The ACIT, Central Circle-2,, Nadiad v. Kant Associates, Nadiad

ITA 2429/AHD/2011 | 2005-2006
Pronouncement Date: 30-04-2015 | Result: Dismissed

Appeal Details

RSA Number 242920514 RSA 2011
Assessee PAN AAGFK4649D
Bench Ahmedabad
Appeal Number ITA 2429/AHD/2011
Duration Of Justice 3 year(s) 7 month(s) 4 day(s)
Appellant The ACIT, Central Circle-2,, Nadiad
Respondent Kant Associates, Nadiad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-04-2015
Assessment Year 2005-2006
Appeal Filed On 26-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI SHAILENDRA KR. YADAV JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTAN T MEMBER ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 BARODA (APPELLANT) VS M/S. KANT ASSOCIATES NR. KIDNEY HOSPITAL PETLAD ROAD NADIAD- 387001 PAN: AAGFK4649D (RESPONDENT) M/S. KANT ASSOC IATES NR. KIDNEY HOSPITAL PETLAD ROAD NADIAD- 387001 PAN: AAGFK4649D (CROSS OBJECTOR) VS ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 BARODA (RESPONDENT) REVENUE BY: SMT. SONIA KUMAR SR.D.R. ASSESSEE BY: SHRI P.M. MEHTA A.R. DATE OF HEARING : 24-04-2015 DATE OF PRONOUNCEMENT : 30-04-2015 ITA NO. 2429/AHD/2011 ASSESSMENT YEAR 2005-06 C.O. NO. 226/AHD/2011 (IN ITA NO. 2429/AHD/2011) ASSESSMENT YEAR 2005-06 I.T.A NO. 2429/AHD/2011 & CO NO. 226/AHD/2011 A.Y. 2005-06 PAGE NO ACIT VS. M/S. KANIT ASSOCIATES 2 / ORDER PER : SHAILENDRA KR. YADAV JUDICIAL MEMBER:- REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF LD. CIT(A)-IV AHMEDABAD DATED 29 TH JULY 2011 ON FOLLOWING GROUNDS:- 1. THE LD. C1T(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 8 91 500/- MADE BY THE ASSESSING OFFICER BY HOLDING THAT AMENDMENT MADE IN SECTION 40(A)(IA) OF THE INCOME TAX ACT BY FINANCE ACT- 2010 HAVE RETROSPECTIVE EFFECT. 1.1 IN THE PROCESS THE LD. CIT(A) FAILED TO TAKE COGNIZANCE OF OBJECT CLAUSE OF AMENDMENT EFFECTED I N SECTION 40(A)(IA) OF I T. ACT AS MENTIONED IN NOTES ON CLAUSES OF FINANCE ACT 2010 AS WELL AS MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL - 2010. 2. CROSS OBJECTION IS FILED BY THE ASSESSEE ON THE FOLLOWING GROUND:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) ERRED IN NOT UPHOLDING THE ASSESSEES ALTERNATIVE CONTENTION ALSO WHICH WAS TO THE EFFECT THAT THE PROVISIONS OF SECTION 40 ARE NOT AT ALL ATTRACT ED IN THIS CASE INSOFAR AS THE EXPENDITURE INVOLVED IS NO T COVERED BY ANY OF THE PROVISIONS OF SECTION 30 TO 3 8 AND HENCE THE QUESTION OF APPLYING SUB-CLAUSE (IA) OF C LAUSE (A) OF SECTION 40 DOES NOT ARISE. 3. IN THIS CASE ORIGINAL ASSESSMENT ORDER WAS PASSE D U/S. 143(3) OF THE ACT ON 29-03-2007. A DISALLOWANCE OF RS. 11 07 132/- WAS MADE BY INVOKING THE PROVISIONS OF SECTION I.T.A NO. 2429/AHD/2011 & CO NO. 226/AHD/2011 A.Y. 2005-06 PAGE NO ACIT VS. M/S. KANIT ASSOCIATES 3 40(A)(IA) OF THE ACT. ABOVE AMOUNT WAS PAID TOWARDS CONSTRUCTION EXPENSES TO M/S. DHARNENEDRA DEVELOPER S. ASSESSEE DEDUCTED TAX OF RS. 42 000/- ON 31-03-2005 BUT DEPOSITED THE SAME TO GOVERNMENT ACCOUNT ON 28-05-2 005. HOWEVER AS PER SECTION 201 OF THE ACT R.W. RULE 30 OF INCOME TAX RULES ASSESSEE WAS REQUIRED TO DEPOSIT SUCH TD S TO THE ACCOUNT LATEST BY 07-04-2005. THEREFORE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) DISALLOWANCE OF CO NSTRUCTION EXPENSES AT RS. 11 07 132/- WAS MADE IN FIRST ROUND . 3.1 ABOVE DISALLOWANCE WAS CHALLENGED BEFORE CONCER NED CIT(A) WHEREIN HE VIDE ORDER DATED 11-09-2007 CONFI RMED THE ADDITION SO MADE BY AO. 3.2 ISSUE WAS CHALLENGED BEFORE ITAT WHEREIN VIDE I TS ORDER DATED 19-02-2009 SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO VERIFY THE AMOUNTS OF DHA RNENEDRA DEVELOPERS AND DECIDE THE ISSUE AFRESH. ITAT ALSO DIRECTED TO EXAMINE THE ISSUE OF TDS IN VIEW OF THE AMENDMENT O F SECTION 40(A)(IA) BY FINANCE ACT 2008 W.E.F. 01-04-2005. 3.3 ASSESSING OFFICER FINALIZED THE SET ASIDE ASSES SMENT ORDER AS PER DIRECTION OF ITAT WHEREBY MAKING DISALLOWANC E OF RS. 8 91 500/- IN VIEW OF THE AMENDED PROVISIONS OF SEC TION 40(A)(IA) EFFECTED W.E.F. 01-04-2005. AS PER AMENDE D PROVISIONS NO DISALLOWANCE OF EXPENDITURE IS TO BE MADE IF TAX I.T.A NO. 2429/AHD/2011 & CO NO. 226/AHD/2011 A.Y. 2005-06 PAGE NO ACIT VS. M/S. KANIT ASSOCIATES 4 WHICH WAS DEDUCTABLE AND SO DEDUCTED DURING THE LAS T MONTH OF THE PREVIOUS YEAR IS PAID TO THE GOVERNMENT ACCO UNT UPTO TO THE DUE DATE OF FILING OF RETURN OF INCOME. HOWEVE R TAX DEDUCTABLE AND SO DEDUCTED BEFORE MOTH OF MARCH MU ST HAVE PAID BY END OF MARCH ONLY SO AS TO CLAIM DEDUCTION OF SUCH RELATED EXPENSES. IN VIEW OF THIS AO DISALLOWED T HE CLAIM OF CONSTRUCTION OF EXPANSES AMOUNTING TO RS. 8 91 500/ - MADE DURING THE PERIOD PRIOR TO THE MARCH 2005 FOR WHIC H TAX WAS DEDUCTED BUT NOT PAID BY THE END OF PREVIOUS YEAR I .E. MARCH 2005 BY INVOKING THE AMENDED PROVISION OF SECTION 4 0(A)(IA). 3.4 THE MATTER WAS AGAIN CARRIED BEFORE FIRST APPEL LATE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED O N BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) GRAN TED RELIEF TO THE ASSESSEE. SAME STAND HAS BEEN OPPOSED ON BE HALF OF REVENUE INTERALIA STATING THAT CIT(A) ERRED IN DEL ETING THE ADDITION OF RS. 8 91 500/- MADE BY AO. ACCORDINGL Y ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER O N THE ISSUE BE RESTORED. ON THE OTHER HAND LD. AUTHORIZED REP RESENTATIVE SUPPORTED THE ORDER OF LD. CIT(A) 4. AFTER GOING THROUGH RIVAL SUBMISSION AND MATERIA L ON RECORD WE FIND THAT ISSUE BEFORE US IS WHETHER ASS ESSEE IS ENTITLED TO GET BENEFIT OF AMENDED PROVISIONS OF SE CTION 40(A)(IA) BROUGHT BY FINANCE ACT 2010 W.E.F. 01-04-2010. AS PER THIS AMENDED PROVISION NO DISALLOWANCE CAN BE MADE IF A FTER I.T.A NO. 2429/AHD/2011 & CO NO. 226/AHD/2011 A.Y. 2005-06 PAGE NO ACIT VS. M/S. KANIT ASSOCIATES 5 DEDUCTION OF TAX THROUGH THE PREVIOUS YEAR SAME HA S BEEN PAID ON OR BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME. WE FIND THAT ITAT IN CASE OF KANUBHAI RAMJIBHAI MAKWAN A HELD AS UNDER:- 'IN VIEW OF THE ABOVE DISCUSSION FOLLOWING THE CAS E LAWS OF HON'BLE APEX COURT AND OF HON'BLE HIGH COURTS CITED ABOVE WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 4 0(A)(IA) AS AMENDED BY THE FINANCE ACT 2010 W.E.F 1-4-2010 WH ICH HAS NEWLY BEEN INSERTED BY THE FINANCE (NO.2) ACT 2004 WITH EFFECT FROM 1-4-2005 TO SECTION 40 OF THE ACT IS REMEDIAL IN NATURE DESIGNED TO ELIMINATE UNINTENDE D CONSEQUENCES WHICH MAY UNDUE HARDSHIP TO THE TAXPAY ERS AND WHICH MADE THE PROVISION UNWORKABLE OR A SPECIF IC SITUATION AND IS OF CLARIFICATORY NATURE AND THER EFORE HAS TO BE TREATED AS RETROSPECTIVE WITH EFFECT FROM 01- 04-2005 THE DATE ON WHICH SECTION 40(A)(IA) HAS BEEN INSERT ED BY THE FINANCE (NO.2) ACT 2004. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 5. LD. AUTHORIZED REPRESENTATIVE BEFORE US FURTHE R POINTED OUT THAT DECISION OF KANUBHAI RAMJIBHAI MAKWANA HAS BEEN UPHELD BY HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 819/AHD/2011 VIDE ORDER DATED 10-12-13 HOLDING THAT AMENDMENT TO SECTION 40(A)(IA) BROUGHT BY FINANCE A CT 2010 W.E.F. 01-04-2010 IS HAVING RETROSPECTIVE EFFECT W. E.F. 01-05- 2005 I.E. DATE ON WHICH SECTION 40(A)(IA) INTRODUCE D IN IT ACT. SINCE TAX DEDUCTED AT SOURCE HAS BEEN PAID BEFORE D UE DATE OF FILING OF RETURN NO DISALLOWANCE COULD BE MADE IN VIEW OF FURTHER AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WHICH IS APPLICABLE RETROSPECTIVELY W.E.F. 01-04-20 05. ACCORDINGLY CIT(A) WAS JUSTIFIED IN DELETING THE D ISALLOWANCE OF I.T.A NO. 2429/AHD/2011 & CO NO. 226/AHD/2011 A.Y. 2005-06 PAGE NO ACIT VS. M/S. KANIT ASSOCIATES 6 8 91 500/- MADE BY AO SAME IS UPHELD. AS A RESULT REVENUES APPEAL IS DISMISSED. 6. CO IS NOTHING BUT SUPPORTING THE ORDER OF CIT(A) WHICH HAS BEEN UPHELD BY US. SO ISSUE RAISED IN CROSS O BJECTION GOES INFRUCTUOUS AND THE SAME IS DISMISSED. 7. AS A RESULT BOTH REVENUES APPEAL AS WELL AS CR OSS OBJECTION FILED BY ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE I.E. 30/04/2015 SD/- SD /- (ANIL CHATURVEDI) (SHAILENDRA KR . YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD : DATED 30/04/2015 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /