Kalyani Carpenter Special Steels Ltd, Pune V. Addl CIT Rg- 11 Pune, Pune

ITA 621/PUN/2012

• Counselvise Citation: 62124514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 26-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Depreciation; Additional depreciation; Non-deduction of tax; Capital expenditure
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.621/PN/2012 (ASSESSMENT YEAR : 2008-09) KALYANI CARPENTER SPECIAL STEELS LTD., 72-76, MUNDHWA, PUNE-411036 .. APPELLANT PAN NO. AABCK1779L VS. ADDL.CIT, RANGE-11, PUNE .. RESPONDENT APPLICANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI P.L. PATHADE DATE OF HEARING : 20-03-2014 DATE OF PRONOUNCEMENT : 21-03-2014 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 21-10-2011 OF THE CIT(A)-I, PUNE RELATING TO ASSESS MENT YEAR 2008-09. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THE GR OUNDS OF APPEAL RELATES TO DISALLOWANCE OF EXPENDITURE OF RS.9,88,0 18/- U/S.40(A)(IA) OF THE ACT DUE TO SHORT DEDUCTION OF TAX. 2.1 AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE ISSUE IS IDENTICAL TO GROUNDS OF APPEAL NO.1.1 AND 1.2 FILED BY THE ASSES SEE FOR A.Y. 2007-08. WE FIND THE TRIBUNAL VIDE ITA NO.1577/PN/2011 ORDER DATED 12-03-2014 HAS DISCUSSED THE ISSUE AT PARA 13 OF THE ORDER AND OBSERVED AS UNDER : 2 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND AN IDENT ICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF BHARAT FORGE L TD. VS. ADDL.CIT. WE FIND THE TRIBUNAL VIDE ITA NO.340/PN/2012 ORDER DAT ED 30-09-2013 FOR A.Y. 2007-08 HAD DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. OSTENSIBLY, THE POINT MADE OUT BY THE ASSESSEE, IS TO THE EFFECT THAT SECTION 40(A)(IA) OF THE ACT CAN BE INVOKED ONLY IN CASES WHERE THERE IS A NON-DEDUCTION OF TAX AT SOURCE AND NOT IN CASES WHERE THERE IS SHORT-DEDUCTION OF TAX AT SOURCE. IN THE PRESE NT CASE, THE CHARGE MADE BY THE ASSESSING OFFICER IS THAT ASSESSEE HAS NO T DEDUCTED TAX AT APPROPRIATE RATE UNDER SECTION 194C OF THE ACT. WITHOUT GOING INTO THE MERITS OF THE RIVAL CLAIMS, FO R THE PRESENT, IT IS SUFFICIENT TO OBSERVE THAT THE ASSESSEE HAS BEEN HELD TO BE AN ASSESSEE IN DEFAULT FOR THE REASON THAT IT DEDUCTED TAX AT SOURCE ON PAYMENTS MADE BY WAY OF DIE REPAIRS AND MOTOR REWINDI NG EXPENSES WHICH WAS LOWER THAN THE RATE PRESCRIBED IN LAW, AS PER THE VIEW OF THE ASSESSING OFFICER. THE CONTROVERSY IS AS T O WHETHER IN SUCH A SITUATION, PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CAN BE ATTRACTED SO AS TO DISALLOW THE CORRESPONDING EXPENDITU RE, WHICH ACCORDING TO THE ASSESSING OFFICER HAS SUFFERED DEDUCTION AT LOWER RATE OF TAX AT SOURCE. 18. TO ANSWER THE AFORESAID CONTROVERSY, ONE MAY NOT ICE THE CRUCIAL EXPRESSION IN SECTION 40(A)(IA) OF THE ACT WH ICH PRESCRIBES THAT THE EXPENDITURE SPECIFIED THEREIN SHALL BE DISALL OWED ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII- B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT B EEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUBSECTION (1) OF SE CTION 139. CLEARLY, THE PHRASEOLOGY TO SECTION 40(A)(IA) OF THE ACT SEEKS TO DISALLOW AN EXPENDITURE ONLY IN SITUATIONS WHERE THE T AX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTE D OR AFTER DEDUCTION HAS NOT BEEN PAID AS PER THE PERIOD PRESCRIB ED THEREIN. THE PHRASEOLOGY USED IN SECTION 40(A)(IA) OF THE ACT CLEARLY REMOVES FROM ITS PURVIEW CASES WHERE TAX HAS BEEN SHORT- DEDUCTED. THEREFORE, THE INFERENCE DRAWN BY THE CIT (A) IS BORNE OUT OF A PLAIN READING OF SECTION 40(A)(IA) OF THE ACT. MOREOVER, THE DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL IN THE CA SE OF SANDVIK ASIA LTD. VS. JCIT 146 TTJ 644 (PUNE); AND, ALSO THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CHANDABHOY & JASSOBHOY VIDE ITA NO.20/MUM?2010 DATED 08.07.2011 SUPPORT THE AFORESA ID PREMISE. THUS, IN THE PRESENT CASE THE PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT ARE NOT ATTRACTED AS THIS IS A C ASE OF SHORT- DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT AND NOT A CASE OF NON-DEDUCTION OF TAX AT SOURCE. THE DISALLOWAN CE OUT OF DIE REPAIRS AND MOTOR REWINDING EXPENSES IS HEREBY SET-ASIDE. 13.1 RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL IN THE CASE OF BHARAT FORGE LTD. (SUPRA) AND IN ABSENCE OF ANY CON TRARY MATERIAL BROUGHT TO OUR NOTICE, WE SET-ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE U/ S.40(A)(IA) IN RESPECT OF SHORT DEDUCTION OF TAX. GROUNDS OF APPEAL NO.1.1 AND 1.2 BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 3 2.2 RESPECTFULLY FOLLOWING THE DECISION OF THE TRIB UNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE SET -ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFIC ER TO DELETE THE ADDITION. 3. THE SECOND ISSUE RAISED BY THE ASSESSEE IN THE G ROUNDS OF APPEAL RELATES TO DISALLOWANCE OF EXPENDITURE OF RS.3,08,8 7,701/- INCURRED ON REPLACEMENT OF ROLLING MILL ROLLS TREATING THE SAME AS CAPITAL EXPENDITURE. 3.1 THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THIS GROUND IS AGAINST THE ASSESSEE BY THE DECISION OF T HE TRIBUNAL IN ASSESSEES OWN CASE FOR THE PRECEDING YEARS. IN VIEW OF THE A BOVE, THIS GROUND BY THE ASSESSEE IS DISMISSED. 4. THE THIRD ISSUE RAISED BY THE ASSESSEE RELATES T O DENIAL OF ADDITIONAL DEPRECIATION ON ADDITION TO ROLLING MILLS AS PER PR OVISIONS OF SECTION 32(1)(IIA). 4.1 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL GROUND HAD COME BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE PRECEDING YEARS. WE FIND THE TRIBUNAL VIDE ITA NO.1131/PN/2010 ORDER DA TED 12-03-2014 FOR A.Y. 2006-07 HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS TO VERIFY THE ALLOWABILITY OF ADDITIONAL DEPRECIATION ON ADDITION TO ROLLING MILLS. RESPECTFULLY FOLLOWI NG THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WE RESTORE THIS ISS UE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ALLOWABILITY OF ADD ITIONAL DEPRECIATION IN 4 THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL F OR A.Y. 2006-07. THIS ISSUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOS ES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21-03-2014. SD/- SD/- (R.S.PADVEKAR ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 21 ST MARCH , 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE