Backbone Tarmat JK oint Venture, Ahmedabad V. The Income tax Officer,Ward-92), Ahmedabad

ITA 3550/AHD/2008

• Counselvise Citation: 355020514 RSA 2008
• Duration Of Justice: 3 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 24-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MANDAL K PATEL
• Section: 234B; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 3549/ AHD/2008 (ASSESSMENT YEAR 2005-06) BACKBONE TARMAT N G JOINT VENTURE, A-9, KUMUD APARTMENTS, STADIUM, NAVRANGPURA, AHMEDABAD VS. ITO, WARD 9(2), AHMEDABAD PAN/GIR NO. : AAAAB4064A I.T.A. NO. 3550/ AHD/2008 (ASSESSMENT YEAR 2005-06) BACKBONE J.K. JOINT VENTURE, A-9, KUMUD APARTMENTS, STADIUM, NAVRANGPURA, AHMEDABAD VS. ITO, WARD 9(2), AHMEDABAD PAN : AAANB3885F (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI MANDAL K PATEL, AR RESPONDENT BY: SHRI MUDIT NAGPAL, DR DATE OF HEARING: 14.09.2012 DATE OF PRONOUNCEMENT: 12.10.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THESE TWO APPEALS ARE FILED BY TWO DIFFERENT ASSES SEES FOR THE SAME ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2005-06 AND TH ESE APPEAL WERE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) XV, AHMEDABAD BOTH I.T.A.NO.3549,3550 /AHD/2008 2 DATED 01.09.2008. BOTH THESE APPEALS WERE HEARD TOG ETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL OF THE ASSESSEE IN THE CASE OF BACKBONE TARMAT N G JOINT VENTURE IN I.T.A.NO. 3549/AHD/2008 . THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: I) THAT THE LD. CIT(A), HAS GRIEVOUSLY ERRED IN LA W AND ON FACTS IN HOLDING THAT THE APPELLANT ASSESSEE IS LIA BLE TO DEDUCT TAX AT SOURCE WITHIN THE MEANING OF SECTION 194C AN D THEREBY CONFIRMING THE ADDITION OF RS.36,81,88,846/ - MADE U/S 40(A)(IA) OF THE INCOME TAX ACT. II) THAT ON FACTS AND IN LAW IT OUGHT TO HAVE BEEN HELD THAT IT IS NOT A PAYMENT TO SUBCONTRACTOR BUT ONLY ALLOCATION OF RECEIPT TO MEMBERS OF ASSESSEE AOP, ON WHICH TAX IS NOT DED UCTIBLE AT SOURCE. III) THAT THE LD. CIT(A) OUGHT TO HAVE DELETED THE INTER EST CHARGED U/S 234B OF THE ACT, INSTEAD OF TREATING IT AS CONSEQUENTIAL IN NATURE. 2.1 IT WAS SUBMITTED BY THE LD. A.R. THAT IN THE PR ESENT CASE, THE DISPUTE IS REGARDING DISALLOWANCE MADE BY THE A.O. U/S 40(A)(IA) OF RS.36,81,88,846/-. HE FURTHER SUBMITTED THAT THE D ETAILS OF PAYMENT OF TDS BY THE ASSESSEE IS NOTED BY LD. CIT(A) ON PAGES 14 & 15 OF HIS ORDER. HE FURTHER SUBMITTED THAT FROM SL. NO.1-14, LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND HEN CE, THERE IS NO DISPUTE IN THE PRESENT APPEAL TOWARDS THIS AMOUNT. REGARDI NG SL. NO.15-22, IT WAS SUBMITTED THAT THE DISALLOWANCE FOR THESE ITEMS WERE MADE BY THE A.O. OF RS.32,18,58,199/- BUT SUCH DISALLOWANCE IS NOT JUSTIFIED IN VIEW OF THE RECENT DECISION OF HONBLE CALCUTTA HIGH COU RT RENDERED IN THE CASE OF VIRGIN CREATIONS (APPEAL NO.302 OF 2007)[G. A.NO.3200/2011] BECAUSE IT WAS HELD BY HONBLE CALCUTTA HIGH COURT IN THAT CASE THAT THE AMENDMENT IN SECTION 40(A)(IA) IS RETROSPECTIVE AND HENCE, IF THE TDS WAS DEPOSITED BY THE ASSESSEE IN THE GOVERNMENT ACC OUNT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, DISALLOWANCE U/ S 40(A)(IA) IS NOT CALLED I.T.A.NO.3549,3550 /AHD/2008 3 FOR. IT IS SUBMITTED THAT FORM SL. NO.15 -22, THE TDS WAS DEPOSITED BY THE ASSESSEE IN GOVERNMENT ACCOUNT ON 21.07.2005 TO 24.8.2005 WHICH ARE THE DATES BEFORE THE DUE DATE OF FILING OF RETU RN OF INCOME AND HENCE, NO DISALLOWANCE IS JUSTIFIED TO THIS EXTENT. 2.2 REGARDING SL. NO.23-24 INVOLVING AN AMOUNT OF R S.4,63,30,647/-, IT WAS SUBMITTED THAT OUT OF THIS AMOUNT, THE AMOUN T PAYABLE AS ON 31.03.2005 WAS ONLY RS.2,30,59,781/- AND IN SUPPORT OF THIS CONTENTION, HE SUBMITTED A COPY OF THE BALANCE SHEET OF THE ASS ESSEE AS ON 31.03.2005 ALONG WITH SCHEDULE II OF CURRENT LIABILITY. IT IS SUBMITTED THAT THE BALANCE AMOUNT WAS ALREADY PAID AND HENCE, FOR THAT PORTION , NO DISALLOWANCE IS JUSTIFIED AS PER THE DECISION OF SPECIAL BENCH OF T HE TRIBUNAL RENDERED IN THE CASE OF MARILYN SHIPPING & TRANSPORTS VS ACIT A S REPORTED IN 136 ITD 23 (VIZAG)(SB) HE SUBMITTED THAT IN VIEW OF TH IS DECISION OF SPECIAL BENCH OF THE TRIBUNAL DISALLOWANCE OF ONLY RS.2,30, 59,781/- CAN BE MADE. 2.3 LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BE LOW. 2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY LD. A.R. WE FIND THAT THE TOTA L AMOUNT IN DISPUTE IS OF RS.36,81,88,846/- FOR WHICH DISALLOWANCE WAS MAD E BY THE A.O. U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 ON THIS BASIS THAT TDS WAS NOT DEPOSITED BY THE ASSESSEE IN TIME AS REQUIRED. ON THIS ASPECT, WE FIND THAT NOW, FOR THE PART AMOUNT OF RS.32,18,58,199/- AS PE R SL. NO.15-22 ON PAGE 15 OF THE ORDER OF LD. CIT(A), TDS WAS DEPOSIT ED BY THE ASSESSEE IN THE GOVERNMENT ACCOUNT LATEST BY 24.08.2005 WHICH I S BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME AND AS PER THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF VIRGIN CREATIONS (SUPRA) AMENDMENT IN SECTION 40(A)(IA) WAS HELD AS RETROSPE CTIVE AND, THEREFORE, NO DISALLOWANCE IS CALLED FOR IN THE PRESENT CASE F OR THIS PART AMOUNT I.T.A.NO.3549,3550 /AHD/2008 4 BECAUSE TDS WAS DEPOSITED BY THE ASSESSEE IN THE GO VERNMENT ACCOUNT BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HONBLE CALCUTTA HIGH COURT, THIS PART DISALLOWANCE IS DELETED TO THE EXTENT OF RS.32,18,58,199/-. 2.4 FOR THE BALANCE AMOUNT OF DISALLOWANCE OF RS.4, 63,30647/- AS PER SL. NO.23-24 IN THE CHART APPEARING ON PAGE 15 OF T HE ORDER OF LD. CIT(A), WE FIND THAT LD. A.R. HAS PLACED RELIANCE O N THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MARILYN SHIPPING & TRANSPORTS VS ACIT (SUPRA). HE HAS ALSO POINTED O UT THAT AS ON 31.03.2005, ONLY AN AMOUNT OF RS.2,30,59,781/- WAS PAYABLE TO THE CREDITORS FOR LABOUR AS PER THE BALANCE SHEET AND S CHEDULE II OF THE CURRENT LIABILITY SUBMITTED BY HIM BEFORE US. AS PER THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL, DISALLOWANCE U/S 40(A)(IA) C AN BE MADE ONLY IN RESPECT OF THE AMOUNT PAYABLE ON THE LAST DAY OF PR EVIOUS YEAR AND NO DISALLOWANCE CAN BE MADE FROM THE AMOUNT ALREADY PA ID IN THE PREVIOUS YEAR. RESPECTFULLY FOLLOWING THIS DECISION OF SP ECIAL BENCH OF THE TRIBUNAL, WE CONFIRM THE DISALLOWANCE OF ONLY RS.2, 30,59,781/- BEING THE AMOUNT PAYABLE BY THE ASSESSEE TO THE CREDITORS FOR LABOUR WORK AS ON 31.03.2005 AND THE DISALLOWANCE OF BALANCE AMOUNT I S DELETED BECAUSE THE SAME WAS ALREADY PAID IN THE PREVIOUS YEAR ITSE LF AND NO DISALLOWANCE IS CALLED FOR IN RESPECT OF THIS PAID AMOUNT AS PER THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL. ACCORDINGLY, GROUND NO.1 IS PARTLY ALLOWED. 3. REGARDING GROUND NO.2, NO ARGUMENT WAS MADE BY T HE LD. A.R. AND HENCE, IT IS INFERRED THAT THIS GROUND IS NOT P RESSED AND ACCORDINGLY REJECTED AS NOT PRESSED. 4. AS PER GROUND NO.3, THE ISSUE IN DISPUTE IS REGA RDING CHARGING OF INTEREST U/S 234B, WHICH IS A CONSEQUENTIAL ISSUE A ND NO SEPARATE ADJUDICATION IS CALLED FOR. I.T.A.NO.3549,3550 /AHD/2008 5 5. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED. 6. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 3550/AHD/2008 IN THE CASE OF BACKBONE J K JOINT VEN TURE. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) THAT THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT IS LIABLE TO DEDUCT T AX AT SOURCE WITHIN THE MEANING OF SECTION 194C AND THEREBY CONFIRMING THE ADDITION OFRS.2,93,46,430/- MADE U/S 20(A)((IA) OF THE INCOM E TAX ACT, 1961. 2) THAT ON FACTS AND IN LAW IT OUGHT TO HAVE BEEN H ELD THAT IT IS NOT A PAYMENT TO SUB CONTRACTOR BUT ONLY ALLOCATION OF RECEIPT TO MEMBERS OF ASSESSEE AOP, ON WHICH TAX IS NOT DEDUCT IBLE AT SOURCE. 3) THE LD. CIT(A) OUGHT TO HAVE DELETED THE INTERES T CHARGED U/S 234B OF THE ACT, INSTEAD OF TREATING IT AS CONS EQUENTIAL IN NATURE. 6.1 IT WAS SUBMITTED BY THE LD. A.R. IN RESPECT OF THIS APPEAL THAT IT IS NOTED BY LD. CIT(A) ON PAGE 19 OF HIS ORDER THAT TH E TOTAL AMOUNT OF TDS WAS PAID BY THE ASSESSEE ON 31.10.2005 AND SINCE, T HIS WAS THE LAST DATE FOR FILING RETURN OF INCOME BY THE ASSESSEE, NO DIS ALLOWANCE IS JUSTIFIED U/S 40(A)(IA) AS PER THE RECENT JUDGEMENT OF HONBLE CA LCUTTA HIGH COURT RENDERED IN THE CASE OF VIRGIN CREATIONS (SUPRA). 6.2 LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BE LOW. 6.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF VIRGIN CREATIONS (SUPRA) SINCE IT WAS HELD BY HONBLE CALCUTTA HIGH COURT IN THAT CASE THAT AMENDMENT IN SECTION 40(A)(IA) IS RETROSPECTIVE AND THEREFORE, IF THE TDS IS DEPOSITED BY THE ASSESSEE BEFORE THE DUE DATE FO R FILING THE RETURN OF INCOME, NO DISALLOWANCE IS CALLED FOR U/S 40(A)(IA) . IN THE PRESENT CASE, ENTIRE AMOUNT WAS PAID BY THE ASSESSEE IN TIME I.E. BY 31.10.2005 AND THE DUE DATE FOR FILING RETURN OF INCOME WAS ALSO 31.10 .2005 AND THE ASSESSEE I.T.A.NO.3549,3550 /AHD/2008 6 FILED THE RETURN OF INCOME ON 31.10.2005 AND THEREF ORE, AS PER THIS JUDGEMENT OF HONBLE CALCUTTA HIGH COURT, THE DISAL LOWANCE MADE BY THE A.O. U/S 40(A)(IA) IS NOT SUSTAINABLE. OUT OF THE TOTAL DISALLOWANCE MADE BY THE A.O. OF RS.3,53,13,779/-, THE LD. CIT(A) HAS ALREADY ALLOWED PART RELIEF AND HAD CONFIRMED ONLY DISALLOWANCE OF RS.2, 93,46,430/-. NOW, WE DELETE THE BALANCE DISALLOWANCE ALSO. GROUND NO .1 IS ALLOWED. 7. FOR GROUND NO.2, NO ARGUMENT WAS MADE BY THE LD. A.R. AND HENCE, IT IS INFERRED THAT THIS GROUND WAS NOT PRES SED AND ACCORDINGLY REJECTED AS NOT PRESSED. 8. GROUND NO.3 IS REGARDING CHARGING OF INTEREST U/ S 234B BUT SINCE THIS ISSUE IS CONSEQUENTIAL, NO SEPARATE ADJUDICATI ON IS CALLED FOR. 9. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS AL SO PARTLY ALLOWED. 10. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED IN TERMS INDICATED ABOVE. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.3549,3550 /AHD/2008 7 1. DATE OF DICTATION 28/09/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08/10/2012 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 12/10/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.12/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 12/1 0/2012 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. .