Vivek Dattatraya Gupte - HUF, Satara V. Income-tax Officer,

ITA 406/PUN/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2266 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NANI WADEKAR
• Keywords: Opportunity of being heard
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO S . 406 & 407 /PN/201 4 / ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 VIVEK DATTATRAYA GUPTE HUF, RACHIT, 11/111/1A, GORAKHPUR ROAD, PIRWADI, KHED, SATARA 415001 . / APPELLANT PAN: AA EHV4655E VS. THE INCOME TAX OFFICER, WARD - 2 , SATARA . / RESPONDENT / APPELLANT BY : SHRI NANI WADEKAR / APPELLANT BY : SHRI NANI WADEKAR / RESPOND ENT BY : SHRI SANJAY PUNGLIA / DATE OF HEARING : 0 3 . 12 .2015 / DATE OF PRONOUNCEMENT: 16 . 1 2 .2015 / ORDER PER SUSHMA CHOWLA, J M : BOTH THE APPEAL S FILED BY THE ASSESSEE ARE AGAINST THE CONSOLIDATED ORDER OF C IT (A) - III , PUNE , DATED 05 . 12 .20 13 RELATING TO ASSESSMENT YEARS 2007 - 08, 2008 - 09 & 2009 - 10 PASSED AGAINST ORD ER U NDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 406 & 407 /PN/201 4 VIVEK DATTATRAYA GUPTE (HUF) 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO. 406 /PN/201 4 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO.406/PN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.6 ,21,123/ - BEING INTEREST PAID TO CHATRAPATI SAMBHAJI MAHARAJ PATASANSTHA LIMITED UNDER SECTION 40(A)(IA) OF THE ACT. 2) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE ISSUE RAISED IN BOTH THE APPEALS UNDER CONSIDERATION IS IN RELATION TO DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF INTEREST PAID TO CHATRAPATI SAMBHAJI MAHARAJ PATASANSTHA LIMITED . IN ASSESSMENT YEAR 2008 - 09, THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS.6 ,21,123/ - AND IN ASSESSMENT YEAR 2009 - 10, THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS.5,07,709/ - . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS DERIVING INCOME FROM BUSINESS ACTIVITY OF BUILDER AND DEVELOPER IN THE NAME AND STYLE AS M/S. KOTESHWAR DEVELOPERS IN THE CAPACITY OF HUF. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD RAISED LOAN FROM CHATRAPATI SAMBHAJI MAHARAJ PATASANSTHA LIMITED , WHICH WAS A CREDIT CO - OPERATIVE SOCIETY. THE ASSESSEE HAD PAID SUM OF RS.6,21,123/ - AS INTEREST TO THE SAID CHATRAPATI SAMBHAJI MAHARAJ PATASANSTHA LIMITED , WHICH ITA NO. 406 & 407 /PN/201 4 VIVEK DATTATRAYA GUPTE (HUF) 3 EXPENDITURE WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER VERIFIED THE ALLOWABILITY OF THE EXPENSES WITH REGARD TO TDS PROVISIONS AS THE PAYMENT OF INTEREST TO CHATRAPATI SAMBHAJI MAHARAJ PATASANSTHA LIMITED ATTRACTED THE PROVISIONS OF SECTION 194A OF THE ACT. THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE OUT OF SUCH INTEREST PAYMENTS AND CONSEQUENTLY, THE ASSESSING OFFICER HELD THA T THE SAID PAYMENT OF INTEREST WAS NOT ALLOWABLE AS AN EXPENDITURE, IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 6. BEFORE THE CIT(A), THE CLAIM OF THE ASSESSEE WAS THAT SINCE THE AMOUNT OF INTEREST HAS BEEN PAID, THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT WERE NOT APPLICABLE. ANOTHER CONTENTION WAS ALSO RAISED THAT THE PROVISIONS OF SECTION 194A OF THE ACT ARE NOT ATTRACTED. THE CIT(A) HOWEVER, DISMISSING BOTH THE PLEAS OF THE ASSESSEE, UPHELD THE ADDITION OF RS. 6,21,123/ - , AGAINST WHI CH THE ASSESSEE IS IN APPEAL. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT PUNE BENCH OF TRIBUNAL HAVE TAKEN A CONSISTENCY VIEW THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE ATTRACTED TO AN EXPENDITURE TO WHICH PRO VISIONS OF TAX DEDUCTION AT SOURCE ARE APPLICABLE, IRRESPECTIVE OF THE FACT WHETHER THE SAME IS PAID AT ANY TIME DURING THE PREVIOUS YEAR AND WAS NOT PAYABLE AT THE CLOSE OF YEAR. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT PUNE BENCH OF TRIBUNAL HOWEVER, HAS FURTHER TAKEN NOTE OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH WAS INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013, WHEREIN IT IS PROVIDED THAT THE SAID PROVISIONS WOULD NOT BE APPLICABLE IF THE ASS ESSEE WAS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER FIRST PROVISO TO SECTION 201(1) OF THE ACT. THE ITA NO. 406 & 407 /PN/201 4 VIVEK DATTATRAYA GUPTE (HUF) 4 MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN IN ACIT VS. BHAVOOK CHANDRAPRAKASH TRIPATHI (2015) 43 CCH 292 (PUNE - TRIB) . 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW . 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE ATTRACTED TO AN EXPENDITURE, WHICH WAS NOT PAYABLE AT THE CLOSE OF THE YEAR. THE PU NE BENCH ES OF TRIBUNAL HA VE CONSISTENTLY TAKEN VIEW THAT THE SAID PROVISIONS ARE ATTRACTED IRRESPECTIVE OF THE EXPENDITURE BEING PAID DURING THE YEAR AND NOTHING BEING PAY ABLE AT THE CLOSE OF THE YEAR. HENCE, WHERE THE ASSESSEE HAD MADE PAYMENT ON ACCOUNT OF INTEREST HENCE, WHERE THE ASSESSEE HAD MADE PAYMENT ON ACCOUNT OF INTEREST EXPENDITURE TO WHICH THE PROVISIONS OF SECTION 194A OF THE ACT ARE APPLICABLE, THE ONUS WAS UPON THE ASSESSEE TO DEDUCT TDS AND IN ABSENCE OF THE SAME, THE SAID EXPENDITURE IS LIABLE TO THE DISALLOWED IN THE HANDS OF ASSESSEE , IN VIEW OF THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT. WE UPHOLD THE ORDER OF CIT(A) IN THIS REGARD. 10. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE I.E. NEW LEGAL PLEA RAISED BY THE ASSESSEE IN VIEW OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH WAS INS ERTED BY THE FINANCE ACT, 2012. THE TRIBUNAL IN ACIT VS. BHAVOOK CHANDRAPRAKASH TRIPATHI (SUPRA) WHILE ADJUDICATING SIMILAR ISSUE HAD OBSERVED AS UNDER: - ITA NO. 406 & 407 /PN/201 4 VIVEK DATTATRAYA GUPTE (HUF) 5 4. FOLLOWING THE AFORESAID PRECEDENT, WE HEREBY REVERSE THE DECISION OF THE CIT(A). HOWEVER, AT T HE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE RESPONDENT - ASSESSEE MADE A NEW LEGAL ARGUMENT THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INSERTED BY FINANCE ACT, 2012 W.E.F. 01.04.2013, WHEREBY IT IS PROVIDED THAT THE DISALLOWANCE U/S 40(A) (IA) OF THE ACT WOULD NOT BE MADE IF THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) OF THE ACT. THE STAND OF THE ASSESSEE IS THAT THE SAID PROVISO SHOULD BE UNDERSTOOD AS RETROSPECTIVE IN NATURE AS IT HAS BEEN INTRODUCED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIPS TO THE TAX PAYERS. IT WAS POINTED OUT THAT IN SIMILAR CIRCUMSTANCES, THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S GAURIMAL MAHAJAN & SONS VIDE ITA N O .1852 / PN / 2012 DATED 06.01.2014 FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL VS. ACIT VIDE ITA N O .38 / COCH / 2013 DATED 29.11 .2013 HAS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. IN THE PRECEDENT DATE D 06.01.2014 (SUPRA), THE TRIBUNAL NOTED THAT SUCH A PLEA WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND THE CORRECTNESS OR OTHERWISE OF THE CONTENTIONS RAISED WAS NOT EXAMINED BY THE LOWER AUTHORITIES. THEREFORE, THE TRIBUNAL RESTORED THE MATTER B ACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION AFRESH, FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF ANTONY D. MUNDACKAL ( SUPRA ) IN A SIMILAR CIRCUM STANCE. THE LD. REPRESENTATIVE SUBMITTED THAT THE MATTER BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE ORDER OF THE TRIBUNAL DATED 06,01.2014 (SUPRA). THE AFORESAID PLEA OF THE RESPONDENT - ASSESSEE HAS NOT BEEN SERIOUSLY OPPOSED BY THE LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVENUE. 5. FOLLOWING THE AFORESAID PRECEDENT, WE THEREFORE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE PLEA OF THE ASSESSEE BASED ON THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT W.E.F. 01.04.2013 IN THE LIGHT OF THE DIRECTIONS OF THE TRIBUNAL CONTAINED IN ITS ORDER DATED 06.01.2014 (SUPRA). NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING AN ORDER A FRESH ON THIS ASPECT AS PER LAW. 11. THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL CONSIDER THE PLEA OF THE ASSESSEE BASED ON THE PROVISIONS OF THE ACT INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 AND IN LINE WITH EARLIER ORDER OF THE TRIBUNAL DATED 06.01.2014 (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO ADJUDICATE THE ISSU E IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE . ITA NO. 406 & 407 /PN/201 4 VIVEK DATTATRAYA GUPTE (HUF) 6 12 . THE FACTS AND ISSUES IN ITA NO. 407 /PN/201 4 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 406 /PN/201 4 AND OUR DECISION IN ITA NO. 406 /PN/201 4 SHALL APPLY MUTAT IS MUTANDIS TO ITA NO. 407 /PN/201 4 . 13. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER P RONOUNCED ON THIS 16 TH DAY OF DECEMBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDI A) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH DECEMBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / T HE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I I I, PUNE ; 4. / THE CIT - I I I, PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE