The Income tax Officer, Jammu V. Sh. Pankaj Jain Prop., Jammu

ITA 10/ASR/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5708 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO.10(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN :ABNPJ7081N THE INCOME-TAX OFFICER, VS. SH. PANKAJ JAIN,PROP. WARD 1(2), JAMMU. M/S. AAGAM FOOD INDUSTRIES, PHASE-II, GANGYAL, JAMMU. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. TARSEM LAL, DR ASSESSEE BY: SH. R.K. GUPTA, CA ORDER PER MEHAR SINGH, AM, THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER OF THE CIT(A), J & K, JAMMU, DATED 01.11.2010, PASSED UNDER SECTION 250(6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O IN SHORT THE ACT), RELATING TO ASSESSMENT YEAR 2007-08., WHERE FOLLOWI NG GROUNDS HAVE BEEN RAISED : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.2 0,28,545/- MADE BY THE A.O. WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM EXPENDITURE ON ACCOUNT OF PRINTING OF PACKING MATERIAL UNDER SUB-SECTION (A)(AI) OF SECTI ON 40 FOR NON DEDUCTION OF TDS UNDER THE PROVISIONS OF SECTION 19 4-C IN VIEW OF DECISION OF ITAT, AMRITSAR BENCH, AMRITSAR, IN THE CASE OF THE AMRITSAR DISTT. COOP. MILLS PRODUCERS U NION LIMITED (MILK PLANT VERKA), AMRISAR VS. ITO (TDS) ITA NO.377(ASR)/2008 FOR THE ASSESSMENT YEAR 2007-08. 2 2. THAT THE DEPARTMENT DID NOT FILE SECOND APPEAL IN THE CASE OF THE AMRITSAR DISTT. COOP. MILLS PRODUCERS UNION LIM ITED (MILK PLANT VERKA), AMRISAR VS. ITO (TDS) ITA NO.377(ASR)/2008 FOR THE ASSESSMENT YEAR 2007-08 BE CAUSE OF THE FACT THAT TAX EFFECT INVOLVED WAS LESS THAN T HE MONETARY LIMIT GIVEN IN INSTRUCTION NO.05 OF 2008 ISSUED BY THE C.B.D.T., NEW DELHI. 3. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE PRINTING OF PACKING MATERIAL WAS ONLY SALE AND NOT CONTRACT IN TERMS OF PROVISIONS OF SECTION 194C OF THE ACT. 2. ALL THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE INTER-CONNECTED, RELATING TO DELETION OF ADDITION OF RS.20,28,545/- BY THE LD. CIT(A), WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ENT ITLED TO CLAIM EXPENDITURE ON ACCOUNT OF PRINTING OF PACKING MATERIAL UNDER SU B-SECTION (A)(IA) OF SECTION 40 FOR NON DEDUCTION OF TDS UNDER THE PROVI SIONS OF SECTION 194C OF THE ACT. THE BRIEF AND NEAT FACTS, AS CULLED OUT, F ROM THE RELEVANT RECORD ARE THAT THE ASSESSEE HAS GOT PACKING MATERIAL FROM CE RTAIN PARTIES WITH THE PRINTING DONE ON THE SAME AS PER SPECIFICATIONS GIV EN BY THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS.27,11,341/- FOR PRINTING OF WRAPPERS FOR PACKING OF BREAD UNDER THE HEAD PACKING MATERIAL CONSUMED. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THIS EXPENDITURE M AY NOT BE DISALLOWED UNDER SECTION (A)(IA) OF SECTION 40 FOR NON DEDUCTI ON OF TDS UNDER THE PROVISIONS OF SECTION 194-C. IN RESPONSE TO THIS, T HE ASSESSEE CONTENDED THAT HE HAS MOVED AN APPLICATION U/S 144A OF THE ACT BEF ORE THE ADDL. CIT, R-1, JAMMU TO SEEK HIS DIRECTIONS ON THIS ISSUE. ON 11.1 2.2009, THE ASSESSEE FILE WRITTEN SUBMISSIONS CONTENDING THAT PAYMENTS OF RS. 27,11,341/- MADE UNDER THE HEAD PACKING MATERIAL CONSUMED. AFTER CONSIDE RING THE CONTENTION OF THE ASSESSEE, THE AO WAS OF THE VIEW THAT THE PROVI SIONS OF SECTION 194C SHALL APPLY TO ALL TYPES OF CONTRACTS FOR CARRYING OUT ANY WORK INCLUDING 3 ADVERTISING CONTRACTS, BROADCASTING CONTRACTS, TELE CASTING CONTRACTS ETC. THE AO WAS FURTHER OF THE OPINION THAT THE ASSESSEE WAS REQUIRED TO DEDUCT INCOME TAX AT SOURCE @ 2% OUT OF THE PAYMENT MADE T O THE PARTIES FROM WHERE WRAPPERS WERE GOT PRINTED UNDER THE PROVISION S OF SECTION 194C(1), WHICH HE FAILED. THUS, THE AO DISALLOWED THE AMOUNT OF RS.27,04,724/- (2711341-6617) CLAIMED UNDER THE HEAD PACKING MATER IAL CONSUMED. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE AO F ILED AN APPEAL BEFORE THE CIT(A), WHO ALLOWED THE APPEAL OF THE ASSESSEE. NOW , AGGRIEVED WITH THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFOR E THIS BENCH. 3. THE LD. DR, SIMPLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED ON THE ORDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. HE, FURTHER, CONTENDED THAT THE ISSUE INVOLVED IN THE P RESENT APPEAL IS COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL, DATE D 17 TH OCTOBER, 2008, IN THE CASE OF THE AMRITSAR DISTT. CO-OP. MILLS PRODUC ERS UNION, VERKA VS. THE INCOME TAX OFFICER (TDS) RANGE-IV, AMRITSAR, PA SSED IN ITA NO. 377(ASR)/2008 FOR THE ASSESSMENT YEAR 2007-08. HE ALSO PLACED RELIANCE ON SEVERAL DECISIONS OF TRIBUNAL AND THE HONBLE HIGH COURTS, IN SUPPORT OF HIS CASE, WHICH SEEMS TO HAVE BEEN CONSIDERED BY THE CI T(A), IN HIS IMPUGNED APPELLATE ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THE RIVAL SUBMISSIONS WITH REFERENCE TO FACTS, EVIDENCE AND M ATERIAL PLACED ON RECORD, INCLUDING THE CASE LAWS RELIED UPON BY THE LD. COUN SEL FOR THE ASSESSEE. A CAREFUL PERUSAL OF THE IMPUGNED APPELLATE ORDER, DA TED 01.11.2010 OF THE LD. CIT(A), SHOWS THAT HE HAS DELETED THE ADDITION, IN QUESTION, BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF THE AMRITSAR D ISTT. CO-OP. MILLS PRODUCERS UNION, VERKA VS. THE INCOME TAX OFFICER ( TDS) RANGE-IV, 4 AMRITSAR, PASSED IN ITA NO. 377(ASR)/2008 FOR THE A SSESSMENT YEAR 2007- 08. THEREFORE, WE ARE OF THE CONSIDERED OPINION TH AT THE ORDER OF THE LD. CIT(A), WHICH IS BASED ON REASONING AND LOGIC, REQU IRES NO INTERFERENCE AND DESERVES TO BE UPHELD. HOWEVER, IT IS IMPERATIVE T O REPRODUCE THE FINDINGS GIVEN BY THE CIT(A), IN HIS IMPUGNED APPELLATE ORDE R, FOR THE PURPOSE OF APPRECIATION OF THE FACTS OF THE CASE: BEFORE ME, IN THE APPELLATE PROCEEDINGS SIMILAR AR GUMENTS WERE ADVANCED BY SH. R.K. GUPTA, REPRESENTATIVE OF THE A SSESSEE. HE HAS ALSO FILED COPY OF AN ORDER OF JURISDICTIONAL ITAT, AMRITSAR, IN THE CASE OF THE AMRITSAR DISTT. CO-OP. MILLS PRODUCERS UNION, VERKA VS. THE INCOME TAX OFFICER (TDS) RANGE-IV, AMRITSAR, PA SSED IN ITA NO. 377(ASR)/2008 FOR THE ASSESSMENT YEAR 2007-08, THE RELEVANT PART OF WHICH READS AS : THERE WAS NO DISPUTE THAT THE MAIN PURPOSE OF THE ASSESSEE TO BUY PACKING MATERIAL WAS FOR THE PURPOSE OF PACKING OF ITS FINISHED PRODUCTS. THE FACTUM OF SUCH PACKING MATER IAL CARRYING SOME PRINTED WORK COULD ONLY BE REGARDED A S THE WORK EXECUTED BY THE SUPPLIER INCIDENTAL TO THE SALE OF THE ASSESSEE. THE FACT OF SOME PRINTING BEING DONE AS A PART OF S UPPLY WAS OF NO CONSEQUENCE TO THE CONTRACT BEING ESSENTIAL TO THE SALE OF CHATTEL. THE PREDOMINANT OBJECT UNDERLYING THE CONT RACT WAS SALE/PURCHASE OF GOODS AND ONLY INTENTION OF THE AS SESSEE WAS TO BUY PACKING MATERIALS. ADMITTEDLY, THE RAW MATER IAL FOR THE MANUFACTURING OF SUCH PACKING MATERIAL WAS NOT SUPP LIED BY THE ASSESSEE. THUS, IT WAS A CASE OF SALE AND NOT A CON TRACT FOR CARRYING ON ANY WORK. IN THE PRESENT CASE ALSO THE FACTS ARE SIMILAR IN T HE CASES CITED BY REPRESENTATIVE OF THE ASSESSEE AND ARE UNDISPUTED A LSO. THE CONTRACT WAS A CONTRACT FOR SALE OF GOODS AS HELD IN THE CAS E LAWS CITED AS ABOVE.. IN FACT, IT IS SEEN FROM CASE RECORDS THAT M/S. VEER PLASTO PRINT (INDIA) PVT. LTD. WHO HAS SUPPLIED PACKING MATERIA L WORTH RS.25,83,747/- OUT OF TOTAL PACKING MATERIAL OF RS. 27,11,341/- HAS CHARGED SALES TAX ALSO IN THE BILLS SENT TO ASSESSE E. THE AO ALSO DOES NOT DISPUTE THE FACTS BUT WENT ON TO MAKE ADDITIONS FOR THE REASONS AS MENTIONED AS ABOVE. 5 IT IS FOUND THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE ALMOST IDENTICAL AND THE CASE LAWS CITED BY ASSESSEE ARE S QUARELY APPLICABLE. THE CASE OF AMRITSAR DISTT. COOP. MILLS PRODUCERS U NION VS. ITO (TDS) DECIDED BY THE HONBLE ITAT, AMRITSAR BENCH, WHICH IS THE JURISDICTIONAL TRIBUNAL IS RESPECTFULLY FOLLOWED AN D HENCE THE ADDITION OF RS.20,28,545/- IS DELETED. 5.1. IN VIEW OF THE ABOVE DISCUSSIONS, WE DO NOT FI ND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A), AS THE SAME ARE BASED ON PROPER APPRECIATION OF THE LEGAL AND FACTUAL POSITION OF T HE CASE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAND DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23RD JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 23RD JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: SH. PANKAJ JAIN PROP. M/S. AAGAM FOOD INDUSTRIES, GANGYAL, JAMMU. 2. THE ITO WARD 1(2), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.