Shri Navubha J. Chavda, JAMNAGAR V. The Income Tax Officer, Ward-2(2), JAMNAGAR

ITA 592/RJT/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6715 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P BHATIA SR DR
• Assessee Lawyers: CHETAN L AGARWAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.592/RJT/2014 ( / ASSESSMENT YEAR : 2009-10) SHRI NAVUBHA J.CHAVDA CHAVDA & CO. NR.PANCHVATI SOCIETY JAMNAGAR / VS. INCOME TAX OFFICER, WARD-2(2) JAMNAGAR ./ ./ PAN/GIR NO. ABWPC 8135B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI CHETAN L. AGARWAL, AR ! / RESPONDENT BY : SHRI C.P. BHATIA, SR.DR ' #$% ! & / DATE OF HEARING 10/02/2017 '( ! & / DATE OF PRONOUNCEMENT 20/02/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM : IN THE PRESENT APPEAL, THE ASSESSEE IS AGGRIEVED B Y THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS)-JAMNAGAR [CIT( A)- IN SHORT] IN CONFIRMING THE ADDITION OF RS.3,25,528/- MADE BY TH E ASSESSING OFFICER (AO) UNDER S.40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). ITA NO.592 /RJT /2014 SHRI NAVUBHA J. CHAVDA VS. J.P. MEENA ASST.YEAR 2009-10 - 2 - 2. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE B USINESS OF TRANSPORTATION AND CONTRACT. THE RETURN OF INCOME FOR ASSESSMENT YEAR (AY) 2009-10 WAS FILED DECLARING INCOME AT RS.5,23 ,080/-. THE ASSESSMENT WAS MADE UNDER S.143(3) OF THE ACT AND T OTAL INCOME OF RS.5,33,620/- WAS DETERMINED. SUBSEQUENTLY, CASE WAS REOPENED AND ASSESSMENT UNDER S.143(3) R.W.S.147 OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS PASSED A FTER MAKING ADDITIONS TOWARDS INTEREST EXPENSES OF RS.3,25,528/- PAID TO NON-FINANCIAL INSTITUTIONS ON THE GROUND THAT TDS ON INTEREST PAY MENT HAS NOT BEEN NOT DEDUCTED IN TERMS OF 194A OF THE ACT. IT WAS OBS ERVED BY THE AO THAT ON VERIFICATION OF THE DETAILS OF INTEREST EXPENDIT URE, IT WAS NOTICED THAT THE ASSESSEE HAS PAID INTEREST OF RS.29,127/- TO M/ S.TATA MOTORS LTD. AND TATA CAPITALS LTD. AGGREGATING TO RS.3,25,528/-. I T WAS ASSERTED BY THE AO THAT AS PER THE PROVISIONS OF SECTION 194A OF TH E ACT, WHEN THE AGGREGATE SUM PAYABLE DURING THE FINANCIAL YEAR (FY ) TOWARDS INTEREST EXCEEDS RS.20,000/-, THE ASSESSEE IS UNDER STATUTOR Y OBLIGATION TO DEDUCT TDS THEREON. THE ASSESSEE HAVING FAULTED IN THE DE DUCTION OF TDS IN TERMS OF SECTION 194A, THE EXPENDITURE IS REQUIRE D TO BE DISALLOWED IN TERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHILE COMPUTING THE TAXABLE INCOME. THE DISALLOWANCE WAS ACCORDINGLY M ADE INVOKING THE SECTION 40(A)(IA) OF THE ACT WHICH WAS CONFIRMED BY THE CIT(A). ITA NO.592 /RJT /2014 SHRI NAVUBHA J. CHAVDA VS. J.P. MEENA ASST.YEAR 2009-10 - 3 - 3. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E ON BEHALF OF THE RESPECTIVE PARTIES. IT IS THE CASE OF THE ASSE SSEE THAT IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INT RODUCED BY THE FINANCE ACT, 2012 W.E.F. 01/07/2012 R.W.S. 201, DESPITE FAI LURE TO DEDUCT TDS, DISALLOWANCE OF EXPENDITURE OUGHT NOT TO HAVE BEEN MADE IF THE RECIPIENTS PAYEE, NAMELY TATA MOTORS LTD. AND TATA CAPITALS LT D. HAVE TAKEN INTO ACCOUNT THE AFORESAID SUM OF INTEREST WHILE COMPUTI NG INCOME IN THEIR HANDS AND PAID TAXES THEREON. IT IS A CASE OF THE ASSESSEE THAT THE AFORESAID AMENDMENT IS RETROSPECTIVE IN NATURE AND THEREFORE APPLY TO THE PRESENT CASE. IT WAS CLAIMED BY THE ASSESSEE THAT RECIPIENTS OF THE INTEREST ARE REPUTED FINANCIAL INSTITUTIONS HAVE DULY PAID T HE TAXES. WE FIND THAT THE ISSUE IS FAIRLY SETTLED BY LONG LINE OF JUDICIA L PRECEDENTS ON THE ISSUE. THE LATEST DECISION OF THE ISSUE IS IN THE CASE OF CIT VS. ANSOL LAND MARK TOWNSHIP PVT.LTD. REPORTED IN 377 ITR 635 (DELHI). THE REVENUE HAS NOT BEEN ABLE TO REBUT THE ASSERTIONS OF THE ASSESS EE ON FACTUAL POSITION THAT THE RECIPIENTS HAVE DULY PAID THE TAXES ON THE AFORESAID AMOUNT. THE RECIPIENTS ARE REPUTED COMPANIES. THE AMOUNT INVOL VED IS MEAGER. THUS, THERE IS NO REASON TO DOUBT THE CLAIM OF THE ASSESSEE. THUS, IN THE BACKDROP OF THE AFORESAID DECISION OF THE HONBLE D ELHI HIGH COURT, WE HOLD THAT DISALLOWANCE UNDER S.40(A)(IA) CANNOT BE FASTENED ON THE ASSESSEE IN SUCH CIRCUMSTANCES. WE THUS FIND MERIT IN THE CASE OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE DISALLOWAN CE. ITA NO.592 /RJT /2014 SHRI NAVUBHA J. CHAVDA VS. J.P. MEENA ASST.YEAR 2009-10 - 4 - 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 20/02/2 017 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD ; DATED 20/02/2017 ..#, $.,#../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. - & ' .& / CONCERNED CIT 4. ' .& ( ) / THE CIT(A)-JAMNAGAR 5. 2$34 ,&,# , , /DR,ITAT, RAJKOT 6. 4?@ A% / GUARD FILE. / BY ORDER, 2& ,& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) %&, / ITAT, RAJKOT 1. DATE OF DICTATION .. 13.2.17(DICTATION-PAD 6- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 14.2.17 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 20.2.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.2.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER