AGA PUBICATIONS LIMITED,HYDERABAD V. DCIT, CIRCLE-1(1), HYDERABAD

ITA 518/HYD/2024

AI Insights

The case involves AGA Publications Ltd, which appealed against the order of the CIT (A)-NFAC Delhi, which upheld the additions made by the Assessing Officer for the Assessment Year 2013-14. The additions were made under section 40(a)(ia) of the Income Tax Act, 1961, due to non-deduction of tax at source on reimbursements made to two printing companies. The Tribunal considered the appellant's previous case for A.Y 2014-15 and the Supreme Court's ruling in Hindustan Coco Cola Beverages (P) Ltd vs. CIT, which clarified that if the recipient of the payment includes it in their income and pays the tax, the payer is not in default for non-deduction of TDS.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26912 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 29-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 15-05-2024
• Other Referred Cases: Hindustan Coco Cola Beverages (P) Ltd vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: TDS; Non-deduction of tax
• Section: 40(a)(ia); 194C

Judgement Text

" ITA No 518 of 2024 AGA Publications Ltd Page 1 of 7 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri Manjunatha, G. Accountant Member and Shri K. Narasimha Chary, Judicial Member आ.अपी.सं /ITA No.518/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2013-14) AGA Publications Ltd Hyderabad PAN:AABCA8511G Vs. Dy. CIT Circle 1(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri P Murali Mohan Rao, CA राज̾ व Ȫारा/Revenue by:: Shri Karthik Manickam,DR सुनवाई की तारीख/Date of hearing: 29/10/2024 घोषणा की तारीख/Pronouncement: 29/10/2024 आदेश/ORDER Per Manjunatha, G. A.M This appeal filed by the assessee is directed against the order dated 03/04/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2013-14. 2. The brief facts of the case are that the assessee company is engaged in the business of publication of newspapers, filed its return of income for the A.Y 2013-14 on 22/07/2014 declaring an income of Rs.35,35,790/-under normal provisions of the Act, and book profits of Rs.(-) 1,46,21,872/-. During the ITA No 518 of 2024 AGA Publications Ltd Page 2 of 7 course of assessement proceedings, the Assessing Officer noticed that during the financial year relevant to A.Y 2013-14, the assessee has paid a sum of Rs.1,85,62,456/- to M/s Prabhata Vartha Pvt. Ltd and Rs.1,13,27,615/- to M/s. Superior Printers Pvt Ltd. The assessee claimed that the amount paid to above two companies is reimbursement of various expenditure incurred by above companies on behalf of the assessee. The Assessing Officer observed that the amount paid by the assessee to M/s. Prabhata Vartha Pvt Ltd and Superior Printers Pvt Ltd without deduction of taxes at source is not allowable as deduction because as per the provisions of section 194C of the Act, the assessee ought to have deducted TDS on payment made to above two parties. Therefore, rejected the explanation of the assessee and made addition towards the amount paid to above two parties u/s 40(a)(ia) of the Act, 3. The assessee carried the matter in appeal before the learned CIT (A) and the learned CIT (A) for the reasons stated in their appellate order dated 3/4/2024 dismissed the appeal filed by the assessee and upheld the additions made by the Assessing Officer. 4. Being aggrieved, the assessee is in appeal before the Tribunal. ITA No 518 of 2024 AGA Publications Ltd Page 3 of 7 5. The learned Counsel for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of the ITAT Hyderabad Benches in appellant’s own case for the A.Y 2014-15 in ITA No.879/Hyd/2018, order dated 15/03/2019, where the Tribunal held that the provisions of section 194C is not applicable for reimbursement of expenditure and consequently amount paid without deduction of tax cannot be disallowed u/s 40(a)(ia) of the Act. Therefore, he submitted that the additions made by the Assessing Officer should be deleted. 6. The learned DR, on the other hand, supporting the order of the learned CIT (A) submitted that as per the provisions of section 194C, the assessee is required to deduct TDS on payment made to other parties towards various expenditure whether the said payment is directly made by the assessee or reimbursed to 3rd parties for making payment on behalf of the assessee. The learned CIT (A) after considering the relevant facts has rightly upheld the additions made by the Assessing Officer and their orders should be upheld. 7. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The facts borne out from the record indicate that the assessee has reimbursed sum of Rs.1,85,62,456/- to M/s. Prabhata Varta (P) Ltd towards various expenditure incurred by the above party on behalf of the assessee. Similarly, the assessee ITA No 518 of 2024 AGA Publications Ltd Page 4 of 7 has reimbursed Rs.1,13,27,615/- to Superior Printers (P) Ltd for reimbursement of various expenditure incurred by the above party on behalf of the assessee. Both the payments have bee made without deducting tax at source as per the provisions of section 194C of the Act, The Assessing Officer disallowed the said payment u/s 40(a)(ia) of the Act, for non-deduction of tax at source u/s 194C of the Act,. 8. We find that an identical issue has been considered by the Tribunal in appellant’s own case for the A.Y 2014-15 in ITA No.879/Hyd/2018 dated 15/03/2019 wherein the Tribunal under identical set of facts has held as under: ITA No 518 of 2024 AGA Publications Ltd Page 5 of 7 ITA No 518 of 2024 AGA Publications Ltd Page 6 of 7 9. Coming to another aspect of the issue, the learned Counsel for the assessee submitted that the recipient company have filed the return of income for A.Y 2013-14 and included the amount paid by the assessee in their return of income and paid relevant taxes. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages (P) Ltd vs. CIT in Appeal (civil) No. 3765 of 2007, dated 16/08/2007, once the assessee is not declared as an assessee in default u/s 201 and 201A of the I.T. Act, 1961, in view of 2nd proviso to section 40(a)(ia) of the Act, it shall be deemed that the assessee had deducted and paid the taxes of such sum on the date of furnishing return of income by the payee and consequently no disallowances can be made u/s 40(a)(ia) of the Act. We find that the assessee has filed return of income of payee and proved that both the parties have included sum paid by the assessee without deduction of tax at source in the return of income filed for the A.Y. Since the appellant has filed relevant evidences to prove that the payees has considered the said payments in their books of account, in our considered view, as per the 2nd proviso of section 40(a)(ia) of the Act, the assessee cannot be treated as an assessee in default and further it shall be deemed that the assessee has deducted and paid advances on said sum paid to the payees on the date of filing of return of income by the payees. This principle is further supported by the decision of the Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages (P) Ltd vs. CIT (Supra). ITA No 518 of 2024 AGA Publications Ltd Page 7 of 7 10. In view of the above and by respectfully following the decision of the Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages (P) Ltd vs. CIT (Supra) and also by following the decision of the ITAT Hyderabad Bench in assessee’s own case for the A.Y 2014-15, we direct the Assessing Officer to delete the additions made towards payment made to M/s. Prabhata Varta (P) Ltd and Superior Printers (P) Ltd u/s 40(a)(ia) of the I.T. Act, 1961. 11. In the result, appeal filed by the assessee is allowed. Order pronounced in the Open Court on 29th October, 2024. Sd/- Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER (MANJUNATHA, G.) ACCOUNTANT MEMBER Hyderabad, dated 29th October, 2024 Vinodan/sps Copy to: S.No Addresses 1 AGA Publications Ltd c/o P Murali & Co. CAs, 6-3-655/2/3 Somajiguda, Hyderabad 500082 2 Dy. CIT, Circle 1(1) Hyderabad 3 Pr. CIT – Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "