R.Ramesh, Villupuram V. DCIT, Villupuram

ITA 3110/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90346 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 3110/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) MR. R.RAMESH, 673, ANANDA HOTEL(UPSTAIRS) NEHRUJI ROAD, VILLUPURAM - 605 602. VS DEPUTY COMMISSIONER OF INCOME TAX VILLUPURAM CIRCLE, VILLUPURAM - 605 602 . PAN:ABPPR3315K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. V.S.JAYAKUMAR, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 19 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 15 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) PUDUCHERRY DATED 26.11.2014 FOR THE ASSESSMENT YEAR 2010-11. T HE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT COMMISS IONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING DISALLOWAN CE MADE UNDER SECTION 40(A)(IA) OF THE ACT REPRESENTING MAC HINERY HIRE CHARGES PAID WITHOUT DEDUCTING TAX AT SOURCE. 2. AT THE TIME OF HEARING, COUNSEL FOR THE ASSESSEE SUBMITS THAT DURING THE ASSESSMENT YEAR ASSESSEE HA S PAID 2 ITA NO.3110 /MDS/2014 MACHINERY HIRE CHARGES TO M/S. BALAJI TRANSPORT. CO UNSEL FOR THE ASSESSEE SUBMITS THAT ENTIRE PAYMENT WAS MADE D URING THE ACCOUNTING YEAR ONLY AND NOTHING IS OUTSTANDING AS ON 31.3.2010 RELEVANT TO THE ASSESSMENT YEAR 2010-11, THEREFORE PROVISIONS OF SECTION 40(A)(IA) HAVE NO A PPLICATION IN VIEW OF THE VARIOUS DECISIONS OF THIS TRIBUNAL A ND THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE O F CIT VS. VECTOR SHIPPING SERVICE PVT. LTD. IN ITA NO.122 OF 2013 DATED 9.7.2013. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THIS BENCH IS CONSISTENTLY HOLDING THAT PROVISIONS OF SECTION 40(A)(IA) HAVE NO APPLICATION WHEN THE AMOUNTS WER E ALREADY PAID WITHIN THE ACCOUNTING YEAR ITSELF. IN THIS CASE APPARENTLY THE ASSESSEE PAID MACHINERY HIRE CHARGES WITHIN THE ACCOUNTING YEAR ITSELF, THEREFORE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX ON HI RE CHARGES HAVE NO APPLICATION. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN 3 ITA NO.3110 /MDS/2014 THE CASE OF ITO VS. THEEKATHIR PRESS IN ITA NO.2076/MDS/2012 DATED 18.9.2013 HELD AS UNDER:- 2. IN THE PRESENT CASE, THE ASSESSING OFFICER HA S DISALLOWED THE CLAIM OF CERTAIN EXPENDITURE MADE BY THE ASSESSEE UNDER SECTION 40(A)(IA) ON THE GROUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE AND PAID T O THE CREDIT OF GOVERNMENT OF INDIA. BUT, THE COMMISSIONER OF INCOME-TAX(APPEALS) DELETED THE DISALLOWANCE STATING THAT THE AMOUNT PAYABLE ALON E WOULD ATTRACT THE DISALLOWANCE UNDER SECTION 40(A)( IA) AND THE AMOUNT ALREADY PAID WOULD NOT ATTRACT THE ABOVE PROVISION. THE REVENUE IS AGGRIEVED AND, THEREFORE, THIS SECOND APPEAL BEFORE US. 3. THE INCOME-TAX APPELLATE TRIBUNAL, VISAKHAPATNAM-SPECIAL BENCH, HAD HELD IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ADDL. CIT, 1 6 ITR (TRIB) 1, THAT THE PROVISIONS OF SECTION 40(A)( IA) DO APPLY ONLY TO THOSE AMOUNTS REMAINED PAYABLE BY THE END OF THE PREVIOUS YEAR AND THE SAID PROVISIONS DO NOT APPLY TO THE AMOUNTS ALREADY PAID BY THE ASSESSEE BEFORE THE CLOSE OF THE RELEVANT PREVIOUS YEAR. IN THAT WAY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IN THE PRESENT CASE IS CONDUCIV E TO THE DECISION OF THE SPECIAL BENCH. THE VERY SAME VIEW HAS BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES(P) LTD. THE HONBLE ALLAHABAD HIGH COURT, THROUGH THEIR JUDGMENT DATED 9-7-2013 IN ITA NO.122 OF 2013, HAS HELD THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG AND TRANSPORTS VS. ADDL. CIT IS GOOD LAW. IN THAT W AY, THE PRESENT APPEAL FILED BY THE REVENUE IS LIABLE T O BE DISMISSED. 4. BUT, AT THE SAME TIME, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE HAS RELIED ON THREE OTHER JUDGMENTS RENDERED BY THE HONBLE CALCUTTA HIGH COURT AND GUJARAT HIGH COURT, IN WHICH THEIR LORDSHIPS HAVE H ELD THAT THE LAW STATED BY THE SPECIAL BENCH OF THE 4 ITA NO.3110 /MDS/2014 TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS VS. ADDL.CIT WAS NOT ACCEPTABLE. THE HONBLE CALCUTTA HIGH COURT, THROUGH THEIR JUDGMENT DELIVER ED ON 3 RD APRIL, 2013 IN ITA NO.20 OF 2013 IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATES, HAS HELD THAT T HE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL.CIT IS NO T ACCEPTABLE. THE SAME VIEW HAS AGAIN BEEN REPEATED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF C IT VS. MD. JAKIR HOSSAIN MONDAL, THROUGH THEIR JUDGMEN T DELIVERED ON 4 TH APRIL, 2013 IN ITA NO.31 OF 2013. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARKHAN N.TUNVAR, 33 TAXMAN.COM.133, HAS ALSO HELD THAT THE DISALLOWANCE UNDER SECTION 40(A) (IA) DOES NOT DISTINGUISH BETWEEN AMOUNTS PAID AND PAYABLE. IN VIEW OF THE ABOVE JUDGMENTS OF TWO HI GH COURTS, THE LEARNED OFFICER CONTENDED THAT THE APPE AL OF THE REVENUE NEEDS TO BE ALLOWED. 5. WE FIND THAT THE JUDGMENT OF THE HONBLE ALLAHAB AD HIGH COURT IS IN FAVOUR OF THE ASSESSEE. AT THE SAM E TIME, WE FIND THAT THE ORDERS OF THE CALCUTTA HIGH COURT AND THE GUJARAT HIGH COURT ARE AGAINST THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE RULE OF JUDICI AL PRECEDENCE DEMANDS THAT THE VIEW FAVOURABLE TO THE ASSESSEE MUST BE ADOPTED, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192. FOLLOWING THE ABOVE FUNDAMENTAL RULE DECLARED BY THE HONBLE SUPREME COURT, WE HAVE TO FOLLOW THE JUDGMENT OF THE HONBL E ALLAHABAD HIGH COURT, WHICH IS IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE HOLD THAT THE DISALLOWANC E UNDER SECTION 40(A)(IA) APPLIES ONLY TO THOSE AMOUN TS PAYABLE AND NOT TO THOSE AMOUNTS PAID. ACCORDINGLY, WE UPHOLD THE ORDER OF THE COMMISSIONE R OF INCOME TAX(APPEALS) IN THE PRESENT CASE. THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISS ED. 6. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPH OLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) ON THIS ISSUE AND REJECT THE GROUNDS RAISED BY THE REVENUE. 5 ITA NO.3110 /MDS/2014 5. RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL, WE HOLD THAT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAVE NO APPLICATION AND THEREFORE DIRECT THE ASSESSING OFFI CER TO DELETE THE DISALLOWANCE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 15 TH MAY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .