ACIT, Circle-2(1), Cuttack V. Pattnaik Minerals Private Ltd., Keonjhar

ITA 349/CTK/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5348 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MOHAPATRA
• Assessee Lawyers: S C BHADRA
• Keywords: Retrospective amendment; Question of law
• Section: 201(1); 139

Judgement Text

1 ITA NO.347/CTK/2016 ASSESSMENT YEAR : 2007 - 2008 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.347 /CTK/2016 ASSESSMENT YEAR : 2007 - 2008 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(1), CUTTACK VS. PATNAIK MINERALS P VT LTD., BONAIKELA, JODA, KEONJHAR. PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.C.BHADRA, AR REVENUE BY : SHRI A.K.MOHAPATRA , CIT DR DATE OF HEARING : 01/11 / 2017 DATE OF PRONOUNCEMENT : 2 /11 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), CUTTACK DATED 29.6.2016 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF ADDITION MADE BY THE AO U/S.40(A)(IA) AMOUNTING TO RS.2,50,31,692 - ON THE GR OUND THAT ASSESSEE HAS ALREADY DEDUCTED AND DEPOSITED THE TDS IN THE PREVIOUS YEAR BEFORE THE DU E DATE OF FILING OF RETURN OF INCOME U/S. 139(1). - ESPECIALLY WHEN THE PROVISO TO SECTION 40(A)(IA) WAS ENTERED BY THE FINANCE ACT'2010 W.E.F. 01.04.2010. 0 2.IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF STATUTORY PROVISIONS OF SECTION 40(A)(IA) AS THE SECTION 201(1) AND PRINCIPLE LAID DOWN THEREIN COULD NOT BE ADOPTED FOR THE PURPOSE OF INTERPRETATING SECTION 40(A)(IA), PARTICULARLY WHEN THERE IS NO DECISION IN FAVOUR OF 2 ITA NO.347/CTK/2016 ASSESSMENT YEAR : 2007 - 2008 THE ASSESSEE BY THE JURISDICTIONAL HIGH COURT ON THE SAME DISPUTE ISSUE.. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED INTEREST EXPENDITURE OF RS.2,99,76,686/ - PAID TO SREI INFRASTRUCTURE FINANCE LTD.. ON PERUSAL OF THE DETAILS OF THE TDS MADE U /S. 194A OF THE ACT ON SUCH PAYMENTS, THE ASSESSING OFFICER FURTHER FOUND THAT TDS AMOUNTING TO RS.5,61,711/ - ON PAYMENT OF RS.2,50,31,692/ - WERE DEPOSITED INTO CENTRAL GOVT. ACCOUNT BEYOND T HE STIPULATED DUE DATE. THE ASSESSING OFFICER THEN ANALYSED THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT AND SHOW CAUSED THE ASSESSEE AS TO WHY THE AMOUNT O F IN TEREST EXPENSES CLAIMED SHOULD NOT BE DISALLOWED AS P ER THE PROVISIONS OF SECTION 40( AJ( IA) OF THE ACT AS THE TDS DEDUCTED WERE NOT DEPOSITED TO THE CENTRAL GOVT. ACCOUNT WITHI N THE STIPULATED DATES AND WERE DEPOSITED INTO THE CENTRAL GOVT. ACCOUNT ON 07.06.2007 I.E. BEYOND THE FINANCIAL YEAR 20 0 6 - 07. IN REPLY, THE ASSESSEE SUBMITTED THAT THE TDS HAVE BEEN DULY MADE FROM THE PAYMENTS OF INTEREST FOR THE MONTHS OF OCTOBER, NOVEMBER, DECEMBER, JANUARY AND FEBRUARY OF THE FINANCIAL YEAR 2006 - 07 AND WER E DEPOSITED TO THE CENTRAL GOVT. ACCOUNT ON 07.06.2007. THE ASSESSEE REFERRED TO THE AMENDMENT MADE TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 FROM 1 ST APRIL, 2010 WHERE IT IS HELD THAT DISALLOWANCE WILL BE MADE IF AFTER DEDUCTING TAX AT SOURCE, THE ASSESSEE FAILS TO PAY THE AMOUNT OF TAX ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION [1) OF SECTION 139 OF THE ACT. THE EFFECT OF THIS AMENDMENT IS THA T THE ASSESSEE DEDUCTING TAX EITHER IN THE LAST MONTH OF 3 ITA NO.347/CTK/2016 ASSESSMENT YEAR : 2007 - 2008 THE PREVIOUS YEAR OR 11 MONTHS OF THE PREVIOUS YEAR SHALL BE ENTITLED TO DEDUCTION OF THE EXPENDITURE IN THE YEAR OF INCURRING IT, IF THE TAX SO DEDUCTED AT SOUR CE IS PAID ON OR BEFORE THE DUE DATE U /S. 139(1) OF THE ACT. THEREAFTER, THE ASSESSING OFFICER CONCLUDED THAT THE AMENDED VERSION OF THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IS APPLICABLE FROM 1 ST APRIL, 2010 AND DOES NOT HAVE ANY RETROSPECTIVE EFFECT AND DISALLOWED THE AMOUNT OF RS.2,50 ,31,691/ - AND ADDED T HE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OBSERVING AS UNDER: IT HAS BEEN OBSERVED THAT AMENDMENTS TO DIFFERENT PROVISO TO SECTION 40(A)(IA) OF THE ACT HAVE BEEN MADE OVER THE YEARS. WHILE IN SOME SUCH AMENDMENTS , IT IS MENTIONED THAT THE SAME IS FROM THE RETROSPECTIVE EFFECT AND IN SOME OTHER AMENDMENTS THERE HAS BEEN NO MENTION OF APPLICABILITY OF THE PROVISIONS FOR PRIOR PERIODS. FOR EXAMPLE, IN THE FI NANCE ACT, 2008 AMENDMENT WAS MADE TO CLAUSE - (A) IN SUB - CLAUSE(IA) IN SECTION 49 WITH RETROSPECTIVE AFFECT FROM 1 ST APRIL, 2005, SUCH AMENDMENT WAS THAT 'IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, THE SAME SHOULD BE PAID TO THE GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE SPECIFIED IN SUB SECTION (1) OF SECTIO N 139 FOR CLAIMING DEDUCTION UNDER THE SECTION.' IN THE AMENDMENT BROUGHT IN FINANCE ACT, 2010, IT IS MENTIONED THAT 'WHERE IN RESPECT OF ANY SUCH SUM TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION - 1 OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID.' IT IS SEEN THAT ISSUE WHICH AROSE IN THE FINANCIAL YEAR 2005 - 06 AS FIRST AMENDE D THROUGH THE FINANCE ACT, 2008 AND THEN BY ACTION OF THE FINANCE ACT, 2010. WHILE IN FINANCE ACT, 2008, THE AMENDMENT WAS MADE WITH RETROSPECTIVE EFFECT FROM FIRST APRIL, 2005 IN FINANCE ACT, 2010, THERE HAS BEEN AMENDMENT WITH RETROSPECTIVE EFFECT FROM F IRST APRIL, 2010. THE HON'BLE HIGH COURTS HAVE TREATED THE ISSUE TO BE THE SAME AND HAVE GIVEN OPINION THAT THIS AMENDMENT TO 4 ITA NO.347/CTK/2016 ASSESSMENT YEAR : 2007 - 2008 PROVISO TO SECTION 40(A)(IA) OF THE ACT MADE TO FINANCE ACT, 2010 SHOULD ALSO HAVE RETROSPECTIVE OPERATION EFFECT. T HE HONB LE SUPREME COURT IN THE CASE OF R.B.JODHAMALL KUTHIALA, 82 ITR 570 (SC) HAVE HELD THAT THE PROVISIONS WHICH HAS BEEN INSERTED AS REMEDY TO MAKE THE PROVISION WAR KABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASO NABLE DEDUCTION CAN BE T AKEN TO THE SECTION AS WELL. THE SUPREME COURT WHILE DECIDING THE WORKABILITY OF THE OTHER AMENDED PROVISIONS HAVE DECIDED IN THE CASE OF ALLIED MOTORS PVT. LTD AND ALOM EXTRUSIONS LTD. THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. THE CIT(A ) ALSO REFERRED TO THE CASE OF VIRGIN CREATIONS VS. CIT IN ITA NO.302 OF 2011, THE HON'BLE HIGH COURT, CALCUTTA HAVE HELD THA T THE AMENDMENT IN SECTION 40(A) (IA) BY THE FINANCE ACT, 2010 HAS RETROSPECTIVE EFFECTS FROM 01.04.2005 AND IS ALSO APPLICABLE FOR THE ASSESSMENT YEAR 2007 - 08. IN THE CASE OF CIT VS. OM PRAKASHJ CHOUDHARY, ITA NO. 412/2 013, THE HON'BLE HIGH COURT GUJ RAT HAVE HELD THAT ' FROM THE DISCUSSION HELD HEREIN ABOVE, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW RAISED IN THESE APPEALS IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY HOLDING THE AMENDMENT MADE IN SECTION 40(A)(IA) OF THE INCOME - TAX ACT, 1961 BY THE FINANCE ACT, 2010, AS RETROSPECTIVE IN OPERATION, HAVING EFFECT FROM 1 ST APRIL, 2005 I.E. FROM THE DATE OF INSERTION OF SECTION 40(A)(IA) OF THE ACT. ' IN THE CASE OF CIT VS. SHRI SANTOSH KUMAR SHETTY (2014) 89 CCH 199, THE HON'BLE HIGH COURT OF KARNATAKA HAVE HELD THAT 'WE ARE IN THE RESPECTFUL AGREEMENT WITH THE VIEW EXPRESSE D BY THE GUJARAT HIGH COURT IN GIVING RETROSPECTIVE OPERATION TO THE SAID AMENDMENT NOT WITHSTANDING THAT THE PARLIAMENT HAS EXPRESSLY STATED THAT IT COMES INTO EFFECT FROM 01.04.2010. THE SAID AMENDMENT IS CURATIVE IN NATURE. THE TRIBUNAL COMMITTED AN ERR OR IN HOLDING IT IS PROSPECTIVE. THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' S IMILAR DECISIONS HAVE BEEN TAKEN IN THE CASE OF CIT VS. SRI SCORPIO ENGINEERING PVT. LTD. IN ITA NO.551/2015 BY THE HON'BLE HIGH COURT OF KANRATAKA. AFTER PERUSING THE DECISIONS OF THE HON'BLE HIGH COURTS OF INDIA AS EXTRACTED ABOVE WHICH ARE BINDING ON ME, THE AO IS DIRECTED TO TREAT THE AMENDMENT AS RETROSPECTIVE FROM 01.04.2005 AND DIRECTED TO DELETE THE ADDITION. 5. BEFO RE US, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS LD A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 5 ITA NO.347/CTK/2016 ASSESSMENT YEAR : 2007 - 2008 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT NO SPECIFIC ERROR IN THE ORDER OF THE CIT(A) COULD BE POINTED OUT BY LD D.R . THEREFORE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND GROUND OF APPEAL OF THE REVENUE IS REJECTED. 7. IN T HE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUN CED ON 2 /11 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 2 /11 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(1), CUTTACK 2. THE RESPONDENT. PATNAIK MINERALS PVT LTD., BONAIKELA, JODA, KEONJHAR 3. THE CIT(A) - CUTTACK 4. PR.CIT - CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//