Baba Logistics, Cuttack V. ITO, Bhubaneswar

ITA 370/CTK/2011

• Counselvise Citation: 37022114 RSA 2011
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-08-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: C R DASD K PARIDAARS
• Keywords: Retrospective amendment

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 370 /C T K/2011 (ASSESSMENT YEAR 2007 - 08) BABA LOGISTICS, PLOT NO.797, SAHID NAGAR, BHUBANESWAR 751 007 PAN: AAIFBV 0111 H VER SUS INCOME - TAX OFFICER , WARD 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI C.R.DAS/D.K.PARIDA,ARS FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 25.06.2012 DATE OF PRONOUNCEMENT : 13.07.2012 ORDER SHRI K .K.GUPTA, AM : THE ASSESSEE HAS COME UP IN THE PRESENT APPEAL AGAINST DISALLOWANCE OF 1,36,10,000 U/S.40(A)(IA) OF THE I.T.ACT,1961 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 2. THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE FIRM RECEIVED A SUM OF 1,37,40,322 FROM ONE J.N.PATTNAIK OF KEONJHAR TOWARDS EXECUTION OF TRANSPORT CONTRACT WORKS. FOR EXECUTION OF THE SAID TRANSPORT C ONTRACT WORKS , THE ASSESSEE ENGAGED M/S. NIRUPAMA TRANSPORT OF CHANDIKHOL AND MADE PAYMENT ON DIFFERENT DATES AS FOUND FROM THE CREDIT ENTRIES IN THE LEDGER ACCOUNT TOTALING 1,36,46,211 DURING THE PERIOD FROM 28.6.2006 UP TO 10.11.2006, ON WHICH THE ASSE SSEE DEDUCTED TDS OF 38,277 ON 31.3.2007 AND DEPOSITED THE SAME IN GOVT. EXCHEQUER ON 13.5.2007. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TAX DEDUCTED AT SOURCE ON 31.3.2007 SHOULD HAVE BEEN DEPOSITED INTO THE CENTRAL GOVERNMENT ACCOUNT N THE SAME DAY ITSELF SO THAT THE EXPENSES MADE UP TO FEBRUARY,2007 WITH REGARD TO TDS PROVISION COULD HAVE BEEN REGULARIZED AS PER PROVISIONS OF CHAPTER XVII - B . THE ASSESSING OFFICER OBSERVED THAT THE TAX DEDUCTED ON 31.3.2007 AND DEPOSITED ON 13.6.2007 LAW ALLOWS A SSESSEES ITA NO.370/CK/2011 2 EXPENDITURE FOR THE MONTH OF MARCH, 2007 BUT NOT FOR THE EARLIER MONTHS. THE ASSESSEE HAS NOT MADE ANY EXPENDITURE IN THE MONTH OF MARCH, 2007. THEREFORE, HE CONCLUDED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF CHAPTER XVII - B OF THE I.T.ACT AND ACCORDINGLY DISALLOWED THE EXPENDITURE ON TRANSPORT CHARGES OF 1,36,10,000 U/S.40(A)(IA) AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CIT(A) WAS OF THE OPINION THAT THE DEDUCTION OF TAX AT SOURCE IS REQUIRED TO BE M ADE FROM THE PAYMENT AT THE TIME OF SUCH PAYMENT. IN OTHER WORDS THE AMOUNT PAYABLE IS TO BE REDUCED BY THE TAX DEDUCTION. FURTHER THE LEARNED CIT(A) NEGATED THE CONTENTION OF THE ASSESSEE THAT SINCE THE ASSESSEE HAS DEPOSITED THE TAX DEDUCTED AT SOURCE WI THIN THE DUE DATE OF FILING THE RETURN, NO DISALLOWANCE COULD BE MADE IN VIEW OF THE AMENDMENT IN SECTION 40(A)(IA) BROUGHT BY FINANCE ACT,2010 W.E.F. 1.4.2010. THE LEARNED CIT(A) WAS OF THE VIEW THAT THIS AMENDMENT WAS TO TAKE EFFECT ONLY FROM 1.4.2010 AN D NOT EARLIER. HE CONFIRMED THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER. 3. THE LEARNED AR OF THE ASSESSEE REITERATED THE CONTENTION AS MADE BEFORE THE LEARNED CIT(A) THAT SINCE THE ASSESSEE HAS PAID THE TAX DEDUCTED AT SOURCE WITHIN THE DUE DATE OF FILING THE RETURN, THE DISALLOWANCE AS MADE BY THE AUTHORITIES BELOW ARE NOT JUSTIFIED. HE PLACED RELIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS IN ITAT NO.302 OF 2011 DT.23.11.2011 DOWNLOADED FROM WWW.ITATONLINE.ORG (COPY PLACED ON RECORD). THE LEARNED DR ON THE OTHER HAND CONTENDED THAT THE AMENDMENT TO SECTION 40(A)(IA) OF THE I.T.ACT,1961 IN FINANCE ACT, 2010 W.E.F. 1.4.2010 WITH RETROSPECTIVE EFFECT FROM 1.4.2005 IS PROSPECTIVE AS HELD BY THE SPECIAL BENCH OF ITAT IN THE CASE OF BHARATI SHIPYARD LTD V. DCIT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS UNDISPUTED ARE THAT THE ASSESSEE HAS PAID TO ITA NO.370/CK/2011 3 M/S. NIRUPAMA TRA NSPORT OF CHANDIKHOL ON DIFFERENT DATES DURING THE PERIOD FROM 28.6.2006 UP TO 10.11.2006 TOTALLING 1,36,10,000 AND DEDUCTED TDS AMOUNT ON 1.3.2007 AND DEPOSITED THE SAME ON 13.6.2007, WHICH IS WELL BEFORE THE DUE DATE OF FILING OF THE RETURN. HONBLE KO LKATA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS (SUPRA) FOLLOWED THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD., AND ALOM EXTRUSIONS LTD WHEREIN RETROSPECTIVE APPLICATION OF SECTION 40(A)(IA) HAS BEEN CONSIDERED IN F A VOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE SAID DECISION OF HONBLE KOLKATA HIGH COURT IS QUOTED HEREUNDER : THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE III JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME C OURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. IN A NUMBER OF CASES ON SIMILAR SUCH FACTS AS IN THE PRESENT CASE, THIS TRIBUNAL IN EARLIER OCCASION S HAS HELD THAT THE AMENDMENT BROUGHT ABOUT BY THE FINANCE ACT, 2010 W.E.F. 1.4.2010 HAS TO BE TREA TED AS RETROSPECTIVE W.E.F. 1 ST APRIL, 2005, THE DATE ON WHICH SECTION 40(A)(IA) HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT,2004. IN VIEW OF THE ABOVE, SINCE IN THE INSTANT CASE THE ITA NO.370/CK/2011 4 ASSESSEE HAS ADMITTEDLY DEPOSITED THE TAX DEDUCTED AT SOURCE WELL BEFORE THE DUE DATE OF FILING OF RETURN, THE DISALLOWANCE MADE U/S.40(A)(IA) CANNOT BE SUSTAINED AND AS SUCH, WE DIRECT DELETION OF THE ADDITION OF 1,36,10,000 MADE TO THE TOTAL INCOME OF THE ASSESSEE ON THIS SCORE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 13.07.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: BABA LOGISTICS, PLOT NO.797, SAHID NAGAR,BHUBANESWAR 751 007 2. THE RESPONDENT: INCOME - TAX OFFICER , WARD 2(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY. APPEN DIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 25.06.2012 .. 2. DATE ON WHICH THE TY PED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9.7.2012 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 DICTATING MEMBER FOR PRONOUNCE MENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.07.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..