M/S VIVEK CONSTRUCTION, KORBA(CG) V. DY.. C.I.T. CIRCLE, KORBA, KORBA(CG)

ITA 385/BIL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3532 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 17-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Keywords: Set aside
• Section: 40(a)(ia)

Judgement Text

1 ITA NO. 385/RPR/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.385/RPR/2014 ASSESSMENT YEAR : 2010 - 11. M/S VIVEK CONSTRUCTION, DY. COMMISSIONER OF INCOME - TAX, KORBA. VS. CIRCLE, KORBA. PAN AAFFV3390P. APPELLANT. RESPONDENT. APPELLANT BY : NONE. RESPONDENT BY : SHRI D.K. JAIN. DATE OF HEARING : 20 - 10 - 2016 DATE OF PRONOUNCEMENT : 3 RD NOV.2016. O R D E R. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS), BILASPUR DATED 25 - 04 - 2013 AND PERTAINS TO ASSESSME NT YEAR 2010 - 11. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE FINDING OF THE ASSESSING OFFICER WITHOUT PROPER EXAMINATION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5,45,064/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID TO VBFC (RS.5,45,064/ - ). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.2,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CAPITAL CONTRIBUTION MADE BY THE PARTNER SHRI VIKAS SINGH. 2 ITA NO. 385/RPR/2014. 2. APROPOS THE ISSUE OF ADDITION OF RS.5,45,064/ - U/S 40(A)(IA) OF THE I.T. ACT. ON THIS ISSUE THE ASSESSEE HAS DEBITED RS.5 , 4 5 ,064/ - AS INTEREST ON SE CURED LOANS. THE AO NOTED THAT THE TAX WAS NOT DEDUCTED ON THIS PAYMENT. HENCE HE DISAL LOWED THE PAYMENT INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) AFFIRMED THE AOS ACTION. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, IN MY CONSIDERED OPINION THE ISSUE CAN BE DISPOSED OF BY PERUSING THE RECORDS AND HEARING THE LEARNED D.R. 6. I FIND T HAT IN THIS CASE THE ASSESSEES PLEA IS THAT THE INTEREST PAYMENT HAS BEEN PAID AND THERE IS NO AMOUNT PAYABLE. HENCE THE PROVISION OF SECTION 40(A)(IA) ARE NOT APPLICABLE. I FIND THAT ON THIS ISSUE THERE ARE CONTRADICTORY DECISIONS OF HONBLE HIGH COURTS. BUT THERE IS NO JURISDICTIONAL HIGH COURT DECISION. IN SUCH CIRCUMSTANCES THE DECISION FROM THE HONBLE A PEX COURT COURT IN THE CASE OF CIT VS. VE GETABLE PRODUCTS LTD. 88 ITR 192 WILL APPLY . IN THIS DECISION THE HONBLE APEX COURT HAS EXPOUNDED THAT IF THERE ARE TWO CONSTRUCTIONS POSSIBLE, ONE IN FAVOUR OF THE ASSESSEE SHOULD BE ADOPTED. IN THIS REGARD I FIND THAT THE HONBLE ALLAHABD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES 357 ITR 642 HAS TAKEN A VIEW THAT SECTION 40(A)(IA) CAN BE INVOKE D ONLY IF THE AMOUNTS ARE PAYABLE, SLP AGAINST WHICH HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT IN CC NO. 8068/2014 VIDE ORDER DATED 02 - 07 - 2014. HENCE RESPECTFULLY FOLLOWING THE ABOVE DECISION I HOLD THAT SINCE THE AMOUNT INVOLVED HAS BEEN PAID AND N OTHING IS PAYABLE, THE AMOUNT CANNOT BE DISALLOWED U/S 40(A)(IA). HENCE I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AN D DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 3 ITA NO. 385/RPR/2014. 7. APROPOS THE ISSUE OF ADDITION OF RS.2 LAKHS BEING PARTNERS CAPITAL CONTRIBUTION: ON THIS ISSUE THE AO OBSERVED THAT ONE OF THE PARTNERS SHRI VIKAS SINGH INTRODUCED RS.2 LAKHS IN CASH. THE SOURCE OF CASH WAS EXPLAINED TO BE FROM SHRI VIKAS SINGH, PARTNER OUT OF HIS OPENING CASH BALANCE OF RS.4,35,096/ - . HOWEVER, THE AO WAS NOT SATISFIED A S HE INSISTED FOR DOCUMENTARY EVIDENCE AS TO WHEN CASH WAS WITHDRAWN FROM THE INDIVIDUAL CAPITAL ACCOUNT OF THE PARTNER AND INTRODUCED IN THE BOOKS OF ACCOUNTS OF THE FIRM. HENCE THE AO ADDED THE SAME AS UNDISCLOSED INCOME IN THE HANDS OF THE FIRM. 8. UPON ASSESSEES APPEAL LEARNED CIT(APPEALS) AFFIRMED THE ORDER REFERRING TO HONBLE PATNA HIGH COURT DECISION IN THE CASE OF CIT VS. HARDWARMAL ONKARMAL 102 ITR 779 (PAT.). 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 10. I HAVE HEARD THE LEARNED D.R. AND PERUSED THE RECORDS. I FIND THAT IN THIS CASE THERE IS NO AMBIGUITY ABOUT THE IDENTITY OF THE PARTNER AND CAPITAL INTRODUCED FROM HIM. IN SUCH CIRCUMSTANCES IF THE AO WAS OF THE OPINION THAT THE AMOUNT IS NOT PROVED IN THE HANDS OF THE PARTNER SHRI VIKAS SINGH, HE SHOULD HAVE CONSIDERED IT IN HIS INDIVIDUAL HANDS AND NOT IN THE HANDS OF THE FIRM. THIS VIEW IS DULY SUPPORTED BY HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. MET A CH E M INDUSTRIES 245 ITR 160. NO CONTRARY DECISION FROM THE HONBLE JURISDICTIONAL HIGH COURT HAS BEEN BROUGHT TO MY NOTICE. HENCE I FOLLOW THE HONBLE APEX COURT DECISION FROM VEGETABLE PRODUCT S (SUPRA) THAT WHEN TWO CONSTRUCTION ARE POSSIBLE, ONE IN FAVOUR OF THE ASSESSEE SHOULD BE ADOPTED . IN SUCH CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT I HOLD THAT THIS ADDITION IN THE HANDS OF THE FIRM IS NOT SUSTAINABLE. ACCORDINGLY I SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 4 ITA NO. 385/RPR/2014. 11. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 3 RD DAY OF NOV., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 3 RD NOV., 2016. COPY FORWARDED TO : 1. M/S VIVEK CONSTRUCTION, HOUSE NO. 128, BEHIND HOUSING BOARD COLONY, BALCO NAGAR, KORBA (CG). 2. D.C.I.T., KORBA. 3. C.I.T., BILASPUR. 4. CIT(APPEALS), BILASPUR. 5. D.R., ITAT, RAIPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.