Ramesh Anand, Indore V. Income Tax Officer-4(1), Indore

ITA 64/Ind/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1201 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMNI
• Keywords: Retrospective amendment
• Section: 143(3); 142(1); 40(a)(ia); 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.64/IND/2018 ASSESSMENT YEAR: 2012-13 RAMESH ANAND C/O G.J. SHAH & CO., 416, MANAS BHAWAN MAIN, 11, RNT MARG, INDORE / VS. ITO, 4(1), INDORE ( APPELLANT ) ( RE VENUE) PAN: AEAPA1661F APPELLANT BY SHRI PANKAJ SHAH, CA RESPONDENT BY SHRI K.C. SELVAMNI SR. DR DATE OF HEARING: 20.11.2018 DATE OF PRONOUNCEMENT: 27.11.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2012-13 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INC OME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)), DATED 1 6.11.2017 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON RAMESH ANAND 2 30.03.2015 BY ITO-4(1), INDORE. THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)-II (CI T(A)) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES UNDER SECTION 40(A)(IA) OF THE ACT. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINE SS OF TRADING OF ELECTRICAL GOODS & SERVICES UNDER SOLE PROPRIETORSHIP CONCERN OF M/S ANAND ELECTRIC EMPORIU M. INCOME OF RS.9,92,750/- DECLARED IN THE INCOME TAX R ETURN FILED ON 21.02.2013. CASE SELECTED FOR SCRUTINY THRO UGH CASS. NOTICE U/S 143(2) & 142(1) OF THE ACT WERE DU LY SERVED UPON THE ASSESSEE ALONG WITH QUESTIONNAIRE. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER ( IN SHORT LD. AO) OBSERVED THAT THE ASSESSEE HAS CLAIMED THE INTEREST EXPENDITURE OF RS.16,32,559/- PAID TO NON-BANKING FINANCIAL COMPANIES BUT HAS NOT DEDUCTED THE TAX AT SOURCE, AND THUS, THE ALLEGED INTEREST IS DISALLOWABLE U/S 40(A)(IA) OF THE AC T. THE ASSESSEE CONTENDED BEFORE THE LD. AO THAT ON ACCOUNT OF THE AMENDMENT BROUGHT BY FINANCE ACT 2012, BY VIRTUE OF SECOND PROVISO TO SECTION 40(A)(IA) WHICH PROVIDES TH AT NO RAMESH ANAND 3 DEDUCTION OF TAX AT SOURCE TO BE MADE IN CASE THE ALLEG ED EXPENDITURE IS OFFERED AS INCOME BY THE PAYEE IN THE RETURN OF INCOME FILED U/S 139 OF THE ACT. IT WAS ALSO CONT ENDED THAT ABOVE REFERRED AMENDMENT IS DECLARATORY AND CURATIVE IN NATURE AND SHOULD BE GIVEN RETROSPECTIVE EFFECT FR OM 1 ST APRIL, 2005. THESE CONTENTIONS OF THE ASSESSEE WERE NOT SUFFICIENT TO CONVINCE THE ASSESSING OFFICER AND HE AS SESSED THE INCOME AT RS.26,25,309/- AFTER DISALLOWING INTERES T EXPENDITURE OF RS.16,32,559/- U/S 40(A)(IA) OF THE AC T. 3. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A) BUT FAILED TO GET ANY RELIEF. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ISSUE RAISED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDIN ATE BENCH, INDORE IN THE CASE OF ITO VS. SHRI NARAYAN DAS GOYAL, ITANO.486/IND/2017 DATED 25.09.2018. RELIANCE WAS ALSO PLACED ON: B. JASLEEN EDUCATIONAL SERVICE SOCIETY VS. ACIT (2017 ) 30 ITJ 605 (TRIB-INDORE) C. DILIP SURYAVANSHI VS. ACIT (2016) 29 ITJ 404 (TRI B- INDORE) D. CIT VS. ANSAL LAND MARK TOWNSHIP (P.) LTD. [2015] 6 1 TAXMANN.COM 45 (DELHI HIGH COURT) RAMESH ANAND 4 E. SOMA TRG JOINT VENTURE VS. CIT (2017) 398 ITR 425 (JAMMU & KASHMIR) 5. LD. AUTHORIZED REPRESENTATIVE (AR) ALSO SUBMITTED THAT THE ALLEGED INTEREST AMOUNT PAID TO THREE NON-BANKING FINANCE COMPANIES HAVE DULY BEEN OFFERED TO TAX BY RESPECTIVE PAYEES AND THE CERTIFICATE TO THIS EFFECT HAS BEEN PROVIDED BY THE RESPECTIVE CHARTERED ACCOUNTANTS CONFIRMING THIS FACT OF OFFERING THE ALLEGED INTEREST INCOME TO TAX IN THE INCOME TAX RETURN. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) THOU GH SUPPORTED THE ORDER OF THE LOWER AUTHORITIES BUT FAIL ED TO CONTROVERT THE SUBMISSIONS MADE BY THE LD. AR FOR TH E ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE R ECORD PLACED BEFORE US AND GONE THROUGH THE JUDGMENTS RELIE D BY THE LD. COUNSEL FOR THE ASSESSEE. THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST DISALLOWA NCE OF INTEREST EXPENDITURE OF RS.16,32,559/- U/S 40(A)( IA) OF THE ACT PAID TO FOLLOWING THREE COMPANIES: NAME AMOUNT M/S BAJAJ FINANCE LTD. 10,79,202/- RAMESH ANAND 5 M/S CHOLA MANDALAM INVESTMENT 25,284/- CITI FINANCE CONSUMER FINANCE INDIA LTD. 5,28,073/- TOTAL 16,32,559/- 8. THE ABOVE INTEREST EXPENDITURE WAS CLAIMED/PAID BY T HE ASSESSEE WITHOUT DEDUCTING TAX AT SOURCE. BEFORE FIRS T APPELLATE AUTHORITY ASSESSEE PLACED ON RECORD THE CERTIFICATES ISSUED BY CHARTERED ACCOUNTANTS FIRM B.K . KOTHARI & CO., SIVAKUMAR AND ASSOCIATES, AND NAINESH PATH & CO. CONFIRMING THAT THE ALLEGED INTEREST AMOUNT REFERRED ABOVE HAVE BEEN INCLUDED IN THE RESPECTIVE R ETURN OF INCOME FILED BY EACH FINANCE COMPANIES AND HAVE BEEN INCLUDED IN THE INCOME OFFERED TO TAX. THIS FACT TH AT EACH OF THE THREE PAYEES HAS DISCLOSED THE RESPECTIVE INTERE ST RECEIPT IN THEIR INCOME TAX RETURN HAS NOT BEEN DISP UTED BY THE REVENUE AUTHORITIES. 9. INSOFAR AS THE CLAIM OF THE ASSESSEE THAT THE AMENDME NT BROUGHT IN SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT 2012, THEREBY INSERTING SECOND PROVISION TO EFFECTI VE FROM 1 ST APRIL 2013 IS DECLARATORY AND CURATIVE IN NATURE AND IT SHOULD BE GIVEN RETROSPECTIVE FROM 1 ST APRIL 2005, WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE RAMESH ANAND 6 BENCH, INDORE IN THE CASE OF NARAYAN DAS GOYAL,(SUPRA) OBSERVING AS FOLLOWS: 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORD BEFORE US. REVENUES SOLE GRIEVANCE IS AGAINST THE FINDINGS OF LD.CIT(A) DELETING THE ADDITION OF RS.10,43,000/- M ADE BY THE LD. ASSESSING OFFICER ON THE INTEREST OF RS.10,43, 000/- PAID TO FOUR PERSONS. THE LD. CIT(A) DELETED THE IMPUGNED DISALLOWANCE OBSERVED AS FOLLOWS; 4.1 GROUND NO.1:-THROUGH THIS GROUND OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.10,43,0 001- ON ACCOUNT OF DISALLOWANCE U/S. 40(A)(IA). THE APPE LLANT HAS PAID THE INTEREST OF RS.LO,43,0001- TO THE FOLL OWING PERSONS:- RAM GOPAL SITARAM GOYAL PROP GOBIND GOYAL RS.4,50,000/- SMT KAMLA BAI RS.2,40,000/- RAVISHANKAR NARAYAN DAS GOYAL HUF RS.L,55,000/- SMT VINITA DEVI GOYAL RS.1,98,000/- THE ABOVE PERSONS HAS ALREADY INCLUDED THE ABOVE RE CEIPT IN THEIR RETURN OF INCOME AND PAID THE TAX THEREON. 4.1.1 AS PER AMENDMENT IN SECTION 40(A)(IA) W.E.F. 1 ST JULY, 2013. IF THE ASSESSEE IS LIABLE TO, DEDUCT TAX AT S OURCE AND IF HE HAS NOT DEDUCTED THE TAX AT SOURCE BUT PAYEE HAS ALREADY DECLARED THE INCOME AND PAID THE TAX ON SUC H SUM AND FURNISHED THE RETURN, THE ASSESSEE CANNOT BE HA S RETROSPECTIVE EFFECT FROM 01.04.2005 AS HELD BY HON 'BLE DELHI HIGH COURT IS THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (2015) 61 TAXMANN.COM 45 (DELHI). WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT- SECTION 40(A)(IA), READ WITH SECTION 194J, OF THE I NCOME-TAX ACT, 1961-BUSINESS DISALLOWANCE-INTEREST ETC. PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX AT SOURCE (SECOND PROVISO )-ASSESSMENT YEAR 2008-09 AND 2009-10 -WHETHER SECO ND RAMESH ANAND 7 PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CUR ATIVE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005- HELD, YES- WHETHER, THEREFORE, WHERE ASSESSEE MADE PAYMENTS WITHOUT DEDUCTING TAX AT SOURCE UNDER SECTION 194J, SINCE PAYEE HAD FILED RETURN OFFERED SUM RECEIVED FROM AS SESSEE TO TAX, IMPUGNED DISALLOWANCE MADE UNDER SECTION 40 (A) (IA) DESERVED TO BE DELETED ELD, YES [PARAS 13 AND 14] [IN FAVOUR OF ASSESS] SAME VIEW WAS FOLLOWED BY HON'BLE ITAT INDORE IN TH E CASE OF SHRI DILIP SURYANVANSHI P/O M/S DILIP BUILD ERS BHOPAL VS. ACIT 2(1) BHOPAL ITA NO. 84IIND/2015 AY 2015-16. IN THE CASE OF RAJEEV KUMAR AGRAWAL [2014] 45 TAXMA NN. COM 555 (AGRA TRIB) IN THE IT AT AGRA BENCH WAS HEL D THAT _ SECTION 40(A)(IA), OF THE INCOME-TAX ACT, 1961 -BUS INESS DISALLOWANCE - INTEREST ETC. PAID TO A RESIDENT WIT HOUT DEDUCTION OF TAX AT SOURCE (SECOND PROVISO) - ASSES SMENT YEAR 2006-07 -WHETHER INSERTION SECTION PROVISO TO SECTION 40(A)(IA) WITH EFFECT FROM 01.04.2013 IS DECLARATOR Y AND CURATIVE IN SECTION 40(A) (IA) WITH EFFECT FROM 01. 04.2013 IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPE CTIVE FROM 01.04.2005, BEING DATE FROM WHICH SUB CLAUSE ( IA) OF SECTION 40(A) WAS INSERTED BY FINANCE (NO.2) ACTM 2 004- HELA YEAS [PARA9] [IN FAVOUR OF ASSESSEE] THE RATIO OF DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. VS. CIT, 211 CTR 545 (S.C.) HELD THAT WHEN THE ASSESS IS IN DEFA ULT FOR TDS, THE TAX ALREADY PAID BY RECIPIENT OF INCOME TA X PAYEE HAD ALREADY PAID THE TAXES DUE ON PAYMENT RECEIVED FROM IT FROM THE ASSESSEE. THEREFORE, THE TAX COULD NOT BE RECOVERED ONCE AGAIN FROM THE DEDUCTOR ASSESSEE. TH IS ISSUE ALREADY STANDS CLARIFIED BY CIRCULAR NO.272/2 01L95- IT (B) DATED 29.01.1997. KEEPING IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENT S, THE ADDITION MADE BY THE AO AMOUNTING TO RS.LO,43,000/- IS DELETED. THEREFORE, THE APPEAL ON THIS GROUND IS AL LOWED. 5. IN THE RESULT APPEAL FILED BY THE APPELLANT IS A LLOWED. RAMESH ANAND 8 9. THE ABOVE FINDINGS OF LD.CIT(A) COULD NOT CONT ROVERTED BY THE DEPARTMENTAL REPRESENTATIVE AND THERE IS NO DIS PUTE TO THE FACT THAT THE ALLEGED INTEREST PAID AT RS.10,43,000 /- HAS BEEN OFFERED TO TAX BY RESPECTIVE PARTIES IN THEIR REGUL AR RETURN OF INCOME AND TAXES HAVE BEEN PAID THEREON. WE FIND T HAT THE I.T.A.T. AGRA BENCH IN THE CASE OF RAJEEV KUMAR AGR AWAL (2014) 45 TAXMANN.COM 555 HAS HELD THAT THE PROVISO INSERT ED TO SECTION 40(A)(IA) OF THE ACT WITH EFFECT FROM 01.04 .2013 IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPE CTIVE EFFECT FROM 01.04.2005. THIS JUDGMENT OF THE TRIBUNAL WAS DISCUSSED BY HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (2015) 61 TAXMANN.COM 45 (SUPRA) AND THE VIEW TAKEN BY THE TRIBUNAL WAS CONFIRMED BY THE HON'BLE HIGH COURT. 10. WE THEREFORE RESPECTFULLY FOLLOWING THE JUDGMEN TS REFERRED ABOVE ARE OF THE VIEW THAT SINCE THE PAYEES WHO REC EIVED THE INTEREST OF RS.10,43,000/- SHOWN THE INTEREST INCOM E IN THEIR INCOME TAX RETURN FILED AND OFFERED IT TO TAX, NO D ISALLOWANCE WAS CALLED FOR U/S 40(A)(IA) OF THE ACT. WE UPHOLD THE FINDINGS OF LD.CIT(A) AND DISMISS THE REVENUES APPEAL. 10. AFTER EXAMINING THE FACTS OF THE INSTANT APPEAL, IN THE LIGHT OF ABOVE DECISION, WE ARE OF THE CONSIDERED OP INION THAT THE ISSUE RAISED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS JUDGMENT AND RESPECTFU LLY FOLLOWING THE SAME, ARE OF THE CONSIDERED OPINION THAT NO DISALLOWANCE WAS CALLED FOR U/S 40(A)(IA) OF THE ACT FOR THE ALLEGED INTEREST EXPENDITURE OF RS.16,32,559/- AS TH E PAYEES HAVE DISCLOSED THE RESPECTIVE INTEREST AMOUNT IN REVENUE TO BE OFFERED TO TAX IN THEIR RESPECTIVE RE TURN OF INCOME FILED U/S 139 OF THE ACT. RAMESH ANAND 9 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 .11 .2018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 27 /11/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR