ACIT, UDAIPUR V. Shri Naresh Boliya, UDAIPUR

ITA 58/JODH/2014

• Counselvise Citation: 5823314 RSA 2014
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Opportunity of being heard
• Section: 43B; 37(1)

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 58 /JODH/2014 (A.Y. 200 9 - 1 0 ) A CIT, CIRCLE - 2 , VS. SHRI NARESH BOLIYA, UDAIPUR. N H - 8, BHUWANA , UDAIPUR. PAN NO. ABAPB 8973 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 30 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 13 /0 8 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 22/11 /2013 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: - 1. DELETING THE DISALLOWANCE OF RS. 15,41,950/ - MADE U/S. 40(A)(IA) OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE SHEET, BUT IT IS ALSO 2 APPLICABLE TO SUCH EXPENDITURE, WHICH BECOME PAYABLE AT ANY TIME DURING THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. 2. DELETING THE DISALLOWANCE OF RS. 1,05,464/ - TREATING THE SAME AS SALES TAX/ INTEREST WITHOUT FACTS GIVING ANY OPPORTUNITY OF BEING HEARD TO THE AO AND WITHOUT APPRECIATING THE FACTS TH A T DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTS TO PROVE THAT THE SUM OF RS. 1,05,464/ - WAS RELATED TO INTEREST OR SALES TAX PAYMENT AND FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEES REPRESENTATIVE HAS AGREED THAT THIS AMOUNT WAS RELATED TO SALES TAX PENALTY WHICH IS DULY MENTIONED IN THE ASSESSMENT ORDER. 2 VIDE GRO UND NO. 1 , THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF DISALLOWANCE OF RS. 50,41,950/ - MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 31/07/2009 DECLARING AN INCOME OF RS. 8,48,950/ - . THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE MADE THE PAYMENTS OF RS. 15,41,950/ - TO M/S. SHRI MARMO TILES & M/S. SUSHMA MARBLES AND DEDUCTED TDS OF RS. 30,83 9/ - WHICH WAS PAID AFTER THE YEAR END. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TDS WHICH WAS DEDUCTED UPTO FEBRUARY 2009 SHOULD HAVE BEEN DEPOSITED BEFORE 31/03/2009, BUT THE S A ME WAS DEPOSITED ON 3 13/04/2009 . HE THEREFORE, DISALLOWED THE EXPENDITURE OF RS. 15,41,950/ - U/S. 40(A)(IA) OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAD NOT CONSIDERED TH A T TDS AMOUNTING TO RS. 30, 839/ - WAS RELATED TO A.Y. 2009 - 10 WHICH WAS PAID ON 13/04/2009 BEFORE THE DUE DATE OF FILING OF RETURN ON 30/09/2009 . THEREFORE, THE SAME WAS ALLOWABLE U/S. 40(A)(IA) OF THE ACT. IT WAS FURTHER STAT ED THAT THE AMENDMENT OF DECLARING THE EXTENSION OF DUE DATE OF AFORESAID PAYMENT FROM MARCH OF THE YEAR TO DUE DATE OF RETURN THOUGH HAD BEEN MADE ON 01/04/2010 , BUT SAME BEING CLARIFICATORY IN NATURE WAS APPLI C ABLE FROM 01/04/2005 BEING THE DATE ON WHICH SECTION 40(A)(IA) WAS INTRODUCED . IT WAS FURTHER SUBMITTED THAT WHEN A PROVISO IN A SECTION WAS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE , THE PROVISO INSERTED TO SUPPLY AN OBVIOUS OMISSION PARTIC ULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE WAS CURATIVE IN NATURE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. CIT VS. VIRGIN CREATIONS (CALCUTTA HC) 2. ALLIED MOTORS (P) LTD. ETC. VS. CIT [ (1997) 224 ITR 677 (SC) ] 3. CIT VS. ALOM EXTRUSIONS LTD. [(2009) 319 ITR 306 (SC) ] 4. PIYUSH C. MEHTA VS. ACIT [(2012) 52 SOT 27 (MUM B .) 4 IT WAS FURTHER STATED THAT THE TDS TOTALING TO RS. 30,839/ - ON THE PAYMENT OF 15,41,950/ - WAS PAID ON 13/04/2009 MUCH BEFORE THE DUE DATE U/S. 139(1) OF THE ACT I.E. ON 30/09/2009, THIS AMOUNT WAS NOT COVERED FOR DISALLOWANCE , THEREFORE, NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WAS CALLED FOR. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AT PAGES NO. 5 & 6 OF THE IMPUGNED ORDER AS UNDER: - I HAVE CONSIDERED THE SUBMISSIONS, CASE LAWS AND FACTS OF THE CASE IT IS SEEN THAT IN THE PRESENT CASE THE APPELLANT HAD DEDUCTED RS. 30,839/ - DURING THE PREVIOUS YEAR AND DEPOSITED THE TAX DEDUCTED AT SOURCE ON 13.04.2009 I.E. ON OR BEFORE THE DUE DATE OF FILING RETURN OF INCOME U/S 139(1) OF THE ACT I.E. 30.09.2009. THE CALCUTTA HIGH COURT AND MUMBAI TRIBUNAL DECISION CITED ABOVE SUPPORTED BY RATIO OF DECISION BY SUPREME COURT IN CASE OF ALLIED MOTORS PVT. LTD. VS CIT 139 CTR (SC) 364 AND CIT VS ALOM ENTERPRISES LTD (2009) 227 CTR (SC) 417 HAVE HELD THAT AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, BY THE FINANCE AC T, 2010 IS RETROSPECTIVE FROM 01.04.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FROM A.Y. 2005 - 06 IF MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME U/S 139(1) OF THE A CT, THEN NO DISALLOWANCE U/S 40(A) (IA) OF THE ACT CAN BE MADE. FURTHER, IN VIEW OF LATEST DECISION OF HONOURABLE ITAT,SPECIAL BENCH, VISAKHAPATNAM IN THE CASE OF MERILYAN SHIPPING & TRANSPORTS VISAKHA PATTANAM VS. ADDL.CIT RANGE - 1 VISAKHAPATNAM IN ASSESS MENT YEAR 2005 - 06 IN ITA NO.477/VIZAG/200 DATED 09.02012 WHEREIN IT HAS BEEN HELD THAT 5 THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE INVOKED WITH RESPECT TO THE PAYMENTS WHICH WERE ACTUALLY PAID DURING THE FINANCIAL YEAR BUT IT CAN BE INVOKED WITH RESPECT TO AMOUNT WHICH REMAINED PAYABLE AS ON THE DATE OF BALANCE SHEET AT THE END OF THE PREVIOUS YEAR AND THE SAME VIEW HAS BEEN EXPRESSED BY THE HONOURABLE ITAT, JAIPUR IN THE CASE OF JAIPUR VIDYUT VITRAN NIGANM LTD VS. DCIT (2009) 123 TTJ (JP 888 ORDER DATED 30.04.2009 AND HELD AS UNDER: ' PROVISIONS OF S.40(A)(IA) ARE APPLICABLE ONLY TO THE AMOUNT OF EXPENDITURE WHICH IS PAYABLE AS ON 31ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW THE EXPENDITURE WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR WITHOUT DEDUCTION OF TDS.' HENCE, THE PAYMENT OF TDS HAVING BEEN MADE IN THE CASE OF APPELLANT MUCH BEFORE THE DUE DATE I.E. 30.09.2009 ON 13.04.2009 THE SAME IS HELD TO BE ALLOWABLE AND NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT IS CALLED FOR ACCORDI NGLY THE DISALLOWANCE OF RS. 15,41,950/ - MADE BY THE LD. AO IS HEREBY DELETED. THIS GROUND OF APPEAL IS ALLOWED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT SINCE THE TDS DEDUCTED BY THE ASSESSEE WAS NOT DEPOSITED BEFORE THE YEAR END, THEREFORE, DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WAS RIGHTLY MADE BY THE ASSESSING OFFICER AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME . 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 6 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFU LLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE DEPOSITED THE TDS BEFORE THE DUE DATE OF FILING THE RETURN U/S. 139(1) OF THE ACT. IT IS ALSO NOTICED THAT A PROVISO TO SUB - CLAUSE ( I A) OF CLAUSE (A) TO SECTION 40 OF THE ACT HAS BEEN SUBSTITUTED BY THE FINANCE ACT, 2010 AND READ AS UNDER: - ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DED UCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 :] [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID . ] ALTHOUGH , THE SAID PROVISO IS SUBSTITUTE D W.E.F. 01/04/2010, HOWEVER, THE ITAT MUMBAI BENCH C IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA) BY FOLLOWING THE ORDER OF THE HON'BLE CALCUTTA HIGH COURT IN I.T.A.NO. 302/2011 GA 32 00/2011 HAS HELD THAT THE AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS RETROSPECTIVE W.E.F. 01/04/2005 . IN THE PRESENT CASE, THE LD. CIT(A) WHILE DELET ING THE 7 DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS ALSO FOLLOWED THE SAID DECISION. WE THEREFORE, BY FOLLOWING THE DECISION OF THE COORDINATE BENCH I.E. ITAT MUMBAI, IN THE CASE OF PIYUSH C. MEHTA VS. ACIT (SUPRA) , DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE . ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT ON THIS ISSUE. 9 . VIDE GROUND NO. 2 , THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF DISALLOWANCE OF RS. 1,05, 464/ - . 10 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 1,60,660/ - PAID IN RESPECT OF SALES TAX DEMAND TREATING THE SAME AS PENALTY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE RECEIVED A LETTER FROM COMMERICIAL TAX DEPARTMENT, JAIPUR DATED 11/01/2008 STATING THEREIN THAT THE PAYMENT OF RS. 1,99,468/ - WAS AN INTEREST AND RS. 55,196/ - W AS PENALTY. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY DOCUME NT WHERE HE COULD PROVE THAT SUM OF RS. 1,05,464/ - WAS RELATED TO THE INTEREST OR SALES TAX DEMAN D . HE , THEREFORE, DISALLOWED A SUM OF RS. 1,60,660/ - (RS. 1,05,464/ - + 55, 1 96/ - ) . 8 11 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 2.1. THE LD. AO DISALLOWED RS. 1,60,660/ - TREATING THE WHOLE AMOUNT AS SALES TAX PENALTY, THOUGH THE ASSESSEE HAD ONLY AGREED THAT RS. 55,196/ - WAS PENALTY WHERELSE IT WAS WRONGLY INTERPRETED AT THE TIME OF ASSESSMENT THAT ENTIRE RS. 1,60,660/ - PAYMENT TO SALES TAX DEPARTMENT IS PENALTY. 2.2.2. THE BREAK UP OF RS. 160660 DISALLOWED BY AO IS AS UNDER: - DATE OF PAYMENT AMOUNT 28.07.2008 1352 28.07.2008 379 05.01.2009 99987 15.02.2009 3746 08.12.2008 (254664 199468 INTEREST 55196 (PENALTY) GRAND TOTAL 160660 IT WILL BE OBSERVED THAT THE AFORESAID AMOUNT INCLUDED RS. 55196 AS PENALTY ONLY AND THEREFORE THE REMAINING AMOUNT OF RS. 105464 IS EITHER INTEREST OR SALES TAX DEMAND WHICH IS ALLOWABLE AS PER SECTION 37(1) AND SECTION 43B ALSO. THE AO HAS NOT GIVEN ANY PROOF TO SUPPORT HIS CONTENTION THAT RS. 105564 IS PENALTY. 2.2.3 WHERE AS PER THE ASSESSEE THE AMOUNTS OF RS. 105464 IS SALES TAX / INTEREST ON SALES TAX PAID TO STATE GOVERNMENT DURING THE FINANCIAL YEAR ITSELF BETWEEN THE PERIOD 28.07.2008 TO 15.02.2009, HENCE THE SAME IS ALLOWABLE UNDER SECTION 37(1) AND ALSO UNDER SECTION 43B OF IT ACT 1961. THE BREAKUP OF RS. 105564 VIS A VIS NATURE AND DATE OF PAYMENTS ARE AS UNDER: - S.NO. DATE OF PAYMENT AMOUNT NATURE OF PAYMENT 1 28.07.2008 1352 INTEREST 2 28.07.2008 379 SALES TAX 9 FROM THE ABOVE CHART IT IS CLEAR THAT NONE OF ABOVE AMOUNTS CONTAIN PENALTY AMOUNT SO AS TO BE NOT ALLOWABLE. IN SUPPORT OF THE FACT THAT ABOVE AMOUNTS ARE SALES TAX OR INTEREST A CERTIFICATE BEARING NO. 1698 OF CTO , CIRCLE - A, UDAIPUR ,THE ASSESSING OFFICER OF ASSESEES PROPRIETARY FIRM M/S G.B.S. ENTERPRISES IS ENCLOSED. 2.2.2. FURTHER THE INTEREST AMOUNT PAID ON ARREARS SALES TAX - IS COMPENSATORY IN NATURE - SAME ALLOWABLE AS DEDUCTION ; AS PER THE JUDGMENT OF SUPREME COURT OF INDIA IN CASE OF - LACHMANDAS MATHUR VS. COMMISSIONER OF INCOME TAX 254 ITR 799 (SC): 174 CTR 579 (SC). (COPY OF CASE LAW ENCLOSED ).' 12. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ENTIRE SUM OF RS. 1,60,660/ - DISALLOWED BY THE ASSESSING OFFICER TREATING THE SAME AS PENALTY WAS NOT JUSTIFIED BECAUSE THE AMOUNT CONTAINED THE PENALTY OF RS. 55,196/ - ONLY AND THE BALANCE AMOUNT OF RS. 1,05,464/ - WAS SALES TAX /INTEREST PAID DURING THE YEAR WHICH BEING A GOVERNMENT PAYMENT AND RELATING TO THE BUSINESS OF THE ASSESSEE WAS ALLOWABLE U/S. 37(1) R.W.S. 43B OF THE ACT . HE THEREFORE, RESTRICTED THE DISALLOWANCE TO RS. 55,196/ - AND ALLOWED RELIEF OF RS. 1,05, 464/ - . NOW THE DEPARTMENT IS IN APPEAL. 3 05.01.2009 99987 SALES TAX 4 15.02.2009 3746 SALES TAX + INTEREST TOTAL 105564 10 13 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, IT APPEARS THAT THE ASSESSING OFFICER WRONGLY CONSIDERED A SUM OF RS. 1,05,4 64/ - AS PENALTY WHICH WAS ACTUALLY A PAYMENT FOR INTEREST AND SALES TAX. THE LD. CIT(A) VERIFIED FROM THE CERTIFICATE BEARING NO. 1698 OF CTO, CIRCLE - A, UDAIPUR THAT THE AMOUNT OF RS. 1,05,464/ - WAS RELATING TO THE SALES TAX AND INTEREST. SO, IT WAS ALLOWABLE U/S. 37(1) R.W.S . 43B OF THE ACT. WE THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 14 IN THE RESU LT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 13 TH AUGUST , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH AUGUST , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .