R.V. Rail Products (P) Ltd., Kolkata v. DCIT, CC-XIX, KOLKATA, Kolkata

ITSSA 194/KOL/2014 | 2007-2008
Pronouncement Date: 05-10-2016 | Result: Allowed

Appeal Details

RSA Number 19423516 RSA 2014
Assessee PAN AADCR2377M
Bench Kolkata
Appeal Number ITSSA 194/KOL/2014
Duration Of Justice 1 year(s) 9 month(s) 4 day(s)
Appellant R.V. Rail Products (P) Ltd., Kolkata
Respondent DCIT, CC-XIX, KOLKATA, Kolkata
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 05-10-2016
Assessment Year 2007-2008
Appeal Filed On 31-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI JUDICIAL MEMBER IT(SS)A NO.144-145/KOL/2014 & IT(SS)A NO.194- 197/KOL/2014 ASSESSMENT YEARS:2010-11 & 2011-12 AND 2007-08 TO 2009- 10 & 2012-13 R.V.RAIL PRODUCTS (P) LTD. 2 HARE STREET 3 RD FLOOR NICCO HOUSE KOLKATA-700 001 [ PAN NO.AADCR 2377 M ] / V/S . DCIT CC-XIX AAYAKAR BHAWAN PURVA 8 TH FLOOR 110 SHANTI PALLI E.M. BY- PASS KOLKATA-700 107 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI SRI M. SATNALIWALA FCA /BY RESPONDENT SHRI G.MALLIKARJUN CIT-DR /DATE OF HEARING 28-09-2016 /DATE OF PRONOUNCEMENT 05-10-2016 /O R D E R PER BENCH:- THESE ARE SIX APPEALS BY SAME ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- CENTRAL-II KO LKATA DATED 15.09.2014 AND 26.11.2014. ASSESSMENTS WERE FRAMED BY DCIT CE NTRAL CIRCLE-XIX KOLKATA U/S 153A/143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS DATED 17.04.2012 FOR ASSESSMENT YEARS 2010-11 2011-12 2007-08 TO 2009-10 AND 2012-13 RESPECTIVELY . IT(SS)A NO.144-145 194-197/KOL/2014 A. YS 10-11 TO 11-12 07-08 TO 09-10 AND 12-13 R.V.RAIL PRODUCTS (P) LTD. VS. DCIT CC-XIX KOL . PAGE 2 SHRI M. SATNALIWALA LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE AND SHRI G.MALLIKARJUN LD. DEPARTMENTAL R EPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. ALL THESE ARE HEARD TOGETHER AND ARE BEING DISPO SED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP IT(SS)A NO. 194/KOL/2014 FOR A.Y 0 7-08 3. ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) CENTRAL-II KOLKATA WAS NO T JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.4 52 241/- U/S 40(A)(IA) OF INCOME TAX ACT 1961. 2. THAT THE LD. CIT(A) CENTRAL-II KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE US/S 40(A)(IA) AS THE INSPECTION F EE OF RS.3 97 227/- WAS PAID TO M/S RITES LTD. DURING THE YEAR ITSELF AND THE SUM OF RS.55 014/- WAS ALSO PAID TO M/S MODI PROJECTS LTD. DURING THE YEAR. 3. THAT OTHER GROUNDS IF ANY WILL BE ARGUED AND U RGED AT THE TIME OF HEARING. 4. FACTS IN BRIEF AS CULLED OUT FROM THE ORDER OF A UTHORITIES BELOW AND OTHER RELEVANT DOCUMENTS ARE THAT ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS O F RAILWAY PRODUCTS. SOLITARY ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY DISALL OWING THE EXPENSE INSPECTION FEE 3 97 227/- PAID TO M/S RITES LTD. (MRL FOR SHORT) AND FOR 55 014/- PAID TO M/S MODI PROJECTS LTD. (FOR SHORT MPL) ON ACCOUNT OF NON- DEDUCTION OF TAX DEDUCTED AT SOURCE (TDS FOR SHORT) U/S 40(A)(IA) OF THE ACT. THE ASSESSEE FOR THE YEAR HAS INCURRED INSPECTION C HARGES OF 4 52 241/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSE RVED THAT ASSESSEE HAS CLAIMED INSPECTION CHARGES WITHOUT THE DEDUCTION OF TDS. ACCORDINGLY AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME O F ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 6. I HAVE CONSIDERED THE SUBMISSION OF THEE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE JUDI CIAL DECISIONS RELIED IT(SS)A NO.144-145 194-197/KOL/2014 A. YS 10-11 TO 11-12 07-08 TO 09-10 AND 12-13 R.V.RAIL PRODUCTS (P) LTD. VS. DCIT CC-XIX KOL . PAGE 3 UPON BY THE APPELLANT. IT IS OBSERVED THAT THE SIMI LAR ISSUE WAS INVOLVED IN THE CASE OF APPELLANT COMPANY IN AM YEAR 2010-11 . THE APPEAL FOR THE A.Y 2010-11 HAS BEEN DECIDED BY THE UNDERSIGNED VIDE APPEAL NO. 268/CC-XIX/CIT(A)C-II/14-15 DATED 1509.2014 WHEREIN THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE AC T WAS CONFIRMED AFTER DIFFERENTIATING THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT AND ON PLACING THE RELIANCE ON THE DECISION OF THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT-XI KOLKATA VS. CRESCENT EXPORT SYNDICATE 33 TAXMANN.COM 250 (CAL). THEREFORE FOLLOWING MY DECISION IN THE CASE OF APPELLANT COMPANY FOR THE A.Y 2010-1 1 FOR THE YEAR UNDER CONSIDERATION I.E. A.Y 2007-08 THE DISALLOWA NCE OF RS.4 52 241/- MADE BY THE AO U/S 40(A)(IA) OF THE ACT IS CONFIRME D. THE GROUND NO. 1 IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. BEFORE US LD. AR OF THE ASSESSEE SUBMITTED THAT PAYEES I.E. MRL AND MPL HAVE SHOWN THE AFORESAID RECEIPTS AS INCOME IN THEIR BOOKS OF ACCOUNTS AND THEREFORE DISALLOWANCE U/S. 40(A)(IA) IS NOT W ARRANTED. LD. AR IN SUPPORT OF ASSESSEES CLAIM HAS SUBMITTED A LETTER WRITTEN BY MRL CERTIFYING THAT THE AMOUNT RECEIVED FROM ASSESSEE HAS BEEN TAKEN INTO A CCOUNT WHILE COMPUTING THE INCOME. ON THE OTHER HAND LD. DR SUBMITTED THAT CERTIFICAT E ISSUED BY MRL PERTAINS TO THE FYS 2008-09 TO 2011-12 AND THE INSTANT CASE PER TAINS TO FY 2006-07 AND THERE IS NO SUCH CERTIFICATE ISSUED BY MRL FOR THE YEAR UNDER CONSIDERATION. HE VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BE LOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND THAT AO HAS MADE THE DISALLOWANCE OF INSPECTION CHARGES ON ACCOUNT O F NON-DEDUCTION OF TDS U/S 194C R.W.S. 40(A)(IA) OF THE ACT AND SAME WAS C ONFIRMED BY LD. CIT(A). FROM THE FACTS WE FIND THAT CERTIFICATE HAS BEEN O BTAINED BY ASSESSEE FROM MRL CERTIFYING THAT THE PAYEE HAS INCLUDED IN ITS I NCOME THE INSPECTION CHARGES PAID BY ASSESSEE. HOWEVER THAT CERTIFICATE PERTAINS TO THE FINANCIAL YEAR BEGINNING FROM 2008-09 TO 2011-12. THE SAID CE RTIFICATE IS SILENT ABOUT IT(SS)A NO.144-145 194-197/KOL/2014 A. YS 10-11 TO 11-12 07-08 TO 09-10 AND 12-13 R.V.RAIL PRODUCTS (P) LTD. VS. DCIT CC-XIX KOL . PAGE 4 THE RECEIPT OF INSPECTION CHARGES FOR THE FY 2006-0 7 WHETHER THE SAME HAS BEEN INCLUDED IN THE INCOME OR NOT. HOWEVER WE FIN D THAT PAYEE IS A GOVERNMENT ORGANIZATION AND THE AO SHOULD HAVE CONF IRMED THE SAME BEFORE MAKING THE DISALLOWANCE OF THE EXPENSE CLAIMED BY A SSESSEE FOR INSPECTION CHARGES. CONSIDERING THE FACTS AND CIRCUMSTANCES W E ARE INCLINED TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FO R FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO ENSURE WHETHER THE PAYEE HAS INCLUDED IN ITS RECEIPT THE PAYMENT MADE BY THE ASSESSEE IN ITS TOTAL INCOME. T O THIS POINT LD. DR RAISED NO OBJECTION IF THE MATTER RESTORE BACK TO T HE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW. IN THIS CONNECTION WE ALS O FIND THAT THERE IS AMENDMENT OF PROVISO TO SEC. 40(A)(IA) OF THE ACT R .W.S 1 ST PROVISO TO SEC. 201 WHEREIN IF ANY PAYEE HAS PAID THE TAXES BY OFFERIN G / DISCLOSING THE SAID RECEIPT IN ITS RETURN OF INCOME THEN THE PAYER (TH E ASSESSEE HEREIN) SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT. ACCORDINGLY NO D ISALLOWANCE U/S. 40(A)(IA) OF THE ACT COULD OPERATE IN THAT SCENARIO. THE SAID PROVISO THOUGH INSERTED BY THE FINANCE ACT 2012 W.E.F. 1-4-2013 HAS BEEN HELD TO BE RETROSPECTIVE IN OPERATION BY RECENT DECISION OF THE HON'BLE DELHI H IGH COURT IN THE CASE OF CIT V. ANSAL LAND MARK TOWNSHIP (P) LTD. (2015) 61 TAXMANN.COM 45 (DEL) WHEREIN THE QUESTION RAISED BEFORE THE COURT AND TH E DECISION RENDERED THEREON IS REPRODUCED HEREIN BELOW FOR THE SAKE OF CLARITY:- QUESTION : WHETHER THE SECOND PROVISO TO SECTION 40(A)(IA) ( INSERTED BY THE FINANCE ACT 2012) WHICH STATES THAT TDS SHALL BE DEEMED TO BE DEDUCTED AND PAID BY A DEDUCTOR IF RESIDENT RECIPIENT HAS DI SCLOSED THE AMOUNT IN HIS RETURN OF INCOME AND PAID TAX THEREON IS RETROSPEC TIVE IN NATURE OR NOT? HELD : SECTION 40(A)(IA) WAS INTRODUCED BY THE FINANCE ( NO.2) ACT 2004 TO ENSURE THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION WHERE INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. HENCE SECTION 40(A)(IA) IS NOT A PENALTY PROVISION FOR TAX WITHHOLDING LAPSE BUT IT IS A PROVISION INTRODUCED TO COMPENSATE ANY LOSS TO THE REVENUE IN CASES WHERE DEDUCTOR HASNT DEDUCTED TDS AN AMOUNT PAID TO DEDUCTEE AND IN TURN DEDUCTEE ALSO HASNT OFFERED TO TAX INCOME EMBEDDED IN SUCH AMOUNT THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEP ARATELY PROVIDED UNDER SECTION 271C AND THEREFORE SECTION 40(A)(I) ISNT ATTRACTED TO THE SAME. IT(SS)A NO.144-145 194-197/KOL/2014 A. YS 10-11 TO 11-12 07-08 TO 09-10 AND 12-13 R.V.RAIL PRODUCTS (P) LTD. VS. DCIT CC-XIX KOL . PAGE 5 HENCE AN ASSESSEE COULD NOT BE PENALIZED UNDER SEC TION 40(A)(IA) WHEN THERE WAS NO LOSS TO REVENUE. THE AGRA TRIBUNAL IN THE CASE OF RAJIV KUMAR AGARWAL-VS-ACIT [2014] 45 TAXMANN.COM 555 (AGRA TRIB) HAD HELD THAT THE SEC OND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005 BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SECTION 40(8) WAS INSERTED BY THE FINANCE NO.(2) ACT 2004 EVEN THOUGH THE FINANCE ACT 2012 HAD NOT SPECIFICALLY STATED THAT PROVISO IS RE TROSPECTIVE IN NATURE. THE HIGH COURT AFFIRMED THE RATIO LAID DOWN BY THE AGRA TRIBUNAL AND HELD THAT SAID PROVISOS IS DECLARATORY AND CURATIVE IN NATURE AND HA RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E HON'BLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA) WE DEEM IT FIT AND APPROPRIATE IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY TO SET ASIDE THIS ISSUE TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE AFORESAID JUDGMENT. ACCORDINGLY WE DIRECT THE AO TO VERIFY W HETHER THE PAYEES HAVE INCLUDED THE SUBJECT-MENTIONED RECEIPTS IN THEIR RE SPECTIVE RETURNS AND PAID TAXES THEREON OR NOT. IF THAT IS SO THEN DISALLOWA NCE U/S. 40(A)(IA) OF THE ACT SHALL NOT BE MADE IN THE HANDS OF ASSESSEE. ACCORDI NGLY ASSESSEES GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT ASSESSEES APPEAL STAND ALLOWED F OR STATISTICAL PURPOSES. COMING TO IT(SS)A NO.195/KOL/2014 FOR A.Y.08-09. 9. AT THE OUTSET IT WAS FOUND THIS APPEAL INVOLVES TWO ISSUES. THE FIRST ISSUE IS EXACTLY IDENTICAL AS OF IT(SS)ANO.195/KOL/ 2014 EXCEPT FIGURE INVOLVING THE NON-DEDUCTION OF TDS. BOTH THE PARTIES ARE AGRE ED WHATEVER VIEW TAKEN IN THE ABOVE APPEAL (IT(SS)A NO.194/KOL/2014) MAY BE T AKEN IN THESE APPEALS ALSO WE HOLD ACCORDINGLY. HOWEVER THE SECOND ISSUE IS THAT THE INSPECTION CHA RGES WERE CLAIMED AS PART OF THE PURCHASE PRICE BY THE ASSESSEE BUT THE AO DI SALLOWED THE SAME FOR NON-DEDUCTION OF TDS UNDER SECTION 194C R.W.S. 40(A )(IA) OF THE ACT. HOWEVER THE ASSESSEE DID NOT PRODUCE THE COPY OF THE BILL B EFORE US AT THE TIME OF HEARING. HOWEVER IN THE INTEREST OF JUSTICE AND FAI R PLAY WE ARE OF THE VIEW TO IT(SS)A NO.144-145 194-197/KOL/2014 A. YS 10-11 TO 11-12 07-08 TO 09-10 AND 12-13 R.V.RAIL PRODUCTS (P) LTD. VS. DCIT CC-XIX KOL . PAGE 6 RESTORE THE ISSUE TO THE FILE OF THE AO FOR FRESH A DJUDICATION AS PER LAW TO CHECK WHETHER IT IS PART OF THE PURCHASE OR NOT. IF IT IS PART OF THE PURCHASE THEN ALLOW THE SAME AND IN CASE IT IS NOT PART OF THE PURCHASE THEN FOLLOW THE DIRECTION AS GIVEN BY US IN APPEAL (IT(SS)A NO.194/KOL/2014). AC CORDINGLY BOTH THE ISSUES RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSES . COMING TO IT(SS)A NO.196-197/KOL/2014 & 144-145/KOL /2014 FOR A.YS 09- 10 12-13 10-11 & 11-12 . 11. IN THE REMAINING APPEALS SINCE THE FACTS ARE E XACTLY IDENTICAL EXCEPT FIGURE AND BOTH THE PARTIES AGREED WHATEVER VIEW TA KEN IN THE ABOVE APPEALS (IT(SS)A NO.194/KOL/2014) AND (IT(SS)A NO.194/KOL/2 014) MAY BE TAKEN IN THESE APPEALS ALSO WE HOLD ACCORDINGLY. 12. IN THE RESULT ASSESSEES APPEALS STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 05/10/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP SR.P.S '#$ - 05/10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-R.V.RAIL PRODUCTS (P) LTD. 2 HARE ST 3 RD FL NICCO HOUSE KOL-01 2. /REVENUE-DCIT CENTRAL CIRCLE-XIX AAYAKAR BHAWAN P URVA 8 TH FLOOR 110 SHANT I PLLI E.M. BY-PASS KOLKATA-107 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& %& / DR ITAT KOLKATA 6. * - / GUARD FILE. /TRUE COPY/ BY ORDER/ / # %&