M/s. RCL Exports, New Delhi V. ITO, New Delhi

ITA 3585/DEL/2012

• Counselvise Citation: 358520114 RSA 2012
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: KAPU AGGARWALAR
• Keywords: Retrospective amendment
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI I&SMC BENCH BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM ITA NO.3585/DEL/2012 ASSESSMENT YEAR: 2007-08 M/S RCL EXPORTS C-161, EAST OF KAILASH, NEW DELHI V/S . INCOME-TAX OFFICER, WARD 22 (4), NEW DELHI [PAN/GIR : AAFFR 3473 D] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI KAPU AGGARWAL,AR REVENUE BY MS. Y.S. KAKKAR, DR DATE OF HEARING 08-10-2012 DATE OF PRONOUNCEMENT 08-10-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 06.07.2012 BY THE ASSESSEE AG AINST AN ORDER DATED 24 TH APRIL, 2012 OF THE LD. CIT(A)-XXIII, NEW DELHI, RA ISES THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- X XIII, HAS ERRED IN CONFORMING THE DISALLOWANCES OF ` .2,62,394/- ON ACCOUNT OF LATE PAYMENT OF TDS U/S 40(A)(IA) WITHOUT CONSIDERI NG THE FACTS OF THE CASE. THE SUBMISSIONS MADE BY THE APPELLANT HAV E ARBITRARILY BEEN REJECTED. 2. THAT THE LEARNED HON'BLE COMMISSIONER WHILE DISA LLOWING THE SAID PAYMENT OF ` .2,62,394/- ON ACCOUNT OF DELAYED PAYMENT OF TDS HA S FAILED TO OBSERVE THAT THE APPELLANT HAS DEPOSITED THE SAID AMOUNT BEFORE DUE DATE OF FILING OF RETURN OR INCOME. ITA NO.3585DEL./2012 2 3. THE LEARNED OFFICER FAILED TO APPRECIATE THE AME NDMENT IN SECTION 40(A)(IA) HAS BEEN HELD RETROSPECTIVE IN NATURE TO BE MADE APPLICABLE FROM 01.04.2005 AS PER DECISIONS OF VARI OUS AUTHORITIES, 4. THAT THE ACTION OF LEARNED HON'BLE OFFICER SHOU LD NOT BE SUSTAINED ON GROUNDS OF JUSTICE. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` `49,203/- FILED ON 31 ST OCTOBER, 2007 BY THE ASSESSEE, AFTER BEING PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) WAS TAKEN UP FOR SCRUTINY WITH THE SERVICE O F A NOTICE U/S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER (A.O. IN SHORT) NOTICED THAT TDS ON CONTRACTUAL PAYMENTS OF ` ` 1,90,866/- IN TERMS OF PROVISION OF SECTION 194C OF THE ACT AND ON PROFES SIONAL/TECHNICAL PAYMENTS OF ` `71,528/- IN TERMS OF PROVISION U/S 194J OF THE ACT , WERE DEPOSITED IN THE SUBSEQUENT YEAR. ACCORDINGLY, WHILE REFERRING TO T HE PROVISIONS OF SECTION 40A(IA) OF THE ACT, THE AO DISALLOWED THE CLAIM FOR DEDUCTI ON OF ` ` 2,62,394/-. 3. ON APPEAL, THE LD. CIT(A) ADJUDICATED THE ISSUE IN THE FOLLOWING MANNER WHILE UPHOLDING THE DISALLOWANCE IN THE YEAR UNDER CONSIDERATION:- {5} ON THE ISSUE OF DEDUCTION OF EXPENDITURE ON WHICH TAX WAS DEDUCTED, BUT NOT DEPOSITED DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSING OFFICER HAS REPRODUCED CLAUSE (A)(IA) OF SECTION 40 IN THE BODY OF THE ORDER. THIS CLAUSE WAS SUBSTITUTED BY THE FINANCE ACT, 2008, WITH RETROSPECTIVE EFFECT FROM 01.04.200 5, WHEREIN IT IS CLEARLY PROVIDED THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ANY FEE FOR PROFESSIONAL OR TECHNICAL SERVICES, OR OF A MOUNTS PAYABLE TO A CONTRACTOR, ON WHICH TAX IS DEDUCTIBLE AT SOURCE, AND AFTER DEDUCTION, HAS NOT BEEN PAID, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. THE EXTENSION OF TIME FOR PAYMENT OF THE TAX DEDUCTED TILL THE DUE DATE FOR FILING OF THE RETURN OF INCOME APPLIES ONLY TO CASES OF TAX DEDUCTIBLE AND DEDUCTED IN THE LAST MONTH OF THE PREVIOUS YEAR. WHEREAS IN THIS CASE, TAX WAS DE DUCTED ON VARIOUS DATES DURING THE YEAR, AND NOT IN THE LAST MONTH, AND WAS THEREFORE REQUIRED TO BE DEPOSITED WITHIN THE YEAR, I.E. ON OR BEFORE 31.03.2007. THE APPELLANT HAS SOUGHT RELIEF UNDER A N UNNAMED DECISION OF THE ITAT, DELHI, HOWEVER, NO SUCH CASE HAS BEEN CITED. THE RELIANCE ON THE JUDGMENT OF TEJA CONSTRUCTIONS VS. DCIT [2010] 36 DTR 220 (HYD), IS ALSO MISPLACED. IN THE APPELLA NT'S CASE, THE TAX DEDUCTED REMAINED PAYABLE AT THE END OF THE YEA R. THE ITAT, ITA NO.3585DEL./2012 3 HYDERABAD HELD IN THAT CASE THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY IN RESPECT OF OUTSTANDING EXPEN SES ON WHICH TDS HAS NOT BEEN MADE. IN THIS CASE, THE APPELLANT HAD EITHER PAID THE AMOUNTS OR CREDITED THE ACCOUNTS OF THE PARTIES CONCERNED, DEDUCTED TAX ON BEHALF OF THE GOVERNMENT ON VARIOUS DATES BETWEEN 07.05.2006 AND 07.02.2007, BUT FAILED TO DE POSIT THE AMOUNTS TO THE CREDIT OF THE GOVERNMENT TILL THE CL OSE OF THE PREVIOUS YEAR. HENCE, THE FACTS OF THE CITED CASE L AW DIFFER FROM THAT OF THE APPELLANT. RELYING UPON THE CLEARLY WORDED PROVISIONS OF SECTION 40(A)(IA), THE APPELLANT IS NOT ENTITLED TO DEDUCTION OF THE AMOUNTS ON WHICH TAX WAS DEDUCTED, BUT NOT PAID AS ON 31.03.2007. HENCE, THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER OF RS.2,62,394/- IS CONFIRMED. HOWEVER, THE PROVISO TO SECTION 40(A)(IA) ALLOWS DEDUCTION OF THE TAX DEDUC TED DURING THE PREVIOUS YEAR, BUT PAID IN THE SUBSEQUENT YEAR, IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. THE APPELLANT MAY MAKE NECESSARY APPLICATION TO THE ASS ESSING OFFICER FOR DEDUCTION OF THE TAXES PAID IN THE FINANCIAL YE AR 2007-08 IN THE ASSESSMENT YEAR 2008-09. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. AR ON BEHALF OF THE ASSESSEE WHILE RELYING UPON A DECISION DATED 22.05.2012 IN THE CASE OF INC OME-TAX OFFICER VS. TARU LEADING EDGE (P) LTD. I.T.A. NO.3592/D/2011 FOR THE AY 2008-09 SUBMITTED THAT TDS HAVING BEEN DEPOSITED ON 29 TH MAY, 2007 I.E. BEFORE THE DUE DATE OF FILING THE RETURN, THE LD. CIT(A) WAS NOT JUSTIFIED IN DEN YING THE CLAIM FOR DEDUCTION IN THE YEAR UNDER CONSIDERATION. ON THE OTHER HAND, TH E LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE DEPOSITED TDS ON CONTRACTUAL PAYMENTS OF ` ` 1,90,866/- IN TERMS OF PROVISION OF SECTION 194C O F THE ACT AND ON PROFESSIONAL/TECHNICAL PAYMENTS OF ` ` 71,528/- IN TERMS OF PROVISION U/S 194J OF THE ACT , ON 29 TH MAY, 2007 I.E. BEFORE THE DUE DATE OF FILING THE R ETURN ON 31 ST OCTOBER, 2007. THE ISSUE BEFORE US IN THIS CASE IS AS TO WHETHER AMENDMENT MADE TO THE PROVISIONS OF SECTION 40A(IA) OF THE AC T BY THE FINANCE ACT,2010, WOULD APPLY WITH RETROSPECTIVE EFFECT FROM 1.4.2005 OR W.E.F 1.4.2010. WE FIND ITA NO.3585DEL./2012 4 THAT VARIOUS CO-ORDINATE BENCHES OF THE ITAT IN TH EIR DECISION DATED 16.12.2010 IN KULWANT SINGH VS. ITO IN ITA NO.2191/AHD./2008 F OR THE AY 2005-06, DECISION DATED 22.9.2010 IS IN THE CASE OF BANSAL PARIVAHAN (INDIA) P LTD. VS. ITO IN ITA NO.2355/MUM/2010 FOR THE AY 2006-07AND THE DECISIO N DATED 3.12.2010 IN THE CASE OF SHRI KANUBHAI RAMJIBHAI MAKWANA IN ITA NO.3 983/AHD./2008 FOR THE AY 2005-06 HELD THAT THE SAID AMENDMENT WOULD OPERATE RETROSPECTIVELY W.E.F 1.4.2005.SUBSEQUENTLY, SPECIAL BENCH IN BHARATI S HIPYARD LTD. VS. DCIT ,13 TAXMANN.COM101(MUM)(SB) VIDE THEIR. ORDER DATED 9.9 .2011 HELD THAT THE AFORESAID AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 WAS APPLICABLE PROSPECTIVELY. LATER, HONBLE CALCUTTA HIGH COURT IN THEIR DECISION DATED 23.11.2011 ITA NO. 302 OF 2011 GA 3200/2011 IN CIT VS. VIRGIN CREATIONS, HELD THAT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)( IA) OF THE ACT, BY THE FINANCE ACT, 2010 AS AFORESAID WAS RETROSPECTIVE FROM 1.4. 2005. THE LD. AR POINTED OUT THAT THIS IS THE SOLE DECISION RENDERED BY A HIGH C OURT AT THE MOMENT ON THE ISSUE. FOLLOWING THE VIEW TAKEN IN THIS DECISION, A CO-ORDINATE BENCH IN THEIR DECISION DATED 11.4.2012 IN PIYUSH C. MEHTA VS. AC IT NO.1321/MUM./2009 FOR THE AY 2005-06 AND THE DECISION DATED 10.5.2012 IN ITA NO. 717/BANG/2011FOR THE AY 2008-09 IN ACIT VS. M.K. GURUMURTHY ALSO HEL D THAT THE AFORESAID AMENDMENT IS APPLICABLE RETROSPECTIVELY W.E.F 1.4. 2005.. 5.1 IN VIEW OF THE FOREGOING, FOLLOWING THE VI EW TAKEN IN THE AFORESAID DECISION OF THE HONBLE CALCUTTA HIGH COURT IN VIRGIN CREAT IONS(SUPRA) , WE ARE OF THE OPINION THAT THE AMENDMENT TO THE PROVISIONS OF SEC .40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS APPLICABLE RETROSPECTIVELY FRO M 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT, CANNOT BE DISALLOWED IN TERMS OF PROVISIONS OF SEC.40A(IA) OF THE ACT. INDISPUTABLY, IN THE INSTAN T CASE THE ASSESSEE DEPOSITED THE TAX DEDUCTED AT SOURCE ON 29.5.2007 I.E. BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT . IN THIS SITUATION , ESPECIALLY WHEN THE REVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISIO N, WE ARE NOT INCLINED TO ITA NO.3585DEL./2012 5 INTERFERE WITH THE FINDINGS OF THE LD. CIT(A).IN VI EW THEREOF, GROUND NOS.1 TO 3 IN THE APPEAL ARE ALLOWED. 6. GROUND NO.4 IN THE APPEAL BEING GENERAL IN NATU RE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION, AND IS, THEREFORE, DISMI SSED. . 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 8. IN RESULT, APPEAL IS ALLOWED. SD/- SD/- (I.C. SUDHIR) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. INCOME-TAX OFFICER,WARD 22 (4),NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XXIII, NEW DELHI 5. DR, ITAT, I &SMC BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT