Income Tax Appellate Tribunal - Chennai
Dcit, Madurai vs Sri Parameswari Spinning Mills Private ... on 26 February, 2018
आयकर अपील य अ
धकरण, 'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
''C' BENCH : CHENNAI
ी अ ाहम पी. जॉज , लेखासद य एवं ी जॉज माथन, या यक सद य के सम
BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND
SHRI GEORGE MATHAN, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No. 1364/CHNY/2016
नधा रण वष /Assessment year : 2012-2013.
The Deputy Commissioner of Vs. M/s. Sri Parameswari Spinning
Income Tax, Mills Private Limited,
Corporate Circle 2, 4A, Mill Premises, 38/39,
Madurai. Great Cotton Road,
Pandalgudi, Aruppukottai.
[PAN AABCS 5356F]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ! क" ओर से/ Appellant by : Ms. D.Kumutha, IRS, JCIT.
$%यथ! क" ओर से /Respondent by : Shri. S. Sridhar, Advocate
सन
ु वाई क" तार)ख/Date of Hearing : 20-02-2018
घोषणा क" तार)ख /Date of Pronouncement : 20-02-2018
आदे श / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
Revenue in this appeal assails an order dated 29.02.2016 of ld. Commissioner of Income Tax (Appeals)-1, Madurai. The appeal has been filed with a delay of seven days. Revenue has filed a condonation petition. Reason shown for the delay seems to be justified. Ld. Authorised Representative did not raise any serious objection. Delay is condoned. Appeal is admitted.
:- 2 -: ITA No. 1364/2016.
2. Revenue has altogether raised four grounds of which grounds 1 & 4 are general in nature needing no specific adjudication.
3. Vide its ground No.2, grievance of the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted a disallowance made by the ld. Assessing Officer u/s.14A of the Income Tax Act, 1961 (in short ''the Act'') r.w.Rule 8D of the Income Tax Rules, 1962 (herein after referred to as 'the Rules'), taking a view that assessee having not earned any dividend income, no disallowance could be made. Ld. Assessing Officer had applied Rule 8D and disallowed a sum of C28,90,419/- considering investments made by the assessee which could yield exempt income. However, ld. Commissioner of Income Tax (Appeals) taking note that assessee had not claimed any exempt income, deleted such disallowance, relying on the decision of Delhi Bench of the Tribunal in the case of DCM Ltd vs DCIT (in ITA 4467/2012, dated 01.09.2015).
4. We find that the view taken by the ld. Commissioner of Income Tax (Appeals) is in sync with the judgment of Hon'ble Jurisdictional High Court in the case of Redington India Ltd vs. Addl. CIT (2016) 97 CCH 0219. Accordingly, we are not inclined to interfere with the order of the ld. Commissioner of Income Tax (Appeals) on this issue. Ground No.2 of the Revenue stands dismissed.
:- 3 -: ITA No. 1364/2016.
5. Vide its ground No.3, grievance of the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted a disallowance of C1,70,84,271/- made by the ld. Assessing Officer u/s.40(a)(ia) of the Act.
6. Facts apropos are that assessee engaged in the business of textiles and power looms had paid freight charges of C1,70,84,271/- on which no deduction of tax required u/s.194C of the Act was made. This was put to the assessee. Its answer was that, the payments were made to transport contractors. Ld. Assessing Officer took a view that assessee had not complied to sub Section (6) of Section 194C of the Act nor filed form No.26Q within the date prescribed under Rule 31A of the Rules. He disallowed the claim of C1,70,84,271/- invoking Section 40(a)(ia) of the Act.
7. Aggrieved, assessee moved in appeal before the ld. Commissioner of Income Tax (Appeals). Argument of the assessee was that it had obtained PAN of the deductees while making payments and therefore complied with Section 194C(6) of the Act. Further, as per the assessee, it had also furnished particulars as prescribed u/s.194C(7) of the Act by filing form No.26Q, though belatedly. Reliance was placed on the decision of Hyderabad Bench of the Tribunal in the case of ACIT Vs. Mohamed Suhail (ITA No.1536/Hyd/2014, dated 13.2.2015).
:- 4 -: ITA No. 1364/2016.
8. Ld. Commissioner of Income Tax (Appeals) after considering the contention of the assessee held that assessee having complied with Section 194(6) of the Act, non- compliance with Section 194(7) of the Act was not fatal. According to him, assessee could not be visited with the consequence of Section 40(a)(ia) of the Act. In other words, as per the ld. Commissioner of Income Tax (Appeals) failure to file quarterly return in form 26Q would not lead to a disallowance u/s.40(a)(ia) of the Act. He deleted the disallowance made by the ld. Assessing Officer.
9. Now before us, the ld. Departmental Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals) submitted that Sub Sections 6 & 7 to Section 194C of the Act were not independent and had to be read together. As per the ld. DR, partial compliance of collecting PAN of the payees would not be sufficient. As per the ld. DR, ld. Commissioner of Income Tax (Appeals) fell in error in deleting the disallowance made by the ld. Assessing Officer u/s.40(a)(ia) of the Act.
10. Per contra, ld. Authorised Representative strongly supporting the orders of the authorities below submitted that assessee had filed form No.26Q though belatedly. According to the ld. Authorised Representative, there was compliance of Sub Section (7) of Section 194C of the Act and mere delay in filing the return in form :- 5 -: ITA No. 1364/2016.
No.26Q, would not entitle the Revenue to apply Section 40(a)(ia) of the Act.
11. We have considered the rival contentions and perused the orders of the authorities below. Ld. Commissioner of Income Tax (Appeals) had held that non compliance with Sub Section (7) of Section 194C of the Act was not fatal and disallowance u/s.40(a)(ia) of the Act could not be made for such non compliance since assessee had complied with Sub Section (6) of Section 194C of the Act. For taking this view he had relied on a decision of Hyderabad Bench of the Tribunal in the case of Mohamed Suhail (supra). Be that as it may, one of the submission of the assessee is that it had filed form No.26Q as prescribed under Rule 31A, though belatedly. It is true that quarterly returns specified in Rule 31A have to be filed on or before 15th of the first month of the succeeding the quarter. However, in our opinion, this time limit cannot be construed so strictly to mean belated filing will automatically result in a disallowance under Section 40(a)(ia) of the Act. Sub Section (6) of Section 194C of the Act clearly say that there is no need to deduct tax on sums credited or paid to a contractor engaged in plying, hiring or lease charges, if the payer, who is the assessee here, gets a declaration that former was owning ten or less goods carriages and also gave their PAN numbers. In our opinion, considering the facts and circumstances of the case, the issue requires :- 6 -: ITA No. 1364/2016.
a fresh look by the ld. Assessing Officer. Ld. Assessing Officer has to verify whether assessee had complied with Sub Section (6) of Section 194C of the Act. He also needs to verify whether the assessee had filed form No.26Q, though belatedly. If assessee has complied with these there can be no disallowance u/s.40(a)(ia) of the Act. Ordered accordingly.
12. In the result, the appeal of the Revenue is partly allowed for statistical purpose.
Order pronounced in the open court at the time of hearing on 20th day of February, 2018, at Chennai.
Sd/- Sd/-
(जॉज माथन) (अ ाहम पी. जॉज$)
(GEORGE MATHAN) (ABRAHAM P. GEORGE)
या यक सद य/JUDICIAL MEMBER लेखा सद&य/ACCOUNTANT MEMBER
चे नई/Chennai
.दनांक/Dated: 20th February, 2018
KV
आदे श क" $ त0ल1प अ2े1षत/Copy to:
1. अपीलाथ!/Appellant 3. आयकर आय3
ु त (अपील)/CIT(A) 5. 1वभागीय $ त न8ध/DR
2. $%यथ!/Respondent 4. आयकर आयु3त/CIT 6. गाड फाईल/GF