M/s. Rasranjan Food Products Pvt. Ltd., Ahmedabad V. The Income tax Officer,Ward-5(3), Ahmedabad

CO 188/AHD/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8432 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: G C PIPARA
• Keywords: Depreciation
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI G. C. GUPTA, VP AND SHRI ANIL CHATURVE DI, AM) ITA NO.1794/AHD/2010 AND CO NO.188/AHD/2010 (AY: 2006-07) THE INCOME TAX OFFICER, WARD- 5(3), AHMEDABAD RASRANJAN FOOD PRODUCTS PVT. LTD., RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, AHMEDABAD P. A. NO. AABCR 8986 Q VS VS RASRANJAN FOOD PRODUCTS PVT. LTD., RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, AHMEDABAD P. A. NO. AABCR 8986 Q THE INCOME TAX OFFICER, WARD- 5(3), AHMEDABAD (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI RAHUL KUMAR, SR. DR ASSESSEE BY SHRI G. C. PIPARA, AR DATE OF HEARING: 14-03-2013 DATE OF PRONOUNCEMENT: 19-04-2013 ORDER PER ANIL CHATURVEDI : THE REVENUE HAS FILED THE APPEAL IN ITA NO.1794/AHD/2010 AND THE ASSESSEE HAS FILED C. O. NO.188/AHD/2010 AGAINST THE ORDER OF THE LEARNED CI T(A)-XI, AHMEDABAD DATED 22-03-2010 IN APPEAL NO. CIT(A)-XI/ 654/08-09 PASSED U/S 250 READ WITH SECTION 143(3) OF THE IT A CT, FOR THE ASSESSMENT YEAR 2006-07. THE SAME WERE HEARD TOGETH ER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NO.1794/AHD/2010 (REVENUES APPEAL FOR AY 2006-07) 2. THE BRIEF FACTS AS CULLED OUT FROM THE ORDERS AR E AS UNDER:- ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 2 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS EN GAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF SWEETS, N AMKIN, FOOD PRODUCTS AND OTHER ALLIED ITEMS. THE ASSESSEE FILED ITS RETURN OF INCOME ELECTRONICALLY ON 29-12-2006 DECLARING TOTAL INCOME AT RS.5,29,140/-. THE CASE WAS SELECTED FOR SCRUTINY A ND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE OR DER 30-12-2008 AND THE INCOME WAS DETERMINED AT RS.77,59,280/-. AG GRIEVED BY THE AFORESAID ORDER OF THE AO THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) VIDE HIS ORDER D ATED 22-03-2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED B Y THE AFORESAID ORDER OF THE LEARNED CIT(A), THE REVENUE IS IN APPE AL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO CALCULATE G. P. @29% ON ESTIMATED SALE OF RS.3,75 CRORES INSTEAD OF 32% ON SALES OF RS.5 CRORES. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF DEPRECIATION ON VEHICLE OF RS.1,45,000/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME TAX (A)-XI AHMEDABAD OUGHT T O HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD MAY BE SET ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. 4. GROUND NO.1 OF THE APPEAL IS WITH RESPECT TO ADD ITION OF GROSS PROFIT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODUCE MONTH-WISE SALES, ITEM-WISE BR EAK-UP OF PURCHASE AND CONSUMPTION OF RAW MATERIALS, PRODUCTI ON, SALES OF ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 3 FINISHED GOODS AND CLOSING STOCK FOR THE CURRENT YE AR AS WELL AS TWO PRECEDING ASSESSMENT YEARS. THE ASSESSEE SUBMITTED ONLY MONTH- WISE BREAK-UP OF PURCHASES AND SALES, STOCK STATEME NT FOR 3 MONTHS FOR THE PERIOD APRIL, 2005 TO JUNE, 2005. THE ASSES SEE DID NOT SUBMIT ANY STOCK REGISTER. ON THE BASIS OF STOCK STATEMENT SUBMITTED TO THE BANK FOR THE PERIOD APRIL, 2005 TO JUNE, 2005 THE A O WORKED OUT THE DISCREPANCY OF CLOSING STOCK. THE ASSESSEE WAS ASKE D TO EXPLAIN AS TO WHY THE SALES SHOULD NOT BE ESTIMATED ON SAME LI NE OF ASSESSMENTS MADE IN EARLIER YEARS IN THE ABSENCE OF ANY STOCK REGISTER, SALES REGISTER ETC. THE AO NOTED THAT THE SUBMISSION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS FOR THE ASSESSMENT YEAR 2005-06 MAY BE CONSIDERED IN THIS R ESPECT. THE AO THUS FOLLOWING THE RATIO ADOPTED IN EARLIER YEARS A ND RELYING ON THE ORDERS ESTIMATED THE SALE AT RS.5 CRORES AS AGAINST RS.3,52,48,694/- SHOWN BY THE ASSESSEE. THE AO FURTHER NOTED THAT IN THE ASSESSMENT YEAR 2005-06 THE GROSS PROFIT SHOWN BY THE ASSESSEE WAS 28.33% AGAINST WHICH GROSS PROFIT WAS ESTIMATED AT 32% WHI CH WAS REDUCED TO 31% BY THE LEARNED CIT(A). HE, THEREFORE, FOLLOW ING THE DECISIONS IN THE ASSESSMENT YEAR 2005-06 ESTIMATED THE GROSS PROFIT AT 32% ON THE SALES OF RS.5 CRORES AND WORKED OUT GROSS PROFI T AT RS.1,60,00,000/-. SINCE THE ASSESSEE HAD ALREADY DE CLARED GROSS PROFIT OF RS.92,39,465/-, HE MADE THE ADDITION OF D IFFERENCE AMOUNT OF RS.67,60,535/- TO THE INCOME OF THE ASSESSEE. AGGRI EVED BY THE ORDER OF THE AO THE ASSESSEE CARRIED THE MATTER BEFORE TH E LEARNED CIT(A). THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER IN PARA 3.3 OF HIS ORDER ON PAGE 11 AND 12: ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 4 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE A. R. OF THE APPELLANT AND OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER. I HAVE ALSO GONE THROUGH THE FINDING OF MY PREDECESSOR IN EARLI ER YEARS AND THE ORDERS OF THE HONBLE ITAT, FOR THE EARLIER YEARS. THE FOL LOWING PICTURE EMERGES ON THIS ISSUE FROM THE EARLIER YEARS ORDERS:- (RS. IN CRORES) ASSTT. YEAR SALES AS PER BOOKS SALES ESTIMATED BY A. O. SALES AS PER CIT(A) SALES ESTIMATED BY ITAT 01-02 3.51 4 4 3.75 02-03 3.56 5 5 3.75 03-04 3.38 5 3.38 3.75 04-05 3.87 5.5 3.87 4.25 05-06 3.79 6 3.79 4.25 THE SALES OF THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDERATION IS RS.3,52,48,694/- WHICH IS ALMOST IN THE SAME RANGE OF THE SALES OF A. Y. 2001-02 AND A. Y. 2002-03, WHICH HAS BEEN ESTIMATED BY THE HONBLE ITAT AT RS.3.75 CRORES. THE CURRENT YEAR SALES IS L OWER AS COMPARED TO EARLIER YEAR FOR THE REASON THAT FOOD COURT OF THE COMPANY REMAINED SEALED FROM 27/4/2005 TO 25/6/2005 DUE TO THE ORDER OF THE GUJARAT HIGH COURT AND THEREFORE, THERE WAS ABSOLUTELY NO SALES OF FOOD COURT DURING THIS PERIOD AND THIS HAS RESULTED INTO A LOWER SALE S DURING THE YEAR BY RS.26.82 LACS AS COMPARED TO PRECEDING PREVIOUS YEA R. THEREFORE, THERE ARE VALID REASONS FOR FALL IN SALES DURING THE YEAR . CONSIDERING THE REASONS FOR FALL IN THE SALES AND KEEPING IN VIEW OF THE ES TIMATE MADE BY THE TRIBUNAL IN EARLIER YEARS, I AM OF THE CONSIDERED V IEW THAT IT IS REASONABLE TO ESTIMATE THE SALES AT RS.3.75 CRORES. THEREFORE, A. O. IS DIRECTED TO CONSIDER THE SALES AT RS.3.75 CRORES AS AGAINST THE SALES OF THE APPELLANT COMPANY AS PER BOOKS OF RS.3,52,48,694/-. THIS GROU ND IS ACCORDINGLY PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE R EVENUE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT NO EVIDEN CE HAS BEEN BROUGHT ON RECORD BY THE AO INDICATING THAT THE SAL ES HAVE BEEN MADE BY THE ASSESSEE COMPANY OUTSIDE THE BOOKS OF A CCOUNTS. HE FURTHER SUBMITTED THAT THE BOOK OF ACCOUNTS OF THE ASSESSEE COMPANY ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 5 HAS BEEN DULY AUDITED AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE AUDITORS. HE FURTHER SUBMITTED THAT EVEN IN EAR LIER YEARS ESTIMATION OF SALES WAS WITHOUT ANY BASIS AND, THER EFORE, THE SAME WAS DELETED BY THE LEARNED CIT(A) AND THE MANNER OF ESTIMATION OF SALES, THE ITAT WAS ALSO OF THE VIEW THAT IT WAS WI THOUT ANY BASIS AND IT COULD NOT THEREFORE, BE THE BASIS FOR ESTIMATING THE SALES. THE ASSESSEE FURTHER SUBMITTED THAT THE FOOD COURT REMA INED SEALED FOR THE PERIOD 27-04-2005 TO 25-06-2005 AS A RESULT OF WHICH THERE WAS NO SALES OF FOOD COURT AND BECAUSE OF CLOSURE OF TH E FOOD COURT EVEN THE SALES FOR THE MONTH OF JULY AND AUGUST, 20 05 WERE LOW. HE THUS SUBMITTED THAT THERE IS NO CASE FOR MAKING THE ADDITION BY ESTIMATION OF SALES AND THUS URGED THAT THE ADDITIO N MADE BY THE AO BE DELETED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED CIT(A) WHILE GRANTING PARTIA L RELIEF TO THE ASSESSEE HAS NOTED THAT THE SALES WERE ALMOST IN TH E SAME RANGE WITH THAT OF ASSESSMENT YEARS 2001-02 AND 2002-03 A ND IT WAS ESTIMATED BY THE ITAT AT RS.3.75 CRORES. FALL IN SA LES DUE TO CLOSURE OF FOOD COURT IS ALREADY REFLECTED IN THE SALES MAD E BY THE ASSESSEE. THE LEARNED CIT(A) HAD THUS ESTIMATED THE SALES TO BE AT RS.3.75 CRORES AS AGAINST SALES OF RS.3.50 CRORES DISCLOSED BY THE ASSESSEE WHICH CONSIDERING THE TOTALITY OF THE FACTS APPEAR S TO BE REASONABLE AND WE, THEREFORE, FEEL NO REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) IN ESTIMATING THE SALES AT RS.3.75 C RORES. AS FAR AS ESTIMATION OF GROSS PROFIT IS CONCERNED, ITAT ESTIM ATED THE GROSS PROFIT AT 30% FOR ALL THE ASSESSMENT YEARS FROM 200 1-02 TO 2004-05. ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 6 THE LEARNED CIT(A) AFTER CONSIDERING THE FACTUAL PO SITION OF THE CLOSURE OF FOOD COURT FOR TWO MONTHS AND DUE TO INC REASE IN WAGES AND SALARIES HAD CONSIDERED THE GROSS PROFIT RATE A T 29% AS AGAINST 26.21% WORKED OUT BY THE AO. WE, THEREFORE, FEEL NO REASON TO INTERFERE WITH HIS ORDER AS THE LEARNED DR COULD NO T CONTROVERT THE FINDINGS OF THE LEARNED CIT(A). THUS, THIS GROUND O F APPEAL OF THE REVENUE IS DISMISSED. 7. GROUND NO.2 OF THE REVENUES APPEAL RELATES TO D ELETION OF DISALLOWANCE ON VEHICLE AMOUNTING TO RS.1,45,000/-. ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE, THE AO NOTICE D THAT THE ASSESSEE CLAIMED DEPRECIATION ON VEHICLES PURCHASED IN THE N AME OF THE DIRECTORS OF THE ASSESSEE COMPANY. HE WAS OF THE VI EW THAT SINCE THE OWNERSHIP OF THE ASSETS DOES NOT BELONG TO THE ASSE SSEE, THE ASSESSEE IS NOT ENTITLED TO CLAIM DEPRECIATION. HE, ACCORDINGLY DISALLOWED THE CLAIM OF DEPRECIATION OF RS.1,45,000 /-. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A). 8. THE LEARNED CIT(A) FOLLOWING THE DECISIONS OF HI S PREDECESSORS IN THE ASSESSEES OWN CASE FOR EARLIER YEARS 2004-0 5 TO 2005-06 DELETED THE ADDITION. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 9. BEFORE US THE LEARNED DR SUPPORTED THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED AR HAS SUBMITTED THAT T HE ASSESSEE COMPANY HAD MADE PAYMENT FOR THE VEHICLES AND IT IS ALSO REFLECTED IN THE BOOKS OF THE COMPANY. FURTHER, THE VEHICLES WERE USED FOR THE ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 7 PURPOSE OF THE BUSINESS OF THE ASSESSEE COMPANY. HE FURTHER SUBMITTED THAT FOR ASSESSMENT YEARS 2004-05 AND 200 5-06 THE ADDITION WAS DELETED BY THE LEARNED CIT(A) RELYING ON THE DECISION OF THE ITAT IN THE CASE OF AMBUJA SYNTHETICS MILLS PVT . LTD. VS DCIT DATED 29-01-2004. HE THUS SUPPORTED THE ORDER OF TH E LEARNED CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE FINDINGS OF THE LEARNED C IT(A) AND IN VIEW OF THIS FACT, WE FIND NO REASON TO INTERFERE WITH T HE ORDER OF THE LEARNED CIT(A). THUS, THIS GROUND OF REVENUES APPEAL IS DI SMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. C. O. NO.188/AHD/2010 (ASSESSEES C. O. FOR AY 2006-07) 12. IN THE CROSS OBJECTION THE GROUNDS RAISED BY TH E ASSESSEE READS AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN PARTLY CONFIRMING THE ESTIMATIO N OF SALES FROM RS.5 CRORES MADE BY THE A. O. TO RS.3.75 CRORES AS AGAINST THE ACTUAL SALES OF RS.3.52 CRORES RECORDED IN THE BOOK S OF ACCOUNT. IN VIEW OF ELABORATE SUBMISSIONS FILED AND MORE PARTICULARLY T HE SPECIFIC CIRCUMSTANCES PREVAILING DURING THE YEAR FOR DECLIN E IN SALES COMPARED TO PREVIOUS YEARS AND SINCE NO DISCREPANCY HAS BEEN FO UND IN RESPECT OF SALES SHOWN IN BOOKS OF ACCOUNTS, THE ESTIMATION OF SALES BY THE ITAT IN EARLIER YEARS CANNOT FORM THE BASIS FOR ESTIMATION DURING THE YEAR. THE APPELLANT THUS CONTENDS THAT THE SALE SHOWN IN THE BOOKS OF ACCOUNTS REQUIRES TO BE ACCEPTED. 2. THE LEARNED CIT(A) HAS ERRED IN PARTLY CONFIRMIN G THE ADDITION ON ACCOUNT OF ESTIMATION OF GROSS PROFIT RATE AT 32% M ADE BY THE A. O. BY REDUCING IT TO 29% AS AGAINST ACTUAL GROSS PROFIT R ATE OF 26.21% DECLARED BY THE APPELLANT COMPANY. THAT KEEPING IN VIEW THE SPECIFIC CIRCUMSTANCES OF THE APPELLANT DURING THE YEAR UNDE R CONSIDERATION AS COMPARED TO PREVIOUS YEARS AS ALSO OBSERVED BY THE LEARNED CIT(A), THE ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 8 G. P. RATIO OF 26.21% AS PER BOOKS OF ACCOUNTS OUGH T TO HAVE BEEN ACCEPTED BY THE LEARNED CIT(A). 3. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE A DDITION ON ACCOUNT OF DISALLOWANCE U/S. 40A (A) OF THE ACT TO THE EXTE NT OF RS.1,90,661/- ON THE GROUND THAT THE PACKING MATERIAL CANNOT BE CONSIDER ED AS PURCHASES SINCE THEY ARE SPECIFICALLY PRINTED FOR THE APPELLANT COM PANY AND HENCE LIABLE FOR TDS. THE APPLICANT CONTENDS THAT SINCE THE PACKING MATERIAL IN QUESTION HAVING BEEN PURCHASED OFF THE SHELF AND AS IT DOES NOT BEAR ANY LOGO OF THE COMPANY OR ANY OTHER PRINTING AS ASSUMED BY TH E A. O. AND THE LEARNED CIT(A), THE PROVISIONS OF SECTION 194C DO NOT APPLY AND ACCORDINGLY NO DISALLOWANCE IS WARRANTED TO THE EXT ENT OF RS.1,90,661/- U/S. 40A(IA) OF THE ACT . THE IMPUGNED DISALLOWANCE THUS REQUIRES TO BE CANCELLED/DELETED. 13. THE ISSUE INVOLVED IN GROUNDS NO.1 AND 2 OF THE CROSS OBJECTION OF THE ASSESSEE AND GROUND NO.1 OF THE AP PEAL OF THE REVENUE IS IDENTICAL. SINCE WE HAVE DECIDED THIS IS SUE AGAINST THE REVENUE WHILE ADJUDICATING REVENUES APPEAL AS AFOR ESAID, BOTH THE GROUNDS NO.1 AND 2 RAISED BY THE ASSESSEE IN ITS CR OSS OBJECTION ARE ALLOWED IN ITS FAVOUR. 14. GROUND NO.3 OF THE ASSESSEES CROSS OBJECTION R ELATES TO CONFIRMATION OF ADDITION ON ACCOUNT OF DISALLOWANCE MADE U/S 40(A(IA) OF THE ACT FOR RS.1,90,661/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD DE BITED PACKING MATERIAL EXPENSES OF RS.4,18,794/-. HE FURTHER NOTI CED THAT THE ASSESSEE GOT THE PACKING MATERIALS PRINTED WITH ITS LOGO AS WELL AS THE NAME AND ADDRESS OF ITS BRANCHES AND PHONE NUMB ERS ETC. IT WAS ALSO NOTICED BY THE AO THAT THE ASSESSEE HAD MADE P AYMENT IN RESPECT OF PACKING MATERIALS EXCEEDING RS.50,000 TO THREE PARTIES NAMELY- ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 9 SR. NO. NAME OF PARTIES AMOUNT (IN RS.) 1 PREEMINENT PACK 62,608 2 J. D. MARKETING 1,28,053 3 J. K. PACKAGING PVT. LTD. 1,00,784 TOTAL 2,91,445 THE AO WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAV E DEDUCTED TAX BEFORE MAKING PAYMENT AS THE PACKING MATERIALS WERE SPECIFICALLY MADE FOR THE ASSESSEE. SINCE THE ASSESSEE DID NOT D EDUCTED TDS BEFORE MAKING THE PAYMENT, HE DISALLOWED THE EXPENS ES AGGREGATING TO RS.2,91,445/- U/S 40 (A) (IA) OF THE ACT. AGGRIE VED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A). 15. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE GAVE PARTIAL RELIEF TO THE ASSESSEE BY HOL DING AS UNDER: 6.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER. LOOKING TO THE NATURE OF EXPENDITURE, I AM O F THE VIEW THAT THE SAME CANNOT BE CONSIDERED AS PURCHASES OF MATERIAL BUT I T IS A PACKING MATERIAL SPECIALLY PRINTED FOR THE APPELLANT COMPANY AND THE REFORE, PROVISIONS OF SECTION 40A (IA) ARE APPLICABLE TO THE FACTS OF THE INSTANT CASE. THEREFORE, THE A. O. HAS RIGHTLY MADE THE ABOVE DISALLOWANCE. HOWEVER, THE APPELLANT COMPANY CONTENDED THAT IN RESPECT OF PAYM ENT OF RS.1,00,784/- TO J. K. PACKAGING PVT. LTD., TDS @ 0.25% HAS BEEN DEDUCTED, IN VIEW OF CERTIFICATE FOR DEDUCTION AT LOWER RATE ISSUED. PRO OF FOR REMITTANCE OF TDS WAS FURNISHED DURING THE COURSE OF APPELLATE PROCEE DINGS. THEREFORE, SUBJECT TO VERIFICATION BY A. O., DISALLOWANCE OF R S.1,00,784/- IS DELETED. THE BALANCE DISALLOWANCE OF RS.1,90,661/- IS CONFIR MED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) THE AS SESSEE IS NOW IN APPEAL BEFORE US. 16. BEFORE US, THE LEARNED AR SUBMITTED THAT THE AS SESSEE HAD NOT ENTERED INTO ANY CONTRACT WITH THE SAID PARTIES FOR THE MANUFACTURE OF ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 10 PACKING MATERIALS ON ITS BEHALF BUT IT WAS A CASE O F PURCHASE OF THE PACKING MATERIALS AND HENCE, PROVISIONS OF SECTION 194C OF THE ACT FOR DEDUCTION OF TDS WAS NOT APPLICABLE TO THE ASSE SSEE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD PURCHASED PLASTIC T RAYS, CUPS, SPOONS AND PLASTIC CARRY BAGS ETC. FROM PREEMINENT PACKING AND J. D. MARKETING. THE MATERIALS PURCHASED DID NOT CARRY ANY LOGO OF THE COMPANY AND WERE OF STANDARD SIZE AVAILABLE IN THE MARKET. THESE PURCHASES DID NOT CONSTITUTE ANY CONTRACT WITH THE SAID PARTIES; HENCE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS FROM THE PAYMENT MADE TO THEM. THE LEARNED DR ON THE OTHER HAND, SUPPORTED T HE ORDER OF THE AO AND THE LEARNED CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE ASSESSEE BEFORE US SUBMITTED THAT TH E PURCHASES AGGREGATING TO RS.1,90,661/- IS ON ACCOUNT OF PLAST IC TRAYS, CUPS, SPOONS AND PLASTIC DISHES ETC. WHICH DID NOT CARRY THE LOGO OF THE ASSESSEE AND WERE IN THE NATURE OF PURCHASES. THE P URCHASES WERE OF STANDARDIZED MATERIAL AVAILABLE IN MARKET. THESE SUBMISSIONS OF THE ASSESSEE COULD NOT BE CONTROVERTED BY THE REVEN UE BY BRINGING ANY MATERIAL EVIDENCE ON RECORD. WE ARE, THEREFORE, OF THE VIEW THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE AFORESA ID THREE PARTIES CANNOT BE CONSIDERED AS BEING A CASE OF CONTRACT WH ICH WOULD REQUIRE DEDUCTION OF TDS U/S 194C OF THE ACT AND, T HEREFORE, NO DISALLOWANCE U/S 40(A) (IA) OF THE ACT IS CALLED FO R. WE, THEREFORE, DIRECT THE AO TO DELETE THE ADDITION MADE ON THIS C OUNT. THIS GROUND OF ASSESSEES CROSS OBJECTION IS ALLOWED. ITA NO.1794/AHD/2010 & C. O. NO.188/AHD/2010 (AY: 200 6-07) RASRANJAN FOOD PRODUCTS PVT. LTD. 11 18. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-04-2013. SD/- SD/- (G. C. GUPTA) VICE PRESIDENT (ANIL CHATURVEDI) ACCOUNTANT MEMBER LAKSHMIKANTA DEKA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 14-03-2013/12-04-2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 01-04-13/12-04-2013 OTHER MEMBER : 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: