SHRI. C.M.MALLAD V. THE COMMISSISONER OF INCOME-TAX

ITA/200002/2016

AI Insights

The case involves Shri C.M Mallad, a P.W.D contractor, who appealed against the order of the Income Tax Appellate Tribunal, Bengaluru, which related to the assessment year 2005-06. The primary issue was the disallowance of sub-contract expenditure due to non-deduction of tax at source, as examined under Section 40(a)(ia) of the Income Tax Act. The Commissioner of Income-Tax had earlier set aside the original assessment order, finding it erroneous and prejudicial to the interest of the revenue. The High Court's decision focused on the procedural aspects of how the ITAT should handle the pending appeal, emphasizing the retrospective effect of the legislative amendment to Section 40(a)(ia).

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 691465 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 23-08-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMEET KUMAR DESHPANDE
• Assessee Lawyers: A SHANKAR
• Keywords: Assessment Year 2005-06; Erroneous and Prejudicial; Income tax appeal; Re-compute Income; Sub-contract expenditure; Tax deduction at source
• Section: 143(3); 143(1); 263; 40(a)(ia); 260A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 23RD DAY OF AUGUST 2019 PRESENT THE HON’BLE MRS. JUSTICE S. SUJATHA AND THE HON’BLE MR. JUSTICE N.K.SUDHINDRARAO ITA No.200002/2016 Between: Shri C.M Mallad P.W.D Contractor Vijayanagar Colony Solapur Road, Bijapur – 586 101 …Appellant (By Sri A.Shankar, Senior Counsel) And: The Commissioner of Income-Tax Karnataka (Central) Central Revenue Building Queens Road Bangalore – 560 001 …Respondents (By Sri Ameet Kumar Deshpande, Advocate) This ITA is filed under Section 260A of the ITA, praying to formulate the substantial questions of law as stated above 2 and answer the same in favour of the appellant. B) To allow the appeal and set aside the findings therein to the extent against the appellant in the order passed by the Tribunal in ITA No.501(B)/2009 dated 30.09.2009 referred to as Annexure A relating to assessment year 2005-2006. This appeal coming on for orders this day, S. SUJATHA J., delivered the following: JUDGMENT This income tax appeal is filed under Section 260 A of the Income Tax Act, 1961 (‘the Act’ for short) assailing the order of the Hon’ble Income Tax Appellate Tribunal, Bengaluru “A” Bench, Bengaluru in ITA No.501(B)/2009 dated 30.09.2009 relating to the assessment year 2005-06. 2. The appellant is an individual engaged in execution of works contracts. The appellant in turn sub- contracts certain portions of the work to independent third parties. Relating to the assessment year 2005-06, the return filed by the appellant was processed under 3 Section 143(1) of the Act and taken up for scrutiny. Finally, assessment order was passed under Section 143(3) of the Act by making certain additions to the returned income. Subsequently, the Commissioner of Income-Tax, Karnataka Central, Bengaluru (for short ‘CIT’) issued notice dated 07.07.2008 under Section 263 of the Act proposing to pass an order under Section 263 as the assessment order is erroneous and prejudicial to the interest of the revenue on the ground that tax deduction at source was not made and the aspect involving disallowance under Section 40(a)(ia) of the Act was not examined by the assessing officer. The CIT in the order under Section 263 of the Act, confirmed that the assessment order is erroneous and prejudicial to the interest of the revenue, setting aside the assessment order directed the assessing officer to re-compute the income of the appellant by disallowing the sub-contract expenditure. The appellant being aggrieved by the order of the CIT passed under Section 263 of the Act, preferred the appeal 4 before the Income Tax Appellate Tribunal (ITAT), which came to be dismissed. Being aggrieved, the assessee is before this Court. 3. Appeal No.727/Bng/2016 filed by the assessee is pending before the ITAT against the order giving effect to, the order passed under Section 263 of the Act by the Commissioner of Income Tax. 4. In view of the second proviso to Section 40(a)(ia) of the Act is held to be declaratory and curative and has retrospective effect from 1st April 2005 by various Hon’ble High Courts including the jurisdictional High Court in ITA No.100056/2014 disposed of today, the order giving effect to, the order of CIT under Section 263 of the Act requires to be considered in the pending appeal before the ITAT being uninfluenced by any of the observations made in the said order i.e., order passed under Section 263(1) as well as the order in ITA No.501(B)/2009 dated 30.09.2009 by ITAT. Hence, the 5 Hon’ble ITAT shall dispose of the pending Appeal No.727/Bng/2016 in accordance with law relating to the assessment year 2005-2006 as aforesaid. In view of the aforesaid, question of framing of substantial question of law would not arise. Accordingly, ITA stands disposed of in terms of the above. Sd/- JUDGE Sd/- JUDGE LG/sn "