ITO 9(1)(3), MUMBAI V. DR. SAHOOS CLINICAL SERVICES P. LTD, MUMBAI

ITA 999/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71267 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: HARIDAS BHAT
• Section: 143(3)

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. . , ! ! ! ! '#$% '#$% '#$% '#$% , # # # # &' &' &' &' BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDRA,AC COUNTANT MEMBER /. ITA NO.999/MUM/2011 , ( (( ( / ASSESSMENT YEAR-2007-08 ITO 9(1)(3) R.NO. 224, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400020 VS. DR. SAHOOS CLINICAL SERVICES P. LTD., 21 BLOCK NO. 201, SANSKRUTI CHS, THAKUR COMPLEX, KANDIVALI(E) MUMBAI- 400101 PAN:AABCD7091G ( )* / APPELLANT) ( +,)* / RESPONDENT) )* )* )* )* - - - - # ## # / APPELLANT BY : SHRI PITAMBER DAS +,)* . - # / RESPONDENT BY : SHRI HARIDAS BHAT . .. . / / / / / DATE OF HEARING : 23-09-2013 0( . / / DATE OF PRONOUNCEMENT : 27-09-2013 , 1961 . .. . 254(1) # ## # $/1/ $/1/ $/1/ $/1/     ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM: ASSESSING OFFICER(AO)HAD FILED FOLLOWING GROUNDS OF APPEAL AGAINST THE ORDER DATED 04.11.2010 OF THE CIT(A)-19, MUMBAI FOR AY- 2007-08. 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.49,39,985/- MADE BY THE ASSESSING OFFICER U/S 40A(IA) OF THE I .T.ACT, 1961 DISREGARDING THE RELEVANT LEGAL PROVISIONS WHICH STIPULATES THAT THE DEDUCTION WILL BE ADMISSIBLE ONL Y IF THE TAX DEDUCTED AT SOURCE IS PAID TO THE GOVERNMENT ACCOUNT WITHIN THE SPECIFIED TIME. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A)ERRED IN DELETING THE DISALLOWANCE OF RS.49,39,985/- MADE U/S 40A(IA) OF THE I.T.ACT, 1961, OVERLOOKING THE FACT THAT THE AMENDED PROVISIONS OF SECTION 40(A) ARE EFFECTIVE ONLY FROM 1.4.2010, AS PER THE PROVISIONS OF THE F INANCE ACT, 2010. 3.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF CLINICA L DRUG TESTING,FILED ITS RETURN OF INCOME ON 20. 10.2007DECLARING TOTAL INCOME OF RS. 9.91 LACS.AO F INALISED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 02.12.2009 DETERMINING THE INCOME OF THE ASSESSE E AT RS. 63.56 LACS. 2. DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT IN SEVERAL INSTANCES TAX DEDUCTED AT SOURCE (TDS),WAS DEPOSITED TO THE CREDIT OF CENTRAL BANK B EYOND THE DUE DATE SPECIFIED AS PER THE PROVISIONS OF CHAPTER XVII-B OF THE ACT.HE FURTHER OBSERVED THAT RS. 49.39 LACS WERE PAID BY THE ASSESSEE UNDER THE HEAD CONSULTANCY CHARGES.AO WA S OF THE OPINION THAT TDS AMOUNTING TO RS. 2.64 LACS WAS NOT DEPOSITED BY THE ASSESSEE ON DUE DATES,THAT CONSULTANCY CHARGES PAID BY IT HAD TO 2 ITA NO.999/MUM/2011 DR. SAHOOS CLINICAL SERVICES PV T. LTD. BE DISALLOWED U/S. 40(A)(IA) OF THE ACT.AS A RESULT ,HE ADDED RS. 49,39,985/-TO THE INCOME OF THE ASSESSEE. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).FOLLOWING THE DECISION OF BANSAL PARIVARTAN (INDIA) LTD. (ITA NO. 2355/MUM /2010-DATED 20.09.2010) OF B BENCH OF MUMBAI,FAA DECIDED THE MATTER IN FAVOUR OF THE ASSE SSEE.HE HELD THAT ASSESSEE HAD DEDUCTED TDS ON PROFESSIONAL CHARGE PAID, THAT THE TAX SO DEDUCT ED HAD BEEN PAID TO THE CREDIT OF GOVERNMENT BEYOND THE DUE DATE AS STIPULATED IN SECTION 200,TH AT TAX WAS DEPOSITED BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATIO N,THAT PAYMENTS WERE MADE ON FIRST TERM 2007 I.E.BEFORE THE DUE DATE OF FILING OF RETURN,THAT AM ENDMENT MADE TO SECTION 40(A) (IA)BY FINANCE ACT, 2010 WERE REMEDIAL/CURATIVE IN NATURE, THAT SAME HA D RETROSPECTIVE APPLICATION, THAT DISALLOWANCE MADE UNDER THE SAID SECTION COULD NOT BE SUSTAINED. 2.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT ISSUE WAS DECIDED IN FAVOUR OF THE DEPARTMENT BY THE ORDER OF THE SPECIAL BENCH OF ITA T, MUMBAI DELIVERED IN THE CASE OF BHARTI SHIPYARD LTD.AUTHORISED REPRESENTATIVE(AR)RELIED UP ON THE ORDER OF THE BANSAL PARIVAHAN (INDIA) P. LTD.(SUPRA), VIRGIN CREATIONS (2012-TIOL-181-HC- KOL-IT), NARESH KUMAR (2013-TIOL-688- HC-DEL-IT) SHRI PIYUSH C. MEHTA(52 SOT 27 (MUM) 31 CCH 111MUM.TRIB,ATLANTA LTD. (2012- TIOL-700-ITAT-MUM.HE FURTHER SUBMITTED THAT WHILE D ECIDING THE APPEAL OF PIYUSH C. MEHTA C BENCH OF MUMBAI TRIBUNAL HAS CONSIDERED THE DECISIO N OF BHARTI SHIPYARD, THAT HONBLE HIGH COURT OF CALCUTTA HAD DECIDED THE ISSUE AGAINST THE DEPAR TMENT. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT HONBLE HIGH COURT OF CALCUTTA WHILE DECIDING THE APPEAL IN THE CASE OF VIRGIN CREATIONS(SUPRA) HAS HELD AS UNDER: THE TRIBUNAL HELD THAT THE ASSESSEE HAD DEDUCTED TA X AT SOURCE FROM THE PAID CHARGES BETWEEN 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 TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION . THIS FACTUAL POSITION WAS UNDISPUTED. .MOREOVER, THE SUPREME COURT, AS HAS BEEN RECORDE D BY THE LEARNED TRIBUNAL, IN THE CASE OF ALLIED MOTORS PVT.LTD. AND ALSO IN THE CASE OF ALOM EXTRUS IONS 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 REM EDY TO MAKE THE PROVISION WORKABLE,REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASON ABLE DEDUCTION CAN BE GIVEN TO THE SECTION AS WELL. WE FURTHER FIND THAT IN THE CASE OF PIYUSH C.MEHTA (SUPRA) MATTER HAS BEEN DECIDED AS UNDER: IT CAN BE SEEN FROM THE ABOVE DECISION OF THE HON BLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT, BY THE FINA NCE ACT, 2010 AS AFORESAID WAS HELD TO BE RETROSPECTIVE FROM 1.4.2005. IF THE AMENDMENT IS CO NSIDERED AS RETROSPECTIVE FROM 1.4.2005, THE EFFECT WILL BE THAT PAYMENTS OF TDS TO THE CREDIT O F THE GOVERNMENT ON OR BEFORE THE LAST DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT FOR T HE RELEVANT AY HAVE TO BE ALLOWED AS DEDUCTION. ADMITTEDLY IN THE CASE OF THE ASSESSEE PAYMENTS WER E SO MADE BEFORE THE SAID DUE DATE AND IN TERMS OF THE DECISION OF THE HONBLE CALCUTTA HIGH COURT NO DISALLOWANCE COULD BE MADE BY THE AO U/S. 40(A)(IA) OF THE ACT. 18.THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HONBLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE ACT, 2 010 TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE, FROM 1.4.2005 OR THE DECISION OF THE HONBLE CALCUTTA HIGH COURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION , THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTERNATIONAL (P) LTD. V. DY. CIT (2000) 69 113 (DEL) 650, WHEREIN IT WAS HELD THAT I N THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD T O THE HIGHER WISDOM OF THE COURT ABOVE, AND THEREFORE, ONCE AN AUTHORITY HIGHER THAN THIS TRIBU NAL HAS EXPRESSED ITS ESTEEMED VIEWS ON A AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIA L AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHE R HELD THAT THE FACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON- JURISDICTIONAL HIGH 3 ITA NO.999/MUM/2011 DR. SAHOOS CLINICAL SERVICES PV T. LTD. COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GODAVARIDEVI SARAF 113 ITR 589(BOM). 19.IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DEC ISION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 14.2005. CONSEQUENTLY, ANY PAYMENT OF TAX DEDU CTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FROM AY 05-06 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S.40(A)(IA) OF THE ACT CAN BE MADE ADMITTEDLY IN THE PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT AND THEREFORE THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE OR DER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE FOLLOWING THE ABOVE WE HOLD THAT AMENDED PROVISIO NS OF SEC.40(A)(IA) OF THE ACT, ARE RETROSPECT - IVE IN NATURE AND ARE APPLICABLE FROM 14.2005,THAT PAYMENT MADE BY THE ASSESSEE BEFORE FILING ITS RETURN OF INCOME HAS TO BE TAKEN AS PAYMENT MADE IN TIME.THEREFORE,UPHOLDING THE ORDER OF THE FAA,EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST T HE AO. IN THE RESULT, APPEAL OF THE AO STANDS DISMISSED. 4 /5 4/ 6 &7 . 1 4' . '/ 8. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2013.  . 0( # $ : ;& 27 / , 2013 . 1 < SD/- SD/- ( . , / D.MANMOHAN ) ( '#$% / RAJENDRA ) /VICE PRESIDENT # &' /ACCOUNTANT MEMBER MUMBAI, ;& DATE: 27 TH SEPTEMBER, 2013 SK     . .. . +/= +/= +/= +/= >#=(/ >#=(/ >#=(/ >#=(/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR H BENCH, ITAT, MUMBAI / =A1 +/ ,P ,P,P ,P , . . $ . 6. GUARD FILE/ 1 B ,=/ +/ //TRUE COPY//  / BY ORDER, / ' DY./ASST. REGISTRAR , /ITAT, MUMBAI