MONISH BUILDERS, MUMBAI V. ACIT CIR 19(1), MUMBAI

ITA 8880/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3338 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 143(3); 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 8 88 0 /MUM/20 1 0 ( / ASSESSMENT YEA R : 20 07 - 08 ) M/S MONISH BUILDERS , 7B, CENCED APARTMENTS, 318, UNION PARK, PALIHILL ROAD, KHAR, MUMBI - 400052 / VS. A SSTT . COMMISSIONER OF INCOME TAX CIRCLE 19(1), 3RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012. ./ I.T.A. NO. 7068/MUM/2013 ( / ASSESSMENT YEA R : 2007 - 08 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(1), R.NO.322, 3RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012. / VS. M/S MONISH BUILDERS , 7B, CENCED APARTMENTS, 318, UNION PARK, PALIHILL ROAD, KHAR, MUM BI - 400052 . ./ PAN : AANFM6701F / ASSESSEE BY SHRI NIRAJ SHETH / REVENUE BY SHRI SANJEEV JAIN / DATE OF HEARING : 0 2. 0 6 .2016 / DATE OF PRONOUNCEMENT : 02.06 .2016 / O R D E R PER B ENCH : THESE ARE T WO APPEALS UNDER CONSIDERATION. T HESE T WO APPEALS ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS OF CIT(A) DATED 3.9.2010 IN QUANTUM 2 8880 /M/10 AND 7068 /M/13 U/S 143(3) AND DATED 6.9.2013 PASSED U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961(THE ACT). SINCE, THESE APPEALS PERTAIN TO THE SAME ASSESSEE, THEREFORE, FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS G IVEN IN THE SUCCEEDING PARAGRAPHS. FIRST WE WILL DEAL WITH THE APPEAL BEARING I.T.A.NO.8 880 /MUM/2010 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF C IT(A) CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE MADE BY THE AO ON ACCOUNT OF EXPENDITURE UNDER THE HEAD PROJECT COST AND PAID TO S D BHALERAO CONSTRUCTION PVT LTD WITH OUT DEDUCTION OF TDS UNDER SECTION 194C OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3 . BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.85.49 LAKHS UNDER THE HEAD PROJECT COST, WHICH WAS PAID TO S D BHALERAO CONSTRUCTION PVT LTD, TO WHOM CO NSTRUCTION OF PROJECT WAS ALLOTTED. THE AO TREATED THESE PAYMENT S AS CONTRACTUAL PAYMENT U/S 194C OF THE ACT THEREBY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). HE MADE THE DISALLOWANCE OF THESE EXPENSES. AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A) WHO ALSO CONFIRMED THE ACTION OF THE AO. AGGRIEVED 3 8880 /M/10 AND 7068 /M/13 BY THE ORDER OF FIRST APPELLATE AUTHORITY, THE ASSESSEE PREFERRED SECOND APPEAL BEFORE US. 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD PLACED BEFORE US. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS ONLY PLEADED THE ALTERNATIVE CONTENTIONS THAT THIS CLAIM OF EXPENDITURE TO S D BHALERAO CONSTRUCTION PVT LTD HAS ALREADY BEEN BOOKED BY THE PARTY AS THEIR INCOME IN THEIR RETURN OF INCOME AND PAID TAXES O N THE SAME. ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONCE THE PARTY HAS INCLUDED THIS EXPENDITURE AS THEIR INCOME IN THE RETURN OF INCOME NO DISALLOWANCE CAN BE CARRIED OUT IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS B ROUGHT OUT BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1.4.2013, WHICH IS HELD TO BE RETROSPECTIVE BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD (DELHI HIGH COURT) [2015] 377 ITR 635 (DELHI) , WHEREIN IT IS HELD NO DIS ALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TDS ON PAYMENT / EXPENSES, WHEREIN THE PAYEE HAS OFFERED THIS AMOUNT TO TAX IN THEIR RETURN OF INCOME. H ONBLE DELHI HIGH COURT HELD THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AS INSERTED BY THE FINANCE ACT, 201 2 W.E.F1.4.2013 SHOULD BE TREATED AS CURATIVE AND TO HAVE RETROSPECTIVE EFFECT FROM 1.4.2005. WHEN THIS PLEA WAS CONFRONTED TO LD.DR , HE FAIRLY CONCEDED THAT THE ISSUE CAN BE REMITTED BACK TO THE FILE OF THE AO FOR VERIFICATION OF THE FACTS, WHETHER THE PAYEE HAS INCLUDED THE RECEIPTS IN THEIR RETURN OF IN COME OR NOT. WE FIND THAT THE 4 8880 /M/10 AND 7068 /M/13 CONCESSION GIVEN BY BOTH THE SIDES IS QUITE REASONABLE AND THE PLEA OF THE ASSESSEE AND THAT OF THE REVENUE THAT L ET BE AO EXAMINED WHETHER THE PAYEE HAS INCLUDE THE RECEIPTS IN ITS RETURN OF INCOME OR NOT. FOR THIS THE ASSESSEE WILL PRODUCE THE RELEVANT ASSESSMENT DETAILS OF THE PAYEE BEFORE THE AO. RESULTANTLY, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTI CAL PURPOSES. 5 . NOW, WE WILL DEAL WITH THE APPEAL OF THE ASSESSEE IN RESPECT OF PENALTY IMPOSED BY THE AO AND DELETED BY THE CIT(A). THE AO IMPOSED PENALTY ON THE ABOVE MENTIONED DISALLOWANCES AND THE CIT(A) DELETED THE SAME. NOW, THE REVENUE IS IN APPE AL BEFORE THE T RIBUNAL. 6 . WE FIND THAT THIS APPEAL HAS BECOME INFRUCTUOUS AND INCONSEQUEN TIAL AS QUANTUM APPEAL HAS BEEN RESTORED BACK TO THE FILE OF THE AO , HENCE THE PENALTY U/S 271(1)( C) OF THE ACT WILL NOT SURVIVE . 7 . IN THE RESULT, QUANTUM APPEA L OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE REVENUE REGARDING PENALTY IMPOSED U/S 271)(1) (C ) STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2ND JUNE , 201 6 SD SD ( RAJESH KUMAR) ( MAHAVIR SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 02 . 0 6 .2016 SR.PS:SRL: 5 8880 /M/10 AND 7068 /M/13 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE CO PY [ / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI