Income Tax Officer, Ward-1(3), Vijayawada V. Nelakuditi Subhadra, Hyderabad

MA 31/VIZ/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5424 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMA KRISHNA
• Keywords: Difference of opinion; TDS; Set aside
• Section: 143(3); 40(a)(ia); 250; 201; 254(2); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER M . A .NO. 31 /VIZ/201 8 (ARISING OUT OF I.T.A NO.206/VIZ/2015) ( / A SSESSMENT Y EAR : 201 0 - 1 1 ) INCOME TAX OFFICER WARD - 1(3) VIJAYAWADA ( / APPELLANT) VS. SMT.NELAKUDITI SUBHADRA D.NO.6 - 29, MAIN ROAD NANDIGAMA KRISHNA DIST. [PAN : BEOPS3395R ] ( / RESPONDENT) / APPELLANT BY : SHRI C.SUBRAHMANYAM, AR / RESPONDENT BY : S HRI B.RAMA KRISHNA, DR / DATE OF HEARING : 0 7 .0 2 .2020 / DATE OF PRONOUNCEMENT : 19 .0 2 . 20 20 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : IN THE INSTANT CASE, THE REVENUE HAS FILED MISCELLANEOUS APPLICATION AGAINST THE APPEAL ORDER PASSED BY THIS TRIBUNAL IN I.T.A. NO.206/VIZ/2015 DATED 20.12.2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.3,14,020/ - ON 15.10.2010 AND THE 2 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.5,74,020/ - . SUBSEQUENTLY, THE C OMMISSIONER OF I NCOME T AX(CIT) HAS TAKEN UP THE CASE FOR REVISION ON VARIOUS I SSUES AND SET ASIDE THE ORDER OF THE ASSESSING OFFICER (AO) WITH A DIRECTION TO REDO THE ASSESSMENT BY AN ORDER DATED 26.03.2015. ONE OF THE ISSUES CONSIDERED BY THE CIT FOR REVISION U/S 263 WAS FREIGHT CHARGES. THE CIT FOUND THAT THE ASSESSEE HAS NOT DE DUCTED THE TDS ON PAYMENT OF FREIGHT CHARGES AMOUNTING TO 21,71,350/ - , THUS VIEWED THAT THE AO OUGHT TO HAVE MADE THE ADDITION U/S 40(A)(IA) OF THE ACT. SINCE THE AO FAILED TO MAKE THE ADDITION, THE CIT HELD THAT THE ASSE SSMENT ORDER PASSED BY THE AO WA S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, ACCORDINGLY DIRECTED THE AO TO REEXAMINE THE ISSUE AND REDO THE ASSESSMENT. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL AND THE TRIBUNAL VIDE ORDER NO.206/VIZ/2015 DATED 20.12.20 17 HELD THAT THERE WAS NO ERROR IN THE ORDER OF THE AO. HENCE , SET ASIDE THE ORDER OF THE CIT AND ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGAINST WHICH THE DEPARTMENT HAS FILED A MISCELLANEOUS APPLICATION. IN THE MISCELLANEOUS APPLICATION, THE DEPARTMENT HAS SUBMITTED THAT THE ITAT ALLOWED THE APPEAL OF THE ASSESSEE PLACING RELIANCE ON THE DECISION OF ITAT SPECIAL BENCH, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & 3 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA TRANSPORTS V S. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - 1, VISAKHAPATNAM (SB) (2012) 20 TAXMANN.COM 244 (VISAKHAPATNAM), WHEREIN, IT WAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE PAYABLE AS ON DATE OF 31 ST MARC H OF EVERY YEAR. T HE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) WAS REVERSED BY THE HONBLE APEX COURT IN THE CASE OF PALAM GAS SERVICE VS. COMMISSIONER OF INCOME TAX [81 TAXMANN.COM 43](SC), AND HELD THAT THE DISALLOWA NCE U/S 40(A)(IA) WAS NOT ONLY COVERS THE CASES WHERE THE AMOUNT IS PAYABLE BUT ALSO THE AMOUNT ALREADY PAID. THE DEPARTMENT CANVASSED IN THE MISCELLANEOUS APPLICATION THAT SINCE , THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICE (SUP RA) WAS AVAILABLE AT THE TIME OF PASSING THE ORDER, VIEWED THAT THERE IS A MISTAKE IN THE ORDER OF THE ITAT, HENCE REQUESTED TO RECALL THE ORDER AND READJUDICATE THE SAME. DURING THE HEARING OF MISCELLANEOUS APPLICATION, THE LD.DR REITERATED THE SUBMISSION S MADE IN THE MISCELLANEOUS APPLICATION FILED BY THE DEPARTMENT. 4. ON THE OTHER HAND, THE LD.AR SUBMITTED THAT THE HONBLE ITAT HAS DECIDED THE ISSUE NOT ONLY PLACING RELIANCE ON THE DECISION OF SPECIAL BENCH (SUPRA), BUT ALSO ON MERITS OF THE CASE. THE LD.AR SUBMITTED THAT AS PER 4 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA PARA NO.7 OF THE ORDER OF THE ITAT, IT HAS GIVEN A FINDING THAT THE AO COMPLETED THE ASSESSMENT AFTER CONSIDERING THE ENTIRE DETAILS AND FACTS FURNISHED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE TRIBUNAL CONSIDERED THE DECISIONS OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS AND THE HONBLE SUPREME COURTS DECISION IN THE CASE OF CIT VS. MAX IN DIA LTD. [295 ITR 0282] AND HELD THAT THERE IS NO CASE FOR REVISION U/S 263 AND ACCORDINGL Y ALLOWED THE APPEAL OF THE ASSESSEE. THE LD.AR FURTHER SUBMITTED THERE IS NO MISTAKE WHICH CALLS FOR RECTIFICATION U/S 254(2) AND THE DEPARTMENT INTENDS TO REVIEW THE ORDER WHICH IS NOT PERMISSIBLE, HENCE , REQUESTED TO DISMISS THE MISCELLANEOUS APPLICATI ON FILED BY THE DEPARTMENT. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THIS TRIBUNAL AS WELL AS THE ORDERS OF THE LOWER AUTHORITIES. THE APPEAL WAS AGAINST THE ORDERS PASSED BY THE CIT U/S 263 OF THE ACT. THE SIMPLE ISSUE IN THIS CASE IS WHETHER THE ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE OR NOT. IN PARA NO.7 OF THE ITATS ORDER, THE ITAT HAS DISCUSSED THE FACTS IN DETAIL AS UNDER : 7. THE SECOND ISSUE IS NON DEDUCTION OF TAX AT SOURCE ON FREIGHT CHARGES. THE AO DURING THE ASSESSMENT PROCEEDINGS HAS VERIFIED THE FREIGHT CHARGES AND DISALLOWED A SUM OF RS.2,00,000/ - WHICH INDICATES THAT THE AO HAS VERIFIED THE FREIGHT CHARGES AND MADE T HE REQUISITE DISALLOWANCE. FURTHER, IN RESPONSE TO THE QUESTIONNAIRE ISSUED BY THE AO, THE ASSESSEE FURNISHED THE 5 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA DETAILS AS PER THE REPLY DATED 07.08.2012. IN POINT NO.8 OF THE QUESTIONNAIRE, THE ASSESSEE FURNISHED THE DETAILS OF FREIGHT CHARGES AND REA SONS FOR NOT ATTRACTING THE DISALLOWANCE. AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO NON DEDUCTION OF TAX AT SOURCE AND GENUINENESS , THE AO HAS MADE THE DISALLOWANCE. FURTHER, THE ASSESSEE HAS SUBMITTED BEFORE THE LD.CIT THAT T HE ENTIRE FREIGHT CHARGES WERE PAID AND THERE WAS NO EXPENDITURE REMAINED UNPAID AS ON THE DATE OF TAKING UP THE CASE FOR REVISION. AS PER THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS V. ADDITIONAL COMMISSIONER OF INCOME - TAX, R ANGE - 1, VISAKHAPATNAM*ITAT VISAKHAPATNAM BENCH (SB)[2012] 20 TAXMANN.COM 244 (VISAKHAPATNAM) PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE ONLY TO AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON DATE 31ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DIS ALLOW EXPENDITURE WHICH HAS BEEN ACTUALLY PAID DURING PREVIOUS YEAR, WITHOUT DEDUCTION OF TDS. WHEREAS, THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX, KOLKATA XI. V. CRESCENT EXPORT SYNDICATE, [2013] 33 TAXMANN.COM 250 (CALCUT TA) DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. AS ON THE DATE OF TAKING UP THE CASE FOR REVISION U/S 263, THERE IS A DIFFERENCE OF OPINION PREVAILING WITH REGARD TO THE LEGAL POSITION ON DISALLOWANCE U/S 40(A)(IA) FOR NON DEDUCTION OF TAX AT SOURCE. IF, T WO VIEWS ARE POSSIBLE ON AN ISSUE AND THE ITO HAS TAKEN ONE VIEW, THE SAID ORDER CANNOT BE TREATED AS PREJUDICIAL AND ERRONEOUS TO THE INTEREST OF THE REVENUE AS HELD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD. [295 ITR 0282]. IN THE IN STANT CASE, THERE IS NO DISPUTE THAT THE FREIGHT PAYMENT ALREADY MADE AND TWO VIEWS ARE POSSIBLE FOR DISALLOWANCE U/S 40(A)(IA) AND THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS. HENCE, THERE IS NO CASE FOR TAKING UP THE CASE FOR REVISION U/S 263. ACCORDING LY, WE SET ASIDE THE ORDER OF THE LD.CIT ON THIS ISSUE AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. FROM THE PLAIN READING OF THE ORDER OF THIS TRIBUNAL, IT IS ABUNDANTLY CLEAR THAT THE AO MADE THE ADDITION OF RS.2 LAKHS OUT OF FREIGHT CHARGES A FTER VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE AND TAKEN CONSCIOUS DECISION THAT ON THE REMAINING AMOUNT, NO DISALLOWANCE IS CALLED FOR. THIS TRIBUNAL ALSO CONSIDERED THE DECISION OF MERILYN SHIPPING & TRANSPORT, HONBLE CALCUTTA HIGH COURT IN THE C ASE OF COMMISSIONER OF INCOME TAX, KOLKATA XI VS. CRESCENT EXPORT SYNDICATE [2013] 33 TAXMANN.COM 250 (CALCUTTA) , ALSO THE DECISION OF CIT VS. MAX INDIA LTD. (SUPRA) AND HELD THAT 6 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA SINCE , THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, THERE IS NO ERROR IN THE ORDER OF THE AO. HENCE, SET ASIDE THE ORDER OF THE CIT PASSED U/S 263. SINCE , T HE ITAT HAS DECIDED THE ISSUE AFTER EXAMINING THE ENTIRE FACTS PLACED BEFORE IT AND FOUND THAT THE AO PAS SED THE ORDER AFTER VERIFYING THE DETAILS AND TAKEN A CONSCIOUS DECISION TO MAKE THE DISALLOWANCE ONLY TO THE EXTENT OF RS. 2 LAKHS OUT OF THE TOTAL SUM OF RS.21,71,350/ - , THERE IS NO ERROR IN THE ORDER OF THE AO WHICH CALLS FOR REVISION U/S 263. 5.1. DU RING THE HEARING OF MISCELLANEOUS APPLICATION AS WELL AS IN THE MISCELLANEOUS PETITION, THE DEPARTMENT HAS PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF PALAM GAS SERVICE (SUPRA). SINCE THE HONBLE SUPREME COURTS DECISION WAS NEVE R CITED DURING THE APPEAL HEARING, THERE WAS NO OCCASION FOR THE ITAT TO EXAMINE WHETHER THE FACTS OF HONBLE SUPREME COURT ARE APPLICABLE TO THE ASSESSEES CASE OR NOT. THEREFORE, WE FIND NO ERROR IN THE ORDER OF THE ITAT WHICH CALLS FOR RECTIFICATION U/ S 254(2) OF THE ACT. ACCORDINGLY, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. 6 . IN THE RESULT, MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. 7 M .A. NO .31 /VIZ/201 8 , A.Y.201 0 - 1 1 S MT. NEELAKUDITI SUBHADRA, NANDIGAMA ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH F EBRUARY , 2020. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 19 . 0 2 .20 20 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE REVENUE INCOME TAX OFFICER, WARD - 1(3), VIJAYAWADA 2 . / THE ASSESSEE SMT.NELAKUDITI SUBHADRA , D.NO.6 - 29, MAIN ROAD NANDIGAMA , KRISHNA DIST. 3. THE COMMISSIONER OF INCOME TAX, VIJAYAWADA 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM