SHREEKISHAN JOSHI, MUMBAI V. DCIT 30(2), MUMBAI

ITA 378/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9912 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: ASHUTOSH MISHRA
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.378 /MUM/2016 (ASSESSMENT YEAR: 2010-11) SHRI SHREEKISHAN JOSHI VS. D C I T - 30(2) 922/923, 9TH FLOOR, CORPORATE AVENUE, SONAWALA ROAD GOREGAON (E), MUMBAI 400063 C - 13, 6TH FLOOR BANDRA KURLA COMPLEX MUMBAI 400051 PAN AABPJ7710M APPELLANT RESPONDENT APPELLANT BY: SHRI ASHUTOSH MISHRA RESPONDENT BY: SHRI T.A. KHAN DATE OF HEARING: 05.07.2017 DATE OF PRONOUNCEMENT: 14.07.2017 O R D E R PER D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-41, MUMBAI DATED 17.12.2015 FOR A.Y. 2010-11 . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING/CONFIRMING A SUM OF RS.7,69,835/- U/S. 40(A)(I) OF THE I T ACT AND THE REASONS ASSIGNED BY THE FOR DOING SO, WERE WHOLLY WRONG, IRRELEVANT, AND NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF I T ACT AND RULES MADE THERE UNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AUTHORITIES HAVE FURTHER ERRED IN DISALLOWING A SUM OF RS.2,00, 000/- ON AD- HOC BASIS FROM OUT OF LABOUR CHARGES AND THE REASON S ASSIGNED BY THEM, FOR DOING SO, WERE WHOLLY WRONG, IRRELEVAN T, AND NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF I T ACT AND RULES MADE THEREUNDER. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE D ID NOT DEDUCT TDS ON INTEREST PAID OR PAYABLE TO THE FOLLOWING PARTIE S: - ITA NO. 378/MUM/2016 SHRI SHREEKISHAN JOSHI 2 1. BAJAJ AUTO FINANCE LTD. ` 1,71,648/- 2. BOLERO LON M&M ` 72,140/- 3. CHOLAMANDALAM DBS ` 61,539/- 4. MAGMA FINCORP LTD. ` 1,00,688/- 5. RELIANCE CAP ` 1,82,826/- 6. RELIGARE FINVEST LTD. ` 1,38,014/- 7. TATA CAPITAL LTD. ` 42,980/- TOTAL ` 7,69,835/- THE AO WAS OF THE VIEW THAT SECTION 194A EXEMPT BAN KS AND FINANCIAL CORPORATIONS ESTABLISHED BY OR UNDER CENTRAL, STATE OR PROVINCIAL ACT FROM DEDUCTING TAX AT SOURCE. THE ASSESSEE FALLS UNDER T HIS CATEGORY, THEREFORE ASSESSEE WAS LIABLE TO DEDUCT TDS FROM INTEREST PAY MENTS TO THESE PARTIES UNDER SECTION 194A. HENCE THE AO DISALLOWED ` 7,69,835/- UNDER SECTION 40(A)(IA) OF THE ACT AND THE CIT(A) CONFIRMED THE S AME. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. HAVING HEA RD THE LEARNED D.R. WE ARE OF THE VIEW THAT THE ISSUE IN CONTROVER SY IS COVERED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. RAJINDER KUMAR IN ITA NO. 65/2013 WHEREIN IT IS HELD AS UNDE R: - THE INTENTION BEHIND SECTION 40(A)(IA) IS TO ENSUR E THAT TDS IS DEDUCTED AND PAID. THE OBJECT OF INTRODUCTION OF SE CTION 40(A)(IA) IS TO ENSURE THAT TDS PROVISIONS ARE SCRUPULOUSLY IMPLEME NTED WITHOUT DEFAULT IN ORDER TO AUGMENT RECOVERIES. IT IS NOT T O PENALISE AN ASSESSEE WHEN PAYMENT HAS BEEN MADE WITHIN THE TIME STATED. FAILURE TO DEDUCT TDS OR DEPOSIT TDS RESULTS IN LOSS OF REVENU E AND MAY DEPRIVE THE GOVERNMENT OF THE TAX DUE AND PAYABLE. THE PROV ISION SHOULD BE INTERPRETED IN A FAIR, JUST AND EQUITABLE MANNER. I T SHOULD NOT BE INTERPRETED IN A MANNER WHICH RESULTS IN INJUSTICE AND CREATES TAX LIABILITIES WHEN TDS HAS BEEN DEPOSITED/PAID AND TH E RESPONDENT WHO IS FOLLOWING CASH SYSTEM OF ACCOUNTANCY HAS MADE AC TUAL PAYMENT TO THE THIRD PARTY FOR SERVICES RENDERED. IF THE SAID OBJECT AND PURPOSE IS KEPT IN VIEW, WE DO NOT THINK THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING AND IN INVOKING SECTION 40(A)(IA) IN TH E PRESENT CASE. THE QUESTION OF LAW IS ACCORDINGLY ANSWERED IN NEGATIVE , I.E., IN FAVOUR OF THE RESPONDENT ASSESSEE AND AGAINST THE REVENUE. FOLLOWING THE ABOVE JUDGEMENT WE RESTORE THIS ISSUE TO THE FILE OF THE AO AND THE ASSESSEE IS DIRECTED TO PRODUCE THE EVIDENC E IF THE DEDUCTEES HAVE ITA NO. 378/MUM/2016 SHRI SHREEKISHAN JOSHI 3 ALREADY DEDUCTED TAX. IN THAT EVENT NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA). 5. SECOND GROUND RELATES TO THE DISALLOWANCE OF ` 2,00,000/- FROM LABOUR CHARGES. ASSESSEE HAS CLAIMED LABOUR CHARGES OF ` 5,37,13,014/- AND SUBSTANTIAL AMOUNT OF THIS EXPENDITURE WAS INCU RRED THROUGH SELF MADE VOUCHERS. THEREFORE, THIRD PARTY VERIFICATION WAS NOT POSSIBLE. HENCE THE AO DISALLOWED RS.2 LAKHS ON ESTIMATE BASIS. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HE ARD THE LEARNED D.R. AND GONE THROUGH THE ORDER OF THE CIT(A). BEFO RE THE CIT(A) THE ASSESSEE HAS REQUESTED TO RESTRICT THE DISALLOWANCE TO ` 1,00,000/- ON THE GROUND THAT THE BOOKS OF ACCOUNT ARE AUDITED AND AL L EXPENDITURES ARE FULLY VOUCHED. HAVING CONSIDERED THE FACTUAL MATRIX OF TH E MATTER WE ARE OF THE VIEW THAT THE ASSESSEES REQUEST IS JUSTIFIED, THER EFORE WE RESTRICT THE DISALLOWANCE OF LABOUR CHARGES TO ` 1,00,000/-. GROUND ALLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JULY, 2017. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 14 TH JULY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -41, MUMBAI 4. THE CIT - 24/30, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.