Income Tax Appellate Tribunal - Raipur
Shri Rajesh Kumar Goyal, Durg(Cg) vs The Deputy Commissioner Of Income ... on 30 January, 2019
आयकर अपील य अ धकरण यायपीठ रायपरु म ।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI ANIL CHATURVEDI, AM AND
SHRI PARTHA SARATHI CHAUDHURY, JM
आयकर अपील सं. / ITA No.126/RPR/2016
नधा रण वष / Assessment Year : 2010-11
Rajesh Kumar Goyal,
Goyal Road Lines, Shop 49/C,
Transport Nagar, Durg (C.G)
Pin-491 001
PAN : AHLPG4794K
.......अपीलाथ / Appellant
बनाम / V/s.
The Deputy Commissioner of Income Tax-1,
Bungalow-32/32,
Bhilai (C.G.)
...... यथ / Respondent
Assessee by : Shri S.R. Rao
Revenue by : Shri R.P. Namdeo
सन
ु वाई क तार ख / Date of Hearing : 18.01.2019
घोषणा क तार ख / Date of Pronouncement : 30.01.2019
आदे श / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of Ld. CIT(Appeals)-II, Raipur (C.G.) dated 08.03.2016 for the assessment year 2010-11 as per following grounds of appeal on record:
"1. In the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs.8,34,470/- made u/s.40(a)(ia) of Income Tax- Act 1961 out of transportation charges.2 ITA No. 126/RPR/2016
A.Y.2010-11
2. In the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs.1,71,904/- made u/s.40(a)(ia) of Income Tax Act, 1961 out of interest expenses.
3. The order of the Ld. Commissioner of Income Tax (Appeal) is bad in law and on facts.
4. The appellant reserves the right to add, amend, alter and omit all or any of the grounds of appeal with permission of the Hon'ble Appellate Authority."
2. The only grievance of the assessee is confirmation of disallowance of Rs.8,34,470/- made u/s.40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') out of transportation charges and confirmation of disallowance of Rs.1,71,904/- u/s.40(a)(ia) of the Act out of interest expenses.
3. At the time of hearing, the Ld. AR of the assessee vehemently argued that the issue is covered in favour of the assessee by the decision of the Co-
ordinate Raipur Bench in the case of RKP Company, Korba Vs. ITO, in ITA No.106/RPR/2016 for the assessment year 2010-11.
4. On the other hand, the Ld. DR has placed reliance on the orders of the Sub-ordinate Authorities.
5. We have perused the case records and considered the judicial pronouncements placed before us. We find in the case of RKP Company, Korba Vs. ITO, in ITA No.106/RPR/2016 for the assessment year 2010-11, the issue therein was as under:
"That learned CIT(A) erred in law as well as on facts while confirming addition of Rs.6,48,456/- under section 40(a)(ia) on account of interest paid to NBFCs.
The Tribunal, thereafter, held as under:3 ITA No. 126/RPR/2016
A.Y.2010-11 "4. We find that Hon'ble Delhi High Court has specifically approved the stand taken by a coordinate bench of this Tribunal, in the case of Rajeev Kumar Agarwal Vs ACIT [(2014) 149 ITD 363 (Agra)], and upheld the action of the Tribunal in following the same.
9. ............................ Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004.
10. In view of the above discussions, we deem it fit and proper to remit the matter to the file of the Assessing Officer for fresh adjudication in the light of our above observations and after carrying out necessary verifications regarding related payments having been taken into account by the recipients in computation of their income, regarding payment of taxes in respect of such income and regarding filing of the related income tax returns by the recipients. While giving effect to these directions, the Assessing Officer shall give due and fair opportunity of hearing to the assessee, decide the matter in accordance with the law and by way of a speaking order. We order so.
5. In effect this, Their Lordships have approved the action of the Tribunal in remitting the matter to the file of the Assessing Officer with a direction to ascertain whether the recipient has taken into account related payments into computation of his income and offering the same to tax, and, if so, delete the disallowance under section 40(a)(ia) in respect of the same.
6. When, however, we asked the learned Departmental Representative as to why we should also not remit the matter to the file of the Assessing Officer, with the same directions, he, alongwith his senior colleague Shri Darhan Singh, who happens to be the CIT(A) authoring the impugned order and who was on duty as CIT(DR) before us, had three points to make- first, that there are decisions in support of the stand of the Assessing Officer's stand, by way of Hon'ble Kerala High Court's decision in the case of Thomas George Muthoot Vs CIT [(2015) 63 taxmann.com 99 (Kerala)]; second, that even if insertion of second proviso to Section 40(a)(ia) can be construed as retrospective in effect, the corresponding rule in the Income Tax Rules 1962 is not, and has not been held to be, retrospective, and the second proviso to Section 40(a)(ia) cannot, therefore, be give retrospective effect; and, third, that there is no decision on this issue by Hon'ble jurisdictional High Court and, as such, the stand of the Assessing Officer cannot be faulted.4 ITA No. 126/RPR/2016
A.Y.2010-11
7. As for Hon'ble Kerala High Court's decision in the case of Thomas George Muthoot (supra), undoubtedly, outside the jurisdiction of Hon'ble Kerala High Court and outside the jurisdiction of Hon'ble Delhi High Court- which has decided the issue in favour of the assessee, there are conflicting decisions on the issue of restrospectivity of second proviso to Section 40(a)(ia). It is thus evident that views of these two High Courts are in direct conflict with each other. Clearly, therefore, there is no meeting ground between these two judgments. The difficulty arises as to which of the Hon'ble non jurisdictional High Court is to be followed by us in the present situation. It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. We find guidance from the judgment of Hon'ble Supreme Court in the matter of CIT vs. Vegetable Products Ltd. [(1972) 88 ITR 192 (SC)]. Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted". This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction (P) Ltd. & Anr. vs. CBDT & Ors. (1988) 75 CTR (SC) 20 :
(1989) 175 ITR 523 (SC), it has been reiterated that the above principle of law is well established and there is no doubt about that. Hon'ble Supreme Court had, however, some occasions to deviate from this general principle of interpretation of taxing statute which can be construed as exceptions to this general rule. It has been held that the rule of resolving ambiguities in favour of taxpayer does not apply to deductions, exemptions and exceptions which are allowable only when plainly authorised. This exception, laid down in Littman vs. Barron 1952(2) AIR 393 and followed by apex Court in Mangalore Chemicals & Fertilizers Ltd. vs. Dy. Commr. of CT (1992) Suppl. (1) SCC 21 and Novopan India Ltd. vs. CCE & C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, "in case of ambiguity, a taxing statute should be construed in favour of a tax-payer does not apply to a provision giving tax-payer relief in certain cases from a section clearly imposing liability". This exception, in the present case, has no application. The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. vs. Dadabhoy's New Chirmiry Ponri Hill Colliery Co. Ltd.
AIR 1972 (SC) 614. Therefore, what follows is that in the peculiar circumstances of the case and looking to the nature of the provisions with which we are presently concerned, the view expressed by the Hon'ble Delhi High Court in the case of Ansal Landmark (supra), which is in favour of assessee, is required to be followed by us. Revenue does not, therefore, derive any advantage from Hon'ble Kerala High Court's decision in the case of Thomas George Muthoot (supra)."
Respectfully, following the decision of the Co-ordinate Raipur Bench on this issue, we set aside the order of the Ld. CIT(Appeals) and direct for deletion of addition made u/s.40(a)(ia) of the Act both on account of 5 ITA No. 126/RPR/2016 A.Y.2010-11 transportation charges and also interest expenses, allowing therefore, the grounds of appeal of the assessee.
6. In the result, appeal of the assessee is allowed.
Order pronounced on 30th day of January, 2019.
Sd/- Sd/-
ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY
ACCOUNTANT MEMBER JUDICIAL MEMBER
रायपरु / RAIPUR ; दनांक / Dated : 30th January, 2019. SB आदे श क! " त$ल%प अ&े%षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-II, Raipur (C.G).
4. The Pr. CIT-II, Raipur (C.G.)
5. !वभागीय $त$न%ध, आयकर अपील य अ%धकरण, रायपुर ब)च, रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड, फ़ाइल / Guard File.
// True Copy // आदे शानस ु ार / BY ORDER, $नजी स%चव / Private Secretary आयकर अपील य अ%धकरण, रायपुर / ITAT, Raipur.
6 ITA No. 126/RPR/2016A.Y.2010-11 Date 1 Draft dictated on 18.01.2019 Sr.PS/PS 2 Draft placed before author 29.01.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order