RAKESH TAK, Jaipur V. ITO, Jaipur

ITA 888/JPR/2014

• Counselvise Citation: 88823114 RSA 2014
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: RAJEEV SOGANI
• Keywords: Business expenditure; Retrospective amendment

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 888/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. SHRI RAKESH TAK, C-39, HARI MARG, MALVIYA NAGAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 6(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABBPT 1968 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 4/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 27.10.2014. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE DISALLOWANCE OF A SUM OF RS. 7,00,567/- UNDER SECTION 40(A)(IA) OF THE I. T. ACT. 2. I NOTED THAT THE PROVISIONS OF SECTION 40(A)(IA) HAS BEEN AMENDED BY THE FINANCE ACT, 2012 BY WHICH A PROVISO HAS BEEN ADDED WHICH READS AS UNDER :- PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS O F CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEF AULT UNDER THE FIRST 2 ITA NO. 888/JP/2014 A.Y. 2009-10. SHRI RAKESH TAK VS. ITO JAIPUR. PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN, FO R THE PURPOSE OF THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HA S DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RE TURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. THE KOLKATA BENCH OF THE TRIBUNAL IN ITA NO. 1278/K OL/2011 FOR THE ASSESSMENT YEAR 2008-09 VIDE ITS ORDER DATED MAY 22, 2015 TO WHICH MYSELF WAS THE AUTHOR, TOOK THE VIEW THAT THE SECOND PROVISO INSERTED BY THE FINANC E ACT, 2012 IS CURATIVE IN NATURE INTENDED TO SUPPLY AN OBVIOUS OMISSION, TAKE CARE O F AN UNINTENDED CONSEQUENCE AND MAKE THE SECTION WORKABLE. SECTION 40(A)(IA) WIT HOUT THE SECOND PROVISO RESULTED IN THE UNINTENDED CONSEQUENCE OF DISALLOWANCE OF LEGIT IMATE BUSINESS EXPENDITURE EVEN IN A CASE WHERE THE PAYEE IN RECEIPT OF THE INCOME HAD PAID TAX, AND, THEREFORE, THE SECOND PROVISO ALTHOUGH INSERTED WITH EFFECT FROM 1 ST APRIL, 2013 IS CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT. IN THIS CASE, THIS TR IBUNAL RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KOLKATA HIGH COURT IN CASE NO. 302 OF 2011, GA 3200/2011, CIT VS. VIRGIN CREATIONS TOOK THE VIEW THAT WHERE IN ANY S UBSEQUENT YEAR IN WHICH THE TAX HAS BEEN DEDUCTED AND DEPOSITED, THE INTENTION OF THE L EGISLATURE CLEARLY IS NOT TO DISALLOW THE LEGITIMATE BUSINESS EXPENDITURE. THE ALLOWANCE OF SUCH EXPENDITURE IS SOUGHT TO BE MADE SUBJECT TO DEDUCTION AND PAYMENT OF TAX AT SOU RCE. HOWEVER, IN A CASE WHERE THE DEDUCTEE/PAYEE HAS PAID TAX AND AS SUCH THE PER SON RESPONSIBLE FOR PAYING IS NO LONGER REQUIRED TO DEDUCT OR PAY ANY TAX, LEGITIMAT E BUSINESS EXPENDITURE WOULD STAND DISALLOWED SINCE THE SECTION CONTEMPLATED BY THE FI RST PROVISO VIZ. DEDUCTION AND PAYMENT OF TAX IN A SUBSEQUENT YEAR WOULD NEVER COM E ABOUT. SUCH UNINTENDED CONSEQUENCE HAS BEEN SOUGHT TO BE TAKEN CARE OF BY THE SECOND PROVISO INSERTED IN 3 ITA NO. 888/JP/2014 A.Y. 2009-10. SHRI RAKESH TAK VS. ITO JAIPUR. SECTION 40(A)(IA) BY THE FINANCE ACT, 2012. THE ME MORANDUM EXPLAINING THE SECOND PROVISO AS INTRODUCED IN FINANCE BILL, 2012, REPORT ED IN 342 ITR (STATUTES) 234 AT PAGES 260 & 261 EVEN THOUGH STATE THAT THE AMENDMENT WILL TAKE EFFECT FROM 1 ST APRIL, 2013 BUT THIS AMENDMENT, IN MY OPINION, IS RETROSPECTIVE IN OPERATION. THE HONBLE DELHI HIGH COURT HAS ALSO TAKEN THE SIMILAR VIEW IN THE C ASE OF ANSAL LAND MARK TOWNSHIP (P) LTD. VS. CIT [CM APPL. NO. 3774 OF 2015 IN ITA NO. 160 OF 2015]. THE AO WHILE PASSING AN ORDER UNDER SECTION 201(1)/201(1A) OF THE IT ACT FOR THE IMPUGNED ASSESSMENT YEAR 2009-10 TOOK THE VIEW THAT THE ASSESSEE IS NOT IN D EFAULT IN RESPECT OF TDS ON THE PAYMENT OF RS. 7,00,567/- TO M/S. RELIANCE CAPITAL AS THE ASSESSEE HAS PRODUCED CERTIFICATE OF THE ACCOUNTANT/DECLARATION THAT THE DUTY HAS INCLUDED THE CHARGES RECEIVED FROM THE ASSESSEE IN HIS RETURN AND HAS PA ID ENTIRE TAXES ON THE SAME. COPY OF THE ORDER IS PLACED BEFORE US. IN VIEW OF THE SAID DECISION OF THE AO OF THE ASSESSEE, I AM OF THE VIEW THAT IF THE ASSESSEE IS NOT IN DEFAU LT FOR THE PURPOSE OF THE PROVISIONS OF SECTION 201(1)/201(1A), THE ASSESSEE CANNOT BE DENI ED DEDUCTION IN RESPECT OF THE SAID EXPENDITURE UNDER SECTION 40(A)(IA). I, ACCORDINGL Y DELETE THE DISALLOWANCE. 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/11/2015. SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 4/11/ 2015 DAS/ 4 ITA NO. 888/JP/2014 A.Y. 2009-10. SHRI RAKESH TAK VS. ITO JAIPUR. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAKESH TAK, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD-6(1), JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 888/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. 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