JAVERI FISCAL SERVICES LTD, MUMBAI V. ACIT 4(3), MUMBAI

ITA 6046/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2013
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: AJAY R SINGH
• Keywords: Depreciation; Rectification of order
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI , BEFORE SHRI I. P. BANSAL, J M & SHRI R.C.SHARMA , A M ITA NO. 6046 / MUM/20 1 3 ( ASSESSMENT YEAR : 20 10 - 11 ) JAVERI FISCAL SERVICES LTD., PS - 17, 2 ND FLOOR, ROTUNDA, STOCK EXCHANGE BUILDING, FORT, MUMBAI - 400 023 VS. ACIT - 4(3), MUMBAI PAN/GIR NO. : A A ACJ 2577 L ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI AJAY R. SINGH /REVENUE BY : SHRI AKHILENDRA YADAV DATE OF HEARING : 2 ND MARCH , 201 5 DATE OF PRONOUNC EMENT 11 TH MARCH ,2015 O R D E R PER R.C.SHARMA (A.M) : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A), DATED 30 - 8 - 2011 FOR THE ASSESSMENT YEAR 20 10 - 11 , IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE ACT . 2. THE FIRST GRIEVANC E OF THE ASSESSEE RELATES TO DISALLOWANCE OF RS.90,354/ - U/S.40(A)(IA) IN RESPECT OF INTEREST PAID ON CAR LOAN TAKEN FROM NON - BANKING FINANCIAL INSTITUTE M/S RELIANCE CAPITAL LTD. 3. THE AO HAS DISALLOWED THE AMOUNT OF INTEREST ON THE PLEA THAT ASSESSEE HA S NOT DEDUCTED TAX AT SOURCE ON THE PAYMENT OF INTEREST . BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO. 6046 / 1 3 2 4. WE FOUND THAT THE AMOUNT OF INTEREST SO CLAIMED HAS ALREADY BEEN PAID BY ASSESS EE AND IT WAS NOT DUE AS ON LAST DATE OF ACCOUNTING YEAR IE. 31 - 3 - 2010. KEEPING IN VIEW THE DECISION OF COORDINATE BENCH IN THE CASE OF M/S ARCADIA SHARE & STOCK BROKERS PVT. LTD., ITA NO.1871/MUM/2003, DAT ED 22 - 12 - 2014, WHEREIN IT WAS HELD THAT THE PROVIS ION OF SECTION 40 (A)(IA) IS NOT APPLICABLE WITH REFERENCE TO THE PAYMENTS ALREADY MADE SINCE THE EXPRESSION PAYABLE HAS TO BE SATISFIED FOR INVOKING PROVISIONS OF SECTION 40(A)(IA). THE PRECISE OBSERVATI ON OF TRIBUNAL WAS AS UNDER: - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RECORD. WE SHALL FIRST TAKE UP THE LAST ALTERNATIVE GROUND, I.E. WHEN THE PAYMENT IS MADE BY THE ASSESSEE WHETHER SECTION 40(A)(IA) CAN BE ATTRACTED? ON THIS ISSUE THIS VERY BENCH, IN THE CASE OF AMIT NARESH SHAH (ITA NO. 4154/MUM/2013), HAD TAKEN A CONSISTENT STAND THAT IN THE LIGHT OF THE DECISION RENDERED BY HON'BLE SUPREME COURT, IN THE FORM OF DISMISSAL OF REVENUES SLP IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. SECTION 40(A)(IA) IS NOT APPLICABLE WITH REFERENCE TO PAYMENTS ALREADY MADE SINCE THE EXPRESSION PAYABLE HAS TO BE SATISFIED FOR INVOKING PROVISIONS OF SECTION 40(A)(IA). THE BENCH, IN THE AFORECITED DECISION, OBSERVED IN THIS REGARD AS UNDER: - 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE(DR) S TATED THAT ORDER OF THE SPECIAL BENCH DELIVERED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA)HAS BEEN KEPT IN ABEYANCE OF THE HON'BLE ANDHRA PRADESH HIGH COURT, THAT THE HON'BLE GUJARAT HIGH COURT HAD TAKEN A DIFFERENT VIEW. AUTHORISED REPRESENTATIV E (AR) SUPPORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT EXPENSES RELATED TO PROFESSIONAL FEES, ADVERTISEMENT AND MANAGEMENT WERE DEBITED IN P&L ACCOUNT, THAT SAME WERE PAID. THEREFORE, IN OUR VIEW, NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOULD BE MADE. WE FURTHER FIND THAT WHILE DECIDING THE APPEAL IN THE CASE OF JANAPRIYA ENGINEERS SYNDICATE (I.T.T.A. NO. 352 OF 2014 - DT. 24.06.2014) THE HON'BLE ANDHRA PRADESH HIGH COURT HAS CLARIFIED TH E ISSUE OF INTERIM STAY GRANTED BY IT IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA). WE WILL LIKE TO REPRODUCE THE RELEVANT PART OF THE SAID ORDER AND SAME READS AS UNDER: ' 4. WE ARE OF THE VIEW THAT UNTIL AND UNLESS THE DECISION OF THE SPECIAL BEN CH IS UPSET BY THIS COURT, IT BINDS SMALLER BENCH AND COORDINATE BENCH OF THE TRIBUNAL. UNDER THE ITA NO. 6046 / 1 3 3 CIRCUMSTANCES, IT IS NOT OPEN TO THE TRIBUNAL, AS RIGHTLY CONTENDED BY MR. NARASIMHA SARMA, LEARNED COUNSEL, TO REMAND ON THE GROUND OF PENDENCY ON THE SAME I SSUE BEFORE THIS COURT, OVERLOOKING AND OVERRULING, BY NECESSARY IMPLICATION, THE DECISION OF THE SPECIAL BENCH. WE SIMPLY SAY THAT IT IS NOT PERMISSIBLE UNDER QUASI JUDICIAL DISCIPLINE'. FROM THE CLARIFICATION ISSUED BY THE HON'BLE HIGH COURT, IT IS CLE AR THAT UNTIL AND UNLESS THE DECISION OF MARILYN SHIPPING & TRANSPORT (SUPRA) IS REVERSED BY THE COURT, IT IS BINDING ON ALL THE BENCHES OF THE TRIBUNAL. WE FIND THAT HON'BLE COURT HAS HELD THAT JUDICIAL DISCIPLINE MANDATES THAT THE DECISION OF THE SPECIAL BENCH HAS TO BE FOLLOWED BY OTHER BENCHES. AS ON TODAY, THE STAY ORDER GRANTED BY THE HONBLE COURT HAS BEEN VACATED AND THE ORDER OF THE SPECIAL BENCH IS BINDING ON OTHER BENCHES OF THE TRIBUNAL. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT T HE FAA WAS JUSTIFIED IN FOLLOWING THE ORDER OF MARILYN SHIPPING & TRANSPORT (SUPRA). CONSIDERING THE FACTS OF THE CASE AND THE CLARIFICATION ISSUED BY THE HON'BLE ANDHRA PRADESH HIGH COURT ON 24.06.2014 IN THE CASE OF JANAPRIYA ENGINEERS SYNDICATE, WE DECI DE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE AND CONFIRM THE ORDER OF THE FAA. 7. REVERTING TO THE FACTS ON HAND, THE TAX AUTHORITIES HAD NOT DISPUTED THE FACT THAT THE ASSESSEE PAID DEPOSITORY CHARGES WITHOUT DEDUCTING THE TAX AND TAXES ARE ALREADY PAID BY THE RECIPIENT [SEE PARA 3.3 & 3.4 OF THE ORDER PASSED BY THE CIT(A)]. SINCE THE AMOUNT WAS ALREADY PAID AND THE TAXES ARE PAID BY THE RECIPIENT, IN OUR OPINION, THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MARILYN SHIPPING & TRANSPO RTS (SUPRA) IS APPLICABLE AND BY FOLLOWING THE DECISION OF THE ITAT, MUMBAI BENCHES (SUPRA) WE HOLD THAT THE TAX AUTHORITIES HAVE WRONGLY INVOKED PROVISIONS OF SECTION 40(A)(IA) IN THE INSTANT CASE. WE, THEREFORE, SET ASIDE THE ORDERS PASSED BY THE TAX AUT HORITIES DISALLOWING RS. 6,27,423/ - . IN THE LIGHT OF THE DECISION ON MERIT IT IS NOT NECESSARY FOR US TO DEAL WITH THE OTHER ASPECTS URGED BEFORE US SINCE THEY WILL BE OF ACADEMIC IMPORTANCE. SUFFICE TO SAY THAT DISALLOWANCE MADE BY THE AO IS NOT CALLED FOR IN THE CIRCUMSTANCES OF THE CASE, IN THE LIGHT OF THE DECISION OF THE ITAT (SUPRA), WHICH IN TURN WAS BASED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE DO NOT FIND ANY MERIT FOR DISALLOWANCE OF INTEREST WHICH HAVE ALREADY BEEN PAID BEFORE THE CLOSE OF ACCOUNTING YEAR. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.90,354/ - . ITA NO. 6046 / 1 3 4 5. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF DEPRECIATION ON MOTOR CAR EXPENSES AMOUNTING TO RS. 2,04,717/ - ON THE PLEA THAT THE MOTOR CAR WAS IN THE NAME OF INDIVIDUAL DIRECTOR AND NOT IN THE NAME OF ASSESSEE COMPANY. WE F OUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH IN THE CASE OF M/S VIJAY FABRICS, ITA NO.7057&7058 /MUM/2011, ORDER DATED 27 - 9 - 2012, WHEREIN AFTER FOLLOWING THE DECISION OF HONBLE HIGH COURT IN THE CASE OF DILIP SINGH SARDARSHIN GH BAGGA, 201 ITR 995 (BOM) . THE BENCH HELD AS UNDER: - 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. IT IS NOT DISPUTED THAT THE VEHICLE ON WHICH DEPRECIATION HAS BEEN DISALLOWED IS STANDING IN THE BALANCE SHEET O F THE ASSESSEE. FOR THE SAKE OF CONVENIENCE THE VEHICLE WAS GOT REGISTERED IN THE NAME OF DIRECTOR ONLY FOR THE REASON THAT IT WOULD FACILITATE IF THE VEHICLE IS SOLD TO GET IT TRANSFERRED IN OTHER NAME. ACCORDING TO THE RATIO LAID DOWN IN THE AFOREMENTION ED DECISION OF HON'BLE BOMBAY HIGH COURT, REGISTRATION OF VEHICLE PER - SE IN THE NAME OF ASSESSEE IS NOT A CONDITION PRECEDENT FOR ALLOWABILITY OF DEPRECIATION ON THE SAID VEHICLE. IN THE PRESENT CASE THE VEHICLE IS IN THE NAME OF THE DIRECTOR OF THE ASSESS EE COMPANY. THEREFORE, WE ARE OF THE OPINION THAT DEPRECIATION CLAIM OF THE ASSESSEE HAS WRONGLY BEEN DISALLOWED THAT TOO BY WAY OF A RECTIFICATION ORDER. SUCH RECTIFICATION COULD NOT HAVE BEEN DONE AS IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE APPARENT FROM RECORD. THE ASSESSEE COULD RELY UPON THE AFOREMENTIONED DECISION OF HON'BLE BOMBAY HIGH. - COURT TO CONTENT THAT IT IS ENTITLED TO GET DEPRECIATION ON THE VEHICLE REGISTERED IN THE NAME OF ITS DIRECTOR. THE VALUE OF THE VEHICLE HAS BEEN SHOWN TO BE INCU RRED BY THE ASSESSEE COMPANY ITSELF AND THE VEHICLE IS SHOWN AS ASSET IN THE BALANCE SHEET OF THE ASSESSEE COMPANY. IN VIEW OF THE ABOVE DISCUSSIONS, WE ALLOW BOTH THE APPEALS FILED BY THE ASSESSEE. THE AO IS DIRECTED TO ALLOW DEPRECIATION. 6. RESPECTF ULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH AS WELL AS THE DECISION OF THE HONBLE BOMBAY HIGH COURT, WE DO NOT FIND ANY MERIT FOR DECLINE OF CLAIM OF DEPRECIATION IN RESPECT OF MOTOR CAR ITA NO. 6046 / 1 3 5 PURCHASED BY ASSESSEE COMPANY BUT REGISTERED IN THE INDIVIDU AL NAME OF DIRECTOR, INSOFAR AS USE OF CAR FOR THE PURPOSE OF BUSINESS OF ASSESSEE HAS NOT BEEN DISPUTED. 7 . IN THE RESULT, AP PEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11/03/ 201 5 . SD/ - SD/ - ( ) ( I. P. BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 11/03 /201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//