Sai Pushpa Sharada Alliance, Pune V. Income tax Officer, Pune

ITA 595/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6925 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-05-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Non-deduction of tax; TDS
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 595/PUN/2017 / ASSESSMENT YEAR : 2012-13 SAI PUSHPA SHARADA ALLIANCE 102/3, SUGANDHA HOUSING, BUILDING NO.2, LAW COLLEGE ROAD, ERANDWANE, PUNE-411 004 PAN : ABLFS3211R ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 3(1), PUNE. / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 01.05.2019 / DATE OF PRONOUNCEMENT : 02.05.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEALS)-2, PUNE DATED 20.12.2016 FOR THE ASSESSMENT YEA R 2012-13 AS PER THE GROUNDS OF APPEAL ON RECORD. 2. THE ASSESSEE HAS FILED GROUNDS OF APPEAL AND ALSO ADD ITIONAL GROUNDS OF APPEAL. HOWEVER, THE CRUX OF THE GRIEVANCE OF THE ASSES SEE IN THIS APPEAL 2 ITA NO.595 /PUN/2017 A.Y.2012-13 IS THE ADDITION MADE U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF NON DEDUCTION O F TDS FOR INTEREST PAID TO TATA CAPITAL HOUSING FINANCE LTD. 3. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, DEVELOPER S AND BUILDERS. THE RETURN WAS FILED ON 18.09.2012 SHOWING TOTAL INCOME OF RS.25,32,760/-. THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ARRIVIN G ASSESSED TOTAL INCOME OF RS.1,11,46,124/- BY MAKING VARIOUS ADDITIONS/DISALLOWA NCES AS APPEARING IN THE ASSESSMENT ORDER. 4. THAT WITH REGARD TO THE DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT, AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE VEHEMENTL Y ARGUED THAT THE ASSESSING OFFICER AS WELL AS THE LD.CIT(APPEALS) WAS NOT JU STIFIED IN DISALLOWING RS.47,39,488/- U/S.40(A)(IA) OF THE ACT WITH RESPECT TO NON DEDUCTION OF TDS ON INTEREST PAID TO TATA CAPITAL HOUSING FINANCE LTD. THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE SECON D PROVISO TO SECTION 40(A)(IA) OF THE ACT IS RETROSPECTIVE IN NATURE AND HENCE, IT IS APPLICABLE TO THE CASE OF THE ASSESSEE AND THEREFORE, NO DISALLOWANCE IS WARRANTED U/S. 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX ON T HE INTEREST PAID TO THE CO-OPERATIVE CREDIT SOCIETIES. 5. THE FACTS ON RECORD SUGGESTS THAT DURING THE PERIO D UNDER CONSIDERATION, THE ASSESSEE HAD PAID INTEREST TO TATA CA PITAL HOUSING FINANCE LTD. AMOUNTING TO RS.47,39,488/- WHICH THE ASSESSE E HAS DEBITED UNDER THE HEAD INTEREST IN THE P & L ACCOUNT. DURING TH E COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE WAS ASKED WHETHER ANY TDS H AS BEEN DEDUCTED ON THE INTEREST PAID TO TATA CAPITAL HOUSING FINANCE LTD. AS THE SAME IS AN 3 ITA NO.595 /PUN/2017 A.Y.2012-13 NBFC AND IF NO TAX HAS BEEN DEDUCTED, THE LD. AR WAS ASKED TO EXPLAIN WHY THE AMOUNT OF RS.47,39,488/- PAID AS INTEREST TO NBFC SH OULD NOT BE DISALLOWED AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE AC T FOR FAILURE TO DEDUCT TAX AT SOURCE. IT IS WITH REGARD TO THIS SITUATION, THE LD. AR OF THE ASS ESSEE HAS PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBU NAL IN ITA NOS.1370 & 1371/PUN/2015 FOR THE ASSESSMENT YEARS 200 9-10 AND 2012- 13 AND ITA NOS. 22 & 23/PUN/2016 FOR THE ASSESSMENT Y EARS 2010-11 AND 2011-12 WHEREIN, THE TRIBUNAL WAS FACED WITH SIMILAR KIND OF FA CTS. THERE WAS DISALLOWANCE OF EXPENDITURE U/S.40(A)(IA) OF THE ACT SINCE THE ASSESSEE HAS NOT DEDUCTED TDS U/S.194A OF THE ACT BEFORE MAKING THE PAYMENT OF INTEREST AND THEREFORE, THE EXPENDITURE WAS DISALLOWED BY THE ASSESSING OFFICER U/S. 40(A)(IA) OF THE ACT. HOWEVER, THE ASSESSEES CON TENTION WAS THAT THE AMOUNT OF INTEREST PAID BY THE ASSESSEE HAVE BEEN OFFERED TO TAX BY THE RESPECTIVE RECIPIENTS AND AS PROOF OF THE AMOUNT OFFERED B Y THE RESPECTIVE RECIPIENT TO TAX IS ALSO CERTIFIED BY THEIR CHARTERED ACCOU NTANTS AND THE NECESSARY C.A CERTIFICATES WERE ALSO FILED BY THE ASSESSEE. 6. THE PUNE BENCH OF THE TRIBUNAL IN ITA NOS.1370 & 1371 /PUN/2015 AND IN ITA NOS. 22 & 23/PUN/2016 (SUPRA.) HAS OBSERVED T HAT THE HON'BLE KERALA HIGH COURT IN THE CASE OF PRUDENTIAL LOGISTICS AND T RANSPORT VS. INCOME TAX OFFICER (2014) 364 ITR 689 (KER.) HAS HELD THAT A MENDMENT MADE TO PROVISO TO SECTION 40(A)(IA) IS PROSPECTIVE. ON THE O THER HAND, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. 377 ITR 635 (DEL) HAS TAKEN A VIEW THAT SECOND PR OVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURABLE IN NATURE AND HAS RETRO SPECTIVE EFFECT FROM 01.04.2005 BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(A) 4 ITA NO.595 /PUN/2017 A.Y.2012-13 WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. THUS, THE TRIB UNAL HAD REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE CONTENTION OF THE ASSESSEE VIS--VIS DOCUMENTARY EVIDENC ES PLACED ON RECORD NAMELY, CERTIFICATE OF C.A WHETHER THE RECIPIENTS OF THE INTE REST AMOUNT HAD PAID TAX SO THAT THERE IS NO LOSS OF THE REVENUE AND ADJUDICATE THE MA TTER. 7. REVERTING TO THE FACTS OF THE PRESENT CASE BEFORE US , THE LD. AR OF THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THE COPIES OF C ERTIFICATE OF C.A AS ADDITIONAL EVIDENCES WHEREIN IT IS STATED THAT RECIPIENTS OF INTEREST I.E. TATA CAPITAL HOUSING FINANCE LTD. HAS PAID THE REQUISITE TAX TO THE GOVERNMENT. THE LD. AR OF THE ASSESSEE PRAYED THAT THIS ISSUE NEEDS VERIFICATION BY THE ASSESSING OFFICER AND THEREFORE, THE MATTER MAY BE RESTOR ED BACK TO THE FILE OF THE ASSESSING OFFICER. THAT FURTHER, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT AS ON THE PRESENT DATE THE RELEVANT JU DGMENT ON THE ISSUE HAS BEEN DELIVERED BY THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF PR. CIT-5 VS. PERFECT CIRCLE INDIA PVT. LTD. IN INCOME TAX APPEAL NO.70 7 OF 2016 WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS PLACED RELIANCE ON THE VIEW TAKEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD (SUPRA.) AND HAS HELD THAT THE SECO ND PROVISO TO SECTION 40(A)(IA) IS RETROSPECTIVE IN NATURE W.E.F. 01.04.2005 I.E. T HE DATE WHEN THE MAIN PROVISO TO 40(A)(IA) ITSELF WAS INSERTED. THIS VIEW WAS T AKEN IN CONSONANCE TO THE OPINION OF THE HON'BLE APEX COURT IN T HE CASE OF HINDUSTAN COCA COLA BEVERAGES P LTD. VS. CIT IN APPEAL (C IVIL) 3765 OF 2007 THAT EVEN IN ABSENCE OF THE SECOND PROVISO TO SECTION 4 0(A)(IA) IF IT IS NOTICED THAT THE PAYEE HAD ALREADY PAID THE TAX, UNDER SUCH CIR CUMSTANCES, THE COURT HELD THAT THE PAYER/DEDUCTOR CAN AT BEST BE AS KED TO PAY THE INTEREST ON DELAY IN DEPOSITING TAX AND NO FURTHER LIABILITY IS WARRANTED. 5 ITA NO.595 /PUN/2017 A.Y.2012-13 8. PER CONTRA, THE LD. DR HAS SUBMITTED THAT THE A SSESSEE FAILED TO APPEAR ON VARIOUS DATES OF HEARING BEFORE THE LD. CIT(APP EALS) FOR WHICH THE LD. CIT(APPEALS) HAD PASSED AN EX-PARTE ORDER BASED ON MATERIALS AVAILABLE ON RECORD. THE LD. DR CONTENDED THAT AT BEST, THE MAT TER MAY BE RESTORED TO THE FILE OF THE LD. CIT(APPEALS). 9. WE HAVE PERUSED THE CASE RECORDS AND HEARD TH E RIVAL CONTENTIONS. WE FIND THAT IT IS AN UNDISPUTED FACT THAT INTEREST HAS BEEN PAID TO TATA CAPITAL HOUSING FINANCE LTD. BY THE ASSESSEE AND WHILE DOING SO T DS WAS NOT DEDUCTED AND THEREFORE, ASSESSEE WAS FOUND IN DEFAULT AN D ADDITION WAS MADE U/S.40(A)(IA) OF THE ACT. NOW THERE IS SECOND PROVISO TO SECTION 40(A )(IA) OF THE ACT WHICH STATES THAT ANY KIND OF OMISSION BY PAYER FOR NON DED UCTION OF TDS AND IF THE PAYEE PAYS RESPECTIVE TAX ON SUCH AMO UNT RECEIVED, TO THE GOVERNMENT ACCOUNT, IN SUCH SCENARIO PAYER WILL NOT BE HE LD LIABLE FOR NON DEDUCTION OF TDS ANY FURTHER. NOW THE QUESTION ARISES AS TO FROM WHICH POINT OF TIME THIS PROVISO WILL BE APPLICABLE. BEFORE US, THE CONTENTION OF THE ASSESSEE IS THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS RETROSPECT IVE IN NATURE STARTING FROM 01.04.2005 I.E. THE DATE WHEN THE MAIN PROVISO ITSELF WAS INSERTED. EARLIER THE HON'BLE KERALA HIGH COURT IN THE CASE OF PRUDENTIAL LOGISTICS AND TRANSPORT VS. INCOME TAX OFFICER (SUPRA.) HAS HELD THAT THIS PROVISO IS PROSPECTIVE IN NATURE. HOWEVER, WE FIND THAT THE REAFTER, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD (SUPRA.) AS WELL AS THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT-5 VS. PERFECT CIRCLE INDIA PVT. LTD.(SUPRA.) HAVE TAKE N A VIEW THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT HAS RETROSPE CTIVE EFFECT FROM 01.04.2005 BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTIO N 40(A) WAS 6 ITA NO.595 /PUN/2017 A.Y.2012-13 INSERTED BY THE FINANCE ( NO.2) ACT, 2004. FURTHER, THE HO N'BLE SUPREME COURT HAS HELD IN THE HINDUSTAN COCA COLA BEVERAGES P L TD. VS. CIT (SUPRA.) THAT EVEN IN ABSENCE OF SECOND PROVISO TO SECT ION 40(A)(IA) IF IT IS NOTICED THAT THE PAYEE HAD ALREADY PAID THE TAX, ON THE AMOUNT RECEIVED UNDER SUCH CIRCUMSTANCES, THE COURT HELD THAT THE PAY ER/DEDUCTOR CAN AT BEST BE ASKED TO PAY THE INTEREST ON DELAY IN DEPOSITIN G TAX AND NO FURTHER LIABILITY IS WARRANTED IN THE HANDS OF THE PAYER/DEDUCTOR. 10. IN THE PRESENT CASE BEFORE US, THE LD. AR SUBMITTED THE NECESSARY CERTIFICATES FROM C.A SHOWING THAT THE AMOUNTS OF INTEREST PAID BY THE ASSESSEE HAVE BEEN OFFERED TO TAX BY THE RESPECTIVE RE CIPIENTS AND HAD REQUESTED THE MATTER MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATION ON THIS COUNT. THE LD. DR ON THE OTHER HAND, WAS OF THE OPINION THAT SINCE ITS AN EX-PARTE ORDER WAS PASSED BY THE LD. CIT(APPEALS) BASED ON MATERIALS AVAILABLE ON RECORD, AT BEST THE MATT ER MAY BE RESTORED BACK TO THE FILE OF THE LD. CIT(APPEALS). HOWEVER, SINCE WE HA VE COME ACROSS THE JUDICIAL PRONOUNCEMENTS WHEREIN MAJORITY VIEW IS THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS RETROSPECTIVE IN NATURE AND IN SUCH CIRCUMSTANCES, ON APPLICATION OF THAT PROVISO IF THE PAYEE HAS PAID THE TAX TO THE GOVERNMENT ACCOUNT THEN THE PAYER CANNOT BE HELD LIABLE FOR NON DEDUCTION OF TDS AND NO DISALLOWANCE WOULD BE WARRANTED U /S.40(A)(IA) OF THE ACT. THE LD. AR HAS PLACED BEFORE US THE ADDITIONAL EV IDENCES AND NECESSARY CERTIFICATES FROM C.A. DEMONSTRATING THAT THE TA XES HAVE BEEN PAID BY THE PAYEE ON THE AMOUNT RECEIVED AS INTEREST FR OM ASSESSEE. THESE FACTS NEEDS TO BE VERIFIED AND ESTABLISHED THEREFORE, WE SE T ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND RESTORE THE MATTER BACK TO TH E FILE OF THE ASSESSING OFFICER TO VERIFY THE PAYMENTS OF TAXES MADE BY THE PAYEE AND ADJUDICATE THE ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSES SEE. 7 ITA NO.595 /PUN/2017 A.Y.2012-13 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED ON 2 ND DAY OF MAY, 2019. SD/- SD/- ANIL CHATURVEDI PARTH A SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 2 ND MAY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE. 4. THE PR. CIT-2, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 8 ITA NO.595 /PUN/2017 A.Y.2012-13 DATE 1 DRAFT DICTATED ON 01 .0 5 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 01 .0 5 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER