ITO, WD-1(1), KOLKATA, Kolkata V. Sri Sudhir Jain, Kolkata

ITA 785/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1257 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: ASHISH BAJAJ

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 785/KOL/2015 ASSESSMENT YEAR: 2007-08 ITO WARD 1(1) KOLKATA.............................APPELLANT AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA - 700069 SHRI SUDHIR JAIN.......................................................................RESPONDENT 13, B.B. GANGULY STREET, KOLKATA - 700012 [PAN: AEUPJ6167K] APPEARANCES BY: SHRI SAURABH KUMAR, ADDL. CIT APPEARING ON BEHALF OF THE REVENUE. SHRI ASHISH BAJAJ, AR APPEARING ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : OCTOBER 11, 2017 DATE OF PRONOUNCING THE ORDER : OCTOBER 13, 2017 ORDER PER P.M. JAGTAP, AM THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT (APPEALS) -1, DATED 17.02.2015 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN DELETING THE DISALLOWANCE OF RS. 2,30,70,671/- MADE BY THE AO UNDER SECTION 40(A)(IA) FOR THE DELAY IN PAYMENT OF TAX DEDUCTED AT SOURCE FROM INTEREST. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF SHARE TRADING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 02.11.2007 DECLARING A TOTAL INCOME OF RS. 33,32,380/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE FROM THE INTEREST OF RS. 2,30,70,671/- PAID TO M/S. 2 I.T.A. NO. 785/KOL/2015 ASSESSMENT YEAR: 2007-08 SHRI SUDHIR JAIN INDIABULLS FINANCE COMPANY PVT. LTD. BUT THE SAME WAS NOT DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT WITHIN THE DATE SPECIFIED IN THE INCOME TAX ACT. HE, THEREFORE, INVOKED THE PROVISION OF SECTION 40(A)(IA) AND MADE A DISALLOWANCE OF RS. 2,30,70,671/- ON ACCOUNT OF INTEREST PAID BY THE ASSESSEE TO M/S. INDIABULLS FINANCE COMPANY PVT. LTD. THE DISALLOWANCE MADE BY THE AO UNDER SECTION 40(A)(IA) ON ACCOUNT OF INTEREST WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BY THE LD. CIT (A) AND AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT (A) DELETED THE SAID DISALLOWANCE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO 4.2 OF HIS IMPUGNED ORDER: THE SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS RELIED UPON HAVE BEEN CONSIDERED. THE ISSUE IS REGARDING DISALLOWANCE OF RS. 2,30,70,671/- PAID AS INTEREST ON WHICH TDS HAD NOT BEEN DEPOSITED IN GOVERNMENT ACCOUNT BY THE DUE DATE. THE ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THIS CASE OF VIRGIN CREATION VS CIT (SUPRA) AND IN VIEW OF THE SAME IF THE TDS HAS BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN, NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA). THE HIGH COURT WHILE DISMISSING THE DEPARTMENTS APPEAL, HELD THAT:- THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL, 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS INDISPUTED. MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT. LTD. AND ALSO IN THE CASE OF ATOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. 3 I.T.A. NO. 785/KOL/2015 ASSESSMENT YEAR: 2007-08 SHRI SUDHIR JAIN IN VIEW OF THE AUTHORITATIVE PRONOUNCEMENT OF THE SUPREME COURT, THIS COURT CANNOT DECIDE OTHERWISE. HENCE WE DISMISS THE APPEAL WITHOUT ANY ORDER AS TO COSTS. THEREFORE, CONSIDERING THE ABOVE DECISION OF THE JURISDICTIONAL HIGH COURT AND THE FACT THAT THE APPELLANT HAD DEPOSITED THE TDS ON 30.05.2007, I.E. THE DUE DATE OF FILING OF ITS RETURN FOR THE RELEVANT ASSESSMENT YEAR, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN ADDING THE AMOUNT U/S 40(A)(IA) AND THE ADDITION OF RS. 2,30,70,671/- IS DELETED. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT EVEN THOUGH THE TAX DEDUCTED AT SOURCE FROM THE INTEREST IN QUESTION PAID BY THE ASSESSEE TO M/S. INDIABULLS FINANCE COMPANY PVT. LTD. WAS NOT DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT WITHIN THE DUE DATE PRESCRIBED IN THE INCOME TAX ACT, THE SAME WAS DEPOSITED ON 30.05.2007 I.E. WELL BEFORE THE DUE DATE OF FILING OF HIS RETURN OF INCOME BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. IT IS ALSO OBSERVED THAT A SIMILAR DISALLOWANCE UNDER SECTION 40(A)(IA) IN THE CASE OF VIRGIN CREATION (SUPRA) INVOLVING IN IDENTICAL FACTS AND CIRCUMSTANCES WAS DELETED BY THE TRIBUNAL AND THE HONBLE KOLKATA HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL BY RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ATOM EXTRUSIONS LTD. (SUPRA) AND ALLIED MOTORS PVT. LTD. (SUPRA). THE ISSUE INVOLVED IN THIS CASE THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIRGIN CREATION 4 I.T.A. NO. 785/KOL/2015 ASSESSMENT YEAR: 2007-08 SHRI SUDHIR JAIN (SUPRA) AND EVEN THE LEARNED DR HAS NOT DISPUTED THIS POSITION. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT (A) DELETING THE DISALLOWANCE MADE BY THE AO UNDER SECTION 40(A)(IA) BY RELYING ON THE DECISION OF HONBLE KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATION (SUPRA) AND UPHOLDING THE SAME, WE DISMISS THIS APPEAL OF THE REVENUE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/10/2017 BISWAJIT, SR. P.S. COPY OF ORDER FORWARDED TO: 1. SHRI SUDHIR JAIN, 13, B.B. GANGULY STREET, KOLKATA 12. 2. ITO WD. 1(1), KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA