2023 (5) TMI 1136 - AT - Income Tax

Addition u/s 40(a)(ia) - failure to deduct tax on site rent in respect of contract with DTC for display of advertisement on DTC Bus Queue Shelters and Times Keeper Booths - effect of second proviso to section 40(a)(ia) as amended - HELD THAT - It is admitted fact that Ld. CIT(A) has merely followed the judgment in favour of the assessee in his own case 2018 (5) TMI 2145 - DELHI HIGH COURT Hon ble Delhi High Court by order dismissed the the appeal of revenue with following findings that this issue is covered by a judgment of this Court in Commissioner of Income Tax vs. Rajinder Kumar 2013 (7) TMI 454 - DELHI HIGH COURT and also the Commissioner of Income Tax vs. Ansal Land Mark Township Pvt. Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT Consequently finding no error in the conclusion of Ld. CIT(A) the ground raised have no substance and the appeal of Revenue is dismissed.

Summary

Issues Involved:
The appeal involves issues related to the disallowance of expenses under section 40(a)(ia) of the Income Tax Act, 1961, and the retrospective application of relevant provisions.

Issue 1: Disallowance under section 40(a)(ia) and retrospective operation

The Revenue challenged the deletion of disallowance amounting to Rs. 17,67,16,747 under section 40(a)(ia) by the Ld. CIT(A). The Ld. CIT(A) had relied on a Delhi High Court decision without considering the appeal pending before the High Court. The Revenue contended that the provisions inserted by the Finance Act, 2012, were retrospective. The Ld. CIT(A) observed that the AO had exceeded the directions of the ITAT by making the addition again, despite the necessary details and documents submitted by the assessee to prove compliance with the conditions specified in the relevant provisions. The Ld. CIT(A) concluded that the AO's action was not in line with the ITAT's directions and dismissed the Revenue's appeal.

Issue 2: Compliance with the provisions and judicial precedents

The assessment of the assessee was based on the failure to deduct tax on site rent in a contract with DTC for advertisement display. The Ld. CIT(A) had initially allowed relief to the assessee based on the order in the assessee's own case for the previous assessment year. However, the matter was set aside by the ITAT for verification of payments to DTC. The Ld. CIT(A) considered the documents submitted by the assessee, including payment ledger accounts and bank statements, to prove compliance with the conditions specified in the provisions. The Ld. CIT(A) noted that the AO had gone beyond the ITAT's directions and made the addition again, disregarding the judicial precedents and the documents submitted by the assessee.

Separate Judgment by Hon'ble Delhi High Court

The Hon'ble Delhi High Court dismissed the Revenue's appeal, citing previous judgments that supported the assessee's position. The Court found no error in the Ld. CIT(A)'s conclusion and upheld the decision to dismiss the Revenue's appeal.

This judgment highlights the importance of adherence to judicial precedents, proper verification of compliance with tax provisions, and the limitations on the AO's authority as directed by higher judicial authorities.