M/s. SRS Imports & Exports, Tuticorin V. DCIT, Tuticorin

ITA 956/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61263 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR
• Assessee Lawyers: N DEVANATHAN
• Section: 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER .. ITA NO.956 /MDS/2012 ASSESSMENT YEAR: 2007-08 M/S. SRS IMPORT & EXPORT, 7, I FLOOR, SOUTH RAJA STREET, TUTICORIN-628 001. V. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-I, TUTICORIN. PAN : AAFFS6233C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. DEVANATHAN, ADVOCATE RESPONDENT BY : SHRI G. NANTHAKUMAR, JCIT DATE OF HEARING : 05.07.2012 DATE OF PRONOUNCEMENT : 13.0 7.2012 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IS AGAINST THE ORDER PASSED UNDER SECTION 2 63 OF THE INCOME TAX ACT, 1961 BY THE LEARNED CIT-I, MADURAI DATED 01- 02-2012. 2. FACTS IN BRIEF ARE THAT THE PRESENT APPEAL IS FI LED BY THE ASSESSEE BEFORE US QUESTIONING THE NOTICE ISSUED BY THE CIT ITA.956 /MDS/2012 2 WHILE EXERCISING HIS POWERS CONFERRED U/S 263 OF TH E INCOME TAX ACT, 1961 (THE ACT FOR SHORT). THE CIT ISSUE D A NOTICE TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS DE DUCTED AN AMOUNT OF RS.32,29,987/- AND PAID TO THE GOVERNMENT ACCOUNT AFTER DUE DATE SPECIFIED U/S 200(1) OF THE ACT. TH E ASSESSEE HAS PAID THE TDS DEDUCTED AMOUNT TO THE GOVERNMENT ACCOUNT BELATEDLY AND HENCE THE BELATED PAYMENT OF RS. 32,29,987/- IS NOT ALLOWABLE IN THE ASSESSMENT YEAR 2007-08 AND CALLED FOR THE EXPLANATION FROM THE ASSESSEE. IT WAS SUBMITTED BY THE LEARNED COUNSEL AT THE TIME OF HEA RING THAT THE VERY ISSUE OF NOTICE BY THE CIT EXERCISING POWE R U/S 263 OF THE ACT WAS VOID AB INITIO ON THE GROUND THAT THE NOTICE WAS ISSUED BY THE CIT ON 05-12-2011. BEFORE THAT ON 23 -11-2011 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS, REPORTED IN 2012-TIOL-181-HC-KOL-IT, HAS CONSIDERED THE VERY ISSUE INVOLVED IN THIS APPEAL I .E. SECTION 40(A)(IA) OF THE ACT HAS RETROSPECTIVE OPERATION OR NOT AND HELD THAT SECTION 40(A)(IA) HAS RETROSPECTIVE OPERA TION EVEN IF THE ASSESSEE DEPOSITS THE AMOUNT TO THE GOVERNMENT ACCOUNT OF THE TDS AMOUNT DEDUCTED BEFORE THE DUE DATE OF F ILING OF THE RETURN. THE ASSESSEE DEPOSITED THE DEDUCTED TD S BEFORE ITA.956 /MDS/2012 3 THE DUE DATE OF FILING THE RETURN OF INCOME AND THE ORDER PASSED BY THE AO IS IN CONFORMITY WITH THE DECISION OF THE HONBLE CALCUTTA HIGH COURT. THERE IS NO ERROR IN THE ORDER PASSED BY THE AO. 3. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT EVEN ON MERITS THE VERY SAME ISSUE WAS CONSIDE RED BY THE TRIBUNAL IN ITA NO. 325/MDS/2012 DATED 14-05-2012 A ND HELD THAT NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) ON T HE GROUND OF BELATED PAYMENT OF TDS DEDUCTED IF IT IS PAID BE FORE THE DUE DATE OF FILING OF THE RETURN. ON THE OTHER HA ND, THE LEARNED DR RELIED ON THE ORDER OF THE AO. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED CIT WHILE EXERCISING THE POWER U/S 263 OF THE ACT I SSUED A NOTICE DATED 05-12-2011 ON THE GROUND THAT THE ASSE SSEE PAID THE TDS AMOUNT DEDUCTED TO THE GOVERNMENT ACCOUNT BELATEDLY. HENCE THE BELATED PAYMENT OF RS. 32,29, 987/- MAY BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. AS PER T HE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE TD S DEDUCTED AMOUNT IS TO BE PAID TO THE GOVERNMENT ACCOUNT WITH IN THE ITA.956 /MDS/2012 4 TIME PRESCRIBED BY SECTION 200(1) OF THE ACT. THE VERY SAME ISSUE HAS COME BEFORE THE HONBLE CALCUTTA HIGH COU RT IN THE CASE OF VIRGIN CREATIONS (SUPRA), WHEREIN THE HONB LE HIGH COURT HAS CONSIDERED THE ISSUE AS UNDER : IT IS ARGUED BY MR. NIZAMUDDIN THAT THIS COURT NEEDS TO TAKE DECISION AS TO WHETHER SECTION 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEEN THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAME WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. MOREVER, THE SUPREME COURT, AS HAS BEEN RECORDED BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT., LTD. AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD., HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT ITA.956 /MDS/2012 5 REASONABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT SEC. 40(A)(IA) HAS RETROSPECTIVE APPLICATION BY ORDER DATED 23-11- 2011. THE NOTICE WAS ISSUED BY THE CIT DATED 05-12-2011, MUCH AFTER THE DECISION OF THE HONBLE CALCUTTA HIGH COURT, AN D THE ASSESSEE DEPOSITED THE TDS COLLECTED AMOUNT BEFORE FILING THE RETURN OF INCOME. THE VERY SAME ISSUE WAS CONSIDER ED BY THE TRIBUNAL IN THE CASE OF ACIT V. M/S. TRV GLOBAL TRA DING IN ITA NO. 325/MDS/2012 DATED 14-05-2012 ON MERITS AND HEL D THAT, 3. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS IN 2012-TIOL- 181-HC-KOL-IT HAS HELD THAT THE RELEVANT AMENDMENT BROUGHT INTO THE STATUTE IS RETROSPECTIVE AND THEREFORE, ALL SUCH PAYMENTS OF TDS MADE BEFORE DUE DATE OF FILING OF THE RETURN WOULD BE OUTSIDE THE PURVIEW OF APPLICABILITY OF SEC. 40(A)(IA). EVEN THOUGH, THE TRIBUNAL, MUMBAI SPECIAL BENCH IN THE CASE OF BHARTI SHIPYARD LTD. V. DCIT (132 ITD 53) HAD HELD AGAINST THE ASSESSEE ON THIS ISSUE, THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IS IN FAVOUR OF THE ASSESSEE. THEREFORE, WE HAVE TO FOLLOW THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT ITA.956 /MDS/2012 6 RATHER THAN THE DECISION OF THE TRIBUNAL, MUMBAI SPECIAL BENCH. ACCORDINGLY, WE HOLD THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SEC. 40(A)(IA). IN VIEW OF THE ABOVE, IT CANNOT BE SAID THAT THE OR DER PASSED BY THE AO IS ERRONEOUS. WE, THEREFORE, CANCEL THE ORDER PASSED BY THE LEARNED CIT UNDER SECTION 263 OF THE ACT. THIS GROUND OF APPEAL BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 13-07- 2012. SD/- SD/- (ABRAHAM P. GEORGE) ( V.DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 13 TH JULY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE