FURNITURE CONCEPTS (I) LTD, MUMBAI V. DCIT CIR 9(1), MUMBAI

ITA 3706/MUM/2011

• Counselvise Citation: 370619914 RSA 2011
• Duration Of Justice: 4 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 11-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MATNURIADR
• Assessee Lawyers: LATA SUNDER
• Keywords: Opportunity of being heard; Retrospective amendment; Revised return
• Section: 143(3); 194C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.3706/MUM/2011 ASSESSMENT YEAR 2007-08 M/S FURNITURE CONCEPTS (I) LTD. 1 ST FLOOR, VIKAS CENTER, S.V. ROAD, SANTACRUZ (WEST), MUMBAI-400054 / VS. ASST. COMMISSIONER OF INCOME TAX, RANGE-9(1), ROOM NO.223, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO. AABCC1243K ! ' / ASSESSEE BY MS. LATA SUNDER # / REVENUE BY M.S. MATNURIA-DR $ #% & ' ' / DATE OF HEARING : 08/10/2015 & ' ' / DATE OF ORDER: 13/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 17/02/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSEE WHICH WAS A L EGAL CLAIM AMOUNTING TO RS.1,79,24,751/-, MADE BY THE AS SESSEE. M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 2 2. DURING HEARING, THE CRUX OF ARGUMENT ADVANCED O N BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE FILED R EVISED COMPUTATION BEFORE THE LD. ASSESSING OFFICER WHICH WAS NOT CONSIDERED BY HIM AND FURTHER REVISED RETURN COULD NOT BE FILED AS TIME FOR FILING THE REVISED RETURN HAS ALR EADY BEEN ELAPSED. RELIANCE WAS PLACED UPON THE DECISION IN CIT VS PRUTHVI BROKERS AND SHARE HOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM.) AND ORDER OF THE TRIBUNAL IN CHICAGO PNEUMATIC INDIA LTD. VS DCIT 15 SOT 252 (BOM.). ON THE OTHER HAND, THE LD. DR, THOUGH DEFENDED THE CONCLUS ION ARRIVED AT IN THE IMPUGNED ORDER, BUT HAD NO OBJECT ION IF THE MATTER IS REMANDED TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH CONSIDERATION. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE, A LIMITED COMPANY, ENGAGED I N THE BUSINESS OF TRADING/RESELLING OF IMPORTED/LOCAL FUR NITURE AND OTHER RELATED ITEMS. THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR, FILED ITS RETURN ON 26/11/2007, DE CLARING NIL ASSESSABLE INCOME AFTER ADJUSTING THE PREVIOUS BROUGHT FORWARD LOSSES. THE RETURN WAS ACCOMPANIED BY AUDIT ED ACCOUNTS ALONG WITH AUDIT REPORT U/S 44AB OF THE IN COME TAX ACT, 1961 (HEREINAFTER THE ACT). SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING COURSE O F ASSESSMENT, THE COUNSEL FOR THE ASSESSEE REALIZED T HAT IN ORIGINAL COMPUTATION OF INCOME IN THE NET PROFIT, T HE ASSESSEE WRONGLY SHOWED RS.1,11,25,326/- WHICH WAS SET OFF B Y M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 3 CLAIMING LOSSES OF PREVIOUS YEAR INSTEAD OF NET LOS S OF RS.67,96,925/- AS THE COMPANY FAILED TO MAKE FURTHE R CLAIM ON ACCOUNT OF REMISSION BY BANK UNDER ONE TIME SETT LEMENT (OTS) OF RS.1,79,24,751/-. THE COUNSEL FOR THE ASSE SSEE, THEREFORE, VIDE LETTER DATED 14/10/2009 INFORMED TH E ASSESSING OFFICER OF THE CORRECTION, ACCORDINGLY, T HE CORRECTED COMPUTATION WAS FILED WITH A REQUEST TO TREAT THE S AME AS REVISED RETURN SINCE THE TIME LIMIT, PRESCRIBED FOR FILING THE REVISED RETURN, HAD ELAPSED. HOWEVER, THE ASSESSIN G OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT, BAS ED UPON, ORIGINAL COMPUTATION SHOWING NET PROFIT OF RS.1,12, 40,326/- AFTER DISALLOWING CERTAIN EXPENSES WHICH WERE SET O FF BY EARLIER LOSSES. ON APPEAL, THE CONCLUSION DRAWN BY THE ASSESSING OFFICER WAS AFFIRMED. THE ASSESSEE IS AGG RIEVED AND IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.2. NOW, QUESTION ARISES WHETHER THE REVISED COMPUTATION WAS TO BE CONSIDERED BY THE ASSESSING O FFICER SPECIALLY WHEN TIME FOR FILING REVISED RETURN HAD E LAPSED? UNDER THE FACTS, STATED HEREINABOVE, THE HONBLE BO MBAY HIGH COURT IN CIT VS PRUTHVI BROKERS AND SHARE HOLDERS P VT. LTD. (2012) 349 ITR 336 (BOM.) HELD THAT APPELLATE AUTHO RITIES HAVE POWER TO CONSIDER THE CLAIM NOT MADE IN THE RETURN BY FOLLOWING THE DECISION FROM HONBLE APEX COURT IN C IT VS GURJAGRAVUREOUS P. LTD. (1978) 111 ITR 1 (SC), WHE REIN, IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS, BEFORE THE APPELLATE AUTHORITIES, BUT ALSO ENTITLED TO RAISE ADDITIONAL CLAIM BEFORE THEM AND M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 4 FURTHER APPELLATE AUTHORITIES HAVE DISCRETION TO PE RMIT SUCH ADDITIONAL CLAIMS. THUS, WE ARE OF THE VIEW, THAT E VEN OTHERWISE, THE MANDATE OF THE CONSTITUTION IS TO LE VY AND COLLECT DUE TAXES, THEREFORE, WE REMAND THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF T HE ASSESSEE AFRESH AND DECIDE IN ACCORDANCE WITH LAW. THE ASSE SSEE BE GIVEN OPPORTUNITY OF BEING HEARD. THUS, THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT GROUND RAISED BY THE ASSESSEE PERTAINS TO SUSTAINING THE DISALLOWANCE AMOUNTING TO RS.1,12,50 0/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE IS THAT THE AMOUNT WAS DEPOSITED BEFORE FILING THE RETURN BY PL ACING RELIANCE UPON THE DECISION IN 43 SOT 619 (BOM.) AND 40 SOT 361 (BOM.). THE LD. DR DEFENDED THE CONCLUSION ARRI VED AT IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDE R, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, AND WITHOUT GOING INTO MUCH DELIBERATION, WE FIND THAT THE RATIO LAID DOWN BY THE HONBEL APEX COURT IN CIT VS ALOM EXTRUSIONS LTD. (2009) 319 ITR 306, WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENC ES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLI ES AN M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 5 OBVIOUS OMISSION THEREIN IS REQUIRED TO BE READ RET ROSPECTIVELY IN OPERATION , PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. AS PER THE SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WHEN TAX IS DEDUCTIBLE AT SOURCE ON THE PAYMENT UNDER CHAPTER XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID THEN THE SAID DEDUCTION IS NOT ALLOWABLE. AS PER THE SUB-CLAUSE (A) OF SUB-CLAUSE (IA) IF THE TAX IS DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN AS PE R THE PROVISIONS OF SECTION 139(1) THEN SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHERE THE TAX IS DEDUCTED D URING PREVIOUS YEAR OTHER THAN THE LAST MONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFORE, THE CONDITIONS FOR ALLOWABILITY OF THE DEDUCTION IS PRESCRIBED UNDER SECTION 40(A)( IA) ITSELF AND PROVISIONS OF CHAPTER XVII AND SECTION 194C UNDER C HAPTER XVII-B AT THAT RELEVANT POINT OF TIME ARE RELEVANT ONLY FOR THE PURPOSES OF ASCERTAINING THE DEDUCTIBILITY OF THE T AX ON THE PAYMENT. ONCE, THE NATURE OF PAYMENT IS FALLING UND ER THE PROVISIONS OF CHAPTER XVII/VIIB THEN THE DISALLOWAN CE UNDER SECTION 40(A)(IA) SHALL BE AS PER THE CONDITION AS PROVIDED UNDER THIS SECTION ITSELF. THE PROVISO TO SECTION 4 0(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN THE TAX HAS BEEN DEDUCTIBLE AS PER THE PROVISIONS OF CHAPTER XVII BU T DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR BUT PAID AFTER THE DUE DATE UNDER SEC TION 139(1) OR DEDUCTED DURING THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT PAID AFTER THE END OF THE SAI D PREVIOUS M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 6 YEAR THEN THE SAID SUM SHALL NOT BE ALLOWED AS DEDU CTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOW ED IN THE PREVIOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTION AND PAYMENT PRESCRIBED UNDER CHAPTER XVII/XVII-B ARE APPLICABLE FOR DISALLOWANCE OF THE DEDUCTION UNDER SECTION 40(A)(IA) THEN THE PROVISIONS OF SECT ION 40(A)(IA) WILL BE RENDERED AS MEANINGLESS, ABSURDITY AND ETIO SE. AS PER THE PROVISIONS OF SECTION 40(A)(IA) THE DEDUCTION I S DISALLOWED ONLY IN THE CASE WHEN EITHER NO TAX WAS DEDUCTED OR IT WAS NOT PAID AFTER DEDUCTION. BUT WHEN THE TAX IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY THEN DEDUCTION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS SO DEPOSITED. THEREFORE, IF THE PROVISIONS OF SECTION 194C WITH RESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE APPLIED FOR THE DISALLOW ANCE UNDER SECTION 40(A)(IA) THEN THERE WILL BE NO PURPO SE OR OBJECT FOR PROVIDING THE CERTAIN CONDITIONS OF ACTUAL DEDU CTION OF TAX AND PAYMENT OF TAX UNDER SECTION 40(A)(IA). IN OUR VIEW, THE PROVISIONS OF CHAPTER XVII ARE RELEVANT ONLY FOR AS CERTAINING THE DEDUCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISIONS OF SECTION 40(A)(IA). SINCE IN THE CASE IN HAND WHEN THE ASSES SEE HAD DEDUCTED THE TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E., MARCH 2005 AND DEPOSITED THE SAME BEFORE THE DUE DA TE OF FILING OF THE RETURN UNDER SECTION 139(1) THEN IT I S COVERED UNDER CLAUSE (A) OF SECTION 40(A)(IA). THEREFORE, W HEN THE ASSESSEE'S CASE COVERED UNDER THE MAIN PROVISIONS O F EXISTING LAW THEN WE NEED NOT TO GO TO THE ISSUE OF PROSPECT IVE OR RETROSPECTIVE EFFECT OF THE AMENDMENT IN THE PROVIS IONS BY THE M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 7 FINANCE ACT, 2010. AS REGARDS THE DECISION RELIED U PON BY THE LEARNED DR WHEN THE PROVISO TO SECTION 40(A)(IA) IS NOT CONTRARY TO THE MAIN SECTION/ENACTMENT THEN THE SAI D DECISION WILL NOT HELP THE CASE OF THE REVENUE. THE ASSESSEE FIND SUPPORT FROM THE DECISION OF THE TRIBUNAL IN BAPUSHAEB NANASAHEB DHUMAL VS ACIT (40 SOT 361)(BOM. TRIB .). SINCE, IT WAS NOT CONTROVERTED BY THE REVENUE THAT THE TAX SO DEDUCTED WAS DEPOSITED BEFORE FILING OF RETURN, THE REFORE, WE FIND MERIT IN THE GROUND OF THE ASSESSEE, CONSEQUEN TLY, IN VIEW OF THE AFORESAID DISCUSSION, THE GROUND RAISED BY T HE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 08/10/2015. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 13/10/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2' ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2' / CIT(A)- , MUMBAI 5. 4#5 /' , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI M/S FURNITURE CONCEPTS (I) LTD. ITA NO.3706/MUM/2011 8 6. 7 % / GUARD FILE. / BY ORDER, 04,' /' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI.