DCIT CORPORATE CIRCLE 3(2), CHENNAI vs. URMILLA ENTERPRISES P. LTD., CHENNAI

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ITA 1651/CHNY/2017Status: DisposedITAT Chennai28 December 2017AY 2012-133 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the proviso to Section 40(a)(ia) of the Act, which allows for no disallowance if the recipient has paid taxes, is clarificatory and applies retrospectively. Therefore, the CIT(Appeals) was justified in directing verification of tax payment by the recipient.

What were the facts?

The Revenue appealed against the CIT(Appeals) order which allowed the assessee's claim. The issue was disallowance under Section 40(a)(ia) for non-deduction of tax at source.

What were the issues?

Whether disallowance under Section 40(a)(ia) is permissible when the recipient has already paid the taxes, considering the retrospective applicability of the proviso.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Shri D. Anand, Advocate
Hearing: 14.12.2017Pronounced: 28.12.2017

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-11, Chennai, dated 20.03.2017 and pertains to assessment year 2012-13.

2.

The only issue arises for consideration is with regard to disallowance made by the Assessing Officer under Section 40(a)(ia) of the Income-tax Act, 1961 (in short 'the Act') for non-deduction of tax.

3.

Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the CIT(Appeals) by placing reliance on the proviso introduced with effect from 01.04.2013 to Section 40(a)(ia) of the Act, held that when the recipient of the amount has paid the taxes, there cannot be any disallowance. According to the Ld. D.R., the CIT(Appeals), in fact, placed his reliance on the judgment of Delhi High Court in CIT v. Ansal Land Mark Township Pvt. Ltd. (377 ITR 635). According to the Ld. D.R., an SLP was filed before the Apex Court, therefore, the CIT(Appeals) is not justified in placing reliance on the judgment of Delhi High Court.

4.

We heard Shri D. Anand, the Ld.counsel for the assessee also. The Parliament in their wisdom introduced proviso to Section 40(a)(ia) of the Act with effect from 01.04.2013 clarifying that if the recipient of the amount has paid taxes, there cannot be any disallowance under Section 40(a)(ia) of the Act. The Delhi High Court in Ansal Land Mark Township Pvt. Ltd. (supra) found that this proviso is clarifactory nature, therefore, applied retrospectively. In view of this judgment of Delhi High Court, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee and directed the Assessing Officer to verify whether the recipient has already paid taxes or not. On verification, if the Assessing Officer found that the recipient has paid taxes, then there should not be any disallowance in the hands of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

5.

In the result, the appeal filed by the Revenue is dismissed.

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