THE ACIT., CIRCLE - 5(1), Visakhapatnam V. M/s Visakha Constructions, Visakhapatnam

ITA 60/VIZ/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0233 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K S S SARMA
• Assessee Lawyers: M K SETHI

Judgement Text

ITA NO.60/VIZAG/2013 M/S. VISAKHA CONSTRUCTIONS, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.A.NO.60/VIZAG/2013 ( / ASSESSMENT YEAR : 2008-09 ) ACIT CIRCLE-5(1) VISAKHAPATNAM VS. M/S. VISAKHA CONSTRUCTIONS VISAKHAPATNAM [ PAN: AAAFV 9340C ] (, , , , / APPELLANT) (-., -., -., -., / RESPONDENT ) , / / APPELLANT BY : SHRI K.S.S. SARMA, AR -., / / RESPONDENT BY : SHRI M.K. SETHI, DR / 3 / DATE OF HEARING : 27.10.2015 / 3 / DATE OF PRONOUNCEMENT : 29.10.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (A) VISAKHAPATNAM DATED 23.11.12 FOR THE ASSESSMENT YEAR 2008-09. ITA NO.60/VIZAG/2013 M/S. VISAKHA CONSTRUCTIONS, VISAKHAPATNAM 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30.9.2008 DECLARING A TOTAL INCOME OF RS.34,75,300/ -. THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER CALLED ACT) ON 15.3.2010. SUBSEQUENTLY, THE CASE WAS SE LECTED FOR SCRUTINY AND STATUTORY NOTICE U/S 143(2) OF THE ACT DATED 25 .9.2009 WAS ISSUED AND SERVED ON THE ASSESSEE ON 27.9.2009. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAS CLAIMED A SUM OF RS.36,74,900/- TOWARDS FINANCE CHARGES FOR PURCHASE OF VEHICLES AND MACHINERY UNDER HIRE PURCHASE SCHEME F ROM M/S. TATA MOTORS FINANCIAL SERVICES PVT. LTD. SINCE THE ASSE SSEE HAS NOT DEDUCTED TDS FROM INTEREST PAYMENT, THE A.O. DISALLOWED THE AMOUNT OF RS.34,74,900/- U/S 40A(IA) OF THE ACT AND BROUGHT T O TAX. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE CONTESTED THAT OUT OF THE TOTAL FINANCE CHARGES AMOUNTING TO RS.36,74,900/-, A SUM OF RS.16,65,556/- WAS PAID TO BANK OF BARODA FO R WHICH THE PROVISIONS OF TDS DOES NOT ATTRACT. THE REMAINING AMOUNT OF RS.20,09,044/- HAS BEEN PAID TO M/S. TATA MOTORS FI NANCE SERVICES LTD. THE ASSESSEE FURTHER CONTENDED THAT SINCE THE INTER EST WAS ACTUALLY PAID, THE PROVISIONS OF SECTION 40A(IA) OF THE ACT DOES NOT ATTRACT. ITA NO.60/VIZAG/2013 M/S. VISAKHA CONSTRUCTIONS, VISAKHAPATNAM 3 THEREFORE, THE QUESTION OF DEDUCTING TDS IS NOT APP LICABLE ON THE AMOUNT ALREADY PAID BEFORE THE END OF FINANCIAL YEA R. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AN D ALSO RELIED UPON THE INCOME TAX APPELLATE TRIBUNAL, SPECIAL BENCH, V ISAKHAPATNAM DECISION IN THE CASE OF M/S. MERILYN SHIPPING AND T RANSPORT VS. ACIT 146 TTJ 1 (VIZAG)(SB), DIRECTED THE AO TO BIFURCATE THE EACH INSTALMENT TO ASCERTAIN THE INTEREST COMPONENT AND ALLOW THE INTE REST PAID DURING THE PREVIOUS YEAR. 4. AGGRIEVED BY THE CIT(A)S ORDER, THE REVENUE IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) ERRED IN CONSIDERING THE INTERES T COMPONENT PAYMENT TO TATA MOTORS FINANCIAL SERVICES, BASING O N THE DECISION OF HONBLE ITAT, SPECIAL BENCH, VISAKHAPAT NAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDI TIONAL CIT. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING TH E ASSESSING OFFICER TO ALLOW INTEREST COMPONENT PAID DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING, BOTH THE PARTIE S AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING AND TRAN SPORT VS. ACIT (SUPRA). WE HAVE GONE THROUGH THE ORDERS OF THE RE VENUE AUTHORITIES AND ALSO CONSIDERED THE SPECIAL BENCH DECISION IN T HE CASE OF M/S. ITA NO.60/VIZAG/2013 M/S. VISAKHA CONSTRUCTIONS, VISAKHAPATNAM 4 MERILYN SHIPPING AND TRANSPORT VS. ACIT (SUPRA). THE ITAT SPECIAL BENCH IN THE ABOVE MENTIONED CASE WHILE DEALING WIT H THE ISSUE HELD IN FAVOUR OF THE ASSESSEE AS UNDER: I HAVE GONE THROUGH THE ORDERS PASSED BY THE LEARN ED ACCOUNTANT MEMBER, SHRI S.V. MEHROTRA AS WELL AS THE LEARNED J UDICIAL MEMBER, SHRI MAHAVIR SINGH. I AM NOT ABLE TO PERSUADE MYSELF TO AGREE WITH THE VIEW TAKEN BY SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER. I H AVE GONE THROUGH THE DETAILED REASONS GIVEN BY SHRI MAHAVIR SINGH WH ILE COMING TO THE CONCLUSION THAT THE WORD 'PAYABLE' USED IN SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 HAS TO BE GIVEN ITS NATURAL MEANING A ND, GOING BY STRICT INTERPRETATION, I AM OF THE FIRM VIEW THAT SECTION 40(A)(IA) OF THE ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYA BLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AMOUNTS WHICH /0E ALREADY BEEN PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTING TAX AT SOURCE. I THEREFORE AGREE WITH THE VIEW TAKEN BY SHR I MAHAVIR SINGH, JM AND ANSWER THE QUESTION ACCORDINGLY. THE MATTER MAY NOW BE PLACED BEFORE THE DIVISION BENCH FOR PASSING APPROPRIATE O RDERS, IN THE ABOVE LISTED CAS5 1 IN THE LIGHT OF THE MAJORITY VIEW OF THE MEMBERS C ONSISTING OF THE SPECIAL BENCH. 6. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE AND APPLYING THE RATIOS OF SPECIAL BENCH DECISION IN THE CASE OF M/S. MERILYN SHIPPING AND TRANSPORT VS. ACIT (SUPRA), WE ARE OF THE OPINI ON THAT DISALLOWANCE U/S 40A(IA) OF THE ACT IS NOT APPLICABLE TO THE AMO UNTS ALREADY HAS BEEN PAID DURING THE PREVIOUS YEAR. THEREFORE, WE ARE I NCLINED TO UPHELD THE ORDER OF THE CIT(A) AND DELETE THE ADDITIONS MADE B Y THE AO. ITA NO.60/VIZAG/2013 M/S. VISAKHA CONSTRUCTIONS, VISAKHAPATNAM 5 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH OCT15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 29.10.2015 VG/SPS / - 7 / COPY OF THE ORDER FORWARDED TO :8 1. , / THE APPELLANT THE ACIT, CIRCLE-5(1), VISAKHAPATNAM 2. -., / THE RESPONDENT M/S. VISAKHA CONSTRUCTIONS, D.NO.26-40-3, CHAITANYANAGAR, GAJUWAKA, VISAKHAPATNAM 3. ; / THE CIT-1, VISAKHAPATNAM 3. ; () / THE CIT(A), VISAKHAPATNAM 4. -, , / // / DR, ITAT, VISAKHAPATNAM 5 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM