PRINCIPAL COMMISSIONR INCOME TAX SURAT 3 vs. M/S UNIQUE ENTERPRISE SURAT

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TAXAP/490/2018HC GujaratGJHC24021570201811 May 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal dismissed the appeal of the Revenue. The High Court, in its oral order, noted that the Revenue was in appeal against the ITAT's judgment dated June 1, 2017. The sole question for consideration was the retrospective operation of the amendment to Section 40(a)(ia) by the Finance Act, 2010. The ITAT had relied on the Gujarat High Court's judgment in Commissioner of Income Tax-I vs. Royal Builders. The ITAT had further observed that since the assessee made payments before the due date of filing the return, the disallowance under Section 40(a)(ia) was not sustainable. Consequently, the ITAT allowed the assessee's appeal and deleted the disallowance. The High Court, in its final operative direction, stated that the Tax Appeal is dismissed.

What were the facts?

The Revenue, Principal Commissioner of Income Tax, Surat 3, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated June 1, 2017. The ITAT had dismissed the Revenue's appeal. The assessee is M/s Unique Enterprise, Surat. The core of the dispute revolves around the retrospective applicability of an amendment to Section 40(a)(ia) of the Income Tax Act, 1961, made by the Finance Act, 2010. The ITAT's decision was based on the assessee having made payments before the due date of filing the return, rendering the disallowance under Section 40(a)(ia) unsustainable.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding that the amendment made in section 40(a)(ia) by Finance Act, 2010, would be retrospective in operation having effect from 1st April, 2005, i.e. from the date of insertion of section 40(a)(ia) of the Act? The Revenue's contention is that the ITAT erred in holding the amendment to Section 40(a)(ia) as retrospective from April 1, 2005. The ITAT, while dismissing the Revenue's appeal, relied on the judgment of the Gujarat High Court in the case of Commissioner of Income Tax-I vs. Royal Builders reported in 40 taxmann.com 464. The ITAT observed that the assessee made payments before the due date of filing the return, thus the disallowance under Section 40(a)(ia) was not sustainable. The ITAT allowed the assessee's appeal and deleted the disallowance, respectfully following the Gujarat High Court's judgment.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/490/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 490 of 2018 ========================================================== PRINCIPAL COMMISSIONR INCOME TAX SURAT 3 Versus M/S UNIQUE ENTERPRISE SURAT ========================================================== Appearance: MR NIKUNT RAVAL FOR MRS KALPANAK RAVAL(1046) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 11/05/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 01.06.2017 raising following question for our consideration: “Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding that the amendment made in section 40(a)(ia) by Finance Act, 2010, would be retrospective in operation having effect from 1st April, 2005, i.e. from the date of insertion of section 40(a)(ia) of the Act?”

2.

The Tribunal, while dismissing the appeal of the Revenue relied on the judgement of this Court in case of Commissioner of Income Tax-I vs. Royal Builders reported in 40 taxmann.com 464 and made following observations: C/TAXAP/490/2018 ORDER “The assessee has also made payments before due date of filing of return. Therefore, the disallowance under section 40(a)(ia) of the Act is not sustainable in the case of the assessee. Respectfully following judgement of the Hon'ble Gujarat High Court, we allow the appeal of the assessee and delete disallowance.”

3.

In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI

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