DCIT CEN CIR 7(3), MUMBAI V. SIMTOOLS P.LTD, MUMBAI

ITA 4825/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3892 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Rectification of order; Retrospective amendment; TDS
• Section: 143(3); 153A; 40(a)(ia); 143(1); 154; 15

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.4825/MUM/2017 (ASSESSMENT YEAR 2009-10) DCIT, CC-7(3) ROOM NO. 655, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400018. VS. M/S SIMTOOLS PVT. LTD. 216, SHAH AND NAHAR INDUSTRIAL ROAD, OFF. DR. E. MOSES ROAD, WORLI, MUMBAI-400018. P AN: AAECS1757M APPELLANT RESPONDENT APPELLANT BY : SHRI CHAUDHARY ARUN KUMAR SINGH (DR) RESPONDENT BY : SHRI MADHUR AGARWAL (AR) DATE OF HEARING : 30.01.2019 DATE OF PRONOUNCEMEN T : 30.01.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE INC OME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER O F INCOME-TAX-49, MUMBAI (THE LD. CIT(A) DATED 19.04.2017, WHICH IN T URN ARISES FROM THE ORDER UNDER SECTION 154 DATED 24.09.2015 PASSED BY ASSESSING OFFICER FOR ASSESSMENT YEAR 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE DISALLOWANCE OF RS . 3,15,65,489/- U/S 40(A)(IA) IN AN ORDER U/S 154 IS NOT CORRECT. 1(B). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE 2ND PROVISO TO SECTION 40(A)(IA) HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 WITH EFFECT FRO M A.Y. 2013-2014 AND, HENCE, THE BENEFIT OF THE SAID PROVISO IS NOT AVAIL ABLE TO THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-2010. ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 2 1(C). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT IT IS NOT DISPUTED BY THE ASSESSEE THAT THE INTEREST PAYMENT OF RS. 3,15,65,486/- TO THE PARTIE S REQUIRED DEDUCTION OF TAX AT SOURCE AND AS NO TAX WAS DEDUCTED AT SOURCE ON THE SAID INTEREST PAYMENT, THE OMISSION TO DISALLOW THE INTEREST PAYMENT IX] S 40( A)(IA) WAS A MISTAKE APPARENT FROM RECORD WHICH COULD BE RECTIFIED U/S 154. 1(D).ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE HON'BLE SUPREM E COURT HAS GRANTED SLP (WHICH IS REPORTED IN (2016) 242 TAXMAN 5 (SC)) AGA INST THE DECISION OF THE HON'BLE DELHI COURT IN THE CASE OF CIT V. ANSAL LAN DMARK TOWNSHIP PVT. LTD. (2015) 234 TAXMAN 825 (DELHI) WHEREIN THE HON'BLE D ELHI HIGH COURT HELD THAT 2ND PROVISO TO SECTION 40 (A)(IA) IS DECLARATORY AN D CURATIVE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF REAL ESTATE CONSTRUCTION. IN THIS CASE, ASSESSMENT WAS C OMPLETED UNDER SECTION 153A R.W.S. 143(3) ON 28.03.2013. THE ASSESSING OFF ICER ON VERIFICATION OF FACT RECORDED THAT ASSESSEE HAS PAID INTEREST OF RS . 6,64,44,837/- AND RS. 9,98,630/- TO M/S LODHA DEVELOPERS LTD. (LDL) AND L ODHA ELEVATION BUILDCON PVT. LTD. (LEBPL). THE ASSESSEE VIDE ITS L ETTER DATED 19.03.2013 STATED THAT TDS WAS DEDUCTED @ 22.66% ON BOTH THE I NTEREST PAYMENT WHICH IS RS. 1,50,56,400/- AND RS. 2,26,290/- RESPE CTIVELY. THE ASSESSEE FURTHER INFORMED THAT LDL AVAILED LOWER TDS CERTIFI CATE FOR 4.53% OF RS. 3,58,77,981/-. THE TDS AMOUNT OF LDL AFTER CONSIDER ING THE LOWER TDS DEDUCTION WAS CALCULATED TO RS. 85,52,440/- AND THU S THE DIFFERENCE OF TDS OF RS. 65,03,960/- WAS REVERSED ON 01.04.2009, OUT OF TOTAL BALANCE OF TDS, LDL OF RS. 85,52,440/-, THE ASSESSEE PAID TDS OF RS . 16,25,990/- AND BALANCE OF RS. 69,26,450/- WAS REVERSED, SIMILARLY THE ASSESSEE REVERSED THE ENTIRE TDS FOR LEBPL OF RS. 2,26,290/-. THE ASSESSI NG OFFICER TOOK THE VIEW THAT ASSESSEE HAS NOT PAID TDS ON INTEREST PAY MENT OF RS. ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 3 3,05,66,856/- AND RS. 9,98,630/-. FOR NOT MAKING PA YMENT OF TDS EXPENSES. THE ASSESSEE CONTENDED THAT AMENDMENT MADE IN SECTI ON 201 BY FINANCE ACT 2012 W.E.F. 01.07.2012 AND THAT THE AMENDMENT I S RETROSPECTIVE APPLICABILITY. THE ASSESSEE ALSO IN ALTERNATIVE SUB MITTED THAT THE INTEREST EXPENSES HAS NOT BEEN DEBITED TO P&L A/C AND NOT CL AIMED, THEREFORE, IT CANNOT BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 40A(IA) OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT NEW PROVISO REGARDING EXCEPTION WITH REFERENCE TO AMENDMENT MADE IN SECTI ON 201 WAS BROUGHT ON STATUTE BOOK FROM 01.04.2013 AND THUS APPLICABLE FO R ASSESSMENT YEAR 2013-14 AND THAT SAID SECTION IS PROSPECTIVE IN NAT URE AND NOT RETROSPECTIVE AS CLAIMED BY ASSESSEE AND THAT ASSESSEE CANNOT TAK E BENEFIT OF AMENDMENT IN ASSESSMENT YEAR 2009-10. FOR SECOND CONTENTION O F THE ASSESSEE THAT THE INTEREST EXPENSES COULD NOT BE DISALLOWED AS THE SA ME WAS NOT DEBITED TO P&L A/C WAS NOT CORRECT. THUS, THE ASSESSING OFFICE R TOOK THE VIEW THAT INTEREST EXPENSES OF RS. 3,15,65,486/- ON WHICH TDS HAS NOT BEEN PAID WAS TO BE DISALLOWED AND WORK-IN-PROGRESS WAS TO BE RED UCED ACCORDINGLY. THEREFORE, THE ASSESSING OFFICER PASSED THE RECTIFI CATION ORDER AND RECTIFIED THE ASSESSMENT ORDER DATED 28.03.2013 UNDER SECTION 153A R.W.S. 143(3). 3. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE W AS DELETED. THE LD. CIT(A) DELETED THE DISALLOWANCE HOLDING THAT DISALL OWANCE MADE IN ORDER UNDER SECTION 154 IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND SUCH DISALLOWANCE COULD NOT HA VE BEEN MADE UNDER ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 4 SECTION 153/143(3). THE LD. CIT(A) ALSO TOOK THE VI EW THAT SECOND PROVISO TO SECTION 40A(IA) WAS INTRODUCED BY FINANCE ACT 20 10 IS A CURATIVE AMENDMENT AND HAS RETROSPECTIVE EFFECT AS HELD BY T RIBUNAL IN DR. ADI R NAZIR V ACIT IN ITA NO. 1056/M/2011, DCIT V ANAND M ARAKALA [2014] 48 TAXMANN.COM 402 (BANGALORE), CAPITAL PHARMA V ITO [ 2014] 50 TAXMANN.COM 411 (BANGALORE), RAJEEV KUMAR AGARWAL V ADDL. CIT 45 TAXMANN.COM 555 (AGRA), BY HONBLE GUJARAT HIGH COU RT IN CIT V VALIBHAI KHANBHAI MANKAD 28 TAXMANN.COM 119 (GUJARAT HC) & B Y HONBLE DELHI HIGH COURT IN ANSAL LAND MARK TOWNSHIP V CIT IN ITA NO. 160 & 161/2015 (DEL.HC). AGGRIEVED BY THE ORDER OF LD. CI T(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND AUTHORIZED REPRESENTATIVE (AR) OF T HE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. D R FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. D R FOR THE REVENUE FURTHER SUBMITS THAT SPECIAL LEAVE PETITION OF THE REVENUE AGAINST THE DECISION OF HONBLE DELHI HIGH COURT IN ANSAL LAND MARK TOWNSHI P (P.) LTD. IS PENDING IN HONBLE SUPREME COURT. ON THE OTHER HAND , THE LD. AR OF THE ASSESSEE SUBMITS THAT THE GROUND OF APPEAL RAISED B Y REVENUE IS COVERED BY THE DECISION OF HONBLE APEX COURT IN CIT VS. CALCU TTA EXPORT COMPANY [2018] 93 TAXMANN.COM 51 (SC). THE LD. AR FURTHER S UBMITS THAT THE HONBLE SUPREME COURT HELD THAT AMENDMENT MADE BY F INANCE ACT, 2010 TO ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 5 PROVISIONS OF SECTION 40A(IA) IS CURATIVE IN NATURE AND SHOULD BE GIVEN RETROSPECTIVE OPERATION FROM THE DATE OF INCEPTION. THE LD. AR OF THE ASSESSEE IN ALTERNATIVE SUBMISSION SUBMITS THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143/143(3) AND IN ABSENCE O F ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH, THE ASSESSING OFF ICER HAS NO JURISDICTION TO MAKE DISALLOWANCE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153C. THE DISALLOWANCE MADE IN THE ORDER UNDER SECTION 15 4 IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. THE ASSESSMENT ORDER UNDER SECTION 143(1) WAS PASSED ON 24.03.2011 AND RECTIFICATION ORDER COULD ONLY BE MADE UPTO 31.03.2015, THE ORDER WAS P ASSED ON 24.09.2015. THUS, THE ORDER IS NOT SUSTAINABLE ON BOTH THE COUN TS I.E. NOT BASED ON INCRIMINATING MATERIAL AS WELL AS BEYOND THE TIME L IMIT PRESCRIBED FOR RECTIFICATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER RECTIFIED THE ASSESSMENT ORDER VIDE ITS ORDER DATED 24.09.2015 HO LDING THAT IN NEW PROVISO REGARDING EXCEPTION WITH THE REFERENCE TO T HE AMENDMENT TO SECTION 201 HAS BEEN INSERTED BY FINANCE ACT, 2010 W.E.F. 0 1.04.2013 WHICH IS APPLICABLE FROM ASSESSMENT YEAR 2013-14 AND THAT TH E AMENDMENT IS PROSPECTIVE IN NATURE AND NOT RETROSPECTIVE AS CLAI MED BY ASSESSEE. THE ASSESSEE CANNOT CLAIM BENEFIT OF THE AMENDED PROVIS ION FOR ASSESSMENT YEAR 2009-10 AS THE SAME WERE NOT APPLICABLE IN THA T YEAR. OTHER CONTENTION ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 6 OF ASSESSEE THAT EXPENSES CANNOT BE DISALLOWED AS T HE SAME WAS NOT DEBITED TO THE P&L A/C IS ALSO NOT CORRECT AS THERE IS NO S UCH PROVISION IN SECTION 40A(IA). 6. THE LD. CIT(A) DELETED THE DISALLOWANCE ON HIS OBSE RVATION THAT ASSESSMENT UNDER SECTION 143(1)(A) WAS COMPLETED ON 04.03.2011 AND THE RECTIFICATION ORDER COULD BE PASSED ONLY UP TO 31.03.2015. THE L D CIT (A) ALSO HELD THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING TH E SEARCH FOR MAKING ADDITION IN ASSESSMENT UNDER SECTION 153C/143(3) AN D IN ABSENCE OF INCRIMINATING MATERIAL THE ADDITION/DISALLOWANCE WA S WITHOUT JURISDICTION. THE LD. CIT(A) ALSO TOOK THE VIEW THAT THE AMENDMEN T MADE BY FINANCE ACT, 2010 TO THE SECOND PROVISO IS RETROSPECTIVE OR NOT AND CONSEQUENTLY WHETHER TAX WAS DEDUCTABLE AT SOURCE UNDER CHAPTER XVIIB OR NOT IS A DEBATABLE ISSUE. WE HAVE NOTED THAT THE HONBLE APE X COURT IN A RECENT DECISION IN CASE OF CIT VS. CALCUTTA EXPORT COMPANY (SUPRA) THAT THE AMENDMENT MADE BY FINANCE ACT 2010, TO THE PROVISO OF SECTION 40(A)(IA) IS CURATIVE IN NATURE AND IT SHOULD BE GIVEN RETROSPEC TIVE OPERATION FROM THE DATE OF INSERTION I.E. WITH EFFECT FROM ASSESSMENT YEAR 2005-06. 7. WE HAVE NOTED THAT THE LD CIT(A) HAVE PASSED THE IM PUGNED ORDER ON THREE COUNTS, FIRSTLY THAT ASSESSMENT UNDER SECTION 143(1 )(A) WAS COMPLETED ON 04.03.2011 AND THE RECTIFICATION ORDER COULD BE PAS SED ONLY UP TO 31.03.2015, PASSED ON 24.09.2015 IS BARRED BY LIMIT ATION, SECONDLY THE ADDITION/ DISALLOWANCE WAS NOT BASED ON INCRIMINATI NG MATERIAL FOUNDS ITA NO. 4825 MUM 2017-M/S SIMTOOLS PVT. LTD. 7 DURING THE SEARCH AND THIRDLY THE ISSUE IS DEBATABL E. AS HAVE RECORDED THAT THE HONBLE SUPREME COURT RECENTLY IN OF CIT VS. CA LCUTTA EXPORT COMPANY (SUPRA) HELD THAT THE AMENDMENT MADE BY FINANCE ACT 2010, TO THE PROVISO OF SECTION 40(A)(IA) IS CURATIVE IN NATURE AND IT S HOULD BE GIVEN RETROSPECTIVE OPERATION FROM THE DATE OF INSERTION I.E. WITH EFFE CT FROM ASSESSMENT YEAR 2005-06. CONSIDERING THE ABOVE FACTUAL AND LEGAL DI SCUSSION, WE DO NOT FIND ANY ILLEGALITY IN THE ORDER OF LD CIT(A), WHICH WE AFFIRM. NO CONTRARY FACT OR LAW IS BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/ 01/2019. SD/ SD/- MANOJ KUMAR AGGARWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI, DATE: 30.01.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI