DCIT, CIRCLE, PATIALA vs. M/S HINDUSTAN WIRE PRODUCTS LTD., PATIALA

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ITA 460/CHANDI/2018Status: DisposedITAT Chandigarh12 February 2019AY 2013-142 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal followed its previous order in the assessee's own case for the preceding assessment year, which relied on High Court decisions. The deletion of the addition was upheld as the payees had accounted for the sums and paid taxes.

What were the facts?

The Department appealed the deletion of an addition made on account of expenditure paid as reimbursement without deducting tax at source. The Assessing Officer invoked Section 40(a)(ia) read with Section 201(1) of the Income Tax Act.

What were the issues?

Whether disallowance under Section 40(a)(ia) is warranted for reimbursements where the recipient has paid taxes, despite non-deduction of TDS by the payer.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 201(1),Section 194A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, CHANDIGARH BENCHES, ‘SMC’, CHANDIGARH

Before: SHRI N.K. SAINI

For Respondent: Smt. Chandrakanta, Sr. DR
Hearing: 18/02/2019Pronounced: 18/02/2019

This is an appeal by the Department against the order dt. 24/01/2018 of Ld. CIT(A)-3, Ludhiana, the only effective ground raised in this appeal reads as under:

“ Whether in the facts and circumstances of the case, the Ld. CIT(A)-3, Ludhiana is legally correct in deleting the addition of Rs. 72,19,091/- made u/s 40(a)(ia)(r.w.s 201(1) and rule 31ACB without issuing certificate in Form 26A and submitting to the appropriate authority) on account of expenditure paid as reimbursement without deducting the tax at source as per provision of section 194A of the Income Tax Act, 1961.” 2. From the aforesaid ground it is gathered that the grievance of the assessee relates to the deletion of addition made by the Assessing Officer under section 40(a)(ia) read with section 201(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), on account of expenditure paid as reimbursement without deducting tax at source under section 194 of the Act.

3.

During the course of hearing Ld. Counsel for the Assessee at the very outset stated that an identical issue having similar facts has been adjudicated by the ITAT Chandigarh Bench ‘A’ in assessee’s own case in ITA No. 1609/Chd/2017 for the A.Y. 2012-13 vide order dt. 04/12/2018 (copy of the said order was furnished which is placed on record).

4.

In her rival submissions Ld. Sr. DR strongly supported the order of the Assessing Officer but could not controvert the aforesaid contention of the Ld. Counsel of the Assessee.

5.

After considering the submissions of both the parties and the material available on record, it is noticed that an identical issue having similar facts was a subject matter of the Departmental appeal for the A.Y. 2012-13 in ITA No.

1609/Chd/2017 wherein vide order dt. 04/12/2018 the issue has been decided by the ITAT, Bench ‘A’ Chandigarh in favour of the assessee and against the Department the relevant findings have been given in para 4 to 6 which read as under:

4.

The assessee before the Ld. CIT(A) relied upon the decision of the Hon'ble Delhi High Court in the case of ‘CIT Vs. Ansal Land Mark Township Private Limited’ [2015] 377 ITR 635 (Delhi), wherein, Delhi High Court has held that the second proviso inserted by Finance Act 2012 is declaratory and curative in nature and has retrospective effect w.e.f. 1.4.2005. The Ld. CIT(A) considering the submissions of the assessee and the relevant case laws held that since in this case the payees had taken into account the sums received from the assessee and had filed their return and paid due taxes, hence, in the light of the second proviso to section 40(a)(ia) of the Act, no disallowance u/s 40(a)(ia) of the Act was warranted. 5. Being aggrieved by the above order of the CIT(A), the Revenue has come in appeal before us. 6. At the outset, Ld. Counsel for the assessee has placed on file a copy of another decision / order of the Hon'ble Punjab & Haryana High Court in the case of ‘PCIT- 2, Chandigarh Vs. M/s Mobisoft Telesolutions Private Limited’ in ITA No. 495 of 2017 (O&M) order dated 3.10.2018, wherein, the findings so arrived at by the Hon'ble Delhi High Court in the case of ‘CIT Vs. Ansal Land Mark Township Private Limited, (supra) has been reaffirmed by the Jurisdictional High Court . No distinguishing case law has been put before us by the Department. So respectfully following the aforesaid referred to order in assessee’s own case for the preceding assessment year in ITA No. 1609/Chd/2017, I do not find any merit in this appeal of the Department.

6.

In the result, appeal of the Department is dismissed.

(Order pronounced in the open Court on 18/02/2019.)

Sd/- (N.K. SAINI) VICE PRESIDENT Place: Chandigarh Dated : 18/02/2019 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR

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