Appeal details
Counselvise Citation
[2016] 121 COUNSELVISE.COM (IT) 4210 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-11-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
SMC
Next Hearing Date
23-11-2016
Assessment Year
2010-2011
Appeal Filed On
19-02-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.47 /CTK/2016 ASSESSMENT YEAR : 2010 - 2011 ITO, WARD - 1, BERHAMPUR. VS. SRI ACHYUTA NARAYAN BAKSHI, PROP. A.B.MINERALS, GAJAPATI NAGAR, 8 TH LANE, BERHAMPUR PAN/GIR NO. AEFPB 1614 J (APPELLANT ) .. ( RESPONDENT ) ITA NO.48/CTK/2016 ASSESSMENT YEAR :2010 - 2011 C.O.NO.03/CTK/2016 (ARISING OUT OF ITA NO.47/CTK/2016) ASSESSMENT YEAR :2010 - 2011 SRI ACHYUTA NARAYAN BAKSHI, PROP. A.B.MINERALS, GAJAPATI NAGAR, 8 TH LANE, BERHAMPUR VS. ITO, WARD - 1, BERHAMPUR PAN/GIR NO. AEFPB 1614 J (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA, AR REVENUE BY : SHRI SUVENDU DUTTA , DR DATE OF HEARING : 23 /11 / 2016 DATE OF PRONOUNCEMENT : 23 /11 / 2016 2 O R D E R THESE ARE CROSS APPEAL S FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR, DATED 2.11.2015 , FOR THE ASSESSMENT YEAR 2010 - 2011. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION ARISING OUT OF APPEAL FILED BY THE REVENUE. 2. IN THE REVENUES APPEAL, THE GRIEVANCE OF THE DEPARTMENT IS THAT THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS.12,67,759/ - MADE BY THE ASSESSING OFF ICER U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF EXPENDITURE TOWARDS TRANSPORTATION CHARGES. 3. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IN THIS APPEAL IS BELOW RS.10,00,000/ - AND, THEREFORE, IN VIEW OF THE CBDT INSTRUCTION NO.21/2015 DATED 10.12.2015, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND LIABLE TO BE DISMISSED. 4. THE LD DEPARTMENTAL REPRESENTATIVE AGREED TO THE CONTENTION OF LD COUNSEL FOR THE ASSESSEE. 5 . I HAVE CONSIDERED RIVAL CONT ENTIONS AND ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. I FIND FORCE IN THE SUBMISSION OF LD A.R. OF THE ASSESSEE THAT THE CBDT IN ITS CIRCULAR NO.21/2015 DATED 10 TH DECEMBER, 2015 HAVE REVISED THE MONETARY LIMIT TO RS.10 LAKHS FROM RS.4 LAKHS TO FILE 3 THE APPEAL BEFORE THE TRIBUNAL BY THE REVENUE. ON SCRUTINY OF APPEAL FILED BY THE REVENUE, IT IS FOUND THAT THE TAX EFFECT IS BELOW THE PRESCRIBED LIMIT OF RS.10 LAKHS. THE CBDT ALSO CLARIFIES THAT THIS INSTRUCTION WILL APPLY RETROSPECTIV ELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/TRIBUNAL. T HE INCOME TAX ACT WAS AMENDED AND SECTION 268A HAS BEEN INTRODUCED ON THE STATUTE BOOK WITH RETROSPECTIVE EFFECT. SECTION 268A CARVES OUT AN EXCEPTION FOR FILING OF APPEALS AND REFERENCES UNDER SECTION 260A OF THE ACT. THE LEGISLATURE HAS PRESCRIBED THAT THE CBDT IS EMPOWERED TO ISSUE CIRCULARS AND INSTRUCTIONS FROM TIME TO TIME, WITH REGARD TO FILING OF APPEALS DEPENDING ON THE TAX EFFECT. THEREFORE, I DISMISS THE GROUND O F THE APPEAL OF THE REVENUE. 6. IN THE ASSESSEES APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,54,389/ - U/S.40(A)(IA) OF THE ACT MADE BY THE ASSESSING OFFICER ON PAYMENTS MADE TO M/S. MAGMA FINANCE CORPORATION, M/S. MAGMA SRICHI AND M/S. TATA MOTORS PVT LTD. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED EXPENSES OF RS.12,94,082/ - TOWARDS INTEREST AND & FINANCIAL CHARGES IN THE PROFIT AND LOSS ACCOUNT. OUT OF THE ABOVE EXPENSES, INTEREST PAYMENTS AMOUNTING TO RS.6,54,389/ - WAS MADE TO THREE PRIVATE FINANCIAL INSTITUTIONS WITHOUT DEDUCTING TAX AT SOURCE , WHICH ATTRACTS 4 PROVISIONS OF SECTION 194A OF THE ACT . THEREFORE, BY INVOKIN G THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.6,54,389/ - . 8. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 9. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE PAYMENTS WERE MADE TO THE PRIVATE FINANCIAL INSTITUTIONS DURING THE YEAR AND NO AMOUNTS WERE OUTSTANDING AND PAYABLE AS AT THE END OF THE YEAR. THEREFORE, NO DISALLOWANCE OF INTEREST EXPENDITURE CAN BE MADE U/S.40(A)(IA) OF THE ACT. FOR THIS PROPOSITION, HE PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD., (2013) 357 ITR 642(ALL), WHEREIN, IT HAS BEEN HELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TAX HAS NOT BEEN DE DUCTED AT SOURCE, THE AMOUNT SHOULD BE PAYABLE AND NOT IT HAS BEEN PAID BY THE END OF THE YEAR. HE FURTHER SUBMITTED THAT THE SLP FILED AGAINST THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE JUDGMENT DATED 2.7.2014 IN CC NO.(S) 8068/2014. THEREFORE, IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VICTOR SHIPPING SERVICES (P) LTD (SUPRA), NO DISALLOWANCE U/S.40(A)(IA) WAS WARRANTED IN THE CASE OF THE ASSESSEE. HE SUBMITTED THAT WHERE T HERE ARE CONTRARY DECISIONS OF HONBLE HIGH COURTS ON AN ISSUE AND NONE OF WHICH IS HONBLE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSESSEE 5 SHOULD BE FOLLOWED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS.VEG ETABLE PRODUCTS LTD., 88 ITR 192 (SC). 10 . IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT THERE IS NO AMOUNTING OUTSTANDING AND PAYABLE AT THE END OF THE YEAR. THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD(SUPRA) DELETE THE DISALLOWANCE OF RS.6,54,389 / - MADE U/ S.40(A)(IA) OF THE ACT AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE . 11. SO FAR AS CROSS OBJECT ION OF THE ASSESSEE IS CON CERNED, I FIND THAT THE CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF THE LD CIT(A). SINCE I HAVE DISMISSED THE APPEAL OF THE REVENUE CONSIDERING THE TAX EFFECT, THE CROSS OBJECTION IS RENDERED INFRUCTUOUS AND HENCE, IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 23 / 11 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 23 /11 /2016 6 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : /REVENUE: ITO, WARD - 1, BERHAMPUR. 2. THE RESPONDENT. /ASSESSEE: SRI ACHYUTA NARAYAN BAKSHI, PROP. A.B.MINERALS, GAJAPATI NAGAR, 8 TH LANE, BERHAMPUR 3. THE CIT(A) , BERHAMPUR 4. CIT , BHUBAENSWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//
