ITO, Wd -1(4), Nashik, Nashik V. Sanjay Digamber Malve, Nashik

ITA 95/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67080 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 95/PN/2012 (ASSESSMENT YEAR 2006-07) ITO, WARD-1(4), NASHIK .. APPELLANT VS. SANJAY DIGAMBER MALVE, 4A, PLEASANR PARK, PUMPING STATION ROAD, GANGAPUR ROAD, NASHIK PAN NO.AFTPM 5169A .. RESPONDENT APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : NONE DATE OF HEARING : 27-06-2013 DATE OF PRONOUNCEMENT : 28-06-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 11-11-2011 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2006-07. 2. THIS APPEAL WAS FIXED FOR HEARING ON 25-03-2013 AND WAS GETTING ADJOURNED FROM TIME TO TIME DUE TO NON-APPEARANCE O F THE ASSESSEE. IT WAS FIXED FOR HEARING TODAY, I.E. ON 27-06-2013 AND NOBODY APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, THIS MATTER IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEA RING THE LD. DEPARTMENTAL REPRESENTATIVE. 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, D EVELOPERS AND BUILDERS. HE FILED HIS RETURN OF INCOME ON 23-10-2 006 DECLARING TOTAL INCOME OF RS.22,36,130/-. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE DETAILS IN RESPECT OF COMPLIANCE WITH THE PROVISIONS OF TAX DEDUCTED A T SOURCE UNDER CHAPTER XVIIB OF THE I.T. ACT. THE ASSESSEE SUBMIT TED THE CHALLANS OF TDS PAYMENTS AND DEPOSITS OF THE SAME TO THE ACCOUN T OF THE GOVERNMENT. FROM THE VARIOUS DETAILS SUBMITTED BY THE ASSESSEE THE ASSESSING OFFICER NOTED THAT CERTAIN PAYMENTS DEPOS ITED TO THE CREDIT OF THE GOVERNMENT ON ACCOUNT OF TDS ARE AFTER THE END OF THE F.Y. 2005- 06. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY TH E ASSESSEE THE ASSESSING OFFICER MADE ADDITION OF RS.2,06,67,737/- U/S.40(A)(IA) OF THE I.T. ACT. 4. IN APPEAL THE LD. CIT(A) DECIDED THE ISSUE AGAIN ST THE ASSESSEE. ON FURTHER APPEAL THE TRIBUNAL RESTORED THE ISSUE B ACK TO THE FILE OF THE CIT(A) WITH CERTAIN DIRECTIONS. AFTER THE MATTER W AS SET-ASIDE BY THE TRIBUNAL, THE CIT(A) NOTED THAT AN AMOUNT OF RS.1,2 9,33,659/- ON ACCOUNT OF LABOUR CHARGES WAS PAID BY FEBRUARY 2006 AND ONLY RS.4,73,049/- REMAINED PAYABLE IN FEBRUARY 2006. S IMILARLY, IN THE CASE OF TRANSPORTATION CHARGES RS.5,43,05,573/- WAS PAID TILL FEBRUARY 2006 AND RS.6,14,363/- WAS PAYABLE IN MARCH 2006. SIMIL ARLY, NO AMOUNT ON ACCOUNT OF ARCHITECT FEE WAS PAYABLE IN FEBRUARY 20 06. RELYING ON THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CAS E OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT, THE DECISION OF THE HYD ERABAD BENCH OF THE TRIBUNAL IN THE CASE OF TEJA CONSTRUCTIONS VS. ACIT REPORTED IN 5 3 TAXMANN.COM 61 AND THE DECISION OF THE PUNE BENCH O F THE TRIBUNAL IN THE CASE OF SANAP AGRO ANIMALS PVT. LTD HE HELD THA T PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE IN CASE OF AMOUNTS PAYABLE AND NOT IN RESPECT OF THE PAYMENTS ALREADY MADE. HE ACCORDING LY HELD THAT AMOUNTS PAYABLE BY THE ASSESSEE TILL FEBRUARY FOR WHICH TDS WAS TO BE DEDUCTED AND DEPOSITED BEFORE THE LAST DATE OF THE PRECEDING YEAR WILL NOT BE HIT BY PROVISIONS OF SECTION 40(A)(IA). AMOUNTS PAYABLE I N FEBRUARY 2006, I.E. RS.41,13,049/- ON ACCOUNT OF LABOUR CHARGES AND RS. 61,436/- ON ACCOUNT OF TRANSPORTATION CHARGES WILL ONLY BE DISALLOWED U /S.40(A)(IA). SINCE THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.83,06,455/- AND RS.19,27,981/- AS PAYABLE ON 31-03-2006 ON ACCOUNT OF LABOUR CHARGES AND TRANSPORTATION CHARGES RESPECTIVELY, AND SINCE THE ASSESSEE HAS P AID TDS ON THESE PAYMENTS BEFORE THE DUE DATE OF FILING OF THE RETUR N U/S.139(1) OF THE ACT, THEREFORE, NO DISALLOWANCE IS REQUIRED TO BE MADE U /S.40(A)(IA). THUS, HE SUSTAINED ONLY AN AMOUNT OF RS.5,34,485/- OUT OF TH E DISALLOWANCE OF RS.2,06,67,737/-. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1 . IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE AMOUNTS PAID O F RS1,29,33,659/- ON ACCOUNT OF LABOUR CHARGES AND TRANSPORT CHARGES OF RS54,30, 557/- BY THE ASSESSEE TILL FEBRUARY 2006 FOR WHICH TDS WAS TO BE DEDUCTED & DE POSITED BEFORE THE LAST DAY OF THE PREVIOUS YEAR (MARCH 2006), WILL NOT BE HIT BY PROVISIONS OF SECTION 40A(IA). 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE & IN LAW, THE CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE AMOUNTS PAYABL E ON 31.03.2006 OF RS.83,06,455/- & RS.19,27,981/- ON ACCOUNT OF LABOU R CHARGES & AS TDS WAS PAID BEFORE DUE DATE OF FILING RETURN U/S 139(1), T HESE LABOUR CHARGES PAYABLE DOES NOT REQUIRE DISALLOWANCE U/S 40A(IA). 4 3. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE & IN LAW, THE CIT(A) IS NOT JUSTIFIED IN GIVING FINDING THAT THE DISALLOWANCE U/S 40A(IA) IS TO THE EXTENT OF RS.5,34,485/- ONLY AS AGAINST DISALLO WANCE MADE BY THE AO AT RS.2,06,67,737/- AND ADMITTED BY THE ASSESSEE HIMSE LF AT RS.1,97,29,967/- BEFORE CIT(A)'S PREDECESSOR IN APPELLATE PROCEEDING S IN ORDER DT 16.9.2009. 4. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE & IN LAW, THE CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE AMOUNTS PAID BY THE ASSESSEE TILL FEBRUARY 2006 FOR WHICH TDS WAS TO BE DEDUCTED & DE POSITED BEFORE THE LAST DAY OF THE PREVIOUS YEAR I.E. 31/3/2006, AS AGAINST THE PROVISIONS OF RULE 30(2)(B) OF THE INCOME TAX RULES THE TDS IS TO BE D EDUCTED & DEPOSITED TO THE CREDIT OF CENTRAL GOVT. ON OR BEFORE SEVEN DAYS FROM THE END OF THE MONTH IN WHICH THE DEDUCTION IS MADE & THE ASSESSEE DEPOS ITED THE SAID TDS ONLY ON 15.5.2006 AND 21.7.2006 & AS SUCH FOR FAILURE TO DEPOSIT THE TDS , THE DISALLOWANCE U/S 40A(IA) MADE BY THE AO WAS CORRECT . 5. THE WORDS IN SECTION 40A(IA)......... 'OR AMOUN TS PAYABLE' .........'ON WHICH TAX IS DEDUCTIBLE AT SOURCE'.... ......MEANS A SUM FOR WHICH THE ASSESSEE INCURRED LIABILITY IN THE PREVIOUS YEAR EV EN THOUGH SUCH SUM MIGHT NOT HAVE BEEN PAYABLE WITHIN THAT YEAR UNDER THE RE LEVANT LAW & FAILURE TO MAKE TDS OR PAY THE TDS TO THE CREDIT OF CENTRAL GO VT. WILL ATTRACT DISALLOWANCE U/S.40(A)(IA). AS SUCH, THE CIT(A) HA S FAILED TO CORRECTLY JUDGE, THE APPLICATION OF PROVISIONS OF SECTION 40(A)(IA) BY THE AO. 6. THE TITLE OF SECTION 40 IS AMOUNTS NOT DEDUCTI BLE & IT INCLUDES THE AMOUNTS MENTIONED IN SUB-SECTION (A) T O (D) TO SECTION 40 WHICH INCLUDES AMOUNTS PAYABLE ANY SUM PAID, ANY PAYM ENT WHICH IS CHARGEABLE IN SUB-SECTION A(IA), A(IC), A(III) TO SECTION 40 ETC. WHICH INDICATE THAT THE PROVISIONS OF SECTION 40 ARE INCLUSIVE & B ROADER COVERING ALL SUCH AMOUNTS NOT TO BE DEDUCTED & THEREFORE THE CIT(A) W AS NOT JUSTIFIED IN APPLYING THE DECISION OF JAIPUR ITAT BENCH IN THE C ASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. 7. THE ORDER OF CIT(A) BE VACATED AND THE ORDER OF AO MAY PLEASE BE RESTORED. 6. WE HAVE CONSIDERED THE ORDER OF THE ASSESSING OF FICER AND THE CIT(A) AND HEARD THE LD. DEPARTMENTAL REPRESENTATIV E. WE FIND THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE REPORTED IN 33 TAXMANN.COM 250 HAS HELD T HAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE NOT ONLY TO THE AMOUNTS WHICH IS SHOWN AS PAYABLE ON THE DATE OF BALANCE SHEET, BUT IS APPLICABLE TO SUCH EXPENDITURE, WHICH BECOME PAYABLE AT ANY TIME DURIN G THE RELEVANT PREVIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREV IOUS YEAR. 5 6.1 SIMILARLY, THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS. SIKANDARKHAN N. TUNVAR REPORTED IN 33 TAXMANN.COM 1 33 HAS HELD THAT SECTION 40(A) (IA) WOULD COVER NOT ONLY TO THE AMOU NTS WHICH ARE PAYABLE AS ON 31ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH A RE PAYABLE AT ANY TIME DURING THE YEAR. THE TERM USED IS INTEREST, COMMISS ION, BROKERAGE ETC. IS PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTR ACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY WORK. THE LANGUAGE USED IS NOT THA T SUCH AMOUNT MUST CONTINUE TO REMAIN PAYABLE TILL THE END OF THE ACCO UNTING YEAR. ANY SUCH INTERPRETATION WOULD REQUIRE READING WORDS WHICH TH E LEGISLATURE HAS NOT USED AND IS NOT ACCEPTABLE. 6.2 SINCE THE ABOVE DECISIONS WERE NOT AVAILABLE BE FORE THE LD. CIT(A) WHILE DECIDING THE APPEAL WHO HAS FOLLOWED C ERTAIN TRIBUNAL DECISIONS, THEREFORE, WE IN THE INTEREST OF JUSTICE , DEEM IT PROPER TO RESTORE THE ISSUE TO HIS FILE FOR DECIDING THE ISSU E AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GRO UNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF JUNE 2013 . SD/- SD/- (R.S. PADVEKAR) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED: 28 TH JUNE 2013 SATISH 6 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, NASHIK 4 CIT-II, NASHIK 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE