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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The assessee has filed appeals against the different orders of Commissioner of Income Tax (Appeals) -11, Chennai in dated 30.12.2014 passed u/s. 143(3) and 250 of the Income Tax Act and ITA No.
:-2-: & 2196/Mds/2015 26/CIT(A)-11/2014-15 dated 18.09.2015 passed u/s. 143(3) r.w.s. 147 and 250 of the Income Tax Act. Since, the issues in these appeals are common in nature, these appeal are clubbed and heard together and disposed by the common order. For the sake of convenience we first take up assessee appeal and the facts narrated therein.
The assessee has raised the following grounds:
2.1 The CIT(A) ought to have considered that the expenditure claimed should not have been disallowed for non deduction of Tax Deducted at Source when they have been paid and not payable 2.2 The CIT(A) should have followed up the decision of various Courts and the jurisdictional Tribunal decisions which have been considering paid/payable situation and has allowed the same wherein the expenditure has been paid and not shown as payable.
2.3 The CIT(A) ought to have appreciated that there was only a deduction in most of the cases and there is no case of non-deduction and hence, should have allowed the expenditure in full.
2.4 The CIT(A) should have given a specific opportunity to the Appellant to produce evidence if he desired to consider the ground instead of dismissing the same and hence has erred in coming to the conclusion he has arrived at in dismissing the appeal.
The Brief facts of the case are that the assessee is in the business of manufacture of Synthetic & Cotton Yarn and filed the Return of income for the :-3-: & 2196/Mds/2015 assessment year 2006-07 on 07.12.2006 with total income of Rs. 11,74,263/- and the Return of income was processed u/s. 143(1) of the Act on 05.03.2008.
Subsequently, the case was selected for scrutiny and notice u/s. 143(2) of the Act was issued. In compliance to notice, Ld. AR of the assessee appeared from time to time and filed the details. The Assessing Officer considered the information and the detailed submissions and found that the assessee company has made payments as
per the statement referred at Para 5, where the assessee has not deducted TDS on payments and also there is a short deduction of TDS on the payments aggregating to Rs. 36,42,452/- and disallowed the amount with the other additions and assessed the total income of Rs. 2,38,64,294/- and passed order u/s. 143(3) of the Act dated 24.12.2008.
Aggrieved by the order, the assessee has filed an appeal with the CIT(A).
In the appellate proceedings, the Ld. AR argued the grounds on the disputed issue of disallowance u/s. 40(a)(ia) of the Act that the Ld. AO added the amount due to non-deduction of TDS and short deduction of TDS. The Ld. AR submitted that the Recipient/payee has paid the tax on such income, there is no necessity for disallowance. The Ld. CIT(A) overlooked the facts and submissions and dismissed the ground of the assessee.
Aggrieved by the CIT(A) order, the assessee has filed an appeal with the Tribunal. Before us, the Ld. AR argued that the CIT(A) should has considered the facts that the recipient/payee has paid tax on the income and due to short deduction of TDS, disallowance u/s. 40(a)(ia) of the Act invoked by the Ld. AO and supported
:-4-: & 2196/Mds/2015 the submissions with the Hon'ble High Court decisions and co-ordinate bench decisions and prayed for allowing the appeal. Contra, the Ld. DR relied on the orders of the CIT(A) and opposed the grounds
We heard the rival submissions, perused the material on record and judicial decisions. The sole crux of the dispute argued by the assessee (i) short deduction of TDS, where the Assessing Officer made disallowance of expenditure u/s. 40(a)(ia) of the Act and (ii) payments made to payee being the recipient who has offered the income to tax in the income tax assessment. We found there is a merit in the arguments of the Ld. AR, where the assessee has deducted TDS but at a lower rate and Ld. AO cannot involve the provision of section 40(a)(ia) of the Act.
We found the co-ordinate bench of the Tribunal has considered the aspects of the short deduction of TDS and gave findings that the provisions of section 40(a)(ia) of the Act does not apply in the case of short deduction of TDS in M/s. KEC International Ltd Vs ITO in assessment year 2008-09 dated 29.01.2013 at Page 2 Para 3 which is read as under :
"
3. The Income-tax Appellate Tribunal, Mumbai, in the case of DCIT vs. Chandabhoy and Jassobhoy, 49 SOT 448, has held that section 40(a)(ia) does not apply in the case of short deduction of tax and that section applies only in a case of non deduction of tax. The Income-tax Appellate Tribunal, Kolkata B-Bench in the case of DCIT vs. S.K. Tekriwal, 48 SOT 515, has held that where an assessee has deducted a lesser amount of tax, section 40(a)(ia) cannot be invoked. Same view has been taken by the Income-tax Appellate Tribunal, Mumbai L-Bench in the case of Hindustan Thompson Associates Pvt. Ltd. vs. ACIT, in their order dated May 25, 2012, published in taxindiaonline.com (2012-TIOL-328-ITAT-MUM). In the light of the above
:-5-: & 2196/Mds/2015 orders of the Tribunal, we find that the disallowance made in the present case is not sustainable. The disallowance is, therefore, deleted. 4. In result, this appeal filed by the assessee is allowed."
In the present case out of total disallowance, Rs. 25,95,010/- was towards short deduction of TDS by the assessee and we following the judicial decisions direct the Assessing Officer to delete the addition and allow the ground of the assessee.
The Ld. AO has invoked the provisions of section 40(a)(ia) of the Act, in respect of payments where the assessee has not deducted the tax. The Ld. AR submitted that the Recipient/payee has offered the income in the income tax assessment, but we find no evidence was produced before the Ld. AR or CIT(A) by the assessee supporting with income tax returns particulars and assessment details.
No doubt the second provisions of section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1st April, 2005. We re of the opinion, the second provisions of section 40(a)(ia) shall be invoked, where the assessee satisfy with evidence that Recipient/Payee has paid tax and made tax compliance. We rely on the Hon'ble High Court decision of CIT vs Ansal Landmark Township (P) Ltd., 377 ITR 0635 (Del) and in the interest of justice, we remit the disputed issue Rs. 10,47,442/- on which TDS is not deducted by the assessee to the file of AO and provide opportunity to the assessee to substantiate its claim relying on decision of CIT vs Ansal Landmark Township (supra), submitting income tax details of payee and the AO shall pass a speaking order and the ground of the assessee is allowed for statistical purpose.
:-6-: & 2196/Mds/2015
Now, we take up ITA No. 2196/Mds/2015. The assessee has raised two grounds on (i) re-opening of assessment and (ii) disallowance u/s. 40(a)(ia) of the Act for short deduction of TDS. At the time of hearing, the Ld. AR of the assessee has not pressed the ground on Re-opening of assessment and made endorsement and on second disputed issue of short deduction of TDS. We have decided the issue in at Para 6 and same shall apply and allow the ground and Accordingly the appeal of the assessee is allowed
In the result, assessee appeal in is allowed for statistical purpose and ITA No. 2196/Mds/2015 is allowed.
Order pronounced on Monday, the 27th day of March, 2017 at Chennai.