Nihalchand Shantikumar, Cuttack V. Asstt. Commissioner of Income Tax, Cuttack

ITA 443/CTK/2012

• Counselvise Citation: 44322114 RSA 2012
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: D K SHETH
• Section: 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 443/CTK/2012 / ASSESSMENT YEAR 2008 - 09 NIHALCHAND SHANTIKUMAR, MAHATAB ROAD, CUTTACK 753 003 PAN:AADFN 1404 E - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI D.K.SHETH, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 07.11.2012 / DATE OF PRONOUNCEMENT: 09.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE IS ON THE SOLITARY GROUND THAT THE DISALLOWANCE OF EXPENSES CLAIMED AMOUNTING TO 6,48,389 UNDER THE PROVIS IONS OF SECTION 40(A)(IA) OF THEI.T.ACT,1961 FOR THE ASSESSMENT YEAR 2005 - 06 HAS BEEN MADE WITHOUT DEDUCTION OF TAX AT SOURCE WAS NOT CONSIDERED BY THE AUTHORITIES BELOW IN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008 - 09 . 2. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE ASSESSING OFFICER IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 INSOFAR AS THE AMOUNT DISALLOWED U/S.40(A)(IA) WAS TO BE CONSIDERED FOR ALLOWANCE AS AND WHEN THE TAX DEDUCTED AT SOURCE WAS DEPOSITED INSOFAR AS THE ASSESSEE CLAIMED THE SAME AFTER HAVING PAID THE TDS TO THE GOVERNMENT ACCOUNT IN THE IMPUGNED ASSESSMENT YEAR WHICH HAS BEEN VERIFIED BY THE ASSESSING OFFICER OU GHT TO HAVE BEEN ALLOWED THE CLAIM U/S.40(A)(IA) . HE SUBMITTED THAT THE ASSESSING I.T.A.NO. 443/CTK/2012 2 OFFICER HELD THAT LAW DOES NOT PROVIDE FOR DEDUCTION ON ACCOUNT OF PAYMENT BY THE ASSESSEE FROM ITS OWN ACCOUNT WHICH WHEN WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUT HORITY SECONDED BY THE LEARNED CIT(A) WHERE IT WAS HELD THAT THE DEDUCTION OUGHT TO HAVE BEEN MADE FROM THE DEDUCTEES ACCOUNT AND NOT TO BE PAID AFTER DEBITING HIS CAPITAL ACCOUNT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW H AVE MISDIRECTED THEMSELVES TO HOLD THAT THE TDS WAS TO BE AGAINST THE PAYMENT WHICH PAYMENT WOULD HAVE BECOME EXPENSES OF THE ASSESSEE IN ANY WAY. THE ASSESSEE WAS TO WITHHOLD THE PAYMENT OF TAX ON ACCOUNT OF EXPENDITURE INCURRED HAD CLAIMED THE WHOLE OF T HE EXPEND ITURE WHICH WAS DISALLOWED AMOUNTING TO 6,48,389. THEREFORE, HAVING PAID THE TAXES FROM ITS OWN ACCOUNT, THE LIABILITY COULD ONLY BE DEPOSITED AGAINST THE CAPITAL AND NOT AGAINST ANY OTHER EXPENDITURE. THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) M ISDIRECTED THEMSELVES TO HOLD THAT THE TAX DEDUCTION CREDIT HAS BEEN AVAILABLE BY THE ASSESSEE AND NOT THE DEDUCTEES. THE ASSESSEE HAS ISSUED NECESSARY CERTIFICATES TO THE DEDUCTEES WHO WILL AVAIL THE CREDIT FOR THE INCOME INSOFAR AS IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO FIND WHETHER THE DEDUCTEES HAVE FILED RETURN U/S.139(1) FOR THE ASSESSMENT YEAR 2005 - 06 CLAIMING CREDIT OR THE TDS SO DEDUCTED. HE SUBMITTED THAT THE LAW CLEARLY PROVIDES THAT THE AMOUNT OF DISALLOWANCE U/S.40(A)(IA) WILL BE ALLOW ED AS AND WHEN THE AMOUNT OF TAX NOT DEDUCTED OR SHORT DEDUCTED IS PAID IN ANY OTHER PREVIOUS YEAR COULD ENTITLE THE ASSESSEE TO CLAIM DEDUCTION IN THAT YEAR REQUIRES NO FURTHER ADJUDICATION. 3. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE ACCOUNTING IT IS VERY CLEAR THAT THE ASSESSEE HAS PAID THE TAX WHICH HE WAS TO DEDUCT FROM THE DEDUCTEES IN THE ASSESSMENT YEAR 2005 - 06. THE AMOUNT WAS DISALLOWED U/S.40(A)(IA) OUGHT TO HAVE BEEN SUBSTANTIATED BY THE I.T.A.NO. 443/CTK/2012 3 ASSESSEE FOR CLAIMING DEDUC TION IN THE ASSESSMENT YEAR 2008 - 09 WHEN THE DEDUCTEES HAVE BEEN DEBITED BY THE AMOUNT FURTHER AGAINST THE EXPENDITURE DISALLOWED ALREADY CONSIDERED FOR DISALLOWANCE IN THE ASSESSMENT YEAR 2005 - 06. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSID ERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW HAVE MISCONSTRUED TO CONSIDER THE PROVISIONS OF SECTION 40(A)(IA) WHICH FOR READY REFERENCE IS REPRODUCED AS UNDER : 40.(I) .. ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFES SIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INC LUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID, (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 ; OR (B) IN ANY OTHER CASE, ON OR BEF ORE THE LAST DAY OF THE PREVIOUS YEAR: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE; OR (B) DURING A NY OTHER MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. (EMPHASIS APPLIED) A BARE PERUSAL OF THE ABOVE WOULD INDICATE THAT THE INTENTION OF THE LEGISLATURE WAS TO WITHHOLD TAX WHICH TAX WAS TO BE CLAIMED BY THE ASSESSEE AS EXPENDITURE. THIS EXPENDITURE WAS DISALLOWED WAS TO BE CLAIMED IN THE YEAR WHEN NON - DEDUCTION OF TAX WAS PAID AFTER COMPUTING THE TDS TH EREON WAS PAID BY DEBITING THE CAPITAL OF THE ASSESSEE CLEARLY INDICATES THAT THE AMOUNT WAS DEDUCTED FROM THE BUSINESS OF THE ASSESSEE WHEN THE EXPENDITURE HAS NOT BEEN CLAIMED AGAIN. THEREFORE, THE ASSESSING OFFICER AND LEARNED CIT(A) ON THE AMOUNT OF DI SALLOWANCE OUGHT TO HAVE CONSIDERED I.T.A.NO. 443/CTK/2012 4 THAT THE AMOUNT OF TAX THAT HAD BEEN DEDUCTED WHICH SHOULD HAVE BEEN ALLOWED COMPLIES TO PROVISION TO THE SAID SECTION . THE LAW IS CLEAR THAT THE DISALLOWANCE HAS TO BE ALLOWED IN THE YEAR WHEN THE NON - DEDUCTED TAX IS PA ID TO THE GOVERNMENT CANNOT BE GIVEN A CREDIT TO THE ASSESSEE BUT TO THE DEDUCTEES. THEREFORE, FINDING NO MERIT IN THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO GRANT DEDUCTION OF SUCH AMOUNT IN COMPLIANCE TO THE PROVISIONS OF THE ACT AS MENTIONED ABOVE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 09.11.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : NIHALCHAND SHANTIKUMAR, MAHATAB ROAD, CUTTACK 753 003 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), CUTTACK. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 08.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.