ACIT 18(2), MUMBAI v. R.M. MEHTA & CO.,, MUMBAI

ITA 5469/MUM/2009 | 2005-2006
Pronouncement Date: 09-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 546919914 RSA 2009
Assessee PAN TOBER2005I
Bench Mumbai
Appeal Number ITA 5469/MUM/2009
Duration Of Justice 11 month(s) 4 day(s)
Appellant ACIT 18(2), MUMBAI
Respondent R.M. MEHTA & CO.,, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 09-09-2010
Assessment Year 2005-2006
Appeal Filed On 05-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) ACIT 18(2) R NO.115 1 ST FL. PIRAMAL CHAMBERS PAREL MUMBAI -400012 APPELLANT VS R M MEHTA AND CO. BHARGAV BHAVAN BLOCK NO.4 39 SHIVAJI PARK MUMBAI-400028. PAN:AAFR1339D RESPONDENT ASSESSEE BY : SHRI RAHUL K HAKANI REVENUE BY : SHRI JITENDRA YADAV O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 10.07.2009 OF CIT(A)-XVI MUMBAI FOR THE ASSE SSMENT YEAR 2005-06. 2. THE REVENUE HAS RAISED FOLLOWING EFFECTIVE GROUN DS OF APPEAL: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN I) IN DIRECTING THE ASSESSING OFFICER TO VERIFY TDS IN VIEW OF THE AMENDED PROVISIONS OF 40(A)(AI) BY THE FINANCE ACT 2008 W.E.F 1.4.2005 AND ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 2 ACCORDINGLY DELETED THE DISALLOWANCE MADE U/S 40(A)(AI) II) WHETHER THE LD. CIT(A) WAS RIGHT TO SET- ASIDE ASSESSMENT FOR VERIFICATION ON TAKING ANY FRESH ACTION IN ACCORDANCE WITH LAW 3. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEA RNED AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT RECO RD. THE MAIN CONTENTION OF THE LEARNED DR IS THAT THE CIT (A) HAS COMMITTED AN ERROR BY DIRECTING THE AO TO VERIFY W HETHER THE TDS HAS BEEN PAID BEFORE 31 ST OCTOBER 2005 I.E. DUE DATE OF FILING OF THE RETURN AND IF YES THE DISALLOWANCE M ADE U/S 40(A)(IA) SHALL BE DELETED. WHEREAS AS PER THE AM ENDED PROVISIONS OF SECTION 40(A)(IA) THE PAYMENT IS ALLO WABLE ONLY WHEN THE TDS DEDUCTED IN THE LAST MONTH OF THE PRE VIOUS YEAR AND IS PAID OR BEFORE THE DUE DATE OF FILING OF TH E RETURN AS PER SUB-SECTION (1) OF SECTION 139 OF INCOME TAX ACT 1961. IN ALL OTHER CASE THE TDS HAS TO BE PAID BEFORE THE LAST DATE OF PREVIOUS YEAR. THUS THE LEARNED DR HAS SUBMITTED T HAT THE DIRECTIONS GIVEN BY THE LEARNED CIT(A) ARE NOT IN CONFORMITY WITH THE AMENDED PROVISIONS OF SECTION 40(A)(IA). 4. ON THE OTHER HAND THE LEARNED AR OF THE ASSESSE E SUBMITTED THAT THE AO HAS ALREADY PASSED AN ORDER GIVING EFFECT TO THE ORDER OF THE LEARNED CIT(A) AND THER EBY GRANTED THE RELIEF OF ` .7 41 120/- OUT OF TOTAL DISALLOWANCE. ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 3 5. AFTER CONSIDERING THE RIVAL CONTENTIONS AND RELE VANT RECORD WE NOTE THAT THE AO HAS DISALLOWED THE INT EREST CONTRACT AND COMMISSION PAYMENT OF ` .8 64 990/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) BECAUSE THE TDS DEDUCTED WAS NOT CREDITED TO THE GOVERNMENT ACCOUNT WITHIN T HE STIPULATED TIME. 6. ON APPEAL THE LEARNED CIT(A) AFTER CONSIDERING THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DECIDED THE ISSUE AS UNDER : 2.1 DURING THE APPELLANT PROCEEDINGS THE APPELLANT HAS POINTED OUT THAT THE PROVISIONS OF SECTION 40(A)(IA) AND THE PROVISO THERETO AFFECTING SUBSTANTIVE RIGHT OF THE APPELLANT FIRM AND SIMILAR LY PLACED ASSESSEE WERE AMENDED WITH RETROSPECTIVE EFFECT APPLICABLE FROM THE AY 2005-06 BY THE FINA NCE ACT 2008 IN AS MUCH AS THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AFTER THE AMENDMENT WAS NOT WITH REFERENCE TO THE DATES GOVERNED BY SECTION 200(1) OF THE ACT BUT WITH REFERENCE TO TH E DUE DATE OF THE FILING OF THE RETURN OF INCOME. THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME T AX ACT 1961 AND PROVISO THERETO HAVE BEEN AMENDED BY SECTION 10 OF THE FINANCE ACT 2008 WITH RETROSPECT IVE EFFECT I.E W.E.F 01.4.2005. THE SECTION 40(A)(IA) OF THE ACT NOW READS AS UNDER : AMOUNTS NOT DEDUCTIBLE 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [ 38 ] THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION (A) IN THE CASE OF ANY ASSESSEE ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 4 [(I) .. (IA) ANY INTEREST COMMISSION OR BROKERAGE 70 [RENT ROYALTY ] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION 71 [HAS NOT BEEN PAID (A) IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS SO DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ; OR (B) IN ANY OTHER CASE ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR: [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE SAID DUE DATE; OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. IN VIEW OF THE RETROSPECTIVE AMENDMENT REFERRED TO ABOVE AND IN VIEW OF THE FACT THAT THE ENTIRE TAX DEDUCTED AT SOURCE PERTAINING TO THE FY 2004-05 HA S BEEN PAID BEFORE 31 ST OCTOBER 2005 I.E. THE DUE DATE OF FILING OF THE RETURN FOR THE YEAR AY 2005-0 6 (UNDER APPEAL) NO DISALLOWANCE IS CALLED FOR U/S 40(A)(IA) OF THE ACT. 2.2 AO WILL THEREFORE VERIFY WHETHER THE IMPUGNED TDS HAS BEEN PAID BEFORE 31 ST OCTOBER 2005 I.E. ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 5 DUE DATE OF FILING OF THE RETURN. IF YES AO SHALL DELETE THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA). 7. AS PER THE AMENDED PROVISIONS OF SECTION 40(A)( IA) VIDE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1 .4.2005 IF THE TDS IS DEDUCTED IN THE LAST MONTH OF PREVIOUS YEAR THEN THE SAME IS REQUIRED TO BE PAID ON OR BEFORE THE D UE DATE OF FILING OF THE RETURN AS PER THE PROVISIONS OF SECTI ON 139(1) OF THE INCOME TAX ACT 1961 TO AVAIL THE DEDUCTION R EGARDING THE PAYMENT IN COMPUTING THE INCOME CHARGEABLE UNDE R THE HEAD PROFIT AND GAIN OF BUSINESS AND PROFESSION. IN CASE THE TDS WAS DEDUCTED OTHER THAN THE LAST MONTH OF PREVIOUS YEAR THEN THE SAME HAS TO BE DEPOSITED BEFORE THE E ND OF THE SAID PREVIOUS YEAR TO AVAIL THE DEDUCTION. THE AM ENDED PROVISIONS OF SECTION 40(A)(IA) READS AS UNDER : AMOUNTS NOT DEDUCTIBLE. 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [ 38 ] THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER T HE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION (A)IN THE CASE OF ANY ASSESSEE [(I) ANY INTEREST (NOT BEING INTEREST ON A LOAN I SSUED FOR PUBLIC SUBSCRIPTION BEFORE THE 1ST DAY OF APRIL 1938) ROYALTY FEES FOR TECHNICAL SERVICES OR OTHE R SUM CHARGEABLE UNDER THIS ACT WHICH IS PAYABLE (A)OUTSIDE INDIA; OR ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 6 (B)IN INDIA TO A NON-RESIDENT NOT BEING A COMPANY OR TO A FOREIGN COMPANY ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID DURING THE PREVIOUS YE AR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSE QUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB- SECTION (1) OF SECTION 200 SUCH SUM SHALL BE ALLOW ED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE (A) ROYALTY SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9 ; (B) FEES FOR TECHNICAL SERVICES SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB- SECTION (1) OF SECTION 9 ; (IA)ANY INTEREST COMMISSION OR BROKERAGE [RENT ROYALTY ] FEES FOR PROFESSIONAL SERVICES OR FEES FO R TECHNICAL SERVICES PAYABLE TO A RESIDENT OR AMOUNT S PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK) ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION [HAS NOT BEEN PAID (A)IN A CASE WHERE THE TAX WAS DEDUCTIBLE AND WAS S O DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139 ; OR (B)IN ANY OTHER CASE ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR:] [ PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 7 (A)DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT P AID AFTER THE SAID DUE DATE; OR (B)DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE END OF THE SAID PREVIOUS YEAR SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUT ING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX H AS BEEN PAID.] EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE (I)COMMISSION OR BROKERAGE SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) OF THE EXPLANATION TO SECTION 194H ; (II)FEES FOR TECHNICAL SERVICES SHALL HAVE THE SA ME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB- SECTION (1) OF SECTION 9 ; (III)PROFESSIONAL SERVICES SHALL HAVE THE SAME ME ANING AS IN CLAUSE (A) OF THE EXPLANATION TO SECTION 194J ; (IV)WORK SHALL HAVE THE SAME MEANING AS IN EXPLANATION III TO SECTION 194C ; [(V)RENT SHALL HAVE THE SAME MEANING AS IN CLAUSE (I) TO THE EXPLANATION TO SECTION 194-I ; (VI)ROYALTY SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9 ;] [(IB)[***]] [(IC)ANY SUM PAID ON ACCOUNT OF FRINGE BENEFIT TAX UNDER CHAPTER XIIH;] (II)ANY SUM PAID ON ACCOUNT OF ANY RATE OR TAX LEV IED ON THE PROFITS OR GAINS OF ANY BUSINESS OR PROFESSION OR ASSESSED AT A PROPORTION OF OR OTHERWISE ON THE BA SIS OF ANY SUCH PROFITS OR GAINS. [EXPLANATION 1.FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT FOR THE PURPOSES OF THIS SUB-CLAUSE ANY SUM PAID ON ACCOUNT OF ANY RATE OR TAX LEVIED INCLU DES AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ANY SUM ELIGIBLE FOR RELIEF OF TAX UNDER SECTION 90 OR AS THE CASE ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 8 MAY BE DEDUCTION FROM THE INDIAN INCOME-TAX PAYABL E UNDER SECTION 91 .] [EXPLANATION 2.FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT FOR THE PURPOSES OF THIS SUB-CLAUSE ANY SUM PAID ON ACCOUNT OF ANY RATE OR TAX LEVIED INCLU DES ANY SUM ELIGIBLE FOR RELIEF OF TAX UNDER SECTION 90A ;] 8. THUS IT IS CLEAR THAT WITHOUT GIVING THE FINDIN G THAT THE ASSESSEE DEDUCTED THE TDS ONLY IN THE LAST MONTH O F PREVIOUS YEAR THE DIRECTION GIVEN BY THE LEARNED CIT(A) THA T IF THE TDS IS PAID BEFORE 31 ST DAY OF OCTOBER 2005 I.E. THE DUE DATE OF FILING THE RETURN THE DISALLOWANCE MADE U/S 40(A)( IA) BE DELETED IS NOT IN ACCORDANCE WITH AMENDED PROVISIO NS OF SECTION 4)(A)(IA). ACCORDINGLY WE MODIFY THE ORDE R OF THE LEARNED CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AS PER THE AMENDED PROVISIONS OF SECTION 4)(A)(IA) AS OBSERVED ABOVE. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED PRONOUNCED IN THE OPEN COURT ON 9.09.2010 SD SD (P.M.JAGTAP) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9 TH SEP 2010 SRL:31810 ITA NO. 5469/MUM/2009 (ASSESSMENT YEAR: 2005-06) 9 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI