Shri Bhikhubhai Jivrajbhai Gadhetharia, Bharuch V. The Income Tax Officer, Ward-4, Bharuch

ITA 3344/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2200 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Keywords: Bonafide mistake; TDS
• Section: 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH SMC, SURAT , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER . / ITA NO.3344/AHD/2014/SRT / ASSESSMENT YEAR: 2010-11 SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA, G-1, SUNDER VAN APARTMENT, VALIA GIDC, ANKLESHWAR, BHARUCH 393 002. [PAN: ADOPP 4681R] VS. INCOME TAX OFFICER, WARD-4, BHARUCH. ( / APPELLANT) ( ! /RESPONDENT) / ASSESSEE BY : SHRI MEHUL SHAH, A.R /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 20-09-2018 / DATE OF PRONOUNCEMENT : 25-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, BARODA (C IT(A) FOR SHORT) DATED 01.09.2014 FOR THE ASSESSMENT YEAR (A.Y) 2010 -11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF INTEREST PAID TO MAGMA FICOR P LIMITED OF 2 ITA NO.3344/AHD/2014/SRT (A.Y: 2010-11) SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA RS. 1,28,799/- U/S. 40(A)(IA) ON ACCOUNT OF NON-DED UCTION OF TDS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF CARTING EXPENSE OF RS. 21,12 ,295 U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS. GROUND NO.1: 3. APROPOS GROUND NO.1, I HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) S UBMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN MAKING DISALLOWANCE OF INTEREST PAID TO MAGMA FICOR P LIMITED OF RS. 1,28,799/- U/S. 40(A)(IA) OF THE INCOME TAX ACT, 19 61 (FOR SHORT THE ACT) ON ACCOUNT OF NON-DEDUCTION OF TDS. THE LD. AR FUR THER SUBMITTED THAT IF ANY BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE IN DEDUCTING TDS ON THIS PAYMENT IS FOUND THEN, ALSO ONLY 30% OF TOTAL PAYMENT MAY BE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUBMITTED THAT IT IS THE DUTY OF THE ASSESSEE TO DE DUCT TDS AT THE TIME OF MAKING INTEREST PAYMENT TO THE RESPECTIVE RECIPIENT AND FAILURE TO DEDUCT ATTRACTS PROVISION OF S. 40(A)(IA)OF THE ACT AND DE PARTMENT HAS NO OBJECTION IF 30% OF TOTAL PAYMENT IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3 ITA NO.3344/AHD/2014/SRT (A.Y: 2010-11) SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA 5 ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSIO NS, I AM OF THE VIEW THAT THE LD. AR IN ALL FAIRNESS HAS ACCEPTED T HE FAILURE OF THE ASSESSEE IN MAKING TDS IN SUCH A POSITION ALSO 100% AMOUNT OF PAYMENT OF INTEREST CANNOT BE DISALLOWED, ONLY 30% OF IMPUGNED PAYMENT MADE WITHOUT MAKING TDS CAN BE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE AND THUS, AUTHORITIES BELOW WERE NOT C ORRECT IN MAKING ADDITION OF 100% INTEREST PAYMENT. ACCORDINGLY, GR OUND NO.1 OF THE ASSESSEE IS PARTLY ALLOWED AND AO IS DIRECTED TO RE CALCULATE THE DISALLOWANCE TO 30% OF TOTAL PAYMENT OF IMPUGNED IN TEREST. GROUND NO.2: 6. APROPOS GROUND NO.2, THE LD. AR PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306 (SC), WHICH WAS FOLLOWED BY ITAT, HYDERABAD B BENCH IN THE CASE OF ASSOCIATED ROADWAYS P. LTD. VS . DCIT ORDER DATED 20.05.2013 IN ITA NO.63/HYD/2013 FOR AY 2009-10, SU BMITTED THAT THE PROVISIONS OF S. 194C(6) OF THE ACT IS APPLICABLE T O THE ASSESSEES CASE AND CONSIDERED TO BE APPLIED RETROSPECTIVELY. THE LD. AR VEHEMENTLY POINTED OUT THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF CARTING EXPENSE OF RS. 21,12 ,295 U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS. 4 ITA NO.3344/AHD/2014/SRT (A.Y: 2010-11) SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA 7. THE LD. AR ALSO SUBMITTED THAT THE AO NOTED THAT THE ASSESSEE HAD DEBITED A SUM OF RS. 46,25,083/- TOWARDS CARTAGE EX PENSES, OUT OF WHICH RS. 22,29,270/- WERE CREDITED UP TO 30.09.2009 AND THE REMAINING AMOUNT OF RS. 23,95,753/- WERE CREDITED AFTER 30.09 .2009. THE AO OBSERVED THAT OUT OF RS. 22,29,270/- CREDITED PRIOR TO 30.09.2009, THE TOTAL CARTAGE EXPENSES EXCEEDING RS. 50,000/- CREDITED TO VARIOUS PARTIES DURING THE YEAR UNDER CONSIDERATION WAS RS. 21,10,2 95/- AS PER TABLE AT PARA 7 OF THE ASSESSMENT ORDER. THE AO MADE THE DI SALLOWANCE OF THESE CARTAGE EXPENSES OF RS. 21,12,295/- ON THE SOLE GRO UND THAT ASSESSEE COULD NOT FURNISH DECLARATION IN FORM 15-I IN RESPE CT OF THESE PARTIES. IT IS TO BE NOTED THAT THE AO DID NOT MADE ANY ADVERSE CO MMENT ON THE REMAINING AMOUNT OF RS. 23,95,753/- CREDITED PRIOR TO 1.10.2009 AS THE PROVISIONS TO FURNISH FORM 15-I WAS DONE AWAY WITH AND THE ONLY REQUIREMENT WAS TO FURNISH THE PAN. FURTHER, THE L D. AR SUBMITTED THAT THE PROVISION OF S. 194C(6) INTRODUCED BY FINANCE A CT, 2009 W.E.F 1.10.2009 IS APPLICABLE RETROSPECTIVELY AND HENCE N O DISALLOWANCE OF CARTAGE EXPENSES FOR THE NON-DEDUCTION OF TDS SHOUL D BE MADE WHEN PAN ARE PROVIDED BY THE TRANSPORTERS TO THE ASSESSE E. 8. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND S UBMITTED THAT THE PROVISION OF S. 194C(6) OF THE ACT CANNOT BE MADE O R APPLIED 5 ITA NO.3344/AHD/2014/SRT (A.Y: 2010-11) SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA RETROSPECTIVELY TO PROVIDE IMMUNITY TO THE ASSESSEE IN CASE WHEN ONLY PAN NUMBERS OF THE TRANSPORTERS HAVE BEEN PROVIDED TO THE ASSESSEE. 9. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, I AM OF THE VIEW THAT THE PROVISIONS OF S. 194C(6) OF THE ACT I S APPLICABLE TO THE ASSESSEES CASE AND THIS SECTION HAS TO BE CONSIDER ED RETROSPECTIVELY IN VIEW OF THE JUDGMENT OF THE HON'BLE SUPREME COURT I N THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). IN THE PRESENT CASE, THE ASSESSEE HAS PRO VIDED PAN NUMBERS OF THE RESPECTIVE PAYEE TRANSPORTERS AN D AFTER INSERTION OF PROVISION OF S. 194C(6) OF THE ACT NO DISALLOWANCE OF CARTAGE EXPENSES FOR THE NON-DEDUCTION OF TDS CAN BE MADE WHEN THE PAN A RE PROVIDED BY THE TRANSPORTERS TO THE ASSESSEE AND THIS PROVISION IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STAT ED SO RETROSPECTIVELY AS IT IS A WELL SETTLED LEGAL POSITION THAT A CURATIVE AMENDMENT TO AVOID UNINTENTIONAL CONSEQUENCE IS TO BE TREATED AS RETRO SPECTIVE IN NATURE. MY CONCLUSION HOLDING SO GETS STRONG SUPPORT FROM THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANASAL LANDMARK TOWNSHIP PVT. LTD. REPORTED IN 377 ITR 635 (DEL.) AND ORDER OF ITAT, AGRA IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ACIT REPORTED IN 149 ITD 3 63 (AGRA). ACCORDINGLY, GROUND NO.2 OF THE ASSESSEE IS ALSO AL LOWED AND AO DIRECTED TO DELETE THE PENALTY. 6 ITA NO.3344/AHD/2014/SRT (A.Y: 2010-11) SHRI BHIKHUBHAI JIVRAJBHAI GADHETHARIA 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH SEPTEMBER, 2018. / SURAT; DATED : 25 TH SEPTEMBER, 2018 EDN # / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- ( ) (C.M.GARG) /JUDICIAL MEMBER