Income Tax Appellate Tribunal - Ahmedabad
Aadhyashakti Developers, Baroda vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH AHMADABAD
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'सी
सी'
सी
Before Shri G.C.Gupta, Vice President and
सव[ौी ौी जी.सी.गुƯा, माननीय उपाÚय¢ एवं
Shri T.R. Meena, Accountant Member
ौी टȣ.आर.मीणा, लेखा सदःय के सम¢ ।
ITA No. 114/Ahd/2011
Assessm ent Year :2007-08
M/s. Aadhyashakti Developers V/s. ITO,
Mahavir Park, Nr. Shivanjali Soc., Ward-2(4)
B/h Saurabh Park, Gotri, Baroda Baroda.
P AN No. AANFA7401J
(Appellant) .. (Respondent)
अपीलाथȸ कȧ ओर से / By Appellant Ms. Urvashi Shodhan, A.R.
ू×यथȸ कȧ ओर से/By Respondent Shri J. P. Jhangid, Sr. D.R.
सुनवाई कȧ तारȣख/Date of Hearing 13.02.2014
घोषणा कȧ तारȣख/Date of Pronouncement 21.02.2014
ORDER
PER : Shri T.R.Meena, Accountant Member
This appeal is filed by the assessee against the order of the CIT(A)-II, Baroda, order dated 05.10.2010 for A.Y. 2007-08. The effective grounds of appeal are as under:
"1. The learned CIT (A) has erred in law and on facts in holding the assessee as a defaulter in making TDS and confirming the disallowance made by an assessing officer of entire expenditure Rs.32,28,600/- for payment/bill of Jalaram Construction u/s. 40(a)(ia).
2. Both the lower authorities have erred in law and on facts disallowing the entire expenditure Rs.32,28,600/- on which TDS I T A No . 1 14 / Ah d /2 0 11 A . Y. 0 7- 0 8 M / s . A a dh ya s h ak t i De v e lo p er s v s . I TO Page 2 Rs.32.932/- is made and paid before the due date of filing of return of income.
3. The learned CIT(A) has erred in law and on facts in considering he plea of the assessee that assessee could not make the payment of TDS as TDS No. was issued in the month of May only."
All the grounds of assessee's appeal are revolving around not deducting TDS and disallowance made by the A.O. at Rs.32,28,600/- u/s. 40(a)(ia) of the IT Act.
2. The assessee was engaged in the business of development and construction of building. The assessee has debited construction expenses of Rs.32,28,600/-. The A.O. was asked to give the complete details and documentary evidence in support of expenses and also directed to give the details of TDS deducted on it. The assessee had given contract for construction work to Jalaram Construction, Baroda. The assessee had made payment to M/s. Jalaram Construction at Rs.11,65,000/- between July 2006 to February 2007 against construction bill of Rs.32,28,600/-, credited in his account on 31.03.2007. The account of the M/s. Jalaram Construction was debited at Rs.32,932/- on account of the TDS provision. It was further found to the A.O. that TDS deducted was not paid on or before 31st March, 2007 and the said amount of TDS was shown as liability in the balance sheet. Even, there was no evidence that assessee had paid this TDS on or before due date of filing of return. After considering the assessee's reply, the A.O. held that this was the violation of Section 40(a)(ia) of the IT Act. Thus, he made addition of Rs.32,28,600/- in the income of the assessee.
I T A No . 1 14 / Ah d /2 0 11 A . Y. 0 7- 0 8 M / s . A a dh ya s h ak t i De v e lo p er s v s . I TO Page 3
3. Being aggrieved by the order of the A.O., the assessee carried the matter before the CIT(A) who had confirmed the addition by observing as under:
"2.3. I have considered the submissions of the learned Authorized Representative and the order of the Assessing Officer. The appellant had made payment of the amount throughout the year but did not deduct the tax at the time of payment as required by law. It claimed to have deducted tax only on 31.03.2007. In the case of appellant the provision of law as it then existed would apply. Liability to deduct tax arose on the date of payment and date of deduction shown on 31.03.2007 is not only unreliable but irrelevant. Due date of payment would count from the date of payment of the amount. Apparently the appellant had made the payment in the month of July onwards, there is no question of not deducting the tax at that point of time otherwise it would be paid from appellant's own pocket. In that case there would no date for deduction and only relevant date would be date of payment. For example, the Assessing Officer has noted that an amount of Rs.1.10,OOP/- has been claimed in the name of Shri Chiman R. Patel. From the copy of ledger account it is seen that this amount has been paid between 20.06.2006 to 18.10.2006 in 9 installments but TDS is shown to have been deducted at Rs.2,870/-on 31.03.2007. If the full amount has been already been paid prior to 31.03.2007 there is no question of making any deduction on 31.03.2007 because there is no amount available for making, deduction. Similarly in the case of Shiv Construction Rs.16,55,000/- (Actual payment Rs.19,55,000/-) was paid between 23.08.2006 to 28.03.2007. When the full amount was paid before 31.03.2007, how "deduction" could be made on 31.03.2007 is not explained. This is the position in other cases also. If the amount has been paid from appellant's own pocket then again there is no question of any "deduction". And in that case only date of payment would be relevant would be considered in the year of payment. In view of the then existing law the appellant is clearly a defaulter. The Assessing Officer has rightly made the disallowance.
I T A No . 1 14 / Ah d /2 0 11 A . Y. 0 7- 0 8 M / s . A a dh ya s h ak t i De v e lo p er s v s . I TO Page 4 The appellant has argued that there was delay in payment because TDS No. was issued only in the month of May. This is no valid ground for non-deduction. Moreover, no evidence has been produced to show when the TDS No. was applied for. It is the duty of the deductor to acquire the requisite number in time."
4. Now the assessee is before us. Ld. A.R. argued that assessee had made provision for TDS on 31.03.2007 as per law but TAN no. was allotted on 08th May, 2007 to the assessee. Therefore, it could not be deposited in Government exchequer. These facts were also submitted before the Hon'ble CIT(A) and it was also submitted that assessee had paid TDS on or before due date of the return filed by the assessee for which necessary evidences were also enclosed. As per page no.4 of paper book, the assessee had credited TDS account Rs.32,932/- on 31.03.2007 and account of Jalaram Construction had debited accordingly. As per page no.6 of paper book, the assessee had paid Rs.32,932/- as TDS on 31.05.2007, which was before due date of filing of the return u/s. 139 of the IT Act. She further relied upon Hon'ble ITAT 'B' Bench decision in case of M/s. J. K. Construction Co. vs. ACIT in ITA No. 523/Ahd/2009 for A.Y. 2005-06, wherein TDS was paid before on or before due date of return, which was challenged by the Revenue before the Hon'ble Gujarat High Court in Tax Appeal No. 706 of 2010 in case of CIT vs. M/s. J. K. Construction Co., order dated 18.07.2011, wherein Revenue's appeal was dismissed and it was held that ITAT committed no wrong and was therefore, entitled to seek deduction of Rs.32,94,149/- from the income with amount the assessee had deducted from payment of I T A No . 1 14 / Ah d /2 0 11 A . Y. 0 7- 0 8 M / s . A a dh ya s h ak t i De v e lo p er s v s . I TO Page 5 Contractors and had also deposited with Revenue before the last date of filing of return. Thus, he requested to delete the addition. At the outset, ld. Sr. D.r. supported the order of the CIT(A).
5. We have heard the rival contentions and perused the material on record. As Co-ordinate Bench as well as Hon'ble Gujarat High Court had decided this issue in favour of the assessee on identical facts, the assessee had credited TDS on 31.03.2007 but paid on 31.05.2007 before the due date of return i.e. 31.07.2007, therefore, we reverse the order of the CIT(A).
6. In the result, assessee's appeal is allowed.
This Order pronounced in open Court on 21.02.2014 Sd/- Sd/-
(G.C.Gupta) (T.R. Meena)
Vice President Accountant Member
True Copy
S.K.Sinha
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।