ACIT 9(3), MUMBAI V. UNITED RUBBER INDUSTRIS (i) P. LTD, MUMBAI

ITA 7449/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62682 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 01-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Opportunity of being heard; Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.7229/M/2010 (AY: 2006-2007) M/S. UNITED RUBBER INDUSTRIES (I) P. LTD., JAY VAILANKANI INDL. ESTATE, BEHIND GAS GODOWN, MIRA BAYANDER ROAD, BAYANDER (E), MUMBAI 401 105. PAN:AAACU6911F VS. ACIT - 15(3), MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.7449/M/2010 (AY: 2006-2007) ACIT - 9(3), 2 ND FLOOR, R.NO.229, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. UNITED RUBBER INDUSTRIES (I) P. LTD., JAY VAILANKANI INDL. ESTATE, BEHIND GAS GODOWN, MIRA BAYANDER ROAD, BAYANDER (E), MUMBAI 401 105. PAN:AAACU6911F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI M. RAJAN DATE OF HEARING: 12.7.2012 DATE OF ORD ER: 20-07-2012 O R D E R PER R.S. SYAL, A.M. THESE TWO CROSS APPEALS - ONE BY THE ASSESSEE AND OTHER BY THE REVENUE - ARISE ITA NOS. 7229 & 7449/M/2010 2 OUT OF THE ORDER PASSED BY THE LD CIT (A)-20, MUMBA I ON 20.08.2010 IN RELATION TO ASSESSMENT YEAR 2006-2007. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APP EAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF PAYMENT MADE ON ACC OUNT OF AUDIT FEES, TRANSPORT CHARGES, PROFESSIONAL CHARGES AND RENT AG GREGATING TO RS. 24,22,044/- U/S 40(A)(IA) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE HAD NOT DEDUCTED TAX OR PARTLY DEDUCTED TAX AT SOURCE IN RESPECT OF AUDIT FEES RS. 76,219/-, TRANSPORT CHARGES RS. 14,04,448/-, PROFES SIONAL CHARGES RS. 77,207/- AND RENTS, RATES AND TAXES AMOUNTING TO RS. 8,64,17 0/-. IN THE ABSENCE OF THE ASSESSEE HAVING DEDUCTED TAX AT SOURCE ON THESE AMO UNTS, THE ASSESSING OFFICER MADE DISALLOWANCE TOTALING RS. 24.22 LAKHS U/S 40(A )(IA) OF THE ACT. THE LEARNED CIT (A) CONFIRMED THE ADDITION. THE ASSESSEE IS IN APPEAL AGAINST THIS CONFIRMATION OF ADDITION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE AVAILABLE MATERIAL ON RECORD, IT IS OBSERVED THAT THERE IS NO REASON W ORTH THE NAME GIVEN BY THE AO ABOUT THE DEDUCTIBILITY OR OTHERWISE TAX AT SOUR CE ON AMOUNTS UNDER DIFFERENT HEADS TOTALING TO RS. 24.22 LAKHS. THE LEARNED CIT (A) TOO FOLLOWED THE SUIT BY ITA NOS. 7229 & 7449/M/2010 3 CONFIRMING THE ADDITION WITH THE ONLY REMARKS CONTA INED IN PARAGRAPH 2.3 : IT IS NOT CLEAR FROM THEM AS TO HOW THE PAYMENTS MADE UND ER VARIOUS HEADS DID NOT ATTRACT DEDUCTION OF TAX AT SOURCE. UNDER THE CIRC UMSTANCES, I DECLINE TO INTERVENE AND CONFIRM THE ADDITION MADE OF RS. 24,2 2,044/-. THE LEARNED AR PLACED ON RECORD DETAILS ABOUT THESE EXPENSES AND S TATED THAT THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE EITHER DU E TO THE AMOUNTS BEING BELOW THE MAXIMUM LIMIT ON WHICH TAX IS NOT REQUIRED TO B E DEDUCTED AT SOURCE OR OTHERWISE DUE TO THE VERY NATURE OF PAYMENTS BEING SUCH AS NOT ATTRACTING THE PROVISIONS OF DEDUCTION OF TAX AT SOURCE. IN THE A BSENCE OF ANY DISCUSSION ON THE NATURE OF AMOUNT AND THE REASONS FOR NOT ACCEPTING THE ASSESSEES CONTENTION ABOUT NON-DEDUCTIBILITY OF TAX AT SOURCE ON SUCH AM OUNTS, WE ARE UNABLE TO APPRECIATE THE VIEW POINT. UNDER SUCH CIRCUMSTANCE S, WE ARE OF THE CONSIDERED OPINION THAT IT WILL BE IN THE INTEREST OF THE JUST ICE IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF THE ASSESSING OFFICER. WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THIS ISSUE AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY THE AO WILL PASS SPEAKING ORDER ON THIS ISSUE. 5. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPE AL IS AGAINST THE DELETION OF DISALLOWANCE OF RS. 19,86,346/- WHICH WAS MADE B Y THE AO U/S 40(A)(IA) OF THE INCOME TAX ACT. THE FACTS GIVING RAISE TO THIS GROUND ARE THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 19.86 LAKHS ON THE GROUND THAT THE ASSESSEE ITA NOS. 7229 & 7449/M/2010 4 DEPOSITED TAX AT SOURCE ON SUCH PAYMENTS AFTER DUE DATE PRESCRIBED U/S 200(1) OF THE ACT. THE LEARNED CIT (A) OBSERVED THAT THE SECTION 40(A)(IA) WAS AMENDED WITH RETROSPECTIVE EFFECT FROM ASSESSMENT Y EAR 2005-2006 WHEREBY THE TAX DEDUCTED AT SOURCE CAN BE PAID BEFORE THE DUE D ATE OF FILING OF RETURN OF INCOME IF THE AMOUNT OF TAX WAS DEDUCTED IN THE LAS T MONTH OF THE PREVIOUS YEAR. ACCEPTING THE ASSESSEES CONTENTION THAT THE AMOUNT OF TAX DEDUCTED AT SOURCE WAS PAID ON 29.05.2006 WHICH WAS WELL BEFORE THE DU E DATE OF FILING OF RETURN U/S 139(1), THE LEARNED CIT (A) DELETED THE ADDITIO N. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT THE FINANCE ACT, 2008 M ADE AMENDMENT TO U/S 40(A)(IA) WITH RETROSPECTIVE EFFECT FROM 1.4.2005. BY SUCH RETROSPECTIVE AMENDMENT, DEDUCTION BECOMES PERMISSIBLE IF THE TAX HAS BEEN DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE. ON SPECIFIC QUERY, THE LEARNED AR COULD NOT SHOW ANY DETAIL TO DEMONSTRATE THAT THE TAX WAS DEDUCTED AT SOURCE ON SUCH PAYMENTS DURING THE LAST MONTH OF THE PREVIOUS YEAR, WHICH IN TURN WAS DEPOSITED ON 29.5.2006 SO A S TO ESCAPE THE MISCHIEF OF SECTION 40(A)(IA) OF THE ACT. IN OUR CONSIDERED OP INION, THE IMPUGNED ORDER ON THIS ISSUE CANNOT BE UPHELD BECAUSE OF LACK OF THE NECESSARY INFORMATION. ITA NOS. 7229 & 7449/M/2010 5 7. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER ON TH IS ISSUE AS WELL AND RESTORE THE MATTER TO THE FILE OF AO FOR TAKING A D ECISION AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 8. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JULY, 2012. SD/- SD/- (AMIT SHUKLA) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI. DATED THE 20-7-2012 OKK COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE AS MENTIONED IN THE CAUSE TITLE 2. ACIT CONCERNED. 3. CIT-CONCERNED 4. D.R. ITAT F BENCH, MUMBAI 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR I.T.A.T, MUMBAI. *