SAGAR CORPORATION, MUMBAI V. JT CIT RG 24(2), MUMBAI

ITA 5260/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2603 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2014
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Keywords: Retrospective amendment
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ./ ITA NO. 5260 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 0 9 - 20 10 ) SAGAR CORPORATION, 2401/2402, CHALLENGER NO.1 , THAKUR VILLAGE, KANDIVALI (E), MUMBAI - 400101 VS. JCIT, RANGE - 24(2), MUMBAI - 400051 ./ ./ PAN/GIR NO. : A AKFS 6767 Q ( / APPELLANT ) .. ( / RESPONDENT ) / AS SESSEE BY : SHRI VIMAL PUNAMIYA /REVENUE BY : SHRI VIVEK BATRA / DATE OF HEARING : 07 /0 9 /2016 / DATE OF PRONOUNCEMENT 28 / 09 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEA L FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), MUMBAI, DATED 21 - 5 - 2014 , FOR THE ASSESSMENT YEAR 20 0 9 - 2010 , WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - GROUND NO.1 THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,79,600/ - U NDER SECTION 40(A)(IA) OF INCOME TAX ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN B RIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING COPPER WIRES. THE ASSESSEE FIRM FILED ITS RETURN OF INCO ME DECLARING NIL INCOME ON 29 - 9 - 2009. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO MADE A DISALLOWANCE OF RS.3,79,600/ - ON THE PLEA ITA NO. 5260/14 2 THAT ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE U/S.40(A)(IA) OF THE I.T.ACT. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED TH E DISALLOWANCE AGAINST WHICH IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT T HE ASSESSEE HAS INCURRED GENUINE EXPENSES EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AMOUNT RS.3,12,000/ - ON RENT AND RS.67,600/ - ON TRANSPO RTATION . IT WAS CONTENDED BY LD. AR THAT PAYEE HAS ALREADY PAID THE TAX, NON - DEDUCTION OF TAX BY THE TAXPAYER WILL NOT ALTER THE SITUATION. THE PROVISIONS OF SECTION 201(1) THE ACT WHICH PROVIDES THAT IF ANY PERSON DOES NOT DEDUCT THE TAX OR AFTER DEDUCTIN G SUCH TAX DOES NOT PAY THE SAME TO THE CREDIT OF THE GOVERNMENT, AND IF THE TAXPAYER HAS ALSO FAILED TO PAY SUCH TAX, THEN SUCH PERSON WOULD BE TREATED AS AN 'ASSESSEE IN DEFAULT'. THE WORD 'AND' IS VERY IMPORTANT BECAUSE IT CLEARLY INDICATES THAT IF THE PAYEE MAKES PAYMENT OF TAX, THEN DEDUCTOR CANNOT BE TREATED AS AN 'ASSESSEE IN DEFAULT. 4. THE SUPREME COURT DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD [2007] 293 ITR 226(SC) WHERE IT WAS HELD THAT ONCE THE TAX IS PAID BY THE DEDUCTEE, T HE DEDUCTOR CANNOT BE TREATED AS AN 'ASSESSEE IN DEFAULT' FOR THE PURPOSE OF SECTION 201 OF THE ACT. THE PURPOSE OF INTRODUCTION OF SECTION 40(A)(IA) OF THE ACT WAS TO MAKE SURE OF THE COMPLIANCE OF TDS PROVISIONS. IT WAS NOT A SEPARATE TAX AND IF THE PAYE E PAYS SUCH TAX, THE PURPOSE STANDS FULFILLED AND THE DEDUCTOR CANNOT BE SUBJECTED TO ANY FURTHER PENAL ACTION. ITA NO. 5260/14 3 5. THE FOLLOWING SECOND PROVISO HAS BEEN INSERTED BY THE FINANCE ACT, 2012 W.E.F.01.04.2013 : PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201, THEN FOR THE PURPOSE OF T HIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX IN SUCH SUM ON 'HE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. I T HAS BEEN HELD BY THE ITAT BENCH OF AGRA IN THE CASE OF RAJEEV KUMAR AGARW AL VS. ADDL . C IT [2014 45 TAXMANN.COM 555] THAT INSERTION OF SECOND PROVISO TO SECTION 40(A) (IA) WITH EFFECT FROM 1 - 4 - 2013 IS D ECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 - 4 - 2005, BEING DATE FROM W HICH SUB - CLAUSE (IA) OF SECTIO N 40(A) WAS INSERTED BY FINANCE (NO. 2) ACT, 2004. 6. IN VIEW OF THE ABOVE, T HE ASSESSEE CANNOT BE DEEMED TO BE ASSESSEE IN DEFAULT IN VIEW OF THE FIRST PROVISO TO SECTION 201(1) SINCE THE PAYEE HAS FILED HIS RETURN OF INCOME AND DECLARED SUCH AMOUNT AS IN COME AND HAS A LSO PAID THE NECESSARY TAXES. MOREOVER, THE ASSESSEE CAN ALSO NOT BE DEEMED TO BE AN ASSESSEE IN D EFAULT UNDER SECTION 40(A) (IA) IN VIEW OF THE SECOND PROVISO TO SECTION 40 (A) (IA) WHICH IS RETROSPECTIVE IN NATURE. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 5260/14 4 O RDER PRONOUNCED IN THE OPEN COURT ON THIS 28/09/ 201 6 . S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 28/ 09 / 201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//