NENSHI L SHAH, MUMBAI V. AST CIT CEN CIR 17 & 28, MUMBAI

ITA 4115/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8969 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 05-06-2014
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: SANJAY R PARIKH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.4115/MUM/2014 (ASSESSMENT YEAR: 2005-06) SHRI NENSHI L SHAH 6, ABHISHEK VALLABHBHAI ROAD VILE PARLE (W), MUMBAI-56 VS ACIT, CIR.17 & 18, MUMBAI PAN : AAHPS7789M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SANJAY R PARIKH RESPONDENT BY SHRI SUMAN KUMAR (DR) DATE OF HEARING : 22-12-2016 DATE OF ORDER : 11 -01-2017 O R D E R PER ASHWANI TANEJA, AM: THIS APPEAL HAS BEEN FILED AGAINST THE ORDER PASSE D BY COMMISSIONER OF INCOME-TAX (APPEALS)-20, MUMBAI [HEREINAFTER CAL LED CIT(A)] DATED 07- 03-2013 PASSED AGAINST THE ASSESSMENT ORDER OF THE AO U/S 143(3) R.W.S. 263 OF THE ACT DATE 22-12-2011 FOR AY. 2005-06 ON T HE FOLLOWING GROUNDS:- THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO ONE ANOTHER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S. 143 (3) R.W.S.263 DETERMINING TOTAL INCOME AT RS.89,56,503/-. 2 I.T.A. NO.4115/MUM/2014 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILS TO APPRECIATE THAT THE ORDER U/S. 143 (3) R.W.S. 263 I S WITHOUT JURISDICTION AND BAD IN LAW. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS. 23,39,657/- ON ACCOUNT OF DISALLOWANCE U/S. 40 A (IA) OF THE INCOM E TAX ACT. 2. THE SOLITARY GROUND RAISED IN THIS APPEAL IS WITH R EGARD TO DISALLOWANCE MADE U/S 40(A)(IA) ON THE GROUND THAT ASSESSEE FAILED TO DEDUCT TAX AT SOURCE ON THE AMOUNT OF INTEREST PAID . DURING THE COURSE OF HEARING IT WAS SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARIES, INCOME FROM HOUSE PROPERTY, INCOME FROM BUSINESS OR PROFESSION, CAPIT AL GAINS AND INCOME FROM OTHER SOURCES. IN THE ASSESSMENT ORDER, WHICH HAS BEEN PASSED IN PURSUANCE TO THE REVISION ORDER U/S 263 OF LD.CIT, IT IS HELD THAT ASSESSEE HAS PAID INTEREST WITHOUT DEDUCTING TDS U/S 194A. BUT AO OMITTED TO PROPERLY CONSIDER THE PROVISIONS OF SECTION 194A WH ICH STIPULATE THAT THE ASSESSEE SHALL BE LIABLE TO DEDUCT TDS ONLY IF ITS TURNOVER IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR IS MORE THAN R S.40 LAKHS. OUR ATTENTION WAS DRAWN ON THE COPY OF INCOME-TAX RETUR N AS WELL AS ASSESSMENT ORDER PASSED U/S 143(3) SHOWING THAT TUR NOVER OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR WAS NOT MORE THAN RS.40 LAKHS. THEREFORE, PROVISIONS OF SECTION 194A WERE NOT APPLICABLE. THUS, NO QUESTION ARISES OF FAILURE OF DEDUCTION OF TAX U /S 194A. THEREFORE, DISALLOWANCE MADE BY THE AO IS ABSOLUTELY INCORRECT AND THE SAME HAS BEEN WRONGLY CONFIRMED BY THE LD. CIT(A). 3. PER CONTRA, THE LD. DR RELIED UPON THE ORDERS OF TH E LOWER AUTHORITIES. 4. WE HAVE GONE THROUGH THE FACTS & CIRCUMSTANCES OF T HE CASE. THE ONLY ISSUE THAT WE ARE REQUIRED TO DECIDE IS WHETHE R ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 194A ON THE AMOUNT OF PAYMENT OF INT EREST. IT IS NOTED FROM THE PERUSAL OF SECTION 194A THAT ASSESSEE WOUL D BE REQUIRED TO DEDUCT TDS ONLY IF ITS TURNOVER IN THE IMMEDIATELY PRECEDING YEAR HAPPENS TO BE MORE THAN RS.40 LAKHS. WITH THE ASSISTANCE O F THE PARTIES, IT WAS 3 I.T.A. NO.4115/MUM/2014 NOTED THAT IN THE IMMEDIATELY PRECEDING YEAR, I.E. AY. 2004-05, THE ASSESSEE HAD SHOWN INTEREST INCOME AMOUNTING TO RS. 71,533/- WAS SHOWN AS INCOME FROM OTHER SOURCES. THE SAID INCOME WAS ACCEPTED AS INCOME FROM OTHER SOURCES BY THE AO IN THE ASSESSMENT ORDE R PASSED U/S 143(3) DATED 30-12-2008. THUS, PERUSAL OF THE RETURN AS W ELL AS ASSESSMENT ORDER OF THE IMMEDIATELY PRECEDING YEAR SHOWS THAT TURNOVER OF THE ASSESSEE WAS NOT MORE THAN RS.40 LAKHS. EVEN FOR T HE YEAR UNDER CONSIDERATION, THE INTEREST INCOME WAS SHOWN AS PAR T OF INCOME FROM OTHER SOURCES. UNDER THESE CIRCUMSTANCES, THE AO S HOULD NOT HAVE ARTIFICIALLY TREATED THE INTEREST INCOME AS INCOME FROM BUSINESS OR PROFESSION MERELY FOR THE PURPOSE OF ATTRACTING PRO VISIONS OF SECTION 194A. ONCE, THE INTEREST INCOME IN THE PRECEDING YEAR WAS SHOWN IN THE RETURN OF INCOME AS INCOME FROM OTHER SOURCES AND ACCEPT ED AS SUCH BY THE AO, THEN, IN THE PRESENT YEAR THE SAME CANNOT BE RE -CHARACTERISED IN THE ASSESSMENT ORDER OF THE PRESENT YEAR MERELY FOR THE PURPOSE OF APPLYING PROVISIONS OF SECTION 194A. SUCH KIND OF SUPERFLUO US EXERCISE IS NOT PERMITTED UNDER THE LAW. THUS, AS PER LAW AND FACT S OF THIS CASE, THE CASE OF THE ASSESSEE IS NOT COVERED U/S 194A AS THE MAND ATORY CONDITION OF THERE BEING TURNOVER EXCEEDING A SUM OF RS.40 LAKHS IS APPARENTLY MISSING IN THIS CASE. THUS, ASSESSEE WAS NOT OBLIGED TO DE DUCT TDS U/S 194A. THUS, THE AO AS WELL AS THE LD. CIT(A) HAVE ERRED I N MAKING DISALLOWANCE U/S 40(A)(IA). THE SAME IS DIRECTED TO BE DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS _11 TH DAY OF JANUARY, 2017. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 13 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 4 I.T.A. NO.4115/MUM/2014 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , B-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES