ACIT, Circle-2(1), Hyderabad V. Shri Y Rajeev Reddy, Hyderabad

ITA 1032/HYD/2013

• Counselvise Citation: 103222514 RSA 2013
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Retrospective amendment; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE S/SHRI B. RAMAKOTAIAH, A.M. & SAKTIJIT DEY, J.M. ITA.NO.1032/HYD/2013 ASSESSMENT YEAR 2008-09 ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 2(1), HYDERABAD VS. SHRI Y. RAJEEV REDDY, HYDERABAD PAN AAFPY 9057J (APPELLANT) (RESPONDENT) FOR REVENUE : SRI SOLGY JOSE T. KOTTARAM FOR REVENUE : SRI P. MURALI MOHAN RAO DATE OF HEARING : 03-06-2014 DATE OF PRONOUNCEMENT : 18-06-2014 ORDER PER SAKTIJIT DEY, J.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15-10-2013 OF CIT(A)-V, HYDERABAD PERTA INING TO ASSESSMENT YEAR 2008-09. 2. THE ISSUE IN THE AFORESAID APPEAL OF THE DEPARTM ENT IS IN RESPECT OF THE ORDER OF THE CIT(A) IN DELETING T HE ADDITION OF RS. 88,25,000/- MADE BY THE AO. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIV IDUAL AND IS THE PRINCIPAL OFFICER AND CHAIRMAN-CUM-MANAGING DIRECTOR OF THE COMPANY M/S COUNTRY CLUB (INDIA) LTD., AN IN DIAN COMPANY. FOR THE AY UNDER CONSIDERATION, THE ASSESS EE HAD FILED HIS RETURN OF INCOME ON 08/12/2009 DECLARING TOTAL INCOME OF RS. 1,96,98,000/-. DURING THE SCRUTINY AS SESSMENT PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAS RECE IVED RS. 88,25,304/- AS RENT FROM AP BEVERAGES CORPORATION L TD., ON 2 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY WHICH, TAX OF RS. 3,99,561/- WAS DEDUCTED AT SOURCE . HOWEVER, ON EXAMINING THE RETURN OF INCOME FILED BY THE ASSESSEE, THE AO NOTED THAT THE ASSESSEE HAS NOT OF FERED THE INCOME OF RS. 88,25,304/- AND HAS ALSO NOT CLAI MED TDS FOR THE AY UNDER CONSIDERATION. WHEN THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THIS ISSUE, IT WAS SUBMITTED TH AT THE ASSESSEE AS A PRINCIPAL OFFICER AND CHAIRMAN-CUM-MA NAGING DIRECTOR OF M/S COUNTRY CLUB(INDIA) LTD. HAS APPLIE D FOR LIQUOR LICENCE AND OBTAINED NECESSARY PERMISSION FROM AP BEVERAGES CORPORATION LTD.. HOWEVER, THE AP BEVERAG ES CORPORATION LTD., WHILE COLLECTING PAYMENTS ON PURC HASE OF LIQUOR HAS DEDUCTED TAX AT SOURCE BY MENTIONING PAN OF THE ASSESSEE. IT WAS SUBMITTED THAT THE PURCHASE AND SA LE OF LIQUOR WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE COMPANY, WHICH WAS ALSO OFFERED AS INCOME BY THE CO MPANY AND TCS COLLECTED BY AP BEVERAGES CORPORATION LTD. WAS TAKEN CREDIT OF BY THE COMPANY. THE AO, HOWEVER, MENTIONING THAT THE ASSESSMENT RECORD OF M/S COUNTR Y CLUB INDIA LTD. DOES NOT REFLECT ANY SUCH INCOME OFFERED BY THE COMPANY AND NO CREDIT FOR TDS/TCS WAS AVAILED BY TH E COMPANY, ASSESSEES CONTENTION CANNOT BE ACCEPTED. ON THE AFORESAID REASONING, THE AO ADDED THE AMOUNT OF RS. 88,25,304/- TO THE INCOME OF THE ASSESSEE FOR THE I MPUGNED ASSESSMENT YEAR. BEING AGGRIEVED OF SUCH ADDITION MADE BY THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A). 4. IN COURSE OF HEARING OF APPEAL BEFORE THE CIT(A) , IT WAS REITERATED BY THE ASSESSEE THAT THOUGH THE COMPANY HAD APPLIED FOR LIQUOR LICENSE BEFORE THE PROHIBITION AND EXCISE DEPARTMENT, THE PROHIBITION AND EXCISE DEPARTMENT D OES NOT GENERALLY ISSUE ANY LIQUOR LICENSE IN THE NAME OF C OMPANIES, 3 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY BUT, ONLY IN THE NAME OF INDIVIDUAL. THEREFORE, IN THE PRESENT CASE ALSO, LIQUOR LICENSE WAS ISSUED BY THE PROHIBI TION AND EXCISE DEPARTMENT IN THE NAME OF PRINCIPAL OFFICER OF THE COMPANY, I.E., PRESENT ASSESSEE. IT WAS SUBMITTED T HAT DUE TO THAT REASON ONLY THEY COLLECTED TCS BY INDICATING P AN OF THE ASSESSEE AND THAT IS HOW THE NAME OF THE ASSESSEE I S ALSO INDICATED IN FORM NO. 26AS FILED BY THE COMPANY. IT WAS SUBMITTED BY THE ASSESSEE THAT THOUGH TCS WAS COLL ECTED IN THE NAME OF THE PRESENT ASSESSEE, HOWEVER, THE ENTI RE PURCHASE AND SALE OF LIQUOR FROM AP BEVERAGES CORPO RATION LTD. WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE COMPANY. INVOICES FROM THE AP BEVERAGES CORPORATION LTD. ARE ALSO IN THE NAME OF THE COMPA NY AND NOT IN THE NAME OF THE ASSESSEE. IT WAS SUBMITTED T HAT THE COMPANY I.E. M/S COUNTRY CLUB (INDIA) LTD. HAS NOT ONLY SHOWN THE INCOME FROM THE SALE OF LIQUOR AND THE RE TURNS FILED, BUT, HAS ALSO CLAIMED THE CREDIT FOR THE TAX DEDUCTED/COLLECTED AT SOURCE BY AP BEVERAGES CORPOR ATION. IT WAS, THEREFORE, SUBMITTED THAT THE SAME INCOME H AVING ALREADY BEEN OFFERED TO TAX BY THE COMPANY, IT CANN OT AGAIN BE ASSESSED AT THE HANDS OF THE ASSESSEE. IN SUPPO RT OF SUCH CONTENTION, THE ASSESSEE ALSO SUBMITTED DOCUM ENTARY EVIDENCE IN THE FORM OF PAPER BOOK. 5. THE CIT(A) ON GOING THROUGH THE SUBMISSIONS OF T HE ASSESSEE AND EVIDENCES SUBMITTED BEFORE HIM CALLED FOR A REMAND REPORT FROM THE AO. AFTER RECEIVING THE REMA ND REPORT FROM THE AO AND EXAMINING ALL ASPECTS OF ISSUE, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 4.3 I HAVE CONSIDERED THE ASSESSMENT ORDER, REMAND REPORT, WRITTEN SUBMISSIONS AND ARGUMENTS OF THE ASSESSEES AUTHORIZED REPRESENTATIVE AND THE APPEAL IS DECIDED AS UNDER: 4 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY 4.31 THE APPELLANT IS THE MANAGING DIRECTOR OF THE COMPANY M/S COUNTRY CLUB(INDIA) LTD. THE COMPANY HAD APPLIED FOR LIQUOR LICENSE BEFORE THE PROHIBITI ON AND EXCISE DEPARTMENT. AS A MATTER OF GENERAL PRACTICE, THE LIQUOR LICENSE WAS ISSUED BY PROHIBIT ION AND EXCISE DEPARTMENT IN THE NAME OF THE PRINCIPAL OFFICER OF THE COMPANY I.E. APPELLANT MR. Y. RAJEEV REDDY ON BEHALF OF THE COMPANY. ACCORDINGLY, THE PROHIBITION AND EXCISE DEPARTMENT HAD COLLECTED THE PAN OF THE APPELLANT MR. Y. RAJEEV REDDY. THE AP BEVERAGES CORPORATION LIMITED HAS COLLECTED THE TCS ON THE PAYMENT RECEIVED AGAINST THE SALE OF LIQUOR AND CREDIT OF SAME WAS GIVEN TO THE APPELLANT WHICH IS REFLECTED IN HIS FORM 26AS. 4.3.2 DURING THE SCRUTINY PROCEEDINGS, THE ASSESSIN G OFFICER HAD OBSERVED THAT THE APPELLANT HAD NOT DISCLOSED THE INCOME RECEIVED FROM AP BEVERAQE CORPORATION LIMITED AND ACCORDINGLY MADE AN ADDITIO N OF RS. 88,25,314/- WITH AN OBSERVATION THAT THE APPELLANT HAD RECEIVED RS. 88,25,314 AS RENT FROM A .P BEVERAGE CORPORATION LTD. 4.3.3 AT THE OUTSET, IT IS VERY MUCH CLEAR FROM THE ASSESSEE'S EXPLANATION/SUBMISSION OF THE DOCUMENTS THAT THE APPELLANT HAS NOT RECEIVED ANY RENTAL INCO ME FROM AP BEVERAGE CORPORATION LIMITED. IN FACT, AP BEVERAGE CORPORATION LIMITED HAS COLLECTED TCS AGAINST THE PAYMENT MADE FOR PURCHASE OF LIQUOR M/S COUNTRY CLUB (INDIA) LTD AND THE CREDIT OF THE TCS WAS GIVEN TO THE APPELLANT. 4.3.4 HOWEVER, AS CAN BE SEEN FROM PAPER BOOK FILED , THE COMPANY, M/S COUNTRY CLUB (INDIA) LIMITED FOR W HICH THE APPELLANT IS CHAIRMAN CUM MANAGING DIRECTOR, HA S RECORDING ALL THE PURCHASES IN THEIR BOOKS OF ACCOU NT AND HAS ALREADY OFFERED TO TAX THE INCOME FROM SALE OF LIQUOR IN THEIR RETURN OF INCOME FOR THE AY 2008-09 . THE .COMPANY HAS OFFERED THE INCOME AND CLAIMED THE TCS COLLECTED BY A.P BEVERAGE CORPORATION LIMITED. SINC E THE IMPUGNED RECEIPTS WERE ALREADY BROUGHT TO TAX I N THE HANDS OF THE M/S.COUNTRY CLUB (INDIA) LTD WHERE IN CREDIT FOR THE TCS HAS BEEN CLAIMED BY THE SAME COMPANY FOR THE AY 2008-09, TAXING THE SAME IN THE HANDS OF THE APPELLANT TANTAMOUNT TO DOUBLE TAXATIO N. IN A RECENT JUDGMENT PRONOUNCED BY THE HONBLE AP 5 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY HIGH COURT, A SIMILAR ISSUE HAD COME UP IN THE CASE OF CIT VS. BHOORATNAM & CO [2013] 29 TAXMANN.COM 275 (ANDHRA PRADESH) WHILE DECIDING THE ISSUE AS TO WHETHER INCOME SHOWN IN TDS CERTIFICATES HAD EITHER TO BE TAXED IN HANDS OF JOINT VENTURE OR IN HANDS OF INDIVIDUAL CO-JOINT VENTURE AND WHETHER SINCE JOINT VENTURE HAD NOT FILED RETURN OF INCOME AND CLAIMED CREDIT FOR TDS CERTIFICATES, SAID CREDIT WAS TO BE ALLOWED TO ASSESSEE IN CAPACITY OF A CO-JOINT VENTU RE. 4.3.5 THE RELEVANT EXTRACT OF THE JUDGMENT OF THE HONOURABLE A.P HIGH COURT IN THE CASE COMMISSIONER OF INCOME TAX VS. BHOORATNAM & CO [2013] 29 TAXMANN.COM 275 (ANDHRA PRADESH) ARE REPRODUCED AS UNDER: '17. IN OUR VIEW, THE CLT (APPEALS) AND THE TRIBUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE IS ENTITLED TO THE CREDIT OF THE TDS MENTIONED IN THE TDS C ERTIFICATES ISSUED BY THE CONTRACTOR, WHETHER THE SAID CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENTURE OR IN THE NAME OF A DIRECTOR OF THE ASSESSEE COMPANY. THEY HAVE CONSIDERED THE TERMS OF THE AGREEMENT DATED 12-03-2003 AMONG THE PARTIES TO THE JOINT VENTURE AND HELD THAT CREDIT FOR TDS CERTIFICATES CANNOT BE DENIED TO THE ASSESSEE WHILE ASSESSING THE CONTRACT RECEIPTS MENTIONED IN THE SAID CERTIFICATES AS INCOME OF THE ASSESSEE. THE INCOME SHOWN IN THE TDS CERTIFICATES HAS EITHER TO BE TAXED IN THE HANDS OF THE JOINT VENTURE OR IN THE HANDS OF THE INDIVIDUAL CO-JOINT VENTURER. AS THE JOINT VENTURE HAS NOT FILED RETURN OF INCOME AND CLAIMED CREDIT FOR TDS CERTIFICATES AND THE TDS CERTIFICATES HAVE NOT BEEN DOUBTED, CREDIT HAS TO BE GRANTED TO THE TDS MENTIONED THEREIN FOR THE ASSESSEE. 18. RULE 378A IS A PROCEDURAL PROVISION DEALING WITH THE MANNER OF GIVING CREDIT FOR TAX DEDUCTED AT SOURCE FOR THE PURPOSES OF SECTION 199. IT THEREFORE APPLIES TO PENDING PROCEEDINGS. AS OBSERVED IN STATE OF MADRAS V. LATEEF HAMID & CO. AIR 1972 SC 1781, WHERE A NEW PROCEDURE IS PRESCRIBED BY LAW, IT GOVERNS ALL PENDING CASES. 6 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY 19. IN TIKARAM & SONS V. COMMISSIONER OF SALES TAX AIR 1968 SC 1286 IT WAS HELD THAT ALTERATIONS IN THE FORM OF PROCEDURE ARE ALWAYS RETROSPECTIVE, UNLESS THERE IS SOME GOOD REASON OR OTHER WHY THEY SHOULD NOT BE. THE AMENDMENT TO RULE 37 BA MENTIONED ABOVE WHICH HAS BEEN INTRODUCED BY THE INCOME TAX (8TH AMENDMENT) RULES, 2011 NOTIFIED VIDE NOTIFICATION NO. 57/2011 DATED 24-10-2011, BEING PROCEDURAL IN NATURE, WOULD HAVE RETROSPECTIVE EFFECT AND HAS TO BE GIVEN EFFECT TO. 20. THE REVENUE CANNOT BE ALLOWED TO RETAIN TAX DEDUCTED AT SOURCE WITHOUT CREDIT BEING AVAILABLE TO ANYBODY. IF CREDIT OF TAX IS NOT ALLOWED TO THE ASSESSEE, AND THE JOINT VENTURE HAS NOT FILED A RETURN OF INCOME, THEN CREDIT OF THE TDS CANNOT BE TAKEN BY ANYBODY. THIS IS NOT THE SPIRIT AND INTENTION OF LAW. 21. THEREFORE, IN OUR VIEW, THE ASSESSING OFFICER ERRED IN DENYING THE BENEFIT OF THE TDS MENTIONED IN THE TDS CERTIFICATES FILED BY THE ASSESSEES ON THE GROUND THAT TDS CERTIFICATE IS ISSUED IN THE NAME OF THE JOINT VENTURE OR A DIRECTOR AND NOT THE ASSESSEE. 4.3.6 IN THE ABOVE CASE, IT WAS HELD THAT SINCE JOI NT VENTURE HAD NOT FILED RETURN OF INCOME AND CLAIMED CREDIT FOR TDS CERTIFICATES, SAID CREDIT WAS TO BE ALLOWED TO THE COMPANY IN CAPACITY OF A CO-JOINT VENTURE. THE SAME PRINCIPLE CAN BE FOLLOWED IN THE PRESENT CASE THOUGH THE FACTS OF THE CASE ARE NOT COMPLETELY SIMILAR. 4.3.7 KEEPING IN MIND THE PRINCIPLE LAID DOWN BY TH E HONORABLE AP HIGH COURT AND THE FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE PAYMENTS MADE TO THE AP BEVERAGE CORPORATION LIMITED AGAINST THE PURCHASE OF LIQUOR CANNOT BE TREATED AS INCOME IN THE HANDS OF THE APPELLANT AS THE SAME HAS ALREADY BEEN REFLECTED IN THE BOOKS OF ACCOUNTS OF M/S COUNTRY CLUB INDIA LIMITED AND ADMITTED AS' INCOME OF THE SAID COMPANY. THEREFORE, I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 88,25,314 ON ACCOUNT OF RENT RECEIVED FROM AP 7 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY BEVERAGES CORPORATION LIMITED IN THE HANDS OF THE APPELLANT. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTH ORITIES ON THIS ISSUE. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS OBVIOUS THAT THE AO AT THE STAGE OF ASSESSMENT HAS COMPLETE LY MIXED UP FACTS AS HE HAS TREATED THE AMOUNT OF RS. 88,25, 300/- AS RENTAL INCOME RECEIVED FROM AP BEVERAGES CORPORATIO N LT., WHICH IS NOT AT ALL CORRECT. FURTHERMORE, IT IS THE CONSISTENT STAND OF THE ASSESSEE RIGHT FROM THE STAGE OF ASSES SMENT THAT THOUGH THE LICENSE WAS ISSUED IN THE NAME OF I NDIVIDUAL BECAUSE OF RESTRICTION IN THE POLICY DECISION OF TH E PROHIBITION AND EXCISE DEPARTMENT, BUT, THE LIQUOR BUSINESS WAS CARRIED ON BY THE COMPANY M/S COUNTRY CLUB (INDIA) PVT. LTD . THE ENTIRE PURCHASE FROM AP BEVERAGES CORPORATION LTD. AND SALES EFFECTED OF LIQUOR HAVE BEEN REFLECTED IN TH E BOOKS OF ACCOUNT OF THE COMPANY AND PROFIT GENERATED THERE F ROM HAS BEEN OFFERED TO TAX IN THE RETURN OF INCOME FILED B Y THE COMPANY. THE TDS/TCS ON PURCHASE OF LIQUOR MADE FRO M AP BEVERAGES CORPORATION LTD. HAS ALSO BEEN CLAIMED B Y THE COMPANY AND NOT BY THE ASSESSEE. ALL THE AFORESAID CONTENTIONS OF THE ASSESSEE ARE FOUND TO BE CORRECT BY THE CIT(A) ON EXAMINATION OF THE DOCUMENTARY EVIDENCE PRODUCED BEFORE HIM. THE AO IN THE REMAND REPORT HA S ALSO NOT BROUGHT ANY MATERIAL TO SHOW THAT THE AMOUNT OF RS. 88,25,300/- RECEIVED FROM AP BEVERAGES CORPORATION LTD. HAS NOT BEEN OFFERED AS INCOME BY THE COMPANY. IN T HESE CIRCUMSTANCES, WE DO NOT FIND ANY FAULT WITH THE CO NCLUSION DRAWN BY THE CIT(A). IN FACT ON PERUSAL OF THE REM AND REPORT DATED 18/06/2012 OF THE AO, A COPY OF WHICH IS PLAC ED AT PAGE 48 OF THE PAPER BOOK, IT APPEARS THAT THE AO A CCEPTS THE FACT THAT LIQUOR LICENSE IN GENERAL IS ONLY ISS UED TO 8 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY INDIVIDUALS BY THE PROHIBITION AND EXCISE DEPARTMEN T AND NOT TO PARTNERSHIP FIRMS AND COMPANIES. FURTHER, IN PAR AGRAPH (E) OF THE REMAND REPORT, THE AO HAS SUGGESTED FOR EXC LUDING THE SALES AND CORRESPONDING EXPENDITURE RELATING TO LIQUOR SALES SHOWN BY M/S COUNTRY CLUB (INDIA) LTD. AS HE ALSO AGREES THAT TAX SHOULD NOT BE CHARGED TWICE FOR THE SAME INCOME. THEREFORE, EFFECTIVELY THE AO ADMITS THE FA CT THAT THE INCOME OF RS. 8825,300/- HAS BEEN OFFERED AT THE HA NDS OF THE COMPANY I.E., COUNTRY CLUB(INDIA) LTD. IN THE AFORESAID CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDER PASSED BY THE CIT(A) IN DELETING THE ADDI TION AS THE PARTICULAR INCOME, WHICH HAS BEEN ADDED AT THE HAND S OF THE ASSESSEE HAS ALREADY BEEN OFFERED TO TAX BY THE COM PANY IN THE RETURN OF INCOME FILED FOR THE IMPUGNED IN THE ASSESSMENT YEAR. THE VIEW TAKEN BY THE CIT(A) IS ALSO IN TUNE WITH THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. BHOORATNAM & CO, [2013] 29 TAXMANN.COM 275 (AP). IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT(A) AND THE GROUND RAISED IN THIS REGARD ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS CONSIDER ED TO BE DISMISSED. ORDER WAS PRONOUNCED IN COURT ON 18-6-2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH JUNE, 2014 KV 9 ITA.NO. 1032 OF 2013 SHRI Y. RAJEEV REDDY COPY TO : 1. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1(2), 4 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD 2. SHRI Y. RAJEEV REDDY, A-21, FILM NAGAR, ROAD NO. 9, JUBILEE HILLS, HYDERABAD. 3. CIT (A)-V, HYDERABAD. 4. CIT-I, HYDERABAD. 5.D.R. ITAT, HYDERABAD.