Shreedhan Construction Co., Ahmedabad V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 3465/AHD/2008

• Counselvise Citation: 346520514 RSA 2008
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 20-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND SR DR
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Retrospective amendment

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.3465/AHD/2008 ( & ' & ' & ' & ' / / / / ASSESSMENT YEAR : 2005-06) SHREEDHAN CONSTRUCTION CO. PLOT NO.180/181, GULAB RESIDENCY SOLA ROAD AHMEDABAD-380 061 & & & & / VS. THE INCOME TAX OFFICER WARD-9(1) AHMEDABAD ( '# ./)* ./ PAN/GIR NO. : AAUFS 4788 H ( (+ / // / APPELLANT ) .. ( ,-(+/ RESPONDENT ) (+ . '/ APPELLANT BY : SHRI MEHUL K.PATEL ,-(+ / . ' / RESPONDENT BY : SHRI ROOPCHAND, SR.D.R. &0 / #/ // / DATE OF HEARING : 09/07/2012 12' / # / DATE OF PRONOUNCEMENT : 13/7/2012 '3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS)-XV, AHMEDABAD DATED 11 TH JULY-2008 AND THE SUBSTANTIVE GROUND READS AS UNDER:- THE LD. CIT(A) HAD CONFIRMED (PARTLY) THE ADDITION MADE BY ITO U/S.40(A)(IA) OF THE IT ACT, 1961 TO THE TUNE OF RS .9,68,087/-. ITA NO. 3465/AHD/2008 SHREEDHAN CONSTRUCTION CO.VS. ITO ASST.YEAR - 2005-06 - 2 - IT IS SUBMITTED AND PRAYED THAT THE AMOUNT OF TDS P AYABLE AS PER SEC.94C OF THE IT ACT, 1961 HAVE ALREADY BEEN DEDUC TED AND PAID ON 25-5-2005. 2. AT THE OUTSET, LD.AR HAS INFORMED THAT THE CORRE CT AMOUNT SHOULD BE RS.20,02,500/- INSTEAD OF THE AMOUNT MENTIONED I N THE GROUND. LD.AR HAS THEREFORE PLEADED TO CORRECT THE AMOUNT N OTED IN THE GROUNDS OF APPEAL. 3. WHILE FRAMING THE ASSESSMENT U/S.143(3) VIDE ORD ER DATED 29.11.2007, IT WAS OBSERVED BY THE AO THAT CERTAIN PAYMENTS HAVE BEEN MADE TO SUB-CONTRACTORS AMOUNTING TO RS.31,84,737/- WITHOUT DEDUCTION OF TAX AT SOURCE, HENCE CONTRAVENING THE PROVISIONS OF SECTION 40(A)(IA) OF IT ACT. THE ASSESSEE-FIRM IS IN THE BUSINESS OF BU ILDING CONSTRUCTION AND ESTATE DEVELOPER. IN COMPLIANCE, IT WAS SUBMITTED BY THE AO THAT THE TDS U/S.194C WAS DEDUCTED AND A SUM OF RS.62,087/- WAS PAID ON 25.5.2005. THE ASSESSEE HAS ALSO INFORMED THAT I N THIS REGARD FORM NO.26 HAD ALSO BEEN FILED ON 02/06/2005. IT HAS A LSO BEEN INFORMED THAT THE BILLS OF THE LABOUR SUPPLIER WAS CREDITED ON 31 /03/2005 AND ACCORDINGLY TDS WAS PAID TO THE CENTRAL GOVERNMENT ON 25/05/2005. THE AO WAS OF THE VIEW THAT AS PER THE PROVISIONS O F THE IT ACT, THE ASSESSEE HAD TO DEDUCT AND DEPOSIT THE TDS IN THE G OVERNMENT ACCOUNT BY THE 7 TH DAY OF THE FOLLOWING MONTH. SINCE THE ASSESSEE H AD DEFAULTED, HENCE FOR VIOLATION OF SECTION 40(A)(IA), THE SAID EXPENDITURE OF RS.29,97,552/- WAS DISALLOWED. THE MATTER WAS C ARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. LD.CIT(A) HAS GRANTED PART RELIEF IN THE FOLLOWI NG MANNER:- ITA NO. 3465/AHD/2008 SHREEDHAN CONSTRUCTION CO.VS. ITO ASST.YEAR - 2005-06 - 3 - 6. I HAVE GONE THROUGH RIVAL SUBMISSIONS AND FIND THAT AS PER AMENDMENT BROUGHT IN SECTION 40A(IA), THE APPELLANT SHOULD HAVE DEPOSITED TDS ON PAYMENTS MADE TILL 28.2.2005 (WHIC H AGGREGATE TO RS.20,02,500) BY 31.3.2005, BUT TDS WAS DEPOSITE D ONLY IN MAY, 2005. THIS IS IN CLEAR VIOLATION OF SECTION 4 0A(IA), I WOULD THEREFORE, UPHOLD ADDITION OF RS.20,02,500 MENTIONE D IN COLUMN 3 OF THE CHART ABOVE. THE AMOUNTS MENTIONED AGAINST EACH CONTRACTOR SHOW THAT PAYMENTS WERE MADE MUCH MORE THAN RS.20,000 TO EACH ONE OF THEM AND THEREFORE, THE GROUND ON THIS POINT OF THE APPELLANT IS DISMISSED. HOWEVER, TDS ON PAYMENTS OF RS.9,68,087 MADE IN MAR CH, 2005 WAS DEPOSITED IN GOVERNMENT ACCOUNT ON 25.5.05, AND AS PER AMENDMENT BROUGHT IN SECTION 40A(IA) VIDE FINANCE A CT, 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2005, THE APPELLANT G ETS RELIEF OF RS.9,68,087. 5. HAVING HEAD THE SUBMISSIONS OF BOTH THE SIDES, W E ARE OF THE VIEW THAT NOW THIS ISSUE IS DIRECTLY COVERED BY A DECISI ON OF HONBLE CALCUTTA HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. VIRGIN CREATIONS (APPEAL NO.302 OF 2007 [GA NO.3200/2011] ORDER DATED 23/11/ 2011), WHEREIN IT WAS HELD AS UNDER:- THE COURT: WE HAVE HERD MR.NIZAMUDDIN AND GONE TH ROUGH THE IMPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH THE PRESENT APPEAL IS SOUGHT T O BE ADMITTED. IT IS ARGUED BY MR.NIZAMUDDIN THAT THIS COURT NEEDS TO TAKE DECISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PER IOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY T HE ASSESSEE IN ITA NO. 3465/AHD/2008 SHREEDHAN CONSTRUCTION CO.VS. ITO ASST.YEAR - 2005-06 - 4 - JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED B Y THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CSE OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDE D THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE TH E PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTI ON AS WELL. 5.1. FURTHER, WE HAVE BEEN INFORMED THAT ITAT C B ENCH AHMEDABAD IN THE CASE OF M/S.ALPHA PROJECTS SOCIETY P.LTD. VS . DCIT BEARING ITA NO.2869/AHD/2011 (A.Y.2005-06) VIDE AN ORDER DATED 23/03/2012 HAS HELD AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND ORDERS PASSED BY THE AUTHOR ITIES BELOW. THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS NOW BE EN DECIDED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATORS IN GA NO.3200/2011 DATED 23-11-2011 AGAINS T THE REVENUE. HOWEVER, IT IS NOTEWORTHY THAT THE SPECIA L BENCH OF ITAT MUMBAI IN THE CASE OF BHARATI SHIPYARD LTD. V. DCIT IN ITA NO.2404/MUM/2009 IN ORDER DATED 12-09-2011 HAS TAKE N A VIEW THAT THE AMENDMENT IS PROSPECTIVE IN NATURE AND WOU LD APPLY ACCORDINGLY. RESPECTFULLY FOLLOWING THE DECISION O F HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA) THE ORDER OF LD.CIT(A) IS NOT SUSTAINABLE. HENCE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. THE ASSESSING OFFICE R IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.3,69,568/- AS MADE U/ S.40(A)(IA) OF THE ACT. ITA NO. 3465/AHD/2008 SHREEDHAN CONSTRUCTION CO.VS. ITO ASST.YEAR - 2005-06 - 5 - 6. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, SINCE THE TDS WAS DEPOSITED ON 25/5/05, THEREFORE, WE HEREBY DIRECT TO DELETE THE ADDITION. GROUND IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. SD/- SD/- ( .. ) ( ) '# ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 13 / 7 /2012 ..&, .&../ T.C. NAIR, SR. PS '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-XV, AHMEDABAD 5. 49: ,& , , / DR, ITAT, AHMEDABAD 6. :; <0 / GUARD FILE. '3& '3& '3& '3& / BY ORDER, -4 , //TRUE COPY// = == =/ // / ) ) ) ) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER 9.7.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.7.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S13.7.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.7.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER