R.V.Chakrapani, Hyd, Hyderabad V. ACIT, Circle-6(1), Hyderabad

ITA 894/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69872 (ITAT-HYDERABAD)
• Duration Of Justice: 43 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2013
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKARA RAO
• Assessee Lawyers: INTURI RAMA RAO
• Keywords: Revision of order; Retrospective amendment; Question of law
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 894/HYD/2012 ASSESSMENT YEAR 2007-08 SRI R.V. CHAKRAPANI HYDERABAD PAN: ACBPR3853R VS. THE ASST. CIT CIRCLE-6(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI INTURI RAMA RAO RESPONDENT BY: SRI D. SUDHAKARA RAO DATE OF HEARING: 01.10.2013 DATE OF PRONOUNCEMENT: 01.10.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT-III, HYDERABAD DATED 30.3.2012 FOR A.Y. 2007 -08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: (1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX-ILL, HYDERABAD DATED 30 TH MARCH, 2012 PASSED U/S 263 OF THE IT ACT IS AGAINST THE LAW AND FACTS OF THE CASE. (2) THE COMMISSIONER OF INCOME TAX-ILL, HYDERABAD OUGHT NOT TO HAVE ASSUMED JURISDICTION U/S 263 IN AS MUCH AS THE SUBJECT MATTER OF 263 PROCEEDINGS WAS DULY CONSIDERED, EXAMINED ON BEING SATISFIED WITH THE EXPLANATION OFFERED BY THE APPELLANT, THE ASSESSING OFFICER HAD CHOSEN NOT TO MAKE ANY ADDITION IN RESPECT OF THOSE ITEMS. (3) THE LEARNED COMMISSIONER OF INCOME TAX-ILL, HYDERABAD OUGHT NOT TO HAVE ASSUMED JURISDICTION U/S 263 AS THE ORDER SOUGHT TO BE REVISED IS NOT ERRONEOUS AS THE ASSESSMENT ITA NO. 894/HYD/2012 SRI R.V. CHAKRAPANI ================== 2 ORDER WAS PASSED IN ACCORDANCE WITH THE LAW AND THE SAME CANNOT BE BRANDED AS ERRONEOUS SIMPLY BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX-ILL, HYDERABAD FELT THAT EXPENDITURE AMOUNT OF RS. 79,03,201 IS NOT ALLOWABLE BASED ON SURMISES, CONJECTURES WITHOUT BRINGING ANY FURTHER EVIDENCES ON RECORD. (4) THE LEARNED COMMISSIONER OF INCOME TAX-ILL, HYDERABAD OUGHT TO HAVE APPRECIATED THAT, SECTION 40(A)(IA) IS HAVING A RETROSPECTIVE APPLICATION SO THAT, REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. (5) THE LEARNED COMMISSIONER OF INCOME TAX-ILL, HYDERABAD OUGHT TO HAVE APPRECIATED THAT, THE DISALLOWANCE OF EXPENDITURE OF RS. 79,03,201/- IS NOT WARRANTED. (6) THE LEARNED COMMISSIONER OF INCOME-TAX-III, HYDERABAD DIRECTION TO THE ASSESSING OFFICER TO MODIFY THE ORDER PASSED U/S. 143(3) DATED 23 RD DECEMBER, 2009 BY DISALLOWING THE AMOUNT OF RS. 79,03,201 IS TO BE QUASHED. 3. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF SRI MADINENI MOHAN VS. ITO, SURYAPET IN ITA NO. 762/HYD /2012 ORDER DATED 31.5.2013. WHILE DECIDING THE ISSUE IN FAVOU R OF THE ASSESSEE, THE TRIBUNAL OBSERVED AS FOLLOWS: '7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS DEPOSITED THE TDS AMOUNT ON 29-9- 2005 AS THE ASSESSING OFFICER HIMSELF HAS MENTIONED THIS FACT IN THE ASSESSMENT ORDER. AN AMENDMENT WAS MADE TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 WHICH READS AS UNDER AFTER THE AFORESAID AMENDMENT SEC. 40(A)(IA) READS AS UNDER: ANY INTEREST, COMMISSION OR BROKERAGE, (RENT, ROYA LTY) FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT ITA NO. 894/HYD/2012 SRI R.V. CHAKRAPANI ================== 3 SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEE N DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN DEDUCTED OR AFTER DEDUCTING TAX HAS NOT BEEN PAID ON OR BEFORE DUE DATE SPECIFIED IN SEC. 139(1). THE HONBLE CALCUTTA HIGH COURT IN CASE OF CIT VS. VIRGIN CREATIONS IN JUDGMENT DATED 23-11-2011 IN IT A NO.302 OF 2011 GA 3200/2011 HELD THAT AMENDMENT TO THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 WOULD BE APPLICABLE RETROSPECTIVEL Y FROM 1-4-2005. FOLLOWING THE AFORESAID DECISION OF HONBLE CALCUTTA HIGH COURT, DIFFERENT BENCHES OF T HE TRIBUNAL HAVE ALSO HELD THAT THE AMENDMENT BROUGHT TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 WOULD APPLY RETROSPECTIVELY FROM 1-4-2005 AND IF AN ASSESSEE HA S DEPOSITED THE TDS AMOUNT BEFORE DUE DATE OF FILING OF RETURN U/S 139(1), NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT. THE ORDERS OF THE TRIBUNAL REL IED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE FOR T HE ASSESSEE ALSO ARE IN THE SIMILAR LINE. IN THE FACTS OF THE PRESENT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE HAS DEPOSITED TDS AMOUNT BEFORE THE DUE DATE OF FILING THE RETURN U/S 139(1) OF THE ACT. HENCE, IN VIEW OF THE RATIO LAID DOWN BY THE CALCUTTA HIGH COURT IN CASE OF CIT VS. VIRGIN CREATIONS (SUPRA) AND DECISIONS OF DIFFERENT BENCHES OF INCOME-TAX APPELLATE TRIBUNAL, WE HOLD TH AT THE ASSESSEE HAVING DEPOSITED TDS AMOUNT BEFORE THE DUE DATE OF FILING THE RETURN U/S 139(1) NO DISALLO WANCE CAN BE MADE BY INVOKING THE PROVISIONS CONTAINED U/ S 40(A)(IA) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 1,37,56,960/-.' 4. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORD ER OF THE CIT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. ADMITTEDLY, THE SAME ISSUE CAME BEFORE THIS TRIBUNAL IN THE CASE OF MADINENI MOHAN (CITED SUPRA) WHEREIN THE IS SUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. FURTHER, THE KA RNATAKA HIGH COURT IN THE CASE OF ITO VS. ANIL KUMAR & CO. (354 ITR 170) HELD AS FOLLOWS: 'IT IS NOT IN DISPUTE THAT ON THE DATE THE ASSESSEE DEDUCTED THE TAX, HE HAD NO PAY/REMIT THE MONEY ITA NO. 894/HYD/2012 SRI R.V. CHAKRAPANI ================== 4 WITHIN SEVEN DAYS FROM THAT DATE AND IF THE AMOUNT IS ACTUALLY PAID WHEN THE CREDIT IS GIVEN, THEN THE TA X IS PAYABLE WITHIN TWO MONTHS. IN THE INSTANT CASE, ASSESSEE DID NOT COMPLY WITH T HE LEGAL REQUIREMENT; THEREFORE, THE ASSESSING AUTHORITY WAS JUSTIFIED IN MAKING THE DISALLOWANCE, BUT ON TH E DATE THE APPEAL WAS FILED, THE SECTION CAME TO BE AMENDED, GIVING RETROSPECTIVE BENEFIT. THEREFORE, THE APPELLATE AUTHORITY EXTENDED THE BENEFIT OF THE AMENDED PROVISION AND HELD THAT THE DISALLOWANCE IS PAID AND THE ORDER HAS BEEN UPHELD BY THE TRIBUNAL. BY FINANCE ACT, 2008 WHICH IS GIVEN RETROSPECTIVE EFFECT FROM 1.4.2005, THE BENEFIT OF THAT PROVISION HAD BEEN EXTENDED TO THE ASSESSEE, THOUGH NO FAULT WAS FOUND WITH THE ASSESSMENT ORDER PASSED INITIALLY. WITH CHANGE OF LAW, WHEN THE EFFECT OF THE AMENDMENT IS TO GIVE BENEFIT TO THE ASSESSEE, THE APPELLATE AUTHORI TY AND THE TRIBUNAL WERE JUSTIFIED IN EXTENDING THE SAID BENEFIT. THUS, ORDER PASSED BY THE TRIBUNAL IS IN ACCORDANCE WITH LAW AND DOES NOT CALL FOR INTERFERE NCE. THEREFORE, THE SUBSTANTIAL QUESTION OF LAW IS ANSWE RED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 6. FURTHER, THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. J.K. CONSTRUCTION CO. IN TAX APPEAL NO. 706 OF 2010 HELD AS FOLLOWS: 'PLAINLY SPEAKING, ASSESSEE HAD TO MAKE DEDUCTION BEFORE 31 ST MARCH OF THE YEAR IN QUESTION AND AS LONG AS SUCH AMOUNTS WERE DEPOSITED BEFORE LAST DATE OF FIL ING OF THE RETURN, REQUIREMENTS OF LAW WOULD BE FULFILL ED. IT WAS ON THIS BASIS THAT TRIBUNAL WAS OF THE OPINION THAT THE ASSESSEE COMMITTED NO WRONG AND WAS, THEREFORE, ENTITLED TO SEEK DEDUCTION OF RS. 32,94,149/- FROM THE INCOME WHICH AMOUNT THE ASSESSEE HAD DEDUCTED FROM PAYMENTS OF CONTRACTORS AND HAD ALSO DEPOSITED WITH REVENUE BEFORE THE LAST DATE OF FILING OF THE RETUR N. WE DO NOT FIND ANY ILLEGALITY IN ORDER OF TRIBUNAL. T AX APPEAL IS THEREFORE, DISMISSED.' 7. FURTHER, THIS TRIBUNAL IN THE CASE OF DCIT VS. M/S. LIQUIDZ INDIA PVT. LTD. IN ITA NO. 835/HYD/2013 ORDER DATED 28.8.2013 HELD AS FOLLOWS: ITA NO. 894/HYD/2012 SRI R.V. CHAKRAPANI ================== 5 '7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS GONE THROUGH THE ORD ERS OF THE AUTHORITIES BELOW. AS HELD BY THE DELHI HIGH COURT IN THE CASE OF CIT VS. RAJINDER KUMAR IN INCO ME TAX APPEAL NO. 65/2013 DATED 1 ST JULY, 2013, THE IMPUGNED AMENDMENT TO SECTION 40(A)(IA) PERMITS REMITTANCE OF TDS TO THE CENTRAL GOVERNMENT ACCOUNT ON OR BEFORE THE DUE DATE OF FILING RETURN OF INCOM E U/S. 139(1) OF THE ACT IS RETROSPECTIVE IN NATURE. SAME V IEW HAS BEEN TAKEN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PEC ELECTRICALS PVT. LTD., IN ITA NO . 263 OF 2013 DATED 12.7.2013. THE ASSESSEE IN PRESENT CA SE PAID THE TDS TO THE CENTRAL GOVERNMENT ACCOUNT BEFORE FILING THE RETURN OF INCOME AND THE SAME IS TO BE ALLOWED AS HELD BY THE ABOVE JUDGEMENTS. ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE C IT(A) IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADD ITION MADE U/S 40(A)(IA) OF THE ACT AND, THEREFORE, THE OR DER OF THE CIT(A) IS HEREBY UPHELD ON THIS COUNT. THIS GROUND RAISED BY THE REVENUE IN THIS REGARD IS DISMISSED.' 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE INCLINED TO HOLD THAT WHEN THE ASSESSEE, THOUGH DEDUCTED TDS BEFORE 31 ST MARCH OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR AND P AID THE SAME IN TO THE CENTRAL GOVERNMENT ACCOUNT BEFORE THE DUE DAT E OF FILING OF RETURN OF INCOME, THE EXPENDITURE CANNOT BE DISALLO WED U/S. 40(A)(IA) OF THE ACT. IN THE PRESENT CASE, THERE IS NO DISPUT E REGARDING THE PAYMENT OF TDS AMOUNT IN TO THE CENTRAL GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME OF THE ASSESSEE. BEING SO, EXERCISING THE POWER U/S. 263 OF THE ACT B Y THE CIT ON THIS ISSUE IS NOT JUSTIFIED. ACCORDINGLY, THE GROUNDS RAI SED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER, 2013 SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 1 ST OCTOBER, 2013 TPRAO ITA NO. 894/HYD/2012 SRI R.V. CHAKRAPANI ================== 6 COPY FORWARDED TO: 1. SRI R.V. CHAKRAPANI, C/O. P.R. DATLA & CO., CHARTERE D ACCOUNTANTS, 6-3-788/A/9, FIRST FLOOR, DURGA NAGAR, AMEERPET, HYDERABAD-500 016. 2. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 6(1), HYDERABAD. 3. THE CIT - III, HYDERABAD. 4. THE ADDL. CIT, RANGE - 6, HYDERABAD. 5 . THE DR 'B' BENCH, ITAT, HYDERABAD