M/S. TESLA TRANSFORMERS LTD., Bhopal V. THE ACIT 3(1), Bhopal

ITA 311/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5823 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER M/S.TESLA TRANSFORMERS LIMITED, 30-B,INDUSTRIAL AREA, GOVINDPURA, BHOPAL PAN: AABCT1005C VS. ACIT, 3(1), BHOPAL APPELLANT RESPONDENT APPELLANT BY SHRI ANIL KHABYA, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 03.08.2016 DATE OF PRONOUNCEMENT 19.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), BHOPAL-2, [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 10.03 .2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11 AS AGAINST APPE AL I.T.A. NO.311/IND/2015 ASSESSMENT YEAR : 2010-11 ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 2 OF 12 2 DECIDED IN ASSESSMENT ORDER DATED 26.03.2013 OF AC IT, 3(1), BHOPAL [HEREINAFTER REFERRED TO AS THE AO]. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. THAT THE LD. CIT(A) ERRED IN MAINTAINING ADDITION O F RS. 6,75,450/- MADE BY AO TOWARDS ALLEGED UNDISCLOSED RECEIPTS. 2. THAT THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWAN CE OUT OF SALE COMMISSION PAYMENTS OF RS. 2,47,614/- MADE BY AO BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3. GROUND NO.1 RELATES TO ADDITION OF RS. 6,75,450/- A S UNDISCLOSED RECEIPTS. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING, DISTRIBUTION AND REPAIR OF POWER TRA NSFORMERS AND ALLIED SERVICES. RETURN OF INCOME WAS FILED ON 2 4.09.2010 DECLARING INCOME OF RS. 8,42,83,810/-. THE ASSESSEE WAS REQUIRED TO STATE WHETHER THE INCOME OF RS. 6,75,450 /- PAID BY SMS INFRASTRUCTURE ON 09.10.2009 ON WHICH THE PAYER HAD DEDUCTED A TDS AMOUNT OF RS. 67,545/- WAS RECOGNIZED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AND THE ASSESSEE WAS ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 3 OF 12 3 REQUIRED TO PRODUCE LEDGER ACCOUNT OF THE PAYER IN BOOKS OF THE ASSESSEE. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY SATISFACTORY ANSWER NOR FURNISHED ANY EVIDENCE OF RE VENUE RECOGNITION IN THE BOOKS OF ACCOUNTS, NOR WAS ABLE T O PRODUCE FORM NO. 16A FROM THE DEDUCTOR. THEREFORE, THE AO A RRIVED AT THE CONCLUSION THAT THE ASSESSEE HAS NOT BOOKED THI S INCOME IN ITS BOOKS OF ACCOUNTS, HENCE, THE SAME WERE ADDE D TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED WITH THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHEREIN IT WAS STATED THAT THE ASSESSEE HAS SOLD TRANSFORMER TO M/S. SMS INFRA STRUCTURE IN EARLIER YEARS. TRANSFORMERS WERE SOLD AGAINST US ANCE BILLS WHICH ARE NEGOTIATED THROUGH BANK AND THE AMOUNT FOR RS. 6,27,033/- WAS RECOVERED DURING THE FINANCIAL YEAR 2 006-07 RELEVANT TO ASSESSMENT YEAR 2007-08. THE PARTY HAS SETTLED THIS AMOUNT AT RS. 6,75,450/- ADDING FURTHER INTERE ST FOR DELAYED PAYMENT. SINCE THE SUM OF RS. 6,27,033/- WHI CH HAS BEEN CREDITED IN EARLIER ASSESSMENTS AND OFFERED TH IS INCOME FOR TAXATION. THEREFORE, THIS AMOUNT OF RS. 6,27,03 3/- OUGHT TO BE DELETED AND ADDITION OF ONLY RS. 48,417/- MAY KI NDLY BE ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 4 OF 12 4 CONFIRMED. HOWEVER, THE LD. CIT(A) WAS OF THE VIEW TH AT THE ASSESSEE HAS INDEED RECEIVED AN AMOUNT OF RS.6,75,4 50/-, DURING THE YEAR UNDER CONSIDERATION, BUT ONLY EVIDE NCE GIVEN BY THE ASSESSEE BEFORE THE AO EVEN IN APPEAL IS COP Y OF THE LEDGER ACCOUNT OF THE CONCERN M/S. SMS INFRASTRUCTU RE IN ITS BOOKS OF ACCOUNTS. HENCE, THE ADDITION WAS, THEREFOR E, CONFIRMED. 6. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES, HENCE, SUBMITTED THAT THE AMOUNT WAS RE CEIVED IN EARLIER YEARS, WHICH HAS BEEN DULY ACCOUNTED FOR AND OFFERED TO TAX AND, HOWEVER, FINAL ACCOUNTS ON WHICH TDS WAS DED UCTED BY PAYEE WERE SETTLED DURING THE ASSESSMENT YEAR UN DER CONSIDERATION. THEREFORE, THERE IS NO JUSTIFICATION FOR MAINTAINING ADDITION OF RS. 6,27,033/-, WHICH TANTAM OUNTS TO DOUBLE ADDITION. 7. THE LD. SR. DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF CIT(A). 8. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. IT APPEARS THAT THE REQUIRED DETAILS WER E NOT ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 5 OF 12 5 SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORIT IES. THEREFORE, WE ARE OF THE VIEW THAT IT WOULD BE REASON ABLE TO RESTORE THE MATTER TO THE FILE OF AO TO EXAMINE THE DETAILS OF ACCOUNTS OF BOTH THE PARTIES I.E. RECIPIENT AND PAY ER WITH NECESSARY EVIDENCE AND CONSIDER THE MATTER AFRESH ACCORDINGLY. THIS GROUND IS, THEREFORE, SET-ASIDE F OR THIS LIMITED PURPOSE ONLY. 9. GROUND NO. 2 IS REGARDING MAINTAINING DISALLOWANCE OUT OF SALE COMMISSION PAYMENTS OF RS. 2,47,614/- M ADE BY THE AO BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961. 10. BRIEFLY STATED, THE FACTS OF THE ASSESSEE ARE THAT THE ASSESSEE HAS MADE VARIOUS PAYMENTS TO COMMISSION AG ENTS WHO HAVE PROCURED BUSINESS FOR THE ASSESSEE AND PAID THE SUM OF RS. 2,47,614/-, ON WHICH NO TDS WAS DEDUCTED. IT WAS CONTENDED THAT THE ASSESSEE HAD PAID RS. 2,12,510/- ACTUALLY DURING THE YEAR AND ONLY A SUM OF RS. 35,103/- WAS P AYABLE AS ON 31.03.2010. THEREFORE, THE AMOUNT OF RS. 2,12 ,510/- CANNOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT AS THE SUM WAS ALREADY PAID DURING THE YEAR, AND ONLY AN AMOUNT OF RS. ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 6 OF 12 6 35,103/- WAS PAYABLE ON 31.03.2010. HOWEVER, THE AO WAS OF THE VIEW THAT THERE IS VIOLATION OF STATUTORY OBL IGATION OF THE ASSESSEE. THEREFORE, THE SAID AMOUNT WAS DISALLOWED U/S 40(A)(IA) OF THE ACT. 11. IN APPEAL, THE LD. CIT(A) NOTED THAT THE FACT REGAR DING NON-DEDUCTION OF TDS AT PRESCRIBED RATES ON SALES C OMMISSION AND, THEREFORE, NON-DEPOSIT IN THE GOVERNMENT ACCOU NT HAS NOT BEEN DISPUTED BY THE ASSESSEE ITSELF. THE ASSES SEE HAS FURTHER RELIED ON AMENDMENT IN SECTION 40(A)(IA) IN FINANCE ACT, 2012, STATING IT TO BE RETROSPECTIVE IN OPERAT ION. IT HAS FURTHER STATED THAT TDS IS REQUIRED TO BE MADE ON P AYABLE AMOUNT AS ON 31.03.2010 ON RS. 35,103/- ONLY. ALL T HESE CONTENTIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTAB LE. IT WAS HELD THAT THE AMENDMENT IN SECTION 40(A)(IA) VIDE F INANCE ACT, 2012, REGARDING DEDUCTION OF SUCH TDS AND PAYMENT T HEREOF BY PAYING ON OR BEFORE DUE DATE OF FURNISHING OF RE TURN OF INCOME IS PROSPECTIVE ONLY AND DOES NOT APPLY TO TH E ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. CIT(A) HAS ALSO PLACED RELIANCE ON THE DECISION OF I.T.A.T., KOLKAT A AND I.T.A.T.,AGRA BENCHES IN THE CASE OF MARC SINGNAGE VS. ITO, ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 7 OF 12 7 (2010) TIOL 778 KOL AND MATRIX GLASS AND STRUCTURES PVT.LTD. VS. ITO, (2011) TIOL 181 I.T.A.T. KOL, SAI BUILDERS VS. ITO, 2(1), 47 TAXMANN.COM 309 (AGRA TR IB), WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE DOES NOT MA KE REQUIRED TDS, DISALLOWANCE U/S 40(A)(IA) IS TO BE MA DE ON THE WHOLE PAYMENTS RELATING TO THE ELIGIBLE TRANSACTION DURING THE YEAR AND NOT ON THE AMOUNT PAYABLE AS ON THE LAST D AY OF THE CONCERNED FINANCIAL YEAR ALONE. 12. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS CONTENDED, THAT THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICE (P) LIMITED, (2013) 38 TAXMANN.COM 77 (ALL) IS IN FAVOUR OF THE ASSESSEE WHERE THE HON'BLE HIGH COURT HAS HELD THAT FOR DISAL LOWANCE U/S 40(A)(IA) OF THE ACT, THE AMOUNT SHOULD BE PAYA BLE AND NOT WHICH HAS BEEN PAID DURING THE YEAR. THE LEARNED AUT HORIZED REPRESENTATIVE SUBMITTED THAT THE SECOND PROVISO A PPENDED TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2012, W.E. F. 01.04.2013, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE BY VARIOUS DECISIONS, PROVIDES THAT WHERE AN ASSESSE E FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANC E WITH THE ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 8 OF 12 8 PROVISIONS OF CHAPTER XVIIB, ON ANY SUCH SUM, BUT I S NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB SECTION (1) OF SECTION 201, THEN FOR THE PURPOS E OF THIS SUB SECTION (1) SHALL BE DEEMED THAT THE ASSESSEE HAS D EDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISH ING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. 13. ON THE OTHER HAND, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 14. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS PAID COMMISSION OF RS. 2,47,614/- WITHOUT DEDUCTING TDS T HEREON, AND AS PER THE RELEVANT PROVISIONS OF SECTION 40(A) (IA) OF THE ACT, THE SAME WAS NOT DEDUCTIBLE DURING THE YEAR UND ER CONSIDERATION. WE MAY DRAW GUIDANCE FROM THE DECISIO N OF THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. SIKANDARKHAN TUNVAR, (2013) 357 ITR 312 (GUJ), WHER EIN THE HON`BLE HIGH COURT HAS OVERRULED THE DECISION OF TH E SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT S V. ADDL. ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 9 OF 12 9 CIT, (2012) 16 ITR (TRIB)1(VISAKHAPATNAM) AND OBSER VED THAT SECTION 40(A)(IA) COVERS NOT ONLY AMOUNTS WHICH ARE PAYABLE AS ON 31 ST MARCH ON A PARTICULAR YEAR, BUT ALSO, WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR, OF COURSE, AS LONG AS THE OTHER REQUIREMENTS OF THE PROVISIONS EXIST. SIMILAR LY, THE HON'BLE CALCUTTA HIGH COURT ALSO IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE, (2013) 33 TAXMANN.COM 25 0 (CAL) ALSO HELD WHETHER PROVISIONS OF SECTION 40(A)(IA) AP PLICABLE NOT ONLY TO AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE SHEET, THEY ARE APPLICABLE TO SUCH EXPENDIT URE, WHICH BECOMES PAYABLE AT ANY TIME DURING THE RELEVANT PRE VIOUS YEAR AND IS ACTUALLY PAID WITHIN THE PREVIOUS YEAR WITHOUT MAKING TDS. HOWEVER, THE DECISION OF HON'BLE ALLAHABAD HIG H COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICE (P) LIM ITED, (2013) 38 TAXMANN.COM 77 (ALL) IS IN FAVOUR OF THE ASSESSE E WHERE THE HON'BLE HIGH COURT HAS HELD THAT FOR DISALLOWANCE U/ S 40(A)(IA) OF THE ACT, THE AMOUNT SHOULD BE PAYABLE AND NOT WHI CH HAS BEEN PAID DURING THE YEAR. THERE ARE DIVERGENT OPIN ION FROM VARIOUS HIGH COURTS. THERE IS NO DECISION OF HON'BL E JURISDICTIONAL HIGH COURT ON THE ISSUE, BROUGHT TO OUR NOTICE. ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 10 OF 12 10 FURTHER, THE SECOND PROVISO APPENDED TO SECTION 40( A)(IA) BY THE FINANCE ACT, 2012, W.E.F. 01.04.2013, PROVIDES THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVIIB, ON ANY SUCH SUM, BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB SECTION (1) OF SECTION 201, TH EN FOR THE PURPOSE OF THIS SUB SECTION (1) SHALL BE DEEMED THA T THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESI DENT PAYEE REFERRED TO IN THE SAID PROVISO. IT MAY ALSO BE NOT ED THAT WHERE THE PAYEE COMPANIES HAVE SHOWN THE AMOUNT OF INTERES T IN THE RETURN OF INCOME FILED AND PAID DUE TAXES THEREON, THEREFORE, IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF T HE ACT, NO DISALLOWANCE WAS EXIGIBLE IN THE CASE OF THE ASSESSEE WHERE THE RECIPIENT HAS PAID TAXES THEREON AND INCLUDED AS IN COME IN THEIR RETURNS U/S 40(A)(IA) OF THE ACT. WE FIND THA T THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARKET TOWNSHIP PRIVATE LIMITED, (377 ITR 635)(DEL) HAS HEL D THAT INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) O F THE ACT BY FINANCE ACT, 2012, IS DECLARATORY AND CURATIVE AND HAS ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 11 OF 12 11 RETROSPECTIVE EFFECT FROM APRIL 1, 2005, BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(A) WAS INSERTED B Y FINANCE (NO.2) ACT, 2004. WE ALSO FIND THAT GUIDANCE FROM T HE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. ELI LILLY & CO. (INDIA)(P) LIMITED, (2009) 312 ITR 225 ( S.C.), WHEREIN, IT HAD BEEN HELD THAT PERIOD OF DEFAULT STA RTS FROM THE DATE OF DEDUCTIBILITY OF TAX TILL THE DATE OF ITS A CTUAL PAYMENTS BY THE CONCERNED EMPLOYEE. WE FURTHER NOTE THAT HO N'BLE APEX COURT ALSO IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT. LIMITED VS. CIT, (2007) 293 ITR 226 (S.C.), HE LD THAT WHEN THE TAX HAS BEEN PAID BY THE DEDUCTEE-ASSESSEE, TH E TAX COULD NOT BE RECOVERED ONCE AGAIN FROM THE ASSESSEE. ALL THESE FACTS ARE NOT BORNE OUT FROM THE ASSESSMENT ORDER OR FROM THE ORDER OF THE LD. CIT (A). THEREFORE, IN THE INTEREST OF J USTICE AND FAIR PLAY, THIS ISSUE IS RESTORED BACK TO THE FILE OF AO WITH THE DIRECTION THAT THE AO SHALL VERIFY WHETHER THE PAYM ENTS SHOWN IN THE ASSESSMENT ORDER IS LIABLE FOR TDS OR NOT. S ECONDLY, IF THERE IS ANY SHORT DEDUCTION OF TAX OR NOT AND NON- DEDUCTION OF TAX, THEN THE RECIPIENT OR THE PAYEE HAS PAID TH E TAX OR NOT AND THEY HAVE SHOWN THE RECEIPT IN THE RETURN OF INC OME, HAS ITA NO.311/IND/15 TESLA TRANSFORMERS LTD, BHOPAL PAGE 12 OF 12 12 TO BE VERIFIED FROM THE CONCERNED ASSESSES. THEREF ORE, ALL THESE FACTS REQUIRE VERIFICATION AT THE END OF AO. THE AS SESSEE IS ALSO DIRECTED TO COOPERATE WITH THE AO AND MUST PRODUCE A LL THE RELEVANT EVIDENCES BEFORE THE AO. THE AO IS FURTHER DIRECTED TO VERIFY THE SAME AND DECIDE THE MATTER AFRESH KEEPIN G IN MIND THE DECISION OF HON'BLE SUPREME COURT CITED SUPRA A ND SECOND PROVISO TO SECTION 40(A)(IA) OF THE FINANCE (NO.2) ACT, 2012. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 19 TH AUGUST, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 19 TH AUGUST, 2016. CPU*