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2016 (7) TMI 848 - ITAT KOLKATA

2016 (7) TMI 848 - ITAT KOLKATA - TMI - Revision u/s 263 - proportionate disallowance u/s 40(a)(ia) of the Act for short deduction of tax at source - Held that:- We find that this issue has been held in favour of the assessee by the co-ordinate bench decision of this tribunal in the case of DCIT vs S K Tibrewal [2011 (10) TMI 10 - ITAT, KOLKATA] wherein it was held that in the case of short deduction of tax at source, no disallowance u/s 40(a)(ia) of the Act could be made in the hands of the ass .....

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AO had been approved by the Hon’ble High Court. In these circumstances, we can safely conclude that the ld AO had taken one of the possible view. - Decided in favour of assessee - I.T.A No. 1194/Kol/2014 - Dated:- 13-7-2016 - Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM For The Appellant: Shri Miraj D. Shah, AR For The Respondent: Shri Niraj Kumar, CIT, DR ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of revision order of CIT, Kolkata-III, Kolkata vide .....

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sst Year 2009-10 was filed by the assessee on 29.9.2009 declaring taxable income of ₹ 3,82,280/-. The assessment was completed u/s 143(3) of the Act on 30.12.2011 determining the total income at ₹ 11,74,000/- after making certain disallowances. The ld CIT on perusal of assessment records, documents, accounts, submissions etc., it was observed that the assessee had paid a sum of ₹ 6,31,14,006/- to M/s. Gananayak Vincom Pvt. Ltd. and ₹ 7,31,63,040/- to M/s Umang Merchandise .....

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ring the period April, 2008 & January, 2009 and the balance ₹ 32,71,803/- in March, 2009. Total bill including Service Tax was ₹ 6,92,03,637/-. M/s Umang Merchandise Pvt. Ltd. had stated to have received ₹ 7,72,99,427/- during April, 2008 & January, 2009 and balance ₹ 44,42,642/- in March, 2009. Total bill including Service Tax was ₹ 8,17,42,.051/-. In other words the assessee had made payments of ₹ 6,59,31,854 + ₹ 7,72,99,427 = ₹ 14,32,31, .....

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u/s 194C & 194I respectively. As per data available, TDS of ₹ 17,103/- only was made from these two parties resulting in short deduction of TDS of ₹ 41,60,372/- [41,77,475 - 10,710]. Conversely it appears that no tax was deducted on expenditure of ₹ 14,25,60,223/- and should have been disallowed u/s.40(a) (ia) of the I. T. Act. No proper compliance was made by the assessee before the ld CIT by giving proper replies to the show cause notice on merits of the case. The ld CIT .....

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d fails to make the enquiries which are called for in the facts and circumstances of the case, will also call for intervention u/s 263 by the CIT. Accordingly he dismissed the preliminary objection raised by the assessee on the assumption of jurisdiction u/s 263 of the Act. The ld CIT observed that since the lower / nil deduction certificate u/s 197(1) of the Act was available only for a limited period of time in a year, the assessee ought to have deducted tax at source on payments made prior to .....

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e facts and circumstances of the case the notice u/s 263 of the Income Tax Act , 1961 issued by the learned Commissioner of Income Tax was without jurisdiction for want of proper notice and opportunity and the order passed on the basis of such notice was bad in law hence the same be quashed and or annulled. 2. For that in the facts and circumstances of the case the notice u/s 263 of the Income Tax Act 1961 issued by the learned Commissioner of Income Tax was without jurisdiction and the order pa .....

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circumstances of the case the Learned Commissioner of Income Tax erred in holding that the assessment order passed by the learned assessing officer in the case of the appellant was erroneous and prejudicial to the interest of revenue and thereby setting aside the said assessment order u/s. 263 of the Income Tax Act 1961. 5. For that in the facts and circumstances of the case the Learned Commissioner of Income Tax failed to appreciate that the assessment order was not erroneous and prejudicial t .....

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x Act 1961 failed to consider the correct law applicable to provisions of Section 68 of the IT Act 1961 and hence the order passed be quashed. 8. For that in the facts and circumstances of the case the directions contained in the order passed by the Learned Commissioner of Income Tax u/s 263 of the Income Tax Act 1961 are beyond jurisdiction and hence the same be struck down or quashed. 9. For that in the facts and circumstances of the case the order passed by the Learned Commissioner of Income .....

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n ITAT NO. 183 of 2012 G.A.No. 2069 of 2012 dated 3.12.2012. He stated that the tribunal order in the case of S.K.Tibrewal was passed in ITA No. 1135/Kol/2010 dated 21.10.2011 wherein it was held that the provisions of section 40(a)(ia) of the Act could not be made applicable for short deduction of tax at source. Hence, the ld AO had only taken a possible view by following the jurisdictional tribunal order while framing the assessment u/s 143(3) of the Act on 30.12.2011. Hence the order passed b .....

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second proviso to section 40(a)(ia) of the Act which has been held to be retrospective in operation by the decision of the Hon ble Delhi High Court in the case of CIT vs Ansal Land Mark Township P Ltd reported in 377 ITR 635 (Del), no disallowance in any case could be made in the hands of the assessee u/s 40(a)(ia) of the Act. Hence the purpose of revision order u/s 263 fails. 5. In response to this, the ld DR argued that the ld AO had not properly examined the period for which section 197(1) c .....

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plied his mind on the same. Hence revisionary jurisdiction invoked by the ld CIT directing the ld AO to make proportionate disallowance u/s 40(a)(ia) of the Act for short deduction of tax at source is right in law. 6. We have heard the rival submissions. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the ultimate purpose of invoking jurisdiction u/s 263 of the Act is to make proportionate disallowance u/s 40(a)(ia) of th .....

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