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Income Tax Appellate Tribunal, CHANDIGARH BENCHES, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 27.06.2016 of the Commissioner of Income Tax (Appeals), Palampur [hereinafter referred to as CIT(A)].
The sole issue raised by the assessee in this appeal is regarding rectification made by the Assessing officer u/s 154 of Income-tax Act, 1961 (in short 'the Act') in the assessment order. The Assessing officer noted that the assessee had made certain payments to Himachal Road Transport Corporation (in short ‘HRTC’) whereupon the assessee did not deduct tax at source (TDS). He, therefore, was of the opinion that the expenditure claimed
2 ITA No.965-c-2016- M/s Vijay Chauhan & Co., Hamirpuri
on account of payments made to HRTC was not allowable as per the provisions
of section 40(a)(ia) of the Act. He accordingly passed the rectification order
u/s 154 of the Act disallowing the aforesaid expenditure. The Ld. CIT(A)
confirmed the above disallowance of expenditure made by the Assessing
officer.
Before us, Ld. Counsel for the assessee, apart from challenging the
action of the Assessing officer in making the disallowance by way of
rectification of the order u/s 154 of the Act, has also contented that HRTC is
a government undertaking which had accounted for the receipts from the
assessee in the income tax return and paid due taxes as per computation. The
Ld. Counsel has further submitted that the assessee was ready to produce the
relevant evidence to show that the payments made by the assessee and
received by the HRTC have been duly accounted for by HRTC. The return for
the year was duly filed and tax paid thereupon. He, therefore, has submitted
that the matter be restored to the file of the Assessing officer so that the
assessee may be able to produce the relevant evidence before the Ld. CIT(A).
The Ld. DR though has strongly supported the order of the Assessing
officer but has been fair enough to admit that the payee in this case is a
government undertaking which is supposed to account for the receipts received
in regular business.
Considering the above submissions of the Ld. Counsel, and in the
interest of justice, the matter is restored to the file of the Assessing officer for
the purpose of giving opportunity to the assessee to furnish the relevant
evidences in this respect. If the assessee will be able show that the payee had
duly accounted for the receipts, filed the income tax return and paid due
3 ITA No.965-c-2016- M/s Vijay Chauhan & Co., Hamirpuri
taxes there upon, then as per the second proviso to section 40(a)(ia) of the
Act, which the Courts have held that the same is clarificatory in nature and
has to be applied retrospectively, the Assessing officer accordingly will not
disallow the expenditure u/s 40(a)(ia) of the Act.
In the result, the appeal of the assessee is treated as partly allowed for
statistical purposes.
Order pronounced in the Open Court.
Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 01.08. 2018 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR