D.C.I.T CIR - 11,KOLKATA., KOLKATA vs. M/S B.S.SEA FOODS PVT LTD, NORTH 24 PARGANAS

This appeal is preferred by the Revenue against the order of CIT(A)-XII, Kolkata dated 19.12.2012 and in the solitary ground raised therein, the Revenue has challenged the action of the CIT(A) in deleting the addition made by the Assessing Officer u/s 40(a)(ia) of the Income Tax Act to the extent of Rs.10 lakh for the delay on the part of assessee in the payment of tax deducted at source.

The assessee in the present is a company which filed its return of income for the year under consideration on 29.09.2009declaring total income of DCIT Cir-11,Kol. V. M/s B.S. Sea Foods Pvt. Ltd. Page 2 Rs.6,72,051/-. In the assessment completed u/s. 143(3) of the Act vide order dated 14.12.2011, the total income of the assessee was determined by the AO at Rs.1,60,59,327/- after making addition inter alia on account of disallowance u/s 40(a)(ia) of the Act amounting to Rs.33 lakh for the delay on the part of the assessee in making payment of tax deducted at source from the labour charges paid to two parties namely – M/s S. Enterprise (P) Ltd. and M/s Z.A. Food Products. On appeal, the CIT(A) deleted the said disallowance after having found that the tax deducted at source from the relevant payments made by the assessee during the year under consideration was paid by the assessee before due date of filing of return for the year under consideration. This relief give by the CIT(A) is disputed by the Revenue to the extent of Rs.10 lakh on the ground the corresponding taxes having been deducted from the said payments prior to March, 2009, assessee was required to deposit the same within the previous year under consideration.

We have heard arguments of both the sides and also perusing the relevant records. It is observed that the issue involved in this appeal of the Revenue is squarely covered by the decision of Hon'ble jurisdictional High Court in the case of CIT v. Virgin Creations (ITAT No. 302 of 2011) GA 3200/2011 dated 23.11.2011, wherein it was held that the tax deducted at source by the assessee during the period from April 2005 to March 2006 having been paid well before the due date of filing the return income for the relevant year, the disallowance made by the Assessing Officer u/s 40(a)(ia) of the Act was not justified keeping in view the first proviso to Sec. 40(a)(ia) as amended by the Finance Act, 2000 w.e.f. 01.04.2010, which is applicable retrospectively. For this conclusion, Hon'ble jurisdictional High Court relied on the decision of Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd., 224 ITR 677 (SC) and in the case of Alom Extrusions Ltd.,. 319 ITR 306 (SC). Respectfully following the said decisions of Hon'ble Supreme Court as well as the decision of Hon'ble DCIT Cir-11,Kol. V. M/s B.S. Sea Foods Pvt. Ltd. Page 3 jurisdictional High Court in the case of Virgin Creations (supra), we uphold the impugned order of CIT(A) deleting the addition of Rs.10 lakh made by AO u/s. 40(a)(ia) of the Act and dismiss the appeal of Revenue.