M/s Om Trading Company, Kurukshetra V. ITO, Kurukshetra

ITA 368/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9208 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 12-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Retrospective amendment
• Section: 201(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MAHARISHTI PRASHAT KUMAR, ACCOUNTANT MEMBER ITA NO. 368/CHD/2016 ASSESSMENT YEAR: 2011-12 M/S OM TRADING COMPANY, VS. THE ITO, WARD-2, LADWA, KURUKSHETRA KURUKSHETRA PAN NO. AACFO1804A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ROHIT GOEL RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 01.08.2016 DATE OF PRONOUNCEMENT : .08.2016 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFT ER REFERRED TO AS CIT(A) - 2, GURGAON DATED 16.2.2016. THE ASSESSEE IN THIS AP PEAL HAS TAKEN FOUR GROUNDS OF APPEAL. 2. AT THE OUTSET, THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE HAS STATED AT BAR THAT AS PER THE INSTRUCTIONS OF HIS C LIENT, GROUNDS NOS. 1 TO 3 ARE NOT PRESSED. HE HAS ALSO SIGNED NOTING IN THIS RES PECT AGAINST THE RELEVANT GROUNDS TAKEN IN THE APPEAL MEMO. IN VIEW OF THE AB OVE, GROUND NOS. 1 TO 3 OF THE APPEAL ARE, THEREFORE, DISMISSED. 2 3. NOW WE ARE LEFT WITH ONLY GROUND NO.4 OF THE APP EAL. THE ASSESSEE IN THIS GROUND HAS AGITATED THE CONFIRMATION OF DISALLOWANC E OF RS. 13,08,469/- U/S 40(A)(IA) ON ACCOUNT OF PAYMENT MADE TO HAFED WITHO UT DEDUCTION OF TAX AT SOURCE. THE LD. AR HAS RELIED ON THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WHICH HAS BEEN INSERTED BY THE FINANCE ACT, 201 2 W.E.F. 1.4.2013, WHICH READS AS UNDER:- PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO D EDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN, FOR THE PURPO SE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HA S DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISH ING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO 4. THE LD. AR HAS FURTHER STATED THAT NOW THE VARIO US BENCHES OF THE TRIBUNAL AS WELL AS HON'BLE DELHI HIGH COURT HAS HE LD THAT THE ABOVE SAID PROVISO TO SECTION 40(A)(IA) OF THE ACT IS DECLARAT ORY AND CURATIVE IN NATURE AND HAS TO READ RETROSPECTIVELY W.E.F. IST APRIL, 2005 BEING THE DATE FROM WHICH SUB SECTION (IA) OF SECTION 40(A) WAS INSERTED BY T HE FINANCE ACT (NO.2) ACT, 2004. 5. THE LD. AR OF THE ASSESSEE HAS BROUGHT OUR ATTEN TION TO PAGE 57 OF THE PAPER BOOK WHICH IS A COPY OF THE CERTIFICATE ISSUE D BY THE PAYEE HAFED RICE SHELLER AT LADWA CERTIFYING THAT ASSESSEE M/S OM TR ADING COMPANY HAS PAID RS.13,08,469/- AS MILLING CHARGES TO THE SAID HAFED RICE MILLS AND THAT THE SAID INCOME HAS BEEN SHOWN IN THE PROFIT AND LOSS A CCOUNT OF FINANCIAL YEAR 2010-11 BY THE SAID HAFED RICE SHELLER. HE HAS ALS O PLACED RELIANCE ON PAGES 63 & 64 OF PAPER BOOK WHICH IS A C.A.S CERTIFICATE THAT THE PAYMENT MADE BY 3 THE ASSESSEE TO THE HAFED HAS BEEN OFFERED FOR TAXA TION IN ITS RETURN OF INCOME BY THE PAYEE HAFED. THE LD. AR HAS FINALLY RELIED UPON THE DECISION OF THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF M/S KURUKSHETRA DARPAN (P) LTD, KURUKSHETRA V ADDL CIT, IN ITA NO. 877/CHD/2008 DATED 16.11.2015, WHEREBY THAT THE COORDINATE BENCH OF TH E TRIBUNAL WHILE RELYING UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT I N THE CASE OF CIT V ANSAL LANDMARK TOWNSHIP (P) LTD IN ITA NO. 160/161 OF 201 5, VIDE ITS ORDER DT. 26.8.2015 WHEREIN IT HAS BEEN OBSERVED AS UNDER:- 4. IN THE ABOVE JUDGMENT, THE HON'BLE DELHI HIGH COURT HAS HELD THAT THAT THE SECOND PROVISO TO SECTION 40 (A) (IA) OF THE ACT IS DECLARATORY AND CURATIVE IN NATURE AND S HOULD BE GIVEN RETROSPECTIVE EFFECT FROM 1ST APRIL 2005 BEIN G THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INS ERTED BY THE FINANCE (NO. 2) ACT, 2004. IN THE ABOVE DECISI ON THE HONBLE HIGH COURT HAS CATEGORICALLY HELD THAT NO D OUBT, THERE IS A MANDATORY REQUIREMENT UNDER SECTION 201 TO DEDUCT TAX AT SOURCE UNDER CERTAIN CONTINGENCIES, BUT THE INTENTION OF THE LEGISLATURE IS NOT TO TREAT THE ASSESSEE AS A P ERSON IN DEFAULT SUBJECT TO THE FULFILLMENT OF THE CONDITION S AS STIPULATED IN THE FIRST PROVISO TO SECTION 201(1) O F THE ACT. THE FIRST PROVISO TO SECTION 201 (1) OF THE ACT WAS INSERTED WITH EFFECT FROM IST JULY 2012. 5. THE HON'BLE DELHI HIGH COURT HAS HELD THAT INSER TION OF THE SECOND PROVISO TO SECTION 40(A)(IA) IS ALSO REQUIRED TO BE VIEWED IN THE SAME MANNER. ACCORDING TO HON'BLE DELHI HIGH COURT THIS AGAIN IS A PROVISO INTENDED TO BENE FIT THE ASSESSEE. THE HONBLE HIGH COURT RULED THAT THE SEC OND PROVISO TO SECTION 40 (A) (IA) OF THE ACT IS DECLAR ATORY AND CURATIVE IN NATURE AND SHOULD BE GIVEN RETROSPECTIV E EFFECT FROM 1 ST APRIL 2005. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE HIGH COURT, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). 4 6. THE LD. DR HAS FAIRLY CONCEDED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT VS. ANSAL LANDMARK TOWNSHIP (P) LTD.(SUPRA) AS WELL AS BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S KURUKSHETRA DARPAN (P) LTD VS. ADDL CIT (SUPRA ). 7. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A SSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE THAT THE PAYEE HAS OFFERE D THE INCOME / AMOUNT RECEIVED FROM THE ASSESSEE FOR TAXATION IN ITS RETU RN OF INCOME AND IF THE CLAIM OF THE ASSESSEE IS FOUND CORRECT, THEN IN THE LIGHT OF THE ABOVE TWO DECISIONS ALLOW THE CLAIM OF THE ASSESSEE ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3.8.2016. SD/- SD/- (MAHARISHI PRASHANT KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03 AUGUST, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR