Ms. Asha Gupta, New Delhi V. JCIT, New Delhi

ITA 6747/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3458 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BEDOBANI CHAUDHURI
• Keywords: Depreciation
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN , ACCOUNTANT MEMBER ITA NO. 6747 / DEL /20 1 4 ASSESSMENT YEAR 20 1 0 - 11 MS. ASHA GUPTA, 423, KANUNGO APARTMENTS, I.P, EXT., PATPAR GANJ, DELHI. PAN: AETPG 8803J VS . J CIT , RANGE - 36 , NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.C. YADAV, ADVOCATE , ASSESSEE(S) BY : MS. BEDOBANI CHAUDHURI , SR.D.R. / DATE OF HEARING : 20 / 0 4 / 201 7 / DATE OF PRONOUNCEMENT: 20 / 04 / 201 7 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A) - X X VI I , NEW DELHI VIDE ORDER DATED 15 . 0 9 .2014 FOR THE ASSESSMENT YEAR 20 10 - 1 1 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THE L D . C I T(APP E AL) HAS E RRED IN LAW AND ON FACTS IN C ONF I RMING THE A PPL I CA BILI T Y OF THE PRO VI SIONS OF SECTION 40(A)(IA) . 2. THAT T H E LD . CLT (APP EA L) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE A DDI TI ON OF RS . 11 , 07 , 04 3/ - IN RESPECT OF PA Y MENT OF INTER E S T OF LO A N . 3. TH AT TH E LD . CIT (APPEAL) HAS ERRED IN LAW AND ON FA C TS IN C ONFIRM I NG T H E ADDITION OF RS.32 , 894 / - OUT OF THE INDIRECT EXPENSES. 4. TH AT T HE IMPUGNED APP E LLATE ORDER IS ARBITRAR Y, ILLEGAL , B A D I N L A W AND I N VIOLATION OF RUDIMENTAR Y PRINCIPLES OF CONTEMPORAR Y JURISPRUDENCE . 5. T HA T T HE APPELLANT CRA V ES LEAVE TO ADD/ ALTER AN Y / ALL GROUNDS OF A PP E AL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL . ITA NO. 6747 /DEL /20 1 4 2 2. GROUN DS NO.4 AND 5 ARE GENERAL IN NATURE, THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 3. AS REGARDS GROUND NO.1 AND 2, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DEBITED RS.14,94,509/ - AS INTEREST IN THE PROFIT & LOSS ACCOUNT. AS PER THE DETAILS OF INTEREST FURNISHED DURING THE ASSESSMENT PROCEEDINGS, THE A SSESSEE PAID INTEREST OF RS.5,80,070/ - TO TATA FINANCE LTD., RS.4,38,258/ - TO C HOLAMANDALAM DBS FINANCE LTD. AND RS.88,715/ - TO CITI FINANCIAL CONSUMER FINANCE INDIA LTD. DURING THE RELEVANT ASSESSMENT YEAR. ACCORDING TO THE ASSESSING OFFICER, THERE IS VIO LATION OF PROVISION OF 194A AS THE APPELLANT HAD FAILED TO DEDUCT TAX ON THIS INTEREST PAYMENTS TO THE ABOVE THREE CONCERNS. THE RELEVANT PORTION OF THE ASSESSMENT ORDER IS AS FOLLOWS: THE REPLY FILED BY THE COMPANY HAS BEEN CONSIDERED. THERE IS NO WAIVER CLAUSE FOR DISALLOWANCE OF INTEREST UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT,1961 AS UNDER: (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCT ED OR AFTER DEDUCTION HAS NOT BEEN PAID OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (I) OF SECTION 139. AS THE ASSESSEE HAS FILED TO DEDUCT TAX AT SOURCE UNDER SECTION 194 ON INTEREST PAID AMOUNTING TO RS.11,07,043/ - TO THE COMPANIES AS MENTIONED ABOVE , THE ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. HENCE IN TERMS OF SECTION 40(A)(IA) INTEREST OF RS.11,07,043/ - DEBITED TO PROFIT & LOSS ACCOUNT OF M/S. PREM CRANE & TRANSPORT SERVICES IN THE YEAR ENDED 31.07.2010, I S DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE, IT WAS BROUGHT TO MY NOTICE THAT THE DECISION IN THE CASE OF ITO VS. SHRI ANOOP ITA NO. 6747 /DEL /20 1 4 3 KHANDELWAL IN PAPER BOOK A AT PAGES 1 TO 4 DECID ED BY ITAT BENCH A NEW DELHI IN ITA NO.18/DEL/2013 ORDER DATED 17 TH OCTOBER, 2014 WHERE THE LEARNED CIT(A) HELD AS UNDER: IT HAS TO BE CONCLUDED THAT, PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE, WHICH ARE PAYABLE A S ON THE DATE OF 31 ST MARCH EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW EXPENDITURE , WHICH HAS BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR WITHOUT DEDUCTION OF TDS. 5. REVENUE FILED THE APPEAL BEFORE THE ITAT AND THE ITAT VIDE ITS ORDER DATED 17.10.2014 MENTIONED HEREINABOVE DECIDED THE ISSUE IN PARAGRAPH 5 TO 8 AS UNDER: 5. LD. A . R . ON THE OTHER HAND SUBMI T TED THAT WHILE HO N 'BLE CAL C UTTA HIG H COURT IN THE CASE OF CIT VS. C R EC ENT EXPORT SYND I CATE 216 TAXMAN 250 = 2013 - TIOL - 404 - HC - KOL - IT AND HON'BLE GUJARAT H I G H COURT I N T HE C ASE OF CIT V S S I KANDARKHAN N TUNVAR 357 ITR 312 = 2013 - TIOL - 389 - HC - AHM - IT HAS O V E R R ULED THE SPEC I A L BENCH DECIS I ON I N THE CASE OF MER I LYN SHIPPING & TRANSPORTS VS ACIT 136 IT D 2 3 = 2012 - TIOL - 184 - ITAT - VIZAG - SB . HOWEVER , THE SPECIAL BENCH DECISION HAS B E EN APPROVED BY H ON ' BLE ALLAHABAD HIGH COURT IN CIT VS VECTOR SHIPPING SERVI C ES (P) LTD . 357 ITR 642 = 2013 - TIOL - 59 9 - HC - ALL - IT AND M O R EOVE R , SLP F I LED BY THE DEPARTMENT AGA I N S T HON ' BLE ALLAHABAD H IGH COURT D EC ISION IN THE C ASE OF VE C TO R SHIPPING SERVICES HAS BEEN D I SM I SSED BY HON ' BLE SUPREME COURT AND T H EREFO R E , THE HON'BLE SUPREM E COURT O RDER HAS BECOME THE LAW ON T H I S I SSUE . WITHOUT PREJUDICE T O THE ABOVE , I T WAS SUBMITTED THAT IN VIEW OF HON ' BLE SUPREME COURT DEC I S I ON I N THE CASE OF CIT VS VEGETABLE PRODU C TS LTD . 8 8 ITR 192 = 2002 - TIOL - S74 - SC - IT - LB , TH E ASSES SEE IS E NT I TLED TO A PPLI C AT I ON OF JUD G E M ENT B E NEFI TI NG T O I T AND THEREFO RE HON ' BLE ALLAHABAD H IGH COURT JUDG E M E NT S H OU LD B E APPLI E D T O T HE A SSE S SEE . 6 . A S R EG A RD S T HE R EBA TE A ND D ISCO U N T S TAK EN B Y R E VENUE IN THE 3 RD GROUND OF APPEAL , LD . A . R . RE L IE D UPON THE ORDER O F LD . CIT ( A ) . 7 . W E HAVE HEARD TH E RIVAL SUBMISS I ONS AND HAVE GONE THROUGH TH E MATERIAL PLA C ED ON RECORD . W E FIND THAT T HE R E A RE C ON TR A R Y J UDGE M EN T S OF ALLAHAB A D HIGH COURT AS COMPARED TO CALCUTTA AND GUJA R AT HIGH COURTS . HOWEVER , APPEAL F I LED BY THE D E PART MEN T WIT H H ON' BL E SUPRE M E COURT AGAINS T T H E ORDER OF HON ' BLE ALLAHABAD HIGH COURT HA S BEEN DISMISSED BY HO N' B L E SUPREME COURT I N LIMINE . MOREOVER , AS PER T HE HON ' BLE SUPREME COURT ORDER I N THE CASE S OF V E GETABLE PRODUCTS AS RELIED UPON BY LD . A . R . I N T HE C ASE OF C ONFLICTING JUD G E M ENTS THA T J UD GM E N T I S TO BE APPLIED TO A N A SSES S EE WHICH IS BENEF IC IAL T O I T . T HE R EFORE , WE DO NOT SEE A NY I NF I RMITY IN THE ORDE R OF LD . CIT(A) I N T H I S C ONTE XT . AS REGARDS T H E ISS U E O F REBATE & DISCOUNT , IN OU R V I EW CIT(A) HAS TA K EN A R E ASONED VI E W KEEP I NG I N V IEW THE FACT S AND CIRCU MSTA N CES OF THE C ASE. 8. IN VIEW OF THE ABOVE, TH E O RD ER O F LD . CIT(A ) I S UPHELD A N D THE RE F ORE , APP E AL FILED BY TH E REVE NU E I S DISMISSED 6. THE DECISION IN THE CASE OF SHRI ANOOP KHANDELWAL (SUPRA) WAS ITA NO. 6747 /DEL /20 1 4 4 FOLLOWED BY M/S. O PTITECH SOFTWARE PVT. LTD. OF ITAT DELHI BENCH E NEW DELHI , VIDE ORDER DATED 25.03.2015 AND THE RELEVANT PARAGRAPH IS REPRODUCED HEREINBELOW: 5. WE HAVE HARD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ISSUE OF ADDITION U/S . 40(A)(IA) IS DULY COVERED IN FAVOUR OF ASSESSEE BECAUSE IT IS AN UNDISPUTED FACT THAT PAYMENTS WERE MADE DURING THE YEAR ITSELF AND THEREFORE, WERE N OT OUTSTANDING AS PAYABLE. THE SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING &TRANSPORT CO . IN 136 IT D 23 HAS CLEARLY HELD THAT DISALLOWANCE U/S 40(A)(IA) , CAN BE MADE OF THE AMOUNTS WHICH ARE PAYABLE AND CANNOT BE MADE OF THE AMOUNTS WHICH HAVE ALREADY BEEN PAID . SIMILAR FINDINGS HAS ALSO BEEN MADE BY HON'BLE ALLAHABAD HIGH COURT IN CASE OF VECTOR SHIPPING SERVICE PVT . LTD. REPORTED AT 357 ITSR 642 AGAINST WHICH SLP FILED B Y THE DEPARTMENT HAS ALSO BEEN DISMISSED. THOUGH HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESENT EXPORT SYNDICATE 216 TAXMAN 250 AND HON ' BLE GUJARAT HIGH COURT IN THE CASE OF CFT VS SIKANDER KHAN 357 ITR 312 ARE NOT IN FAVOUR OF ASSESSEE BUT KE EPING IN VIEW OF HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. VEGETABLE PRODUCTS 88 ITR 92 , THE ASSESSEE IS ENTITLED TO APPLICATION OF JUDGEMENT BENEFITING TO IT AND, THEREFORE , APPLYING THE HON'BLE ALLAHABAD HIGH COURT JUDGEMENT, THE 1 ST GROUND O F APPEAL IS DECIDED IN FAVOUR OF ASSESSEE AND IS THEREFORE , ALLOWED. 7. SINCE THE ISSUE IS IDENTICAL IN THE PRESENT CASE , THEREFORE , THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND GROUNDS NO.1 AND 2 OF THE ASSESSEE ARE ALLOWED. 8. AS REGARDS GROUND NO.3, THE AO HAS MADE ADHOC DISALLOWANCE OF RS.98,682/ - BEING 15% OF CONVEYANCE EXPENSES, TELEPHONE EXPENSES AND DEPRECIATION ON CAR. IT WAS ARGUED BY LEARNED COUNSEL FOR THE ASSESSEE, MR. PRAKASH YADAV, ADVOCATE THAT EACH AND EVERY VOUCH ERS W ERE PRODUCED BEFORE BOTH T HE AUTHORITIES BELOW AND SPECIFIC DEFECT HAS NOT BEEN POINTED OUT , BOOKS OF ACCOUNT WERE ALSO PRODUCED AND NO DEFECT IN THE SAME HAS BEEN POINTED OUT. IN THE CIRCUM STANCES AND FACTS OF THE CASE, T HE AO SHOULD NOT HAVE MADE AN Y DISALLOWANCE ON THIS COUNT AND ANY DISALLOWANCE SO MADE BY THE AO AND DISALLOWANCE ITA NO. 6747 /DEL /20 1 4 5 SUSTAINED BY THE LEARNED CIT(A) IS DIRECTED TO BE DELETED. THUS, THE GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 24 APRIL, 2017 SD/ - ( B.P. JAIN ) ACCOUNTANT MEMBER DATED: 24 / 04 /201 7 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR