Bhagwandas Sagarmal, Kolkata vs Department Of Income Tax
- CitationI.T.A No.1374/Kol/2012
Ratio decidendi
The rule this decision rests on
The Tribunal applied the Jurisdictional High Court's decision in Crescent Exports Syndicate, which the order records as having reversed the Special Bench decision in Merilyn Shipping & Transports, holding that the issue of disallowance under section 40(a)(ia) for non-deduction of tax on loading and unloading charges stands covered by that High Court ruling. The Tribunal held that the second proviso to section 40(a)(ia), inserted by the Finance Act 2012, is curative and has retrospective effect from 1 April 2005, the date from which section 40(a)(ia) was inserted by the Finance (No. 2) Act 2004. Accordingly, where the assessee contends that the recipient has included the related payments in its income and paid tax thereon, the Assessing Officer must verify that fact (including the recipient's filing of its return) before disallowing the expenditure, and the matter is to be remitted to the Assessing Officer for that purpose.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA
[Before Hon'ble Shri Mahavir Singh, JM & Hon'ble Shri B.P.Jain, AM ]
I.T.A No.1374/Kol/2012 Assessment Year: 2008-09
A.C.I.T., Circle-37, Vs. M/s. Bhagwandas Sagarmal Kolkata Kolkata (Appellant) (Respondent) (PAN:AADFB 1849 B) For the Appellant : Shri Kanhiya Lal Kanak,JCIT Sr.DR For the Respondent : Shri Rajeev Kumar, Advocate
Date of hearing : 13.05.2015. Date of pronouncement: 15.05.2015. ORDER
Per Shri B.P.Jain, AM :
This appeal of the Revenue arises out of the order of ld.CIT(A)-XXIV, Kolkata dated 31.07.2012 for Assessment Year 2008-09.
2. The Revenue has raised the following grounds of appeal :-
"1. The ld. CIT(A) has erred in law as well as on fact in disallowing the payment made u/s 40(a)(ia) to the tune of rs.32,49,177/-.
2. That the appellant craves leave to add, or modify, includes any other grounds of appeal."
3. The only issue in this appeal of revenue is against the order of ld. CIT(A) deleting the disallowances made by the AO on account of loading and unloading of expenses by invoking the provisions of section 40(a) (ia) of the Act for non deduction of TDS u/s 194 I of the Act.
4. At the outset, it is noticed from the order of the ld. CIT(A) that the ld. CIT(A) has relied upon the decision of Special Bench of ITAT Vishakapatnam in the case of Merilyn Shipping & Transports, Vishkapatnam vs ACIT in ITA NO.477/Viz./2008 order dated 29.03.2012 wherein the amount was paid or payable. We find that this issue now stands covered by the decision of the Hon'ble Jurisdictional High Court in 2 ITA No.1374/Kol/2012 M/s.Bhagwandas Sagarmal A.Yr.2008-09
the case of Crescent Exports Syndicate (2013) 216 Taxman 258 (Cal) where in the order of the Special Bench in the case of Merilyn Shipping & Transports has been reversed. The ld. Counsel for the assessee, argued that the only thing is to be verified in terms of second proviso inserted in sub-clause (ia) of Clause (a) of section 50 by the Finance Act, 2012 w.e.f. 01.04.2013 whether the recipient has included the income in the respective returns or not and also paid taxes for loading and unloading expenses. For this the Coordinate Bench of this Tribunal in ITA No.1905/Kol/2014 for A.Yr. 2007-08 in the case of Santosh Kr.Kedia vs ITO order dated 04.03.2015 wherein it has been held as under :-
"10. Secondly, I am of the view that the insertion of second proviso to sec. 40(a)(ia) of the Act is curative and it has retrospective effect w.e.f. 1st April, 2005, being a date from which Sec. 40(a)(ia) of the Act was inserted by the Finance (No. 2) Act, 2004. In view of this, I am of the view that matter needs fresh adjudication in the light of the fact that the AO will carry out necessary verification in regard to related payments having been taken into account by the recipient in computation of its income and verification of payment of taxes in respect of such income and also filing of income tax return by the recipient. In term of the above, the second aspect argued by Ld. counsel is restored back to the file of the AO and assessee will provide all the details in terms of second proviso to sec. 40(a)(ia) of the Act. "
5. The facts are in the order of AO but the ld.CIT(A) has not adjudicated the same. On query from the Bench the ld.DR stated that there is no objection if the matter is restored back to the file of the AO, who will verify the facts. In terms of the above the appeal of the revenue is partly allowed and the issue in respect of no deduction of TDS on warehousing charges is set aside to the file of AO for verification whether the recipient has included the income in the respective returns or not and paid taxes for warehousing charges.
6. In the result the appeal of the revenue is allowed for statistical purposes.
Order pronounced in the court on 15.05.2015.
Sd/- Sd/- [ Mahavir Singh ] [B.P.Jain] Judicial Member Accountant Member
Date: 15.05.2015. R.G.(.P.S.) 3 ITA No.1374/Kol/2012 M/s.Bhagwandas Sagarmal A.Yr.2008-09
Copy of the order forwarded to:
1. M/s. Bhagwandas Sagarmal, 12, Syed Salley Lane, Kolkata-700073.
2 ACIT, Circle-37, Kolkata.
3. C.I.T.- (A)-XXIV, Kolkata. 4. CIT Kolkata
5. CIT(DR), Kolkata Benches, Kolkata.
True Copy, By order,
Asst. Registrar, ITAT, Kolkata Benches
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