M/s Suresh Constructions (P) Ltd., Kolkata V. CIT, - II, Kolkata, Kolkata

ITA 612/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8121 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Court: TRIBUNAL
• Department Lawyers: A DAS
• Assessee Lawyers: ANUMITA SARKAR
• Keywords: Retrospective amendment
• Section: 263

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND ! ' ! ! ' ! ! ' ! ! ' ! , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 612KOL/2012 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR : 2007-08 M/S. SURESH CONSTRUCTIONS (P) LTD. COMPANY VS. C OMMISSIONER OF INCOME-TAX, (PAN: AAECS4357B) KOLKATA-II. ()* /APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT: SMT. ANUMITA SARKAR FOR THE RESPONDENT: SHRI A. DAS DATE OF HEARING: 28.08.2012 DATE OF PRONOUNCEMENT: 28.08.2012 , / ORDER IMMEDIATELY UPON CONCLUSION OF HEARING OF THIS APPE AL ON 28TH AUGUST, 2012, THE BENCH PASSED THE FOLLOWING ORDER: 28TH AUGUST, 2012 THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT. REASONED ORDER TO FOLLOW. IN ACCORDANCE WITH THE ABOVE, THE REASONED ORDER IS NOW SET OUT AS FOLLOWS: PER MAHAVIR SINGH, JM ( ! ' ! ! ' ! ! ' ! ! ' !, , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT, KOLKATA-II VIDE M. NO. CIT KOL- II/U/S.263/C-12/2010-11/9497-9501 DATED 14.02.2012. ASSESSMENT WAS FRAMED BY ITO, WARD- 5(1), KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 07.12 .2009. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE REVISION ORDER PASSED BY CIT, KOL-II IN DIRECTING THE AO TO MAKE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN RESPECT OF EXPENDITURE OF RS.1,25,66, 577/- I.E. LABOUR CHARGES INCLUDING PAYMENT TO SUB-CONTRACTORS. FOR THIS, ASSESSEE HAS RAISED FOL LOWING GROUND: 1. THAT THE HONBLE CIT HAS ERRED IN DIRECTING LD. A.O. TO MAKE DISALLOWANCE OF RS.1,25,66,577/- U/S. 40(A)(IA) OF THE INCOME TAX A CT, 1961 ON ACCOUNT OF LATE DEPOSIT OF TDS, WITHOUT CONSIDERING THE AMENDED PROVISION OF S EC.40(A)(IA) BEING CLARIFICATORY IN NATURE BROUGHT WITH RETROSPECTIVE EFFECT IN FINANCE ACT, 2010. 2 ITA 612/K/2012 M/S. SURESH CONSTRUCTIONS (P) LTD. CO.. A.Y. 07-08 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE REVISION ORDER PASS ED BY CIT U/S. 263 OF THE ACT AND FIND THAT THE ONLY PREMISE OF CIT FOR REVISING THE ASSES SMENT ORDER IS AS UNDER: I HAVE CONSIDERED THE ARGUMENT AND AISO GONE THROUG A FEW APPELLATE ORDERS INCLUDING THAT OF ITAT, AHMEDABAD BENCH B, AHMEDABAD IN THE CASE OF KANUBHAI RAMJIBHAI MAKWANA VS. ITO ITA NO.3 983/AHD/2008) ON THE SIMILAR DISPUTE. THERE IS NO STATUTORY PROVISION THAT THE AMENDMENT WOULD BE EFFECTIVE FOR ASSESSMENT YEARS PRIOR TO 2010-11. THE VERY FACT T HAT THE ISSUE HAS GONE BEYOND THE REVENUE AUTHORITIES FOR ADJUDICATION ENT AILS THAT THE FINAL WORD HAS TO COME FROM THE COURT(S). THE LAW ON THIS DIS PUTE IS NOT SETTLED AS YET. SO, WE HAVE TO GO BY THE LETTER ON THE STATUTE BOOK . THE AO IS DIRECTED TO MAKE DISALLOWANCE U/S. 40(A)( IA) OF THE I. T. ACT OF RS.1,25,66,577/- OUT OF THE TOTAL SUM OF RS.2,70,49 ,115/- DEBITED TO P&L A/C. OF THE PREVIOUS YEAR (2006-07) RELATABLE TO THE ASS ESSMENT YEAR 2007-08 UNDER THE HEAD LABOUR CHARGES INCLUDING PAYMENT TO SUB CONTRACTORS. THE ASSESSMENT IS REVISED ACCORDINGLY. IN SUCH CIRCUMSTANCES, THE LD. COUNSEL FOR THE ASSE SSEE RELIED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN C REATIONS IN ITAT NO.302 OF 2011, GA NO.3200/2011 DATED 23.11.2011, WHEREIN HONBLE HIGH COURT HAS CONFIRMED COORDINATE BENCH DECISION OF ITAT IN ITA NO.267/K/2009 A BENCH, IN THE CASE OF VIRGIN CREATIONS VS. ITO DATED 15.12.2010. TRIBUNAL HAS CONSIDERED THE DECI SIONS OF MUMBAI BENCH OF THIS ITAT IN THE CASE OF M/S. BANSAL PARIVAHAN (INDIA) P. LTD. VS. I TO IN ITA NO.2355/MUM/10 AND OF AHMEDABAD BENCH B IN ITA NO. 3983/AHD/2008 FOR AY 2005-06 DATED 03.12.2010. TRIBUNAL CONSIDERED THE AMENDMENT MADE IN THE PROVI SIONS OF SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2010 AS CURATIVE AND REMEDIAL IN N ATURE BY HOLDING AS UNDER: AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT THAT THOUGH THE LD. D.R. SUBMITTED THAT THE DECISIONS OF THE COORDINATE BENCHES ARE NOT BINDING AND THE KOLK ATA BENCHES MAY TAKE A DIFFERENT VIEW, SINCE MUMBAI BENCH AFTER ANALYZING THE PROVIS IONS OF SECTION 40(A)(IA) SINCE ITS INCEPTION AND VARIOUS AMENDMENTS MADE TO THE SAME I NCLUDING THE SUGGESTION MADE BY THE INDUSTRY IN THE FORM OF REPRESENTATION IN THEIR PRE -BUDGET MEMORANDUM TO THE HONBLE FINANCE MINISTER AND BY APPLYING THE DECISION OF TH E HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD., HAS OBSERVED THAT THE PROVIS IONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ACT 201 0 THUS WERE RESULTING INTO UNINTENDED CONSEQUENCES AND CAUSING GRAVE AND GENUI NE HARDSHIPS TO THE ASSESSEES WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PR OVISIONS BY DEDUCTING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S 139(1). IN ORDER TO REM EDY THIS POSITION AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEES B ELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIONS OF SECT ION 40(A)(IA) BY THE FINANCE ACT 3 ITA 612/K/2012 M/S. SURESH CONSTRUCTIONS (P) LTD. CO.. A.Y. 07-08 2010. THE SAID AMENDMENTS, IN OUR OPINION, THUS ARE CLEARLY REMEDIAL/CURATIVE IN NATURE AS HELD BY HONBLE SUPREME COURT IN THE CASE OF ALL IED MOTORS PVT. LTD. (SUPRA) AND MOM EXTRUSIONS LTD. (SUPRA) AND THE SAME THEREFORE WOUL D APPLY RETROSPECTIVELY W.E.F. 1ST APRIL, 2005. IN THE CASE OF R.B. JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE HONBLE SUPREME COURT THAT A PROVISO WHICH IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, RE QUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CA N BE GIVEN TO THE SECTION AS A WHOLE. IN THE PRESENT CASE, THE AMOUNT OF TAX DEDUCTED AT SOU RCE FROM THE FREIGHT CHARGES DURING THE PERIOD 01/04/2005 TO 28/02/2006 WAS PAID BY THE ASS ESSEE IN THE MONTHS OF JULY AND AUGUST 2006 I.E. WELL BEFORE THE DUE DATE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LEARNED CIT(A) ON ACC OUNT OF FREIGHT CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINA BLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEI NG REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION, WE FIND NO REASON TO DE VIATE FROM THE DECISIONS OF THE ITATS MUMBAI BENCH AND AHMEDABAD BENCH, IN THE ABSENCE OF A CONTRARY VIEW, EXCEPT THE OTHER BENCHES DECISION OR ANY OTHER HIGH COURT. THEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCHES (SUPRA), WE ALLOW THE GRO UND NOS. 1 TO 3 OF THE ASSESSEES APPEAL. 4. WE FIND THAT THE ABOVE VIEW OF THIS TRIBUNAL WAS CONFIRMED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA) BY HO LDING AS UNDER: WE HAVE HEARD MR. NIZAMUDDIN AND GONE THROUGH THE I MPUGNED JUDGMENT AND ORDER. WE HAVE ALSO EXAMINED THE POINT FORMULATED FOR WHICH T HE PRESENT APPEAL IS SOUGHT TO BE ADMITTED. IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEED S TO TAKE DECISION AS TO WHETHER SECTION 40(A) (IA) IS HAVING RETROSPECTIVE OPERATION OR NOT . THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSE E HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND A PRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FA CTUAL POSITION WAS UNDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED B Y THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CAS E OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECT IVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTIO N CAN BE GIVEN TO THE SECTION AS WELL. IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE S UPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. 5. ONCE THE ISSUE IS DECIDED BY HONBLE JURISDICTIO NAL HIGH COURT THAT THE AMENDMENT IN THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY F INANCE ACT, 2010 IS REMEDIAL AND CURATIVE IN NATURE AND TDS PAID ON OR BEFORE THE DUE DATE OF FI LING OF RETURN U/S. 139(1) OF THE ACT, DEDUCTION IN RESPECT TO THE AMOUNT ON WHICH TDS IS SO PAID, IS ALLOWABLE. IN THE PRESENT CASE THE ASSESSEE DEDUCTED TAX AND THE SAME WAS DEPOSITE D ON 28.05.2007 FOR THE AY 2007-08 THAT MEANS THE TDS WAS PAID BEFORE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT BY THE 4 ITA 612/K/2012 M/S. SURESH CONSTRUCTIONS (P) LTD. CO.. A.Y. 07-08 ASSESSEE, HENCE, WE ALLOW THE CLAIM OF ASSESSEE AND QUASH THE REVISION ORDER PASSED BY CIT. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 7. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , ! ! ! ! ' ! ' ! ' ! ' ! , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( - - - -) )) ) DATED: 28TH AUGUST, 2012 ./ '$01 '2 JD.(SR.P.S.) , 3 ''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. SURESH CONSTRUCTIONS (P) LTD. COMP ANY, SAGAR ESTATE, 2, N. C. DUTTA SARANI, KOLKATA-700 00 1. 2 +)* / RESPONDENT CIT, KOLKATA-II. 3 . ',$ ( )/ THE CIT(A), KOLKATA 4. ITO, WARD-5(1), KOLKATA 5 . ='> '$ / DR, KOLKATA BENCHES, KOLKATA +4 '/ TRUE COPY, ,$/ BY ORDER, ! 1 /ASSTT. REGISTRAR .