ACIT, Jaipur V. M/S M.C. SHARMA ASSOCIATES & CONSULTANTS, Jaipur

ITA 1028/JPR/2011

• Counselvise Citation: 102823114 RSA 2011
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Section: 143(3); 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 1028/JP/2011 ASSESSMENT YEAR : 2008-09 PAN: AAECM 1656 K THE ACIT VS. M/S. M.C. SHARMA ASSOCIATES & CONSUL TANTS (P) LTD. CIRCLE- 3 MADHO SINGH ROAD, BANI PARK JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI MANISH AGARWAL DATE OF HEARING: 19-08-2013 DATE OF PRONOUNCEMENT: 23-08-2013 ORDER PER KUL BHARAT, JM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. LD. CIT(A) -1, JAIPUR DATED 08-09-2011 FOR THE ASSESSMENT YEAR 2 008-09 WHEREIN THE REVENUE HAS RAISED THE SOLITARY GROUND AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 2,17,38,024/- MADE BY THE AO ON ACCOUNT OF DISALLO WANCES U/S 40(A)(IA) OF THE I.T. ACT, 1961 EVEN THOUGH THE ASS ESSEE COMPANY HAS NOT DEDUCTED TAX AT SOURCE ON ABOVE PAYMENTS. 2.1 BRIEFLY, THE FACTS STATED ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED BY THE AO VIDE ORDER DATED 27-12-2010 DETERMINING THE INCOME AT RS. 2,55,28,300/- AGAINST THE DISCLO SED INCOME OF RS. 39,90,280/-.WHILE FRAMING THE ASSESSMENT, THE AO MADE DISALLOWANCE OF RS. 2,17,38,024/- U/S 40(A)(IA) OF 2 THE ACT. THE ASSESSEE FEELING AGGRIEVED BY THE ORDE R OF THE AO PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE. 2.2 NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE ORDER OF THE LD. CIT(A). 2.3 DURING THE COURSE OF HEARING, THE LD. DR STRONG LY SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 2.4 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT HIS CASE IS SQUARELY COVERED BY THE DECISION HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. S.K. TEKRIWAL (2013) 90 DTR 26 (CAL.). THE LD. COUNSEL FOR THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION TO THIS EFFECT. 2.5 WE HAVE HEAD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE AO MADE DISALLOWANCE OF RS. 2,17,3 8,024/- BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT ON THE BASIS THAT CONS ULTANCY WORK WAS EXECUTED BY THE ASSESSEE AND THE CONSULTANCY SERVICES ARE COVERED U /S 194J OF THE ACT. THE GROUNDS ON WHICH THE SUBMISSION OF THE LD. AR WAS NOT ACCEPTED , ARE EMBODIED IN THE ASSESSMENT ORDER WHICH ARE REPRODUCED HEREIN BELOW FOR THE SAK E OF CLARITY. 1. THE ASSESSEE COMPANY WAS GIVEN THE CONTRACT WOR K BY THE DEPARTMENTS OF MADHYA PRADESH GOVT. AND RAJASTHAN G OVT. ETC. FOR PROVIDING CONSULTANCY, SUPERVISION AND DESIGNING WO RK, DETAILS OF WHICH HAVE BEEN FURNISHED AS PER ANNEXURE A DATED 16-12-2 010 2. OUT OF THE WORK ALLOCATED TO THE ASSESSEE COMPAN Y AS PER SR.NO.(I), CONSULTANCY WORK AMOUNTING TO RS. 2,17,38,024/- WAS GIVEN ON SUB- CONTRACT TO THE THREE PARTIES AS DISCUSSED ABOVE. 3. AS CONSULTANCY SERVICES ARE COVERED U/S 194J OF THE I.T. ACT, HENCE, THE ASSESSEE COMPANY WAS REQUIRED TO DEDUCT TAX AT SOURCE @ 10% WHICH THE ASSESSEE COMPANY HAS FAILED TO DEDUCT. 3 4. THE ASSESSEE COMPANY MIGHT HAVE GIVEN SOME ADDIT IONAL WORK OF MANPOWER SUPPLY ON WHICH TAX @ 2% HAS BEEN DEDUCTED . 5. THE GOVT. DEPARTMENTS HAVE DEDUCTED TAX AT SOURC E FROM THE PAYMENTS OF THE ASSESSEE COMPANY @ 10% UNDER THE PR OVISIONS OF SECTION 194J OF THE I.T. ACT. 2.6 ON THE CONTRARY, THE LD. CIT(A) HAS GIVEN FINDI NG ON FACTS IN PARA 4.5 AND 4.6 OF HIS ORDER WHICH ARE ALSO REPRODUCED HEREIN BELOW. 4.5 IN VIEW OF THE ABOVE FACTS AND THE EVIDENCE F ILED BY THE AR, IT IS HELD THAT THE PAYMENTS MADE TO SH. DE EPESH T KUMAWAT OF RS. 1,83,52,091/- AND SH. S.K. ASSOCIATE S OF RS. 20,16,549/- WERE MADE FOR SUPPLY OF MANPOWER AND TR ANSPORT AND NOT FOR PROVIDING TECHNICAL CONSULTANCY. THEREFORE, THE ASSESSEE HAS CORRECTLY DEDUCTED TDS U/S 194C AND THE DISALLO WANCE MADE OF RS. 1,83,52,091/- + RS. 20,16,549 = RS. 2,03,68, 640/- U/S 40(A)(IA) IS DIRECTED TO BE DELETED. 4.6 IN THE CASE OF PAYMENTS MADE TO M/S. LEA ASSOCIATES SOUTH ASIA (P) LTD. FOR CONSULTANCY SERV ICES OF RS. 13,25,000/-, IT IS SEEN THAT THE ASSESSEE HAS DEDUC TED TAX U/S 194J @ 10%. THEREFORE, THERE IS NO JUSTIFICATION IN DISA LLOWING THIS AMOUNT U/S 40(A)(IA). THEREFORE, THE IMPUGNED ADDIT ION OF RS. 13,25,000/- U/S 40(A)(IA) IS DIRECTED TO BE DELETED . 2.7 WE FIND THAT THIS FINDING ON FACT BY THE LD. C IT(A) IS NOT CONTROVERTED BY THE REVENUE. EVEN IF IT IS ASSUMED THAT THE ASSESSEE WA S REQUIRED TO DEDUCT TAX U/S 194J OF THE ACT BUT NOT U/S 194C OF THE ACT IN THAT EVENTUA LITY ALSO. IT IS THE CASE OF SHORT DEDUCTION OF TAX. THE RELIANCE HAS BEEN PLACED BY T HE LD. COUNSEL FOR THE ASSESSEE ON THE JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. S.K. TEKRIWAL (2013) 90 DTR 26 (CAL) WHEREIN HON'BLE CALCUTTA HI GH COURT HAS HELD THAT WE ARE OF THE VIEW THAT THE CONDITIONS LAID DOWN U/S 40(A)(IA ) OF THE ACT FOR MAKING ADDITION IS THAT TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BE EN DEDUCTED. IF BOTH THE CONDITIONS ARE SATISFIED THEN SUCH PAYMENT CAN BE DISALLOWED U/S 4 0(A)(IA) OF THE ACT BUT WHERE TAX IS DEDUCTED BY THE ASSESSEE , EVEN UNDER BONA FIDE WRO NG IMPRESSION, UNDER WRONG PROVISIONS OF TDS, THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT CANNOT BE INVOKED. 4 HENCE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN B Y THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S..K. TEKRIWAL (SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. THUS THE SOLITARY GROUND RA ISED BY THE REVENUE IS REJECTED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-08-2013. SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 23 RD AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. THE ACIT, CIRCLE- 3, JAIPUR 2. M/S. M.C. SHARMA ASSOCIATES & CONSULTANTS (P) LT D. 3. THE LD. CIT, (A) 4. THE LD. CIT 5. THE LD. DR 6. THE GUARD FILE (IT NO.1028/JP/11 ) A.R. ITAT: JAIPUR 5 6