Deputy Commissioner of Income-tax, V. Corrosion Carriers Pvt. Ltd., Pune

ITA 861/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0561 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Retrospective amendment

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.861/PN/2014 '% % / ASSESSMENT YEAR : 2007-08 DY.CIT, CIRCLE-1(1), PUNE . / APPELLANT V/S CORROSION CARRIERS PVT. LTD., 224, KALPATARU PLAZA, RAMOSHI GATE, BHAWANIPETH, PUNE 411 042 PAN NO.AABCC1264E . / RESPONDENT / ASSESSEE BY : SHRI KISHOR PHADKE / DEPARTMENT BY : SHRI HITENDRA NINAWE / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 31-10-2013 OF THE CIT(A)-I, PUNE RELATING TO ASSES SMENT YEAR 2007-08. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READ S AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.60,02,351/- MADE U/S.40(A)(IA) OF THE I.T. ACT, 1961 HOLDING THAT THE AMENDMENT INTRODUCED BY THE FINANCE ACT, 2010 WAS RETROSPECTIV E IN OPERATION DE HORS THE DECISION OF THE SPECIAL BENCH OF HONBLE ITA T IN THE CASE OF / DATE OF HEARING :29.12.2015 / DATE OF PRONOUNCEMENT:30.12.2015 2 ITA NO.861/PN/2014 BHARATI SHIPYARD LTD. VS. DCIT (132 ITD 53) WHICH HE LD SUCH AMENDMENT TO BE NOT REMEDIAL OR CURATIVE AND, THERE FORE, PROSPECTIVE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED A ND THE COMPANY IS ENGAGED IN THE BUSINESS OF TRANSPORT AGENCY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THA T THE ASSESSEE HAS DEBITED VARIOUS KINDS OF EXPENSES AMOUNTING TO RS.60,02,351/- WHICH WERE INCURRED BY THE ASSESSEE TILL THE MONTH OF FEBRUARY 2007. ACCORDING TO THE AO TAX ON THESE EX PENSES WAS DEDUCTIBLE ON 7 TH DAY OF THE MONTH FOLLOWING THE MONTH IN WHICH SUCH EXPENSES ARE DEBITED. SINCE THE ASSESSEE HAS DED UCTED THE TAX AT SOURCE IN THE MONTH OF MARCH 2007 AND PAID THE SAME IN THE MONTH OF APRIL 2007, THEREFORE, THE AO APPLYING THE PROVISIO NS OF SECTION 40(A)(IA) OF THE I.T. ACT DISALLOWED THE AMOUNT OF RS.60,02,351/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE NEED S TO DEDUCT TAX AT SOURCE AND PAY THE AMOUNT TO THE CRED IT OF THE GOVERNMENT TREASURY BEFORE 31-10-2007 IN CASE TDS HAS BEEN MADE IN THE MONTH OF MARCH 2007 AND BEFORE 31-03-2007 IN ALL OTHER CASES. IT WAS SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) WERE AMENDED BY FINANCE ACT, 2010 AND ACCORDING TO THE SAID PROVISION ANY EXPENDITURE ON WHICH TDS IS MADE DURIN G THE PREVIOUS YEAR AS PER PROVISIONS OF CHAPTER XVIIB OF THE I.T. ACT, 1961 IS ALLOWED AS EXPENDITURE IN THE RELEVANT ASSESSMENT YEAR IF THE TDS IS CREDITED TO THE GOVERNMENT TREASURY ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE I.T. AC T. RELYING ON THE FOLLOWING DECISIONS IT WAS SUBMITTED THAT THE 3 ITA NO.861/PN/2014 AMENDMENT MADE BY THE SAID FINANCE ACT, 2010 ARE RETRO SPECTIVE IN NATURE : 1. VIRGIN CREATIONS GA 3200/2011 DATED 23-11-2011 2. CIT VS. RAJINDER KUMAR ITA NO.65/2013 3. CIT VS. NARESH KUMAR ITA NO.24/2013 AND CIT VS. T ALBROSS P. LTD. 4. ITO VS. ANAND BUILDCON ITA NO.1168/PN/2011 (ITA T PUNE DATED 27-09-2012) 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) FOLLOWING THE DECISION OF HONLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA) AND VARIOUS OTHER DEC ISIONS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRA CTED TO THE FACTS OF THE PRESENT CASE SINCE THE ASSESSEE HAS PAID T HE TDS TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF T HE RETURN OF INCOME. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE GROUND RAISED BY THE REVENUE IS REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO THE ASSESSEE OR NOT IN VIEW OF THE AMENDMENT INTRODUCED BY THE FINANCE ACT 201 0 WHERE THE TAX HAS NOT BEEN PAID BY THE SPECIFIED DATE BUT PAID BEFORE THE DUE DATE OF FILING OF RETURN U/S.139(1) OF THE I.T. ACT. IN TH E INSTANT CASE, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS PAID THE TAX DEDUCTED AT SOURCE TO THE CREDIT OF THE CENTRAL GO VERNMENT BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME U/S.139 (1) OF THE I.T. ACT, 1961. THEREFORE, THE QUESTION THAT ARISES IS AS TO 4 ITA NO.861/PN/2014 WHETHER THE PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED TO THE FACTS OF THE PRESENT CASE AFTER THE AMENDMENT INTRODUCED BY THE FINANCE ACT, 2010. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE TH E PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. ANAND BUILDCON VIDE ITA NO.1168/PN/2011 FOR A.Y. 2007-08. WE FIND THE TRIBUNA L VIDE ORDER DATED 27-09-2012 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE GROUND RAISED BY THE REVENU E BY OBSERVING AS UNDER : 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, IN THIS CASE, THE TAX HAS BEEN DEDUCTED AT SOU RCE ON PAYMENTS OF LABOUR CHARGES OF RS. 19,99,800/-, WHICH I S THE SUBJECT MATTER OF DISPUTE. THE ONLY CASE MADE OUT BY THE ASSESSI NG OFFICER ITA NO 1168 AND CO 76/PN/11 ANAND BUILDCON A.Y. 2007-08 IS THAT THE TAX DEDUCTED ON SUCH PAYMENT OF LABOUR CHARGES, HAS BEEN D EPOSITED IN THE GOVERNMENT TREASURY BELATEDLY I.E. ON 31-5- 2007 . IN TERMS OF AN AMENDMENT MADE TO SECTION 40(A)(IA) OF THE ACT BY T HE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1-4-2010 THE POSI TION EMERGES THAT THE ASSESSEE DEDUCTING TAX AT SOURCE AT ANY TIME IN THE PREVIOUS YEAR SHALL BE ENTITLED TO DEDUCTION OF THE EXPENDITU RE IN THE YEAR OF ITS INCURRENCE SO LONG AS THE TAX DEDUCTED HAS BEEN DEPOSIT ED IN THE STATE EXCHEQUER ON OR BEFORE THE DUE DATE FOR FILING OF T HE RETURN SPECIFIED U/S 139(1) OF THE ACT. CLEARLY, THE CASE OF THE ASSESSEE IS COVERED BY THE SAID AMENDMENT INASMUCH AS THE TAX DEDUCTED AT SOURCE O F RS. 21,144/- WITH RESPECT TO LABOUR PAYMENT OF RS. 19,99, 800/- HAS BEEN DEPOSITED ON 31-5- 2007 WHICH IS PRIOR TO THE DATE SPE CIFIED U/S 139(1) OF THE ACT FOR FILING OF THE RETURN FOR THE ASSESSMENT YEAR IN QUESTION I.E. 2007-08. THE PLEA OF THE REVENUE ON TH IS POINT IS THAT THE AFORESAID AMENDMENT BY THE FINANCE ACT 2010 CAME UP FOR CONSIDERATION BEFORE THE SPECIAL BENCH OF THE TRIBUN AL IN THE CASE OF BHARATI SHIPYARD LTD. VS. DCIT (ITA NO.; 2404/MUM/20 09 FOR A.Y. 2005-06 DATED 9-9-2011) WHEREIN IT WAS HELD THAT SUCH AMENDMENT WAS APPLICABLE WITH PROSPECTIVE EFFECT FROM A.Y. 2010 -11 AND COULD NOT BE HELD TO BE RETROSPECTIVE FROM THE A.Y. 2005- 06. IT WAS THEREFORE, SUBMITTED THAT THE CONTENTS OF THE AFORESAID AMENDMENT CARRIED OUT BY THE FINANCE ACT, 2010 CANNOT IPSO FACTO APPLY TO THE PRESENT CASE OF ASSESSMENT YEAR 2007-08, WHICH IS PRIOR TO THE ASSESSMENT YE AR 2010- 11. 7. HOWEVER, IT IS NOTICED THAT SUBSEQUENT TO THE DECI SION OF THE SPECIAL BENCH IN THE CASE OF BHARATI SHIPYARD LTD (SU PRA), AN IDENTICAL ISSUE CAME UP BEFORE THE CALCUTTA HIGH COURT IN THE C ASE OF VIRGIN CREATIONS (SUPRA). IN THE SAID DECISION, THE TRIBUNAL V IDE ITS ORDER DATED 15-12-2010 (SUPRA) HELD THAT THE AMENDMENT IN ITA NO 1168 AND CO 76/PN/11 ANAND BUILDCON A.Y. 2007-08 QUESTION MADE BY THE FINANCE ACT 2010 WOULD HAVE RETROSPECTIVE APPLIC ATION EVEN FOR THE A.Y. 2005-06 WHICH WAS THE ASSESSMENT YEAR BEFORE I T. ON AN APPEAL BY THE REVENUE BEFORE THE CALCUTTA HIGH COUR T AGAINST SUCH A DECISION, THE ORDER OF THE TRIBUNAL WAS AFFIRMED. AS A RESULT OF THE 5 ITA NO.861/PN/2014 JUDGMENT OF HON'BLE CALCUTTA HIGH COURT DATED 23-11 -2011 (SUPRA), THE IMPUGNED AMENDMENT MADE TO THE PROVISION OF SECTI ON 40(A)(IA) BY THE FINANCE ACT, 2010 HAS BEEN HELD TO BE RETROSPECTIVE FROM 1-4-2005. AS A RESULT THEREOF, IT HAS TO BE UNDE RSTOOD THAT FROM 1- 4-2005 THE EFFECT WOULD BE THAT THE PAYMENT OF TDS TO THE CREDIT OF GOVERNMENT MADE ON OR BEFORE THE DUE DATE FOR FILIN G OF THE RETURN U/S 139(1) OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR WOUL D MITIGATE THE RIGORS OF SECTION 40(A)(IA) OF THE ACT WITH RESPECT TO THE CORRESPONDING EXPENDITURE. 8. IN THIS BACKGROUND OF THE MATTER, WE THEREFORE, ARE OF THE VIEW THAT THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT WH ICH OSTENSIBLY SUPPORTS THE VIEW CONTRARY TO THAT OF THE SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF BHARATI SHIPYARD LTD (SUPRA) IS TO PREV AIL. NOTABLY SIMILAR SITUATION AROSE BEFORE THE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF PIYUSH C. MEHTA (ITA NO. 1321/MUM/2009 FOR A. Y. 2005-096 DATED 11-4-2012) WHEREIN FOLLOWING DISCUSSION IS RELEVA NT. '18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE D ECISION OF THE HON'BLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW T HAT AMENDMENT BY THE FINANCE ACT 2010TO THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT ARE PROSPECTIVE AND NOT RETROSPE CTIVE FROM 1-4-2005 OR THE DECISION OF THE HON'BLE CALCUTTA HIG H COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION, THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISI ON OF THE ITAT DELHI BENCH IN THE CASE OF TEJ INTERNATIONA L (P) LTD. VS. DY. CIT (2000) 69 TTJ (DEL) 650, WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN AUTHORITY HIGHE R THAN THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIAL AUTHOR ITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE FACT T HAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON- JURISDICTIONAL HIGH ITA NO 1168 AND CO 76/PN/11 ANAN D BUILDCON A.Y. 2007-08 COURT DOES NOT REALLY ALTER TH IS POSITION AS LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GODAVARIDEVI SARAF (113 ITR 589 (BOM). 19. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DEC ISION OF THE HON'BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE P ROVISIONS OF SEC. 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 201 0 IS RETROSPECTIVE FROM 1-4-2005. CONSEQUENTLY, ANY PAYMEN T OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO A ND FROM A.Y. 2005-06 CAN BE MADE TO THE GOVERNMENT ON OR BE FORE THE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF T HE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S 40(A)(IA) OF THE ACT CAN BE MADE. ADMITTEDLY, IN TH E PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DESER VES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPE AL OF THE ASSESSEE.' 9. IN VIEW OF THE AFORESAID PRECEDENT, WE THEREFOR E, HOLD THAT FOLLOWING THE RATIO OF THE JUDGMENT OF CALCUTTA HIG H COURT IN THE CASE OF VIRGIN CREATIONS (SUPRA), DISALLOWANCE OF RS. 19,99,800 /- BY INVOKING 6 ITA NO.861/PN/2014 PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS UNJUSTIFIE D, INASMUCH AS THE ASSESSEE HAS DEPOSITED THE CORRESPONDING TAX DEDUCTED AT SO URCE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCO ME SPECIFIED U/S 139(1) OF THE ACT FOR ASSESSMENT YEAR IN QUESTION. 8. SINCE IN THE INSTANT CASE THE ASSESSEE HAS ADMITTEDL Y DEPOSITED THE TAX SO DEDUCTED BEFORE THE DUE DATE OF FILIN G OF RETURN OF INCOME U/S.139(1) OF THE I.T. ACT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L CITED (SUPRA) AND IN ABSENCE OF ANY CONTRARY DECISION BROUGHT T O OUR NOTICE WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-12-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 30 TH DECEMBER, 2015. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT (A) - I , PUNE 4. 5. 6. CIT-I, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE