INTEREX ARCH DESIGN P.LTD, MUMBAI V. DCIT CIR 5(2), MUMBAI

ITA 5241/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9362 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Keywords: Retrospective amendment
• Section: 143(3); 234B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , , ! ' # BEFORE S/SHRI P.M. JAGTAP,AM AND AMIT SHUKLA, JM ./I.T.A. NO.5241/MUM/2012 ( $ $ $ $ % % % % / ASSESSMENT YEAR :2009-2010 M/S. INTEREST ARCH DESIGN PVT. LTD., OFFICE NO. 3, KAILASH NAGAR CO.OP. HSG. SOC., TARDEO ROAD, MUMBAI-400 007 $ $ $ $ / VS. THE DCIT, CIRCLE 5(2), AAYAKAR BHAVAN, MUMBAI-400 020 & ./ ' ./PAN/GIR NO. :AABCI 3867K ( &( /APPELLANT ) .. ( )*&( / RESPONDENT ) &( + / APPELLANT BY: SHRI RAJIV KHANDELWAL )*&( , + / RESPONDENT BY : SHRI P.K. SHUKLA $ , - / DATE OF HEARING : 11.10.2012 ./% , - / DATE OF PRONOUNCEMENT : 21.11.2012 ! / O R D E R PER P.M. JAGTAP, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-9, MUMBAI DT.06.06.2012. 2. THE MAIN ISSUE INVOLVED IN THIS CASE AS RAISED I N GROUND NO. 1 RELATES TO THE DISALLOWANCE OF RS. 2.35 CRORES MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF PAYMENTS MADE BY THE ASSE SSEE TO THE SUB- CONTRACTORS U/S. 40(A)(IA) FOR THE FAILURE OF THE A SSESSEE TO DEPOSIT THE TAX DEDUCTED AT SOURCE TO THE CREDIT OF THE GOVERNMENT WITHIN THE STIPULATED TIME PERIOD. ITA NO.5241/M/2012 2 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF INTERIOR DESIGNING WORK. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.9.2009 DECLARIN G TOTAL INCOME AT RS. 75,19,501/-. DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE TAX DEDUC TED AT SOURCE BY THE ASSESSEE FROM THE PAYMENTS MADE TO THE SUB-CONTRACT ORS DURING THE PERIOD FROM APRIL, 2008 TO FEBRUARY, 2009 HAS NOT BEEN DEP OSITED TO THE CREDIT OF THE GOVERNMENT ON OR BEFORE 31 ST MARCH, 2009 AS REQUIRED BY THE RELEVANT PROVISIONS. HE THEREFORE INVOKED PROVISIONS OF SEC . 40(A)(IA) AND DISALLOWED THE CORRESPONDING PAYMENTS MADE BY THE ASSESSEE TO THE SUB-CONTRACTS TO THE EXTENT OF RS. 2,35,01,844/- IN THE ASSESSMENT C OMPUTED U/S. 143(3) VIDE ORDER DT. 23.12.2011. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAID DIS ALLOWANCE MADE BY THE AO FOR THE FOLLOWING REASONS GIVEN IN PARAS 5.2 .1 AND 5.2.2. OF HIS IMPUGNED ORDER. 5.2.1. IT IS NOT DISPUTED THAT IN CERTAIN SPECIFIE D CASES AS IDENTIFIED BY THE LAO DURING THE COURSE OF RELEVANT SCRUTINY ASSESSMENT PROCEEDINGS AND AS DISCUSSED BY THE LAO GIVING NAME S OF THE DEDUCTEE, DATES OF PAYMENT, AMOUNT. ID/CREDITED, TOT AL TAX DEPOSITED, DATE ON WHICH DEPOSITED ETC APPEARING FROM PAGE 2 TO 20 OF THE RELEVANT ASSESSMENT ORDER, IT WAS NOTED THAT IN THE SE CASES TAX DEDUCTED AT SOURCE BY THE APPELLANT WERE PAID TO THE CREDIT OF GOVERNMENT ACCOUNT BELATEDLY. IN ALL SUCH CASES THE APPELLANT WAS REQUIRED TO DEPOSIT THE TAX ON OR BEFORE 31/3/2009 . THE LAO VERIFIED FROM THE TDS RETURN FURNISHED BY THE APPELLANT THA T IN THE SPECIFIC CASE IDENTIFIED BY THE LAO AND AS APPEARING ON PAGE S 2 TO 20 OF RELEVANT ASSESSMENT ORDER, THE TDS WAS DEFINITELY D EPOSITED AFTER THE END OF F.Y 2009 AND AFTER THE DUE DATE PRESCRIBED B Y THE ACT. HE CONFRONTED THE APPELLANT AND ASKED IT TO SHOW-CAUSE AS TO WHY THE CORRESPONDING SUM OF RS.2,37,68,566/- SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT. 5.2.2. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE LD.AR AND HIS PROPOSITION THAT AMENDMENT TO SECTION 40(A)(IA) MAD E BY FINANCE ACT, 2010 IS RETROSPECTIVE IN NATURE AND IS APPLICABLE F OR A.Y 2009-10 ALSO. I DO NOT AGREE WITH THE SAID LEGAL PREPOSITION MADE B Y THE LAR BECAUSE THERE IS NO SUCH PROVISION IN THE MAIN SECTION 40(A )(IA) AS CONTENDED ITA NO.5241/M/2012 3 BY THE LD.AR THAT THE AMENDMENT MADE BY THE FINANCE ACT, 2010 IS RETROSPECTIVE IN NATURE WITH EFFECT FROM 1/4/2009. ON THE OTHER HAND THERE ARE VARIOUS REASONS TO HOLD THAT THE AMENDMEN T INTRODUCED BY THE FINANCE ACT, 2010 IS NOT RETROSPECTIVE IN NATUR E. INCIDENTALLY, SEC.201(1) HAS ALSO BEEN AMENDED BY THE FINANCE ACT , 2010 W.E.F. 1/7/2010 PROVIDING FOR INCREASE IN THE INTEREST RAT E FROM 12% TO 18%. IF IT IS HELD THAT SEC.40(A)(IA) HAS BEEN AMENDED BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT THEN THE CONSEQUENTI AL AMENDMENT TO SEC.201(1) WOULD ALSO REQUIRE THE SAME TREATMENT BU T IT IS NOT SO. EVEN THE HONBLE FINANCE MINISTERS SPEECH DOES NOT HELP THE CASE OF THE PRESENT APPELLANT. AS A MATTER OF FACT THIS ISSUE H AS BEEN SPECIFICALLY DECIDED BY THE HONBLE ITAT, MUMBAI B SPECIAL BENC H IN THE CASE OF BHARATI SHIPYARD LTD. V/S. DCIT (2011). 132 ITD 53( MUM) (SB) IN FAVOUR OF THE REVENUE AND AGAINST THE APPELLANT. HONBLE ITAT, SPECIAL BENCH HAS HELD THAT THE AMENDMENT TO SEC.40 (A)(IA) MADE BY FINANCE ACT, 2010, WITH RETROSPECTIVE EFFECT FRO M L APRIL, 2010, EXTENDING THE TIME-LIMIT FOR DEPOSIT OF TAX DEDUCT ED AT SOURCE IN THE CASE OF ONE CATEGORY OF CASES IS NEITHER AIMED AT R EMOVING ANY UNINTENDED HARDSHIP TO THE ASSESSES NOR IT IS CURAT IVE OR DECLARATORY OF THE PREVIOUS LAW AND, THEREFORE, IT CANNOT BE GIVEN RETROSPECTIVE EFFECT FROM ASST. YR. 2005-06. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LIGHT OF THE HONBLE SPECIAL BENCH DECISION IN THE CASE OF BHARATI SHIPYARD LTD. V/S DCIT. THE DISALLOWANCE OF RS.2,37 ,68,566/- IS CONFIRMED. 5. WE HAVE HEARD THE ARGUMENTS OF THE BOTH SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E DISALLOWANCE MADE BY THE AO BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) WAS CONFIRMED BY THE LD. CIT(A) MAINLY RELYING ON THE DECISION OF MUMBAI SPE CIAL BENCH OF ITAT IN THE CASE OF BHARATI SHIPYARD LTD. VS DCIT (SUPRA) WHERE IN IT WAS HELD THAT AMENDMENT MADE TO SEC. 40(A)(IA) BY THE FINANCE ACT 2010 EXTENDING THE TIME LIMIT FOR DEPOSIT OF TAX DEDUCTED AT SOURCE W AS APPLICABLE PROSPECTIVELY WITH EFFECT FROM 1.4.2010. AS POINTED OUT BY THE L D. COUNSEL FOR THE ASSESSEE, HONBLE CALCUTTA HIGH COURT IN THE CASE O F CIT VS. VIRGIN CREATIONS (ITA NO. 302 OF 2011 DT. 23 RD NOVEMBER, 2011) HOWEVER HAS TAKEN DIFFERENT VIEW UPHOLDING TO THE DECISION OF CALCUTTA BENCH OF ITAT THAT THE PROVISIONS OF SECTION 40(A)(IA) AS AMENDED BY THE FINANCE ACT, 2010 EXTENDING THE TIME LIMIT FOR DEPOSIT OF TDS ARE APPLICABLE RETROSPECTI VELY. IT WAS HELD BY THE TRIBUNAL THAT THE PROVISIONS OF SEC. 40(A)(IA) AS S TOOD PRIOR TO THE AMENDMENT ITA NO.5241/M/2012 4 MADE BY THE FINANCE ACT, 2010 WERE RESULTING INTO A N UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIP S TO THE ASSESSEE WHO HAD SUBSTANTIALLY COMPLIED WITH A RELEVANT TDS PROV ISIONS BY DEDUCTING TAX DEDUCTED AT SOURCE AND BY PAYING THE SAME TO THE CR EDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THE RETURNS U/S. 1 39(1) OF THE ACT. IT WAS HELD THAT IN ORDER TO REMEDY THIS POSITION AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEE BELONGING TO SUCH CATE GORY, AMENDMENTS WERE MADE IN THE PROVISIONS OF SEC. 40(A)(IA) BY THE FIN ANCE ACT, 2010 AND THE SAME THEREFORE WERE APPLICABLE RETROSPECTIVELY W.E. F. 1.4.2005 BEING REMEDIAL/CURATIVE IN NATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD., 319 ITR 306. 6. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE , THE ASSESSEE IN THE PRESENT CASE HAS PAID TAX DEDUCTED AT SOURCE FROM T HE PAYMENTS OF SUB- CONTRACTS DURING THE PERIOD FROM APRIL 2008 TO FEBR UARY 2009 TO THE SUBSTANTIAL EXTENT UPTO THE DUE DATE OF FILING OF R ETURN U/S. 139(1) I.E. 30.9.2009 AND DISALLOWANCE MADE U/S. 40(A)(IA) TO T HE EXTENT OF SUCH PAYMENTS CANNOT BE SUSTAINED IN VIEW OF THE AMENDME NTS MADE TO THE PROVISIONS OF SEC. 40(A)(IA) BY THE FINANCE ACT 201 0 EXTENDING THE TIME LIMIT FOR DEPOSIT OF TDS WHICH ARE APPLICABLE TO THE YEAR UNDER CONSIDERATION BEING RETROSPECTIVE IN OPERATION. SINCE THE STAND OF THE ASSESSEE IS DULY SUPPORTED BY THE DECISION OF HONBLE CALCUTTA IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA), WE FOLLOW THE SAME AND DIRECT THE AO TO DE LETE THE DISALLOWANCE MADE U/S. 40(A)(IA) TO THE EXTENT IT IS COVERED BY THE AMENDMENT MADE TO THE PROVISIONS OF SEC.40(A)(IA) BY THE FINANCE ACT 2010 WHICH ARE APPLICABLE TO THE YEAR UNDER CONSIDERATION BEING RETROSPECTIV E IN NATURE AFTER THE REQUIRED VERIFICATION. GROUND NO. 1 OF THE ASSESSE ES APPEAL IS ACCORDINGLY ALLOWED SUBJECT TO THE VERIFICATION BY THE AO AS DI RECTED. 2. AS REGARDS THE ISSUES RAISED IN GROUND NO. 2 OF THE ASSESSEES APPEAL RELATING TO LEVY OF INTEREST U/S. 234B & 234D OF TH E ACT, THE LD. COUNSEL FOR ITA NO.5241/M/2012 5 THE ASSESSEE HAS SOUGHT ONLY CONSEQUENTIAL RELIEF. THE AO IS ACCORDINGLY DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSES SEE ON THIS ISSUE. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREA TED AS ALLOWED. 0 1 $0 , 2 3 , 45 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2012 . ! , /% 2 6$1 21.11.2012 / , SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; 6$ DATED 21/11/2012 . $ . ./ RJ , SR. PS ! ! ! ! , ,, , )7 )7 )7 )7 87% 87% 87% 87% / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. 7: )$ , , / DR, ITAT, MUMBAI 6. ; < / GUARD FILE. !$ !$ !$ !$ / BY ORDER, *7 ) //TRUE COPY// = == = / 4 4 4 4 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI