2014 (9) TMI 934 - AT - Income Tax

Disallowance u/s 40(a)(ia) - Held that - As the issue involved in the present case as well as all the material facts relevant thereto are similar to the case of IVRCL Infrastructure & Projects Ltd. (2015 (4) TMI 175 - ITAT HYDERABAD), we respectfully follow the decision of the coordinate bench of the Tribunal rendered in the said case and uphold the impugned order of the learned CIT(A) deleting the disallowance made by the Assessing Officer, holding that the amendment made by the Finance Act, 2010 is applicable to assessment year 2009-10 also, being retrospective in nature - Decided against Revenue. Disallowance made on account of sales tax liability - Held that - No proper and sufficient opportunity was given either by the Assessing Officer or by the learned CIT(A) to produce the relevant evidence either in the form of challan or a certificate issued by the concerned sales tax authority to show that the relevant tax liability was actually paid during the year under consideration. He has submitted that the assessee has actually paid a sum of ₹ 14.15 lakhs against the said liability during the year under consideration and an opportunity may be given to the assessee to produce the documentary evidence in support of the said payment for verification by the Assessing Officer. Since the Learned Departmental Representative has not raised any objection in this regard, we set aside the impugned orders of the Revenue authorities on this issue and restore the matter to the file of the Assessing Officer with a direction to decide the same afresh after giving assessee a proper and sufficient opportunity to produce the proof of payment of sales tax liability. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance under section 40(a)(ia) for retrospective application of Finance Act, 2010.
2. Disallowance of sales tax liability deduction due to lack of evidence.

Issue 1: Disallowance under section 40(a)(ia) for retrospective application of Finance Act, 2010:
The Revenue challenged the deletion of disallowance of Rs. 5,69,07,949 under section 40(a)(ia) by the CIT(A), arguing that the Finance Act, 2010 amendment was not applicable for the assessment year 2009-10. The assessee, a civil construction company, contended that the TDS deducted was paid before the due date of filing the return, hence no disallowance was warranted. The CIT(A) deleted the disallowance, citing a Tribunal decision. The Tribunal upheld the CIT(A)'s decision based on precedents, emphasizing that the amendment was retrospective. The Tribunal dismissed the Revenue's appeal, following consistent decisions.

Issue 2: Disallowance of sales tax liability deduction due to lack of evidence:
The assessee contested the disallowance of Rs. 28,36,026 for sales tax liability made by the Assessing Officer and upheld by the CIT(A) due to insufficient evidence of payment. The assessee claimed the liability arose during the year under consideration and should be allowed as a deduction. The Assessing Officer noted the absence of evidence of actual payment, leading to the disallowance. The CIT(A) affirmed this decision. During the appeal, the assessee argued inadequate opportunity to provide evidence and stated a partial payment of Rs. 14.15 lakhs. As no objection was raised, the Tribunal set aside the orders and directed the Assessing Officer to reevaluate after verifying the payment evidence. The appeal of the assessee was partly allowed for statistical purposes.

In conclusion, the Tribunal dismissed the Revenue's appeal regarding disallowance under section 40(a)(ia) and partially allowed the assessee's appeal concerning the sales tax liability deduction, emphasizing the importance of providing evidence for tax liabilities and the retrospective nature of relevant amendments.