ADDL CIT 23(1), MUMBAI V. AVADHUTH RAMAKANT WAGH, MUMBAI

ITA 3310/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2953 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 08-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-05-2012
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBEY
• Section: 43B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI AMIT SHUKLA (JM) I.T.A. NO. 3310 /MUM/ 20 1 2 (ASSESSMENT YEAR 2008 - 09) ADDL. CIT 23(1) R.NO. 108 C - 10, 1 ST FLOOR BKC, BANDRA (E) MUMBAI - 400 051. VS. SHRI AVADHUT RAMAKANT WAGH 4/113, BHANDUP INDUSTRIAL ESTATE LBS MARG BHANDUP WEST MUMBAI - 400 078. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 3818/MUM/2012 (ASSESSMENT YEAR 2008 - 09) SHRI AVADHUT RAMAKANT WAGH B - 603, PRESIDENTIAL TOWER, L.B.S. MARG GHATKOPAR WEST MUMBAI - 400 086. VS. ACIT 23(1) R.NO. 108 PRATYAKSHKAR BHAVAN C - 10, 1 ST FLOOR BKC, BANDRA (E) MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABPW2515K ASSESSEE BY SHRI MILIND SAHASRABUDHE DEPARTMENT BY SHRI SACHCHIDANAND DUBEY DATE OF HEARING 4 .8. 201 6 DATE OF PRONOUNCEMENT 14 . 9 . 201 6 O R D E R PER B.R. BASKARAN (AM) : - THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 29 - 02 - 2012 PASSED BY LD CIT(A) - 33, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2008 - 09. AVDHUT RAMAKANT WAGH 2 2. THE ASSESSEE I S A DEALER OF KIRLOSKAR BRAND PUMPS. THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE AO BY MAKING FOLLOWING ADDITIONS: - (A) ADDITION OF CREDIT IN THE CAPITAL ACCOUNT RS.69,19,053/ - (B) DISALLOWANCE U/S 43B OF THE ACT - RS. 4 ,23,499/ - IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DELETED THE ADDITION RELATING TO THE CREDIT FOUND IN THE CAPITAL ACCOUNT. WITH REGARD TO THE ADDITION MADE U/S 43B OF THE ACT, THE LD CIT(A) NOTICED THAT THE SAME INCLUDED TDS PAYABLE AMOUNT OF RS.2 ,94,892/ - . HENCE THE LD CIT(A) EXPRESSED THE VIEW THAT THE CORRESPONDING AMOUNT, I.E., THE AMOUNT ON WHICH TDS WAS DEDUCTED, IS REQUIRED TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT. ACCORDINGLY HE DISALLOWED EXPENSES TO THE TUNE OF RS.26,05,347/ - U/S 40(A) (IA) OF THE ACT . THE ASSESSEE PLEADED THAT THE TDS AMOUNT WAS PAID BEFORE THE DUE DATE FOR FILING RETURN OF INCOME. HOWEVER, THE LD CIT(A) DISALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED BY SPECIAL BENCH OF TRIBUNAL IN THE CASE OF BHARTI SHIPYARD LTD (ITA NO.2404/MUM/2009. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US. 3. T HE REVENUE HAS FILED THE APPEAL CHALLENGING THE RELIEF GRANTED BY THE LD CIT(A) IN RESPECT OF ADDITION OF CREDITS FOUN D IN THE CAPITAL ACCOUNT OF THE ASSESSEE. W E NOTICE THAT THE LD CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE HAS TRANSFERRED ASSETS FROM HIS PERSONAL ACCOUNT TO THE BUSINESS ACCOUNT BY PASSING A JOURNAL ENTRY. THUS, THE ASSESSEE HAS INCORPORATED THE ASSE TS IN THE ASSET SIDE OF BALANCE SHEET AND THE VALUE OF THOSE ASSETS HAS BEEN CREDITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. FROM THE PAPER BOOK FILED BY THE ASSESSEE, WE NOTICE THAT THE ASSESSEE HAS PASSED A JOURNAL ENTRY FOR TRANSFERRING ASSETS FROM HI S PERSONAL ACCOUNT TO THE CAPITAL ACCOUNT. WHEN A SPECIFIC QUERY WAS RAISED TO THE ASSESSEE AS TO WHETHER THE PERSONAL ACCOUNT WAS FILED ALONG WITH THE RETURN OF INCOME, THE LD A.R MADE A STATEMENT AT BAR THAT THE PERSONAL ACCOUNT HAS BEEN FILED IN THE YE AR UNDER CONSIDERATION AND ALSO IN THE EARLIER YEARS. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE AVDHUT RAMAKANT WAGH 3 LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE CREDIT TO THE CAPITAL ACCOUNT WITH THE VALUE OF ASSETS TRANSFERRED FROM PERSONAL ACCOUNT, BY PASSING A JOURNAL ENTRY WOULD NOT GIVE RISE TO ANY INCOME ASSESSABLE U/S 68 OF THE ACT. ACCORDINGLY WE AFFIRM HIS ORDER PASSED ON THIS ISSUE. 4. WITH REGARD TO THE ISSUE OF DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT, WE NOTICE THAT THE ASSESSEE HAS PAID THE TDS AMOUNT OF RS.2,94,892/ - ON 11.6.2008, I.E., BEFORE THE DUE DATE FOR FILING RETURN OF INCOME. WE NOTICE THAT THE LD CIT(A) HAS FOLLOWED THE DECISION RENDERED BY THE SPECIAL BENCH OF ITAT IN THE CASE OF BHARTI SHIPYARD LTD (SUPRA). WE NOTICE THAT THE FINA NCE ACT 2010 HAS INTRODUCED A PROVISO IN SEC. 40(A)(IA) W.E.F. 1.4.2010, WHEREIN IT WAS PROVIDED THAT DISALLOWANCE SHALL BE MADE ONLY IF THE TDS AMOUNT IS PAID AFTER THE DUE DATE FOR FILING RETURN OF INCOME. THE ABOVE SAID PROVISO HAS BEEN HELD TO BE CURAT IVE IN NATURE AND HENCE APPLICABLE FOR THE EARLIER YEARS ALSO BY THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF VIRGIN CREATIONS (GA NO.3200/2011). THE ABOVE SAID DECISION OF HONBLE CALCUTTA HIGH COURT WAS FOLLOWED BY THE CO - ORDINATE BENCH OF MUMBAI TR IBUNAL IN THE CASE OF PIYUSH MEHTA (ITA NO.1321/MUM/2009 DATED 11.4.2012) IN PREFERENCE TO THE DECISION RENDERED BY THE SPECIAL BENCH. ACCORDINGLY, BY FOLLOWING THE DECISION RENDERED IN THE CASE OF PIYUSH MEHTA & M/S VIRGIN CREATIONS (SUPRA), WE HOLD THAT THERE IS NO REQUIREMENT TO MAKE DISALLOWANCE U/S 40(A)(IA) OF THE ACT AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 14. 9 .2016 SD/ - SD/ - (AMIT SHUKLA ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 14 / 9 / 20 1 6 COPY OF THE ORDER FORWARDED TO : AVDHUT RAMAKANT WAGH 4 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS