Dhara Enterprise, Surat vs Department Of Income Tax

ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम& BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 2222/Ahd/2011 %नधा)रण वष)/Assessment Year: 2005-2006

DCIT, Cir.6 M/s.Dhara Enterpirse Surat. Vs C/o. Shivangi Enclave Opp: Maheshwari, Moje Rundh Surat Dumas Road, Surat.

PAN : AAEFD 2636 H

अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)

Revenue by : Shri M.K. Singh, SR.DR Assessee(s) by : None

सन ु वाई क तार ख/ Dateof Hearing : 27/03/2015 घोषणा क तार ख / Date of Pronouncement: 10 /04/2015

आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by

the Revenue against the order of the Commissioner of Income-Tax-IV, Surat dated 31/5/2011.

2. Sole ground of appeal taken by the Revenue reads as under:

"1. On the facts and in the circumstances of the case and in law, the CIT(A), Surat has erred in deleting the addition of Rs.10,66,200/- made by the AO on account of expenses not deductible due to contravention of section 40(a)(ia) of the Act."

3. Brief facts of the case are that the AO observing that evidence in respect of payment of TDS within prescribed time was not furnished by ITA No.2222/Ahd/2011 2

the assessee in respect of expenditure of Rs.10,66,200/- paid to sub- contractors. He, therefore, observing that TDS collected from payments made to sub-contractors was not paid within the prescribed time, disallowed deduction for the entire expenditure of Rs.10,66,200/- by invoking the provisions of section 40(a)(ia) of the Act.

4. On appeal, the CIT(A) observed that the assessee had deducted TDS and the same was deposited to the government account after the end of previous year but within the date specified for filing of return u/s.139(1) of the Act. The related expenses was held as inadmissible under section 40(a)(ia) of the Act by the AO as he was of the opinion that amendment to section 40(a)(ia) brought about by Finance Act, 2010 was effective for Asstt.Year 2010-11 and not retrospective in nature. The CIT(A) observed that the issue was decided in favour of the assessee by the decisions of the ITAT relied upon by the assessee in the case of Matrix Glass & Structure Pvt. Ltd., ITA No.658 (Kol) of 2010, Bansal Parvahan (India) P.Ltd., 137 TTJ (Mum) 319 and Kanubhai Ramjibhai, 135 TTJ (Ahd) 364. No contrary decision has come to his notice. He, therefore, following the decision of the Tribunal held that the assessee was eligible for deduction in respect of expenses for which tax deducted had been deposited within the time specified for filing of return under section 139(1) of the Act.

5. The DR supported the order of the AO.

6. Notice of hearing was sent to the respondent-assessee by registered post with acknowledgment due on 24.2.2015 and the same was returned unserved by the postal authorities with the remark "left". The Bench was of the view that the appeal of the Revenue can be disposed of in the absence of respondent-assessee. Therefore, the appeal was heard ex parte qua the respondent-assessee and disposed of the same after considering the submission of the DR.

ITA No.2222/Ahd/2011 3 7. We have heard DR and perused the orders of the lower authorities and material available on record. It is not in dispute that a sum Rs.10,66,200/- was paid by the assessee to the sub-contractors on which the assessee had deducted TDS but the same was deposited to the credit of the central government before the due date of filing of return under section 139(1) of the Act. The disallowance of the expenditure of Rs.10,66,200/- was made by the AO invoking the provisions of section 40(a)(ia) on the ground that the amendment made by the Finance Act, 2010 which allowed payment of TDS within due date of filing of return under section 139(1) without inviting invocation of provisions of section 40(a)(ia) was prospective and applicable w.e.f. 1.4.2010 only, and not applicable for the year under consideration i.e. Asstt.Year 2005-06. The CIT(A) has allowed appeal of the assessee by following decisions of the Tribunal as quoted above in this order and held that the amendment was retrospective in nature. DR could not cite any contrary decision which was in favour of the Revenue. He also could not point out any specific error in the order of the CIT(A).

8. Further, we find the Hon'ble Calcutta High Court in the case of CIT Vs. Virgin Creations, ITA No.302/2011 judgment dated 23.11.2011 held that the amendment to section 40(a)(ia) that an addition under section 40(a)(ia) of the Act cannot be made if the payment of tax deducted at source has been made before the due date of filing of the return of income for the year under consideration. In the present case also payment of TDS has been made before the due date of filing of the return under section 139(1) of the Act, and therefore, the CIT(A) was fully justified in deleting the addition made by the AO by following the ITA No.2222/Ahd/2011 4

decisions of the Tribunal. Hence, we confirm the order of the CIT(A) and dismiss the ground of appeal of the Revenue.

9. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on Friday, the 10th April, 2015 at Ahmedabad.

Sd/- Sd/-

(KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Ahmedabad; Dated 10 /04/2015