Commissioner Of Income Tax Ii v. Prayas Engineering Ltd....opponent(S

O/TAXAP/1237/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1237 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX II....Appellant(s) Versus PRAYAS ENGINEERING LTD....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIand HONOURABLE MR.JUSTICE K.J.THAKER Date : 17/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant has challenged the judgment and order dated 29.4.2014 passed bythe Income Tax Appellate Tribunal, Ahmedabad Bench ‘D’, Ahmedabad in IT(SS)A No. 2826/Ahd/2010 for AY 2007-08. 2.The facts of the present case are that that the assessee has filed original return of income on 31.10.2007 showing total income of Rs. 9,50,66,931/-. Thereafter, revised return of income was filed on 20.3.2008, showing the total income of Rs. 9,50,43,048/-. The case was selected for scrutiny by issuing notice u/s. 143(2) by DCIT Anand Circle on 24.7.2008. Subsequently, the case was assigned to the Addl. CIT, Anand Range. Thereafter, intimation regarding assigning the assessment to Addl. CIT and notice u/s. 142(1) requisitioning paper return, audited accounts and tax audit report was sent on 28.11.2008, which was complied with by the assessee by giving the same on 3.12.2008. Subsequently, notice u/s. 142(1) along with details questionnaire was issued on 3.9.2009. Thereafter, after considering the documents, the assessment order came to be passed. Against the said assessment order, the assessee has preferred O/TAXAP/1237/2014 JUDGMENT an appeal before the CIT(A) which was partly allowed, against which, the assessee has preferred an appeal before the ITAT which was dismissed. Against the said order, the present Tax Appeal is preferred by the Revenue. 3.Heard the learned advocate appearing for the appellant-Revenue and considered the submissions. Learned advocate appearing for the appellant has contended that the circular issued by CBDT is very clear and the issue is governed by section 194J. The learned ITAT, while considering the question has observed in para-17 as under: “17.After hearing both the parties and perusing the record, we find that there is no dispute about the fact that in respect of payment made by assessee to M/s. Elecon Information Technology Ltd.(EITL)andM/s.Akaaish Mechatonics Ltd. (AML) these was short deduction of tax and therefore the ratio of the Tribunal in the case of Apollo Types Ltd. v. DCIT and UE Trade Corporation (India) Ltd is directly applicable to the facts of this case. In the case of UE Trade Corporation v. DCIT, the Hon’ble Tribunal in similar facts has held as under: “17.After hearing both the parties and perusing the record, we find that there is no dispute about the fact that in respect of payment made by assessee to M/s. Elecon Information Technology Ltd.(EITL)andM/s.Akaaish Mechatonics Ltd. (AML) these was short deduction of tax and therefore the ratio of the Tribunal in the case of Apollo Types Ltd. v. DCIT and UE Trade Corporation (India) Ltd is directly applicable to the facts of this case. In the case of UE Trade Corporation v. DCIT, the Hon’ble Tribunal in similar facts has held as under: 6.We have heard both the parties and gone through the material available on record. We have also gone through the Tax Audit Report in Form No. 3CD placed at pages 20 to 49 of the Paper Book. Annexure-XIV of the Tax Audit report gives the details of tax deductible under various sections of the Act. Page 1 of Annexure-XIV gives the details of payments on which tax has not been deducted at all. The total amount of expenditure is at Rs. 7,32,827/-. Pages 2 to 6 of Annexure-XIV give the details where there is a shortfall due to lesser deduction than required to be deducted. The total amount of expenses is at Rs. 20,24,4557/- on which shortfall of tax at Rs. 3,26,011/- has been worked out by the tax auditors: Page 3 of the Annexure gives the details where tax has been deducted but not paid to the credit of the Central Government, the assessee has added back the expenditure on which tax was deductible but no tax was deducted at all and also where tax was deducted at source but not paid to the credit of Central Government amounting to Rs. 20,16,778/-. Details of such expenditure is given at page 1 and page 3 of the Annexure-XIV to the Tax Audit Report. The learned AR of the assessee has claimed the benefit of two decisions, one by the Kolkata Bench and other by the Mumbai Bench of ITAT. In the case of DCIT vs. Chandabhoy S Jassobhoy (supra) the assessee made payment to the consultants by way of salary after deduction of tax at source under sec. 192 and claimed the deduction for the same. Those consultants were working for a period of two years with the assessee. However, the AO applied the provisions of sec. 194-J. In this case it was held that provisions of sec. 192 were applicable to the facts of the assessee’s case. Another decision O/TAXAP/1237/2014 JUDGMENT replied upon by the assessee is of Kolkata Bench in the case of DCIT vs. S.K. Tekriwal (supra). In this case also the difference in shortfallwasduetothe applicability of provisions. The assessee has deducted tax at source u/s. 194C whereas according to the Assessing Officer provisions of section 1941 are applicable. Thus the assessee’s case is covered by the decisions of the Tribunal referred to about. No doubt assessee is in default as per provisions of sec. 201 but disallowance of the expenditure is not permissible u/s. 40(a)(ia), respectfully following the precedents it is held that disallowance of rs. 20,24,455/- is not justified. The Assessing Officer is directed to delete the addition.” In view of the above, the order passed by Ld. CIT(A) deleting the additions of Rs. 60,60,960/- and Rs. 8,86,940/- is hereby upheld. Both these grounds of revenue are dismissed.” 4.In that view of the matter, the same view is confirmed by the Tribunal in its order, and therefore, we are in complete agreement with the order passed by the Tribunal. No substantial question of law is made out and the appeal is devoid of any merits and deserves to be dismissed. Hence, this appeal is dismissed. (K.S.JHAVERI, J.) mandora O/TAXAP/1237/2014 JUDGMENT In view of the above, the order passed by Ld. CIT(A) deleting the additions of Rs. 60,60,960/- and Rs. 8,86,940/- is hereby upheld. Both these grounds of revenue are dismissed.” 4.In that view of the matter, the same view is confirmed by the Tribunal in its order, and therefore, we are in complete agreement with the order passed by the Tribunal. No substantial question of law is made out and the appeal is devoid of any merits and deserves to be dismissed. Hence, this appeal is dismissed. (K.S.JHAVERI, J.) mandora O/TAXAP/1237/2014 JUDGMENT (K.J.THAKER, J)