DCIT, Coimbatore V. Quantum Knits Pvt. Ltd., Coimbatore

ITA 304/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8014 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: S SRIDHAR
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI [ CAMP: COIMBATORE ] . . . , ! .#$#%, ' !( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.304/MDS/2015 % *% / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1, 63-A, RACE COURSE ROAD, COIMBATORE. V. M/S QUANTUM KNITS PVT. LTD., 181, KOLLUPALAYAM VILLAGE, ARASUR POST, COIMBATORE 641 407. PAN : AAACQ 1959 K (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI PATHLAVATH PEERYA, CIT ./,- 0 1 / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE 2 0 3' / DATE OF HEARING : 18.01.2017 45* 0 3' / DATE OF PRONOUNCEMENT : 18.01.2017 / O R D E R PER BENCH: IN THIS APPEAL FILED BY THE REVENUE ITS GRIEVANC E IS THAT THE CIT(APPEALS) DELETED THE DISALLOWANCE MADE UNDER SE CTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.304/MDS/15 2. THE LD. REPRESENTATIVE FOR THE REVENUE SUBMITTED THAT THE CIT(APPEALS) HAD DELETED THE DISALLOWANCE MADE BY T HE A.O. WITH A FINDING THAT M/S KPR MILLS LTD. TO WHOM THE ASSESSE E HAD MADE THE PAYMENT, HAD ACCOUNTED SUCH RECEIPTS IN THEIR BOOKS OF ACCOUNT AND PAID TAX THEREON. AS PER THE LD. D.R., THE CIT(APP EALS) HAD REACHED THIS CONCLUSION WITHOUT VERIFYING THE FACTS OF THE CASE. AS PER THE LD. D.R., AMENDMENT MADE TO SECTION 201(1) OF THE ACT T HROUGH FINANCE ACT, 2012 WITH EFFECT FROM 01.07.2012 COULD NOT BE RETROSPECTIVELY APPLIED. 3. PER CONTRA, THE LD.COUNSEL FOR THE ASSESSEE STRO NGLY SUPPORTED THE ORDER OF THE CIT(APPEALS). 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL S UBMISSIONS. THE ASSESSEE HAD EFFECTED PAYMENT TO ONE M/S KPR MI LLS LTD. WITHOUT DEDUCTING TAX AT SOURCE. THE A.O. HAD CONSIDERED I T AS PART OF BUNDLE OF SERVICES IN THE NATURE OF BUSINESS PROMOTION EX PENSES. ACCORDING TO THE LD. A.O., ASSESSEE FAILED TO DEDUCT TAX AT S OURCE. THE A.O. MADE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE AC T. THE CIT(APPEALS) WHILE AFFIRMING THIS VIEW OF THE A.O., OBSERVED THAT M/S KPR MILLS LTD. WHO ACCOUNTED THESE RECEIPTS UNDER T HE HEAD 3 I.T.A. NO.304/MDS/15 MISCELLANEOUS RECEIPTS, HAD PAID TAX THEREON. TH E CIT(APPEALS) RELIED ON THE AMENDMENT TO SECTION 40(A)(IA) OF THE ACT. RETROSPECTIVITY OF AMENDMENT TO SECTION 40(A)(IA) A ND 201(1) OF THE ACT MADE THROUGH FINANCE ACT, 2012 WAS AN ISSUE WHI CH WAS DEALT WITH BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. M/S ANSAL LAND MARK TOWNSHIP (P.) LTD. (377 ITR 635). THE VIEW TA KEN BY THE HON'BLE DELHI HIGH COURT WAS IN FAVOUR OF THE ASSESSEE. TH ERE IS NO DECISION OF JURISDICTIONAL HIGH COURT ON THIS ISSUE. THIS B EING THE SITUATION, WE ARE OF THE OPINION THAT THE CIT(APPEALS) WAS JUSTIF IED IN TAKING A VIEW THAT IF THE RECIPIENT HAD ACCOUNTED THE INCOME AND PAID THE TAX, ASSESSEE COULD NOT BE SUBJECTED TO RIGOURS OF SECTI ON 40(A)(IA) OF THE ACT. WE DO NOT FIND ANY REASON TO INTERFERE WITH T HIS VIEW TAKEN BY THE LD. CIT(APPEALS). HOWEVER, WHETHER THE PAYEE HAD A CCOUNTED THE RECEIPTS AND PAID TAX THEREON, IN OUR OPINION, REQU IRES VERIFICATION BY THE LD. A.O. WE REMIT THE ISSUE BACK TO THE A.O. F OR THIS LIMITED PURPOSE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. 4 I.T.A. NO.304/MDS/15 ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2017 AT COIMBATORE. SD/- SD/- ( . . . ) ( ! .#$#% ) (N.R.S. GANESAN) (ABRAHAM P. GEORGE) /JUDICIAL MEMBER ' / ACCOUNTANT MEMBER COIMBATORE, 7 /DATED, THE 18 TH JANUARY, 2017. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-II, COIMBATORE 4. 2 ;3 /CIT-III, COIMBATORE 5. 9< .3 /DR 6. =% > /GF.