DCIT 8(3), MUMBAI V. ROHM & HAAS (I) P. LTD, MUMBAI

ITA 4026/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92278 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Depreciation
• Section: 143(3); 194C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 4026/MUM/2011 ASSESSMENT YEAR: 2005-06 DCIT - 8(3) R. NO.217 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020 VS. ROHM & HAAS (INDIA) PVT. LTD. 121/122 SOLITAIRE CORPORATE PARK ANDHERI (E) MUMBAI 400 096 PAN:AAACR 2855 F (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI M. P. LOHIA REVENUE BY : SHRI LOVE KUMAR DATE OF HEARING : 19.03.2015 DATE OF PRONOUNCEMENT : 10.04.2015 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST ORDER DATED 02.02.2011, PASSED BY THE LD.CIT(A)-18, FOR T HE QUANTUM OF ASSESSMENT PASSED U/S 143(3) OF THE ACT FOR THE A.Y . 2005-06. 2. IN GROUND NO. 1 AND 2, REVENUE HAS CHALLENGED TH E DISALLOWANCE U/S 40(A)(IA) OF RS.54,12,000/-, BEING THE PRINCIPA L AMOUNT ADOPTED BY THE AO, CORRESPONDING WITH THE EXCESS TDS OF RS.2,7 0,613/- CLAIMED TO BE REVERSAL OF EXCESS TDS. 3. IN GROUND NO. 3 AND 4, THE REVENUE HAS CHALLENGE D THE DIRECTION OF THE LD. CIT(A), FOR ALLOWING THE DEDUCTION ON AC COUNT OF LEGAL AND PROFESSIONAL CHARGES. ITA NO. 4026/MUM/2011 ASSESSMENT YEAR: 2005-06 2 4. BRIEF FACTS RELATING TO GROUND NO. 1 AND 2 ARE T HAT, ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEED INGS, FROM THE DETAILS OF OTHER LIABILITIES NOTED THAT AN AMOUNT O F RS.44,63,919/- HAS BEEN SHOWN THERE ON ACCOUNT OF TDS, WHEREAS, THE AS SESSEE HAS FILED THE DETAILS IN RESPECT OF PAYMENT OF TDS OF RS.41.9 4 LAKHS. REGARDING THE BALANCE AMOUNT, THE ASSESSEE STATED THAT SAME W AS IN THE NATURE OF EXCESS PROVISIONS MADE WHICH HAS BEEN REVERSED. HE NOTED THAT THE ASSESSEE COULD NOT FILE THE DETAILS IN RESPECT OF T HE PRINCIPAL AMOUNT INVOLVED AND HOW IT WAS IN THE NATURE OF EXCESS PRO VISION AND WHY THE SAME HAS BEEN REVERSED. THE PRINCIPAL AMOUNT ON THE BASIS OF TDS AMOUNT, HE HELD THAT WILL COME TO RS.54.12 LAKHS, W HICH SHALL BE DISALLOWED U/S 40(A)(IA). HE FURTHER NOTED THAT ASS ESSEE HAS MADE PAYMENT OF RS.14.02 LAKHS TO CONTRACTORS WHICH HAS BEEN CAPITALIZED AS PART OF FIXED ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED. IT WAS SUBMITTED BY THE ASSESSEE THAT SAME IS OUTSIDE THE PURVIEW OF SECTION 40(A)(IA) AS THE SAME WAS NOT CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME. THE ASSESSING OFFICER HELD THAT SECTION 194C PROVIDES THAT ASSESSEE WAS LIABLE TO DEDUCT TDS ON THE SAID AMOUN T AND THEREFORE, THE CLAIM OF DEPRECIATION FOR 25% WHICH WAS RS.3,51 ,447/- WOULD BE DISALLOWED U/S 40(A)(IA). 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT UNDER THE HEAD OTHER LIABILITIES APPEARING IN THE BALANCE SHEET, A N AMOUNT OF RS.44,63,919/- WAS SHOWN ON ACCOUNT OF TDS. THE APP ELLANT HAS REVERSED CERTAIN PROVISION OF EXPENSES DURING THE Y EAR AND ACCORDINGLY, THE CORRESPONDING TDS AMOUNT WAS ALSO REVERSED. SI NCE THE ASSESSEE AS REVERSED THE EXPENSES THE SAME WAS NOT CLAIMED A S DEDUCTION. THUS, THE DISALLOWANCE MADE BY THE AO SHOULD BE DELETED. REGARDING ITA NO. 4026/MUM/2011 ASSESSMENT YEAR: 2005-06 3 DISALLOWANCE OF DEPRECIATION HE SUBMITTED THAT SAME COULD NOT HAVE BEEN DISALLOWED U/S 40(A)(IA), BECAUSE THE ASSESSEE HAS CAPITALIZED THE PAYMENT AS PART OF FIXED ASSETS. THE LD. CIT(A) AFT ER CONSIDERING THE ENTIRE FACTS HAS CONFIRMED THE DISALLOWANCE OF DEPR ECIATION OF RS.3,51,447/-, HOWEVER, HAS DELETED THE DISALLOWANC E TO RS.54,12,000/- AFTER OBSERVING AND HOLDING AS UNDER:- ON THE ISSUE OF THE DISALLOWANCE OF RS.54,12,000/- ON ACCOUNT OF REVERSAL OF EXCESS TDS OF RS.2,70,613/-, THE AO HAS MENTIONED THAT THE ASSESSEE HAS NOT FILED DETAILS IN RESPECT TO THE PRINCIPAL AMOUNT INVOLVED AND WHY EXCESS PROVISION SHOULD BE REVERSED. THE AO ESTIMATED THE PRINCIPAL AMOUNT AT RS.54.12 L AKHS AND DISALLOWED U/S 40(A)(IA). THE APPELLANT HAS EXPLAIN ED THAT OUT OF TOTAL OTHER LIABILITIES APPEARING IN THE BALANCE SH EET, AN AMOUNT OF RS.44,63,919/- WAS SHOWN ON ACCOUNT OF TDS. THE APP ELLANT HAS PAID TDS OF RS.41.94 LAKHS AND THE AO ALSO HAS OBSE RVED THAT THE APPELLANT FILED DETAILS WITH RESPECT TO PAYMENT OF RS.41.94 LAKHS. THE AMOUNT OF PROVISION OF TDS, WHICH REMAIN ED UNUTILIZED I.E. THE AMOUNT OF RS.2,70,613/- REPRESENT EXCESS P ROVISION MADE UNDER THE HEAD OTHER LIABILITIES IN THE BALANCE SHE ET. THE REVERSAL OF EXCESS PROVISION OF TDS DOES NOT ATTRACT PROVISI ONS OF SECTION 40(A)(IA) AND THE ACTION OF THE AO TO ESTIMATE THE PRINCIPLE AMOUNT AT RS.54.12 LAKHS AND MAKING DISALLOWANCE U/ S 40(A)(IA) IS FOUND TO BE NOT VALID HENCE THE ADDITION IS DELE TED. 6. REGARDING DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES, WHICH WAS MADE BY THE AO, THE LD. CIT(A), DIRECTED THE AO TO VERIFY THE SAME AS THE ASSESSEE HAS FILED THE INVOICES BEFORE THE A O ALONG WITH THE PETITION/APPLICATION U/S 154. THE RELEVANT OBSERVAT IONS ARE AS UNDER:- GROUND NO. 8 IS REGARDING DISALLOWANCE OF LEGAL AN D PROFESSIONAL CHARGES AMOUNTING TO RS.20,82,784/-. THE AO HAS DIS CUSSED THIS ISSUE AT PARA-9 OF THE ASSESSMENT ORDER. THE AO ASK ED FOR COPIES OF BILLS OF GGI SERVICES CLEARING & FORWARDING PVT. LTD. OF RS.14,50 LAKHS AND S. NANDKUMAR OF RS.6.33 LAKHS. I N COURSE OF ASSESSMENT PROCEEDINGS THE BILLS COULD NOT BE PRODU CED, THE AO THEREFORE MADE DISALLOWANCE. AS THE APPELLANT HAD A LREADY FILED WRIT PETITION U/S 154 ALONG WITH COPIES OF INVOICES OF THESE TWO PARTIES, THE AO SHALL RECTIFY THE MISTAKE. ITA NO. 4026/MUM/2011 ASSESSMENT YEAR: 2005-06 4 7. AFTER HEARING BOTH THE PARTIES IT IS SEEN THAT, SO FAR AS DELETION OF DISALLOWANCE U/S 40(A)(IA) OF RS.54,12,000/-, THE A SSESSEE HAS REVERSED SOME OF THE EXPENSES IN ITS ACCOUNT AND ACCORDINGLY , THE CORRESPONDING TDS AMOUNT HAS ALSO BEEN REVERSED. SUCH A REVERSAL OF EXCESS PROVISION OF TDS CANNOT ATTRACT PROVISION OF SECTION 40(A)(IA ) BECAUSE THERE IS NO CLAIM FOR CORRESPONDING EXPENSES AS DEDUCTION. ACCO RDINGLY, FINDING OF THE LD. CIT(A) IS AFFIRMED. 8. REGARDING DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES, IT IS SEEN THAT ASSESSEE HAS FILED THE INVOICES BEFORE TH E AO, ALONG WITH THE APPLICATION U/S 154. THE LD. CIT(A) HAS MERELY DIRE CTED THE AO TO RECTIFY THE MISTAKE AFTER CONSIDERING THE COPIES OF INVOICE S. THUS, THERE IS NO ILLEGALITY IN SUCH A DIRECTION OF THE LD. CIT(A). A CCORDINGLY, THE DIRECTION OF THE LD. CIT(A) IS AFFIRMED AND AO IS DIRECTED TO CONSIDER THE INVOICES WHILE ADJUDICATING THE PETITION OF THE ASSESSEE. AC CORDINGLY, REVENUES APPEAL IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF APRIL, 2015. SD/- SD/- (B.R. BASKARAN) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 10.04.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH // TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.