Calibre Personnel Services .P. Ltd, ... vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "C " BENCH, MUMBAI सव ी आई.पी.बंसल, या यक सद य. एवं ी राजे , लेखा सद य के सम BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM

आयकर अपील सं./I.T.A. No.7347/MUM/2013 ( नधा रण वष / Assessment Year : 2008-09 Dy. Commissioner of Income बनाम/ M/s. Calibre Personnel Services Tax (OSD), Range- 8(1), Pvt. Ltd., n d Vs. Room No.260A, 2 Floor, D 2148, Oberoi Garden Estate, Aaykar Bhavan, MK Raod, Chandivali Farm Road, Mumbai 400 020 Andheri(E), Mumbai 400 072

थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AACCC 7025J (अपीलाथ /Appellant) .. ( यथ / Respondent)

Appellant by Shri S.B.Prasad Respondent by Shri C.M.Vaze सनु वाई क" तार$ख / Date of Hearing : 14/05/2015 घोषणा क" तार$ख /Date of Pronouncement : 14/05/2015

आदे श / O R D E R

PER I.P.BANSAL, J.M:

This is an appeal filed by the Revenue and it is directed against the order passed by Ld. CIT(A)-16, Mumbai dated 10/9/2013 for assessment year 2008-09. Grounds of appeal read as under:

1. "On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) erred in directing the Assessing officer to allow deduction of Rs.10,16,73,183/- Under Section 40(a)(ia) of the Act on the ground that the TDS has been paid by the assessee before the due date of filing the return of income, without appreciating that the provisions of Section 40(a)(ia) as amended by the Finance Act, 2008 w.r.e.f.01.04.2005 are applicable to the assessee and therefore, the C!T(A) was not justified in allowing relief to the assessee on the basis of the amendment brought in by Finance Act, 2010, w.e.f. 01.04.2010 relying on the decision of the Hon'ble ITAT in the case of Golden Stables Lifestyles Centre Pvt. Ltd. A.Y. 2005-06 which has not been accepted by the Department and contested in further appeal."

2 आयकर अपील सं./I . T . A . N o . 7 3 4 7 / M U M / 2 0 1 3 ( नधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 8 - 0 9

2. "On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) erred in directing the Assessing officer to allow deduction of Rs.10,16,73,183/- Under Section 40(a)(ia) of the Act without considering the fact· that the assessee had not claimed any deduction under section 40(a)(ia) in its original return of income and in the two revised returns filed by the assessee subsequently and, therefore, the allowance of any such deduction will result in the assessed income being lower than the- returned income which is contrary to the scheme of the Income-tax Act, 1961, as envisaged by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 01.04.1989 and as clarified in CBDT'S circular No.549 dated 31.10.1989 wherein it has been stated as under:- "

.... under the new provisions, in as assessment order passed under section 143(3) in a scrutiny case, neither the income can be assessed at a figure lower than the returned income, not loss can be assessed at a figure higher than the returned loss, nor a further refund can be given except what was due on the basis of the returned income and which would have already been allowed under the provisions of Section 143(1)(a)(ii) ... "

3. "On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) erred in directing the Assessing officer to allow deduction of Rs.10,16,73,183/- Under Section 40(a)(ia) of the Act without appreciating that the assessee had already claimed and availed of deduction of the said amount in the subsequent assessment year on actual payment of TDS in terms of Section 40(a)(ia) of the Act as applicable prior to 01.04.2010."

2. The impugned order has been passed by Ld. CIT(A) in pursuance to direction given by the Tribunal vide its order dated18/07/2012 in ITA No.3047/Mum/2011, whereby Ld. CIT(A) was directed to decide the issue relating to disallowance under section 40(a)(ia) on merits, if the said issue was specifically raised during the course of assessment proceedings before AO. The assessee had filed revised return of income declaring income of Rs.11,19,85,730/- by including a sum of Rs.10,16,37,183/- disallowed under section 40(a)(ia). However, during the course of assessment proceedings, assessee claimed the amount added in the revised return by disallowance under section 40(a)(ia) amounting to Rs.10,16,37,183/- on the ground that the said amount was duly paid before due date of filing the return and therefore, it was allowable in view of the decision of Mumbai ITAT in the case of Golden Stables Lifecenters Ltd. Vs. CIT, (ITA No.4145/Mum/2005) which decision has also been referred by the Revenue in its Ground No.1. Ld. CIT(A), in pursuance to directions of ITAT has gone through the assessment record and has found that this issue was raised by 3 आयकर अपील सं./I . T . A . N o . 7 3 4 7 / M U M / 2 0 1 3 ( नधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 8 - 0 9

the assessee before AO and thus, Ld. CIT(A) has proceeded to decide this issue on merits. The assessee has made submission before Ld. CIT(A) that since the TDS amount was paid before the due date of filing the return the same should be allowed in view of the aforementioned decision of Tribunal vide which it was held that amendment brought by the Finance Act, 2010 in section 40(a)(ia) would be retrospectively applicable. Accepting such submission of the assessee, Ld. CIT(A) has directed the AO to delete the disallowance under section 40(a)(ia) of the Act in all instances where TDS has been paid by the assessee before due date of filing the return after due verification of the dates of deposits of TDS from the relevant challans on record. It is against such finding of Ld. CIT(A) the Revenue has raised aforementioned grounds of appeal.

3. Ld. DR relying upon the grounds of appeal submitted that amendment brought by the Finance Act, 2010 cannot be applied retrospectively, therefore, could not be applied to impugned assessment year. Thus, it was pleaded that Ld. CIT(A) has committed an error in allowing the impugned relief to the assessee. It was further submitted that Ld. CIT(A) did not consider the fact that assessee had claimed impugned amount and has availed deduction of the said amount in subsequent assessment year on actual payment of TDS and there is no direction given by Ld. CIT(A) to withdraw the said amount, if the same has been allowed on the basis of actual payment made in the subsequent assessment year.

4. On the other hand, it was submitted by Ld. AR that in addition to decision relied upon by Ld. CIT(A), subsequently, Hon'ble Delhi High Court in the case of CIT vs. Naresh Kumar etc.vide their order dated 6/9/2013 in ITA No.24 of 2013 have held that amendment brought by the Finance Act, 2010 in section 40(a)(ia) w.e.f. 1/4/2010 is retrospective and is applicable to assessment year 2008-09. Copy of this order was placed on our record and was also given to Ld. DR. It was further submitted that Hon'ble Gujarat 4 आयकर अपील सं./I . T . A . N o . 7 3 4 7 / M U M / 2 0 1 3 ( नधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 8 - 0 9

High Court in the case of CIT vs. Ashok J. Patel (2014) 225 Taxman 79(Guj) have also upheld the similar proposition with the following observations:

" 8.1 Now, so far as the question No.2 in Tax Appeal No. 1064 of 2013 for AY 2006-07 Le. disallowance of Rs.93,25,426 made under section 40(a)(ia) of the Act Le. with respect to retrospective operation of the amendment in Section 40(a)(ia) by Finance Act, 2010 is concerned, the said question is squarely covered against the revenue by decision of the Division Bench of this Court in Tax Appeal NoA12 of2013 and allied matters. The Division Bench of this Court in Tax Appeal NoA12 of20 13 and allied matters, has held that the amendment in section 40( a)(ia) of the Act by Finance Act, 2010 would apply retrospectively.

8.2 Mr. Parikh, learned counsel appearing on behalf of the revenue has fairly conceded that the aforesaid issue is squarely covered against the revenue by the Division Bench of this Court in Tax Appeal NoAi2 of 2013 and allied matters.

8.3 Now, so far as disallowance made under section 40(a)(ia) with respect to AY 2005-06 is concerned, it appears that as such the assessee preferred appeal and claimed that the said expenditure be allowed in the next assessment year which has been accepted by the learned ITAT. Therefore, as such the question with respect to disallowance under section 40(a)(ia) would not arise in Tax Appeal No.1065 of2013 for AY 2005-06."

4.1 Thus, it was pleaded by Ld. AR that Ld. CIT(A) did not commit any error in directing the AO to allow the impugned relief on the basis of payment made before the due date of filing the return. Ld.AR did not object to the submissions of Ld.DR that AO may be directed that if any part of the impugned amount of Rs.10,16,73,183/- which is allowed in pursuance of such directions of Ld. CIT(A) and has been claimed and allowed in subsequent year on the basis of actual payment, then such allowance in subsequent assessment year, to the extent it has been allowed in assessment year 2008-09, can be withdrawn.

5. We have heard both the parties and their contentions have carefully been considered. In view of aforementioned decision of Hon'ble Delhi High Court in the case of CIT vs .Naresh Kumar etc.(Supra) and Hon'ble Gujarat High Court decision in the case of Ashok J. Patel(supra), wherein it has been held that aforementioned amendment brought by Finance Act, 2010 would be retrospectively applicable, we hold that Ld. CIT(A) did not commit any error in allowing the appropriate relief to the assessee. However, we direct 5 आयकर अपील सं./I . T . A . N o . 7 3 4 7 / M U M / 2 0 1 3 ( नधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 8 - 0 9

the AO that if any portion of impugned amount of Rs.10,16,73,183/- is allowed to the assessee in subsequent assessment year on the basis of actual payment then, the same may be withdrawn to the extent it has been allowed in assessment year 2008-09. With these observations, in view of above discussion, we dismiss the Revenue's appeal.

6. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 14/05/2015 आदे श क" घोषणा खल ु े यायालय म+ ,दनांकः 14/05/2015 को क" गई ।

Sd/- Sd/- राजे (RAJENDRA) आई.पी.बंसल (I.P.BANSAL)

लेखा सद य /ACCOUNTANT MEMBER या यक सद य /JUDICIAL MEMBER मुंबई Mumbai; ,दनांक Dated 14/05/2015 आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आय0 ु त(अपील) / The CIT(A)-

4. आयकर आय0 ु त / CIT

5. 1वभागीय त न3ध, आयकर अपील$य अ3धकरण, मब ुं ई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, स या1पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मबुं ई / ITAT, Mumbai व. न.स.Vm , Sr. PS