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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI, MANISH BORAD
आदेश / O R D E R
PER MANISH BORAD, ACCOUNTANT MEMBER: Revenue is in appeal against the order of Learned Commissioner of Income Tax (Appeals)-4, Ahmedabad dated 27.05.2015, arising out of order u/s.147 r.w.s. 143(3) of the Income Tax Act (hereinafter referred to as, ‘Act’) dated 28.03.2014 framed by ACIT, BK Circle, Palanpur relating to A.Y.2008-09.
ITA No.2053/Ahd/2015 ACIT vs. Bipinchandra A. Patel Asst.Year – 2008-09 - 2 - 2. Sole grievance of the revenue is against the order of ld. CIT(A) deleting the addition made by the Assessing Officer u/s.40(a)(ia) of the Act of Rs.63,07,900/-.
Briefly stated facts as culled out from the records are that the assessee is an individual engaged in civil construction business under sale property concern M/s. Saraswati Construction Company. Original assessment u/s.143(3) was completed on 12.05.2010 determining total income of Rs.25,61,580/-. Thereafter, re-assessment proceeding were initiated. Notice u/s.148 alongwith reasons was issued to the assessee. During the course of re-assessment proceedings it was observed that tax deducted at source on the contract payments of Rs.63,07,900/- were paid to the Government treasury in April, 2008. AO was of the view that the assessee was statutorily required to deposit the tax in the month of February/March, 2008 respectively, and therefore made a default in complying to the provision of section 40(a)(ia) of the Act and accordingly, made disallowance of Rs.63,07,900/- and assessed the income of Rs.88,69,480/-.
Aggrieved assessee before appeal before ld. CIT(A) and succeeded on this issue of the disallowance u/s.40(a)(ia), as ld. CIT(A) deleted the impugned disallowance following the judgment of Hon’ble Delhi High Court in the case of H. S. Mohindra Traders vs. ITO [2010] 132 TTJ 701 and judgment of Hon’ble Gujarat High Court in the case of CIT vs.
ITA No.2053/Ahd/2015 ACIT vs. Bipinchandra A. Patel Asst.Year – 2008-09 - 3 - Royal Builders, Tax Appeal No.520 of 2012 dated 11.02.2013, thereby holding that no disallowance was called for u/s.40(a)(ia) of the Act as the assessee has deposited the amount before the due date of filing the return of income specified in section 139(1) of the Act.
Aggrieved revenue is now before the tribunal. Ld. Departmental Representative supported the order of the Assessing Officer and ld. Counsel for the assessee supporting the order of ld. CIT(A) submitted that the issue stands squarely covered in favour of the assessee by the judgment of Jurisdictional High Court in the case of Royal Builders (supra).
We have heard the rival contentions and perused the records placed before us. Grievance of revenue is against the deleting of addition of Rs.63,07,900/- u/s.40(a)(ia). From perusal of record, we find that assessee made payments to various parties towards contract charges during the month of January and February totaling to Rs.63,07,900/- and the tax deducted at source on this payment at Rs.68,883/- was required to be deposited in subsequent month i.e. February and March, 2008 respectively. However, there was delay in deposit and tax deducted on the contract payment was finally deposited in the Government Account in April, 2008. This fact is not disputed that the tax deducted was paid in April, 2008, which is much before the due date of filing return of income provided in section 139(1) of the Act.
ITA No.2053/Ahd/2015 ACIT vs. Bipinchandra A. Patel Asst.Year – 2008-09 - 4 - 7. We further observe from going through the judgment of Hon’ble Delhi High Court in the case of H. S. Mohindra Traders (supra) and judgment of Jurisdictional High Court in the case of Royal Builders (supra), where it has been consistently held that no disallowance u/s.40(a)(ia) of the Act is to be made if the tax deducted at source relating to the financial year is deposited before the due date of filing return of income specified in section 139(1) of the Act.
Respectfully following the judgment of Hon’ble High Courts, we find no reason to interfere in the findings of ld. CIT(A) deleting the impugned disallowance of Rs.63,07,900/- observing as follows: “5.2 I have considered the submission filed by the appellant and the observations of the AO in the assessment order. Honourable Delhi High Court, in the case of H. S. Mohindra Traders v. ITO [2010] 132 TTJ 701, having similar facts, has held as below: "The assessee had deducted the tax at source in the month of March, 2007 for the expenditure incurred in February 2007, but the same was deposited with the Income Tax Department in April 2007, i.e. much before the due date specified in sub section (1) of Section 139 of the Income Tax Act for filing the return. In these circumstances, we are of the opinion that the Income Tax Appellate Tribunal [hereinafter referred to as, "the Tribunal"] has rightly interpreted the provision of Section 40(a)(ia) and particularly, sub-clause (A) thereof which clearly gives the time to the assessee to deposit the TDS on or before the due date specified in sub-section (1) of Section 139” of the Act. The entire case sought to be made in this appeal is that the Tribunal wrongly relied upon the amendment which came into effect from 1.04.2010. This is clearly erroneous in as much as
ITA No.2053/Ahd/2015 ACIT vs. Bipinchandra A. Patel Asst.Year – 2008-09 - 5 - Section 40(a)(ia) was amended by the Finance Act, 2008 with effect from 01.05.2005 whereby the words "on or before the due date specified in sub-section (I) of Section 139" was substituted by the words, "has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of Section 200" of the Act. We, thus, find no merit in this appeal. This Appeal is accordingly dismissed."
5.2.1 On similar facts, Hon'ble ITAT, Ahmedabad, in the case of M/s Shah Rasiklal Babulal, in ITA No. 1717/Ahd/2011, in order dated 19/06/2013 has also given a favourable judgement after considering above stated judgement of honourable Delhi High Court and other judicial pronouncements The findings are as below:
"4. The ld Counsel of the assessee further produced a copy of judgment of Hon'ble Gujarat High Court in Tax Appeal No.520 of 2012 in the case of C1T v. Royal Builders, 'delivered on 11.02.2013; wherein the Hon'ble Gujarat High Court has approved the view taken by the Hon'ble Delhi High Court in the case of H.S. Mohindra Traders v. Gujarat High Court, the disallowance of Rs.4,25,708.00 made by the Assessing Officer u/s 40(a)(ia) of the Income-tax Act be deleted as TDS on commission u/s 194H of Rs.22,477/- has been paid on 30.04.2005.
Shri Nimesh Yadav, ld.Sr DR, appeared on behalf of Revenue could not controvert the aforesaid submissions made by the Id Counsel for the assessee.
Having heard both the sides, I have carefully gone through the orders of the authorities below. Admittedly, the assessee has paid the TDS on commission u/s 194H of Rs.22,477/- on 30.04.2005. Therefore, following the judgment of Hon'ble Gujarat High Court in the case of CIT v. Royal Builders (supra), the disallowance of Rs.4,25,708.00 u/s 40(a)(ia) of the Income-tax Act is deleted."
ITA No.2053/Ahd/2015 ACIT vs. Bipinchandra A. Patel Asst.Year – 2008-09 - 6 - 5.2.2 In view of the above stated judicial pronouncements, it is clear that AO was not justified in making the disallowance under the provisions of section 40(a)(ia) of the Act as appellant has deducted and paid the tax before filing of return under section 139(1) of the Act. Accordingly, the disallowance of Rs.63,07,900/- made by the AO is hereby deleted. Ground nos. 4,5 & 6 are allowed.”
In the result, appeal filed by the revenue is dismissed. This Order pronounced in Open Court on 26/12/2017
Sd/- Sd/- ( MAHAVIR PRASAD ) ( MANISH BORAD ) JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 26/12/2017 Priti Yadav, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-3, Rajkot �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad