M/s. Rolls- Royce India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5900/DEL/2012

• Counselvise Citation: 590020114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 20-11-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 26-11-2012
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: R K KAPOOR
• Keywords: Audit objection; Difference of opinion; Change of opinion
• Section: 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. I. C. SUDHIR , JM ITA NO. 5900/DEL/2012 : ASSTT. YEAR : 2004 - 05 M/S ROLLS - ROYCE INDIA PVT. LTD., BIRLA TOWER (WEST), 2 ND FLOOR, 25, BARAKHAMBA ROAD, NEW DELHI - 110001 VS DCIT, CIRCLE, 15(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCR5277Q ASSESSEE BY : SH. PRADEEP DINODIA & R. K. KAPOOR , CA REVENUE BY : SH. VIK RAM SAHAY , SR. DR DATE OF HEARING : 20.11.2014 DATE OF PRONOUNCEMENT : 16 .01.2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24.09.2012 OF LD. CIT(A) - XV III, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER REGARDING REOPENING ASSESSMENT U/S 147/148 OF THE I NCOME TAX ACT. 2. THAT THE ORDER PASSED BY THE CIT(A) IN CONFIRMING THE ACTION OF THE AO U/S 147/148 OF THE I. T. ACT IS BAD IN LAW. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 2 3. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TR ULY ALL MATERIAL FACTS NECESSARY FOR THE COMPUTATION OF INCOME; AND THEREFORE, REOPENING BEYOND FOUR YEAR WAS ILLEGAL AND NOT MAINTAINABLE AS PER LAW. 4. THAT WITHOUT PREJUDICE, THE CONFIRMATION OF DISALLOWANCE U/S 40(A)(IA) AMOUNTING TO RS. 8,60,713/ - IS BAD IN LAW, AS ADMITTEDLY THE TDS AMOUNT FOR THE SAME WAS DEPOSITED ON 29.04.2004 I.E. WITHIN THE PERMISSIBLE TIME AS PER LAW. 5. THAT EACH GROUND IS INDEPENDENT OF AND WITHOUT PREJUDICE TO THE OTHER GROUNDS RAISED HEREIN. 3 . AT THE FIRST INSTANCE THE L D. COUNSEL FOR THE ASSESSEE ARGUED GROUND NO. 4 WHICH RELATES TO THE SUSTENANCE OF THE DISALLOWANCE OUT OF THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) AMOUNTING TO RS. 8,60,713/ - . 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE AO MADE THE DISALLOWANCE OF RS. 37,74,488/ - ON ACCOUNT OF INTEREST U/S 40(A)(IA) OF THE AC T FOR THE ALLEGED NON - DEDUCTION/LATE DEPOSIT OF TDS. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 3 BEFORE PROCEEDING FURTHER, IT WOULD BE APPROPRIATE TO HIGHLIGHT THAT BEFORE EMBARKING UPON THE PROCEEDINGS U/S 147/148, THE AO HAS ISSUED/SUPPLIED COPY OF AUDIT OBJECTION RECEIVED BY THE AO ON ACCOUNT OF THESE TWO ISSUES AND REQUIRED THE ASSESSEE TO EXPLAI N ITS STAND ON THE ISSUES ON WHICH AUDIT OFFICER HAD QUESTIONED THE AO. IN RESPONSE TO THE SAME, THE ASSESSEE VIDE ITS LETTER DATED 28 TH FEBRUARY 2008 HAD EXPLAINED TO THE AO AS TO HOW THE AUDIT OBJECTION WAS NOT SUSTAINABLE AND THE AO HAD TAKEN THE CORREC T VIEW OF THE MATTER, BECAUSE - (I) THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE TO MAKE TDS FROM THE INTEREST PAYMENT. DETAILS OF ALL THE TDS DEDUCTED ALONG WITH COPIES OF CHALLANS WERE SUPPLIED TO THE AO VIDE ASSESSEE S SAID LETTER. (II) THEREAFTER, THERE WAS A NOTICE U/S 154/155 OF THE I. T. ACT VIDE WHICH THE AO WANTED TO CARRY OUT RECTIFICATIONS UNDER THESE PROVISIONS ON THE SAME VERY TWO ISSUES. (III) IN RESPONSE TO THE SAME, THE ASSESSEE AGAIN FILED A COPY OF ITS LETTER DATED 28 TH FEBRUARY 2012 . IT APPEARS THAT THE AO WAS SATISFIED AND NO RECTIFICATION WAS CARRIED OUT. HOWEVER, AT THE SAME TIME, IT APPEARS THAT THE ISSUES INVOLVED WHICH WERE ORIGINALLY RAISED BY THE AUDIT PARTY DID NOT DIE IN THE RECORDS OF THE INCOME TAX DEPARTMENT, RESULTING I NTO ISSUE OF NOTICE U/S 148 DATED 30 TH MARCH 2011. (IV) FROM THE REASONS RECORDED BY THE AO, IT WOULD BE NOTICED THAT THE SAME VERY TWO ISSUES ON WHICH THE ASSESSEE HAD FILED ITS REPLY ON THE AUDIT OBJECTIONS AS WELL AS AGAINST NOTICE U/S 154 WERE MADE TH E SUBJECT MATTER OF RE - ASSESSMENT PROCEEDINGS. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 4 (V) FROM THE REASONS RECORDED, YOUR HONOUR WOULD NOTICE THAT THE AO WAS RELYING UPON THE EXPLANATION TO SECTION 147 TO ALLEGE THAT MERE PRODUCTION OF BOOKS OF ACCOUNTS DOES NOT TANTAMOUNT TO DISCLOSURE NECESS ARY FOR THE PURPOSE OF PROVISO TO SECTION 147 OF THE I. T. ACT. IT IS HEREBY CLARIFIED AND AS WOULD BE SUBSTANTIATED IN THE SUBMISSIONS HEREINAFTER THAT IT WAS NOT MERELY A PRODUCTION OF BOOKS OF ACCOUNTS, BUT ALSO DETAILED INFORMATION/CLARIFICATION ON THE TWO ISSUES THAT THE AO HAD CONSIDERED AND EXAMINED IN THE ORIGINAL PROCEEDINGS. THAT IS WHY IT IS BEING CONTESTED THAT RE - ASSESSMENT IS BASED ON MERE CHANGE OF OPINION AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY THE MA TERIAL FACTS NECESSARY FOR THE COMPUTATION OF INCOME. (VI) WITH REGARD TO THE ISSUE RAISED IN GROUND NO. 6 I.E. NON - DEDUCTION OF TDS ON THE INTEREST PAYMENT, WE WOULD AGAIN LIKE TO REFER TO OUR DETAILED SUBMISSIONS MADE TO THE AO AGAINST NOTICE U/S 148. O UR SUBMISSIONS DATED 25 TH MARCH 2011 CONTAIN THE CLARIFICATION ON THIS ISSUE, WHICH IS REITERATED AS IT IS. EVEN THE CLARIFICATION VIDE ASSESSEE S LETTER DATED 28 TH FEBRUARY 2008 WOULD MAKE IT CRYSTAL CLEAR THAT THERE WAS NO FAILURE ON THE PART OF THE ASSE SSEE TO MAKE THE TDS, AS HAS BEEN ALLEGED. ALL THE DETAILS OF INTEREST PAYMENT ALONG WITH RATE AT WHICH TDS WAS DEDUCTED, COPIES OF CHALLANS AND THE DATE OF DEPOSIT, HAS BEEN CLARIFIED. THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) INVOKED BY THE AO ARE C LEARLY MISPLACED AND HAVE BEEN APPLIED IN MECHANICAL WAY WITHOUT APPLYING HIS MIND THAT APPROPRIATE TDS HAS BEEN MADE AND DEPOSITED ON THE INTEREST PAYMENT AND NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) OF THE I.T. ACT. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 5 6. HOWEVER, T HE LD. CIT(A) SUSTAI NED THE ADDITION OF RS. 8,60,713/ - BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS FILED BY THE APPELLANT. THE APPELLANT HAS STATED THAT THE INTEREST HAD BEEN REMITTED TO RR PLC, UK, AND THE DETAILS WERE FURNIS HED TO THE ASSESSING OFFICER ALONG WITH COPIES OF CHALLANS SHOWING DEPOSIT OF TDS. A COPY OF THESE CERTIFICATES WERE AGAIN F ILE D BY THE APPELLANT IN THE PAPER BOOK. THE CERTIFICATES SHOW THAT PAYMENT OF INTEREST AND DEDUCTION OF TDS HAS BEEN MADE AS UNDER: DATE OF REMITTANCE AMOUNT REMITTED (IN RS.) TDS DEDUCTED (IN RS.) DATE OF PAYMENT 29.04.2003 7,85,078/ - 1,38,565/ - 29.04.2003 29.07.2003 7,42,863/ - 1,31,094/ - 29.07.2003 29.10.2003 7,39,523/ - 1,30,504/ - 29.10.2003 29.01.2004 8,77,920/ - 1,54,927/ - 29. 01.2004 TOTAL 31,45,384/ - 5,55,090/ - THE APPELLANT HAS DEBITED RS. 37,74,488/ - TO ITS PROFIT & LOSS ACCOUNT AS PAYMENT ON ACCOUNT OF INTEREST. HOWEVER, AS PER THE ABOVE DETAILS, THE AMOUNT REMITTED IS RS. 31,45,384/ - . THE APPELLANT HAS FURTHER CLAIMED THAT RS. 8,60,713/ - HAS BEEN REMITTED ON 29.04.2004. HOWEVER, SINCE THIS AMOUNT HAS BEEN REMITTED IN THE NEXT FINANCIAL YEAR, THEREFORE, BENEFIT OF THIS REMITTANCE CANNOT BE GIVEN. THE ASSESSING OFFICER IS DIRECTED TO ALLOW INTEREST EXPENSE OF RS. 31,45,38 4/ - ON WHICH TDS HAS BEEN DEDUCTED AND DISALLOW REST OF THE AMOUNT. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 6 7. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ISSUE IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT - XIII VS RAJINDER KUMAR REPORTED IN 2013 - TIOL - 547 - HC - DEL - IT (COPY OF THE SAID ORDER WAS FURNISHED). 8 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE OR DER OF THE LD. CIT(A). 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE ASSESSEE DEPOSITED THE TDS ON THE REMITTANCE OF RS. 8,60,713/ - ON 29.04.2004 IN THE NEXT FINANCIAL YEAR BUT BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT. 10. ON A SIMILAR ISSUE THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RAJINDER KUMAR (SUPRA) HELD HAS UNDER: WHEN THE RESPONDENT ASSESSEE D EDUCTED TDS IN MARCH 2007, I.E. LAST MONTH OF THE PREVIOUS YEAR AND PAID THE SAME BEFORE IN APRIL 2007 BEFOR E THE SAID DATE I.E. THE DATE ON WHICH RETURN OF INCOME U/S 139(1) OF THE ACT IS TO BE FILED. SECTION 40(A)(IA) COULD NOT HAVE BEEN INVOKED. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 7 IT IS FURTHER BEEN HELD THAT : IT IS APPARENT THAT THE RESPONDENT ASSESSEE DID NOT VIOLATE THE UNAMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOTED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AMEN DED PROVISIONS ARE CL E AR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY WILL HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY SUPPORT VIEW TAKEN IN PARAGRAPHS 17 TO 20 THAN THE EXPRESSION SAID DUE DATE USED IN CLAUSE A OF PROVISO TO UNAMENDED SECTION REFERS TO TIME SPECIFIED IN SECTION 139(1) OF THE ACT. THE AMENDED SECTION 40(A)(IA) EXPANDS AND FURTHER LIBERALISES THE STATUE WHEN IT STIPULATES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILING O F THE RETURN, WILL CONSTITUTE SUFFICIENT COMPLIANCE. 11 . IN THE PRESENT CASE ALSO SINCE THE ASSESSEE HAS DEPOSITED THE TDS ON 29 .04.2004 BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE H ON BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO CASE, W E DELETE THE ADDITION SUSTAINED BY THE LD. CIT(A). 12. NO OTHER GROUND EXCEPT GROUND NO. 4 WAS ARGUED BEFORE US. ITA NO. 5900 /DEL /2012 ROLLS - ROYCE INDIA PVT. LTD. 8 13 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 16 /01/2015 ) SD/ - SD/ - (I. C. SUDHIR ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 /01/2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 15 .01.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 16 .01.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.