Smt. Manjulaben B. Shah, Valsad V. The Income Tax Ward-2, Valsad

ITA 3217/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2245 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SURESH K KABRA
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

SMT. MANJUALABEN B SHAH V. ITO-WD-2 VALSAD /I.T.A. NO.3217/AHD/2014/A.Y.:08-09 PAGE 1 OF 5 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.3217/AHD/2014 / A.Y.:2008-09 SMT. MANJULABEN B. S H A H, PROPERTY. JYOTI TRADING , CHHIPWAD, VALSAD 396 001 PAN: ACPPS 0815E V S . INCOME TAX OFFICER, WARD-2 VALSAD APPELLANT /RESPONDENT /ASSESSEE BY SHRI SURESH K. KABRA, CA /REVENUE BY SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING: 23.08.2018 /PRONOUNCEMENT ON 30.08.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- VALSAD (IN SHORT THE CIT (A)) DATED 18.11.2014 PERTAINING TO ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD- 2 VALSAD (IN SHORT THE AO) DATED 14.02.2014 UNDER SECTION 143 (3) OF INCOME TAX ACT,1961 (IN SHORT THE ACT). SMT. MANJUALABEN B SHAH V. ITO-WD-2 VALSAD /I.T.A. NO.3217/AHD/2014/A.Y.:08-09 PAGE 2 OF 5 2. THE SOLE GROUND OF THE APPEAL RELATES TO CONFIRMING OF DISALLOWANCE OF FREIGHT CHARGES OF RS. 12, 60, 368 MADE UNDER SECTION 40 (A) (IA) OF THE ACT. 3. BRIEF FACTS ARE THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 12, 60, 368 TO DIFFERENT 22 PARTIES/TRUCK OPERATORS AND PAYMENT TO EACH PARTY EXCEEDED THE PRESCRIBED LIMIT OF RS. 50,000 ON WHICH TDS WAS NOT DEDUCTED AS REQUIRED UNDER SECTION 194C, HENCE, THE AO DISALLOWED THE SAME UNDER SECTION 40 (A) (IA)OF THE ACT. 4. THE ASSESSEE HAS CARRIED THE MATTER BEFORE CIT (A) . HOWEVER, THE DISALLOWANCE SO MADE WERE CAME TO BE CONFIRMED BY FOLLOWING THE DECISION IN THE CASE OF SINKANDERKHAN N TUNVER (2013) 33 TAXMANN.COM 133 (GUJARAT) WHEREIN IT WAS LAID DOWN THAT THERE IS NO DIFFERENCE BETWEEN EXPENSES PAID DURING THE YEAR AS WELL AS EXPENSES REMAIN PAYABLE AT THE END OF THE YEAR, SO FAR AS APPLICATION OF SECTION 40(A)(IA) OF THE ACT. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED AUTHORISED REPRESENTATIVE RELYING ON THE DECISIONS IN THE CASE OF SMT. SONU KHANDELWAL V. ITO WARD-2(3)(3) JAIPUR [I.T.A.NO. 597/JP/2017 A.Y. 08-09 DTD. 13.05.2016], RAJENDRA YADAV V. ITO WD-1 (3) AJMER [ I.T.A.NO. 895/JP.2012 DTD. 29.01.2016] AND KANTA YADAV V. ITO [I.T.A.NO. 6312/DEL/2016 DTD. SMT. MANJUALABEN B SHAH V. ITO-WD-2 VALSAD /I.T.A. NO.3217/AHD/2014/A.Y.:08-09 PAGE 3 OF 5 08.05.2017] SUBMITTED THAT IN THESE CASES AFTER CONSIDERING THE DECISION OF HONOURABLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PMS DIESELS V. CIT [2015] 59 TAXMANN.COM 100 (P&H) THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT HAVE BEEN RESTRICTED TO 30% OF THE PAYMENTS MADE WITHOUT DEDUCTION OF TDS BY HOLDING THAT THE BENEFIT OF AMENDMENT MADE IN PROVISO TO SECTION 40(A)(IA) IS ALLOWABLE TO THE ASSESSEE. THEREFORE, IT WAS ARGUED BEFORE US THAT THE DISALLOWANCES MAY BE RESTRICTED TO 30% OF THE PAYMENTS MADE BY THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS COMMITTED THE DEFAULT AS ENVISAGED UNDER SECTION 194C IN RESPECT OF PAYMENTS OF RS.12, 60, 368 MADE TO DIFFERENT PARTIES ON ACCOUNT OF FREIGHT CHARGES FOR NON DEDUCTION OF TDS. THEREFORE, THE AO HAS RIGHTLY APPLIED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HOWEVER, WE FIND THAT THE LEARNED AR HAS PLACED RELIANCE IN THE CASE OF RAJENDRA YADAV V. ITO (SUPRA) WHEREIN FOLLOWING THE DECISION OF HON`BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PMS DIESEL V. CIT (SUPRA) IT WAS HELD THE DISALLOWANCE UNDER SMT. MANJUALABEN B SHAH V. ITO-WD-2 VALSAD /I.T.A. NO.3217/AHD/2014/A.Y.:08-09 PAGE 4 OF 5 SECTION 40(A)(IA) ARE MANDATORY. IT WAS FURTHER OBSERVED AS FOLLOWS HAVING SAID SO, WE WILL BE FAILING IN OUR DUTY IF WE DO NOT DISCUSS THE AMENDMENT BROUGHT IN BY THE FINANCE (NO.2) ACT 2014 WITH EFFECT FROM 1.4.2015 BY VIRTUE OF WHICH PROVISO TO SECTION 40 (A) (IA) HAS BEEN INSERTED, WHICH PROVIDES THAT IF ANY SUCH SUM TAXED HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PERIOD AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF PREVIOUS YEAR, AND FURTHER, SECTION 40(A)(IA) HAS BEEN SUBSTITUTED WHEREIN THE 30% OF ANY SUM PAYABLE TO A RESIDENT HAS BEEN SUBSTITUTED. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAS ADDED THE ENTIRE SUM OF RS. 7, 51, 322/- BY DISALLOWING THE WHOLE OF THE AMOUNT. THOUGH THE SUBSTITUTION IN SECTION 40 HAS BEEN MADE EFFECTIVE WITH EFFECT FROM 1.4. 2015, IN OUR VIEW, THE BENEFIT OF THE AMENDMENT SHOULD BE GIVEN TO THE ASSESSEE EITHER BY DIRECTING THE AO TO CONFIRM FROM THE CONTRACTORS, NAMELY M/S. GARVIT STONEX, M/S. CHANDA MARBLES AND M/S. NIDHI GRANITES AS TO WHETHER THE SAID PARTIES HAVE DEPOSITED THE TAX OR NOT FURTHER OR RESTRICT THE ADDITION TO 30% OF RS. 7,51,322/-. IN OUR VIEW, IT WILL BE TIED TO JUSTICE SMT. MANJUALABEN B SHAH V. ITO-WD-2 VALSAD /I.T.A. NO.3217/AHD/2014/A.Y.:08-09 PAGE 5 OF 5 IF THE DISALLOWANCE IS ONLY RESTRICTED TO 30% OF RS. 7,51,322. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABOVE SAID MANNER IN THIS VIEW OF THE MATTER AND FOLLOWING THE ABOVE DECISION OF JAIPUR BENCH IN THE CASE OF RAJENDRA YADAV V. ITO WD-1 (3) AJMER [ I.T.A.NO. 895/JP.2012 DTD. 29.01.2016] , AND FURTHER THE RATIO IN THE CASE OF SMT. SONU KAHNDELWAL V. ITO WARD- 2(3)(3) JAIPUR [ I.T.A.NO. 597/JP/2017 A.Y. 08-09 DTD. 13.05.2016, AND KANTA YADAV V. ITO [I.T.A.NO. 6312/DEL/2016 DTD. 08.05.2017 OF CO-ORDINATE BENCHES, WE SET ASIDE AND MODIFIED THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 30% OF THE TOTAL ADDITION OF RS. 12,60,368 MADE ON ACCOUNT OF NON-DEDUCTION OF TDS UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE SOLE GROUND OF APPEAL IS ALLOWED PARTLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30-08-2018. SD/- SD/- ( . . ) /(C.M. GARG) ( . . ) /(O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / SURAT: / DATED : 30 TH AUGUST, 2018 COPY OF ORDER FORWARDED TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/ GUARD FILE OF TRIBUNAL. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT