Shri Nitin Ramshi Bhatia, Jam-Khambhalia V. The Joint Commissioner of Income Tax, Range-3, JAMNAGAR

ITA 440/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6619 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: ANKIT GOKANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY , MEMBER ITA NO. 440/RJT/2014 : ASS T. YEAR : 2010 - 11 SHRI NITIN RAMSHI BHATIA 15, VRUNDAVAN CONSTRUCTION, NAGAR GATE, KAILASH CHAMBER, KHAMBHALIA (APPELLANT) PAN : AELPB7611P VS JCIT, RANGE - 3, JAMNAGAR (RESPONDENT) APPELLANT BY : SHRI ANKIT GOKANI, C.A RESPONDENT BY : SHRI AVINASH KUMAR, DR DATE OF HEARING : 2 2 /0 3 /201 7 DATE OF PRONOUNCEMENT : 24 /0 3 /201 7 O R D E R PER K. NAR A SIMHA CHARY, MEMBER, JM : THIS APPEAL BY THE ASSESSEE IS CHALLENGING THE ORDER DATED 16.4.2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMNAGAR (FOR SHORT HEREINAFTER REFERRED TO AS LD. CIT(A) ) IN APPEAL NO.CIT(A)/JAM/36/13 - 14/125. 2 . BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM CONTRACT/SUB - CONTRACT WORK IN THE NAME AND STYLE OF M/S. VRUNDAVAN CONSTRUCTION. FOR THE ASSESSMENT YEAR 2010 - 11, HE HAS FILED THE RETURN OF INCOME ON 1.10.2010 DECLARING A TOTAL INCOME OF 2 SHRI NITIN RAMSHI BHATIA ITA NO. 440/RJT/2014 RS.49,32,090/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE CERTAIN PAYMENTS TO NON - BANKING FINANCIAL COMPANIES TO THE TUNE OF RS.22,30,165/ - WITHOUT DEDUCTING TAX AT SOURCE AND ON THAT SCORE THE ASSESSING OFFICER DISALLOWED THE SAME U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER REFERRED TO AS THE ACT). CHALLENGING THE SAME, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) BY WAY OF THE IMPUGNED ORDER DISMISSED THE APPEAL CONFIRMING THE ADDITION. 3 . AGGRIEVED BY THE SAID ORDER OF LD . CIT(A), THE ASSESSEE IS BEFORE US IN THIS APPEAL . THE PRESENT APPEAL IS PREFERRED WITH A DELAY OF 25 DAYS AND THE REASONS STATED IN THE AFFIDAVIT IS THAT THE ASSESSEE BEING ENGAGED IN THE BUSINESS OF CONSTRUCTION WAS REQUIRED TO TRAVEL EXTENSIVELY, AND BECAUSE OF THE SAME HE COULD NOT PREFER THE APPEAL WI THIN TIME AND THE DELAY OF 25 DAYS IS NOT INTENTIONAL. HAVE REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN VIEW OF THE FACT THAT NO PREJUDICE WOULD BE CAUSED TO THE OTHER SIDE BY CONDONING THE DELAY WE ARE INCLINED TO CONDONE THE DELAY AND PROC EED TO HEAR THE MATTER ON MERITS. 4. IT IS SUBMITT ED BY THE LD AR THAT IN VIEW OF THE AMENDMENT TO SEC. 40(A)(IA) OF THE ACT, INTRODUCED BY THE FINANCE ACT, 2012 EVEN IF THERE IS A FAILURE TO DEDUCT TDS, DISALLOWANCE OF EXPENDITURE CANNOT BE MADE IF THE RE CIPIENTS OF THE AMOUNT HAVE TAKEN INTO ACCOUNT THE PAYMENT OF INTEREST WHILE COMPUTING THEIR INCOME. LD . AR RELIES ON THE DECISION DATED 20.2.2017 OF THE COORDINATE BENCH OF TRIBUNAL IN THE 3 SHRI NITIN RAMSHI BHATIA ITA NO. 440/RJT/2014 CASE OF SHRI NAVUBHA J. CHAVDA VS. ITO IN ITA NO. 592/RJT/2014 IN SUPPORT OF HIS CONTENTIONS. BASING ON THIS, HE SUBMITS THAT ON PRODUCTION OF FORM 27BA THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION OF INTEREST EXPENDITURE AND FOR SUCH PURPOSE, HE PRAYED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING O FFICER SO THAT THE ASSESSEE WILL PRODUCE THE REQUISITE FORM 27BA AND CLAIM THE DEDUCTION OF EXPENDITURE. 5. FOR THIS, THE LD. DR REPORTS NO OBJECTION STATING THAT UNLESS AND UNTIL THE ASSESSEE ESTABLISHES THAT THE RECIPIENT S OF THE AMOUNT HAVE PAID TAXE D ON THE IMPUGNED PAYMENTS, ASSESSEE CANNOT HAVE THE BENEFIT OF THE ARGUMENT ADVANCED BY HIM. 6. WE HAVE CAREFUL LY CONSIDERED THE CONTENTIONS RA ISED BY EITHER SIDE AND PERUSED THE MATERIAL PAPERS ON RECORD. IN THE DECISION RELIED UPON BY THE ASSESSEE IT IS CLEARLY HELD THAT IN VIEW OF THE INTRODUCTION OF SECOND PROVISO TO SEC. 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2012 W.E.F. 1.7.2012 R.W.S. 201 O F THE ACT, DESPITE THE FAILURE TO DEDUCT THE TDS, DISALLOWANCE OF EXPENDITURE SHOULD NOT BE MADE IF THE RECIPIENTS OF THE AMOUNT HAVE TAKEN INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY THEM WHILE COMPUTING THE INCOME IN THEIR HANDS AND PAID TAXES THEREO N. RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD. , 377 ITR 635 (DELHI) IN SUPPORT OF THIS PROPOSITION. THEREFORE, IN THIS CASE, WHAT REMAINS TO BE COMPLIED WITH BY THE ASSESSEE TO CLAIM THE DEDUCTION IS THE PRODUCTION OF FORM 27BA, AS SUCH WE DEEM IT JUST AND PROPER TO SET ASIDE THE MATTER TO THE FILE OF ASSESSING OFFICER ENABLING THE ASSESSEE TO 4 SHRI NITIN RAMSHI BHATIA ITA NO. 440/RJT/2014 PRODUCE FORM 27BA AND THE ASSESSING OFFICER TO VERIFY THE SAME TO CONSIDER THE CLAIM OF ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WHO WILL GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE FORM 27BA AND ON VERIFICATION OF THE SAID FORMS, ASSESSING OFFICER WILL DISPOSE OF THE MATTER ACCORDING TO LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 T H MARCH , 201 7 . SD/ - SD/ - ( S.V. MEHROTRA ) ACCOUNTANT MEMBER ( K. NARASIMHA CHARY ) JUDICIAL MEMBER R A J K O T , DATE : 2 4 T H MARCH , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, RAJKOT 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, RAJKOT