2013 (12) TMI 1057 - AT - Income Tax

Tribunal affirms CIT(A) on disallowance under section 40(a)(ia) & partial relief to assessee

M/s TRIVENI ENGICONS PVT LTD Versus INCOME TAX OFFICER KOLKATA

The Tribunal upheld the decision of the ld. CIT(A) regarding the disallowance under section 40(a)(ia) of the Act and the application of the provisions for ... Disallowance u/s 40(a)(ia) – Held that:- Assessee has filed the details of TDS and the submissions of assessee had also been sent to AO. The AO has in his Remand Report clarified that he has verified the challans in respect of TDS and has accepted that TDS was deposited before the due date of filing of the return - As one of the challans for an amount of Rs.98,676/- had not been included by AO – Even unamended provision of section 40(a)(ia) if applied would clearly show that where the tax was deductible and was so deducted during the last month of the previous year then the payment of the same should have been made before the due date specified in sub-section (1) of section 139 – Decided against Revenue. Disallowance u/s 40(a)(ia) – Held that:- The assessee had filed written submissions which was taken into consideration by CIT(A) while calling for the Remand Report – The assessee has made extra payment of TDS which was not considered by the CIT(A) – The issue was restored for fresh decision. Issues:1. Disallowance under section 40(a)(ia) of the Income Tax Act, 1961.2. Application of the amended provision of Section 40(a)(ia) for the Assessment Year 2009-10.Issue 1: Disallowance under section 40(a)(ia) of the Income Tax Act, 1961:In the case, the assessee appealed against the order of the ld. C.I.T.(A)- XX, Kolkata regarding the disallowance of Rs.4,61,24,937 under section 40(a)(ia) of the Act. The assessee contended that the disallowance should have been restricted to Rs.2,27,72,701 by considering an extra payment of tax made. The Revenue, on the other hand, challenged the deletion of an addition of Rs.16,51,73,610 on account of expenses for executing contract work under section 40(a)(ia). The Revenue argued that the amendment to section 40(a)(ia) was not applicable for the assessment year 2009-10. The ld. CIT(A) had deleted the disallowance based on the TDS deducted by the assessee. The Tribunal upheld the decision of the ld. CIT(A) as the TDS amount was deposited before the due date of filing the return, thus allowing the corresponding expenditure.Issue 2: Application of the amended provision of Section 40(a)(ia) for the Assessment Year 2009-10:The Revenue contended that the ld. CIT(A) wrongly applied the amended provision of Section 40(a)(ia) which was effective from 01.04.2010, while considering the assessee's claim for the Assessment Year 2009-10. The Tribunal noted that even under the unamended provision, if TDS was deductible and deducted before the due date of filing the return, the corresponding expenditure should be allowed. The Tribunal found that the ld. CIT(A) had correctly allowed the expenditure based on the TDS deposited by the assessee. The Tribunal dismissed the appeal of the Revenue and partly allowed the appeal of the assessee for statistical purposes, directing the issue of extra TDS payment to be verified by the AO.In conclusion, the Tribunal upheld the decision of the ld. CIT(A) regarding the disallowance under section 40(a)(ia) of the Act and the application of the provisions for the relevant assessment year. The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal for statistical purposes, referring the issue of extra TDS payment for further verification by the AO.