M/s. Prima Automation (India) Pvt.Ltd., Gandhinagar V. DCIT, Mehsana Circle, Mehsana

CO 104/AHD/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7501 (ITAT-AHMEDABAD)
• Duration Of Justice: 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G C PIPARA
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 195

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER, & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 1114/AHD/2018 WITH C.O. NO. 104/AHD/2019 ( / ASSESSMENT YEAR: 2009-10) DCIT MEHSANA CIRCLE, 2 ND FLOOR, APOLLO ENCLAVE, HIGHWAY, MEHSANA / VS. M/S. PRIMA AUTOMATION (INDIA) PVT. LTD. PLOT NO. 793, RAKANPUR, POST- SANTEJ, TALUKA- KALOL, DIST- GANDHINAGAR - 382721 ./ ./ PAN/GIR NO. : AAB CP6 889 L ( APPELLANT /RESPONDENT ) .. ( RESPONDENT /CROSS OBJECTOR ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR. DR / RESPONDENT BY : SHRI G. C. PIPARA, AR / DATE OF HEARING 25/07/2019 !'# / DATE OF PRONOUNCEMENT 26/07/2019 $%/ O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) GANDHINAGAR (CIT(A) IN SHORT), DATED 05 .02.2018 ARISING IN THE ASSESSMENT ORDER DATED 28.03.2016 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 (THE ACT) IN THE ASSESSMENT YEAR 2009-10. ITA NO.1114/AHD/2018 WITH C.O. NO. 104/AHD/2019 [DCIT VS. M/S. PRIMA AUTOMATION (I) PVT. LTD.] A.Y. 200910 - 2 - 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN THE REVENUES APPEAL NOTED ABOVE. 3. AS PER ITS APPEAL, THE REVENUE HAS CHALLENGED TH E ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE OF RS. 1,01,34, 188 MADE BY THE AO BY RESORTING TO SEC. 40(A)(IA) OF THE ACT. 4. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD. DR FOR THE REVENUE RELIED UPON THE ASSESSMENT ORDER. 5. THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND P OINTED OUT THAT THE AFORESAID AMOUNT OF RS. 1,01,34,188/- REPRESENT S INTEREST ON BILL DISCOUNT WHICH IS A SIMPLE SHORT TERM LOAN ARRANGEM ENT WITH FINANCIERS AND USANCE BILL UNDER LETTER OF CREDIT W ERE DISCOUNTED. THE AR FOR THE ASSESSEE SUBMITTED THAT SUCH EXPENDI TURE DO NOT ATTRACT THE PROVISIONS OF SEC. 40(A)(IA) IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ACIT VS. CA RGILL GLOBAL TRADING (I)(P) LTD. 11 TAXMANN.COM 219 DELHI. THE LD. AR THUS RELIED UPON THE ORDER OF THE CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE REVENUE HAS DISPUTED THE ACTION OF THE ASSESSEE FOR NOT DEDUCTING TDS ON PAYMENT OF INTEREST OF BILL DISCOUNT. THE C IT(A) HAS EXAMINED THE ISSUE AFTER TAKING NOTE OF THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE AS REPRODUCED IN PARA 5.1 OF ITS OR DER. THE LD. CIT(A) FOUND MERITS IN THE PLEA OF THE ASSESSEE. T HE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPROD UCED HERE UNDER:- 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSE SSMENT ORDER AND SUBMISSION FILED BY THE APPELLANT. THE AO MADE THE IMPUGNED DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN VIEW OF TH E FACT THAT THE APPELLANT HAD NOT DEDUCTED TDS ON RS.1,01,34,188/- U/S 195 OF THE ACT ON PAYMENT OF INTEREST OF BILL DISCOUNTING CHAR GES. THE APPELLANT HAS SUBMITTED THAT IT WAS NOT LIABLE TO DEDUCT SUCH TAXES AS THE ITA NO.1114/AHD/2018 WITH C.O. NO. 104/AHD/2019 [DCIT VS. M/S. PRIMA AUTOMATION (I) PVT. LTD.] A.Y. 200910 - 3 - PAYMENT HAD BEEN MADE TO RESIDENT BANK AND THAT IT WAS IN ANY CASE NOT LIABLE TO DEDUCT TAX IN VIEW OF VARIOUS CASE LA WS ON THE ISSUE. IT IS SEEN THAT THE INTEREST ON BILL DISCOUNTING C HARGES OF RS.1,01,34,812/- HAS BEEN PAID BY THE APPELLANT IN RESPECT OF SUNDRY DEBTORS VIZ. SUZLON ENERGY LTD. IT IS ALSO SEEN THA T THIS PAYMENT HAS BEEN MADE TO SBI FOR BILL DISCOUNTING DONE WITH IT. SECTION 2(28A) OF THE ACT-DEFINES INTEREST AND READ AS UNDER 2(28A). INTEREST MEANS INTEREST PAYABLE IN ANY MAN NER IN RESPECT OF ANY MONEYS BORROWED OR DEBT INCURRED (IN CLUDING A DEPOSIT, CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION ) AND INCLUDES ANY SERVICE FEE OR OTHER CHARGE IN RESPECT OF THE MONEYS BORROWED OR DEBT INCURRED OR IN RESPECT OF A NY CREDIT FACILITY WHICH HAS NOT BEEN UTILISED. IN THIS CASE, IT IS EVIDENT THAT THE INTEREST HAS NOT BEEN PAID ON ACCOUNT OF ANY MONEY BORROWED OR DEBT INCURRED. THU S, I AM OF THE VIEW THAT THE BILL DISCOUNTING CHARGES WOULD NOT BE TREATED AS INTEREST WITHIN THE MEANING OF SECTION 2(28A). MOREOVER, THE CASE OF THE APPELLANT IS SQUARELY CO VERED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF ACIT VS. CARGILL GLOBAL TRADING (I)(P.) LTD [2009] 34 SOT 42 4, WHEREIN IT HAS BEEN HELD THAT DISCOUNTING CHARGES ON BILLS OF EXCH ANGE ARE NOT IN THE NATURE OF INTEREST. A SIMILAR VIEW HAS BEEN TAKEN B Y THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF C1T VS. VIJAY SHI P BREAKING CORPN., 129 TAXMAN 120; WHICH HAS BEEN RELIED ON IN THE CASE OF ACIT VS. CARGILL GLOBAL TRADING (I)(P) LTD. IN VIEW OF THE DISCUSSION ABOVE AND THE CASE LAWS RELIED ON BY THE APPELLANT, IT IS HELD THAT THE APPELLANT WAS NO T LIABLE TO DEDUCT TDS ON INTEREST PAID TO SBI ON BILL DISCOUNTING CHA RGES AND THE ADDITION OF RS.1,01,34,188/- IS THEREFORE DELETED. GROUND OF APPEAL NO.2 IS ALLOWED. THE ACTION OF THE AO WAS ACCORDINGLY REVERSED AND T HE DISALLOWANCE OF EXPENDITURE WAS DELETED. 7. WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA. THE CIT(A) HAS RIGHTLY SEEN THE FACTS IN PERSPECTIVE AND APPLI ED THE LAW AS INTERPRETED BY THE CO-ORDINATE BENCH OF ITAT IN CAR GILL GLOBAL TRADING (I)(P) LTD. REPORTED IN (2009) 34 SOT 424 ( DEL.) WHICH WAS UPHELD BY THE HONBLE DELHI HIGH COURT REPORTED IN (2011) 11 TAXMANN.COM 219 (DEL.). THE SLP AGAINST THE JUDGME NT OF HONLE DELHI HIGH COURT WAS DISMISSED BY HONBLE SUPREME C OURT DATED ITA NO.1114/AHD/2018 WITH C.O. NO. 104/AHD/2019 [DCIT VS. M/S. PRIMA AUTOMATION (I) PVT. LTD.] A.Y. 200910 - 4 - 10.05.2012. THE CIT(A) HAS ALSO NOTED THE VIEW TAK EN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VI JAY SHIP BREAKING CORP. [2003] 129 TAXMANN 120 WHEREIN IT HAS BEEN HE LD THAT DISCOUNTING CHARGES ON THE BILL OF EXCHANGE IS NOT IN THE NATURE OF INTEREST. WE THUS DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT(A). APPEAL OF THE REVENUE IS DISMISSED. CROSS OBJECTION NO. 104/AHD/2019:- 8. AT THE TIME OF HEARING, THE LD. AR FOR THE ASSES SEE SUBMITTED THAT HE DOES NOT SEEK TO PRESS THE CROSS OBJECTIONS IN THE EVENT OF DISMISSAL OF THE REVENUES APPEAL AS THE GRIEVANCE OF THE ASSESSEE HAS BECOME INFRUCTUOUS. 9. IN THE LIGHT OF ASSERTIONS MADE ON BEHALF OF THE ASSESSEE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 10. IN THE COMBINED RESULT, APPEAL OF THE REVENUE A S WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 26/07/2019 TANMAY TRUE COPY !' #' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. $ / ASSESSEE 3. ) *+ , / CONCERNED CIT 4. ,- / CIT (A) 5. 012 33*+, *+#, 56$)$ / DR, ITAT, AHMEDABAD 6. 289 : / GUARD FILE. BY ORDER / $% , ;/5 *+#, 56$)$ < THIS ORDER PRONOUNCED IN OPEN COURT ON 2 6/07/2019