M/s. Spencer Travel Services Ltd., CHENNAI V. DCIT, CHENNAI

ITA 3387/CHNY/2018

AI Insights

The case involves M/s. Spencer Travel Services Ltd., the appellant, contesting an assessment order by the Deputy Commissioner of Income Tax, Company Circle-6(4), Chennai, which disallowed certain payments for want of Tax Deduction at Source (TDS) under section 40(a)(i) of the Income Tax Act, 1961. The primary issue was whether the assessee could be considered an 'assessee-in-default' for not deducting TDS on payments made to Air Maldives. The tribunal also addressed the issue of withdrawal of interest under section 244A, which was initially granted but later retracted following a re-assessment of the refund due to the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133982 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 09-04-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 244A; 143(1)

Judgement Text

आयकर अपीलीय अिधकरण ‘बी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI माननीय +ी वी. द ु गा1 राव, ाियक सद3 एवं माननीय +ी मनोज कु मार अ8वाल ,लेखा सद3 के सम:। BEFORE HON’BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.3387/Chny/2018 (िनधा1रण वष1 / Assessment Year: 2008-09) M/s. Spencer Travel Services Ltd. Sudarsan Building, 6 th Floor, 27, Whites Road, Chennai – 600 014. बनाम/ V s. DCIT Company Circle-6(4), Chennai. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AAF CS -5 2 0 5 - F (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Ms N.V. Lakshmi (Advocate) – Ld. AR थ की ओरसे/Respondent by : Shri D. Hema Bhupal (JCIT) –Ld. DR सुनवाई की तारीख/Date of Hearing : 10-04-2023 घोषणा की तारीख /Date of Pronouncement : 13-04-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2008-09 arises out of the order of learned Commissioner of Income Tax (Appeals)-16, Chennai [CIT(A)] dated 26-09-2018 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s 147 of the Act on 27-03-2014. The primary grievance of the assessee is disallowance u/s 40(a)(i) for want of Tax Deduction at Source (TDS) on certain payments. The registry has noted a delay of one day in the appeal which stands condoned. ITA No.3387/Chny/2018 - 2 - 2. The limited prayer of Ld. AR is that the payee has declared the impugned payments in their tax returns and paid due taxes thereon. Accordingly, the assessee could not be held to be assessee-in-default. In support, copy of Income Tax Return of the payee has been placed on record. The Ld. AR, thus, pleaded for shelter of second proviso to Sec. 40(a)(i). The Ld. Sr. DR submitted that the assessee has to file requisite documents and the plea could not be accepted merely on the basis of Income Tax Return of the payee. Having heard rival submissions, the issue is adjudicated as under. 3. The impugned disallowance stem from the fact that the assessee made certain remittances to Air Maldives without deducting applicable tax at source. Accordingly, disallowance of Rs.4.15 Lacs was made u/s 40(a)(i). The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 4. We find that in terms of second proviso to Sec. 40(a)(i), if the assessee is not deemed to be an assessee-in-default under first proviso to sub-section (1) of Sec.201, then it shall be deemed that the assessee has deducted and paid tax on such sum. Though the proviso has been inserted from 01.04.2020, however, we are of the opinion that the said amendment is curative in nature and intended to avoid undue hardship that may have been caused to the assessee due to harsh provisions of Sec. 40(a)(i) since failure to deduct TDS would result into full disallowance of the expenditure. Therefore, accepting the plea of Ld. AR, we direct the assessee to demonstrate before Ld. AO that the assessee fulfills the prescribed conditions and could not be considered as assessee-in-default in terms of first proviso to sub- section (1) of Sec.201 by furnishing the requisite documents as ITA No.3387/Chny/2018 - 3 - specified therein. The Ld. AO would verify the claim of the assessee and re-adjudicate the same. The corresponding grounds stands partly allowed for statistical purposes. 5. Another issue in the appeal is withdrawal of interest granted to the assessee u/s 244A. The same stem from the fact that in the regular scrutiny assessment proceedings, balance refund of Rs.24.61 Lacs was determined which was rectified on 12.01.2011 and re-determined at Rs.43.43 Lacs. The same was issued on 30.03.2011. However, return was processed u/s 143(1) and refund of Rs.43.42 Lacs was issued on 29.10.2010 after taking credit of Rs.53.98 Lacs against the claimed credit of Rs.79.71 Lacs. The credit was allowed in full for Rs.79.69 Lacs and refund of Rs.43.42 Lacs was issued. No details were available with respect to credit of Rs.36.26 Lacs disallowed in the 143(1) intimation. This needed verification and the period of delay attributable to the assessee had to be disallowed for grant of interest u/s 244A. The interest u/s 244A was reworked and difference of Rs.0.99 Lacs was computed which is given on para-2 of the assessment order. The same was withdrawn. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 6. We find that the claim of TDS credit has finally been found to be correct and the credit of the same has been granted to the assessee. Therefore, the withdrawal of interest is not justified. We order so. ITA No.3387/Chny/2018 - 4 - 7. The appeal stand partly allowed in terms of our above order. Order pronounced on 13 th April, 2023. Sd/- (V. DURGA RAO) ाियक सद3 /JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद3 / ACCOUNTANT MEMBER चे+ई / Chennai; िदनांक / Dated : 13-04-2023 EDN/- आदेश की Uितिलिप अ 8ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु4/CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF