M/s. Consulting Engineering Services (I) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5419/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2691 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER & SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO. 5419/DEL/2011 ASSESSMENT YEAR: 2007-08 CONSULTING ENGINEERING SERVICES (I) PVT. LTD., 5 TH FLOOR, MANJUSHA BUILDING, 57, NEHRU PLACE, NEW DELHI. PAN NO. AAACC5110G VS. DCIT, CIRCLE 3(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: V.P. GUPTA, BASANT KUMAR, ANUNAV KR., ADV. RESPONDENT BY: MS. Y. KAKKAR, SR. DR O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A) DATED 05/09/2011 FOR A.Y. 2007-08. 2. THE ASSESSEE COMPANY, IN THE RELEVANT ASSESSMEN T YEAR, WAS ENGAGED IN THE BUSINESS OF CONSULTING AND DESIGN EN GINEERING, ARCHITECT AND TOWN PLANNING. IT HAD FILED ITS RETURN OF INCO ME DECLARING AN INCOME OF RS. 12,26,51,602/-. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH FORM NO. 16A U/S 194J OF TDS DEPOSITED AFTER MARCH, 2008 AND TO SHOW CAUS E AS TO WHY ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 2 DISALLOWANCE U/S 40(A)(IA) BE NOT MADE IN RESPECT O F LATE DEPOSIT OF TDS. THE ASSESSEE FURNISHED FOLLOWING DETAILS REGARDING DEPOSIT OF TDS: S.NO. MONTH SECTION AMOUNT PAID TDS DUE DATE OF DEPOSIT DATE OF DEPOSIT 1. FEB07 194J 6448000 328848 07.03.07 09.04.07 2. FEB07 194J 846392 43166 07.03.07 31.05.07 3. FEB07 194J 5637650 287520 07.03.07 10.04.07 4. FEB07 194J 378686 19313 07.03.07 31.05.07 5. FEB07 194C 33774 689 07.03.07 10.04.07 6. DEC07 194C 1041568 21248 07.01.07 10.04.07 7. FEB07 194I 1208464 184895 07.03.07 07.05.07 TOTAL 15594534 885679 3. THE AO MADE A DISALLOWANCE OF RS.1,55,94,534/- O BSERVING AS UNDER: ADMITTEDLY, THE TDS HAS BEEN DEPOSITED BEYOND THE DUE DATE IN THE SUBSEQUENT FINANCIAL YEAR IN RESPEC T OF PAYMENTS OF RS. 1,55,94,534/- IN THE SUBSEQUENT ACCOUNTING YEAR. THEREFORE, AS PER THE CLEAR PROVI SIONS OF PROVISO TO SECTION 40(A)(IA), THE AFORESAID SUM IS NOT TO BE ALLOWED. AS PER THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 2 00, THE TOTAL PAYMENT OF RS. 1,55,94,534/- ON WHICH TDS OF RS. 8,85,679/- WAS DEDUCTED WOULD NOT BE ALLOWABLE AS A N EXPENSE SINCE THE TDS ON THIS AMOUNT WAS CREDITED T O THE CENTRAL GOVT. BEYOND THE DUE DATE. HENCE, THE AMOUNT OF RS. 1,55,94,534/- IS DISALLOWED U/S 40(A) (IA) OF THE I.T. ACT, 1961 AND ADDED BACK TO THE TOTAL I NCOME OF THE ASSESSEE. 4. LD. CIT(A) UPHELD THE DISALLOWANCE, INTER-ALIA, OBSERVING AS UNDER: ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 3 SINCE THE CASE OF THE APPELLANT COMPANY IS RELATED TO A.Y. 2007-08 THE AMENDMENTS MADE IN SEC. 40(A)(IA) OF THE I.T. ACT BY FINANCE ACT, 2010 CANNOT BE APPLIED RETROSPECTIVELY AND, THEREFORE, I HAVE NO HESITATIO N TO UPHOLD THE DISALLOWANCE OF RS. 1,55,94,534/- MADE B Y THE AO. 5. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED BY LD. CIT(A) U/S 250 OF THE ACT IS PREJUDICIAL, BIASED, BAD IN LAW & WRONG ON FACTS . 2. THAT THE LD. AO HAS MADE DISALLOWANCE U/S 40(A)(IA) OF RS. 15,594,534/- DESPITE THE FACT THAT TDS WAS DEPOSITED BEFORE THE FILING OF THE RETURN. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. AO HAS WRONGLY CALCULATED THE TAX AND INTEREST THEREON . 4. THAT THE LD. AO HAS WRONGLY INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C). 6. GROUND NO. 1 IS GENERAL IN NATURE. 7. GROUND NO. 2 READS AS UNDER: 2. THAT THE LD. AO HAS MADE DISALLOWANCE U/S 40(A)(I A) OF RS. 15,594,534/- DESPITE THE FACT THAT TDS WAS DEPOSITED BEFORE THE FILING OF THE RETURN. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS P ER THE AMENDMENT BROUGHT OUT BY THE FINANCE ACT, 2010 TO SECTION 40( A)(IA) W.E.F. APRIL 1, ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 4 2010, THE TIME LIMIT FOR DEPOSIT OF TDS HAS BEEN EX TENDED UPTO THE DATE OF FILING OF RETURN. HE SUBMITTED THAT THIS AMENDMENT HAS BEEN HELD TO BE CLARIFICATORY IN NATURE BY THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS [2011 (11) TMI 348 CALCUTTA HIGH COURT] IN ITA NO. 302/2011 DATED 23/11/2011 WHICH DECISION HAS BEEN F OLLOWED BY MUMBAI C BENCH OF ITAT IN THE CASE OF SHRI PIYUSH C. MEH TA VS. ACIT IN ITA NO. 1321/MUM./2009 FOR A.Y. 2005-06 VIDE ORDER DATED 11 /04/2012. LD. COUNSEL FILED A COPY OF THE ORDER OF TRIBUNAL IN TH E CASE OF M/S TALBROS PRIVATE LIMITED IN ITA NO. 1490/DEL/2012 DATED 8 TH OCTOBER, 2012 IN SUPPORT OF HIS CONTENTION. 9. LD. DR SUBMITTED THAT SPECIAL BENCH OF TRIBUNAL IN THE CASE OF BHARATI SHIPYARD LTD. VS. DCIT (2011) 011 ITR (TRIB ) 0599 VIDE ITS ORDER DATED 9 TH SEPTEMBER, 2011 HAS HELD THAT AMENDMENT BROUGHT OU T BY THE FINANCE ACT, 2010 IS PROSPECTIVE AND, THEREFORE, NO T APPLICABLE FOR A.Y. 2007-08. 10. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. 11. THERE IS NO DISPUTE ON FACTS. ADMITTEDLY THE A SSESSEE HAD DEPOSITED THE TDS AFTER 31 ST MARCH BUT BEFORE THE DUE DATE OF FILING THE RETURN . ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 5 12. WE FIND THAT THE TRIBUNAL IN THE CASE OF M/S TA LBROS PRIVATE LIMITED (SUPRA) HAS OBSERVED AS UNDER: - 18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HONBLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE FROM 1.4.2005 OR THE DECISION OF THE HONBLE CALCUTTA HIGH COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTERNATIONAL (P) LTD. VS. DCIT 69 TTJ (DEL) 650, WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICI AL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COU RT BELOW HAS TO YIELD TO THE HIGHER WISDOM OF THE COUR T ABOVE, AND, THEREFORE, ONCE AN AUTHORITY HIGHER THA N THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON A N ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIA L AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON 16 JURISDICTIONAL HIGH COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GODAVARIDEVI SARAF 113 ITR 589 (BOM.). 19. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC. 40(A)(IA) OF TH E ACT, BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 1.4.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTE D ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 6 AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FRO M AY 2005-06 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESA ID, THEN NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN B E MADE. ADMITTEDLY IN THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE T HE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF THE ACT AND, THEREFORE, THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE. 13. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA), WE DIRECT THE AO TO DELETE THE DISALLOWANCE OF RS. 1,55,94,534/-. 14. IN THE RESULT, GROUND NO. 2 IS ALLOWED. 15. GROUND NO. 3 AND 4 READS AS UNDER: 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. AO HAS WRONGLY CALCULATED THE TAX AND INTEREST THEREON. 4. THAT THE LD. AO HAS WRONGLY INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C). 16. AS FAR AS GROUND NO. 3 & 4 ARE CONCERNED, THEY DO NOT ARISE OUT OF THE ORDER OF LD. CIT(A) AND THUS, MISCONCEIVED. ITA NO. 5419/D/2011 CONSULTING ENGINEERI NG SERVICES (I) P. LTD. 7 17. ACCORDINGLY, BOTH THESE GROUNDS ARE DISMISSED. 18. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/04/2013 SD/- SD/- (U.B.S. BEDI) JUDICIAL MEMBER (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 30/04/2013 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR