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Deputy Commissioner of Income Tax, Circle 1 (1) , New Delhi Versus M/s Ansal Landmark Township Ltd.

2017 (12) TMI 471 - ITAT DELHI

Addition on account of Profit reworked for Ghaziabad sub-project plotted - Held that:- CIT(A) in the present year i.e. AY 2010-11 while passing the impugned order has thus observed that since there is no reason for him to differ from the findings of his Predecessor on this issue. Therefore, in order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to de .....

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of ₹ 4,37,87,000/-, in respect of plots in Meerut project on account of 98.72% of completion as against 96.04% of completion declared by the assessee, ₹ 16,97,000/- in respect of built up area in Meerut project on account of 60.36% of completion as against 60.23% declared by the assessee, ₹ 9,65,000/- in respect of constructions of Mall in Meerut project on account of adoption of 38.41% of completion as against 35.97% declared by the assessee. Therefore, the Ld. CIT(A), also r .....

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ncement on the issue. In view of the above facts and circumstances of the case and judicial pronouncements on the issue, Ld. CIT(A) has rightly held that the second proviso to Section 40(a)(ia) is clarificatory and curative in nature and therefore, the assessee was entitled for claim of deduction and AO was rightly directed to verify the claim of the assessee that the tax has been paid on the above amount by the payee i.e. Ansal Properties and Infrastructure Ltd. in terms of the aforesaid judgme .....

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t. Aparna Karan, CIT(DR) For The Assessee : S h . Satyen Sethi, Adv ORDER PER H.S. SIDHU : JM These are the Appeals filed by the Revenue against the respective impugned orders of the Ld. CIT(A)-IV, New Delhi pertaining to assessment years 2010-11 & 2011-12. Since the issues involved in these appeals are common and identical, hence, these appeals were heard together and are being disposed by this common order for the sake of convenience. 2. The grounds raised in Revenue s ITA No. 4820/Del/201 .....

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urrendered. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 3. The grounds raised in Revenue s ITA No. 238/Del/2015 (AY 2011- 12) read as under:- 1. The Ld. CIT(A) has erred on facts and in law in deleting addition of ₹ 19,66,17,000/- on account of Profit reworked for Ghaziabad sub-project plotted. 2. The Ld. CIT(A) has erred on facts and in law in deleting addition .....

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s reworked for Karnal sub project group housing. 6. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. REVENUE S APPEAL - ITA NO. 4820/DEL/2014 (AY 2010-11) 4. The brief facts of the case are that the case of the assessee filed the return of income declaring a loss of ₹ 62,72,484/- on 01.10.2010. the revised return of income was filed on 31.3.2012 at an income of ₹ .....

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s additions vide assessment order dated 26.03.2013 passed u/s. 143(3)(ii) of the Income Tax Act, 1961. 5. Against the aforesaid assessment order dated 26.3.2013, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned Order dated 12.6.2014 has partly allowed the appeal of the asseseee. 6. Aggrieved with the impugned order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 7. Ld. DR relied upon the order of the AO and reiterated the grounds of appeal raised in the .....

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000/- on account of Profit reworked for Ghaziabad sub-project plotted is concerned, we find that AO has made the addition in dispute on the basis of addition made in AY 2008-09 and Ld. CIT(A) has deleted the addition made during the year 2008-09. However, in the assessment year 2009-10 the AO has accepted the order of the Ld. CIT(A) of AY 2008-09 and hence, no such addition was made in the AY 2009-10 in the order passed u/s. 143(3) of the I.T. Act, 1961. We further note that the Ld. CIT(A) in th .....

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e, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 1 raised by the Revenue. 10. Apropos ground no. 2 relating to deletion of addition of ₹ 4,37,87,000/- on ₹ 16,97,000/- and ₹ 9,65,000/- on account of Profits reworked for Meerut sub project is concerned, we find that AO has made the addition in dispute on the basis of addition made in AY 2008-09 and Ld. CIT(A) has deleted the addition made during the year 2008-09. However, in the asse .....

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ecision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition of ₹ 4,37,87,000/-, in respect of plots in Meerut project on account of 98.72% of completion as against 96.04% of completion declared by the assessee, ₹ 16,97,000/- in respect of built up area in Meerut project on account of 60.36% of completion as against 60.23% declared by the assessee, ₹ 9,65,000/- in respect of constructions .....

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ound no. 3 relating to deletion of addition of ₹ 1,26,46,909/- being know how fee surrendered is concerned, we find that ITAT, Agra Bench has considered the similar issue in the case of Rajiv Kumar Agarwal vs. Addl. CIT in ITA No. 337/Agra/2013 in their order dated 29.5.2014 and held that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005. We also find that ITAT has relied on the decision of the Ho .....

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usly implemented without default in order to augment recoveries Failure to deduct TDS or deposit TDS results in loss of revenue and may deprive the Government of the tax due and payable (Emphasis by underlining supplied by us) . Having noted the underlying objectives, Their Lordships also put in a word of caution by observing that, the provision should be interpreted in a fair, just and equitable manner . Their Lordships thus recognized the bigger picture of realization of legitimate tax dues, a .....

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Section 40(a)(ia), was rejected too. In any event, even going by Bharti Shipyard decision (supra), what we have to really examine is whether 2012 amendment, inserting second proviso to Section 40(a)(ia), deals with an intended consequence or with an unintended consequence . 7. When we look at the overall scheme of the section as it exists now and the bigger picture as it emerges after insertion of second proviso to section 40(a)(ia), it is beyond doubt that the underlying objective of section 40 .....

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d payments, without corresponding income inclusion by the recipient. That is the clearly discernable bigger picture, and, unmistakably, a very pragmatic and fair policy approach to the issue - howsoever belated the realization of unintended and undue hardships to the taxpayers may have been. It seems to proceed on the basis, and rightly so, that seeking tax deduction at source compliance is not an end in itself, so far as the scheme of this legal provision is concerned, but is only a mean of rec .....

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row light on what was actually sought to be achieved by this legal provision, and in the light of the above analysis of the scheme of the [aw, we are of the considered view that section 40(a)(ia) cannot be seen as intended to be a penal provision to punish the lapses of non deduction of tax at source from payments for expenditure - particularly when the recipients have taken into account income embedded in these payments, paid due taxes thereon and filed income tax returns in accordance with the .....

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ven effect prospectively . Revenue, thus, does not derive any advantage from Special bench decision in the case Bharti Shipyard (supra). 9. On a conceptual note, 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 pl .....

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exclusive, connotations. When we appreciate the 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 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 .....

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or tax withholding lapse per 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 end. 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 shortcoming .....

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earlier, we cannot subscribe to the view that it could have been an intended consequence to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1 st April .....

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ely. We further find that the Pune Bench of the ITAT in the case of DCIT, Cir-3, Pune Vs. Bhandari Associates in ITA no. 1129 vide their order dated 19.5.2014 has held that the second proviso to Section 40(a)(ia) was clarificatory in nature. The Bench referred to the decision of ITAT Cochin Bench in the case of Antony D. Mundackal vs. the ACIT vide ITA No. 38/COCH/2013 dated 29.11.2013 for A.Y. 2009-10. 11.2 Therefore, Ld. CIT(A) has observed that AO has not considered the above judicial pronoun .....

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