Mernide Satyanarayana, Kakinada V. THE ITO , WARD - 2, Kakinada

ITA 8/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1157 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMESH KUMARDR
• Assessee Lawyers: V GOVINDA RAJUAR

Judgement Text

ITA NO.8/VIZAG/2014 MERNIDI SATYANARAYANA, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.8/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) MERNIDI SATYANARAYANA KAKINADA VS. ITO, WARD - 2, KAKINADA [PAN: AGJPM4250B ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI V. GOVINDA RAJU,AR / RESPONDENT BY : SHRI A. RAMESH KUMAR,DR / DATE OF HEARING : 17.05.2016 / DATE OF PRONOUNCEMENT : 20.05.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 22.10.2013 FOR THE ASSE SSMENT YEAR 2009-10. ITA NO.8/VIZAG/2014 MERNIDI SATYANARAYANA, KAKINADA 2 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TAKING BUILDING ON RENTS AND RENTING THEM AS GUEST HOUSES TO OIL COMPANIES AND ALSO PROVIDING VEHICLES ON HIRE TO OI L COMPANIES. THE ASSESSEE FILED RETURN OF INCOME BY DECLARING TOTAL INCOME OF ASSESSEE OF ` 4,78,740/-. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS RELATING TO DISALLOWANCE U/S 40(A)(IA) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ON GUEST HOUSE CH ARGES OF ` 34,06,000/-. IN THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED THAT DURING THE YEAR THE ASSESSEE MADE GUEST HOUSE RENTS OF ` 34,06,000/-. THE ASSESSEE WAS REQUIRED TO DEDUCT TAX U/S 194I OF THE ACT FROM THE ABOVE PAYMENTS. ASSESSEE HAS FAILED TO DEDUCT TDS. THEREFORE, IN T ERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE ENTIRE SUM OF ` 34,06,000/- IS NOT ALLOWABLE AS A DEDUCTION. ACCORDINGLY, THE SAME IS DISALLOWED. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ORDER OF T HE A.O. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT OUT OF TOTAL DISALLOWANCE OF ` 34,06,000/-, AN AMOUNT OF ` 30,49,000/- WAS PAID DURING THE FINANCIAL YEAR 2008-09 I.E. BEFORE 31.03.2009 AND SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE ITA NO.8/VIZAG/2014 MERNIDI SATYANARAYANA, KAKINADA 3 HONBLE SPECIAL BENCH CASE OF ITAT VISAKHAPATNAM IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORTS VS. ACIT (136 ITD 23) . 4. ON THE OTHER HAND, THE LD. D.R. HAS STRONGLY SUP PORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE FOR CONSIDERATION IS THAT OUT OF THE AMO UNT OF ` 34,06,000/-, THE ASSESSEE SUBMITTED THAT ` 30,49,000/- WAS ALREADY PAID AND AS PER THE SPECIAL BENCH JUDGEMENT IN THE CASE OF M/S. MER ILYN SHIPPING & TRANSPORTS (SUPRA), ONCE AN AMOUNT IS ALREADY PAID AS ON THE END OF THE FINANCIAL YEAR, DISALLOWANCE CANNOT BE MADE U/S 40( A)(IA) OF THE ACT. RECENTLY THE COORDINATE BENCH OF THIS TRIBUNAL ITAT , VISAKHAPATNAM IN THE CASE OF MUKUNDARA ENGINEERS & CONTRACTORS VS. A CIT IN ITA NO.657/VIZAG/2014 HAS DECIDED THE ISSUE BASED ON TH E SPECIAL BENCH DECISION IN THE CASE OF M/S. MERILYN SHIPPING & TRA NSPORTS (SUPRA) AS FOLLOWS: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. CONSISTENT WITH THE VIEW TAKEN BY THE ITAT SPECIAL BENCH VISAKHAPATNAM AND ALSO IN THE LIGHT OF THE VIEW EXP RESSED BY THE HONBLE A.P. HIGH COURT IN THE CASE OF JANAPRIYA ENGINEERIN G SYNDICATE, WE ARE OF THE OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT CANNOT BE MADE APPLICABLE IN RESPE3CT OF THE AMOUNTS ALREADY PAID BEFORE 31 ST MARCH. IN OTHER WORDS, THE A.O. IS DIRECTED TO RES TRICT THE DISALLOWANCE TO ITA NO.8/VIZAG/2014 MERNIDI SATYANARAYANA, KAKINADA 4 THE AMOUNTS PAYABLE AFTER 31 ST MARCH. WITH THESE OBSERVATIONS, GROUND NO.3 OF THE ASSESSEE TREATED AS PARTLY ALLOWED. 6. IN VIEW OF THE ABOVE, WE FIND THAT IF THE ASSESS EE HAS ALREADY PAID AN AMOUNT OF ` 30,49,000/- AS ON 31.3.2009, THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT CANNOT BE MADE. HOWEVER, NO S UCH DETAILS ARE AVAILABLE BEFORE US AND IT IS TO BE ASCERTAINED THA T WHETHER THE PAYMENT IS MADE ALREADY AS ON 31.3.2009 OR NOT? IN VIEW O F THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE A.O. TO EXAMINE THE DETAILS AND DECIDE THE ISSUE IN VIEW OF OUR OBSERVATIONS MADE ABOVE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH MAY16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 20.5.2016 VG/SPS ITA NO.8/VIZAG/2014 MERNIDI SATYANARAYANA, KAKINADA 5 '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI MERNIDI SATYANARAYANA, D.NO .3-17-48/5A, GODARI GUNTA, KAKINADA. 2. / THE RESPONDENT THE ITO, WARD-2, KAKINADA 3. ) / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM