Income Tax Appellate Tribunal - Ahmedabad
Acit.,(Osd),Circle-9,, Ahmedabad vs Purshottam Prabhudas Patel,, ... on 9 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "A" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.54/Ahd/2014
&
C.O. No.172/Ahd/2014
(Assessment Year:2007-08)
ACIT(OSD), Circle-9,
Ahmedabad Appellant
Vs.
Shri Purshottam Prabhudas Patel,
(Prop. P. P. Patel & Co.), 54, Rachna
Society, Nr. Jodhpur Char Rasta, Satellite,
Ahmedabad - 380015 Respondent/Cross Objector
PAN: AGXPP1574B
राज व क ओर से/By Revenue : Shri K. Madhusudan, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri G. M. Thakor & Shri P. M.
Mehta, A.R.
सन
ु वाई क तार ख/Date of Hearing : 31.01.2017
घोषणा क तार ख/Date of
Pronouncement : 09.02.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This Revenue's appeal and assessee's cross objection thereto arise from the CIT(A)-XV, Ahmedabad's order dated 15.10.2013, passed in appeal ITA No. 54/Ahd/14 with C.O. No.172/Ahd/14 (ACIT (OSD) vs. Shri Purshottam P. Patel) A.Y. 2007-08 -2- no. CIT(A)-XV/ACIT(OSD)/Cir-9/162/2012-13, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short "the Act".
2. The Revenue's sole substantive ground seeks to revive Section 40(a)(ia) disallowance of Rs.30,78,700/- made by the Assessing Officer in the impugned re-assessment framed on 01.11.2012 on account of assessee's failure in not remitting the TDS deducted as per the scheme of the Act. The Revenue's case is that the CIT(A) has erred in deleting the above stated disallowance after observing as under:
"(b) Ground No. 2 to 8 are descriptive with fact, case laws etc. but mainly against the disallowance u/s 40(a)(ia) of the Act and addition of Rs. 30,78,000/-. It is contended in the ground that TDS was deducted out of such payment and paid before the due date of filing of return of income hence as per judicial pronouncement as relied on by appellant, disallowance and addition u/s 40(a)(ia) of the Act are not justified. It is undisputed as admitted by A.O. also that due TDS was deducted out of payment to M/s J. J. Patel but the dispute relate to its payment beyond due date as stipulate under section 200(1) of the IT. Act. I am inclined with the contentions of the appellant that in the eventuality that due TDS was deducted and paid before filling of return of income, there remains no payable amount out of such expenditure as on 31/03/07 on which there was alleged to be a default as per section 40 (a) (ia) of the Act, hence there remains no justification for making disallowance and addition. The A.O. in the assessment order mentioned that after verification of details there is no dispute that total amount credited in the subcontractor J. J. Patel account is Rs. 65,33,133/- and TDS was deducted in the month of March 2007 and paid to govt. account in the month of April 2007. The dispute is related to crediting of an amount of Rs. 30,78,700/- out of this total Rs.55,33,133/-. In January 2007 to Feb. 2007 on which TDS was deducted and paid late as stipulated u/s 194C read with section 200(1) of the IT. Act hence disallowable u/s 40 (a)(ia) of the Act. The A.O.'s observation is not disputed with existing provision. But the legal preposition in this regard gives benefit to the assessee, if the due TDS deducted and paid before the due date of filling of return of income. Hon'ble Calcutta high court in the case of CIT v/s Virgin creations in its judgment dt. 23/11/11 held that amendment brought by the Finance Act 2010 in section 40(a)(ia) of the Act are clarificatory and retrospective hence no disallowance be made u/s 40 (a)(ia) of the Act where IDS has been paid before the due date of filling of return of income. Hon'ble ITAT Ahmedabad 'B' Bench in its order dt. 03/01/10 in the case of Shri Kanubhai Ramjibhai Makwana v/s ITO followed the same ratio. In the case of ITO Ward 9(4) v/s Shri Sanjay Sandalal Patel ITA No. 2826/Ahd/2011 (A.Y. 08-09) vide order dt. 23/03/201, Hon'ble ITAT Ahmedabad even after considering the special bench order in the case of M/s Bhartishipyard Ltd. V/s Dy. C.I.T (ITA No. 2404/Mum/2009 order dt. 12/09/11) followed the Hon'ble Calcutta high court judgment in the case of virgin creations ITA No. 54/Ahd/14 with C.O. No.172/Ahd/14 (ACIT (OSD) vs. Shri Purshottam P. Patel) A.Y. 2007-08 -3- (supra) and allowed the benefit to assessee for payment of TDS before filling of return of income within due date for non applicability of section 40(a)(ia) of the Act. It is therefore following the ratios of above discussed legal authorities, disallowance in the case of appellant u/s 40(a)(ia) of the Act is not sustainable in law.
The A.O. is directed to delete the addition so made of Rs.30,78,700/-. The appellant gets relief accordingly. All the grounds are therefore treated as allowed for statistical purpose."
3. The assessee's cross objection on the other hand challenges the validity of the impugned re-opening taken recourse to by the assessing authority and upheld in the lower appellate proceedings.
4. We have heard both the parties strongly reiterating their respective stands. We notice first of all that the assessee had duly deducted TDS upon the impugned contractual payments and paid/remitted the same in government account on 09.04.2007. The Revenue's case is that the Assessing Officer had rightly invoked Section 40(a)(ia) disallowance in these facts and circumstances. We find that the issue as to whether TDS deducted by an assessee and remitted before the end of the relevant previous year or paid before the due date of filing of return is no more res integra since hon'ble Calcutta high court in Virgin Creations case (supra) has already settled the law that amendment to Section 40(a)(ia) made by the Finance Act, 2010 is retrospectively applicable w.e.f. 01.04.2005 thereby impliedly reversing this tribunal's special bench decision in Bharti Shipyard Ltd. vs. DCIT (2011) 132 ITD 53 (Mum.). Learned Departmental Representative fails to dispute this legal position. We thus find no reason to interfere with the CIT(A)'s findings deleting Section 40(a)(ia) disallowance in question. The Revenue's sole substantive ground as well as its main appeal fails.
5. We now come to assessee's cross objection challenging validity of reopening. Learned counsel representing assessee states very fairly that the ITA No. 54/Ahd/14 with C.O. No.172/Ahd/14 (ACIT (OSD) vs. Shri Purshottam P. Patel) A.Y. 2007-08 -4- assessee no more wishes the press the same more particularly in view of our findings on merits. We thus dismiss assessee's cross objection as not pressed at this stage.
6. This Revenue's appeal is dismissed and assessee's cross objection is dismissed as not pressed.
[Pronounced in the open Court on this the 09th day of February, 2017.] Sd/- Sd/-
(MANISH BORAD) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 09/02/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय!
ु त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।