M/s. Chemfab Alkalis Ltd., CHENNAI V. ACIT, Pondicherry

ITA 387/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64597 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.387/MDS/2012 ASSESSMENT YEAR : 2008-09 M/S. CHEMFAB ALKALIS LTD., GNANANANDA PLACE, KALAPET, PONDICHERRY-605014. V. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-I, PONDICHERRY. (PAN :AAACC1957D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR,ADVOCATE RESPONDENT BY : SHRI ANIRUDH RAI, CIT DATE OF HEARING : 26-1 1-2012 DATE OF PRONOUNCEMENT : 26-11-201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-XII, CHENNAI DATED 12-12-2011 F OR THE ASSESSMENT YEAR 2008-09. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FILED R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 BY DECLARING TOTAL ITA NO.387/MDS /2012 2 INCOME OF ` 20,18,60,629/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED ORIGINALLY UNDER SECTION 143(1) OF TH E INCOME TAX ACT, 1961 ('THE ACT' FOR SHORT). SUBSEQUENTLY IT WAS TAKEN UP FOR SCRUTINY. THEREAFTER, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER HAS OBSERVED THAT THE ASSESSEE COMPANY HAD PAID RENT OF ` 2,50,000/- WITHOUT DEDUCTING TDS AND THE ASSESSING OFFICER DISALLOWED THE SAME UNDER SECTION 40(A)(IA) OF THE ACT. WHILE VERIFYING THE DETAILS FURNISHED IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD NOT DEDUCTED TDS OUT OF THE RENTAL PAYMENT MADE TO THE FOLLOWING PERSONS : 1. SHRI MAHESH KHANNA ` 1,25,000/- 2. SHRI DWARAKADAS KHANNA ` 1,25,000/- ACCORDING TO THE ASSESSING OFFICER AS PER THE PROVI SIONS OF SECTION 40(A)(IA) OF THE ACT, THE ABOVE AMOUNT OF ` 2,50,000/- FOR WHICH NO TDS HAD BEEN MADE, WAS NOT ALLOWABLE EXPENDITURE. HENCE THE SAME WAS DISALLOWED AND ADD ED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. THEREAFTER THE ASSESSEE CARRIED THE MATTER BEFOR E THE CIT(APPEALS). IT WAS SUBMITTED BEFORE THE LEARNED ITA NO.387/MDS /2012 3 CIT(APPEALS) THAT THE PROPERTY BELONGED TO 4 CO-OWN ERS NAMELY, SHRI DWARAKADAS T. KHANNA, SHRI MAHESH N. KHANNA, SHRI DINESH P. KHANA AND SHRI PRASHANT B. KHANNA. HENCE RENT PAID PER HEAD PER MONTH COMES TO ` 6,250/- ONLY AND THEREFORE NO TDS WAS REQUIRED TO BE DEDUCTED. IT W AS SUBMITTED BEFORE THE LEARNED CIT(APPEALS) THAT THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS NOT WARRAN TED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE RELEVANT PROVISIONS OF LAW THE LEARNED CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS PAID RENTALS OF ` 12,500/- PER MONTH TO EACH SHRI DWARAKADAS KHANNA AND SHRI MAHESH KHANNA. SINCE TH E RENT PAYABLE IS MORE THAN THE PRESCRIBED LIMITS IN EACH CASE, THE ASSESSEE WAS LIABLE FOR DEDUCTING TAX AT SOURCE. H ENCE HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. THEREAFTER THE ASSESSEE CARRIED THE MATTER BEFOR E THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAS ACTUALLY PAID PAYMENTS TO 4 PERSON S. SEC. 40(A)(IA) OF THE ACT HAS NO APPLICATION. ALTERNATI VELY, HE SUBMITTED THAT THE ASSESSEE HAD ALREADY PAID THE AM OUNTS AND THEREFORE AS PER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS, ITA NO.387/MDS /2012 4 VISAKHAPATNAM V. ADDITIONAL CIT IN ITA NO. 477/VIZ. /2008 (2012) 16 ITR (TRIB) 1 (VISAKHAPATNAM) (SB), SECTION 40(A)(IA) OF THE ACT HAS NO APPLICATION IN RESPECT OF THE PAYMENTS ALREADY MADE. 5. ON THE OTHER HAND, THE LEARNED DR SIMPLY SUPPORT ED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT PAYMENTS HAD ALREADY BEEN MADE. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS, VISAKHAPATNAM IN ITA NO. 477/VIZAG/2008 DATED 09-04-2012 (SUPRA) HAS HELD AS UNDER : THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTION OF TDS. ITA NO.387/MDS /2012 5 THEREFORE, RESPECTFULLY FOLLOWING THE SPECIAL BENCH DECISION OF THE TRIBUNAL, SUPRA, THIS GROUND OF APPEAL RAISED B Y THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 26 TH OF NOVEMBER, 2012, AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 26 TH NOVEMBER, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE