Aquafil Polymers Co.Pvt.Ltd., Ahmedabad V. The Dy.CIT, TDS Circle, Ahmedabad

ITA 684/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8301 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 133A; 201(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AQAFIL POLYMERS CO. PVT. LTD. 202, 203 SHYAMAK COMPLEX, B/H. KAMDHENU COMPLEX, POLYTECHNIC, AHMEDABAD - 380015 PAN: AABCA7902R (APPELLANT) VS THE DCIT, TDS CIRCLE, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: MS. URVASHI SHODHAN , A.R. DATE OF HEARING : 02 - 05 - 2 018 DATE OF PRONOUNCEMENT : 22 - 05 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARIS ES FROM ORDER OF THE CIT(A) - 8 , AHM EDABAD DATED 13 - 02 - 2015 , IN PROCEEDINGS UNDER SECTION 201(1 ) /201(1A) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HA S RAISED FOLLOWING GROUNDS OF APPEAL: - 1. A) THE ID. COMMISSIONER OF INCOME TAX (APPEALS): 8, AHMEDABAD [CIT(A) FOR SHORT] HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER OF THE DCIT, TDS CIRCLE, AHMEDABAD DEMANDING SHORT FALL OF TDS OF RS. 1, 94,610/ - ON THE INTEREST EXPENDITURE OF RS. 19,46,092/ - . I T A NO . 684 / A HD/20 15 A SSESSMENT YEAR 2011 - 12 I.T.A NO. 684 /AHD/20 15 A.Y. 2011 - 12 PAGE NO AQUAFIL POLYMERS CO. PVT. LTD. VS. DCIT 2 B) THE ID. CIT(A) HAS FAILED TO APPRECIATE THAT THE APPELLANT COMPANY NEITHER PAID NOR CLAIMED THE INTEREST EXPENDITURE OF RS. 19,46,092/ - IN ITS RETURN OF INCOME FOR A.Y. 201 1 - 2012. 2. THE ID. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY OF INTEREST OF RS. 1,34,280/ - 201(1A). 3. THE ID. CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN NOT WORKING OUT CORRECT INTEREST U/S. 201(1A). 3. AL L THE GROUNDS OF AP PEAL ARE INTERCONNECTED , THEREFORE , THE SAME ARE ADJUDICATED TOGETHER AS FOLLOWS. 4. THE BRIEF FACT OF THE CASE IS THAT SURVEY U/S. 133A OF T HE ACT WAS CONDUCTED IN THE PREMISES OF T HE ASSESSEE ON 17 TH DEC , 2013 AND THE ASSESSING OFFICER HAS PASSED ORDE R U /S. 201 (1)/201(1A) OF THE ACT O N 20 TH JAN, 2014 STATING THAT ASSESSEE HAS FAILED TO DEPOSIT THE TAX DEDUCT ED TDS AMOUNTING TO R S. 1 , 94 ,610/ - PERTAINING TO FINANCIAL YEAR 2010 - 11 IN THE GOVT. ACCOUNT. THE ASSESSEE HAS EXPLAINED IN HIS STATEMENT RECORDED U/S. 131 IN REPLY TO QUESTION NO. 10 THAT T HE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE TOWARDS INTEREST IN THE RETURN OF INCOME AND NO LIABILITY OF TDS WAS ARISEN IN THE CASE OF ASSESSEE. THE ASSESSING OFFICER STATED THAT ASSESSEE HAS ACTED IN CONTRA VENTION OF THE PROVISION OF CHAPTER XVII (194A, 200(3), 201(1) , 201(1A) AND OTHER PROVISIONS OF THE ACT R.W. RULE 30, 31A AND OTHER PROVISIONS OF THE IT RULES. CONSEQUENTLY, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 3 , 28 , 890/ - U/S. 201(1)/201(1A) OF THE ACT COMPRISING AN AMOUNT OF RS. 1 , 94 ,61 0, SHORT PAYMENT OF TDS AND AN AMOUNT OF RS . 1 , 34 , 280/ - AS INTEREST PAYABLE U/S. 201(1A). 5 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 6 . WE HAVE HEARD THE RIVAL CONTENTIO NS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSING OFFICER HAS PASSED ORDER U/S. 201(1)/ 201(1A) OF THE ACT AND RAISED DEMAND OF RS. 3,28,890/ - (SHORT PAYMENT RS. 1,94,610/ - + INTEREST I.T.A NO. 684 /AHD/20 15 A.Y. 2011 - 12 PAGE NO AQUAFIL POLYMERS CO. PVT. LTD. VS. DCIT 3 U/S. 201(1A) OF RS. 1,34,280/ - ). THE LD. COUNSEL HAS PLA CED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2012 - 13 VIDE ITA NO. 1139/AHD/2015 DATED 21/03/2018. HE HAS CONTENDED THAT VIDE THE AFORESAID ORDER ON THE SIMILAR FACT THE ISSUE HAS B EEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF THE CO - ORDINATE BENCH STATED AS SUPRA IN THE CASE OF THE ASSESSEE IS REPRODUCED AS UNDER: - IN THE PRESENT CASES, THE ASSESSEE WAS SUPPOSED TO DEDUCT TAX ON THE ALLEGED PAYMENT OF RS.22,31,797/ - , AND IN CASE IT FAILED TO DEDUCT OR AFTER DEDUCTION FAILED TO DEPOSIT IN THE GOVERNMENT TREASURY THEN IT WOULD BE CONSIDERED AS ASSESSEE - IN - DEFAULT. BUT THE ASSESSEE DID NOT CLAIM INTEREST EXPENDITURE OF TOTAL AMOUNT I.E. RS.22,31,797/ - . THIS AMOUNT WAS INCLUDED IN THE TAXABLE INCOME OF THE ASSESSEE, THEREFORE, PROTECTION PROVIDED BY THE PROVISO WILL BE APPLICABLE UPON THE ASSESSEE AND WOULD NOT BE CONSTRUED THE ASSESSEE AS ASSESSEE - IN - DEFAULT. WE ALLOW APPEAL OF THE ASSESSEE AND DELETE P AYMENT RAISED BY TH E AO UNDER SECTION 201(1)7201(1 A) OF THE ACT. IN OTH ER WORDS, DEMAND OF RS. 3,37,000/ - IS DELETED. IT IS UNDISPUTED FACT THAT DURING THE COURSE OF SURVEY A SPECIFIC QUESTION NO. 10 WAS ASKED FROM THE DIRECTOR AND ITS REPLY , THE DIRECTO R OF THE ASSESSEE COMPANY SHR I . HITESH BABUBHAI SHAH HAS STA T ED AS UNDER : - 'Q. 10. I AM SHOWING YOU THE PROVISION OF SECTION 194A(1) OF THE I.T, ACT, 1961. AS PER SECTION 194A(1), THE TDS HAS TO BE DEDUCTED EITHER AT THE TIME OF MAKING ENTRY IN THE BOOKS OF ACCOUNT (CREDITING INCOME IN THE PAYEE S NAME) OR, WHILE MAKING ACTUAL PAYMENT WHICHEVER IS EARLIER. UNDER SUCH CIRCUMSTANCES, PLEASE EXPLAIN AS TO WHY YOU SHOULD NOT BE CONSIDERED AS ASSESSEE - IN - DEFAULT U/S.201(1)/201(1)A OF THE I.T.ACT, 1961. ANS : THE PROVISION FOR INTEREST MADE BY THE COMPANY IN ANTICIPATION AND IS CONTINGENT IN NATURE. THOUGH SECTION 194A WAYS THAT TAX SHOULD BE DEDUCTED AT THE TIME OF PAYMENT OR CREDIT, WHICHEVER IS EARLIER, THE COMPANY FIRMLY BELIEVES THAT WHEN THE LIABILITY IS NOT CERTAIN, THERE WILL NOT ARISE ANY LIABILITY OF TDS. FURTHER, THE COMPANY HAS NOT CLAIMED ANY EXPENDITURE TOWARDS INTEREST IN THE RETURN OF INCOME. (UNQUOTE) AGAIN IN THE POST SURVEY INQUIRY THE APPELLANT COMPANY VIDE ITS LETTER DT.26 - 12 - 2013 FILE D ON THE SAME DATE, REITERATED FOLLOWING FACTS VIDE PARA : REPRODUCED UNDER: 'DURING THE COURSE OF THE PROCEEDINGS YOU HAVE ASKED THE ASSESSES COMPANY TO FURNISH THE WORKING OF INTEREST U/S.201(L A) SO AS TO ENABLE YOUR OFFICE TO PASS THE ORDER, ACCORDING LY TO AVOID FURTHER PROCEEDINGS OF SECTION 154. THOUGH, THE ASSESSEE COMPANY IS UNDER NO LEGAL OBLIGATION TO WORK OUT THE INTEREST U/S. 201(1A) AND QUANTIFY THE DEMAND, THE WORKING OF INTEREST U/S.201 (1 A) ARC AS - UNDER: I.T.A NO. 684 /AHD/20 15 A.Y. 2011 - 12 PAGE NO AQUAFIL POLYMERS CO. PVT. LTD. VS. DCIT 4 FINANCIAL YEAR REMARKS 2010 - 11 THE ASSESSES COMPANY HAS PROVIDED FOR INTEREST PAYABLE BY MANGALORE REFINERY AND PETROCHEMICALS LTD, UNDER PROTEST, AND HAS DEDUCTED SAX AT SOURCES THERE FROM APPEARING AS TDS PAYABLE IN THE FINAL ACCOUNTS. THE ASSESSES COMPANY HAS DISALLOWED THE SAID EX PENDITURE IN ITS RETURN OF INCOME OF RESPECTIVE YEAR AND ENTIRE AMOUNT WILL BE REVERSED ON SETTLEMENT WITH MANGALORE REFINERY AND PETROCHEMICALS LTD. 2011 - 12 2013 - 14 (PAGE : 1 TO 7) AFT E R CONSIDERING THE ABOVE FACTS AND MATERIAL ON RECO RD , WE HAVE NOTICED THAT THE ASSESSEE COMPANY HAS DISALLOWED THE S A ID EXPENDITURE OF RS. 19 , 46 , 092/ - U/S, 40(A)( IA) AND ADDED TO THE TO T AL INCOME WHICH IS EVIDENT F ROM THE COMP UTATION OF TOTAL INCOME FILED WITH THE RETURN OF INCOME AS PER PAGE NO. 1 TO 6 O F THE PAPER BOOK FILED BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS FILED THE RETURN OF INCOME MUCH PRIOR TO THE SURVEY ACTION AS ON 30/09/2011 BY DISALLOWING THE SAID IN TEREST EXPENSES OF RS. 19,46,092/ - U/S. 40(A)(IA) OF THE ACT AND PAID THE DUE TAXES ON RE TURNED INCOME. IT WAS ALSO EXPLAINED THAT THE PROVISION OF THE INTEREST MADE BY THE ASSESSE E COMPANY WAS IN ANTICIPATION AND WAS CONTINGENT IN NATURE. THE LIABILITY OF THE COMPANY WAS NOT CERTAIN. THE INTEREST EXPENDITURE OF RS. 19 , 46 , 092/ - PROVIDED IN THE AUDITED BOOK UNDER PROTES T AS PAYABLE TO MANGALORE REFINERY PETROCHEMICALS LTD. WAS NEITHER PAID TO THE SAID PARTY NOR CLAIMED AS BUSINESS EXPENDITURE. AFTER CONS IDERING THE ABOVE FACTS AND T HE FINDINGS OF THE CO - ORDINATE BENCH, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE ADDITION OF RS. 3 , 28 , 890/ - MADE BY THE ASSESSING OFFICER VIDE ORDER DATED 20/01/2014 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 22 - 05 - 201 8 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A NO. 684 /AHD/20 15 A.Y. 2011 - 12 PAGE NO AQUAFIL POLYMERS CO. PVT. LTD. VS. DCIT 5 AHMEDABAD : DATED 2 2 /05 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,