ITO, Trichy v. Shri B.Karthikeyan, Trichy

ITA 1468/CHNY/2011 | 2006-2007
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 146821714 RSA 2011
Assessee PAN AAKPK8392H
Bench Chennai
Appeal Number ITA 1468/CHNY/2011
Duration Of Justice 2 month(s) 8 day(s)
Appellant ITO, Trichy
Respondent Shri B.Karthikeyan, Trichy
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 04-11-2011
Assessment Year 2006-2007
Appeal Filed On 26-08-2011
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI B BENCH CHENNAI. BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER I.T.A. NO. 1468/MDS/2011 ASSESSMENT YEAR: 2006-07 THE INCOME TAX OFFICER WARD IV(1) NO. 44 WILLIAMS ROAD CANTONMENT TRICHY 620 001. VS. SHRI B. KARTHIKEYAN PROP. KUMAR INDUSTRIES D-70 INDUSTRIAL ESTATE THUVAKUDI TRICHY 620 015. [PAN: AAKPK8392H] (APPELLANT) (RESPONDENT) I.T.A. NO. 1469/MDS/2011 ASSESSMENT YEAR: 2006-07 THE INCOME TAX OFFICER WARD IV(1) NO. 44 WILLIAMS ROAD CANTONMENT TRICHY 620 001. VS. M/S. D.G.R. ENGINEERING VENTURES NO.6 SIDCO INDUSTRIAL ESTATE THIRUVERUMBUR TRICHY 620 014. [PAN: AACFD8791R] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI R.B. NAIK CI T DR ASSESSEE BY : SHRI S. KEERTHIRAJAN C.A. DATE OF HEARING : 3 1 . 1 0.2011 DATE OF PRONOUNCEMENT 04.11.2011 ORDER PER N.S. SAINI ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE DEPARTMENT AGAI NST THE SEPARATE ORDERS OF THE LD. CIT(A) TIRUCHIRAPALLI DATED 01.0 7.2011 AND 27.06.2011. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 2 2. THE REVENUE IN BOTH THE APPEALS HAS RAISED CO MMON GROUNDS OF THE APPEAL. THE SOLE ISSUE INVOLVED IN ALL THE GROUNDS OF BOTH THE APPEALS IS THAT (I) THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING TH E DISALLOWANCE OF ` .15 72 626/- MADE UNDER SECTION 40(A)(IA) FOR THE F AILURE TO DEDUCT TDS ON THE PAYMENTS MADE/CREDITED TO M/S. M.N.V. CONTACTOR AND M/S. BALAJI TRANSPORT AND TO REMIT THE DEDUCTED TAX AT SOURCE I NTO GOVERNMENT ACCOUNT BEFORE 31.03.2006 BY THE ASSESSEE SHRI B. KARTHIKEY AN; AND (II) THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWAN CE OF ` .17 51 710/- PAID TO SHRI V. KANNAN TOWARDS LABOUR CONTRACT IN THE ASSES SMENT YEAR 2006-07 AND ` .2 29 269/- PAID TO THE SUB-CONTRACTOR M/S. R.J. TR ANSPORTS FOR THE FAILURE TO DEDUCT TDS ON PAYMENTS MADE/CREDITED TO THE CONTRAC TOR AND TO REMIT THE DEDUCTED TAX AT SOURCE INTO GOVERNMENT ACCOUNT BEFO RE 31.03.2006 BY THE ASSESSEE M/S. D.G.R. ENGINEERING VENTURES. 3. THE LD. DR SUBMITTED THAT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL. BOTH THE CASES WERE ARGUED T OGETHER BEFORE US. THEREFORE FOR THE SAKE OF CONVENIENCE BOTH THE APP EALS ARE DISPOSED OF BY THIS COMMON ORDER. THE FACTS IN THE CASE OF SHRI B. KARTHIKEYAN ARE DISCUSSED HEREINAFTER TO APPRECIATE THE FACTS INVOL VED IN THE ISSUES AND ARE TAKEN AS COMMON FACTS INVOLVED IN BOTH THE CASES. 4. THE FACTS AS EMANATING FROM THE ORDER OF THE AS SESSING OFFICER ARE THAT THE ASSESSEE HAS CREDITED/PAID THE AMOUNTS TO THE LABOUR CONTRACTOR AND TRANSPORT CONTRACTORS ACCOUNT ON WHICH TDS HAS BEEN DEDUCTED ONLY IN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 3 THE MONTH OF MARCH 2006 AND REMITTED INTO THE GOVE RNMENT ACCOUNT IN APRIL 2006. ACCORDING TO THE ASSESSING OFFICER AS PER SE CTION 40(A)(IA) OF THE INCOME TAX ACT THE PAYMENTS CREDITED TO THE PARTIE S ACCOUNT OR PAID TO THE PARTIES UPTO FEBRUARY 2006 WHICH IS EXIGIBLE FOR TAX DEDUCTION UNDER CHAPTER XVIIB OF THE INCOME TAX ACT THE TAX DEDUCT ION AT SOURCE SHOULD HAVE BEEN EFFECTED AND REMITTED BEFORE 31.03.2006. WHEREAS THE ASSESSEE HAS DEDUCTED THE TAX FOR THE ENTIRE AMOUNT CREDITED /PAID FOR THE ENTIRE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006- 07 ONLY IN MARCH 2006 AND REMITTED THE SAME ONLY IN APRIL 2006. HE THER EFORE DISALLOWED THE DEDUCTION FOR THE PAYMENTS CREDITED/PAID TO VARIOUS PARTIES WHICH WAS EXIGIBLE FOR TDS UPTO 28.02.2006 FOR NON-DEDUCTION/ NON-REMITTANCE OF TDS ACCORDING TO SECTION 40(A)(IA). THE CREDITS/PAYMENT S IN THE LEDGER ACCOUNT OF THE PARTIES ARE AS UNDER: NAME L.F. NO. AMOUNTS CREDITED/PAID DURING THE YEAR M.N.V. CONTRACTOR 166 ` .13 73 647 BALAJI TRANSPORT 60 `. 1 78 979 TOTAL `. 15 72 626 4.1 BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBM ITTED THAT SINCE THE ASSESSEE WAS BEING AN INDIVIDUAL THE PAYMENTS NEED NOT BE DISALLOWED UNDER SECTION 40(A)(IA). THE ASSESSING OFFICER HAS OBSERVED THAT THE ARGUMENTS OF THE ASSESSEE IS NOT CORRECT SINCE EVEN INDIVIDUALS WHOSE ACCOUNTS ARE LIABLE FOR STATUTORY AUDIT UNDER SECTI ON 44AB OF THE I.T. ACT ARE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 4 COVERED BY THE TDS PROVISIONS AND ANY VIOLATION THE REOF WOULD AUTOMATICALLY WARRANT DISALLOWANCE UNDER SECTION 40(A)(IA). 5. IN APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE S UBMITTED THAT THE AMOUNTS CREDITED TO M.N.V. CONTRACTOR WAS ONLY ON T HE BASIS OF ROUGH ESTIMATE PENDING COMPLETION OF VARIOUS JOBS WHICH WERE IN DIFFERENT STAGES OF EXECUTION. THE FINAL BILL WAS RAISED IN THE MONT H OF MARCH 2006 AND TAX WAS DEDUCTED THEREOF. THE TAX SO DEDUCTED WAS REMIT TED ON 05.04.2006 AND THERE WAS NO UNJUST ENRICHMENT AND SIMILAR WAS THE CASE WITH BALAJI TRANSPORT. THE ASSESSEE ALSO RELIED ON THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. LAXMI ENGINEER ING WORKS IN ITA NO. 662/MDS/2010 DATED 07.01.2011. 5.1 THE ASSESSEE FURTHER CONTENDED THAT IN VIEW OF THE AMENDED PROVISIONS OF 40(A)(IA) AS ALSO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. REPORTED IN 319 IT R 306 THE SUBSTITUTION MADE BY THE FINANCE ACT 2010 TO THE PROVISIONS OF SECTION 40(A)(IA) SHOULD BE READ TO BE RETROSPECTIVE AND THE ASSESSEE HAD MA DE THE PAYMENT OF TDS BEFORE THE DUE DATE OF FILING THE RETURN THE ASSES SEE SHOULD BE HELD TO BE ENTITLED TO THE EXPENDITURE AS CLAIMED. IN THE PRES ENT CASE IT IS NOTICED THAT ORIGINALLY BEFORE THE SUBSTITUTION OF THE FINANCE A CT 2010 SUB-CLAUSE (A) DID RECOGNIZE THAT IF THE IDS WAS DEDUCTED AND IT RELATED TO THE LAST MONTH OF THE PREVIOUS YEAR AND THE SAME WAS PAID BEFORE THE DUE DATE SPECIFIED IN SUB- SECTION (1) OF SECTION 139 FOR FILING OF RETURN THE BENEFIT WAS LIABLE TO BE GIVEN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 5 TO THE ASSESSEE. THUS BY THE SUBSTITUTION BY FINANC E ACT 2010 THE SUB- CLAUSE (A) HAS BEEN MADE APPLICABLE TO THE TDS DEDU CTED FOR THE WHOLE YEAR SUBJECT TO THE CONDITION THAT THE TDS IS PAID BEFORE THE DUE DATE FOR FILING THE RETURN U/S 139(1). THIS SUBSTITUTION HAS BEEN MADE OBVIOUSLY TO REMOVE UNINTENDED CONSEQUENCES AND CONSEQUENTLY IN VIEW OF THE PRINCIPLES LAID DOWN IN THE HON'BLE SUPREME COURT I N THE CASE OF ALOM EXTRUSIONS LTD. REFERRED TO SUPRA. IN THE PRESENT CASE AS IT IS NOTICED THAT THE ASSESSEE HAS DEDUCTED TDS ON THE PAYMENTS MADE TO BOTH MNV CONTRACTOR AND BALAJI TRANSPORT IN RESPECT OF TRANS PORT CONTRACTS AND IT IS NOTICED THAT THE TDS HAS ALSO BEEN PAID MUCH BEFORE THE DUE DATE OF FILING THE RETURN U/S 139(1). 6. THE LD. CIT(A) AFTER CONSIDERING THE ABOVE SUB MISSIONS VACATED THE DISALLOWANCE BY OBSERVING THAT AS THE ASSESSEE HAS REMITTED THE AMOUNT OF TDS IN THE MONTH OF APRIL LONG BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME THE DISALLOWANCE MADE BY THE ASSESSING OFFI CER UNDER SECTION 40(A)(IA) IS NOT CALLED FOR. 7. BEING AGGRIEVED BY THE SAID ORDER OF THE LD. CI T(A) THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. DR VEHEMENTLY ARGUED AND RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE LD . CIT(A) HAS FAILED TO NOTICE THAT THE AMENDMENT OF SECTION 40(A)(IA) OF T HE I.T. ACT CAME INTO EFFECT FROM 01.04.2010. SO THE BENEFIT OF AMENDMEN T CANNOT BE GIVEN WITH I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 6 RETROSPECTIVE EFFECT. THE EARLIER AMENDMENT OF FINA NCE ACT 2008 RELATED TO DEDUCTION OF PAYMENT OF TDS FOR THE INSTALLMENT FOR THE MONTH OF MARCH WHICH IS NOT THE CASE HERE. THEREFORE THE LD. CIT( A) ERRED IN ALLOWING THE DEDUCTION FOR THE ENTIRE AMOUNT. HE FURTHER ARGUED THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. [319 ITR 306] WHICH IS DISTIN GUISHABLE AND NOT APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES O F THIS CASE. 9. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANCE CASE THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S DEDUCTED TAX AT SOURCE IN RESPECT OF PAYMENTS MADE FOR LABOUR CONTR ACTOR AND TRANSPORTING CONTRACT ONLY IN THE LAST MONTH OF THE PREVIOUS YEA R AND DEPOSITED THE TAX SO DEDUCTED AT SOURCE ON 05.04.2006 I.E. BEFORE THE DU E DATE OF FURNISHING OF RETURN UNDER SECTION 139(1) OF THE ACT. ACCORDING T O THE ASSESSING OFFICER IN RESPECT OF ` .15 95 485/- IN THE CASE OF SHRI B. KARTHIKEYAN AND ` .19 80 979/- IN THE CASE OF M/S. D.G.R. ENGINEERING VENTURES TH E TAX WAS DEDUCTABLE IN EARLIER MONTHS AND THE ASSESSEE DEDUCTED THE TAX ON LY IN THE MONTH OF MARCH 2006 HE DISALLOWED THE AFORESAID AMOUNTS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 7 11. ON APPEAL THE LD. CIT(A) DELETED THE AFORESAI D DISALLOWANCE ON THE GROUND THAT THE PAYMENT OF TAX DEDUCTED AT SOURCE W AS MADE MUCH BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME UNDER SE CTION 139(1) OF THE ACT. 12. BEFORE US THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT AS THE TAX WAS DEDUCTABLE IN EAR LIER MONTHS AND AS THE TDS AMOUNT WAS NOT PAID WITHIN THE RELEVANT FINANCI AL YEAR THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. 13. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF CHENNAI B BENCH OF THE T RIBUNAL IN THE CASE OF ITO VS. M/S. LAXMI ENGINEERING WORKS IN ITA NO. 662 /MDS/2010 PASSED IN THE ASSESSMENT YEAR 2006-07 ORDER DATED 07.01.2011. IN THE AFORESAID DECISION THE TRIBUNAL FOUND ON THE BASIS OF MATERI AL PRODUCED BEFORE IT THAT NO TAX WAS DEDUCTABLE UNDER SECTION 194(C) OF THE A CT BY THE ASSESSEE. IN THE INSTANCE CASE WE FIND THAT THE ASSESSEE HAS BR OUGHT NO MATERIAL BEFORE US TO SHOW THAT THE TAX WAS NOT DEDUCTABLE AT SOURC E IN RESPECT OF THE AMOUNT AT ISSUE. THUS WE FIND THAT THE DECISION RE LIED UPON BY THE LD. AR OF THE ASSESSEE IS NOT AT ALL APPLICABLE TO THE FACTS OF THE INSTANCE CASE. 14. HOWEVER WE FIND FROM A READING OF CLAUSE (A) OF PROVISO TO SECTION I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 8 40(A)(IA) THAT WHEN THE TAX WAS DEDUCTABLE AND TAX WAS ACTUALLY DEDUCTED IN THE LAST MONTH OF THE RELEVANT PREVIOUS YEAR THEN NO DISALLOWANCE UNDER SECTION 40(A)(IA) SHALL BE MADE AFTER THE TAX SO DE DUCTED IN THE LAST MONTH WAS PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT ON OR BEFORE THE SPECIFIED DATE UNDER SECTION 139(1) OF THE ACT. IN THE INSTAN CE CASE WE FIND THAT THE ASSESSEE COULD NOT BRING ANY MATERIAL BEFORE US TO DISPUTE THE FACT THAT THE TAX WAS DEDUCTABLE ON ` .15 95 485/- IN THE CASE OF SHRI B. KARTHIKEYAN AND ` .19 80 979/- IN THE CASE OF M/S. D.G.R. ENGINEERING VENTURES. HOWEVER IT IS AN ADMITTED FACT THAT TAX ON THE AFORESAID AMOUN T WAS ACTUALLY DEDUCTED BY THE ASSESSEE ONLY IN THE MONTH OF MARCH 2006. H OWEVER IT IS ALSO AN ACCEPTED FACT THAT THE TAX SO DEDUCTED IN THE MONTH OF MARCH 2006 WAS PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT ON 05.04.20 06. THUS IN OUR CONSIDERED VIEW THE ISSUE IS COVERED BY CLAUSE (A) OF PROVISO TO SECTION 40(A)(IA) OF THE ACT AND THEREFORE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. OUR ABO VE VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE MUMBAI B BENCH O F THE TRIBUNAL IN THE CASE OF BAPUSHAEB NANASAHEB DHUMAL VS. ACIT IN ITA NO. 6628/MUM/2009 PASSED IN ASSESSMENT YEAR 2005-06 ORD ER DATED 25.06.2010. WE THEREFORE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUNDS OF APPEALS OF THE REVENUE IN BOTH THE C ASES UNDER CONSIDERATION. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1468 & 1469 468 & 1469 468 & 1469 468 & 1469/ // /MDS/ MDS/ MDS/ MDS/11 1111 11 9 15. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.11.2011. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI DATED THE 04.11.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.