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

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ITA 1609/CHANDI/2017Status: DisposedITAT Chandigarh04 December 2018AY 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 second proviso to Section 40(a)(ia) is declaratory and curative, and the payees having accounted for the income and paid taxes, no disallowance was warranted. This was supported by jurisdictional High Court decisions.

What were the facts?

The assessee had deducted TDS on payments to certain parties. However, the payees had included these amounts in their taxable income and filed their returns. The Assessing Officer made a disallowance under Section 40(a)(ia) of the Income-tax Act.

What were the issues?

Whether disallowance under Section 40(a)(ia) is permissible when the payee has accounted for the income and paid taxes, despite a technical failure in TDS deduction.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 201

AI-generated summary — verify with the full judgment below

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आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the Revenue against the order dated 13.09.2017 of the Commissioner of Income Tax(Appeals)-1, Ludhiana [hereinafter referred to as ‘CIT(A)’].

2.

The sole issue raised in this appeal is relating to the action of the Ld. CIT(A) in deleting the disallowance made by the Assessing officer u/s 40(a)(ia) of the Income-tax Act, 1961 (in short 'the Act').

3.

Before us, the Ld. Counsel for the assessee has pleaded that though the assessee had deducted TDS on the amounts paid to certain parties, however, the respective payees had taken into consideration the amount

ITA No. 1609-Chd-2017- M/s Hindustan Wire Products Ltd., Patiala 2

received from the assessee while computing their taxable income and had

filed their income tax return accordingly. The Ld. counsel, therefore, relied

upon second proviso to section 40(a)(ia) of the Act inserted by the

Finance Act 2012, which provides that in case an assessee fails to deduct

TDS as per the provisions of section 40(a)(ia) of the Act, but he is not

deemed to be assessee in default under the first proviso to sub-section (1)

of section 201, then, for the purpose of provisions of section 40(a)(ia) of

the Act, it shall be deemed that as the assessee had deducted and paid the

tax on such sum on the date of furnishing of return of income by the

resident payee referred to in the said proviso. It is pertinent to mention

here that first proviso to Section 201 stipulates that a person if failed to

deduct tax in accordance with the provisions of the Act shall not be

deemed to be assessee in default, if a certificate is furnished from an

accountant in a prescribed form to the effect that the resident payee had

furnished the return of income tax and has taken into account the sum

received and has paid due taxes as payable as per his return of income.

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

ITA No. 1609-Chd-2017- M/s Hindustan Wire Products Ltd., Patiala 3

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. In view of this, we do not find any merit in the appeal of the Revenue and the same is accordingly dismissed. Order dictated and pronounced in the Open Court on 4.12.2018.

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 04.12. 2018 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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