ACIT 11(1), MUMBAI vs. HINDUSTAN THOMPSON ASSOCIATES P.LTD, MUMBAI

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ITA 6729/MUM/2014Status: DisposedITAT Mumbai13 July 2016AY 2010-114 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 followed the co-ordinate bench decision which held that Section 40(a)(ia) is not applicable in cases of short deduction of tax at source. The Tribunal decided in favour of the assessee, taking the view that is beneficial to the assessee when there is a conflict of High Court decisions.

What were the facts?

The Revenue appealed against the CIT(A)'s order which held that short deduction of tax at source does not attract Section 40(a)(ia) of the IT Act. The assessee relied on co-ordinate bench decisions for earlier assessment years.

What were the issues?

Whether short deduction of tax at source attracts disallowance under Section 40(a)(ia) of the Income Tax Act, 1961.

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, “H” BENCH, MUMBAI

Before: SHRI B.R. BASKARAN & SHRI C.N. PRASAD,

Hearing: 31.05.2016Pronounced: 13.07.2016

सुनवाई क" तार"ख / Date of Hearing : 31.05.2016 घोषणा क" तार"ख /Date of Pronouncement :13.07.2016 आदेश / O R D E R

PER C.N. PRASAD, JM:

1.

This appeal is filed by the Revenue against the order of the Ld. CIT(A)-3, Mumbai dated 4.8.2014 pertaining to assessment year 2010-11.

2.

The Revenue has raised the following grounds of appeal:

“1. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) was justified in holding that short deduction of tax at source will not attract the provisions of Sec. 40(a)(ia) of the I.T. Act, 1961?

2 2. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) was justified in holding that disallowance u/s. 40(a)(ia) of the I.T. Act cannot be made where the tax deducted at source is les than the amount deductible as per chapter XVIIB of the I.T. Act, 1961?”

3.

At the outset, the Ld. Counsel for the assessee submits that the issue, whether the provisions of Sec. 40(a)(ia) are attracted or not, when there was a short deduction of tax at source has been decided in favour of the assessee by the Co-ordinate Bench for the Assessment Year 2008-09 & 2009-10 in dated 7.2.2014 & 746/M/2014 dated 19.2.2016. Placing reliance on these decisions, the Ld. Counsel for the assessee submits that the issue in appeal has been squarely covered in favour of the assessee in its own case therefore request for sustaining the order of the Ld. CIT(A) on this issue.

4.

The Ld. Departmental Representative placed reliance on the order of the Assessing Officer.

5.

We have heard the rival contentions and perused the orders of the authorities below and the decision of the Co-ordinate Bench in assessee’s own case for Assessment Years 2008-09 and 2009-10. The Co-ordinate Bench for the Assessment Year 2009-10 in dated 19.02.2016 considered similar issue and held that provisions of Sec. 40(a)(ia) have no application when there is short deduction of tax observing as under:

We have heard the rival submissions and perused the material before us.We find that the Hon’ble Kerala High Court in the case of P V S Memorial Hospital(supra),has held that deduction of TDS under wrong provision of law will not save assessee from disallowance u/s. 40(a)(ia)of the Act.However,the Kolkata High Court in the matter of 3 Samir Tekriwal(supra), has held that expenses are not liable to be disallowed u/s.40(a)(ia)on account of short deduction of tax.The Hon’ble jurisdictional High Court has not decided the issue. Thus,we are faced with two diagonally opposite views about applicability of the provisions of section 40 (a)(ia)of the Act. We find that the Hon’ble Bombay High Court has in the case of Ashok Kumar Parekh(186 IT R212)has dealt with the binding precedence of the High Court judgments.Here,we would also like to reproduce the a portion of the judgment delivered by the Hon’ble Bombay High Court in the case of Siemens India Ltd.(156ITR11) and same reads as under : “ So far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is (functioning), irrespective of the pendency of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a conflict between different High Courts,he must follow the decision of the High Court within whose jurisdiction he is (functioning), but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the Tribunal has decided a point in favour of the assessee,he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee.

Considering the above,we are taking the view which is in favour of the assessee.We are following the judgment of Samir Tekriwal (supra)of the Hon’ble Kolkata High Court as well as the orders of the Mumbai Tribunal delivered by it for the earlier years.Effective ground of appeal is decide against the AO.”

Respectfully following the said order, we uphold the order of the Ld. CIT(A) on this issue and dismiss the Revenue’s appeal.

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