Amaravathy Textiles, Karur V. DCIT, Trichy

ITA 3381/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4981 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN IRS
• Assessee Lawyers: A S SRIRAMAN
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 3381/MDS/2016 / ASSESSMENT YEAR : 2009-2010. M/S. AMARAVATHY TEXTILES, 9-D/5, RAMAKRISHNAPURAM, KARUR 639 001. [PAN AAFFA 9673E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1) TIRUCHIRAPPALLI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE /RESPONDENT BY : SHRI. B. SAHADEVAN, IRS, JCIT. /DATE OF HEARING : 06-04-2017 !' /DATE OF PRONOUNCEMENT : 12-04-2017 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, DIRECTED AG AINST AN ORDER DATED 17.11.2016 OF THE COMMISSIONER OF INCO ME-TAX (APPEALS)- 1, TIRUCHIRAPALLI, IT IS AGGRIEVED ON A DISALLOWANC E OF A13,20,000/- MADE U/S. 40(A) (IA) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT). 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DIS ALLOWANCE WAS MADE FOR PAYMENT OF RENT WITHOUT DEDUCTION OF T AX. ACCORDING TO HIM, SUCH RENT THOUGH IT WAS PAID WITHOUT DEDUCTING TAX, WAS SHOWN BY RESPECTIVE RECIPIENTS IN THEIR RETURNS AND SUCH RECIPIENTS HAD PAID ITA NO. 3381MDS//2016 :- 2 -: THE TAX ON THE RENTALS RECEIVED BY THEM. RELYING O N THE JUDGMENT OF CO-ORDINATE BENCH IN THE CASE OF DCIT VS. M/S. QUANTUM KNITS PVT. LTD (ITA NO.304/MDS, 2015, DATED 18.01.2017), LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT AMENDMENT TO SEC. 40( A)(IA) OF THE ACT AND SEC. 201(1) OF THE ACT MADE THROUGH FINANCE AC T, 2012 HAD TO BE CONSIDERED RETROSPECTIVELY. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ONLY CONTENTION RA ISED BY THE LD. AUTHORISED REPRESENTATIVE IS THAT PAYEE HAD ACCOUNT ED RENT RECEIPTS AND PAID TAXES THEREOF. ACCORDING TO HIM, AMENDMEN T TO SEC. 40(A)(IA) AND SEC. 201(1) OF THE ACT MADE THROUGH F INANCE ACT, 2012 WERE RETROSPECTIVE. IN THE CASE OF M /S. QUANTUM KNITS PVT. LTD (SUPRA) RELIED ON BY THE LD. AUTHORISED REPRESENTATIVE, THIS TRIBUNAL HAD HELD AT PARA 4 OF ITS ORDER AS UNDER:- 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE ASSESSEE HAD EFFECTED PAYMENT TO ONE M/S KPR MILLS LTD. WITHOUT DEDUCTING TAX AT SOURCE. THE A. O. HAD CONSIDERED IT AS PART OF BUNDLE OF SERVICES IN THE NATURE OF BU SINESS PROMOTION EXPENSES. ACCORDING TO THE LD. A.O., ASSESSEE FAIL ED TO DEDUCT TAX AT SOURCE. THE A.O. MADE DISALLOWANCE UNDER SECTION 4 0(A)(IA) OF THE ACT. THE CIT(APPEALS) WHILE AFFIRMING THIS VIEW OF THE A.O., OBSERVED THAT M/S KPR MILLS LTD. WHO ACCOUNTED THESE RECEIPT S UNDER THE HEAD MISCELLANEOUS RECEIPTS, HAD PAID TAX THEREON. TH E CIT(APPEALS) RELIED ON THE AMENDMENT TO SECTION 40(A)(IA) OF THE ACT. RETROSPECTIVITY OF AMENDMENT TO SECTION 40(A)(IA) A ND 201(1) OF THE ACT MADE THROUGH FINANCE ACT, 2012 WAS AN ISSUE WHI CH WAS DEALT WITH BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. M/S ANSAL LAND MARK TOWNSHIP (P.) LTD. (377 ITR 635). THE VIEW TA KEN BY THE ITA NO. 3381MDS//2016 :- 3 -: HON'BLE DELHI HIGH COURT WAS IN FAVOUR OF THE ASSES SEE. THERE IS NO DECISION OF JURISDICTIONAL HIGH COURT ON THIS ISSUE . THIS BEING THE SITUATION, WE ARE OF THE OPINION THAT THE CIT(APPEA LS) WAS JUSTIFIED IN TAKING A VIEW THAT IF THE RECIPIENT HAD ACCOUNTED T HE INCOME AND PAID THE TAX, ASSESSEE COULD NOT BE SUBJECTED TO RIGOURS OF SECTION 40(A)(IA) OF THE ACT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THIS VIEW TAKEN BY THE LD. CIT(APPEALS). HOWEVER, WHETH ER THE PAYEE HAD ACCOUNTED THE RECEIPTS AND PAID TAX THEREON, IN OUR OPINION, REQUIRES VERIFICATION BY THE LD. A.O. WE REMIT THE ISSUE BACK TO THE A.O. FOR THIS LIMITED PURPOSE. FOLLOWING THE ABOVE ORDER, I AM OF THE OPINION THAT QUESTION WHETHER PAYEE HAD ACCOUNTED RECEIPTS AND PAID TAX THEREON R EQUIRES VERIFICATION BY THE LD. ASSESSING OFFICER. NEEDLESS TO SAY, IF THE PAYEE HAD ACCOUNTED RENT RECEIPTS AND PAID TAXES THEREON, ASSESSEE CANNOT BE MULCTED WITH A TAX, BY MAKING A DISALLOWANCE U/ S.40(A) (IA) OF THE ACT. I THEREFORE SET ASIDE THE ORDER OF THE LOWER A UTHORITIES AND REMIT THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFF ICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH DAY OF APRIL, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:12TH APRIL, 2017 KV &' ()*) / COPY TO: 1. / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /1 / GF