ITO 18(2)(4), V. REFORM CREATION,

MA 294/MUM/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2706 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R N DSOUZA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ! ' # ./MA NO. 294/MUM/2014 (ARISING OUT OF ITA NO. 6884/MUM/2011) ( / ASSESSMENT YEARS: 2008-09) ITO-18(2)(4) ROOM NO. 109, PIRAMAL CHAMBERS, LALBAUG PAREL, MUMBAI-400 012 / VS. REFORM CREATIONS 1/7, KRISHNA KRUPA, GOKHALE ROAD (NORTH), DADAR (W), MUMBAI-400 028 % ./''' ./PAN/GIR NO. AAIFR 8186 N ( APP LICANT ) : ( RESPONDENT ) APPLICANT BY : SHRI R. N. DSOUZA RESPONDENT BY : NONE # ( ) * / DATE OF HEARING : 21.11.2014 + ,- ) * / DATE OF PRONOUNCEMENT : 05.01.2015 ' / O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS PETITION BY THE REVENUE ARI SING OUT OF THE ORDER BY THE TRIBUNAL DATED 21.02.2014 IN THE CAPTIONED APPEAL. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE -RESPONDENT WHEN THE INSTANT APPEAL WAS CALLED OUT FOR HEARING. THIS, DESPITE DU E SERVICE OF NOTICE OF HEARING, WHICH HAD BEEN SPECIFICALLY ADJOURNED BY THE TRIBUNAL SO AS TO EXTEND OPPORTUNITY TO THE ASSESSEE TO BE HEARD IN THE MATTER. UNDER THE CIRCUMSTANCES IT WAS ONLY CONSIDER IT FIT AND PROPER TO 2 MA NO. 294/MUM/2014 & ITA NO. 6884/MUM/2011 ITO VS. REFORM CREATIONS (A.Y. 2008-09) PROCEED WITH THE HEARING AND ADJUDICATE THE ISSUES ARISING ON MERITS, AFTER HEARING THE PARTY BEFORE US. 3. IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND F ACTS OF THE CASE. THE ASSESSEE, IN THE BUSINESS OF CIVIL CONSTRUCTION AS A WORKS CONTR ACTOR, MADE LABOUR PAYMENTS IN THE SUM OF RS.64,59,515/- DURING THE RELEVANT YEAR. THOUGH TAX, AT RS.1,44,824/-, WAS DEDUCTED THEREON, THE SAME WAS PAID ONLY ON 29.05.2008, I.E. , AFTER THE END OF THE RELEVANT PREVIOUS YEAR, BEING THE FINANCIAL YEAR 2007-08, ALBEIT PRIO R TO THE DATE OF THE FILING OF RETURN FOR THE RELEVANT YEAR AS ALLOWED U/S.139(1) OF THE ACT. THE SAME STOOD DISALLOWED BY THE ASSESSING OFFICER (A.O.) U/S.40(A)(IA) OF THE ACT, WHICH, AS IT STOOD AT THE RELEVANT TIME, REQUIRED THE PAYMENT OF TDS BEFORE THE LAST DATE OF THE PREVIOUS YEAR, EXCEPT WHERE THE TAX WAS DEDUCTIBLE DURING THE LAST MONTH OF THE PRE VIOUS YEAR, FOR WHICH AN EXTENDED DATE, I.E., UP TO THE TIME PRESCRIBED U/S.139(1), W AS ALLOWED. THE ASSESSEE FOUND FAVOUR IN APPEAL ON THE BASIS THAT THE PAYMENT OF TDS HAD BEE N MADE BEFORE THE DUE DATE OF FILING OF THE RETURN U/S.139(1) AND, FURTHER, CONFIRMED BY THE TRIBUNAL ON THE SAME BASIS, WITH REFERENCE TO THE AMENDMENT TO SECTION 40(A)(IA) BY FINANCE ACT, 2008 W.R.E.F. 01/4/2005. THE REVENUE HAS NOW MOVED AN APPLICATION THAT THE S UBSTITUTION OF THE PROVISO BY FINANCE ACT, 2008 DOES NOT ASSIST THE ASSESSEES CA SE AT ALL, WHICH IS IN FACT COVERED BY THE AMENDMENT BY FINANCE ACT, 2010, WHICH THOUGH IS ONLY EFFECTIVE FROM 01.04.2010. THE ISSUE HAD BEEN SPECIFICALLY BROUGHT FORTH VIDE GROUNDS 2 & 3 OF THE REVENUES APPEAL. IN FACT, THE PAYMENTS TO THE LABOUR HAVE BE EN MADE THROUGHOUT THE YEAR, SO THAT THE EXTENDED DATE PER THE AMENDED (I.E., BY FINANCE ACT, 2008) SECTION 40(A)(IA), I.E., BY THE DUE DATE OF THE FILING OF THE RETURN, WHICH IS APPLICABLE TO THE PAYMENTS MADE DURING THE LAST MONTH OF THE PREVIOUS YEAR, IS ALSO NOT PO SSIBLE TO BE ASCERTAINED. THE APPEAL MAY BE RECALLED FOR BEING ADJUDICATED AFRESH IN ACCORDA NCE WITH LAW. 4. WE HAVE HEARD THE PARTY, AND PERUSED THE MATERIA L ON RECORD. WE SHALL BEGIN BY REPRODUCING THE OPERATIVE PART OF THE IMPUGNED ORDER, SO AS TO UNDERSTAND THE BASIS OF THE TRIBUNALS DECISION: 3 MA NO. 294/MUM/2014 & ITA NO. 6884/MUM/2011 ITO VS. REFORM CREATIONS (A.Y. 2008-09) 4. AT THE OUTSET, IT IS PERTINENT TO MENTION THA T IT IS NOT DISPUTED THAT THE ASSESSEE HAS PAID THE TDS ON 29.05.2008 WHICH IS BE FORE THE DUE DATE OF FILING THE RETURN. IN THIS CONNECTION, IT IS RELEVA NT TO STATE THAT THE AMENDMENT MADE IN THE PROVISION OF SECTION 40(A)(IA ) VIDE FINANCE ACT 2008 PROVIDES THAT W.E.F. A.Y. 2005-06, IN CASE OF EXPENSES ON WHICH TAX DEDUCTIBLE AT SOURCE IS DEDUCTED, THE EXPENDITURE W OULD BE ALLOWABLE IF TAX HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF RETU RN OF INCOME U/S 139(1) OF THE ACT. SINCE, THE LD. CIT(A) HAS CORRECTLY RELIED ON THE SAID PROVISION FOR ALLOWING THE CLAIM OF THE ASSESSEE, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE SAID DECISION AND THUS THE SAME IS UPHELD. THE TRIBUNAL CONFIRMED THE DELETION OF THE DISALLOW ANCE U/S.40(A)(IA) FOLLOWING THE AMENDMENT TO THE PROVISION PER FINANCE ACT, 2008, E FFECTIVE 01.04.2005, SO THAT IT WAS APPLICABLE FOR THE CURRENT YEAR. THE SAME PROVIDES FOR DEDUCTION FOR PAYMENTS WHERE THE TAX DEDUCTED AT SOURCE THEREON IS DEPOSITED BY THE LAST DAY OF THE RELEVANT PREVIOUS YEAR. THE EXCEPTION IS FOR PAYMENTS MADE DURING THE LAST MONTH OF THE PREVIOUS YEAR, FOR WHICH THE EXTENDED TIME, I.E., UP TO THE DUE DATE OF THE FILING THE RETURN OF INCOME U/.S 139(1), IS PROVIDED. IN-AS-MUCH AS THE DATE OF THE IMPUGNED PA YMENTS IS NOT BORNE OUT BY THE RECORD, NOR CLARIFIED IN THE IMPUGNED ORDER, IT COU LD NOT BE SAID AS TO WHICH PART OF THE PAYMENT IS COVERED BY THE EXCEPTION PER THE AMENDED SECTION 40(A)(IA) (I.E., BY FINANCE ACT, 2008). TO THIS EXTENT, THERE IS CLEARLY A MIST AKE APPARENT FROM THE RECORD IN THE TRIBUNALS ORDER. FURTHER, THE POSITION OF LAW AS S TATED BY THE TRIBUNAL VIDE PARA 4 OF ITS IMPUGNED ORDER, IS IN FACT THE PROVISION AS IT STAN DS AFTER THE AMENDMENT BY FINANCE ACT, 2010, SO THAT THE REFERENCE TO FINANCE ACT, 2008 IS CLEARLY INCORRECT. THE IMPUGNED ORDER WOULD THEREFORE BE REQUIRED TO BE RECTIFIED BY PASS ING AN AMENDED ORDER. WE, ACCORDINGLY, RECALL THE IMPUGNED ORDER FOR FRESH AD JUDICATION. 5 . IN THE RESULT, THE REVENUES MISCELLANEOUS APPLICAT ION IS ALLOWED. ./- 0 ) ! ' # 1 ) 23 4 MA NO. 294/MUM/2014 & ITA NO. 6884/MUM/2011 ITO VS. REFORM CREATIONS (A.Y. 2008-09) ORDER U/S.254(1) OF THE ACT (IN ITA NO. 6884/MUM/2011) ( / ASSESSMENT YEARS: 2008-09) 6. THE BENCH, COMMUNICATING THE DECISION BY THE TRI BUNAL, AT THIS STAGE REQUIRED THE LD. DEPARTMENTAL REPRESENTATIVE (DR) TO CANVASS THE REVENUES CASE, I.E., IN ITS APPEAL, ON MERITS, WHICH WAS EVEN OTHERWISE APPARENT FROM T HE CONTENTS OF ITS MISCELLANEOUS APPLICATION. HE WOULD PLEAD THE SAME WITH REFERENCE TO THE PROVISION AS AMENDED BY FINANCE ACT, 2008, SO THAT ONLY THE PAYMENTS MADE D URING THE LAST MONTH OF THE RELEVANT PREVIOUS YEAR WOULD STAND EXCEPTED BY THE PROVISO AS APPLICABLE. REFERENCE TO AMENDMENT BY FINANCE ACT, 2010 IS INAPPOSITE INASMU CH AS IT IS INAPPLICABLE, BEING OPERATIVE A.Y. 2010-11 ONWARDS. 7. WE HAVE HEARD THE PARTY, AND PERUSED THE MATERIA L ON RECORD. THE AMENDMENT BY FINANCE ACT, 2010 ALLOWS AN EXTENDED PERIOD OF TIME FOR DEPOSIT OF TDS, I.E., UP TO THE DUE DATE OF THE FILING THE RETURN U/S.139(1) OF THE ACT, IRRESPECTIVE OF THE DATE OF THE PAYMENT ON WHICH THE TAX IS DEDUCTIBLE DURING THE Y EAR. THE SAID AMENDMENT HAS BEEN HELD BY THE SERIES OF DECISIONS BY THE HONBLE COUR TS TO BE RETROSPECTIVE, VIZ. CIT VS. RAJINDER KUMAR [2014] 362 ITR 241 (DEL); CIT VS. NARESH KUMAR [2013] 362 CTR 256 (DEL); CIT VS. OMPRAKASH & OTHERS (IN TAX APPEAL NO. 412/2013 (GUJ); CIT VS. TEJ ORGANISATION PVT. LTD. (IN TAX APPEAL NO. 1040/2013 DATED 28.11.2013/COPY ON RECORD); CIT VS. VIRGIN CREATION (IN ITA NO. 302 OF 2011 (CAL)). THE HONBLE HIGH CO URTS HAVE ANSWERED THE PRECISE QUESTION THAT ARISES IN THE IN STANT CASE, I.E., WHETHER THE AMENDMENT TO SECTION 40(A)(IA) BY FINANCE ACT, 2010, W.E.F. 0 1.04.2010 IS RETROSPECTIVE OR NOT, REPLYING THE SAME IN THE AFFIRMATIVE. THE DECISION BY THE TRIBUNAL IN THE CASE OF BHARTI SHIPYARD LTD. VS. DY. CIT (IN ITA NO. 2404/MUM/2009 DATED 12.09.2011) RELIED UPON THE REVENUE, WOULD THEREFORE BE TO NO MOMENT. IN VIEW O F THE SAME, THE TAX DEDUCTED AT SOURCE DURING THE RELEVANT PREVIOUS YEAR HAVING BEE N DEPOSITED ADMITTEDLY ON 29.05.2008, I.E., BEFORE THE DUE DATE PRESCRIBED U/ S. 139(1), NO DISALLOWANCE IS CALLED FOR. FURTHER, IN-AS-MUCH AS SECTION 40(A)(IA) ONLY PROVI DES FOR A TIMING DIFFERENCE, SO THAT THE A.O. WAS IN ANY CASE OBLIGED TO ALLOW DEDUCTION FOR THE IMPUGNED SUM IN ASSESSMENT FOR 5 MA NO. 294/MUM/2014 & ITA NO. 6884/MUM/2011 ITO VS. REFORM CREATIONS (A.Y. 2008-09) A.Y. 2009-10, THE SAME, WHERE SO, SHALL OBTAIN NO L ONGER IN CONSEQUENCE TO OUR ORDER, WHICH SHALL BE READ ALONG AND IN CONJUNCTION WITH T HE IMPUGNED ORDER, OF WHICH IT SHALL FORM A PART. WE DECIDE ACCORDINGLY. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ./- 0 ) . / ) 23 ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 5, 20 14 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 4( MUMBAI; 5# DATED : 05.01.2015 .#../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. . %6 / THE APPLICANT 2. 78%6 / THE RESPONDENT 3. ' ' ( . ) / THE CIT(A) 4. ' ' / CIT - CONCERNED 5. ; < 7#=! , ' .* =!- , 4( / DR, ITAT, MUMBAI 6. < > ? ( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 4( / ITAT, MUMBAI