PR COMMISSIONER OF vs. SHRI MAHALINGAM

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ITA/377/2016HC KarnatakaKAHC01025082201621 December 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that the ITAT had not adjudicated the issues on merits and had dealt with the appeal on a technical issue. Therefore, the order of the ITAT was quashed.

What were the facts?

The Assessing Officer made an addition under Section 40(a)(ia) for non-deduction of TDS on stall rent. The assessee's appeal was allowed, and the revenue's subsequent appeal to the ITAT was dismissed on a technicality.

What were the issues?

Whether the ITAT correctly dismissed the revenue's appeal without adjudicating the merits of the case, and whether the disallowance under Section 40(a)(ia) should be restricted to outstanding amounts.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194I,Section 147,Section 148

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 21ST DAY OF DECEMBER, 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.377 OF 2016

BETWEEN:

1.

PR. COMMISSIONER OF INCOME-TAX

MYSORE.

2.

ASSISTANT COMMISSIONER OF INCOME-TAX

CIRCLE-1(1), MYSORE.

… APPELLANTS (BY Mr. E.I. SANMATHI, ADV.,)

AND:

SHRI. MAHALINGAM NO.1161, 1ST MAIN, 1ST CROSS II STAGE, SRIRAMPURA MYSURU-570023 PAN: ADEPM1686R.

…. RESPONDENT (BY Mr. A. SHANKAR, SR. COUNSEL FOR Mr. M. LAVA, ADV.,) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED

4.12.2015 PASSED IN ITA No.1081/BANG/2015, FOR THE ASSESSMENT YEAR 2007-07, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 4.12.2015 PASSED BY THE ITAT, 'C' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO.1081/BANG/2015 FOR A.Y. 2006-07 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Year 2006-07. The appeal was admitted by a Bench of this Court vide order dated 11.10.2017 on the following substantial question of law:

‘Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the disallowance

under Section 40(a)(ia) of the Act ought to be restricted to the amounts remaining outstanding, on which TDS was not made during the relevant previous year and not on the amounts which were actually paid during the previous year?’

2.

The facts giving rise to filing of this appeal briefly stated are that the assessee claims to be involved in civil contract work. The assessee filed the return of income for the Assessment Year 2006-2007. The Assessing Officer by an order dated 26.02.2014 made addition under Section 40(a)(ia) of the Act for the Assessment Year under consideration. During the course of the proceedings of assessment, it was noticed by the Assessing Officer that the assessee has not deducted the TDS under Section 194I of the Act on stall rent at Rs.7,22,555/- for the Assessment Year 2006-07. Being aggrieved, the assessee filed an appeal, which was allowed vide order dated 26.03.2015. The revenue

thereupon, filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’, for short). The Tribunal by order dated 04.12.2015 has dismissed the appeal preferred by the revenue.

3.

Learned counsel for the revenue submitted that the Tribunal has not adjudicated the issue on merits and in a cryptic and cavalier manner has dismissed the appeal preferred by the revenue.

4.

On the other hand, learned Senior Counsel for the assessee submitted that the following issues, which arose for consideration before the Tribunal have not been dealt with by the Tribunal:-

a. The payment of Stall fees is not in the nature of rent.

b. The proceedings are bad in law in view of the fact that the reasons recorded have not

been furnished inspite of written requests made by the Respondent Assessee in letter dated 11.03.2013.

c. No proceedings u/s. 147/148 can be issued on the basis of audit objection.

5.

We have considered the submissions made by learned counsel for the parties. From a perusal of the order passed by the Tribunal, it is evident that the issues which arose for consideration before the Tribunal have not been dealt with on merits and the Tribunal has dealt with the appeal on a technical issue. Therefore, in the peculiar fact situation of the case, we deem it appropriate to quash the order passed by the Tribunal. Therefore, the order dated 04.12.2015 passed by the Tribunal is set aside and the Tribunal is directed to adjudicate the appeal on the aforesaid three issues. Therefore, it is not necessary for us to answer the substantial questions of law framed in this appeal.

6.

Needless to state that all other issues are kept open for both the parties, which could be canvassed before the Tribunal. In the result, the appeal is disposed of.

Sd/- JUDGE

Sd/- JUDGE

dn/- CT-HR

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