Income Tax Appellate Tribunal - Delhi
Dcit, New Delhi vs M/S. Pc Jeweller Ltd., New Delhi on 28 January, 2019
ITA No. 4942/Del/2015
Assessment year 2011-12
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A' NEW DELHI
BEFORE
SHRI N.K. SAINI, VICE PRESIDENT
AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No. 4942/Del/2015
Assessment Year: 2011-12
DCIT, vs P.C. Jeweller Ltd.,
Circle-19(2), No.24/2708, Bank Street,
Room No. 221, Karol Bagh,
2nd Floor, New Delhi-110005
C.R. Building, (PAN: AADCP5443Q)
I.P. Estate,
New Delhi.
(Appellant) (Respondent)
Department by : Shri Sridhar Dora, Sr. DR
Assessee by : Shri Sanjeev Jain, CA
Date of hearing: 15.11.2018
Date of pronouncement: 28.01.2019
ORDER
PER SUDHANSHU SRIVASTAVA, J.M.
This appeal is preferred by the department against the order passed by the Ld. CIT (Appeals)-7, New Delhi for assessment year 2011-12 dated 15.5.2015.
2.0 Brief facts of the case are that the assessee is in the business of manufacturing and trading of jewellery. The return of income was filed declaring income of Rs. 54,88,91,67/- and 1 ITA No. 4942/Del/2015 Assessment year 2011-12 assessment u/s 143(3) of the Act was completed at an income of Rs. 55,58,36,830/- after making a disallowance of Rs. 69,45,219/- u/s 40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for non-deduction of TDS on bank charges deducted by the various banks. The book profit u/s 115JB of the Act as per the assessee's computation was Rs. 1,04,50,10,050/- but the same was determined at Rs. 1,04,54,13,356/- after making a disallowance of Rs. 4,03,306/- pertaining to the gratuity liability of the assessee on the ground that the same was unascertained liability.
2.1 The assessee's appeal before the Ld. CIT (Appeals) was allowed on both the grounds wherein both the disallowances were deleted and now the department is before the ITAT challenging the order of the Ld. CIT (Appeals) by raising the following grounds of appeal:-
"1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs. 69,45,219/- u/s 40(a)(ia) of the Income Act, 1961, treating the Notification No 56/2012 dated 31-12-2012 effective from 01-01-2013 for the deduction of tax payment to Indian Bank under the Income tax Act, 1961 as merely of a clarification in nature.
2. On the facts and in the circumstances of the case, the Ld CIT (A) has erred in deleting the addition of Rs.4,03,306/- made by AO ignoring the facts that the 2 ITA No. 4942/Del/2015 Assessment year 2011-12 provision was created to meet the unascertained liability and hence require to be added back while calculating the book profit.
3. The appellant craves to be allowed to add any fresh ground(s) of appeal and/or delete or amend any of the ground(s) of appeal."
3.0 At the outset, Ld. AR appearing on behalf of the assessee submitted that both the issues raised by revenue stood fully covered in favour of the assessee by the order of the ITAT Delhi Bench in assessee's own case for assessment year 2012-13. A copy of the said order was placed on record.
4.0 The Ld. Sr. DR supported the order of the Assessing Officer but he could not dispute the fact that both the issues stood covered in assessee's favour by the order of the ITAT in assessee's own case for assessment year 2012-13. 5.0 Having heard both the parties and after having perused the material on record as well as the order of the ITAT for assessment year 2012-13 in assessee's own case, we agree with the averments of the Ld. AR that both the issues are squarely covered in assessee's favour. A perusal of the order of the ITAT in ITA No. 4943/Del/2015 for assessment year 2012-13 vide order dated 23.10.2017 shows that the finding of the ITAT with respect to the first issue being raised by the department is contained in 3 ITA No. 4942/Del/2015 Assessment year 2011-12 Para 4 and 5 of the said order wherein the Coordinate Bench has relied on the judgment of the Hon'ble Delhi High Court in the case of CIT vs. JDS Apparels (P) Ltd. reported in (2015) 370 ITR 454 (Delhi) and has held that since the bank was making the payment to the assessee after making deduction of bank charges, there was no occasion for the assessee to deduct tax at source and, further, the bank was not acting on behalf of the assessee but on the other hand was acting on behalf of the customers while processing payments through debit cards and credit cards. The observations of the Jurisdictional High Court in CIT vs. JDS Apparels (supra) are in Para 17 and 18 and the same are being reproduced here in under for a ready reference:-
"17. Another reason why we feel Section 40(a)(ia) of the Act should not have been invoked in the present case is the principle of doubtful penalization which requires strict construction of penal provisions. The said principle applies not only to criminal statutes but also to provisions which create a deterrence and results in punitive penalty. Section 40(a)(ia) is a deterrent and a penal provision. It has the effect of penalizing the assessee, who has failed to deduct tax at source and acts to the detriment of the assesse's property and other economic interests. It operates and inflicts hardship and deprivation, by disallowing expenditure actually incurred and treating it as disallowed. The Explanation, therefore, requires a strict construction and the principle against doubtful penalization would come into play. The detriment in the present case, as is noticeable, would include intimation of proceedings for imposition of penalty for concealment, as 4 ITA No. 4942/Del/2015 Assessment year 2011-12 was directed by the Assessing Officer in the present case. The aforesaid principle requires that a person should not be subjected to any sort of detriment unless the obligation is clearly imposed. When the words are equally capable of more than one construction, the one not inflicting the penalty or deterrent may be preferred. In Maxwell's The Interpretation of Statutes, 12th edition (1969) it has been observed:
"The strict construction of penal statutes to manifest itself in four ways: in the requirement of express language for the creation of an offence; in interpreting strictly words setting out the elements of an offence; in requiring the fulfillment to the letter of statutory conditions precedent to the infliction of punishment; and in insisting on the strict observance of technical provisions concerning criminal procedure and jurisdiction.
18. The aforesaid principles and interpretations can apply to taxing statutes. In the present case we further feel the said principle should be applied as HDFC would necessarily have acted as per law and it is not the case of the Revenue that the bank had not paid taxes on their income. It is not a case of loss of Revenue as such or a case where the recipient did not pay their taxes."
5.1 Accordingly, on identical facts and respectfully following the order of the Coordinate Bench in assessee's own case for AY 2012-13, which has followed the principle and ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT vs. JDS Apparels (P) Ltd. (supra), we find no reason to interfere with the findings of the Ld. CIT (Appeals) on this issue and we dismiss ground no. 1 of the department's appeal. 5.2 Similarly, ground no. 2 is also covered in favour of the assessee and against the department by the order of the Tribunal 5 ITA No. 4942/Del/2015 Assessment year 2011-12 in assessee's own case for assessment year 2012-13 wherein it has been held that provision for gratuity was an ascertained liability as it based on actuarial valuation. We find from the order of the Ld. CIT (Appeals) that he has given a categorical finding that the provision for gratuity was an ascertained liability and was based on actuarial valuation and, therefore, the addition made to the book profits u/s 115JB on this account was liable to be deleted. The Ld. DR also could not point out that the observations of the Ld. CIT (Appeals) in this regard were factually incorrect. We also note that this issue is also covered by another order of the Delhi Bench of the Tribunal in the case of ACIT vs. NHPC Ltd. vide order dated 30.09.2014. The Ld. CIT (Appeals), while allowing the assessee's appeal, has also referred to the observations of the ITAT in this case. Accordingly, we find ourselves unable to take a view which is different from that of the Ld. CIT (Appeals) on this issue and we dismiss ground no. 2 of the department's appeal.
5.3 Ground no. 3 is general in nature and does not require any separate adjudication.
6.0 In the result, the appeal of the department stands dismissed.
6ITA No. 4942/Del/2015 Assessment year 2011-12 Order pronounced in the open court on 28th January, 2019.
Sd/- Sd/-
(N.K. SAINI) (SUDHANSHU SRIVASTAVA)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 28th JANUARY, 2019
'GS'
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
By Order
ASSTT. REGISTRAR
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