Shri Tippanna M. Agar, Bijapur V. CIT, Bangalore

ITA 502/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0592 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 19-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: P C CHADAGA
• Keywords: Search and seizure; Non-deduction of tax; TDS
• Section: 143(3); 40(a)(ia); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.502/BANG/2009 ASSESSMENT YEAR : 2005-06 SHRI TIPPANNA M. AGASAR, PWD CONTRACTOR, SYNDICATE BANK BUILDING, SINDAGI DISTRICT, BIJAPUR. : APPELLANT VS. THE COMMISSIONER OF INCOME-TAX, KARNATAKA (CENTRAL), BANGALORE. : RESPONDENT APPELLANT BY : SHRI P.C. CHADAGA RESPONDENT BY : SHRI JASON P. BOAZ O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER IN THIS APPEAL, THE ASSESSEE, AN INDIVIDUAL, HAS AGITATED THE ACTION OF THE LD. CIT(CENTRAL) IN PASSING AN ORDER U/S 263 OF THE FOR THE AY 2005-06 , SETTING ASIDE THE ORIGINAL ORDER PASSED U/S 143(3) OF THE ACT BY THE AO. 2. THE ASSESSEE HAS RAISED FIVE GROUNDS OF APPEAL, OUT OF WHICH, GROUND NO.1 AND 5 ARE GENERAL AND NOT SPECIFIC AND, ACCORDINGLY, THEY DO NOT SURVIVE FOR ADJUDICATION. IN THE REMAINING GRO UNDS, THE ESSENCE AND SUBSTANCE OF THE ISSUE IS CONFINED TO ITA NO.502/B/09 PAGE 2 OF 11 EVEN THOUGH THE CLAUSE (IA) WAS INSERTED TO S. 40( A) AND WILL BE OPERATIVE FROM 1.4.2005 AND THUS MAKES IT APPLICABL E FROM THE ASSESSMENT YEAR 2005-06 (WHICH RECEIVED THE ASSENT OF THE PRESIDENT ONLY ON 11/9/2004), THE LD. CIT (C) ERRED IN PASSIN G AN ORDER U/S 263 OF THE ACT DIRECTING THE AO TO DISALLOW A SUM OF RS .1.10 CRORE U/S 40(A)(IA) OF THE ACT. 3. THE ASSESSEE, A CIVIL CONTRACTOR, FURNISHED HIS ROI FOR THE AY UNDER DISPUTE ADMITTING AN INCOME OF RS.30.71 LAKHS WHICH WAS PROCESSED AND CONCLUDED BY THE AO, DETERMINING THE TOTAL INCOME A T RS.32.12 LAKHS. THE LD.CIT, AFTER VERIFICATION OF P & L ACCOUNT OF THE ASSESSEE FOUND THAT HE HAD CLAIMED A SUM OF RS.1.10 CRORES REPRESENTING SU B-CONTRACT PAYMENT FOR WHICH THERE WAS NO PROOF OF TAX DEDUCTED AT SOU RCE, IN A SUO MOTO ACTION INITIATED PROCEEDINGS U/S 263 OF THE ACT TO DISALLOW THE SAID SUM IN VIEW OF THE NEWLY AMENDED S. 40(A)(IA) OF THE ACT, AS THIS ISSUE HAD NOT BEEN EXAMINED BY THE AO WHILE CONCLUDING THE ASSESS MENT IN QUESTION. 4. THE STAND OF THE CIT WAS OBJECTED TO BY THE ASSE SSEE ON THE FOLLOWING LINES: (I) CLAUSE (IA) OF S.40(A) OF THE ACT WAS INTRODUCED BY THE FINANCE (NO:2) ACT OF 2004 AND THE SAID ACT RECEIVED THE AS SENT OF THE PRESIDENT ONLY ON 10/9/2004. PRIOR TO THE AMENDMEN T, THE ISSUE OF DISALLOWANCE WAS ONLY IN RESPECT OF CERTAIN PAYMENT S WHICH WERE EXTENDED BY THE AMENDMENT TO THE PAYMENTS MADE TO R ESIDENT CONTRACTOR/SUB-CONTRACTOR. SINCE THE AMENDMENT WAS NOT IN EXISTENCE ON THE STATUTE BOOK AS ON 1 ST APRIL OF THAT YEAR, THE ASSESSEE WAS GIVEN TO UNDERSTAND THAT THE PROVISION S WERE APPLICABLE FOR THE AY 06-07 ONLY AND NOT FOR AY 05-06; (II) THE RECIPIENT OF THE SAID SUB-CONTRACT HAD DECLARED THE SAID AMOUNT IN HIS ROI, PAID TAXES AND THAT THE ASSESSME NT HAD BEEN COMPLETED IN HIS CASE. EVEN IF THE ASSESSEE HAD TO DEDUCT THE TAX, THE RECIPIENT CAN NOT CLAIM THE SAME SINCE THE EXIS TING PROVISIONS ITA NO.502/B/09 PAGE 3 OF 11 OF LAW DO NOT PERMIT ANY SUPPLEMENTARY CLAIM OF REF UND AND IN EFFECT THE DEDUCTION AMOUNTS TO DOUBLE TAXATION; (III) EVEN IF THE ASSESSMENT WAS FOUND TO BE ERRONEOUS IN LAW, IT WAS NOT PREJUDICIAL TO THE INTEREST OF REVENUE AS THE T AXES DUE ON THE SAID SUM HAD BEEN COLLECTED BY WAY OF ASSESSMENT IN THE CASE OF RECIPIENT AND SINCE TWO VIEWS WERE POSSIBLE, THE PH RASE 'PREJUDICIAL TO THE INTEREST OF REVENUE SHOULD NOT BE UNDERSTOOD TO MEAN THAT IT WAS A LOSS OF REVENUE AND PLACED RELIA NCE ON THE FINDINGS REPORTED IN 243 ITR 83 (SC) AND IN 268 ITR 128 (P&H). 4.1. BRUSHING ASIDE THE ASSESSEES OBJECTION, THE C IT CAME UP WITH THE FOLLOWING REASONS TO JUSTIFY HIS STAND: (I) THE FINANCE (NO:2) ACT BY WHICH CLAUSE (IA) WAS INS ERTED INTO S.40(A) RECEIVED THE ASSENT OF THE PRESIDENT ONLY O N 10/9/04 AND THE SAID PROVISION WAS NOT ON THE STATUTE AS ON 1.4 .04 WAS NOT TENABLE; (II) THE FINANCE(NO:2) ACT 2004 CLEARLY PROVIDES THAT TH E PROVISION IN CLAUSE (IA) TO S. 40(A) WILL BE OPERATIVE FROM 1.4. 05 AND THUS MAKES IT APPLICABLE FROM THE ASST. YEAR 05-06; (III) THE SUB-CONTRACT ASSIGNED BY THE ASSESSEE WAS A CON TINUOUS ONE SPREAD OVER THE ENTIRE FY AND NOT AN ACT ON A PARTI CULAR DAY AND THAT IN THE INSTANT CASE AND THE ON THE DATE OF PAY MENT TO THE SUB- CONTRACTOR THE SAID PROVISION WAS VERY MUCH ON THE STATUTE AND AS SUCH THE ASSESSEE WAS BOUND TO DEDUCT TAX AS PER TH E PROVISIONS OF THE I.T. ACT WHILE MAKING SUCH SUB-CONTRACT PAYMENT S WHICH THE ASSESSEE HAD FAILED TO DO SO; (IV) THE INTRODUCTION OF CLAUSE (IA) IN THE STATUTE WAS TO KEEP A CHECK ON SUCH NON-COMPLIANCE TO THE PROVISIONS RELATING T O TDS AS PER THE PROVISIONS OF THE ACT; (V) THE ASSESSEES PLEA OF IGNORANCE OF CLAUSE (IA) WHI CH PROMPTED HIM FOR MAKING THE PAYMENT OF ENTIRE SUB-CONTRACT A MOUNT WITHOUT TDS DOESNT HOLD WATER; (VI) IN THE CASE ON HAND, THE APPLICATION OF THE NEW PRO VISION S.40(A)(IA) COMES INTO EFFECT ONLY IN CASE OF VIO LATION OF ANOTHER PROVISIONS OF S.194C WHICH WAS ALREADY IN EXISTENCE ; ITA NO.502/B/09 PAGE 4 OF 11 (VII) THE MAKE BELIEF ASCERTAIN OF THE ASSESSEE THAT HIS PREVIOUS CAS VERSION THAT THE PROVISIONS APPLICABLE FROM THE AY 06-07 WAS THE REASON FOR NON-DEDUCTION OF TAX AT SOURCE HAD EXPOS ED HIM WIDELY AS THE SAME AUDITOR HAD HIGHLIGHTED THE SAID OMISSI ON IN HIS AUDIT REPORT FURNISHED ALONG WITH THE ROI; (VIII) THE ASSESSEE HAVING PAID THE SUB-CONTRACT AMOUNT WI THOUT RESORTING TO DEDUCT TAX AT SOURCE AMOUNTS TO NON-CO MPLIANCE WHICH ATTRACTS THE PROVISIONS OF NEW S.40(A)(IA). THE PROVISION CLAUSE (IA) OF S.40(A) IS ENFORCING IN NATURE AND I S INTENDED TO ENSURE THAT THE PROVISIONS RELATING TO DEDUCTION OF TAX AT SOURCE ARE COMPLIED WITH; (IX) THE APPLICATION OF THE SAID PROVISIONS WOULD BE ON ACTUAL FACTS AND NOT ON HYPOTHETICAL SITUATIONS AS SOUGHT TO BE BROUGHT OUT BY THE AR OF THE ASSESSEE; (X) THE RELIANCE PLACED IN THE CASE LAWS REPORTED IN 29 5 ITR 282 (SC) AND 243 ITR 83 (SC) WHEREIN THE DECISIONS OF THE AP EX COURT THAT THE PROVISIONS OF S.263 CANNOT BE INVOKED TO CORREC T AN ORDER OF THE AO ON AN ISSUE ON WHICH THERE WAS A POSSIBILITY OF TWO VIEWS; IN THE CASE ON HAND, THERE WAS NO SUCH POSSIBILITY OF TWO VIEWS ON THE ISSUE OF DISALLOWANCE OF SUB-CONTRACT AMOUNT ON WHICH NO TAX WAS DEDUCTED. THIS WAS FOR THE REASON THAT DURING THE PERIOD OF PAYMENT, THE LAW WAS VERY CLEAR IN VIEW OF THE PROV ISIONS OF CLAUSE (IA) OF S.40(A) OF THE ACT. THE PAYMENTS ON WHICH TAX WAS NOT DEDUCTED NEED TO BE DISALLOWED FROM EXPENDITURE ; (XI) IN VIEW OF THE CLEAR PROVISIONS OF THE ACT, THERE W AS NO POSSIBILITY OF HAVING TWO VIEWS AND THUS THE CASE LAWS CITED AR E CLEARLY DISTINGUISHABLE; (XII) SINCE THE AO WHILE PASSING THE ORDER HAD NOT APPLIE D THE PROVISIONS OF S.40(A)(IA) IN RESPECT OF SUB-CONTRAC T PAYMENTS ON WHICH NO TDS WAS MADE AS PER THE PROVISIONS OF THE ACT, THE IMPUGNED ORDER OF THE AO WAS ERRONEOUS AND WAS PREJ UDICIAL TO THE INTEREST OF REVENUE. 5. STUNG BY THE ACTION OF THE LD.CIT, THE ASSESSEE BROUGHT THE ISSUE BEFORE US FOR REDRESSAL. DURING THE COURSE OF HEAR ING, THE LD. A R VEHEMENTLY REITERATED MORE OR LESS WHAT HAS BEEN PU T-FORTH DURING THE ITA NO.502/B/09 PAGE 5 OF 11 COURSE OF PROCEEDINGS U/S 263 OF THE ACT. BUTTRESS HIS ARGUMENT, THE LD. A R SUBMITTED THAT THE LD. CIT (C) HAD GROSSLY ERRE D IN INTERPRETING THE AMENDED PROVISIONS WHICH WAS DETRIMENTAL TO THE ASS ESSEE AND PLEADED THAT THE IMPUGNED ORDER OF THE CIT (C) DESERVES TO BE ANNULLED. 5.1. ON THE OTHER HAND, THE LD. D.R ARGUED THAT T HE CIT (C) HAD IN A JUDICIOUS MANNER DEALT WITH THE ISSUE AS PER THE AM ENDED PROVISIONS OF S.40(A)(IA) WHICH HAD BEEN LOST SIGHT OF, WHILE CON CLUDING THE ORIGINAL ASSESSMENT BY THE AO. THUS, THERE WAS NO IMPEDIMEN T WHATSOEVER WHICH REQUIRES TO BE CORRECTED. IT WAS, THEREFORE, PLEAD ED THAT THE ORDER OF THE CIT (C) REQUIRES NO INTERFERENCE AT THIS STAGE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE HAVE ALSO PERUSED THE RELEVANT RECORDS. THE CRUX OF THE ISSU E AND THE GRIEVANCE OF THE ASSESSEE IS THAT THOUGH THE AMENDMENT WAS INTRO DUCED BY THE FINANCE (NO.2) ACT, 2004 AND PUT INTO OPERATION W.E.F. 1.4. 2005 [APPLICABLE FROM THE ASSESSMENT YEAR 2005-06], IT CANNOT BE APPLIED IN T HE CASE OF THE ASSESSEE AS THE PAYMENTS WERE MADE BETWEEN APRIL AND SEPTEMB ER 2004 AND THAT THE SAID FINANCE ACT RECEIVED THE ASSENT OF THE PRE SIDENT ONLY ON 10/9/2004. THE CONTENTION OF THE ASSESSEE IS LACKI NG CONVICTION. BEING A CIVIL CONTRACTOR EXECUTING THE CONTRACT FOR THE IRR IGATION DEPARTMENT OF GOVERNMENT OF KARNATAKA, CANNOT PLEAD IGNORANCE THA T THE TAX WILL HAVE TO BE DEDUCTED AT SOURCE FOR THE PAYMENTS MADE TO THE SUB-CONTRACTOR. THE ASSESSEES ARGUMENT THAT THE FINANCE ACT (NO:2) ACT 2004 WAS BROUGHT ON THE STATUTE, ON RECEIVING OF ASSENT FROM THE PRESID ENT; ONLY ON 10.9.2004 AND THAT THE ASSESSEE HAD MADE THE PAYMENTS BETWEE N APRIL AND ITA NO.502/B/09 PAGE 6 OF 11 SEPTEMBER, 2004 IS HARDLY CONVINCING. BEING A CON TRACTOR EXECUTING WORK RUNNING INTO CRORES OF RUPEES AND HIS BOOKS OF ACCO UNT WERE SUBJECTED TO AUDIT U/S 44 AB AND ABLY ASSISTED BY HIS TAX CONSUL TANTS, THERE WONT BE ANY BUYERS OF HIS THEORY THAT THE AMENDMENT WAS NOT IN EXISTENCE ON THE STATUTE BOOK AS ON 1 ST APRIL OF 2004 AND THAT HE WAS GIVEN TO UNDERSTAND BY HIS CA THAT THE PROVISIONS WERE APPLICABLE FOR THE AY.2006-07 AND NOT FOR THE AY UNDER DISPUTE. 6.1. REVERTING BACK TO THE ISSUE, THE INTENT OF T HE LEGISLATURE WAS TO PLUG THE REVENUE LOSS AND TO BRING THE LEGITIMATE T AXES DUE TO THE GOVERNMENT EXCHEQUER. FOR AN ARGUMENT SAKE WITHOUT CONCEDING, IF THE ASSESSEES ARGUMENT THAT THE TAXES DUE ON THE SAID SUMS HAVE ALREADY BEEN COLLECTED FROM THE SO CALLED RECIPIENT AND THA T THERE WAS NO LOSS TO THE GOVERNMENT WERE TO BE ACCEPTED RATHER IN PRINCIPLE, WE ARE AFRAID, THE VERY PURPOSE AND INTENT OF THE LEGISLATURE WOULD BE DEFE ATED IN BRINGING IN SUCH AN AMENDMENT. SECTION 40(A)(IA) OF THE ACT IS EXTR ACTED HEREBELOW FOR A CLOSER EXAMINATION : (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CH APTER 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 S O DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR , ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139; OR ITA NO.502/B/09 PAGE 7 OF 11 ( B ) IN ANY OTHER CASE, ON OR BEFORE 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 DEDUCT ED ( A ) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT P AID AFTER THE SAID DUE DATE; OR ( B ) DURING ANY 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 COMPUTI NG THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. A PLAIN READING OF THE PROVISION CLEARLY PROVIDES T HAT ANY PAYMENT MADE TO A RESIDENT OR TO A CONTRACTOR OR SUB-CONTRACTOR IN LIEU OF ANY INTEREST, COMMISSION, BROKERAGE, ETC. AS SPECIFIED IN THE ACT , ON WHICH TAX IS TO BE DEDUCTED AND IF SUCH TAX IS NOT DEDUCTED OR AFTER D EDUCTION HAS NOT BEEN REMITTED, SUCH SUM SHALL NOT BE ALLOWED AS DEDUCTIO N IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. IN OTHER WORDS, THE PROVISION PROVIDES THAT UNDER CERTAIN CI RCUMSTANCES OF NON- COMPLIANCE WITH TDS PROVISIONS, THE PAYMENT MADE ON WHICH TAX HAS TO BE DEDUCTED AT SOURCE SHALL NOT BE ALLOWED AS A DEDUCT ION IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD, PROFITS AND GAINS OF BUSINESS OR PROFESSION. HOWEVER, SUCH SUM SHALL BE ALLOWED AS DEDUCTION IN THE YEAR IN WHICH THE TAX IS DEDUCTED ON SUCH PAYMENT AND RE MITTED. THIS PROVISION IS NO DOUBT INTRODUCED TO PLUG IN ANY PROBABLE LOSS TO THE REVENUE. IT IS A HARSH PROVISION COMPELLING ANY TAX DEDUCTOR TO DEDU CT TAX AT SOURCE AND REMIT IT TO THE GOVERNMENT TREASURY IN ORDER TO ENS URE THAT NO INCOME ESCAPES TAX. HOWEVER, THE RIGOUR OF THIS PROVISION IS MADE EQUITABLE BY PROVIDING THAT THE TAX DEDUCTED SHALL BE ALLOWED DE DUCTION FOR THE ITA NO.502/B/09 PAGE 8 OF 11 DISALLOWED EXPENDITURE IN THE PREVIOUS YEAR THAT TA X IS DEDUCTED. TO SUM UP, THOUGH THE ACT HAS BEEN EMBEDDED WITH A PENAL P ROVISION OF THE DISALLOWANCE ON NON-COMPLIANCE, RELIEF IS INHERENTL Y GRANTED ON COMPLIANCE, THOUGH WITH SOME INCONVENIENCE, DISTURB ANCE OF MATCHING PRINCIPLE AND CUMBERSOME PROCESS WHEN IT COMES TO C LAIM REFUND WHEN TAX IS DEDUCTED AT SOURCE AND THE TAX DEDUCTEE HAS ALSO PAID THE TAX. IN ORDER TO AVOID SUCH A SITUATION, IT WOULD BE PRUDENT ON T HE PART OF THE ASSESSEE TO PROMPTLY DEDUCT TAX AND REMIT IT TO THE GOVERNMENT TREASURY. IN INTERPRETING TAX STATUTE, GENERALLY ACCEPTED PRINCIPLE FOLLOWED IS LIBERAL INTERPRETATION. THE LEGENDARY DECISION HELD IN CAPE BRANDY SYNDICAT E V. INLAND REVENUE IS BEING FOLLOWED IN MANY OF THE RECENT DECISIONS O F THE HONBLE APEX COURT. IT WAS HELD THAT; IN A TAXING STATUTE ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO REASON FOR ANY INTENDMENT. THER E IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO TAX. NOTHING IS TO BE READ IN, N OTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED. IN THE NEW SUB-CLAUSE (IA) IN CLAUSE (A) OF SECTIO N 40 WHICH HAS COME INTO EFFECT FROM 1.4.2005, THE LA NGUAGE IS VERY CLEAR AND THERE IS NO AMBIGUITY IN IT. IN THE CASE OF CIT V. PUNJAB FINANCIAL CORPORATION (2002) 254 ITR 6 (P&H) , THE HIGH COURT REITERATED THE LAW THAT THE TAXING STATUTE SHOULD BE CONSTRUED STRICTLY IN RESPECT OF CHARGING PROVISION OR A PROVISION IMPOSING PENALTY. 6.2 FURTHER IN DENTAL COUNCIL OF INDIA V. HARI PRAKASH (2001) 8 SC C 61 , IT WAS HELD THE INTENTION OF LEGISLATURE IS PRIMARI LY TO BE GATHERED FROM THE LANGUAGE USED IN THE STATUTE, THUS PAYING ATTENTIO N TO WHAT HAS BEEN SAID AS ALSO TO WHAT HAS NOT BEEN SAID. WHEN THE WORDS ARE NOT AMBIGUOUS, LITERAL MEANING HAS TO BE APPLIED WHICH IS THE GENE RAL RULE OF INTERPRETATION. ITA NO.502/B/09 PAGE 9 OF 11 6.3. ANOTHER ARGUMENT OF THE ASSESSEE THAT SINCE TH E RECIPIENT OF THE SUB-CONTRACT AMOUNT HAS DECLARED AND PAID THE TAXES IN HIS HANDS AND THAT THERE WAS NO LOSS TO THE GOVERNMENT (IN ANY WAY) WE RE TO BE TAKEN ON ITS FACE VALUE AND CONCEDING TO THE ASSESSEES ARGUMENT , WE ARE AFRAID, WE WOULD BE SETTING A PRECEDENT WHICH WOULD ENABLE THE ERRANT ASSESSEE (S) TO TAKE A LEAF OUT OF THIS PRECEDENT AND WALK AWAY SCO T-FREE. THE VERY INTENT OF THE LEGISLATION, IN OUR UNANIMOUS VIEW, WOULD TH EN BE A CASUALTY. 6.4. WITH RESPECTS, WE HAVE PERUSED THE RULING OF THE HONBLE APEX COURT WITH REGARD TO APPLICABILITY OF THE PROV ISIONS OF S.263 OF THE ACT. (I) CIT V. MAX INDIA LIMITED 295 ITR 282 (SC) : THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE IN S.263 OF THE ACT HAS TO BE READ IN CONJUNCTION WITH EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONS EQUENCE OF THE ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER A DOPTS ONE OF TWO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ON E VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN B Y THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. 6.5. IF THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LAW WHICH HAD RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS WERE POSSIBLE AND THE ASSESSING OFFICER HAD TAKEN ONE VIEW WITH W HICH THE COMMISSIONER ITA NO.502/B/09 PAGE 10 OF 11 DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS A ND PREJUDICIAL TO THE REVENUE AS RULED BY THE HONBLE APEX COURT REFERRED SUPRA. HOWEVER, WITH DUE RESPECTS, WE WOULD LIKE TO POINT OUT THAT IN THE PRESENT CASE; ONE OF TWO COURSES PERMISSIBLE IN LAW HAD NOT BEEN ADOP TED BY THE ASSESSING OFFICER AT ALL. ON A CAREFUL PERUSAL OF THE IMPUGN ED ORDER OF THE AO, WE FIND THAT THE APPLICABILITY OF THE AMENDED PROVISIONS OF S.40(A)(IA) OF THE ACT WAS NOT LOOKED INTO BY THE LD. AO RATHER HE HAS OMITTED TO EXAMINE IT AND GIVE EFFECT TO THAT ASPECT. THERE WAS NEITHER DIFFERENT OPINION NOR TWO VIEWS ON THE ISSUE OF DISALLOWANCE OF SUB-CONTRACT AMOUNT ON WHICH NO TAX WAS DEDUCTED. AS SUCH, IN OUR CONSIDERED VIEW, THE RULI NG OF THE HONBLE SUPREME COURT REFERRED SUPRA CANNOT COME TO THE RES CUE OF THE ASSESSEE. 6.5.1. THE ASSESSEE HAS BEEN TRYING TO SEEK SANCTU ARY UNDER ANOTHER RULING OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT REPORTED IN 243 ITR 83. ON A CAREFUL PERUSAL OF THE SAID VERDICT WITH RESPECTS, WE ARE OF THE UNANI MOUS VIEW THAT THE SAID RULING WAS AN IDENTICAL ISSUE WHICH WAS RELIED BY T HE HONBLE SUPREME COURT WHILE DECIDING THE ISSUE IN THE CASE OF CIT V . MAX INDIA LTD. CITED SUPRA. THUS, THE RULINGS OF THE HONBLE COURT REFE RRED SUPRA ARE DISTINGUISHABLE WHICH ARE NOT APPLICABLE TO THE FAC TS OF THE CASE ON HAND. 6.6. IN AN OVERALL CONSIDERATION OF THE FACT S AND THE CIRCUMSTANCES OF THE ISSUE ON HAND, WE ARE OF THE UNANIMOUS VIEW THA T THE LD.CIT (C) WAS FULLY JUSTIFIED IN INVOKING THE PROVISIONS OF S.263 OF THE ACT IN SETTING ASIDE THE IMPUGNED ORDER PASSED U/S 143(3) OF THE A CT BY THE AO. IT IS ORDERED ACCORDINGLY. ITA NO.502/B/09 PAGE 11 OF 11 7. IN THE RESULT , THE ASSESSEES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF OCTOBER, 2009. SD/- SD/- (SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD OCTOBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.