DCIT, CC - 3 (2), CHENNAI V. SHRI K. DHANASEKHARAN, CHENNAI

MA 73/CHNY/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8659 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-11-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Non-deduction of tax; TDS; Set aside
• Section: 144; 40(a)(ia); 201(1); 254(2); 40a(ia)

Judgement Text

आयकर अपीलȣय अͬधकरण, ‘बी’ Ûयायपीठ, चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘B’ BENCH, CHENNAI Įी वी. द ु गा[ राव, ÛयाǓयक सदèय एवं Įी जी. मंज ु नाथ, लेखा सदèय के सम¢ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER Misc. Application No. 73/Chny/2022 [In ITA No. 1869/Chny/2019] (Ǔनधा[रणवष[ / Assessment Year: 2010-11) Assistant Commissioner of Income Tax, Central Circle -3(2), Chennai. Vs Shri. K. Dhanasekaran, 59/31, Kachaleeswarar Agraharam Street, Parrys, Chennai – 600 001. PAN : ADTPD-8931-D (ᮧाथᭅक /Petitioner) (Ĥ×यथȸ/Respondent) ᮧाथᭅक कȧ ओरसे/ Petitioner by : Mr. P. Sajit Kumar, JCIT Ĥ×यथȸ कȧ ओरसे/Respondent by : Mr. S. Sridhar, Advocate स ु नवाई कȧ तारȣख/Date of hearing : 11.11.2022 घोषणा कȧतारȣख /Date of Pronouncement : 11.11.2022 आदेश / O R D E R PER G. MANJUNATHA, AM: The Revenue has filed present Miscellaneous Application u/s. 254(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) against the order of the Tribunal dated 10.02.2022 in ITA No. 1869/Chny/2019, relevant to assessment year 2010-11. 2. The Revenue had narrated facts and mistakes stated to be apparent on record from the order of the Tribunal dated 10.02.2022 and relevant :-2-: MA No: 73/Chny/2022 contents of the Miscellaneous Application filed by the Revenue are reproduced as under: 1. This office received ITAT's order dated 10.02.2022 in ITA No.1869/Chny/2019 in the case of Shri K. Dhanasekaran for the AY 2010-11. 2. The assessment for the AY 2010-11 in the case of the assessee, Shri K. Dhanasekaran, PAN: ADTPD8931D, was completed u/s 144 r.w.s.147 of the I.T. Act, 1961, on 29.02.2016: AY Date of filing of return Income Returned (Rs.) Income Assessed (Rs.) 2010-11 17.09.2010 19,62,050/ 22,95,215/- Addn: 3,33,166/ - 3. In the case of the assessee, assessment was completed by making addition of Rs.3,33,166/- u/s 40(a)(ia) of the Income Tax Act, 1961, to the returned income of Rs. 19,62,050/- thereby the total income assessed in the Order u/s 144 r.w.s.147 is Rs.22,95,215/-. The details of expenditure disallowed u/s 40a(ia) of the Act, for the reason of non-deduction of tax at source by the assessee is as below: i) Cholamandalam DBS Finance Rs. 75,052/ ii) GE Money Rs. 25,384/ iii) India Bulls Loans Rs. 1,28,766/ iv) Reliance Consumer Finance Rs. 61,990/ v) Religare Finvest Rs. 41,974/ ---------------- Rs.3,33,166/ 4. Aggrieved by the same, the assessee filed appeal before the CIT(A)-19, Chennai. Before, the CIT(A), the assessee took the plea that the provisions of Section 40(a)(ia) of the Act is applicable only on the amounts which are payable as at the end of the year and not on the expenditure which have been paid during the year and also that the Assessing Officer did not offer adequate opportunity to the assessee while completing the assessment u/s 144 r.w.s.l+l of the Act. The ld.CIT(A), vide his order in ITA No.13 /16-17 dated 26.03.2019 dismissed assessee's appeal by holding that provisions of Section 40(a)(ia) are attracted on amounts paid also. 5. Aggrieved by the order of the CIT(A), the assessee filed further appeal before the Hon'ble ITAT. The Hon'ble ITAT B' Bench, vide :-3-: MA No: 73/Chny/2022 their order in ITA No. 1869/Chny/2019 dt.10.02.2022, relying on its own decision in the case of M/s Mani Nagappa Motors Madurai Pvt. Ltd. Vs. ITO in ITA No.1612/Chny/2019 dated 07.02.2021 remitted the issue back to the file of the Assessing Officer to consider the issue in the light of the claim of the assessee before the Hon'ble ITAT that as per the second proviso to Section 40(a)(ia), disallowance u/s 40(a)(ia) is not called for if the payees have included the said income in their returns of income filed for the relevant assessment year. The second proviso to Section 40(a)(ia) has been inserted by the Finance Act, 2012, w.e.f.01.04.2013 and corresponding first proviso to sub-section (1) of Section 201(1) was inserted by the Finance Act w.e.f.01.07.2012. In such a case, both provisos are not applicable for the A Y 2010-11. 6. In the decision of the Coordinate Bench of the Hon 'ble ITAT in the case of M / s Mani Nagappa Motors Pvt. Ltd., Madurai, Vs. ITO, the assessment year involved is 2014-15 in which the second proviso to Section 40(a)(ia) and first proviso to subsection (1) of Section 201(1) are very much applicable, whereas in the case of the assessee, Shri K. Dhanasekaran, for the AY 2010-11, the said provisos are not applicable. Therefore, considering the claim of the assessee in line with the decision of the Coordinate Bench of the Hon'ble ITAT in the case of M / s Mani Nagappa Motors Pvt. Ltd. may not be correct. Thus, to that extent, there is mistake apparent from record in the order of the Hon'ble ITAT in ITA No. 1869/Chny/2019 dt.10.02.2022. 7. Therefore, Miscellaneous Petition is hereby submitted before the Hon'ble ITAT with the approval of the Director General of Income Tax (Investigation), Chennai, seeking to re-adjudicate on the issue of disallowance u/s 40(a)(ia) made in the case of the assessee for the AY 2010-11.” 3. We have heard both the parties and considered relevant contents of Miscellaneous Application filed by the Revenue and we find that the Tribunal has set aside the issue to the file of the AO, in light of second proviso to section 40(a)(ia) of the Act to ascertain whether the recipient of sum paid by the assessee have included payment in the return of income :-4-: MA No: 73/Chny/2022 and paid necessary taxes thereon, and if so, the AO is directed to reconsider the issue of disallowance of expenses u/s. 40(a)(ia) of the Act. The tribunal, while deciding the issue has followed the decision of Co- ordinate bench of ITAT, Chennai in the case of M/s. Mani Nagappa Motors Madurai Pvt. Ltd vs ITO in ITA No. 1612/Chny/2019 dated 07.02.2021. The Revenue, now contended that the amendment by way of second proviso to section 40(a)(ia) of the Act is from assessment year 2014-15 onwards and same cannot be applied for the assessment year in question involved in this appeal. We do not find any merit in contentions of the Revenue, because the issue is settled now by the decision of Hon’ble Supreme Court in the case of Hindustan Coco Cola Beverages Pvt. Ltd vs CIT (2007) 293 ITR 226 (SC), where a similar view has been expressed and held that if payees included sum paid by the assessee in their return of income and paid relevant taxes, then sum paid by the assessee without TDS cannot be disallowed u/s. 40(a)(ia) of the Act. Since, the findings recorded by the Tribunal is in accordance with law laid down by the Supreme Court decision in the case of Hindustan Coco Cola Beverages Pvt. Ltd vs CIT (supra), we are of the considered view that there is no merit in petition filed by the Revenue for rectification of mistake u/s. 254(2) of the Act and thus, we dismissed Miscellaneous Application filed by the Revenue. :-5-: MA No: 73/Chny/2022 4. In the result, Miscellaneous Application filed by the Revenue is dismissed. Order pronounced in the open court on 11 th November, 2022 Sd/- Sd/- (वी. द ु गा[ राव) (जी. मंज ु नाथ) (V.Durga Rao) (G.Manjunatha) ÛयाǓयक सदèय /Judicial Member लेखा सदèय / Accountant Member चेÛनई/Chennai, Ǒदनांक/Dated : 11 th November, 2022 JPV आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. Appellant 2. Respondent 3.आयकर आय ु Èत (अपील)/CIT(A) 4. आयकर आय ु Èत/CIT 5. ͪवभागीय ĤǓतǓनͬध/DR 6. गाड[ फाईल/GF