Manmandir Enterprises, Bangalore V. ITO, Bangalore

ITA 963/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60768 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 31-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAVANAN V
• Assessee Lawyers: H N KHINCHA
• Keywords: Retrospective amendment
• Section: 194C; 154

Judgement Text

ITA.963/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER I.T.A NO.963/BANG/2011 (ASSESSMENT YEAR : 2005-06) M/S. MANMANDIR ENTERPRISES, NO.36 & 7. II FLOOR, SVS COMPLEX, PILLAPPA LANE, NAGARATHPET CROSS, BANGALORE 560 002 .. APPELLANT PAN : AABFM6707B V. INCOME-TAX OFFICER, WARD -5(1), BANGALORE .. RESPONDENT APPELLANT BY : SHRI. H. N. KHINCHA, CA RESPONDENT BY : SHRI. SARAVANAN. V, JCIT DATE OF HEARING : 04.07.2012 DATE OF PRONOUNCEMENT : 04.07.2012 O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE, M/S. MANMANDIR ENTERPRISES, BANGALORE, FOR THE ASSESSMENT YEAR 2005-06, AGAINST THE APPELLATE ORDER DATED.14.09.2011 OF THE CIT(A)-II, BANGALORE. ITA.963/BANG/2011 PAGE - 2 02. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS : I) THE LEARNED AO HAD ERRED IN PASSING THE IMPUGNED ORDER U/S.154 OF THE IT ACT, 1961 AND THE LEARNED CIT HAD ERRED IN CONFIRMING THE SAME. II) THERE WAS NO MISTAKE APPARENT FROM RECORD NEEDI NG RECTIFICATION. THE ORDER PASSED IS BAD IN LAW AND IS LIABLE TO BE QUASHED. III) IN ANY CASE AND WITHOUT PREJUDICE, THE AUTHORI TIES BELOW HAVE ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 40( A)(IA) OF THE IT ACT, 1961 ARE ATTRACTED TO THE CASE OF THE APPELLAN T. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, DISALLOWANCE U/S.40( A)(IA) IS NOT VOLUNTARILY AND THE ADDITION AS MADE AND CONFIRMED IS TO BE DELETED. 03. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TEXTILES. FOR THE ASSES SMENT YEAR 2005-06 THE ASSESSEE FILED RETURN OF INCOME ON 31.10.2005 DECLA RING TOTAL INCOME OF RS.1,13,729/-. THE RETURN WAS PROCESSED U/S.143(1) AND LATER THE CASE WAS SELECTED FOR SCRUTINY AND AFTER DETAILED DISCUSSION S AN ORDER U/S.143(3) DT.14.09.2007 WAS PASSED ASSESSING THE TOTAL INCOME AT RS.1,42,550/- MAKING AN ADDITION OF RS.28,815/- TOWARDS INADMISSIBLE EXP ENSES. LATER ON THE AO INVOKED SECTION 154 AND SENT A NOTICE TO THE ASSESS EE. AFTER HEARING THE ASSESSEE, ORDER U/S.154 OF THE ACT WAS PASSED, WHER EIN ADDITION OF RS.6,46,690/- WAS MADE AS DISALLOWANCE U/S.40(A)(IA ) OF THE ACT. DURING THE ITA.963/BANG/2011 PAGE - 3 PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE ASSESSEE HAD MADE PAYMENT TO VARIOUS PARTIES FOR JOB WORKS ON WHICH T AX WAS DEDUCTED AT SOURCE IN THE MONTH OF MARCH, 2005 ONLY. THE TAX T HAT WAS DEDUCTED ON 31.03.2005 WAS REMITTED TO GOVERNMENT ACCOUNT ON 10 .05.2005. HOWEVER, THE AO HAS DISALLOWED PAYMENTS TOTALING TO RS.6,46, 690/- U/S.40(A)(IA), CITING REFERENCE TO THE AMOUNT REPORTED IN THE AUDI TORS REPORT. AGGRIEVED BY THIS ORDER OF THE AO, THE ASSESSEE MOVED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY. 04. BEFORE THE FIRST APPELLATE AUTHORITY, TWO GROU NDS WERE RAISED, NAMELY, ONE REGARDING INVOKING OF SECTION 154 WAS B AD IN LAW AND THE OTHER REGARDING INVOKING OF SECTION 40(A)(IA) TO DISALLOW RS.6,46,690/- WAS NOT CORRECT. THE LEARNED CIT(A) HELD THAT ACTION U/S.1 54 WAS IN ORDER. AS REGARDS THE MERITS OF DISALLOWANCE U/S.40(A)(IA), T HE CIT(A) FOLLOWING THE DECISION OF THE SPECIAL BENCH B OF THE ITAT, MUMB AI IN THE CASE OF M/S. BHARATI SHIPYARD LTD V. DCIT IN 2011- TOIL-560-ITAT -MUM SB, UPHELD THE ACTION OF THE AO. STILL AGGRIEVED THE ASSESSEE IS ON SECOND APPEAL BEFORE US WITH THE GROUNDS OF APPEAL EXTRACTED ELSEWHERE I N THIS ORDER. 05. BEFORE US ALSO, THE ASSESSEE HAS TAKEN GROUNDS RELATING TO SECTION 154 AND DISALLOWANCE U/S.40(A)(IA) ON MERITS. LET US FIRST TAKE UP THE ISSUE ITA.963/BANG/2011 PAGE - 4 ON MERIT U/S.40(A)(IA) OF THE IT ACT. FROM THE FAC TS ALREADY NARRATED ELSEWHERE IN THIS ORDER, IT IS CLEAR THAT THE ASSES SEE HAS DEDUCTED TAX AT SOURCE IN THE MONTH OF MARCH, 2005 ONLY AND THE TAX THAT W AS DEDUCTED WAS REMITTED TO THE GOVERNMENT ACCOUNT ON 10.05.2005, W ITHIN THE TIME PRESCRIBED FOR FILING THE RETURN OF INCOME. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE PLACED A DECISION OF THIS TRIBUNAL IN THE CASE OF M. K. GURUMURTHY IN ITA NO.717/BANG/2011, DT.10.05.201 2, FOR THE ASSESSMENT YEAR 2008-09 AND SUBMITTED THAT SIMILAR ISSUE WAS CONSIDERED BY THE SAID ORDER OF THE TRIBUNAL AND THE DEPARTMENTAL APPEAL WAS DISMISSED. 06. WE HAVE ALSO HEARD THE LEARNED DR AND CONSIDER ED THE FACTS OF THE CASE ON RECORD, INCLUDING THE DECISION OF THE TRIBU NAL CITED SUPRA. IN THE SAID DECISION, THE TRIBUNAL HAS DISMISSED THE REVEN UES APPEAL BY OBSERVING AS UNDER : 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THAT THE AS SESSEE DEDUCTED TDS WHICH WAS NOT PAID TO THE ACCOUNT OF CENTRAL GO VT. WITHIN THE PRESCRIBED TIME, HOWEVER, IT WAS PAID BEFORE THE DU E DATE OF FILING THE RETURN SPECIFIED IN SECTION 139(1) OF THE ACT. ON A SIMILAR ISSUE, THE HONBLE CALCUTTA HIGH COURT HELD THAT AMENDMENT IN SEC. 40(A)(IA) IS HAVING RETROSPECTIVE OPERATION AND UPH ELD THE ORDER OF THE ITAT IN THE CASE OF CIT V. VIRGIN CREATIONS, IT A NO.302 OF ITA.963/BANG/2011 PAGE - 5 2011, JUDGMENT DATED 23.11.2011, COPY OF WHICH IS P LACED AT PAGES 15 AND 16 OF THE ASSESSEES COMPILATION, BY OBSERVI NG AS UNDER:- THE LEARNED TRIBUNAL ON FACT FOUND THAT THE ASSESS EE HAD DEDUCTED TAX AT SOURCE FROM THE PAID CHARGES BETWEE N THE PERIOD APRIL 1, 2005 AND APRIL 28, 2006 AND THE SAM E WERE PAID BY THE ASSESSEE IN JULY AND AUGUST 2006, I.E. WELL BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION. THIS FACTUAL POSITION WAS UNDISPUTED. 12. ALTHOUGH THE AFORESAID JUDGMENT WAS RELATING TO THE ISSUE AS TO WHETHER THE AMENDMENT IN SECTION 40(A)(IA) WAS HAVI NG RETROSPECTIVE EFFECT OR NOT, BUT FROM THE RATIO LAI D DOWN IN THE SAID CASE, IT IS CLEAR THAT ADDITION U/S. 40(A)(IA) OF T HE ACT CANNOT BE MADE IF THE PAYMENT OF TAX DEDUCTED AT SOURCE HAS B EEN MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IN THE PRESENT CASE, PAYMENT OF THE TDS HAS BEEN MADE BEFORE THE DUE DATE FOR FILING OF THE RETURN U /S. 139(1) OF THE ACT, THEREFORE THE LD. CIT(A) WAS FULLY JUSTIFIED I N DELETING THE ADDITION MADE BY THE AO BY FOLLOWING THE DECISION O F THE ITAT MUMBAI BENCH IN THE CASE OF BAPUSAHEB NANASAHEB DHU MAL V. ACIT, [2010] 40 SOT 361 (MUM) WHEREIN IT HAS BEEN H ELD AS UNDER: THE CONTROVERSY IN THE INSTANT CASE REVOLVED AROUN D THE APPLICABILITY OF THE PROVISIONS OF SECTION 194C WHI LE DISALLOWING THE EXPENDITURE UNDER THE PROVISION OF SECTION ITA.963/BANG/2011 PAGE - 6 40(A)(IA). IT WAS UNDISPUTED FACT THAT THE ASSESSEE MADE THE PAYMENT TO THE SUBCONTRACTOR DURING THE PREVIOUS YE AR BUT THE TAX WAS DEDUCTED ONLY ON 31-3-2005. THE ASSESSING O FFICER HAD ALREADY ALLOWED THE DEDUCTION IN RESPECT OF PAYMENT MADE DURING THE MONTH OF MARCH, 2005 BUT DISALLOWED THE DEDUCTION IN RESPECT OF THE PAYMENT WHICH WAS CREDITED AND MA DE DURING THE PERIOD OTHER THAN THE MONTH OF MARCH, 2005. NO DOUBT THAT AS PER THE PROVISIONS OF CHAPTER XVII-B AND PARTICU LARLY SECTION 194C AS THE PAYMENT UNDER CONSIDERATION WAS COVERED UNDER THE PROVISIONS OF SECTION 194C, TAX HAD TO BE DEDUCTED AT THE TIME OF PAYMENT OR CREDIT OF SUCH SUM IN WHICH THE TAX WAS DEDUCTED WITHIN 7DAYS FROM THE END OF THE MONTH AND HAD TO BE DEPOSITED WITH THE GOVERNMENT WITHIN THE PERIOD PRE SCRIBED UNDER SECTION 194C. IN CASE OF FAILURE OF DEDUCTION OF TAX AND/OR DEPOSITING THE SAME AS PER THE PROVISIONS OF SECTION 194C OR THE PROVISIONS OF CHAPTER XVII AS THE CASE MAY BE, THE ASSESSEE HAD TO FACE THE CONSEQUENCES AS PROVIDED U NDER THE SAID CHAPTER XVII OF THE ACT BY ATTRACTING THE PENA LTY OR INTEREST. THE PROVISIONS OF SECTION 40(A)(IA) ARE I N ADDITION TO THE PROVISIONS OF CHAPTER XVII AS WELL AS CHAPTER X XII TO ENSURE THE DEDUCTION AND DEPOSIT OF TDS. AS PER SU B-CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WHEN TAX IS DEDUCT IBLE AT SOURCE ON THE PAYMENT UNDER CHAPTER XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID THEN THE SAID DEDUCTION IS NOT ALLOWABLE. AS PER CLAUSE (A) OF PR OVISO TO CLAUSE (A)(IA), IF THE TAX IS DEDUCTED DURING THE L AST MONTH OF PREVIOUS YEAR AND PAID ON OR BEFORE THE DUE DATE OF FILING OF ITA.963/BANG/2011 PAGE - 7 RETURN AS PER THE PROVISIONS OF SECTION 139(1), THE N SUCH SUM SHALL BE ALLOWED AS DEDUCTION. IN THE CASES WHERE T HE TAX IS DEDUCTED DURING PREVIOUS YEAR OTHER THAN THE LAST M ONTH OF PREVIOUS YEAR BUT IS DEPOSITED BEFORE THE LAST DAY OF PREVIOUS YEAR THEN IT WILL BE ALLOWED AS DEDUCTION. THEREFOR E, THE CONDITION FOR ALLOWABILITY OF DEDUCTION IS PRESCRIB ED UNDER SECTION 40(A)(IA) ITSELF AND PROVISIONS OF CHAPTER XVII AND SECTION 194C UNDER CHAPTER XVII-B ARE RELEVANT ONLY FOR PURPOSES OF ASCERTAINING DEDUCTIBILITY OF TAX ON PA YMENT. ONCE, THE NATURE OF PAYMENT IS FALLING UNDER THE PROVISIO NS OF CHAPTER XVII/VII-B THEN DISALLOWANCE UNDER SECTION 40(A)(IA ) SHALL BE AS PER CONDITION AS PROVIDED UNDER THIS SECTION ITS ELF. THE PROVISO TO SECTION 40(A)(IA) MAKES IT FURTHER CLEAR THAT EVEN IN THE CASE WHEN THE TAX HAS BEEN DEDUCTIBLE AS PER TH E PROVISIONS OF CHAPTER XVII BUT DEDUCTED IN THE SUBSEQUENT YEAR OR DEDUCTED DURING THE LAST MONTH OF PREVIOUS YEAR BUT PAID AFTER THE DUE DATE UNDER SECTION 139(1) OR DEDUCTED DURIN G THE OTHER MONTH OF THE PREVIOUS YEAR EXCEPT LAST MONTH BUT PA ID AFTER THE END OF THE SAID PREVIOUS YEAR, THEN THE SAID SUM SH ALL NOT BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR BUT ALLOWED IN THE PREVIOUS YEAR IN WHICH THE SAID TAX HAS BEEN PAID. IF THE CONDITION OF DEDUCTION AND PAYMEN T PRESCRIBED UNDER CHAPTER XVII/XVII-B ARE APPLICABLE FOR DISALL OWANCE OF THE DEDUCTION UNDER SECTION 40(A)(IA) THEN THE PROV ISIONS OF SECTION 40(A)(IA) WILL BE RENDERED AS MEANINGLESS, ABSURD AND ETIOSE. AS PER THE PROVISIONS OF SECTION 40(A)(IA), THE DEDUCTION IS DISALLOWED ONLY IN THE CASE WHEN EITHER NO TAX W AS DEDUCTED ITA.963/BANG/2011 PAGE - 8 OR IT WAS NOT PAID AFTER DEDUCTION. BUT WHEN THE TA X IS DEDUCTED MAY BE BELATEDLY AND DEPOSITED BELATEDLY THEN DEDUC TION IS ALLOWABLE IN THE PREVIOUS YEAR IN WHICH IT WAS SO D EPOSITED. THEREFORE, IF THE PROVISIONS OF SECTION 194C WITH R ESPECT TO THE TIME OF DEDUCTION AND PAYMENTS ARE APPLIED FOR THE DISALLOWANCE UNDER SECTION 40(A)(IA), THEN THERE WI LL BE NO PURPOSE OR OBJECT FOR PROVIDING THE CERTAIN CONDITI ONS OF ACTUAL DEDUCTION OF TAX AND PAYMENT OF TAX UNDER SECTION 4 0(A)(IA). THE PROVISIONS OF CHAPTER XVII ARE RELEVANT ONLY FO R ASCERTAINING THE DEDUCTIBILITY OF THE TAX AT SOURCE AND NOT FOR THE ACTUAL DEDUCTION AND PAYMENT FOR ATTRACTING THE PROVISION OF SECTION 40(A)(IA). SINCE IN THE INSTANT CASE, WHEN THE ASSESSEE HAD DEDUCTED TAX IN THE LAST MONTH OF THE PREVIOUS YEAR I.E. MARCH, 2005 AND DEPOSITED THE SAME BEFORE THE DUE D ATE OF FILING OF THE RETURN UNDER SECTION 139(1), THEN IT WAS COVERED UNDER CLAUSE (A) OF PROVISO TO SECTION 40(A)(IA). T HEREFORE, WHEN THE ASSESSEE S CASE WAS COVERED UNDER THE MAI N PROVISIONS OF EXISTING LAW THEN THERE WAS NO NEED T O GO TO THE ISSUE OF PROSPECTIVE OR RETROSPECTIVE EFFECT OF THE AMENDMENT IN THE PROVISIONS BY THE FINANCE ACT, 2010. ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES WERE TO BE SET ASID E AND THE CLAIM OF DEDUCTION OF THE ASSESSEE WAS TO BE ALLOWE D. 13. AS REGARDSO THE DECISION OF SPECIAL BENCH MUMBA I IN THE CASE OF BHARTI SHIPYARD LTD. V. DCIT (132 ITD 53) RELIED BY THE LD. DR IS CONCERNED, ALTHOUGH THAT DECISION MAY SUPPORT TH E REVENUES ITA.963/BANG/2011 PAGE - 9 CASE, PARTICULARLY THE OBSERVATIONS IN PARA 25 OF T HE DECISION WHICH READ AS UNDER:- THE AMENDMENT TO S. 40(A)(IA) BY THE FINANCE ACT, 2010 HAS BEEN SPECIFICALLY MADE RETROSPECTIVELY APPLICAB LE FROM THE ASST. YR. 2010-11. IT HAS NOWHERE BEEN EXPRESSL Y SET OUT THAT THE AMENDMENT IS CURATIVE OR MERELY DECLARATOR Y OF THE PREVIOUS LAW. THE INTENTION OF THE LEGISLATURE AS G ATHERED FROM THE NOTES ONCLAUSES AND THE MEMORANDUM EXPLAIN ING THE PROVISIONS OF THEFINANCE BILL DOES NOT PARTICUL ARLY INDICATE ANY RELAXATION IN THE PROVISION RETROSPECT IVELY FROM ASST. YR. 2005-06 BY PROVIDING THAT THE EXPENDITURE ON WHICH DUE TAX WAS DEDUCTED UPTO FEBRUARY, 2005 BUT PAID B EFORE THE DUE DATE SPECIFIED IN S. 139(1) SHALL NOT SUFFE R ANY DISALLOWANCE IN THE ASST. YR. 2005-06. 14. HOWEVER, THE HONBLE CALCUTTA HIGH COURT HAS TA KEN A DIFFERENT VIEW IN THE CASE OF CIT V. VIRGIN CREATIO NS (SUPRA) AND THE ISSUE STANDS DECIDED AGAINST THE REVENUE. THERE FORE CONSIDERING THE PRECEDENT IN THE JUDICIAL HIERARCHY , WE ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE CALCUTTA HIGH COURT BECAUSE IT IS THE ONLY JUDGMENT OF ANY HIGH COURT WHICH IS BROUGHT TO OUR NOTICE. 15. SIMILAR VIEW HAS BEEN TAKEN IN THE THIRD MEMBER DECISION IN THE CASE OF KANEL OIL & EXPORT INDS. LTD. V. JCIT [ 2009] 121 ITD 596 (AHD)(TM) WHEREIN IT HAS BEEN HELD AS UNDER:- ITA.963/BANG/2011 PAGE - 10 IN THE INSTANT CASE, QUESTION THAT CAME UP FOR CON SIDERATION WAS AS TO WHETHER THE ORDER OF THE SPECIAL BENCH UP HOLDING THE LEVY OF INTEREST IN THE LIGHT OF SUB-SECTION (4 ) OF SECTION 115JA SHOULD BE FOLLOWED OR THE JUDGMENT OF THE BOM BAY HIGH COURT IN SNOWCEM INDIA LTD.S CASE (SUPRA), AL SO RENDERED IN THE CONTEXT OF SECTION 115JA, HAD TO BE APPLIED. BOTH THE DECISIONS WERE UNDER SECTION 115JA. ONE WA S OF A SPECIAL BENCH OF THE TRIBUNAL, AHMEDABAD AND THE OT HER WAS OF A HIGH COURT, THOUGH NOT A JURISDICTIONAL HIGH C OURT. A SIMPLE ANSWER WOULD BE THAT THE JUDGMENT OF A HIGH COURT, THOUGH NOT OF A JURISDICTIONAL HIGH COURT, PREVAILS OVER AN ORDER OF THE SPECIAL BENCH EVEN THOUGH IT IS FROM T HE JURISDICTIONAL BENCH (OF THE TRIBUNAL) ON THE BASIS OF THE VIEW THAT THE HIGH COURT IS ABOVE THE TRIBUNAL IN THE JU DICIAL HIERARCHY. BUT THIS SIMPLE VIEW IS SUBJECT TO SOME EXCEPTIONS. IT CAN WORK EFFICIENTLY WHEN THERE IS ONLY ONE JUDG MENT OF A HIGH COURT ON THE ISSUE AND NO CONTRARY VIEW HAS BE EN EXPRESSED BY ANY OTHER HIGH COURT. BUT WHEN THERE A RE SEVERAL DECISIONS OF NON-JURISDICTIONAL HIGH COURTS EXPRESSING CONTRARY VIEWS, IT HAS BEEN RECOGNIZED T HAT THE TRIBUNAL IS FREE TO CHOOSE TO ADOPT THAT VIEW WHICH APPEALS TO IT. 16. ON THE ISSUE UNDER CONSIDERATION, THE LONE DECI SION OF NON- JURISDICTIONAL HIGH COURT I.E., THE HONBLE CALCUTT A HIGH COURT IS AVAILABLE ON THE VERY SAME ISSUE, SO THAT HAS TO BE FOLLOWED BECAUSE IT WILL PREVAIL OVER THE ORDER OF THE SPECI AL BENCH OF THE ITA.963/BANG/2011 PAGE - 11 ITAT, MUMBAI BENCH, SINCE THE HONBLE HIGH COURT IN THE JUDICIAL HIERARCHY IS ABOVE THE TRIBUNAL. WE, THEREFORE CONS IDERING THE TOTALITY OF THE FACTS AS NARRATED HEREINABOVE, DO N OT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(APPEALS). 17. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. IN EFFECT, THE TRIBUNAL HAS FOLLOWED THE DECISION O F THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. VIRGIN CREATIONS IN ITA NO.02 OF 2011, DT.23.11.2011 AND THE DECISION OF THE SPECIAL BENCH, MUMBAI IN TH E CASE OF BHARTI SHIPYARD LTD V. DCIT (132 ITD 53) AND DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE BY REJECTING THE REVENUES APPEAL. IN THE PRESENT CASE THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO THAT DEALT WITH BY THE TRIBUNAL EARLIER. HENCE, FOLLOWING THE SAME, WE ARE ALLOWING THE GROUND OF A PPEAL ON MERITS IN RESPECT OF DISALLOWANCE U/S.40(A)(IA) OF THE ACT. 07. SINCE WE HAVE ALREADY DECIDED THE ISSUE IN FAVO UR OF THE ASSESSEE ON THE ISSUE OF MERITS, WE DO NOT FEEL IT NECESSARY TO GO INTO THE JURISDICTIONAL ISSUE AS IT WOULD BE ONLY ACADEMIC. ITA.963/BANG/2011 PAGE - 12 08. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE HEARIN G, ON 04.07.2012. SD/- SD/- (N. V. VASUDEVAN) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT