ITO, W-3(3), Chandigarh V. M/s Avtar Singh Construction Co. Pvt. Ltd., Chandigarh

MA 30/CHANDI/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2022 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDARSHAN JCIT
• Keywords: Audit objection; Tax effect; TDS
• Section: 143(3); 40(a)(ia); 201(1); 147; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH (VIRTUAL COURT) .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M MISCELLANEOUS APPLICATION NO. 30/CHD/2020 ( ./ ITA NO. 573/CHD/2019) / ASSESSMENT YEAR : 2010-11 ITO, W - 3(3) SECTOR-17, CHANDIGARH M/S AVTAR SINGH CONSTRUCTION CO. PVT. LTD. SCO 1004-05, SECTOR 22-B CHANDIGARH ./ PAN NO: AABCA9381L / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA # ! ' / REVENUE BY : SHRI ARVIND SUDARSHAN, JCIT $ % ! &/ DATE OF HEARING : 02/11/2020 '()* ! &/ DATE OF PRONOUNCEMENT : 02/11/2020 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS MISCELLANEOUS APPLICATION DT. 28/02/2020 HAS B EEN FILED BY THE DEPARTMENT AGAINST THE ORDER DT. 04/09/2019 IN ITA NO. 573/CHD/2019 FOR THE A.Y. 2010-11 BY STATING THEREIN AS UNDER: APPEAL WAS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-1, CHANDIGARH IN APPEAL NO. 10361/ 16-17 DATED 15.2.20 19 IN THE CASE OF M/S AVTAR SINGH CONSTRUCTION CO. PVT. LTD., SCO 1004-05 SECTOR 22-B, CHANDIGARH. THE FOLLOWING GROUNDS OF APPEAL WERE TAKEN BY THE R EVENUE BEFORE THE HON'BLE ITAT:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8,94,445/-, M ADE ON ACCOUNT OF FAILURE TO 2 DEDUCT TDS ON INTEREST PAID TO M/S TATA CAPITAL LTD ., ON BORROWED FUNDS, A NON- BANKING FINANCIAL COMPANY (NBFC) U/S 40(A)(IA). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8,94,445/-, M ADE ON ACCOUNT OF FAILURE TO DEDUCT TDS ON INTEREST PAID TO NBFCS U/S 40(A)(IA) RELYING UPON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF CIT VS. CALCUTTA EXPORT COMPANY (2018)093 TAXMAN. COM 51/255 TAXMAN 293/404 ITR 654 (SC), THI S CASE LAW DOES NOT APPLY IN THIS CASE, SINCE THE FACTS IN THESE CASES ARE DIFFE RENT FROM EACH OTHER. IN THE CASE OF CALCUTTA EXPORT COMPANY, THE TDS WAS DEDUCTED BU T NOT DEPOSITED IN TIME, WHILE THE PRESENT CASE RELATES WITH NON-DEDUCTION O F TDS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 8,94,445/-, M ADE ON ACCOUNT OF FAILURE TO DEDUCT TDS ON INTEREST PAID TO NBFCS U/S 40(A)(IA) RELYING UPON THE JUDGMENT IN THE CASE OF ACADEMY OF MEDICAL SCIENCES VS. CIT (20 18) 91 TAXMAN.COM 293/254 TAXMAN 419 (KERALA), THIS CASE LAW DOES NOT APPLY I N THIS CASE, LD. CIT(A) HAS ACCEPTED THE CA'S CERTIFICATE WITHOUT CONSIDERING T HE FACTS THAT THE FIRST PROVISO TO SECTION 201(1) ARE INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.07.2012 WHEREAS THE CASE PERTAINS TO A.Y. 2010-11 AND GIVEN RELIEF TO THE ASSESSEE KEEPING IN VIEW THE FIRST PROVISO TO SECTION 201(1) WHICH IS APPLIC ABLE W.E.F. 01.07.2012. IT IS PERSPECTIVE AND NOT RETROSPECTIVE. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) B E CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR IS DISPOSED OFF. THE HON'BLE ITAT DISMISSED THE APPEAL OF THE DEPART MENT DUE TO LOW TAX EFFECT AS PER THE CBDT CIRCULAR NO. 17/2019 DATED 0 8.08.2019 WITHOUT GOING INTO THE MERITS OF THE ISSUE. FACTS OF THE CASE: ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 26.02.2013 AT ASSESSED INCOME OF RS. 41,81,710/- THEREBY MAKING A DDITION OF RS. 11,87,286/-. FURTHER ORDER U/S 154 WAS PASSED DATED 25.03.2015 O N ACCOUNT OF WHICH INCOME OF THE ASSESSEE WAS NOW ASSESSED AT RS.65,53,634/-. FURTHER ON ACCOUNT OF THE AUDIT PARA DATED 10.07.2014, THE ASSESSMENT IN THE CASE WAS AGAIN MADE U/S 143(3) RWS 147 OF THE INCOME TAX ACT, 1961 AND ADDI TION OF RS.8,94,445/- WAS MADE AND THE INCOME WAS ASSESSED AT RS.74,48,080/- RESULTING IN TAX EFFECT OF RS.2,76,383/-.THE AO HAS MADE DISALLOWANCE U/S 40(A )(IA) AMOUNTING TO RS. 8,94,445/- FOR NON DEDUCTION OF TDS ON INTEREST PAI D TO NBFC. THE HON'BLE ITAT HAS DECIDED THE APPEAL CONSEQUENT TO CIRCULAR NO. 17/20 19 DUE TO LOW TAX EFFECT AND HAS NOT ADJUDICATED ON THE ISSUE INVOLVED. THEREFORE IN VIEW OF ABOVE, THE DEPARTMENT DESIRES TO CONTEST THE CASE WHICH NEEDS TO BE DECIDED ON MERITS SINCE THE CASE LIES UNDER THE EXCEPTION 10(C) OF CIRCULAR NO. 3/2018. 3 PRAYER: IN VIEW OF THE AFORESAID, IT IS PRAYED THAT THE PRE SENT MISC. APPLICATION FILED UNDER SUB-SECTION (2) OF SECTION 254 OF THE INCOME TAX AC T, 1961 MAY KINDLY BE ADMITTED AND THE APPEAL AS FILED IN ITA NO. 573/CHD /2019 BE REVIVED. THE PRESENT MISC. APPLICATION IS BEING FILED WITH T HE APPROVAL OF THE PR. COMMISSIONER OF INCOME TAX-1, CHANDIGARH CONVEYED T O THIS OFFICE VIDE LETTER NO. 4269 DATED 26.02.2020. 2. DURING THE COURSE OF HEARING, THE LD. SR. DR REI TERATED THE CONTENTS OF THE AFORESAID APPLICATION AND FURTHER SUBMITTED THAT TH E MONETARY LIMIT FOR NOT FILING THE APPEALS DUE TO TAX EFFECT WAS NOT APPLICABLE AS THE ISSUE COMES UNDER THE EXCEPTION IN CLAUSE 10(C) OF THE CIRCULAR NO. 17/20 19 ISSUED BY THE DEPARTMENT. 3. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD IN ORD ER DATED 04/09/2019 PASSED BY THE ITAT IN ITA NO. 573/CHD/2019 AND THAT THE TA X EFFECT INVOLVED IN THE DEPARTMENTAL APPEAL WAS LESS THAN THE MONETARY LIMI T OF RS. 50 LACS, AS SUCH, THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL BEFOR E THE ITAT AS PER THE INSTRUCTIONS GIVEN VIDE CIRCULAR NO. 3/2018 DATED 1 1.7.2018 BY THE CBDT. IT WAS FURTHER SUBMITTED THAT THE ISSUE RAISED BY THE DEPA RTMENT IN ITS APPEAL DOES NOT COME IN THE EXCEPTION LAID DOWN IN CLAUSE 10(B) OF THE AMENDED CIRCULAR NO. 17/2019 DATED 8.8.2019AS WELL AS THE LETTER OF THE CBDT DATED 11.12.2018. RELIANCE WAS PLACED ON THE DECISION DATED 9.8.2019 OF THE ITAT A BENCH CHANDIGARH IN M.A.NO. 76/CHD/2019 AND OTHERS IN TH E CASES OF ACIT- 4(1), CHANDIGARH VS M/S DIAMOND PLASTIC PRODUCTS, CHANDIG ARH AND OTHERS. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE CAREFULLY GONE THE MATERIAL AVAILABLE ON THE RECORD . IT IS NOTICED THAT THE ISSUE AGITATED BY THE DEPARTMENT IN ITS APPEAL NO. 573/CH D/2019 FOR THE ASSESSMENT YEAR 2010-11 RELATES TO THE DELETION OF DISALLOWANC E AMOUNTING TO RS. 8,94,445/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE INCOME TAX ACT, THEREFORE, THE TAX EFFECT ON THE SAID ISSUE WAS LESS THAN THE PRES CRIBED LIMIT AS MENTIONED IN CIRCULAR NO.3 OF 2018 DATED 11.7.2018 ISSUED BY THE CBDT. ACCORDINGLY THE 4 APPEAL OF THE DEPARTMENT WAS DISMISSED VIDE ORDER D ATED 21.8.2019. NOW THE DEPARTMENT IN THE MISC. APPLICATION SUBMITTED THAT THE ISSUE WAS COVERED IN THE EXCEPTION LAID DOWN VIDE CLAUSE 10 OF THE CIRCULAR NO.3 OF 2018. THE CONTENTS IN THE SAID CLAUSE READS AS UNDER:- 10.ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT : (A)WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISI ONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B)WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION O R CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C)WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BE EN ACCEPTED BY THE DEPARTMENT, OR (D)WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIG N ASSETS/ BANK ACCOUNTS. 5. FROM THE AFORESAID CONTENTS OF CLAUSE 10 OF CIRC ULAR NO. 3/2018 DATED 11.7.2018, IT IS CRYSTAL-CLEAR THAT THE ISSUE UNDER CONSIDERATION WHICH WAS INVOLVED IN ITA NO.573/CHD/2019 IN ASSESSEES CASE, DOES NOT COME IN THE AFORESAID EXCEPTION. IT IS ALSO NOTICED THAT AFTER ISSUING TH E AFORESAID CIRCULAR DATED 11.7.2018, THE CBDT AGAIN ISSUED CLARIFICATION VIDE LETTER DATED 11.10.2018 STATING THEREIN AS UNDER:- 2. IN PARA 10 OF THE SAID CIRCULAR READ WITH BOARD 'S LETTER ISSUED VIDE F.NO. 279/MISC.142/2007-ITJ(PT) DATED 20.08.2018, IT HAS BEEN UNAMBIGUOUSLY AND EXPRESSLY PROVIDED THAT ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR TH ERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR 5 (D)WHERE ADDITION RELATES TO UNDISCLOSED FOREIGN IN COME/UNDISCLOSED FOREIGN ASSETS (INCLUDING FINANCIAL ASSETS)/ UNDISCLOSED FOREIGN B ANK ACCOUNT. (E)WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI/ED/D RI/SFIO/DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI). (F) CASES WHERE PROSECUTION HAS BEEN FILED BY THE DEPAR TMENT AND IS PENDING IN THE COURT.' 3. THE DIRECTION THAT APPEALS BE 'CONTESTED ON MERI TS' IN ITSELF IMPLIES THAT THERE SHOULD NOT BE ANY MECHANICAL FILING OF APPEALS IN THESE CA SES. IT IS THEREFORE REITERATED THAT THE IMPORT AND INTENT OF PARA 10 OF CIRCULAR 3 OF 2 018 IS THAT EVEN ON ISSUES MENTIONED IN THE SAID PARA, APPEALS AGAINST THE ADVERSE JUDGE MENTS SHOULD ONLY BE FILED ON MERITS. 6. FROM THE AFORESAID CLARIFICATION ALSO, IT IS CL EAR THAT THE CBDT CLARIFIED VIDE AFORESAID LETTER DATED 11.10.2018 THAT EVEN ON THE ISS UES MENTIONED IN PARA 10 OF CIRCULAR NO.3 OF 2018, THE APPEALS AGAINST THE ADVERS E JUDGEMENT SHOULD ONLY BE FILED ON MERIT BUT IN THE PRESENT CASE NOTHING IS BROUG HT ON RECORD TO SUBSTANTIATE THAT THERE WAS ANY ADVERSE JUDGMENT ON ANY OF THE ISSUES AS MENTIONED IN THE CBDT CIRCULAR. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS M ISC. APPLICATION MOVED BY THE DEPARTMENT. ACCORDINGLY, THE SAME IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 02.11.2020. SD/- SD/- '# $ .. (SANJAY GARG ) ( N.K. SAINI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE 02/11/2020 (+ ! ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ / / CIT 4. $ / ( )/ THE CIT(A) 5. -01 2 , & 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7% / GUARD FILE