Shri Sureshbhai G.Patel, Ahmedabad V. The Income tax Ward-9(1), Ahmedabad

ITA 673/AHD/2010

• Counselvise Citation: 67320514 RSA 2010
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: V P PATEL
• Keywords: Retrospective amendment
• Section: 43B; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY - AM ITA NO.673/AHD/2010 (ASSESSMENT YEAR:-2006-07) SHRI SURESHBHAI G PATEL, 21, NALKUNJ SOCIETY, SHAHIBAUG, AHMEDABAD V/S THE INCOME-TAX OFFICER, WARD-9(1), AHMEDABAD PAN: ABCPP 1758 M [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI V P PATEL, AR REVENUE BY:- SHRI DINESH SINGH, SR. DR DATE OF HEARING:- 28-03-2012 DATE OF PRONOUNCEMENT:- 30-03-2012 O R D E R PER D K TYAGI (JM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XV, AHMEDAB AD DATED 18-11-2009 FOR ASSESSMENT YEAR 2006-07. THE ASSESSE E HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAWS IN SUSTAI NING THE ADDITION OF RS.60.91 LACS UNDER THE PROVISION OF SE CTION 40A(IA) OF THE ACT, WHERE THE APPELLANT HAD MADE TDS UNDER THE PROVISION OF SECTION 194C OF THE ACT AND PAID BEFOR E THE 30 TH MAY 2006. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAWS IN SUSTAI NING THE ADDITION OF RS.60.91 LACS TOWARDS LABOR PAYMENTS, W ITHOUT CONSIDERING THE FACTS THAT NONE OF THE LABOUR CONTR ACTOR HAVE TAXABLE INCOME AND PROVISIONS OF SECTION 43B AND 19 1 R.W.S OTHER PROVISIONS OF CHAPTER XVII OF THE ACT. 2 2 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CIVIL CONSTRU CTION IN THE NAME AND STYLE OF ELEVATE CONSTRUCTION. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE OR TAX DEDUCTED AT SOURCE WAS NOT DEP OSITED BEFORE 31-03-2006 IN RESPECT OF PAYMENTS OF RS.60,91,078/- MADE TO VARIOUS PARTIES AS PER THE DETAILED TABLE GIVEN IN THE ASSESSMENT ORDER, GIVING THE AMOUNTS, NAMES, DATES OF PAYMENTS / CREDITS AND DATES OF VARIOUS DEPOSITS IN GOVT. A/C. INVOKING TH E PROVISIONS OF SECTION 40(A)(IA) THE ADDITION OF THIS AMOUNT WAS M ADE. 3 IN APPEAL, THE LEARNED CIT(A) CONFIRMED THIS ACTI ON OF THE AO BY OBSERVING THAT THERE IS NO DISPUTE THAT TDS S HOULD HAVE BEEN DEPOSITED IN GOVT. A/C., BY MARCH, 2006 AND NO T LATER AND WHEREAS THE ASSESSEE DEPOSITED TDS ON DATES AFTER 3 1-03-2006. 4 FURTHER AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE US. AT THE TIME OF HEARING, THE LEARNED COUNSEL OF THE ASSESSEE CONCEDED THAT IN RESPECT OF PAYMENT OF RS.2,85,750/ - SINCE NO TAX WAS DEDUCTED BY THE ASSESSEE, THE ADDITION OF THIS AMOUNT HAS RIGHTLY BEEN MADE. AS FAR AS THE REMAINING AMOUNT O F RS.58,05,328/- IS CONCERNED, HE ARGUED THAT THE TAX WAS DEDUCTED AND WAS DEPOSITED IN GOVT. ACCOUNT BEFORE FILING OF RETURN FOR THE YEAR UNDER APPEAL. IN VIEW OF THE AMENDMENT OF THE PROVISIONS OF SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 WITH EFFECT FROM 1-4-2010 WHICH HAS BEEN TREATED AS HAVI NG RETROSPECTIVE APPLICATION WITH EFFECT FROM 1-4-2005 , BY THE DECISION OF THE ITAT AHMEDABAD IN THE CASE OF M/S A LPHA 3 3 PROJECTS IN 2869/AHD/2011, ORDER DATED 23-03-2012, NO ADDITION U/S 40(A)(IA) WAS CALLED FOR. CONCLUDING HIS ARGUME NTS, HE SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONF IRMED BY THE LEARNED CIT(A) DESERVES TO BE DELETED. 5 THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE AO. 6 AFTER HEARING BOTH THE PARTIES AND PERUSING THE R ECORD, WE FIND THAT THE TRIBUNAL IN THE CASE OF M/S ALPHA PRO JECTS IN 2869/AHD/2011, ORDER DATED 23-03-2012, HAS HELD AS UNDER:- 6. GROUND NO. 2 IS WITH REGARD TO DISALLOWANCE OF U/S. 40(A)(IA). THE LD. CIT(A) HAS GIVEN VIEW WHICH REPRODUCED AS U NDER:- '3.2 I HAVE CONSIDERED THE MATTER. DISALLOWANCE OF HS.3,69,568/- MADE U/S. 40(A)(IA) WAS IN RESPECT OF AMOUNT CREDIT ED IN MONTHS OF FEBRUARY AND JANUARY, 2006, TAX DEDUCTED FROM WHICH WAS DEPOSITED TO THE CREDIT OF GOVERNMENT IN APRIL/AUGUST 2006. A PPELLANT HAS RELIED UPON DECISION OF ITA T, AHMEDABAD IN THE CAS E OF KANUBHAI RAMJIBHAI MAKWANA (201 1) 44 SOT 264 (AHD) THAT PRO VISIONS OF SECTION 40(A)(IA) AS AMENDED BY FINANCE ACT, 2010 W .E.F. 1.4.2010 ARE TO BE TREATED AS HAVING RETROSPECTIVE APPLICATION W ITH EFFECT FROM 1ST APRIL, 200-5. HOWEVER, ITAT'S MUMBAI SPECIAL BENCH IN THE CASE OF BHARTI SHIPYARD LTD. VS. DCIT IN ORDER DATED 12.9.2 011 (ITATONLINE.ORG) HAS OVERRULED DECISION IN THE CASE OF KANUBAHAI MAKWANA, 135 TTJ (AHD) 364 AS WEIL AS BANSAL PARIVA HAN 43 SOT 619 (MUMBAI AND HAS HELD AS UNDER:- THE AMENDMENT TO S.40(A)(IA) BY THE FA 2010 WAS MAD E RETROSPECTIVELY APPLICABLE ONLY FROM AY 2010-11 AND NOT EARLIER. IT IS NOWHERE STATED THAT THE AMENDMENT IS CURATIVE OR DE CLARATORY IN NATURE NOR IS SUCH AN INTENTION DISCERNIBLE. ORDINARILY, A SUBSTANTIVE PROVISION IS 'PROSPECTIVE' IN OPERATION AND COURTS CANNOT GIV E IT 'RETROSPECTIVE EFFECT' EXCEPT IN LIMITED CIRCUMSTANCES WHERE, SAY, THE AMENDMENT MAKES EXPLICIT WHAT WAS EARLIER IMPLICIT OR WHERE T HE AMENDMENT WAS TO REMOVE UNINTENDED CONSEQUENCES IN THE EXISTING P ROVISION AND TO 4 4 MAKE IT WORKABLE. A PROVISION GIVING RELIEF CANNOT BE REGARDED AS RETROSPECTIVE ONLY BECAUSE THE ORIGINAL PROVISION C AUSED HARDSHIP TO THE ASSESSEE. S.40(A)(IA) CAUSED 'INTENDED DIFFICUL TY' WITH THE OBJECT OF DISCOURAGING NON-COMPLIANCE WITH THE IDS PROVISIONS . A PARTIAL RELAXATION IN ITS RIGOR, INSERTED WITH PROSPECTIVE EFFECT, CANNOT BE TREATED AS 'RETROSPECTIVE'. IN VIEW OF THIS, DISALLOWANCE OF RS.3,69.568/- U/S. 40(A)(IA) IN RESPECT OF PAYMENTS IN MONTHS OF JANUARY & FEBRUARY, 2006, TAX DEDUCTED AT SOURCE FROM WHICH WAS NOT DEPOSITED TO THE CREDIT O F GOVERNMENT BEFORE 31.3.2006 IS CONFIRMED.' 7 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD AND ORDERS PASSED BY THE AUTHOR ITIES BELOW. THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS NOW BEEN D ECIDED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATORS IN GA NO.3200/2011 DATED 23-11-2011 AGAINST THE REVENU E. HOWEVER, IT IS NOTEWORTHY THAT THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF BHARATI SHIPYARD LTD. V. DCIT IN ITA NO.2404/MUM/20 09 IN ORDER DATED 12-09-2011 HAS TAKEN A VIEW THAT THE AMENDMEN T IS PROSPECTIVE IN NATURE AND WOULD APPLY ACCORDINGLY. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA) THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE. HENCE, THIS GROUND OF ASSESSEE'S APPEAL IS ALLOWED. THE ASSESSING OFFI CER IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.3,69,568/- AS MADE U/ S. 40(A)(IA) OF THE ACT. 7 IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS.58,0 5,328/- U/S 40(A)(IA) IS DELETED. IN THE RESULT, THE APPEAL FIL ED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-03-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 30-03-2012 5 5 COPY OF THE ORDER FORWARDED TO: 1. SHRI SURESHBHAI G PATEL, 21, NALKUNJ SOCIETY, SH AHIBAUG, AHMEDABAD 2. THE INCOME-TAX OFFICER, WARD-9(1), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XV, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD