2015 (11) TMI 641 - AT - Income Tax

Rejection of revised computation - whether the revised computation was to be considered by the Assessing Officer specially when time for filing revised return had elapsed? - Held that - Hon ble Bombay High Court in CIT vs Pruthvi Brokers and Share Holders Pvt. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) held that appellate authorities have power to consider the claim not made in the return by following the decision from Hon ble Apex Court in CIT vs Gurjagravureous P. Ltd. (1977 (11) TMI 1 - SUPREME Court) wherein it was held that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities but also entitled to raise additional claim before them and further appellate authorities have discretion to permit such additional claims. Thus we are of the view that even otherwise the mandate of the constitution is to levy and collect due taxes therefore we remand this issue to the file of the ld. Assessing Officer to examine the claim of the assessee afresh and decide in accordance with law. The assessee be given opportunity of being heard. Disallowance u/s 40(a)(ia) - delay in depositing TDS - crux of argument advanced on behalf of the assessee is that the amount was deposited before filing the return - Held that - In the case in hand when the assessee had deducted the tax in the last month of the previous year i.e. March 2005 and deposited the same before the due date of filing of the return under section 139(1) then it is covered under clause (A) of section 40(a)(ia). Therefore when the assessee s case covered under the main provisions of existing law then we need not to go to the issue of prospective or retrospective effect of the amendment in the provisions by the Finance Act 2010. As regards the decision relied upon by the learned DR when the proviso to section 40(a)(ia) is not contrary to the main section/enactment then the said decision will not help the case of the revenue. The assessee find support from the decision of the Tribunal in BAPUSHAEB NANASAHEB DHUMAL vs ACIT ( 2010 (6) TMI 513 - ITAT MUMBAI). Since it was not controverted by the Revenue that the tax so deducted was deposited before filing of return therefore we find merit in the ground of the assessee consequently in view of the aforesaid discussion the ground raised by the assessee is allowed. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of a legal claim amounting to Rs. 1,79,24,751
2. Disallowance of Rs. 1,12,500 under section 40(a)(ia) of the Income Tax Act

Analysis:

Issue 1:
The assessee contested the disallowance of a legal claim amounting to Rs. 1,79,24,751, which was not considered by the Assessing Officer due to the elapsed time for filing a revised return. The Tribunal referred to relevant case law, including CIT vs Pruthvi Brokers and Share Holders Pvt. Ltd., and CIT vs Gurjagravureous P. Ltd., to establish that appellate authorities have the power to consider claims not made in the original return. The Tribunal remanded the issue to the Assessing Officer for fresh examination, allowing the assessee an opportunity to present their case. The ground was allowed for statistical purposes.

Issue 2:
The second ground involved the disallowance of Rs. 1,12,500 under section 40(a)(ia) of the Act. The Tribunal analyzed the provisions of the Act and relevant case law, including CIT vs Alom Extrusions Ltd., to determine the deductibility of the amount. It was established that if tax is deducted and deposited before the due date of filing the return, it should be allowed as a deduction. The Tribunal emphasized that the provisions of Chapter XVII are relevant for determining tax deductibility at the source, not for disallowing deductions under section 40(a)(ia). As the tax was deducted and deposited before the due date of filing the return, the disallowance was found to be unwarranted. The ground raised by the assessee was allowed based on the merits of the case.

In conclusion, the appeal of the assessee was partly allowed for statistical purposes, with both issues being examined in detail and decided in favor of the assessee based on legal interpretations and relevant provisions of the Income Tax Act.