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2016 (4) TMI 555 - ITAT AHMEDABAD

2016 (4) TMI 555 - ITAT AHMEDABAD - TMI - Rectification of mistake - judgement of the Hon’ble High Court of Delhi in the case of Ansal Land Mark Township (P) Ltd.[2015 (9) TMI 79 - DELHI HIGH COURT ] was cited and relied upon by the assessee(s) which was not recorded by the Tribunal while deciding the appeals of the assessees - disallowance u/s 40(a)(ia) - Held that:- Rectification allowed - Looking to the totality of the facts of the case, we deem it proper to modify our order passed as below: .....

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any components/parts. We find that the AO has not made any enquiry with regard to the nature of expenditure. However, before the ld.CIT(A), the assessee has given separate account of replacement of spares and labour charges. The assessee has relied on the judgement of the Hon’ble High Court of Delhi in the case of CIT vs. Ansal Land Mark Township (P) Ltd. reported at (supra), wherein it has been held that the amendment in the Finance Act, 2012, dated 01/04/2013 being curative to be treated as re .....

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heard to the assessee(s) and then decide the issue afresh" - MA No. 99/Ahd/2015, MA No.100/Ahd/2015, I.T.A. Nos.1414 & 1415/Ahd/2011 - Dated:- 4-3-2016 - SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER And SHRI KUL BHARAT, JUDICIAL MEMBER For The Applicant : Shri S.N. Soparkar, AR For The Respondent : Shri Nagendra Singh, Sr.DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : The present two miscellaneous applications have been filed by the different Assessees on 15/12/20015 (arising out of ITA Nos.1414 & .....

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ision afresh. It is submitted by the ld.counsel for the assessee that the Tribunal s order may be modified and the AO be directed to decide the issue in the light of the judgement of Hon ble High Court of Delhi in the case of Ansal Land Mark Township (P) Ltd.(supra). 2.1. On the contrary, ld.Sr.DR Shri Nagendra Singh opposed the submissions made by the ld.Sr.counsel for the assessee Shri S.N. Soparkar and submitted that there is no mistake apparent from the records and, therefore, there is no ne .....

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rce. Alternate to the submission that the appellant was not liable to deduct tax on non contractual commission expenses, AR advanced the proposition that second proviso below section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 01.04.2013 being curative amendment is to be treated as retrospective in nature placing reliance on Ansal Land Mark Township (P) Ltd. (Del) (377 ITR 635). [Provided further that where an assessee fails to deduct the whole or any part of the tax in accorda .....

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s decided the issue by observing as under:- 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The AO made disallowance on the basis that the assessee was required to deduct the tax on the commission receipts. It is the contention of the assessee that these receipts are not of the contractual in nature. However, the ld.counsel for the assessee submitted that the receipts have been offered to tax by the concerned .....

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he ld.counsel for the assessee is that there was no contractual terms for the payment of commission. Alternatively, it is submitted that the concerned party has offered the receipts as income for the year under appeal and in respect of the second disallowance of ₹ 4,58,971/-, it is contended that the payments did not exceed the prescribed limit, therefore there was no requirement to deduct the tax. We find that the AO has made disallowance on the basis that the expenditure, like spare-part .....

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of expenditure. However, before the ld.CIT(A), the assessee has given separate account of replacement of spares and labour charges. Under these facts, we deem it proper to restore these issues to the file of AO for decision afresh. Needless to say that the AO would afford reasonable opportunity of being heard to the assessee. As a result, assessee s appeal (in the case of Shri Amarjitsingh D.Randhawa) is allowed for statistical purposes. 3.2. It is the contention of the ld.Sr.counsel for the as .....

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it proper to modify our order passed in ITA Nos.1414 & 1415/Ahd/2011 for AY 2006-07, dated 21/10/2015. Accordingly, we modify the paragraph No.4.1 of the said Tribunal s order dated 21/10/2015, as under:- 4.1. After considering the rival submissions and perusing the material available on record, we find that the ld.CIT(A) in respect of disallowance of ₹ 3,66,469/-, has held that the tax was required to be deducted. The contention of the ld.counsel for the assessee is that there was no .....

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expenses of ₹ 5,23,119/- are separately debited in the profit & loss account. Therefore, it can be assumed that the repairs and maintenance expenses of ₹ 4,58,971/- debited to the profit & loss account was purely in the nature of labour charges for repairs and maintenance and did not include any expenditure on account of purchase of any components/parts. We find that the AO has not made any enquiry with regard to the nature of expenditure. However, before the ld.CIT(A), the .....

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rt of Delhi in the case of Ansal Land Mark Township (P) Ltd., wherein the High Court has held as under:- 12. Relevant to the case in hand, what is common to both the provisos to section 40(a)(ia) and section 201(1) of the Act is that the as long as the payee/resident (which in this case is APIL) has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in d .....

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to paragraph 9 of the said order which reads as under (page 485 of 34 ITR (Trib)) : "On a conceptual note, the primary justification for such a disallowance is that such a denial of deduction is to compensate for the loss of revenue by corresponding income not being taken into account in computation of taxable income in the hands of the recipients of the payments. Such a policy motivated deduction restrictions should, therefore, not come into play when an assessee is able to establish that .....

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object of scheme of section 40(a)(ia), as on the statute, and to examine whether or not, on a 'fair, just and equitable' interpretation of law-as is the guidance from the hon'ble Delhi High Court on interpretation of this legal provision, in our humble understanding, it could not be an 'intended consequence' to disallow the expenditure, due to non-deduction of tax at source, even in a situation in which corresponding income is brought to tax in the hands of the recipient. The .....

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r se is separately provided for in section 271C, and, section 40(a)(ia) does not add to the same. The provisions of section 40(a)(ia), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now, that the Legislature has been compassionate enough to cure these shortcomings of provision, and thus ob .....

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