Bikash Swain, Bhubaneswar V. ITO,Ward-2(1), Bhubaneswar, Bhubaneswar

ITA 08/CTK/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5081 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SAMIR DASH
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

P A G E 1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER ITA NO. 08 /CTK/201 9 ASSESSMENT YEA R: 2009 - 2010 BIKASH SWAIN, HIG DUPLEX, 36, SAILASHREE VIHAR, CHANDRASEKHARPUR, BHUBANESWAR. VS. ITO, WARD 2(1), BHUBANESWAR. PAN/GIR NO. AHQPS 2788 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SAMIR DASH, AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 1 5 / 0 5 / 201 9 DATE OF PRONOUNCEMENT : 1 6 / 0 5 / 201 9 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 2 , BHUBANESWAR DATED 30.11.2018 FOR THE ASSESSMENT YEAR 20 09 - 2010. 2. GROUND NOS.1 & 2 ARE NOT PRESSED , THEREFORE SAME ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS.4,5 & 6 ARE GENERAL IN NATURE AND HE N CE REQUIRES NO SEPARATE ADJUDICATION BY ME. ITA NO.08/CTK/2019 ASSESSMENT YEAR: 2009 - 2010 P A G E 2 | 5 4. THE ONLY GROUND AGITATED BY THE ASSESSEE IS AS UNDER: FOR THAT BOTH THE ASSESSING AUTHORITY AS WELL AS FIRST APPELLATE AUTHORITY HAD FAILED TO APPLY THEIR JUDICIAL M IND AND TO APPLY AN INAPPLICABLE LAW TO C REATE THE DEMAND TO THIS INDIVIDUAL TAX PAYER. THEY HAD NOT CONSIDERED LAWFUL CLAIM OF DEDUCTION ON ACCOUNT OF PAYMENT MADE TO LOCALLY ENGAGE PRINTING PERSONNEL , EXPENSES INCURRED TOWARDS ADVERTISEMENT AND COMMISSION EXPENSES ON THE GROUND OF NON - DEDUCTION OF TAXES ON SUCH TRANSACTIONS. 5 . I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS PLACED ON RECORD OF THE TRIBUNAL. FROM THE FIRST PARA PAGE 3, IT IS DISCERNIBLE THAT THE ASSESSING OFFI CER HAS MADE DISALLOWANCE BY OBSERVING THAT NO TDS HAS BEEN DEDUCTED AT SOURCE WHILE MAKING THE PAYMENT TO THE PARTIES AS REQUIRED UNDER THE PROVISIONS OF SECTION 194C OF THE ACT, AND SINCE THE ASSESSEE HAS FAI LED TO DEDU CT TAX AT SOURCE ON P AYMENT OF RS.1,44,000/ - , THEN SAME IS DISALLOWED U/S.40(A)(IA) OF THE ACT. FIRST OF ALL, I MAY POINT OUT FROM THE RELEVANT PART OF THE ASSESSMENT ORDER AT PA GES 3 & 4 , I OBSERVE THAT IN THE FIRST LIMB OF OBSERVATION, THE ASSESSI NG OFFICER O BSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.3,02,022 / - UNDER THE HEAD P U BLICITY EXPE NSES WHEREAS IN THE SECOND LIMB OF OBSERVATION AT PAGE 4, THE ASSESSING OFFICER FURTHER OBSERVED THAT SINCE THE ASSESSEE HAS FA ILED TO DEDUCT TAX ON PAYMENT OF COMMISSION OF RS.1,44,000/ - . THEREFORE, THE SAME IS DISALLOWED U/S. 40(A)(IA) OF THE ACT. THESE CONTRADICTORY ITA NO.08/CTK/2019 ASSESSMENT YEAR: 2009 - 2010 P A G E 3 | 5 OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER PROCEEDED TO MAK E THE IMPUGNED DISALLOWANCE WITHOUT APPLICATION OF MIND. 6 . SO FAR AS THE FIRST APPELLATE ORDER IS CONCERNED, I CLEARLY OBSERVE THAT THERE IS NO AD JUDICATION AND FINDINGS BY THE CIT(A) ON THIS ISSUE , ESPECIALLY WHILE DISMISS ING THE APPEAL OF THE ASSESSEE. 7 . WHEN I CAREFULL Y CONSIDERED THE FACTS OF THE CASE, I OBSERVE THAT IT IS AN EXPLANATION OF THE ASSESSEE THAT THE IMP UGNED PAYMENT OF RS.1,44,000/ - HAS BEEN MADE TO THE SAMAJ NE WS PAPER AND EASTERN MEDI A SERVICES FOR PUBLICITY EXPENSES AND THE SAME WAS NOT A WORK CONTRACT BUT THE ENTIRE LIABILITY OF PROCURING MATERIAL AND PRINTING THEREON WAS GIVEN TO THE RECIPIENTS. AS I HAVE NOTED THAT THE AUTHORITIES BELOW HAVE NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE PROVISIONS OF SECTION 194C OF THE ACT ARE APPLICABLE TO THE PRESENT CASE ON THE IMPUGNED PAYMENTS MADE BY THE ASSESSEE TO THE SAID TWO PARTIES. I MAY POINT OUT THAT AS PER EXPLANATION TO CLAUSE (IV) SUB - CLAUSE (E) OF SECTION 194C OF THE ACT , THE WORK SH ALL INCLUDE MANUFAC TURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER ITA NO.08/CTK/2019 ASSESSMENT YEAR: 2009 - 2010 P A G E 4 | 5 BU T DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIALS PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER. IN THE PRESENT CASE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT BROUGHT ON RECORD ANY PO SITIVE MATERIAL TO SHOW THAT THE PUBLICITY EXPENSES CLAIMED BY THE ASSESSEE TO THE SAID TWO PARTIES DOES NOT INCLUDE THE COST OF MATERIAL AND SAME WAS SUPPLIED BY THE ASSESSEE. EVEN FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE RELEVANT PART OF THE ASSESSMENT ORDER AT PA GE 3 , THE ASSESSING OFFICER HIMSEL F OBSERVED THAT THE ASSESSEE HAS DEBITED THE IMPUGNED AMOUNT UNDER THE HEAD PUBLICITY EXPENSES AND HE IS NOT CLAIMING UNDER JOB WORK EXPENSE S. THEREFORE, I AM SATISFIED THAT THE SECOND LIMB OF SU B - CLAUSE (E) OF CLAUSE (IV) OF EXPLANATION TO SECTION 194C OF THE ACT ABSOLVES THE ASSESSEE FROM THE LIAB ILITY OF DED UCTION OF TAX AT SOURCE U/S.194C OF THE ACT. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) CANNOT BE HELD A S SUSTAINABLE AND THUS, I DELETE THE SAME. 8 . MY FINDINGS FURTHER GETS STRONG SUPPORT FROM THE DECISION OF KOLKATA B ENCHES IN THE CASE OF DCIT VS SHALIMAR CHEMICALS WORKS LTD., IN ITA NO . 892/KOL/2011 FOR A.Y. 2008 - 09 ORDER DATED ITA NO.08/CTK/2019 ASSESSMENT YEAR: 2009 - 2010 P A G E 5 | 5 28.9.2015 AND CBDT CIRCULAR NO.05/2016 DATED 29.2.2016. ACCORDINGLY, THE SOLE GROUND OF THE ASSESSEE IS A LLOWED. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED ON 1 6 / 0 5 /201 9 . S D/ - ( CHANDRA MOHAN GARG ) JUDICIALMEMBER CUTTACK; DATED 1 6 / 0 5 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT. SECRETARY, ITAT, CUTTACK 1. THE APPELLANT : BIKASH SWAIN, HIG DUPLEX, 36, SAILASHREE VIHAR, CHANDRASEKHARPUR, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD 2(1), BHUBANESWAR 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//