ITO, NEW DELHI vs. M/S. AASHIRWAD LOGISTICS, NEW DELHI

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ITA 2282/DEL/2016Status: DisposedITAT Delhi29 September 2016AY 2008-094 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 upheld the CIT(A)'s deletion of disallowance for the amount paid to M/s Prakash Freight, as this amount was included in their income. The Tribunal followed the Delhi High Court's decision in CIT vs. Ansal Landmark Township (P) Ltd., which held the second proviso to Section 40(a)(ia) to be retrospective.

What were the facts?

The assessee paid freight and forwarding charges of Rs. 37,20,904/- without deducting TDS. The AO disallowed the entire amount under Section 40(a)(ia). The CIT(A) deleted a major part of the disallowance, holding that the recipient company had included the amount in its income.

What were the issues?

Whether disallowance under Section 40(a)(ia) is warranted when the recipient has included the income, and the retrospective applicability of the second proviso to Section 40(a)(ia).

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194C

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI

Before: SHRI R.S. SYAL

For Appellant: Shri Pranjal Srivastava, Advocate, Shri Ashish Chadha &, Shri Ashish Goel, CAs
For Respondent: Shri Rajesh Kumar, Sr. DR
Hearing: 29.09.2016Pronounced: 29.09.2016

Assessment Year : 2008-09 ITO, Vs. Aashirwad Logistics, WZ-909B, 1st Floor, Ward 50(5), New Delhi. Naraina, Ring Road, New Delhi. PAN: AAMFA1261B (Appellant) (Respondent) Assessee By : Shri Pranjal Srivastava, Advocate, Shri Ashish Chadha & Shri Ashish Goel, CAs. Department By : Shri Rajesh Kumar, Sr. DR Date of Hearing : 29.09.2016 Date of Pronouncement : 29.09.2016 ORDER This appeal filed by the Revenue is directed against the order passed by the CIT(A) on 15.2.2016 in relation to the assessment year 2008-09.

2.

The only issue raised in this appeal is against restricting the addition to Rs.3,52,935/- out of total disallowance of Rs.37,20,904/- made by the AO u/s 40(a)(ia) of the Act.

3.

Briefly stated, the facts of the case are that the assessee paid freight and forwarding amounting to Rs.37,20,904/- to M/s Prakash Freight and others. The AO invoked the provisions of Section 40(a)(ia), as in his opinion, the tax was required to be deducted at source u/s 194C before making payment. The assessee contended that it was a booking agent for M/s Prakash Freight and others and working for them as an agent and not paying any freight to them. Not convinced, the AO made disallowance u/s 40(a)(ia) for a sum of Rs.37.20 lac. The ld. CIT(A) deleted the disallowance amounting to Rs.33,67,969/-, being the amount of freight paid to M/s Prakash Freight, by relying on the judgment of the Hon’ble Delhi High Court in CIT vs. Ansal Landmark Township (P) Ltd. (2015)

377 ITR 635 (Del). For the remaining amounts paid by the assessee, the ld. CIT(A) sustained the disallowance. The Revenue is aggrieved against the deletion made by the first appellate authority.

4.

Having heard the rival submissions and perused the relevant material on record, it is observed that the assessee paid a sum of Rs.33,67,969.26 to M/s Prakash Freight without deduction of tax at source. This amount was admittedly included by that company in its income at the time of filing of return. This fact transpired from the remand report submitted by the AO at the instance of the ld. CIT(A). The Hon’ble Delhi High Court in CIT vs. Ansal Landmark Township (P) Ltd. (supra) has held that second proviso to section 40(a)(ia) is declaratory and curative in nature and, hence, has retrospective effect from 1st April, 2005. This judgment fully supports the deletion of disallowance u/s 40(a)(ia) because M/s Prakash Freight admittedly included the amount received from the assessee in its income. The contention of the ld. DR that SLP has been admitted against this judgment of the Hon’ble Delhi High Court, in my considered opinion, does not change the existing legal position. So long as the judgment of the Hon’ble High Court is not modified by the Hon’ble Supreme Court, the same is binding and has a precedent value. In view of the foregoing discussion, I am satisfied that the ld. CIT(A) was fully justified in deleting the addition to the tune of Rs.33,67,969.26.

5.

In the result, the appeal is dismissed.

The order pronounced in the open court on 29.09.2016.

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