ARC CONSTRUCTION P. LTD, MUMBAI V. ITO WD 9(1)(1), MUMBAI

ITA 352/MUM/2010

• Counselvise Citation: 35219914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G SRINIVASAN
• Assessee Lawyers: A K LAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHIRI R.S. PADVEKAR, J.M. AND SHRI RAJENDRA SINGH, A.M. ITA NO. : 352/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. ARC CONSTRUCTION PVT. LTD. 19A, TURAKHIYA PARK, M.G. ROAD, KANDIVALI, MUMBAI-400 067 PAN NO: AAACC 3369 H VS. ITO (19)(1) (1) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI A.K. LAL RESPONDENT BY : SHRI G. SRINIVASAN DATE OF HEARING : 2 8 .12.2011 DATE OF PRONOUNCEMENT : 04.01.2012 ORDER PER RAJENDRA SINGH (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 05.11.2009 OF CIT(A)-19, MUMBAI FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING THE DISALLOWANCE OF COMMISSION. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A CI VIL CONTRACTOR. THE AO NOTED THAT THE ASSESSEE HAD MADE PAYMENTS TO SUB -CONTRACTORS ON WHICH TAX WAS DEDUCTED, BUT THE SAME HAD NOT BEEN D EPOSITED WITHIN THE DUE DATE. THE DETAILS OF TAX DEDUCTED, THE DUE DATE OF PAYMENTS ITA NO : 352/MUM/2010 M/S. ARC CONSTRUCTION PVT. LTD. 2 AND THE DATE OF ACTUAL PAYMENT HAS BEEN MENTIONED B Y THE AO AS UNDER :- NAME OF THE PARTY NATURE OF PAYMENT DUE DATE OF PAYMENT AMOUNT PAID (IN `. `.`. `. ) TDS DEDUC TED (IN `. `.`. `. ) DT. OF PAYMENT IN GOVT A/C. SUNIL CONSTRUCTION U/S.194C JUNE 2005 188390 3770 30.05.2006 S. S. ENTERPRISES U/S.194C SEPT. 2005 195470 3990 22.04.2006 SHREEJI CORPORATION U/S.194C SEPT.2005 84750 1800 23.05.2006 CON-TECH ENGINEERS U/S.194C OCT. 2005 20700 425 23.05.2006 ECONOMIC CREATIONS U/S.194C DEC.2005 175011 3570 30.05.2006 IVA ENTERPRISES U/S.194C SETP. & DEC. 2005 464750 9480 22.5.06 & 30.05.2006 K. D. CORPORATION U/S.194C DEC. 2005 191520 3910 30.05.2006 PRS & COMPANY U/S.194C NOV. & DEC. 2005 326555 6660 22.04.2006 R. P. CORPORATION U/S.194C OCT. & DEC. 2005 475640 9705 22.04.2006 & 30.05.2006 S. S. ENTERPRISES U/S.194C OCT. & DEC. 2005 229110 4667 22.04.2006 & 30.05.2006 V. B. MISTRY & CO. U/S.194C DEC. 2005 145960 2980 22.04.2006 & 30.05.2006 B. R. CORPORATION U/S.194C FEB. 2006 203610 4160 30.05.2006 D. SHAH & WORKS U/S.194C FEB. 2006 284850 5810 22.04.2006 HARSH CORPORATION U/S.194C JAN. 2006 189125 3860 30.05.2006 K. D. CORPORATION U/S.194C JAN. 2006 169455 3460 30.05.2006 PRS & CO. U/S.194C JAN. 2006 158445 3240 22.04.2006 PRS & CO. U/S.194C FEB. 2006 171715 3500 30.05.2006 REDDY CONSTRUCTION U/S.194C JAN. 2006 99800 2045 30.05.2006 SUNVIK CONSTRUCTION U/S.194C FEB. 2006 129860 2650 22.04.2006 TEJ CREATION U/S.194C FEB. 2006 263310 5370 22.04.2006 V. B. MISTRY & CO U/S.194C JAN. 2006 & FEB. 2006 276391 5893 30.05.2006 N. A TRANSPORT U/S.194C JAN. 2006 & FEB. 2006 30450 630 23.05.2006 VIRAJ D. KAKKA U/S.194C JAN. 2006 & FEB. 2006 30000 615 03.06.2006 & 23.05.2006 GAURAV CONSTRUCTION U/S.194C FEB 2006 2375745 32213 30.05.2006 RASIK MOTA & CO. U/S.194J OCT. 2005 34050 1740 23.05.2006 TOTAL 6914662 ITA NO : 352/MUM/2010 M/S. ARC CONSTRUCTION PVT. LTD. 3 2.1 THE AO, THEREFORE, OBSERVED THAT THE CLAIM OF P AYMENT OF `. 69,14,682/- MADE BY THE ASSESSEE TO DIFFERENT PERSO NS ON ACCOUNT OF CONTRACT WORK WAS NOT ALLOWABLE U/S.40(A)(IA), AS T HE TAX DEDUCTED HAD NOT BEEN PAID TO THE GOVERNMENT WITHIN THE DUE DATE. THE AO, THEREFORE, DISALLOWED THE CLAIM OF EXPENSES TO THE TUNE OF `. 69,14,662/-. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE CIT(A) THAT THE ASSESSEE WAS A CON TRACTOR AND PAYMENTS HAD BEEN MADE TO SUB-CONTRACTORS ON WHICH TAX WAS TO BE DEDUCTED ONLY @ 1%. THE ASSESSEE HAD, HOWEVER BY MI STAKE DEDUCTED TAX @ 2% AND, THEREFORE, EXTRA DEDUCTION OF TAX SHO ULD BE TREATED, DEFICIT SHOULD BE CONSIDERED ONLY WITH RESPECT TO 1 %. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSER VED BY HIM THAT THE ISSUE WAS NOT WHETHER TAX HAD BEEN DEDUCTED AT 1% O R 2%. THE ISSUE WAS REGARDING THE DEFAULT MADE BY THE ASSESSEE IN C REDITING THE TAX DEDUCTED TO THE ACCOUNT OF CENTRAL GOVERNMENT WITHI N DUE DATE AND, THEREFORE, PROVISION OF SECTION 40(A)(IA) WERE ATTR ACTED. HE, THEREFORE, CONFIRMED THE DISALLOWANCE MADE BY THE AO AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAD NOT APPLIED THE CORRECT PROVI SION OF SECTION 40(A)(IA) WHICH HAD BEEN AMENDED AND AS PER THE AME NDED PROVISIONS, THE TIME FOR DEPOSIT OF TAX WITH THE CE NTRAL GOVERNMENT WAS AVAILABLE UPTO THE DATE OF FILING OF THE RETURN IN RESPECT OF TAX DEDUCTED IN THE MONTH OF MARCH AND IN OTHER CASE TH E AMOUNT WAS TO BE DEPOSITED BY THE END OF THE FINANCIAL YEAR. IT W AS POINTED OUT THAT OUT OF THE DISPUTED AMOUNT, ABOUT `. 65 LAKHS HAD BEEN CREDITED BY THE ASSESSEE TO THE ACCOUNT OF THE PARTIES ON THE L AST DATE OF THE FINANCIAL YEAR AND, THEREFORE, IN SUCH CASES, THE T IME WAS AVAILABLE TO THE ASSESSEE TILL THE DATE OF FILING THE RETURN OF INCOME, BUT THE DEPOSIT ITA NO : 352/MUM/2010 M/S. ARC CONSTRUCTION PVT. LTD. 4 HAD BEEN MADE MUCH BEFORE THAT, WHICH WAS CLEAR FRO M THE DETAILS GIVEN BY THE AO. IT WAS ACCORDINGLY, URGED THAT THE ORDER OF THE CIT(A) SHOULD BE SET ASIDE. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING THE DISALLOWANCE OF PAYMENTS OF COMMISSION MADE TO SUB-CONTRACTORS BY T HE ASSESSEE ON THE GROUND THAT TAX DEDUCTED BY THE ASSESSEE U/S.19 4C HAD NOT BEEN DEPOSITED WITH THE GOVERNMENT WITHIN THE DUE DATE. WE FIND THAT AS PER THE AMENDED PROVISIONS OF SECTION 40(A)(IA) APP LICABLE TO THE YEAR UNDER CONSIDERATION, IN CASE OF COMMISSION/BROKERAG E PAYMENTS TO THE CONTRACTOR OR SUB-CONTRACTOR ON WHICH TAX IS DE DUCTABLE, IF TAX DEDUCTED HAS NOT BEEN PAID TO THE GOVERNMENT BY THE END OF THE FINANCIAL YEAR IN RESPECT OF DEDUCTIONS MADE UPTO F EBRUARY OF THAT YEAR AND BY THE DUE DATE OF FILING THE RETURN OF IN COME IN RESPECT OF TAX DEDUCTED DURING THE LAST MONTH OF THE FINANCIAL YEAR, SUCH COMMISSION/BROKERAGE CANNOT BE ALLOWED AS DEDUCTION . THE AO HAS NOT GIVEN THE DATES OF DEDUCTION OF TAX AND, THEREF ORE, WE ARE NOT IN A POSITION TO ARRIVE AT A FINDING WHETHER THE DEPOSIT MADE BY THE ASSESSEE WITH THE CENTRAL GOVERNMENT WAS WITHIN THE DUE DATE OR NOT. THE LD. AR FOR THE ASSESSEE HAS POINTED OUT THAT TH E BULK OF THE PAYMENTS WERE CREDITED BY THE ASSESSEE TO THE ACCOU NTS OF THE PARTIES ONLY ON THE LAST DATE OF THE FINANCIAL YEAR AND, TH EREFORE, IN SUCH CASES, THE DEPOSITS WHICH HAD BEEN MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, WERE IN TIME. IN OUR OPINION, THE MATTER REQUIRES FRESH VERIFICATION. WE, THEREFORE, SET ASIDE THE OR DER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR PASSIN G AFRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF THE OBSERVATI ONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE AS SESSEE. ITA NO : 352/MUM/2010 M/S. ARC CONSTRUCTION PVT. LTD. 5 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 04 TH DAY OF JANUARY, 2012. S D/ - S D/ - ( R.S. PADVEKAR ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 04/01/2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI