Prempal Singh, New Delhi V. ITO, New Delhi

ITA 6275/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5104 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: S C SINGHAL
• Keywords: Retrospective amendment
• Section: 194C

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6275/DEL/2013 (ASSESSMENT YEAR: 2010 - 11 ) PREMPAL SINGH, C/O. SINGHAL ASSOCIATES, 4546, GURNIVAS, FIRST FLOOR, 16, DARYA GANJ, NEW DELHI PAN: BHUPS3723A VS. ITO, WARD - 27(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SC SINGHAL, CA REVENUE BY: SH. FR MEENA, SR. DR DATE OF HEARING 16/05 / 2017 DATE OF PRONOUNCEMENT 08 / 08 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXIV, NEW DELHI DATED 03.10.2013 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - THE LEARNED ITO AS WELL AS CIT(A) EARNED IN RESPECT OF THE FOLLOWING: - 1 . AS THE ENTIRE SUM OF RS. 1,91,10,049 WAS PAID BEFORE 31/03/2010 AND NOTHING WAS PAYABLE AS ON BALANCE SHEET DATE, IN VIEW OF THE LANGUAGE OF SECTION 40(A)(IA) NO DISALLOWANCE SHOULD HAVE BEEN MADE AS NOTHING WAS PAYABLE - MERILYN SHIPPING & TRANSPORT VS ACIT (SPL. BENCH OF ITAT VISAKHAPATNAM), DELHI ITAT IN CADTRIUM ENGINEERING SOLUTION VS ITO IN ITA NO 3372/DEL/2012 ORDER DT 14/09/2012 AND ALLAHABAD HIGH COURT IN C IT VS VECTOR SHIPPING SERVICES (P) LTD (ITA NO. 122 OF 2013). IN CASE OF CONFLICTING VIEWS BY VARIOUS COURTS, OPINION WHICH FAVOURS TAX - PAYER SHOULD BE FOLLOWED - VEGETABLE PRODUCTS (SC). THE CIT(A) HAS FAILED IN HIS ORDER TO CONSIDER THIS PLEA, THOUGH ARGUE D. 2. THAT THE EXPENDITURE DISALLOWED IN FULL FALLS U/S 28(1) OF I.T. ACT BEING DIRECT EXPENDITURE INCIDENTAL TO CONDUCT OF BUSINESS BY THE APPELLANT AND DO NOT FALL WITHIN SEC 30 TO 38 OF I.T. ACT. THE SCOPE OF APPLICATION OF SEC 40(A)(IA) IS LIMITED TO E XPENSES COVERED U/S 30 TO 38 ONLY AND IT HAS NO APPLICATION TO THE INSTANT DIRECT EXPENDITURE. SO, NO DISALLOWANCE IS CALLED FOR IN THIS CASE - TEJA CONSTRUCTIONS VS ACIT (2010) 129TTJ57 (HYD) AND SB BUILDERS & DEVELOPERS VS. ITO (2011) 136TTJ (MUMBAI) 420. THE LEARNED CIT (A) FAILED TO CONSIDER THE PLEA IN HIS ORDER, THOUGH PRESSED/ARGUED. PAGE 2 OF 4 3. THAT ALL THE PARTIES TO WHOM THE SUB - CONTRACT AMOUNT WAS PAID AGGREGATING TO RS. 1,91,10,049 ARE TAX - PAYERS AND THEIR CONFIRMATION WITH PAN ARE THERE ON ITO/CIT (A) FIL E. ONCE THEY HAVE PAID TAX ON MONEY SO RECEIVED, TDS THEREON IS NOT JUSTIFIED - HINDUSTAN COCA - COLA BEVERAGES (P) LTD VS. CIT (2007) 293 ITR 226(SC). 4. THAT THE ORDER OF THE ITO IS CONTRADICTION WITHIN ITSELF. HE HAS NOT ACCEPTED THE USE OF CARS TAKEN ON HI RE FOR MEETING THE CONTRACTUAL OBLIGATION BUT ON PAGE 2 OF THE ASSESSMENT ORDER MENTIONS OTHERWISE. IN A STATE OF CONFUSION, THE MATTER HAS BEEN DECIDED. 5. THAT IN THE END OF ASSESSMENT ORDER, THERE IS A GENERAL DIRECTION 'CHARGE INERTEST AS PER LAW'. THERE IS NO/SPECIFIC MENTION OF SECTION OR SUB - SECTION APPLICABLE IN THIS CASE, AND IN SUCH CASES THE INTEREST IS NOT CHARGEABLE. OTHERWISE IN CASE OF SUCH DISALLOWANCES UNDER FICTION OF LAW, NO INTEREST IS TO BE CHARGED. 3. DURING THE COURSE OF HEARING OF T HE APPEAL THE ASSESSEE HAS REQUESTED FOR SUBSTITUTION THE ABOVE GROUND NO. 3 WITH THE BELOW MENTIONED GROUND MODIFYING THE ARGUMENT AS UNDER: - 3. SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY FINANCE ACT, 2012 BE TREATED TO HAVE RETROSPECTIVE EFFECT AS IT IS THERE W.E.F 01.04.2004 AND AS FORM 26A AND ITR COPY OF EACH PAYEE WERE FILED BEFORE ITO/CIT(A), CERTIFYING THE FACT THAT PAYEE HAVE TAKEN CARE OF ALL PAYMENTS IN THEI R RESPECTIVELY ITRS, NO DISALLOWANCE IS CALLED FOR IN THIS CASE. 4. THE ASSESSEE HAS SUBMITTED THAT THE GIST OF THE DECISION OF HON'BLE SUPREME COURT IN HINDUSTAN COCO COLA BEVERAGES PVT. LTD VS . CIT 293 ITR 226 HAS BEEN NOW ENSHRINED IN THE STATUTE AND THER EFORE THE ABOVE GROUND OF APPEAL IS MODIFIED. THE REVENUE HAS NOT EXPRESSED ANY RESERVATION ON SUCH MODIFICATION AND AS SUCH, THE ABOVE GROUND CANNOT BE SAID TO BE AN ADDITIONAL GROUND BUT THE MODIFIED GROUND. IT IS REQUIRED TO BE ADJUDICATED. 5. THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CAB RENTALS AS PROPRIETOR OF M/S. PAL TRAVELS. FOR THE YEAR HE FILED ITS RETURN OF INCOME ON 07.08.2010 SHOWING INCOME OF RS. 472369/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE LD ASSESSING OFFICER THA T ASSESSEE HAS OBTAINED SERVICES OF 24 CAR OWNERS AND ON PAYMENT TO THEM NO TAX AT SOURCE WAS DEDUCTED U/S 194C OF THE INCOME TAX ACT, 1961 AND HENCE, DISALLOWED RS. 19110049/ - APPLYING PROVISIONS OF SECTION 40(A ) ( IA) OF THE ACT. ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT ( A) WHO ALSO CONFIRMED THE ABOVE DISALLOWANCE AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD AR SUBMITTED THAT WITHOUT ENTERING INTO THE CONTROVERSY OF NON DEDUCTION OF TAX AT SOURCE ALL THE PERSONS WHOM THE PAYMENT HAVE BEEN MA DE HAVE FILED THEIR RETURN OF INCOME SHOWING THE ABOVE RECEIPT. SUCH DETAILS ARE AVAILABLE AT PAGE NO. 11 TO 33 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT FORM NO. 26A DULY CERTIFIED BY THE CHARTERED ACCOUNTANT WITH RESPECT TO ALL THE PARTIES IS ALSO PLA CED AT PAGE NO. PAGE 3 OF 4 34 TO 102 IS ALSO AVAILABLE AND THEREFORE, HE SUBMITTED THAT NOW PLETHORA OF DECISION HAVE HELD THAT PROVISO ADDED TO SECTION 40(A) ARE RETROSPECTIVE IN NATURE THEN, NO DISALLOWANCE IS CALLED FOR . HE THEREFORE SUBMITTED THAT DISALLOWANCE RE QUIRED TO BE DELETED. 7. THE LD DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT SUCH PROVISION COULD NOT BE APPLIED RETROSPECTIVELY. IN ANY WAY HE SUBMITTED THAT THESE DETAILS COULD BE VERIFIED BY ASSESSING OFFICER ONLY. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND IT IS NOW AN UNDISPUTED FACT THAT APPELLANT SHOULD HAVE DEDUCTED TAX AT SOURCE ON PAYMENT MADE TO THE CAB OPERATOR BY APPLYING THE PROVISIONS OF SECTION 194C OF THE ACT. ADMITTEDLY, NO TAX HAS BEEN DED UCTED, HOWEVER, TWO PROVISOS HAVE BEEN ADDED TO SECTION 40(IA). BOTH THE PROVISOS ARE HELD TO BE RETROSPECTIVE IN OPERATION BY HON'BLE DELHI HIGH COURT IN CIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD, 61 TAXMANN.COM 45 . AS THE REQUISITE DETAILS WITH RESPECT TO THE INCOME TAX RETURN OF THE PAYEE AS WELL AS FORM NO. 26A DULY CERTIFIED BY THE CHARTERED ACCOUNTANTS, THE DISALLOWANCE COULD NOT BE MADE WITH REQUISITE CONDITIONS ARE FULFILLED BY THE ASSESSEE. HOWEVER, WHETHER THE REQUISITE CONDITIONS ARE COMPLIED WITH BY THE ASSESSEE OR NOT IS REQUIRED TO BE VERIFIED BY THE LD ASSESSING OFFICER. IN VIEW OF THIS WE SET THE WHOLE ISSUE BACK TO THE FILE OF LD ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE APPLICABILITY OF THE FIRST AND SECOND PROVISO INTRODUCED W.E.F. 0 1.04.2005 AS WELL AS W.E.F. 01.04.2013 RESPECTIVELY AND IF THE ASSESSEE SATISFIES THEM THE ADDITION MAY BE DELETED AFTER VERIFICATION OF THE DETAILS. NEEDLESS TO SAY THE PROPER OPPORTUNITY OF HEARING MAY BE GIVEN, HOWEVER, THE RESPONSIBILITY OF SATISFYING REQUISITE CONDITION FOR BOTH THE PROVISO SHALL REST ON THE ASSESSEE. IN THE RESULT GROUND NO. 1 , 2 , 4 TO 6 OF THE APPEAL ARE DISMISSED AND GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED WITH ABOVE DIRECTION. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 0 8 / 08 / 2017 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 08 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT PAGE 4 OF 4 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI