M/s. Unison Insurance Broking Services P.Ltd.,., Baroda V. Income Tax Officer, Baroda

ITA 3488/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2512 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Retrospective amendment; TDS
• Section: 40(a)(ia); 201(1)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASSEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO. 3488/AHD/2014 ( ASSESSMENT YEAR: 2010-11) M/S. UNISON INSURANCE BROKING SERVICES PVT. LTD. 206-213, GLACIER COMPLEX, JETALPUR ROAD, VADODARA - 390007 / VS. ITO WARD-4(1) VADODARA ./ ./ PAN/GIR NO. : AAA CU2 865 Q ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : MANISH J. SHAH, AR / RESPONDENT BY : LALIT P. JAIN, SR. DR DATE OF HEARING 04/03/2019 !'# / DATE OF PRONOUNCEMENT 11 /03/2019 / O R D E R PER MAHAVIR PRASAD - JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. CIT(A) APPEAL NO. CAB/III-285/2012-13 DATED 12.09.2014 ARISING FROM ASSESSMENT ORDER DATED 30.01.2013 AND FOLLOWING GROUNDS HAVE BEEN TAKEN:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR A PPELLANTS CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMIN G DISALLOWANCE OF INTEREST EXPENSE OF RS. 6,29,771/-, ON THE TWO GRO UNDS VIZ. (A) THAT THE AMENDMENT MADE BY INSERTING SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2012 HAS NOT BEEN G IVEN RETROSPECTIVE EFFECT AND IS EFFECTIVE FROM 01.04.2 013 AND THUS IS NOT APPLICABLE TO THE ASST. YEAR 2010-11 AND ALSO (B) THAT THE APPELLANT HAS NOT FILED ANY EVIDENCE THAT THE PAYEE HAS FILE D ITS RETURN OF INCOME AND INTEREST PAID BY APPELLANT HAS BEEN TAK EN INTO ACCOUNT IN THE RETURN OF INCOME FILED BY THE SAID PAYEE. ITA NO.3488/AHD/2014 [UNION INSURANCE BROKING SERVI CES PVT. LTD.VS. ITO] A.Y. 2010-11 - 2 - APPELLANT SUBMITS THAT THE AFORESAID AMENDMENT IS T HE BENEFICIAL AMENDMENT AND HENCE IT WILL HAVE RETROSPECTIVE EFF ECT AND THEREFORE, THE LD. CIT(A) SHOULD HAVE DIRECTED THE AO TO ALLOW THE APPELLANT REASONABLE OPPORTUNITY TO COMPLY WITH TH E REQUIREMENTS OF THE SECOND PROVISO TO SEC. 40(A)(IA) R.W. THE F IRST PROVISO TO SEC. 201(1) OF THE ACT AND THEREAFTER DELETE THE IMPUGN ED DISALLOWANCE. YOUR APPELLANT, THEREFORE, PRAYS YOUR HONOUR TO HO LD SO NOW AND KINDLY DIRECT THE LD. AO TO DELETE THE IMPUGNED DI SALLOWANCE ON APPELLANT COMPLYING WITH THE CONDITIONS LAID DOWN IN THE FIRST PROVISO TO SEC. 201(1) OF THE ACT. 2. WITHOUT PREJUDICE THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR APPELLANTS CASE AND IN LAW, THE LD. CIT(A) HAS ALSO ERRED IN CONFIRMING DISALLOWANCE OF INTER EST EXPENSE OF RS. 6,29,771/-, ON THE GROUND THAT THOUGH THE IMPUGNED EXPENDITURE HAS NOT REMAINED UNPAID OF THE LAST DATE OF THE RELEVA NT PREVIOUS YEAR, THE DECISION IN THE CASE OF CIT VS. SIKHANDAR KHAN N. TANWAR 259 CTR (GUJ) 57 IS STILL APPLICABLE. APPELLANT SUBMITS THAT AT THE END OF THE RELEVANT Y EAR THE IMPUGNED EXPENDITURE HAD NOT REMAINED UNPAID AND THEREFORE THE SAME IS NOT DISALLOWANCE U/S 40(A)(IA) OF THE ACT. APPELLANT, THEREFORE, PRAYS YOUR HONOUR TO HOLD SO NOW AND KINDLY DIRECT THE L D. AO TO DELETE THE IMPUGNED DISALLOWANCE. ON THE FACTS AND IN THE CIRCUMSTANCES OF YOUR APPEL LANTS CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN REJECTING THE ADDITIONAL GROUND AND THEREBY HAS ERRED IN NOT ALLOWING TAX CREDIT O F RS. 13,26,186/- THOUGH APPEARING IN FORM NO. 26AS, ON THE GROUND T HAT THE APPELLANT HAS NOT FURNISHED REQUISITE EVIDENCE IN PROOF THAT SUCH INCOME ON WHICH TAX DEDUCTED AT SOURCE HAS BEEN MA DE AND REFLECTED IN FORM 26AS HAVE BEEN MADE PART OF ITS RETURNED INCOME AS REQUIRED UNDER RULE 37BA(3) OF THE INCOME TAX R ULES. YOUR APPELLANT SUBMITS THAT FROM ABOUT 2350 TRANSAC TIONS APPEARING IN FORM NO. 26AS DTD. 23.10.2013 (WHICH CONTINUOUSLY GOT AMENDED FROM TIME TO TIME AUGUST, 2010 TO JANU ARY, 2013) REGARDING TAXES DEDUCTED BY VARIOUS 143 PAYERS/DED UCTORS, YOUR APPELLANT NOTICED THAT TAX DEDUCTED AT SOURCE OF R S. 13,26,186/- HAS NOT BEEN CLAIMED IN THE RETURN OF INCOME. YOUR APPELLANT FURTHER SUBMITS THAT LOOKING TO THE NATURE OF APPELLANTS BUSINESS AND VOLUMINOUS BUSINESS TRANS ACTIONS, EXACT ONE-TO-ONE CO-RELATION OF INCOME APPEARING IN FORM 26AS (AS UPLOADED BY DEDUCTORS) WITH THAT OF INCOME IN THE BOOKS OF ACCOUNTS OF THE APPELLANT REFLECTED IN THE RETURN OF INCOME , IS TIME CONSUMING AND ALSO DIFFICULT DUE TO ABSENCE OF TAX DEDUCTED AT SOURCE DETAILS FROM PAYERS/DEDUCTORS AGAINST EACH AND EVERY PAYMENT MADE BY THEM, DIFFERENT SYSTEM OF ACCOUNTI NG AND MANNER OF TAX DEDUCTED AT SOURCE FOLLOWED BY THEM, AD-HOC PAYMENTS MADE BY THEM ETC. YOUR APPELLANT FURTHER SUBMITS THAT FROM THE ANGLE OF FAIRNESS AND JUSTICE, TDS CREDIT OF RS. 13,26,186/- CANNOT BE D ENIED AND REQUIRES TO BE REFUNDED TO THE APPELLANT ONLY AND HENCE APPELLANT PRAYS YOUR HONOUR TO ADJUDICATE THE RELIEF CLAIMED VIDE THIS GROUND SYMPATHETICALLY. IN VIEW OF THE ABOVE, IT IS HUMBLY SUBMITTED THAT A PPELLANT IS ENTITLED TO TAX CREDIT OF RS. 13,26,186/-, SINCE A PPEARING IN FORM NO. 26AS. ALTERNATIVELY IT IS ALSO ENTITLED TO SAID TAX CREDI T SINCE THE INCOME STATED IN FORM 26AS IS MOSTLY FROM A BROAD ANGLE A LSO VERIFIABLE ITA NO.3488/AHD/2014 [UNION INSURANCE BROKING SERVI CES PVT. LTD.VS. ITO] A.Y. 2010-11 - 3 - WITH THAT OF ITS RETURNED INCOME AS REQUIRED UNDER RULE 37BA(3) OF THE INCOME TAX RULES. APPELLANT, THEREFORE, PRAYS YOUR HONOUR TO HOLD SO NOW AND KINDLY DIRECT THE ASSESSING OFFICE R TO ALLOW CREDIT OF THE TAX DEDUCTED AT SOURCE OF RS. 13,26,186/-. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INSURANCE BROKING IN THE COMPANY RECEIVES BROKERAGE/COMMISSIO N FROM VARIOUS GENERAL INSURANCE COMPANY COVERED UNDER IRDA. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF CASE R ECORDS AND DETAILS FURNISHED BY THE ASSESSEE, IT IS NOTICED THAT THE A SSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE FROM THE FOLLOWING PAYME NTS AND PAID INTO THE GOVERNMENT ACCOUNT AS REQUIRED UNDER THE PROVIS IONS OF SEC. 194A OF THE INCOME ACT. SR. NO. NAME OF THE PARTY NATURE OF PAYMENT AMOUNT CREDITED/PAID(RS.) 1. KOTAL MAHINDRA PRIME FINANCE LTD. INTEREST PAYMENT 56,852.00 2. -DO- -DO- 63,242.00 3. -DO- -DO- 6,398.00 4. -DO- -DO- 2,90,096.00 5. -DO- -DO- 33,799.00 6. -DO- -DO- 25,575.00 7. -DO- -DO- 1,12,418.00 8. -DO- -DO- 41,391.00 TOTAL 6,29,771.00 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ABOVE AMOUNT OF RS. 6,29,771/- ON WHICH TAX HAS NOT BEEN DEDUCTED AT SOURCE SHOULD NO T BE DISALLOWED U/S. 40(A)(IA) OF THE INCOME TAX ACT ADDED TO THE T OTAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AU THORIZED REPRESENTATIVE OF THE ASSESSEE HAS STATED THAT THE ASSESSEE COMPANY HAS NOT DEDUCTED TAX DEDUCTED AT SOURCE ON THE ABOVE ME NTIONED EXPENSES MEANING THEREBY THAT THE ASSESSEE ITSELF HAS ADMITT ED THE DEFAULT OF NOT DEDUCTING TAX AS PER THE PROVISIONS OF SEC. 194A OF THE ACT. AS PER THE PROVISIONS OF SE. 40(A)(IA) OF THE INCOME TAX ACT N O DEDUCTION SHALL ITA NO.3488/AHD/2014 [UNION INSURANCE BROKING SERVI CES PVT. LTD.VS. ITO] A.Y. 2010-11 - 4 - BE ALLOWED IN RESPECT OF THE AMOUNT ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B BUT SUCH TAX HAS NOT BE EN DEDUCTED AT SOURCE AND PAID INTO GOVERNMENT ACCOUNT. HENCE IN THE INSTANT CASE, AS STATED ABOVE, THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE FROM THE PAYMENTS OF INTEREST TO FINANCIAL INSTITUTIONS TOTALING TO RS. 6,29,771/-. THEREFORE, THE SAID AMOUNT OF RS. 6,29 ,771/- IS DISALLOWED U/S. 40(A)(IA) OF THE INCOME TAX ACT AND ADDED TO T HE TOTAL INCOME OF THE ASSESSEE. AND DISALLOWANCE OF RS. 6,29,771/- O N WHICH TAX HAS NOT BEEN DEDUCTED THEIR SOURCE OF ADDED TO THE TOTAL IN COME OF THE ASSESSEE. 4. THEREAFTER ASSESSEE FILED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, ON THE GROUND THAT AMENDMENT MADE BY INSERTING SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT, 2012 HAS NOT BEEN GIVEN RETROSPECTIVE EFFECT A ND THIS EFFECTIVE FROM 01.04.2013 AND THUS IS NOT APPLICABLE TO THE A SSESSMENT YEAR 2010-11. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER IN SUPPORT OF ITS CONTENTION LD. AR CITED AN ORDER OF HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. ANSAL LAND MARK TOWN SHIP (P.) LTD. [2015] 61 TAXMANN.COM 45 (DELHI) WHEREIN IT IS HELD THAT SECOND PROVISO OF SEC. 40(A)(IA) IS DECLARATORY AND CURATI VE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005 AND RELEVANT H EAD NOTE IS GIVEN BELOW:- SECTION 40(A)(IA), READ WITH SECTION 194J, OF THE INCOME-TAX ACT, 1961 BUSINESS DISALLOWANCE INTEREST ETC. PAID T O A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE (SECOND PROVISO) ASSESSMENT YEARS 2008-09 AND 2009-10 WHETHER SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE AND IT HAS RE TROSPECTIVE EFFECT FROM 01.04.2005 HELD, YES WHETHER, THEREFORE, W HERE ASSESSEE MADE PAYMENTS WITHOUT DEDUCTING TAX AT SOURCE UNDER SECTION 194J, SINCE PAYEE HAD FILED RETURN AND OFFERED SUM RECEIV ED FROM ASSESSEE TO TAX, IMPUGNED DISALLOWANCE MADE UNDER SECTION 40 (A)(IA) DESERVED TO BE DELETED HELD, YES [PARA 13 AND 14] [IN FAVOUR OF ASSESSEE] ITA NO.3488/AHD/2014 [UNION INSURANCE BROKING SERVI CES PVT. LTD.VS. ITO] A.Y. 2010-11 - 5 - 6. RESPECTFULLY FOLLOWING THE ABOVE SAID JUDGMENT O F HONBLE DELHI HIGH COURT WE ALLOW THIS GROUND OF APPEAL. 7. NOW, WE COME TO NEXT GROUND RELATING TO REJECTIN G THE ADDITIONAL GROUND FOR NOT ALLOWING TAX CREDIT OF RS. 13,26,186 /- THOUGH SAME IS APPEARING IN FORM NO. 26AS. THIS GROUND WAS ALSO D ISMISSED BY THE LOWER AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RELEVANT RECORD THE ASSESSEE CONTENTION IS THAT ON ACCOUNT O F INADVERTENTLY MENTIONING OF WRONG TAN NO. BY THE ASSESSEE, CREDIT OF RS. 13,26,186/- WAS NOT GIVEN AND LOWER AUTHORITIES REJ ECTED THE CLAIM ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY PROOF. WE CAN SEE FORM 26AS HAVE BEEN MADE IN PART OF ITS RETURNED INCOME AS REQUIRED UNDER RULE 37BA(3) OF THE INCOME TAX ACT. IT IS A CASE W HERE ON ACCOUNT OF ASSESSEE/APPELLANT INADVERTENTLY MENTIONING OF WRON G TAN NO. CLAIM WAS REJECTED AND THIS SORT OF HUMAN ERROR IS POSSIB LE. THEREFORE, IN THE INTEREST OF THE JUSTICE WE SET ASIDE THIS GROUN D TO THE FILE OF LD. AO TO ALLOW THE CREDIT OF TAX DEDUCTED AT SOURCE AF TER VERIFYING DECLARATION TO BE FILED BY THE DEDUCTEE IN TERMS OF PROVISO TO SUB-RULE (2) OF RULE 37BA OF THE INCOME TAX RULE, AND THEREA FTER WE WILL DECIDE THIS GROUND OF THE ASSESSEE IN ACCORDANCE WI TH LAW. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (WASEEM AHMED) (MAHA VIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 11/03/2019 TANMAY TRUE COPY !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE THIS ORDER PRONOUNCED IN OPEN COURT ON 1 1/03/2019 ITA NO.3488/AHD/2014 [UNION INSURANCE BROKING SERVI CES PVT. LTD.VS. ITO] A.Y. 2010-11 - 6 - 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) 1.DATE OF DICTATION ON 06.03.2019 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 07.03.2019 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 11.03.2019 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 11.03.2019 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 11.03.2019 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.03.2019 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER