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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD
आयकर अपील�य अ�धकरण, इ�दौर �यायपीठ, इ�दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE
BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER
ITA No.657/Ind/2017 Assessment Year: 2007-08 ACIT-2(1) M/s. Phaloudi Construction बनाम/ Company, Nersingarh Ujjain Vs. Rajgarh (Revenue) (Respondent) PAN: AAFFP9523Q Revenue by Shri V.J. Boricha, Sr. DR Respondent by None Date of Hearing: 24.01.2019 Date of Pronouncement: 06. 02.2019 आदेश / O R D E R PER MANISH BORAD, A.M: This appeal by Revenue pertaining to A.Y. 2007-08 is directed against the order of Ld. Commissioner of Income Tax(Appeals)- Ujjain, (in short ‘CIT(A)’), dated 04.07.2017 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on
M/s. Phaloudi Construction Co. ITANo.657/Ind/2017 31.01.2013 by DCIT, 2(1), Ujjain. The Revenue has raised following grounds of appeal: 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs.9,97,515/- on account of Short deduction of TDS based on proviso 2 to section 40(a)(ia) which was introduced only from 01.04.2013.”
None appeared on behest of assessee even though the notice of hearing was duly served upon it. It was therefore, decided to hear this appeal with the assistance of the Ld. Departmental Representative and documents available on records.
Brief facts as culled out from the records are, that the assessee is a partnership firm engaged in Civil contractor work. Income of Rs.57,56,110/- was declared in e-return of income filed on 24.10.2007. Case was selected for scrutiny through CASS. Notice u/s 143(2) of the Act duly served upon the assessee. The original assessment was completed u/s 143(3) vide order dated 24.11.2009 on a total income of Rs.63,21,163/-. Subsequently, Ld. Assessing Officer on observing that the tax has been deducted at source at lower rate than the rate applicable on payment of machinery hire charges, issued notice u/s 148 of the Act 2
M/s. Phaloudi Construction Co. ITANo.657/Ind/2017 and thereafter concluded the reassessment proceeding u/s 143(3) r.w.s 147 of the Act on 31.01.2013 and after considering the submissions of the assessee, Ld. AO made disallowance of Rs.11,77,515/- for lower deduction of tax on machinery hire charges. Income was reassessed at Rs.74,98,678/-.
Aggrieved assessee preferred an appeal before the Ld. CIT(A) and partly succeeded.
Now the revenue is in appeal before the Tribunal.
Ld. Departmental Representative vehemently argued supporting the order of assessing officer.
We have heard the Ld. Departmental Representative (DR) and perused the record placed before us. The revenue is aggrieved with the order of Ld. CIT(A) deleting disallowance u/s 40(a)(ia) of the Act at Rs. 9,97,515/-. Ld. CIT(A) deleted the disallowance u/s 40(a)(ia) of the Act observing as follows:
M/s. Phaloudi Construction Co. ITANo.657/Ind/2017 Ground No.1 & 2:- Through these grounds of appeal the appellant has challenged the addition of Rs.11 ,77,515/- on account of short-deduction of TDS. The appellant has made the payment to various persons. The recipient persons have included the receipt from the appellant while filing the return of income. The appellant furnished the certificate in Form no. 26A regarding the payment of taxes by the recipient from the appellant except Shri Narayan Singh Parihar. The AO in the remand report has not commented adversely in this regard. The recipient has declared that said receipt has been included in their books of account and also paid the income tax at the time of filing the return. Therefore, the tax could not be recovered once again from the deductor appellant. The appellant has failed to produce the 26A certificate in case of Shri Narayan Singh Parihar. Therefore, the addition made by the AO amounting to Rs.1,80,000/- is Confirmed. The appellant will get the relief of Rs.9,97,515/-.Therefore, the appeal on these grounds is Partly Allowed.
On perusal of above finding of Ld. CIT(A) which has not been controverted by the Departmental Representative, we observe that the assessee made payment of machinery hire charges to various persons and they were claimed to have been included as receipt in their return of income. Out of the total amount of addition of Rs.11,77,515/- made by the assessing officer on account of short deduction of tax, except for Rs.1,80,000/- which was paid to Shri Narayan Singh Parihar. The assessee has furnished certificate in Form No. 26A to prove that the recipients of the machinery
M/s. Phaloudi Construction Co. ITANo.657/Ind/2017 hire charges have duly offered the amount received by them to tax in their regular return of income.
Hon'ble Apex Court in the case of Hindustan Cocacola Beverages Pvt. Ltd Vs. CIT (2007) 293 ITR 226 (SC) has held that ‘no demand visualized under Section 201 (1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee and this script is taken care of by amendment in section 201(1) with effect from 01.07.2012 which spares liability from tax failed to be deducted, where it is required, if the tax is directly paid by the deductee”.
We, therefore, respectfully following the above judgment and in the given facts and circumstances of the case find that for the impugned machinery hire charges of Rs.9,97,515/-, the assessee has successfully proved that the due tax has been paid by the recipients in their regular income tax return. No interference is therefore called for in the finding of Ld. CIT(A). We affirm the same and dismiss the ground raised by the revenue.
M/s. Phaloudi Construction Co. ITANo.657/Ind/2017 11. In the result, appeal of the revenue stands dismissed.
Order was pronounced in the open court on 06 .02.2019.
Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; �दनांक Dated : 06/02/2019 ctàxÄ? P.S/.�न.स.
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Assistant Registrar