HUDA CONSTRUCTION, MUMBAI V. ITO 2(1), MUMBAI, THANE

ITA 816/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92336 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 29-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOLD OUT
• Section: 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 816/M/2011 ASSESSMENT YEAR: 2005 - 06 M/S. HUDA CONSTRUCTION, SHOP NO. 4 & 5, MARIAM & KARIMAN AP ARTMENT , OPP . MIRA NURSING HOME, NAYA NAGAR, MIRA ROAD ( EAST ) 401 107 MUMBAI PAN: AADFH 8998R VS. THE INCOME TAX OFFICER, WARD - 2(1), QURESHI MANSION , NAUPADA, THANE (APPELLANT) (RESPONDENT) PRESENT FOR: AS SESSEE BY : SHRI DHARMESH SHAH, A.R. REVENUE BY : SHRI JEETENDRA KUMAR, D.R. DATE OF HEARING : 10.02 .201 5 DATE OF PRONOUNCEMENT : 15.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 27 .0 9 .20 1 0 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2005 - 0 6 . 2. THE ASSESSEE IN THIS APPEAL HAS AGITATED THE CONF IRMATION OF DISALLOWANCE OF RS.10 , 40 , 220 / - UNDER S ECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING DISALLOWANCE OF EXPENSES U/S 40(A)(IA) IGN ORING THE FACT THAT THERE IS RS 'NIL' INCOME AS ASSESSEE HAS FOLLOWED PROJECT COMPLETION METHOD OF ACCOUNTING AND HENCE ONLY CLOSING WIP NEEDS TO BE REDUCED AND EXPENSES SHALL NOT BE CONVERTED INTO INCOME ON ITA NO.816/M/2011 M/S. HUDA CONSTRUCTION 2 TECHNICAL GROUNDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS IGNORED THE FACT THAT DURING THE NEXT F.Y. 2005 - 06 THERE WAS NO SUFFICIENT PROFIT ( RS 2,64,590/ - ONLY) SO AS TO ADJUST EXPENSES DISALLOWED U/S 40(A)(IA) OF RS 10,40,220/ - WHICH RESULTS INTO DEPRIVING OFF TH E ASSESSEE FROM CLAIMING THE EXPENSES AND FORCEFULLY TAXING ON NOTIONAL DISALLOWANCE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE AO'S ACTION OF NOT ALLOWING THE SAID EXPENSES IN NEXT F.Y . 2005 - 06. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS IGNORED THE FACT THAT THE APPELLANT FIRM HAS DISSOLVED ON 01/04/2006 AND EVEN THOUGH EXPENSES WOULD HAVE BEEN ALLOWED IN NEXT F.Y. 2005 - 06 THERE WILL BE UNABSORBED LOSS OF RS .7,75,630/ - (RS 2,64,590/ - LESS RS 10,40,220/ - ) WHICH CAN NOT BE CARRIED FORWARD AND SET OFF AS THE PROJECT IS COMPLETED & SOLD OUT AND THERE IS NO ANY OTHER BUSINESS CARRIED ON AS THE FIRM IS DISSOLVED . 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT (A) HAS IGNORED THAT THE OBJECTIVE BEHIND THE NEW PROVISION (SEC 40(A)(IA) ) IS TO ENSURE EFFECTIVE COMPLIANCE WITH THE PROVISIONS OF TDS AND NOT TO PENALIZED BY DISALLOWING EXPENSES PERMANENTLY LIKE STATUTORY DEDUCTION OF PF U/S 43B. 3. A T THE OUTSET, THE LD. AR OF THE ASSESSEE , BEFORE US, HAS CONTENDED THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL, THE TDS WAS DULY DEDUCTED BY THE ASSESSEE ON THE PAYMENTS MADE AND THE SAME WAS DEPOSITED WITH THE GOVT. BEFORE THE DUE DATE OF FILI NG OF RETURN AND HENCE THE CASE OF THE ASSESSEE HAS BEEN DULY COVERED WITH THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NARESH KUMAR (2013) 262 CTR (DEL) 389 AND FURTHER WITH THAT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS. ON THE OTHER HAND THE LD. D.R. HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. I ITA NO.816/M/2011 M/S. HUDA CONSTRUCTION 3 4 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. IN THE CASE IN HAND THE ASSESSEE HAS CLAIMED THAT THOU GH IT HAD NOT DEPOSITED THE TDS BEFORE THE DUE DATE AS WAS PRESCRIBED U/S 40(A)(IA) OF THE ACT, HOWEVER, HE HAD DEPOSITED THE TDS BEFORE THE DUE DATE OF FILING OF RETURN. HE HAS RELIES UPON A CHART AND COPIES OF THE CHALLANS TO SHOW THAT THE TDS WAS DULY D EPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 5. ADMITTEDLY, THE SECTION 40(A)(IA) OF THE ACT HAS BEEN AMENDED BY THE FINANCE ACT, (2010) TO THE EFFECT THAT THE DUE DATE FOR DEPOSIT OF TAX WILL BE THE DUE DATE AS PRESCRIBED IN SUB SECTION (1) OF SECTION 139 OF THE ACT I.E . DUE DATE FOR FILING OF RETURN OF INCOME. THE L D. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE HAS INVITED OUR ATTENTION TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE C ASE OF CIT VS. NARESH KUMAR (2013) 262 CTR (DEL) 389 WHEREIN THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE AMENDMENT MADE TO SECTION 40(A)(IA) OF THE ACT VIDE FINANCE ACT , 2010 WHICH STATES THAT THE DUE D ATE OF DEPOSIT OF TDS WILL BE THE DATE OF FILING OF RETURN U/S 139(1) IS APPLICABLE RETROSPECTIVELY. WHILE HOLDING SO, THE HON'BLE DELHI HIGH COURT HAS RELIED UPON ANOTHER DECISION IN THE CASE OF CIT VS. RAJ INDER KUMAR (ITA NO. 65/2013) AND FURTHER ON THE CASE OF CIT VS. JAGANNATH STEEL CORPORATION OBSERVING THAT WHERE THE STATUTE IS CURATIVE OR MERELY DECLARATORY OF PREVIOUS LAW, RETROSPECTIVE OPERATION IS GENERALLY INTENDED. FURTHER T HE H ON'BLE CALCUTTA HIGH COURT IN THE C ASE OF CIT V. VIRGIN CREATIONS (IN GA 3200/2011 DATED 23/11/2011 COPY ON RECORD) HAS HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) BY THE FINANCE ACT, 2010 IS TO BE CONSIDERED AS RETR OSPECTIVE IN - AS - MUCH AS IT IS ONLY TOWARD MITIGATING A HARDSHIP AND, THUS, IS TO BE CONSIDERED AS CURATIVE IN NATURE. IN VIEW OF THE ABOVE DECISION S OF THE HON'BLE DELHI HIGH COURT AND THAT OF CALCUTTA HIGH COURT AND IN THE ABSENCE OF ANY DECISION TO THE C ONTRARY OF OUR HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY, IT ITA NO.816/M/2011 M/S. HUDA CONSTRUCTION 4 IS TO BE HELD THAT THE AMENDMENT TO SECTION 40(A)(IA) OF THE ACT MADE VIDE FINANCE ACT, 2010 IS APPLICABLE RETROSPECTIVELY AND IF THE PAYMENTS HAVE BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN, THEN IT CANNOT BE SAID TO BE A CASE OF VIOLATION OF PROVISIONS OF SECTION 194C OF THE ACT INVITING DISALLOWANCE U/S SECTION 40(A)(IA) OF THE ACT . SINCE THE CHALLAN S REPRESENTING THE DEPOSIT OF TDS WERE NOT PRODUCED BEFORE THE LOWER AUTHORITIES, HENCE, SUBJECT TO THE VERIFICATION OF THE DEPOSIT OF THE TDS BY THE AO , WE DIRECT THAT THE ASSESSEE'S CLAIM BE ALLOWED TOWARDS PAYMENT TO THE EXTENT IT EXHIBITS PAYMENT OF CORRESPONDING TDS BY THE DUE DATE OF FURNISHING THE RETURN FOR THE RELEVANT YEAR. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.04.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNE D BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.