ASST CIT 11(2), MUMBAI V. KHAITAN & CO., MUMBAI

ITA 5970/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0105 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SANGHVI LD
• Assessee Lawyers: V JUSTIN LD
• Keywords: Difference of opinion
• Section: 143(3); 194C; 147

Judgement Text

ITA NO.5970/MUM/2014 KHAITAN & CO. ASSESSMENT YEAR 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5970/MUM/2014 ( / ASSESSMENT YEAR: 2006-07) ASSISTANT CO M MISSIONER OF INCOME TAX 11(2) ROOM NO. 479 4 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 / VS. KHAITAN & CO 13 TH FLOOR ONE INDIA BULLS CENTRE 841 SENAPATI BAPAT MARG ELPHISTONE ROAD MUMBAI 400 013 ! ./ ./PAN/GIR NO. AAFFK-0088-D ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : V. JUSTIN, LD. AR REVENUE BY : SANJAY SANGHVI, LD.DR / DATE OF HEARING : 21/06/2017 / DATE OF PRONOUNCEMENT : 23/06/2017 ITA NO.5970/MUM/2014 KHAITAN & CO. ASSESSMENT YEAR 2006-07 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2006- 07 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 3 [CIT(A)], MUMBAI DATED 27/07/2014 QUA DELETION OF DISALLOWANCE U/S 40(A)(IA) FOR RS.66 LACS. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT FIRM ENGAGED AS LEGAL PRACTITIONER, WAS ASSESSED U/S 143(3) READ WITH SECTION 147 VIDE ASSESSING OFFICER ORDER DATED 31/01/2014 WHERE THE SOLE ADDITION SUFFERED BY ASSESSEE WAS FOR RS.66 LACS U/S 40(A)(I A) FOR SHORT DEDUCTION OF TDS AGAINST CERTAIN PAYMENTS. THE SAID CHARGES WERE PAID TO AN ENTITY NAMELY KHAITAN & CO. CONSULTING LTD. TOWARDS CONFERENCE /ALLIED CHARGES AFTER DEDUCTION OF TDS U/S 194C @2.24%. HO WEVER, LD. AO OPINED THAT THE SAME BEING PROFESSIONAL PAYMENT, REQUIRED HIGHER TDS @5.1% U/S 194J AND THEREFORE, DISALLOWABLE U/S 40(A)(IA). THE ASSESSEE CONTENDED THAT TDS WAS REQUIRED TO BE DEDU CTED AT LOWER RATE ONLY U/S 194C IN VIEW OF THE NATURE OF PAYMENTS MAD E BY THE ASSESSEE AND FURTHER, THE PROVISIONS OF SECTION 40(A)(IA) AP PLIED IN CASE OF NON- DEDUCTION OF TDS AND NOT TO SHORT-DEDUCTION OF TDS AND THEREFORE, THE SAID DISALLOWANCE WAS NOT JUSTIFIED. HOWEVER, THE S AME COULD NOT FIND FAVOR WITH THE LD. AO AND THE IMPUGNED DISALLOWANCE WAS MADE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME SUCCE SSFULLY BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/07/2014 WHE RE LD. CIT(A) FOLLOWING THE JUDGMENT OF MUMBAI TRIBUNAL IN DCIT VS. CHANDABHOY & ITA NO.5970/MUM/2014 KHAITAN & CO. ASSESSMENT YEAR 2006-07 3 JASSOBHOY [2012 17 TAXMANN.COM 158] AGREED WITH THE SAID CONTENTION OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEA L BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE STRESSED THE POINT THAT THE EXPRESSION USED IN SECTION 40(A)(IA) IS SUCH TAX WHICH TAKES WITHIN ITS AMBIT DEDUCTION OF TDS NOT ONLY UNDER CORRECT SECTI ON BUT DEDUCTION AT CORRECT RATE AS WELL. IF THE ASSESSEES CONTENTION WAS TO BE ACCEPTED, THEN EVERY ASSESSEE SHALL DEDUCT TDS AT LOWER RATES WITHOUT SUFFERING ANY DISALLOWANCE AND THE SAME WOULD MAKE THE PROVIS IONS OF THE SECTION REDUNDANT / OTIOSE. RELIANCE WAS PLACED ON THE JUDG MENT OF KERALA HIGH COURT RENDERED IN CIT VS. PVS MEMORIAL HOSPITAL LTD. [ITA NO. 16 OF 2014 DATED 20/07/2015]. 5. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] CONTEN DED THAT THE ASSESSEE COMPLIED WITH TDS PROVISIONS AND DEDUCTED THE SAME AT APPLICABLE RATES AS PRESCRIBED U/S 194C WHEREAS THE SAME, IN THE OPINION OF LD. AO WAS REQUIRED TO BE DEDUCTED AT HI GHER RATE U/S 194J AND THEREFORE, THERE BEING DIFFERENCE OF OPINION, T HE SAID DISALLOWANCE WAS NOT WARRANTED FOR. RELIANCE WAS PLACED ON THE J UDGMENT OF HONBLE CALCUTTA HIGH COURT IN CIT VS. S.K.TEKRIWAL [2014 46 TAXMANN.COM 444] AND HONBLE KARNATAKA HIGH COURT IN CIT VS. KISHORE RAO & OTHERS [2017 79 TAXMANN.COM 357]. OUR ATTENTION IS DRAWN TO THE FACT THAT KARNATAKA HIGH COURT JUDGMENT, BEING LATER ONE, IN COMPARISON TO KERALA HIGH COURT JUDGMENT AND THEREFORE, HAS TO BE FOLLOW ED. MOREOVER, IN CASE OF CONTRARY JUDGMENT OF VARIOUS HIGH COURTS, T HE VIEW FAVORABLE TO THE ASSESSEE HAS TO BE TAKEN IN VIEW OF THE APEX CO URT JUDGMENT IN CIT VS. VEGETABLE PRODUCTS LTD. [88 ITR 192]. THE COPIES OF VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON HAVE BEEN PLACED IN THE PAPER BOOK. ITA NO.5970/MUM/2014 KHAITAN & CO. ASSESSMENT YEAR 2006-07 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL INCLUDING CITED CASE LAWS. THE RELEVANT FACTS ARE N OT IN DISPUTE. THE ONLY DISPUTE IS THAT WHETHER THE CASE OF SHORT-DEDUCTION OF TDS GETS HIT BY THE PROVISIONS OF SECTION 40(A)(IA) OR NOT. WE FIND THA T THERE ARE CONTRARY VIEWS OF THE HIGH COURT ON THE ISSUES AS CITED BY T HE RESPECTIVE REPRESENTATIVES. THE CASE LAWS CITED BY THE ASSESSE E SUPPORTS THE VIEW POINT THAT SHORT-DEDUCTION OF TDS IS NOT HIT BY THE PROVISIONS OF SECTION 40(A)(IA) WHEREAS THE KERALA HIGH COURT JUDGMENT CI TED BY THE REVENUE TAKES A CONTRARY VIEW. THEREFORE, FOLLOWING APEX CO URT JUDGMENT IN CIT VS. VEGETABLE PRODUCTS LTD. [88 ITR 192], WE ARE INCLINED TO FOLLOW THE VIEW WHICH IS FAVORABLE TO THE ASSESSEE. MOREOVER, THE JUDGMENT OF KARNATAKA HIGH COURT IS LATER ONE AND SIMILAR VIEW HAS BEEN TAKEN BY THIS TRIBUNAL IN NUMBER OF DECISIONS, THE COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE STAND OF LD. CIT(A) AND DISMISS REVENUE S APPEAL. 6. IN NUTSHELL, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23.06.2017 SR.PS:- THIRUMALESH ITA NO.5970/MUM/2014 KHAITAN & CO. ASSESSMENT YEAR 2006-07 5 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. $'. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI