DCIT, Cochin V. M/s.Almark Housing Company Ltd, Cochin

ITA 357/COCH/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8782 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 12-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO.357/COCH/2014 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(2), KOCHI VS. M/S. ALMARK HOUSING COMPANY PVT. LTD., 5 TH FLOOR, SANTHI EMERALD, CHERUPARAMBATH ROAD, KADAVANTHARA, KOCHI-682 020. [PAN:AADCA 7644G] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI K.K. JOHN, SR. DR ASSESSEE BY SHRI C.B.M. WARRIER, CA DATE OF HEARING 12/012015 DATE OF PRONOUNCEMENT 06/02/2015 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 26-02- 2014 PASSED BY THE CIT(A)-II, KOCHI FOR THE ASSESSM ENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE GROUND WITH REGARD TO ALLOWABILITY OF EXPENDITURE THOUGH THE TDS WAS NOT REMITTED TO THE GOVERNMENT ACCOUNT AS REQUIRED WITHIN THE DUE DATE OF FILING OF RETURN AN D RESTRICTION OF DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT. I.T.A. NO.357/COCH/2014 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS MADE THE DISALLOWANCE U/S. 40(A)(IA) AS THE ASSESSEE COULD N OT FURNISH AND PROVE THAT THIS TAX WAS DEDUCTED AND PAID IN THE GOVERNMENT ACCOUNT BY THE DUE DATE OF FILING OF RETURN. THE FORM 3CD HAS ONLY MADE A DISALLOWAN CE OF RS.11,26,150/- WHEREAS THE TOTAL TAX DEDUCTED BUT NOT PAID BY THE DUE DATE OF FILING OF RETURN AMOUNTED TO RS.58,13,996/- AND HENCE THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.46,87,846/-. 4. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT REMITTED THE TDS AMOUNT WITHIN THE DUE DATE AS REQUIRED BY THE STATUTE. THE LD. DR RELIED ON THE DECISION OF THE SPECIAL BENCH OF THE ITAT, MUMBAI IN THE CAS E OF BHARATI SHIPYARD LTD. VS. DCIT (SB) (TRIB. MUMBAI) (132 ITD 53) WHERE IT WAS HELD THAT UPTO 1-4-2010 ASSESSEE DEDUCTING TAX AT SOURCE DURING THE FIRST 1 1 MONTHS OF THE PREVIOUS YEAR AND PAYING IT BEFORE CLOSE OF THE PREVIOUS YEAR WAS A REQUIREMENT FOR GRANTING DEDUCTION IN THE YEAR OF INCURRING SUCH EXPENDITURE . THE LD. DR SUBMITTED THAT THE AMENDMENT MADE W.E.F. 01-04-2010 ALLOWING THE A SSESSEE TO MAKE SUCH PAYMENTS BEFORE THE DUE DATE OF FILING SUCH RETURN IS PROSPECTIVE ONLY AND DOES NOT APPLY TO ASSESSMENT YEARS PRIOR TO 2010-11. IN THIS CASE, ACCORDING TO THE LD. DR, EXPENDITURE INCURRED DURING THE YEAR ENDING 31-03-2006, ON WHICH TAX HAS BEEN DEDUCTED AND PAID ON 20-04-2006, I.E., BEF ORE THE DUE DATE U/S. 139(1) FOR FILING THE RETURN OF INCOME FOR THE F.Y. 2006-0 7 CAN BE ALLOWED, ONLY IF SUCH I.T.A. NO.357/COCH/2014 3 EXPENDITURE WAS NOT INCURRED DURING THE FIRST 11 MO NTHS OF THE PREVIOUS YEAR AND WAS ONLY INCURRED DURING THE LAST MONTH OF THE PREV IOUS YEAR. 4. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS REMITTED THE TDS AMOUNT WITHIN THE DUE DATE OF FILING OF RET URN AND THE AMOUNT CLAIMED AS EXPENDITURE IS TO BE ALLOWED. THE LD. AR RELIED ON THE FOLLOWING CASE LAW: I) BANSAL P. ARIVAHAN (INDIA) (P) LTD. VS. ITO (53 DTR (MUMBAI) (TRIB.) 40). II) CIT VS. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC ). III)CIT VS. MOTHER INDIA REFRIGERATOR INDUSTRIE S (P) LTD. (1985) 48 CTR (SC) 176. IV)JAIPUR VIDYUT VITARAN NIGAM VS. DCIT (26 DTR (JP) (TRIB.) 79). 4. BEFORE THE CIT(A), THE ASSESSEE FILED COPY OF CH ALLANS WHEREIN VARIOUS TDS AMOUNTS PAID AND CREDITED ALONGWITH DATE OF TAX DEPOSITED IN THE GOVERNMENT ACCOUNT HAS BEEN FURNISHED. 5. HOWEVER, ON GOING THROUGH THE COPY OF CHALLANS, THE CIT(A) NOTICED THAT TOWARDS AMOUNT OF RS.6,66,328/-, TAX WAS DEPOSITED ON 20-04-2006, I.E., BEFORE DUE DATE OF FILING OF RETURN. THE CIT(A) ALSO FOUN D THAT AN AMOUNT OF RS.20,27,361/- AS TAX HAVE BEEN DEPOSITED ON 20/04/ 2006, I.E., BEFORE DUE DATE OF FILING OF RETURN AND HENCE THESE TWO AMOUNTS CAN NOT BE DISALLOWED U/S. 40(A)(IA). HOWEVER, FOR THE AMOUNT OF RS.3,12,686/ - AND 28,07,621/-, THE CIT(A) NOTICED THAT THE TAX WAS DEPOSITED ON 28.12. 2006. SINCE THE TDS DEDUCTED WAS PAID AFTER THE DUE DATE OF FILING OF R ETURN, THE SAME WAS NOT I.T.A. NO.357/COCH/2014 4 ALLOWABLE AS DEDUCTION, THE CIT(A) CONFIRMED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. THUS, OUT OF THE TOTAL DISALLOW ANCE OF RS.46,87,846/- MADE BY THE ASSESSING OFFICER, THE CIT(A) CONFIRMED THE ADD ITION OF RS.31,20,307/-. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. . AFTER HEARING BOTH THE PARTIES, WE ARE OF T HE OPINION THAT THIS ISSUE WAS CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF PRUDENTIAL LOGISTICS AND TRANSPORTS VS. ITO IN I.T.A. NO. 01 O F 2014 DATED 13 TH JAN. 2014 WHEREIN THE HIGH COURT IN PARAS 5 & 6 HAS OBSE RVED AS UNDER: 5. READING OF SECTION 40(A)(IA) ALONG WITH 2 ND PROVISO AND SEC. 201(1) ALONG WITH PROVISO, IT WOULD MEAN THAT THE MANDATE OR REQUIREMENT ON THE PART OF THE PAYER TO DEDUCT TAX AT SOURCE IS NO T SO STRICT IF THEY ARE ABLE TO SHOW THAT THE PAYEE OR THE RECIPIENT OF THE AMOUNT HAS PAID TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTION 201(1) AND THE PROVISO. 6. THIS WAS NOT THE CLAIM MADE BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER. THE CLAIM WAS ON A DIFFERENT STAND, INITI ALLY REFLECTING THE AMOUNTS AS LOAN IN THE ACCOUNT BOOKS THOUGH SHOWN A S FREIGHT CHARGES IN THE RETURNS AND LATER EXPLAINED THAT IT WAS NOT THE LOAN AMOUNT BUT FREIGHT CHARGES. IT WAS NEVER THE CASE OF THE ASSE SSEE THAT THERE WAS NO MANDATE SUBSEQUENT TO AMENDMENT, TO DEDUCT TAX A S TDS IN THE LIGHT OF ABOVE PROVISIONS. THE ASSESSMENT YEAR IN QUESTION IS 2007-08 AND THE AMENDMENT GIVING BREATHING SPACE TO PAYER O F AMOUNTS IS WITH EFFECT FROM 1.4.2013. THEREFORE, THE SAID BENEFIT IS NOT APPLICABLE TO THE ASSESSEE. EVEN OTHERWISE, ON FACTUAL SITUATION, THE VERY FACT THAT THESE AMOUNTS WERE CLAIMED AS LONG INITIALLY, TILL THE SE CURITY CAME UP FOR CONSIDERATION BEFORE ASSESSING AUTHORITY WOULD ONLY INDICATE THE REAL INTENTION OF THE ASSESSEE FIRM I.E., NOT TO DISCLOS E THIS AMOUNT AS FREIGHT CHARGES BUT SOMETHING ELSE AS REPAYMENT OF LOAN. I.T.A. NO.357/COCH/2014 5 7. IN VIEW OF THE ABOVE JUDGMENT OF THE JURISD ICTIONAL HIGH COURT, WE ARE INCLINED TO DECIDE THE ISSUE IN FAVOUR OF THE D EPARTMENT. ACCORDINGLY, THIS GROUND OF THE REVENUE IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. PRONOUNCED IN THE OPEN COURT ON 6TH -02-2015 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 6 TH FEBRUARY, 2015 GJ COPY TO: 1. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4( 2), KOCHI. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN