ACIT 11(1), MUMBAI V. HINDUSTAN THOMSPON ASSOCIATES P. LTD, MUMBAI

ITA 746/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3891 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDEAR
• Keywords: Non-deduction of tax
• Section: 194C; 2

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI H BENCH , ,, , , , , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAM LAL NEGI,JUDICIAL MEMBER /.ITA NO.746/MUM/2014, /ASSESSMENT YEAR-2009-10 ASSTT. COMMISSIONER OF INCOME TAX- 11(1),ROOM NO.439, AAYAKAR BHAVAN,M.K. MARG MUMBAI-400 020. VS. HINDUSTAN THOMPSON ASSOCIATES PVT. LTD.,PENINSULA CHAMBERS, GANPATRAO KADAM MARG, LOWER PAREL,MUMBAI-400 013. PAN:AAACH 1463 M ( / APPELLANT) ( / RESPONDENT) C.O. NO.128/MUM/2015- /ASSESSMENT YEAR-2009-10 HINDUSTAN THOMPSON ASSOCIATES PVT. LTD.MUMBAI-400 013. VS. ACIT-11(1) MUMBAI-400 020. ( / CROSS OBJECTOR) ( / RESPONDENT) /ASSESSEE BY : SHRI ARVIND SONDE-AR / REVENUE BY : SHRI RAHUL RAMAN-CIT-DR / DATE OF HEARING : 17.02.2016 / DATE OF PRONOUNCEMENT : 19.02.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER BENCH - CHALLENGING THE ORDER DATED 11.11.2013 OF CIT(A)-3, MUMBAI,THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL.THE ASSESSEE HAS FILED CROSS OBJECTIONS.ASSESSEE-COMPANY, ENGAGED IN THE BUSINESS OF MANPOWER SUPPLY CABLE SE RVICES ETC.,FILED ITS RETURN OF INCOME ON 29.9.09 DECLARING INCOME OF RS.137.57 CRORES. 2. THE EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING T HE DISALLOWANCE OF RS.47.38 CRORES, MADE U/S.40(A)(IA)OF THE ACT,ON ACCOUNT OF SHORT DEDUCTI ON OF TDS.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD DED UCTED TAX U/S. 194C OF THE ACT FOR THE PAYMENTS MADE TO FIELD AGENTS FOR CONDUCTING RESEAR CH SURVEY,DATA COMPILATION AND TABULATION. HE HELD THAT THE SERVICES AVAILED BY TH E ASSESSEE WERE IN THE NATURE OF TECHNICAL SERVICES,THAT TAX SHOULD HAVE BEEN DEDUCTED U/S. 19 4J OF THE ACT.VIDE HIS ORDER SHEET ENTRY DATED,26.2.13,HE ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE DISALLOWANCE SHOULD NOT BE MADE FOR SHORT DEDUCTION OF TAX.AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE,THE AO HELD THAT THE SERVICES AVAILED BY THE ASSESSEE WERE IN T HE NATURE OF TECHNICAL AND PROFESSIONAL SERVICES,THAT SUCH SERVICES WERE GOVERNED BY THE PR OVISIONS OF SECTION 194J OF THE ACT,THAT IT HAD NOT DEDUCTED DUE TAXES.FINALLY,THE AO,INVOKING THE PROVISIONS OF SECTION 40(I)(IA)OF THE ACT, MADE A DISALLOWANCE OF RS.47,38,35,252/-TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM IT WAS CONTENDE D THAT SHORT DEDUCTION OF TAX WOULD NOT ATTRACT PROVISIONS OF SECTION 40(A)(IA)OF THE ACT,T HAT IN THE EARLIER YEARS THE TRIBUNAL HAD DECIDED THE ISSUE IN ITS FAVOUR.THE FAA,REFERRED TO THE ORDER OF HIS PREDECESSOR PASSED FOR THE AY..2008-09 AND ALLOWED THE APPEAL FILED BY THE ASS ESSEE. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)ARGUED THAT FAILURE TO DEDUCT TAX AS PER THE 746/M/14-HINDUSTAN THOMPSON AASSOCIATES P.LTD. 2 PROVISIONS OF SECTION 194 J WOULD RESULT IN DISALLO WANCE OF SECTION 40(A)(IA)OF THE ACT.HE RELIED UPON THE CASE OF P V S MEMORIAL HOSPITAL,DE LIVERED BY THE HONBLE KERALA HIGH COURT(60TAXMANN.COM.69).THE AUTHORISED REPRESENTATI VE(AR)CONTENDED THAT THE TRIBUNAL HAD DISMISSED THE APPEALS FILED BY THE AO FOR THE E ARLIER THREE AY.S..HE RELIED UPON THE CASES OF S K TEKRIWAL(260CTR73). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE HONBLE KERALA HIGH COURT IN THE CASE OF P V S MEMO RIAL HOSPITAL(SUPRA),HAS HELD THAT DEDUCTION OF TDS UNDER WRONG PROVISION OF LAW WILL NOT SAVE ASSESSEE FROM DISALLOWANCE U/S. 40(A)(IA)OF THE ACT.HOWEVER,THE KOLKATA HIGH COURT IN THE MATTER OF SAMIR TEKRIWAL(SUPRA), HAS HELD THAT EXPENSES ARE NOT LIABLE TO BE DISALLO WED U/S.40(A)(IA)ON ACCOUNT OF SHORT DEDUCTION OF TAX.THE HONBLE JURISDICTIONAL HIGH CO URT HAS NOT DECIDED THE ISSUE.THUS,WE ARE FACED WITH TWO DIAGONALLY OPPOSITE VIEWS ABOUT APPL ICABILITY OF THE PROVISIONS OF SECTION 40 (A)(IA)OF THE ACT.WE FIND THAT THE HONBLE BOMBAY H IGH COURT HAS IN THE CASE OF ASHOK KUMAR PAREKH(186 IT R212)HAS DEALT WITH THE BINDING PRECEDENCE OF THE HIGH COURT JUDGMENTS.HERE,WE WOULD ALSO LIKE TO REPRODUCE THE A PORTION OF THE JUDGMENT DELIVERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SIEME NS INDIA LTD.(156ITR11) AND SAME READS AS UNDER : SO FAR AS THE LEGAL POSITION IS CONCERNED, THE ITO WOULD BE BOUND BY A DECISION OF THE SUPREME COURT AS ALSO BY A DECISION OF THE HIGH COU RT OF THE STATE WITHIN WHOSE JURISDICTION HE IS (FUNCTIONING), IRRESPECTIVE OF THE PENDENCY O F ANY APPEAL OR SPECIAL LEAVE APPLICATION AGAINST THAT JUDGMENT. HE WOULD EQUALLY BE BOUND BY A DECISION OF ANOTHER HIGH COURT ON THE POINT, BECAUSE NOT TO FOLLOW THAT DECISION WOULD BE TO CAUSE GRAVE PREJUDICE TO THE ASSESSEE. WHERE THERE IS A CONFLICT BETWEEN DIFFERENT HIGH CO URTS,HE MUST FOLLOW THE DECISION OF THE HIGH COURT WITHIN WHOSE JURISDICTION HE IS (FUNCTIO NING), BUT IF THE CONFLICT IS BETWEEN DECISIONS OF OTHER HIGH COURTS, HE MUST TAKE THE VI EW WHICH IS IN FAVOUR OF THE ASSESSEE AND NOT AGAINST HIM. SIMILARLY, IF THE TRIBUNAL HAS DEC IDED A POINT IN FAVOUR OF THE ASSESSEE,HE CANNOT IGNORE THAT DECISION AND TAKE A CONTRARY VIE W, BECAUSE THAT WOULD EQUALLY PREJUDICE THE ASSESSEE. CONSIDERING THE ABOVE,WE ARE TAKING THE VIEW WHICH IS IN FAVOUR OF THE ASSESSEE.WE ARE FOLLOWING THE JUDGMENT OF SAMIR TEKRIWAL (SUPRA)OF THE HONBLE KOLKATA HIGH COURT AS WELL AS THE ORDERS OF THE MUMBAI TRIBUNAL DELIVERED BY I T FOR THE EARLIER YEARS.EFFECTIVE GROUND OF APPEAL IS DECIDE AGAINST THE AO. CO.128/M/15 6. WHILE DECIDING THE APPEAL OF THE AO,WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE AO.HENCE,THE CO FILED BY THE ASSESS EE IS TREATED AS INFRUCTUOUS. AS A RESULT APPEAL FILED BY THE AO AND CO FILED BY THE ASSESSEE STAND DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2016. 19 TH , 2016 SD/- SD/- ( /RAM LAL NEGI) ( / RAJENDRA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 19.02. 2016 . . . .. . JV.SR.PS. 746/M/14-HINDUSTAN THOMPSON AASSOCIATES P.LTD. 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR H BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.