M/s. Elite Shipping Synergies (P) Ltd. v. The Income-tax Officer, Salary Ward II(1), Chennai
[Citation -2016-LL-0923-44]

Citation 2016-LL-0923-44
Appellant Name M/s. Elite Shipping Synergies (P) Ltd.
Respondent Name The Income-tax Officer, Salary Ward II(1), Chennai
Court ITAT-Chennai
Relevant Act Income-tax
Date of Order 23/09/2016
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags insurance premium • managing director • non deduction of tds
Bot Summary: Aggrieved, the assessee moved an appeal before the Commissioner of Income Tax. Commissioner of Income Tax including a plea that the payee had furnished their returns and had shown the amounts received from the assessee as part of their income in such returns. Contention of the assessee was that the above provisions had retrospective operation and once the payee had filed their returns disclosing the payments received by them from the assessee and had paid taxes thereon, assessee being the payer could not be treated as a person in default. Assessing Officer in the remand report stated that assessee did offer explanations for non deduction of taxes on payments totaling to 9,16,96,970 - against disallowance of 9,47,78,800 - made u s.40(a)(ia) of the Act. 201(1)of the Act were prospective and did not have any application so far as assessee the was concerned. Authorised Representative strongly assailing the order of the lower authorities below submitted that when there were different views expressed by different High Courts other than the jurisdictional High Court, assessee could always take refuge on the judgment favourable to it. Assessing Officer in the remand report mentioned assessee s inability to produce evidence with regard to payee having included the amount received from the assessee in their return only to the full extent.


IN INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI, BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . I.T.A. No. 1031 Mds 2016 Assessment year : 2011-2012. M s. Elite Shipping Synergies (P) Ltd, Income Tax Officer, No.83 3, 2nd floor, Vs. Salary Ward II(1) Dr. Ranga Road, Chennai. Mylapore, Chennai 600 004. [PAN AABCE 4232C] ( Appellant) ( Respondent) Appellant by : Shri. B. Ramakrishnan, C.A. Respondent by : Shri.Supriya Pal, IRS, JCIT. Date of Hearing : 20-09-2016 Date of Pronouncement : 23-09-2016 ORDER PER SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: In this appeal filed by assessee, it has taken extensive grounds running to two pages. However, effective grounds appear as relief sought by assessee and these are reproduced as under:- 1. disallowance of expenditure u sec. 40(a)(ia) be deleted. 2. disallowance of claim of 2,12,489 - being medial and life insurance premium of Managing director be deleted . :- 2 -: ITA No.1031 Mds 2016. 2. assessee company engaged in business of shipping, clearing and forwarding, consolidation and groupage services had incurred expenditure of 9,25,22,426 - under head freight and clearing and forwarding and expenditure of 22,54,374 - under head delivery charges. While effecting these payments assessee has not deducted tax at sources. ld. Assessing Officer invoked provision of Sec. 40(a)(ia) of Income Tax Act, 1961 (herein after referred to as Act ) and made disallowance of above expenditure. Aggrieved, assessee moved appeal before Commissioner of Income Tax (Appeals). 3. Many fold arguments were taken by assessee before ld. Commissioner of Income Tax (Appeals) including plea that payee had furnished their returns and had shown amounts received from assessee as part of their income in such returns. Reliance was also placed by assessee on first proviso to Sec. 201(1) of Act inserted by Finance Act, 2012 with effect from 1.7.2012 and second proviso to Sec. 40(a)(ia) of Act, which were inserted through Finance Act, 2012 from 01.04.2013. Contention of assessee was that above provisions had retrospective operation and once payee had filed their returns disclosing payments received by them from assessee and had paid taxes thereon, assessee being payer could not be treated as person in default. :- 3 -: ITA No.1031 Mds 2016. Argument of assessee before ld. Commissioner of Income Tax (Appeals) was that it was saved by second proviso to Sec. 40(a)(ia) of Act. ld. CIT(A) sought remand report from ld. Assessing Officer since assessee had in support of above contention, filed certificate in form 26A obtained from payee shipping company. ld. Assessing Officer in remand report stated that assessee did offer explanations for non deduction of taxes on payments totaling to 9,16,96,970 - against disallowance of 9,47,78,800 - made u s.40(a)(ia) of Act. Ld. Assessing Officer also opined that amendment to Sec. 40(a)(ia) and Sec. 201(1)of Act were prospective and did not have any application so far as assessee was concerned. 4. When remand report was put to assessee, it relying on judgment of Hon ble Delhi High Court in case of CIT vs. Ansal Land Mark Township (P) Ltd 337 ITR 635 argued that second proviso to Sec. 40(a)(ia) of Act was declaratory and curative in nature and had retrospective effect. However, ld. Commissioner of Income Tax (Appeals) placing reliance on Hon ble Kerala High Court judgment in case of Thomas George Muthoot vs. CIT (2015) 235 TAXMAN 246 held that second proviso to Sec. 40(a)(ia) of Act introduced by Finance Act, 2012 did not have retrospective :- 4 -: ITA No.1031 Mds 2016. operation. He upheld order of ld. Assessing Officer and confirmed disallowance. 5. Now before us, ld. Authorised Representative strongly assailing order of lower authorities below submitted that when there were different views expressed by different High Courts other than jurisdictional High Court, assessee could always take refuge on judgment favourable to it. Further, according to ld. Authorised Representative various Co-ordinate Bench of Tribunal in number of cases had held that second proviso of Sec. 40(a)(ia) of Act operated retrospectively. 6. Per contra, ld. Departmental Representative supported order of lower authorities. 7. We have considered rival contentions and orders of authorities below. It is not disputed that Hon ble Delhi High Court held second proviso to Sec. 40(a)(ia) of Act, introduced by Finance Act, 2012 to have retrospective operation in case of Ansal Land Mark Township (P) Limited (supra). It is also seen that Hon ble Kerala High Court had taken apposite view in case of Thomas George Muthoot (supra). Ld. Commissioner of Income Tax (Appeals) had preferred to go by order of Kerala High Court for reason that concerned provision was discussed in threadbare by their lordship. :- 5 -: ITA No.1031 Mds 2016. However, in our opinion this cannot be cited as reason for not following judgment in favour of assessee. Unless and until jurisdictional High Court judgment is available, on point of law assessee can always fall back on non jurisdictional High Court judgment which is favourable to it. Plethora of Tribunal judgments are also available were it was held that operation of second proviso to Sec. 40(a)(ia) of Act had to be considered as retrospective. Few of decisions are mentioned hereunder:- 1. Dilip Kumar Roy vs. ITO (2016) 68 Taxmann.com 129 (Kolkata- Trib) 2. New Alignment vs. ITO, (2016) 69 Taxmann.com 122 (Kolkata- Trib) 3. Mitra Guha Builders (India) Co. vs. DCIT (2016) 65 Taxmann.com 243 (Kolkata Trib) 4. ITO vs. Dr. Jaideep Kumar Sharma (2014) 52 Taxmann.com 420 (Delhi Trib) 5. Rajeev Kumar Agarwal vs. Addl. CIT (2014) 45 Taxmann.com 555(Agra-Trib) 6. ACIT vs. Raja Chkravarty (2015) 57 Taxmann.com 88 (Lucknow Trib) 7. R K P Company vs. ITO (2016) 71 Taxmann.com 257(Raipur Trib) 8. Brijgopal Madhusudan Bhattad vs. ITO (2015) 61 Taxmann.com 266(Nagpur Trib) 9. DCIT vs. Ananda Marakala (2014) 48 Taxmann. com 402 (Bangalore Trib) 10. Novo Nordisk India (P) Ltd vs. DCIT (2015) 63 Taxmann.com 351 (Bangalore Trib) 11. Rusabh Diamonds vs. ACIT (2016) 68 Taxmann.com 141 (Mumbai-Trib) :- 6 -: ITA No.1031 Mds 2016. 12. ITO vs. Dudani Metal Agencies (2016) 67 Taxmann.com 80 (Rajkot-Trib) We, are therefore of opinion that assessee has to succeed in this claim. 8. However, we find that ld. Assessing Officer in remand report mentioned assessee s inability to produce evidence with regard to payee having included amount received from assessee in their return only to full extent. As per ld. Assessing Officer evidence for 9,16,96,970 - alone was available out of total disallowance of 9,47,78,800 -. Hence, we delete disallowance of 9,16,96,970 - out of total disallowance of 9,47,78,800 -. Balance disallowance of 30,81,830 - is sustained. 9. In result, appeal of assessee is partly allowed. Order pronounced on Friday, 23rd day of September, 2016, at Chennai. Sd - Sd (G. PAVAN KUMAR) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated:23rd September, 2016 KV Copy to: 1. Appellant 3. ( ) CIT(A) 5. DR 2. Respondent 4. CIT 6. GF M/s. Elite Shipping Synergies (P) Ltd. v. Income-tax Officer, Salary Ward II(1), Chennai
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