The ACIT, Circle-5, RAJKOT-GUJARAT V. M/s. Solar Agrotech Pvt. Ltd., RAJKOT-GUJARAT

ITA 43/RJT/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67282 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS DR LREI
• Section: 143(3); 139

Judgement Text

, H IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . . [ HR - . . - - BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTAVA AM ITA NO. 4 3 /RJT/2013 LR R / ASSESSMENT YEAR 200 6 - 07. THE ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE - 5, RAJKOT. ( / APPELLANT) M/S. SOLAR AGROTECH PVT. LTD. SHYAM COMPLEX, KANTA STREE VIKAS GRUH ROAD, RAJKOT. PAN : AADCS027 0L / RESPONDENT O I / REVENUE BY SHRI K. C. MATHEWS, DR. LREI / ASSESSEE BY NONE. A.D. ON RECORD. I / DATE OF HEARING 1 4 - 06 - 2013 I / DATE OF PRONOUNCEMENT 21 - 06 - 2013 / ORDER . . [ , HR - / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 30 - 11 - 2012 OF CIT (A) - I V , RAJKOT DELETING THE ADDITION OF RS.5,67,130/ - MADE BY AO FOR THE ASSESSMENT YEAR 200 6 - 07. 2. DESPITE THE SERVICE OF NOTICE, N EITHER ANYBODY WAS PRESENT FROM THE SIDE OF THE ASSESSEE NOR AN APPLICATION FOR ADJOURNMENT WAS RECEIVED. WE, THEREFORE, PROCEED TO DECIDE THIS APPEAL ON THE BASIS OF SUBMISSIONS MADE BY THE LD DEPARTMENTAL REPRESENTATIVE AND THE MATERIALS AVAILABLE ON RE CORDS. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A FIRM. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 28 - 12 - 2006 SHOWING THE INCOME OF RS.1,60,420/ - . AO FRAMED THE ASSESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 WHEREI N HE DISALLOWED RS.5,67,130/ - FOR THE FOLLOWING REASONS GIVEN IN THE ASSESSMENT ORDER: - ON VERIFICATION OF THE DETAILS SUBMITTED IT IS OBSERVED FROM THE AUDIT REPORT IN FORM 3CD (COL.NO.27(B)(IV) THAT THE TAX TO THE EXTENT OF RS.20807/ - , DEDUCTED AT SOURC E FROM THE SALARY PAID TO EMPLOYEES UPTO THE MONTH OF FEBRUARY, OUT OF THE TOTAL TDS ON SALARY EXPENSES OF RS.22699/ - WAS REQUIRED TO BE DEPOSITED IN GOVT. ACCOUNT BY MARCH 2006 IN TERMS OF THE PROVISIONS OF SECTION 40(A)(IA) W.R.T. SECT.200(1) OF THE ACT. THE SAID TDS ITA 4 3 - 201 3 2 OF RS.20807/ - WAS DEPOSITED INTO GOVT. ACCOUNT BY THE ASSESSEE ON 31/5/2006. THUS, IT IS SEEN THAT THOUGH THE ASSESSEE DEDUCTED THE TDS FROM THE SALARY OF THE EMPLOYEES IT DID NOT DEPOSIT THE SAME INTO GOVT. ACCOUNT WITHIN THE PRESCRIBED TI ME. IN VIEW OF THE ABOVE, THE EXPENSES INCURRED TOWARDS PAYMENT OF SALARY RS.567130/ - ARE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ADD: RS.567130/ - . 4 . ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE DISALLOWANCE FOR THE DETAILED REASONS GIVEN IN PARA - 4, WHICH READ AS UNDER: - 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF APPELLANT. ASSESSING OFFICER HAS MADE A DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF SALARY OF RS.567130 . THE TDS ON THIS SALARY PAID BY APPELLANT WAS APPARENTLY PAID LATE IN THE GOVERNMENT ACCOUNT. THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLIED WHEN THE TDS IS NOT MADE OR NOT PAID ON CERTAIN EXPENDITURES WITHIN THE TIME PRESCRIBED WITHIN SECTION 40(A)(IA) ITSELF. THE PROVISIONS OF SECTION 40(A)(IA) DO NOT INCLUDE SALARY EXPENDITURE AND THE DISALLOWANCE FOR DEFAULT IN RESPECT OF TDS MAY BE MADE U/S.40(A)(IA) ONLY IN RESPECT OF INTEREST, COMMISSION, BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL OR TECHN ICAL SERVICES TO A RESIDENT CONTRACTUAL PAYMENT AND SUB - CONTRACTUAL PAYMENT. THE EXPENDITURE OF SALARY IS NOT INCLUDED FOR DISALLOWANCE EVEN IN CASE OF A DEFAULT IN RESPECT OF TDS IN THE PROVISIONS OF SECTION 40(A)(IA). I THEREFORE HOLD THAT THE ASSESSIN G OFFICER WAS INCORRECT IN MAKING A DISALLOWANCE OF RS.567130 ON SALARY EXPENDITURE UNDER SECTION 40(A)(IA) OF THE I.T. ACT AND DIRECT HIM TO DELETE THIS DISALLOWANCE AND REDUCE THE TOTAL INCOME OF APPELLANT ACCORDINGLY. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUND . 1 . THE LD. CIT (A) - IV, RAJKOT HAS ERRED IN LAW AS WELL AS FACTS IN DIRECTING THE A.O. TO DELETE ADDITION OF RS.5,67,130/ - ON ACCOUNT OF DISALLOWANCE ON SALARY EXPENSES. AT THE TIME OF HEARING, SHRI K C MATHEWS, LD DR APPEARED FOR THE REVENUE, RELYING ON THE REASONS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, CONTENDED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT BE RESTORED AS THE ASSE SSEE HAS NOT DEPOSITED THE TDS INTO GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED TIME. 5 . AFTER HEARING THE LD DEPARTMENTAL REPRESENTATIVE, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE HONBLE DELHI HIGH COURT IN THE CASE OF H.S. MOHINDRA TRADERS V. INCOME TAX OFFICER, WARD 39(2), NEW DELHI, REPORTED IN [2010] 132 TTJ 701 (DELHI) HELD THAT IF THE TDS IS DEPOSITED WITH THE INCOME - TAX DEPARTMENT IN APRIL 2007, I.E. MUCH BEFORE THE DUE DATE SPECIFIED IN ITA 4 3 - 201 3 3 SUB - SECTION (1) OF SECTION 139 OF THE INCOME - TAX ACT FOR FILING THE RETURN OF INCOME, NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. THE RELEVANT OBSERVATION OF THE HONBLE DELHI HIGH COURT IS REPRODUCED HEREIN BELOW: - THE ASSESSEE HAD DEDUCTED THE TAX AT SOURCE IN THE MONTH OF MARCH, 20 07 FOR THE EXPENDITURE INCURRED IN FEBRUARY 2007, BUT THE SAME WAS DEPOSITED WITH THE INCOME TAX DEPARTMENT IN APRIL 2007, I.E. MUCH BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION(1) OF SECTION 139 OF THE INCOME TAX ACT FOR FILING THE RETURN. IN THESE CIRCU MSTANCES, WE ARE OF THE OPINION THAT THE INCOME TAX APPELLATE TRIBUNAL [HEREINAFTER REFERRED TO AS, THE TRIBUNAL] HAS RIGHTLY INTERPRETED THE PROVISION OF SECTION 40(A)(IA) AND PARTICULARLY, SUB - CLAUSE (A) THEREOF WHICH CLEARLY GIVES THE TIME TO THE ASSE SSEE TO DEPOSIT THE TDS ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 OF THE ACT. THE ENTIRE CASE SOUGHT TO BE MADE IN THIS APPEAL IS THAT THE TRIBUNAL WRONGLY RELIED UPON THE AMENDMENT WHICH CAME INTO EFFECT FROM 1.04.2010. THIS IS CLEARLY ERRONEOUS IN AS MUCH AS SECTION 40(A)(IA) WAS AMENDED BY THE FINANCE ACT, 2008 WITH EFFECT FROM 01.05.2005 WHEREBY THE WORDS ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 WAS SUBSTITUTED BY THE WORDS, HAS NOT BEEN PAID D URING THE PREVIOUS YEAR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB - SECTION (1) OF SECTION 200 OF THE ACT. WE, THUS, FIND NO MERIT IN THIS APPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED. 6 . THE AFORESAID JUDGMENT OF HON BLE DELHI HIGH COURT IS APPROVED BY THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.520 OF 2012 IN THE CASE OF CIT V. ROYAL BUILDERS, DELIVERED ON 11.02.2013 . IN THE IMPUGNED ORDER , THE LD CIT(A) DELETED THE DISALLOWANCE U/S 40(A)(IA) OF THE INCOME - TAX AC T AS THE ASSESSEE HAS DEPOSITED THE TAX DEDUCTED AT SOURCE FROM SALARY AND DEPOSITED THE SAME WELL BEFORE THE DUE DATE OF FURNISHING THE RETURNING OF INCOME U/S 139(1) OF THE INCOME - TAX ACT. SINCE THE VIEW TAKEN BY THE LD CIT(A) IN THE IMPUGNED ORDER IS A S PER THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. ROYAL BUILDERS (SUPRA), WE DECLINE TO INTERFERE WITH THE ORDER. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS O RDER IS PRONOUNCED IN OP EN COURT ON THE DAT E MENTIONED HEREINABOVE. SD/ - SD/ - ( . . O D. K. SRIVASTAVA ) ( . . R / T. K. SHARMA) / ACCOUNTANT MEMBER HL O / JUDICIAL MEMBER / ORDER DATE 21 - 0 6 - 201 3. /RAJKOT NVA/ BT ITA 4 3 - 201 3 4 T RJO NO / COPY OF ORDER FORWARDED TO: - 1 . / APPELLANT - THE ACIT,CIRCLE - 5, RAJKOT. 2 . / RESPONDENT - M/S. SOLAR AGROTECH PVT. LTD., SHYAM COMPLEX, KANTA STREE VIKAS GRUH ROAD, RAJKOT. 3 . T / CONCERNED CIT - II I, RAJKOT. 4 . T - / CIT (A) - I V , RAJKOT. 5 . LL , , / DR, ITAT, RAJKOT 6 . R / GUARD FILE. / BY ORDER TRUE C OPY PRIVATE SECRETARY, ITAT, RAJKOT