ITO, New Delhi V. M/s Shivaai Industries Pvt. Ltd., New Delhi

ITA 6484/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2863 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Assessee Lawyers: R K KAPOOR
• Section: 143(3); 201(1); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D , NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO . 6484 /DE L/ 2015 ASSESSMENT YEAR: 2008 - 09 INCOME TAX OFFICER, WARD - 23(2), ROOM NO.234, C.R. BUILDING, NEW DELHI VS. M/S. SHIVA AI INDUSTRIES PVT. LTD., E - 3/38, SECTOR - 7, ROHINI, NEW DELHI PAN : AABCS4829F ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. VIJAY VERMA, CIT(DR) RESPONDENT BY SH. R.K. KAPOOR, CA DATE OF HEARING 13.03.2018 DATE OF PRONOUNCEMENT 16.03.2018 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER D ATED 19/10/2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 28, NEW DELHI [ IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR 2008 - 09 RAISING FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE U/S 40(A)(IA) MADE BY THE AO IN RESPECT OF PAYMENT MADE TO DTC ON ACCOUNT OF NON - DEDUCTION OF TDS. 2. THE APPEL LANT CRAVES LEAVE TO AMEND, MODIFY, ALTER OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30/09/200 8 2 DECLARING TOTAL INCOME OF RS. 5,68, 0 75/ - AND THE ASSESSMENT UNDER SECTION 143(3) OF THE I NCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS COMPLETED ON 02/12/2010 AS SESSING THE TOTAL INCOME AT RS. 6,45,500/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED BY WAY OF ISSUE OF NOTICE UNDER SECTION 148 OF THE A CT ON 26/11/2012. ACCORDING TO THE ASSESSING OFFICER , THE TAX WAS NOT DEDUCTE D ON PAYMENTS OF RS. 17,67,16,747 / - OF SITE RENTS PAID TO THE DE LHI TRANSPORT CORPORATION (DTC), AND , THEREFORE , SAME ARE DISALLOWABLE IN TER MS OF SECTION 40(A)(IA) OF THE A CT. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE AND MADE DISALLOWANCE OF RS. 17,67,16,747/ - . ON FURTHER APPEAL BY TH E ASSESSEE, THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, DELETED THE ADDITION WITH FOLLOWING FINDINGS: 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE FINDING OF THE ASSESSING OFFICER THE SUBMISSION OF THE, L.D A.R. IN THE CASE UN DER CONSIDERATION IDENTICAL DISALLOWANCE ON SAME SET OF FACTS WERE MADE IN A.Y 2007 - 08 AGAINST WHICH APPEAL WAS FILED BY THE APPELLANT BEFORE THE COMMISSIONER OF INCOME TAX (A) - 8 DELHI . CIT(A) HAS CONSIDERED THE ISSUE IN QUESTION IN DETAIL AND VIDE ORDER NO 1/13 - 14 DATED 03.09.2014 IT HAS BEEN HELD THAT DISALLOWANCE UNDER SECTION 40(A)(IA) IS NOT APPLICABLE FOR THE PAYMENT MADE BY THE ASSESSEE TO DTC/MCD. MOREOVER, HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP PVT. LTD. ORDER DA TED 26TH AUGUST 2015 REPORTED AS TS - 495 - HC - 2015 - DEL, HAS HELD THAT THE SECOND PROVISO INSERTED BY THE FINANCE ACT, 2012, WHICH PROVIDES THAT SECTION ATTRACTED WHERE PAYEE HAS DEPOSITED TAX, IS RETROSPECTIVE IN FOLLOWING THE DECISION OF THE JURISDICTIONAL H IGH COURT AND FINDING OF MY PREDECESSOR IN ASSESSEE OWN CASE IN A.Y 2007 - 08 THE ADDITION OF RS. RS. 17,67,16,747/ MADE BY THE A.O UNDER SECTION 40(A)(IA) OF THE ACT IS DELETED. THE APPELLANT WILL GET NECESSARY RELIEF ACCORDINGLY. 3 2.1 AGGRIEVED, THE REVE NUE IS IN APPEAL BEFORE THE T RIBUNAL RAISING THE GROUNDS IS REPRODUCED ABOVE. 3. BEFORE US, THE LD. CIT(DR) SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCES THAT THE PAYEE HAS PAID TAX. ACCORDING TO HIM, IT IS ONU S OF THE ASSESSEE TO ESTABLISH THAT THE PAYEE HAS PAID THE TAX. IN SUPPORT OF THE PROPOSITION, HE RELIED ON THE ORDER OF THE HON BLE HIGH COURT OF THE CALCUTTA IN THE CASE OF NOPANY MARKETING C OMPANY P RIVATE L IMITED VS. COMMISSIONER OF I NCOME T AX (TDS) REP ORTED IN 231 TAXM A N 802 (CALCUTTA). FURTHER, HE ALSO REFERRED TO THE PROV ISION TO SECTION 201(1) OF THE A CT, ACCORDING TO WHICH, THE ASSESSEE IS REQUIRED TO FURNISH PRESCRIBED CERTIFICATE FOR THIS PURPOSE ( RULE 31 AND FORM 26A). ACCORDING TO HIM, THE LD. C IT(A) HAS NOT VERIFIED ABOVE FACTS WHILE ALLOWING THE APPEAL OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 4. ON THE CONTRARY, T HE LD. C OUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE ASSESSEE ITSELF FOR TH E ASSESSMENT YEAR 2007 - 08, THE T RIBUNAL HAS UPHELD THE FINDING OF THE LD.CIT(A) AND DELETED THE DISALLOWANCE. ACCORDING TO HIM, PAYMENTS MADE BY THE ASSESSEE HAVE BEEN DECLARED BY THE DTC AS THEIR INCOME, THEREFORE, NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) OF THE A CT IN VIEW O F 2 ND PROVISO TO SECTION 40(A) (IA) OF THE A CT, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE. 5. IN REJOINDER, THE LD. CIT(DR) SUBMITTED THAT THE FACT WHETHER THE PAYMENT MADE BY THE ASSESSEE ARE REFLECTED IN THE INCOME OF THE DTC HAS NOT BEEN VERIFIE D BY THE LOWER AUTHORITIES AS FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED. ACCORDINGLY, HE SUBMITTED THAT MATTER MAY BE RESTORED TO THE ASSESSING OFFICER 4 FOR VERIFICATION AND THE ASSESSEE MAY BE DIRECTED TO SUBMIT THE NECESSARY EVIDENCE IN COMPLIANCE OF PROVISO TO SECTION 201(1) OF THE A CT. 6. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN PRINCIPLE THE ISSUE IN DISPUTE AS TO WHETHER DUE TO NON - DEDUCTION OF TAX ON PAYMENTS TO THE DTC, DIS ALLOWANCE COU LD BE MADE UNDER SECTION 40(A)(IA) OF THE A CT, HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2007 - 08 IN IT A NO. 6578/DEL/201 4. THE RELEVANT FINDING OF THE T RIBUNAL IS REPRODUCED AS UNDER: 9. SO FAR AS THE SECOND I SSUE IS CONCERNED THAT, SINCE REGULAR ASSESSMENT OF DTC, I.E., PAYEE HAS BEEN COMPLETED U/S 143(3) AT A HUGE LOSS, WHEREIN ALL THE RECEIPTS OF LICENCE FEE PAID BY THE ASSESSEE HAS BEEN REFLECTED IN ITS INCOME, THEREFORE, NO DISALLOWANCE IS CALLED FOR WE FI ND THAT THIS FACT THAT THE PAYMENT MADE BY THE ASSESSEE IS PART OF DTC S RECEIPTS, HAS BEEN DULY NOTED BY THE LD. CIT (A) IN PARA 12.2. ONCE IN THE HANDS OF THE PAYEE, RECEIPTS HAVE BEEN SHOWN AND INCOME THEREON HAS BEEN ASSESSED U/S 143(3), THEN NO DISALL OWANCE U/S 40(A)(IA) CAN BE MADE IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) BROUGHT BY THE FINANCE ACT 2012 W.E.F. 1.4.2013 WHICH HAS HELD TO BE DECLARATORY AND CURATIVE IN NATURE BY THE HON BLE JURISDICTIONAL HIGH COURT IN VARIOUS CASES INCLUDING THAT OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA). THUS THE FINDING AND OBSERVATION OF LD. CIT (A) WHILE DELETING THE SAID DISALLOWANCE IN PARA 12.3 WHICH HAS BEEN REPRODUCED ABOVE IS AFFIRMED AND ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMIS SED. 7. T HUS , THE T RIBUNAL HAS HELD THAT IN TERMS OF PROVISO TO SECTION 40(A)(IA) OF THE A CT, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE BY THE HON BLE DELHI HIGH COURT, NO 5 DISALLOWANCE COULD BE MADE UNDER SECTION 40(A)(IA) OF THE A CT. FOR READY REFERENCE , THE RELEVANT PROVISO WHICH HAS BEEN INSERTED BY THE F INANCE A CT , 2012, W.E.F. 01/04/2013 IS REPRODUCED AS UNDER: PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIO NS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON S UCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. 8. THUS , THE PROVISO REQUIRES THAT IF THE ASSESSEE IS NOT DEEMED TO BE ASSESSEE IN DEFAULT UNDER THE 1 ST PROVISO TO SUBSECTION 1 OF SECTION 201, THEN THE ASSESSEE SHALL BE DEEMED TO HAVE DEDUCTED AND PAID THE TAX AND , THUS , NO DISALLOWANCE WOULD BE CALLED FOR UNDER SECTION 40(A)(IA) OF THE A CT. FOR READY REFERENCE, THE RELEVANT PROVIS O TO THE SECTION 201(1) OF THE A CT IS REPRODUCED AS UNDER: PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH R ETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED: 9. THUS , FOR COM PLYING WITH THE FINDING OF THE T RIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2007 - 08, THE ASSESSEE IS REQUIRED TO DEMONSTRATE THAT IT FULFILLED THE CONDITIONS PROVIDED IN ABOVE PR OVISO TO SECTION 201(1) OF THE A CT. 6 10. ACCORDINGLY, WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE CONDITIONS OF PROVISO TO SECTION 201(1) OF THE A CT AND DECIDE THE ISSUE IN VIEW OF THE FINDING OF THE T RIBUNAL IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 . T HE ASSESSEE IS DIRECTED TO PRODUCE ALL TH E NECESSARY DOCUMENTS AND EVIDENCES BEFORE THE ASSESSING OFFICER FOR CARRYING OUT THE SAID VERIFICATION. ACCORDIN GLY, THE GROUNDS RAISED BY THE R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTIC AL PURPOSES. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 1 6 T H MARCH . , 201 8 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 T H MARCH , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI