M/s. Malhotra Cables Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4712/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90873 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 16-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA
• Assessee Lawyers: AMIT KHURANA CAS; NAGESH KUMAR BEHL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI N.K. SAINI N.K. SAINI N.K. SAINI N.K. SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 4712/DEL/2013 4712/DEL/2013 4712/DEL/2013 4712/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009 - -- - 10 1010 10 M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., C/O NAGESH BEHL & CO., C/O NAGESH BEHL & CO., C/O NAGESH BEHL & CO., C/O NAGESH BEHL & CO., CHART CHART CHART CHARTERED ACCOUNTANT, ERED ACCOUNTANT, ERED ACCOUNTANT, ERED ACCOUNTANT, 21/25, MOTI NAGAR, 21/25, MOTI NAGAR, 21/25, MOTI NAGAR, 21/25, MOTI NAGAR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 015. 110 015. 110 015. 110 015. PAN : AAACM8040P. PAN : AAACM8040P. PAN : AAACM8040P. PAN : AAACM8040P. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -6(3), 6(3), 6(3), 6(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAGESH KUMAR BEHL AND SHRI AMIT KHURANA, CAS. RESPONDENT BY : SHRI P. DA M KANUNJHA, SR.DR.. DATE OF HEARING : 24.03.2015 24.03.2015 24.03.2015 24.03.2015 DATE OF PRONOUNCEMENT : 01.04.2015 01.04.2015 01.04.2015 01.04.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2009-10 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-IX, NE W DELHI DATED 7 TH JUNE, 2013. 2. THE ONLY GROUND OF APPEAL OF THE ASSESSEE IS AS UNDER:- CIT(A) ERRED IN DISALLOWING EXPENDITURE U/S 40(A)( IA) OF THE ACT IN RESPECT OF EXPENDITURE ALREADY PAID DU RING THE YEAR AS SECTION 40(A)(IA) DISALLOWANCE APPLIES ONLY TO AMOUNTS PAYABLE AS OF 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YEAR. ITA-4712/DEL/2013 2 3. THE ASSESSEE HAS ALSO FILED THE REVISED ADDITION AL GROUNDS OF APPEAL, WHICH ARE AS UNDER:- 1. THAT LEARNED AO ERRED IN DISALLOWING EXPENDITUR E U/S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.5,61,264 ALREADY PAID DURING THE YEAR AS SECTI ON 40(A)(IA) DISALLOWANCE APPLIES ONLY TO AMOUNTS PAYABLE AS OF 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YEAR. 2. THAT LEARNED CIT(A) ERRED IN DISALLOWING EXPENDITURE U/S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.4,06,950 INCURRED ON WHICH NO TDS WAS REQUIRED TO BE DEDUCTED AT SOURCE. 3. THAT LEARNED CIT(A) ERRED IN DISALLOWING EXPENDITURE U/S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.59,438 ON WHICH TDS WAS ALREADY DEDUCTED AT SOURCE. 4. THAT WITHOUT PREJUDICE TO ABOVE GROUNDS, LEARNED AO ERRED IN MAKING DISALLOWING OF RS.13,72,543 U/S 40(A)(IA) OF THE ACT WITHOUT HOLDING ASSESSEE AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT, IN OTHER WORDS, AO ERRED IN PRONOUNCING SENTENCE TO THE ASSESSEE WITHOUT GOING THROUGH THE PROCESS OF TRIAL SPECIF IED U/S 201. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE IN THE GROUND OF APPEAL OF THE ASSESSEE WOULD BE COVER ED WITH THE REVISED ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. 5. THE REVISED ADDITIONAL GROUND OF APPEAL NO.1 IS AS UNDER:- THAT LEARNED AO ERRED IN DISALLOWING EXPENDITURE U /S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.5,61,264 ALREADY PAID DURING THE YEAR AS SECTI ON 40(A)(IA) DISALLOWANCE APPLIES ONLY TO AMOUNTS ITA-4712/DEL/2013 3 PAYABLE AS OF 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YEAR. 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT OF `5,61,264/- OF EXPENDITURE WAS ALREADY PAID DURING THE ACCOUNTING PERIOD AND, THEREFORE, THE PROVISION OF SECTION 40( A)(IA) OF THE ACT DOES NOT APPLY TO THE SAME AS IT APPLIES ONLY TO THE AMO UNT PAYABLE AS ON THE LAST DAY OF THE RELEVANT ACCOUNTING PERIOD. 7. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LE ARNED COUNSEL FOR THE ASSESSEE. HE REFERRED TO THE RELEVANT PORT ION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT( A). WE FIND THAT THE ISSUE IS NOW SETTLED THAT THE PROVISION OF SECTION 40(A)(IA) OF THE ACT SHALL APPLY ONLY TO THE AMOUNT PAYABLE AS ON THE LAST DAY OF THE RELEVANT ACCOUNTING YEAR. ACCORDINGLY, THE ASSESSI NG OFFICER IS DIRECTED TO VERIFY THE AMOUNT IN QUESTION AND, IF T HE AMOUNT WAS ALREADY PAID DURING THE YEAR AND NO EXPENDITURE REM AINED PAYABLE AS ON THE LAST DAY OF THE RELEVANT ACCOUNTING PERIO D, THE PROVISION OF SECTION 40(A)(IA) OF THE ACT SHALL NOT APPLY. WE D IRECT ACCORDINGLY. 9. THE REVISED ADDITIONAL GROUND OF APPEAL NO.2 OF THE ASSESSEE IS AS UNDER:- THAT LEARNED CIT(A) ERRED IN DISALLOWING EXPENDITU RE U/S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.4,06,950 INCURRED ON WHICH NO TDS WAS REQUIRED T O BE DEDUCTED AT SOURCE. ITA-4712/DEL/2013 4 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE OF `4,06,950/- DOES NOT ATTRACT THE TDS PROVISIONS AND, THEREFORE, THERE COULD NOT BE ANY DISALLOWANCE ON T HIS AMOUNT. LEARNED DR HAS OPPOSED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE ASSESSEE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT( A). IN THE FACTS OF THE CASE, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE DE NOVO AFTER VER IFICATION THAT WHETHER THE TDS PROVISIONS WERE APPLICABLE ON THE EXPENDITU RE OF `4,06,950/- AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 12. THE REVISED ADDITIONAL GROUND OF APPEAL NO.3 IS AS UNDER:- THAT LEARNED CIT(A) ERRED IN DISALLOWING EXPENDITU RE U/S 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.59,438 ON WHICH TDS WAS ALREADY DEDUCTED AT SOURCE. 13. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TDS WAS ALREADY DEDUCTED ON THE AMOUNT OF EXPENDITURE OF `5 9,438/- AND, THEREFORE, THERE WAS NO QUESTION OF APPLICABILITY O F PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HE SUBMITTED THAT TH E EVIDENCE OF TDS HAVING BEEN MADE ON THIS AMOUNT OF `59,438/- IS FIL ED IN THE FORM OF FORM NO.16A, COPY FILED AT PAGE 42 OF THE COMPILATI ON FILED BEFORE THE TRIBUNAL. LEARNED DR HAS RELIED ON THE ORDER OF TH E ASSESSING OFFICER. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN V IEW OF THE EVIDENCE FILED BY THE ASSESSEE IN THE COMPILATION B EFORE US TO PROVE ITA-4712/DEL/2013 5 THAT THE ASSESSEE HAS MADE THE TDS ON THE EXPENDITU RE OF `59,438/-, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND D IRECT THAT NO DISALLOWANCE OF `59,438/- BE MADE UNDER SECTION 40( A)(IA) OF THE ACT. ACCORDINGLY, THE REVISED ADDITIONAL GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 15. THE REVISED ADDITIONAL GROUND OF APPEAL NO.4 OF THE ASSESSEE IS AS UNDER:- THAT WITHOUT PREJUDICE TO ABOVE GROUNDS, LEARNED A O ERRED IN MAKING DISALLOWING OF RS.13,72,543 U/S 40(A)(IA) OF THE ACT WITHOUT HOLDING ASSESSEE AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT, IN OTHER WORDS, AO ERRED IN PRONOUNCING SENTENCE TO THE ASSESSEE WITHOUT GOING THROUGH THE PROCESS OF TRIAL SPECIF IED U/S 201. 16. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TOTAL DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WAS `13,72,543/- AND, AFTER CONSIDERING THE THREE AMOUNTS COVERED BY THE REVISED ADDITIONAL GROUNDS OF APPEAL NO.1, 2 & 3, THERE REMAINS THE DI SALLOWANCE OF `3,44,891/- UNDER SECTION 40(A)(IA) OF THE ACT. HE SUBMITTED THAT THE ASSESSEE WAS NEVER HELD AS ASSESSEE IN DEFAULT UN DER SECTION 201 OF THE ACT AND, THEREFORE, THE PROVISION OF SECTION 40 (A)(IA) OF THE ACT WAS WRONGLY INVOKED ON THIS AMOUNT. LEARNED DR HAS REL IED ON THE ORDER OF THE ASSESSING OFFICER. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT( A). WE FIND THAT THERE IS NO FORCE IN THE ARGUMENTS OF THE LEARNED C OUNSEL FOR THE ASSESSEE ON THIS ISSUE AND, SINCE THE AMOUNT OF EXP ENDITURE IN QUESTION WAS NOT PAID DURING THE YEAR AND WAS PAYA BLE AS ON THE LAST ITA-4712/DEL/2013 6 DAY OF THE ACCOUNTING YEAR, THE DISALLOWANCE OF `3, 44,891/- WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE REV ISED ADDITIONAL GROUND OF APPEAL NO.4 OF THE ASSESSEE IS DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL, 2015. SD/- SD/- ( (( ( N.K. SAINI N.K. SAINI N.K. SAINI N.K. SAINI ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., M/S MALHOTRA CABLES PVT.LTD., C/O NAGESH BEHL & CO., CHARTERED ACCOUNTANT, C/O NAGESH BEHL & CO., CHARTERED ACCOUNTANT, C/O NAGESH BEHL & CO., CHARTERED ACCOUNTANT, C/O NAGESH BEHL & CO., CHARTERED ACCOUNTANT, 21/25, MOTI NAGAR, NEW DELHI 21/25, MOTI NAGAR, NEW DELHI 21/25, MOTI NAGAR, NEW DELHI 21/25, MOTI NAGAR, NEW DELHI 110 015. 110 015. 110 015. 110 015. 2. RESPONDENT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -6(3), NEW 6(3), NEW 6(3), NEW 6(3), NEW DELHI. DELHI. DELHI. DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR