TMI Blog2020 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... see : Shree B. S. Balachandran, Advocate For the Revenue : Smt. R. Premi, JCIT (DR)(ITAT), Bengaluru ORDER PER ARUN KUMAR GARODIA, AM: These two appeals are filed by two different but connected assessees M/s. Sai Panchami Developers and M/s. Panchami Developers and these appeals are directed against two separate orders of learned CIT(A) 6 Bengaluru, both dated 15.09.2017 for the same Assessment Year 2012-13. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. 2. The grounds raised by the assessee in both these appeals are identical and for the sake of clarity, we reproduce the grounds from one of these appeals viz., ITA No.90/Bang/2018. These grounds are as under: 1. The impugned order of CIT(A) is bad and unsustainable in the eye of law since the same is passed without properly understanding the facts involved. 2. The CIT(A) grossly erred in not appreciating that the expenditure incurred was mainly towards business promotion and hence the same did not warrant deduction of tax at source and therefore, S.40(a)(ia) was not applicable. 3. The CIT(A) ought to have appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the written submission filed by the assessee before CIT(A) and hence, his orders should be modified and it should be held that the disallowance made by the AO is not justified. It was the alternative submissions that if required, the matter may be restored back to the file of the AO for a fresh decision after examining these claims of the assessee. Learned DR of the Revenue supported the orders of the authorities below. 4. We have considered the rival submissions. For ready reference, we reproduce paras 7 to 11 from the order of CIT(A) and since these orders of CIT(A) are identical, we reproduce these paras from the order of CIT(A) passed by him in the case of M/s. Sai Panchami Developers in ITA No.90/Bang/2018. These paras read as under: 7. The grounds of appeal, appellant's statement of facts, written submissions, AO's observations I explanations and legal position have been duly considered. 8. The solitary issue to be adjudicated in the instant appeal concern disallowance of a sum of ₹ 1,31, 80,311/- u/s 40 (a)(ia) on account of non deduction of tax at source by appellant on payments made under the head Sales Promotion, Advertisement, Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de clarity regarding discharge of tax liability by the resident payee on payment of any sum received by him without deduction of tax, section 201 was amended by Fin Act 2012 to provide that the payer who fails to deduct the whole or any part of the tax o payment made to a resident payee shall not be deemed to be an Assessee in default respect of such tax if such resident payee - (I) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, The date of payment of taxes by the resident payee shall be deemed to be the date on return has been furnished by the payer. SUPPORTING STATEMENT The payee of the amounts has filed the return of income offering to tax the amounts received from the Assessee. The payee has also paid the taxes on its business profits. As the Company is complied with the requirement of the Income tax act, it is said to be company not in default for this purpose. The Assessee in support of the claim has produced the following documents and details. 1. Income Tax re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult, the disallowance under section 40(a) (ia) cannot be invoked. It was held that by the amendment as per the Finance Act, 2012 the legislature has expressed its view to decline from deduction for expenditure in connection with payments made on which TDS has not been deducted but has not resulted in any loss to the Revenue was never the intended consequence. It was declared that the consequences of these amendments is that the disallowance under section 40(a) (ia) cannot be invoked where even if the assessee has not deducted tax at source from the payments for expenses but the recipient has taken them into account while calculating his income and has paid due taxes, if any, and has filed his income tax return under section 139(1). The Tribunal held that in the circumstances, the proviso shall apply retrospectively_ The appeal was allowed. We submit that the assesse has provided all the proofs to claim the benefit of the Second proviso to Section 40(a) (ia), of the income tax act. We request you to grant the relief to the Assessee by allowing the so much of expenses stated above in its return of income. We want to draw your kind attention to the recen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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