHICH WAS A NON BANKING FINANCING INSTITUTION. AS PER LD. ASSESSIN G OFFICER ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE AS REQUIRED U/S.194A OF THE ACT. HE APPLIED SEC. 40A(IA) OF THE ACT AND MADE DISALLOWAN CE OF RS.78,66,589/-. 3. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). CONTENTION OF THE ASSESSEE WAS THAT M/S.KOTAK MAHINDRA FINANCE LTD BEING THE P AYEE HAD OFFERED THE INTEREST EARNED ON THE AMOUNTS LENT TO THE ASSE SSEE AS A PART OF ITS INCOME FOR THE ASSESSMENT YEAR 2012-13. RELYING ON THE JUDGMENT OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD 337 ITR 63 , ASSESSEE SUBMITTED THAT SECOND PROVISO TO SEC. 40A(IA) OF T HE ACT INSERTED BY FINANCE ACT, 2012 HAD TO BE CONSTRUED RETROSPECTIV ELY. LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS APPRECIATI VE OF HIS CONTENTION. HE HELD THAT M/S.KOTAK MAHINDRA FINANCE LTD HAD OFFERED INTEREST EARNED ON LOANS AND ADVANCES BY THE ASSESS EE AS PART OF ITS INCOME, AND ASSESSEE COULD NOT BE DEEMED ONE IN DEF AULT. THUS, ACCORDING TO LD. COMMISSIONER OF INCOME TAX (APPEAL S) DISALLOWANCE ITA NO. 2966/MDS/2016 :- 3 -: U/S.40A(IA) OF THE ACT WAS NOT WARRANTED. HE DELET ED THE DISALLOWANCE. 4. NOW BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT SECOND PROVISO TO SEC. 40A(IA) OF TH E ACT WAS PROSPECTIVE AND EFFECTIVE ONLY FROM 01.04.2013. T HUS, ACCORDING TO HIM, ASSESSEE WAS IN DEFAULT IN NOT DEDUCTING TAX AT SOURCE. IN ANY CASE AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, LD. ASSESSING OFFICER WAS NOT GIVEN ANY CHANCE TO VERIFY WHETHER DEDUCTEE HAD OFFERED THE INTEREST INCOME TO TAX. 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN SO FAR AS RETROSPECTIVE OPER ATION OF SECOND PROVISO TO SEC. 40A(IA) OF THE ACT IS CONCERNED, B Y VIRTUE OF JUDGMENT OF DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP PRIVATE LTD (SUPRA ), LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUS TIFIED IN TAKING A VIEW THAT IT COULD BE DEEMED AS RETROSPECT IVE, AND ASSESSEE COULD NOT BE TREATED AS ONE IN DEFAULT, IF THE PAYE E HAD OFFERED INTEREST ITA NO. 2966/MDS/2016 :- 4 -: INCOME TO TAX. HOWEVER, SUBSTANCE OF THE CONTENTIO N OF THE LD. DEPARTMENTAL REPRESENTATIVE IS THAT LD. ASSESSING O FFICER WAS NOT GIVEN AN OPPORTUNITY TO VERITY THE VERACITY OF THE CLAIM OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE ISSUE REQUIRES A FRE SH LOOK BY THE LD. ASSESSING OFFICER. WE SET ASIDE THE ORDERS OF THE L OWER AUTHORITIES IN SO FAR AS DISALLOWANCE U/S.40A(IA) OF THE ACT AND R EMIT IT BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 15 TH FEBRUARY, 2017 AT MADURAI. SD/- SD/- ( . . . # ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER MADURAI. $% / DATED:15 TH FEBRUARY, 2017. %& '()( / COPY TO: 1 . / APPELLANT 3. *+# / CIT(A) 5. (,- . / DR 2. / RESPONDENT 4. * / CIT 6. -/0 / GF