ACIT, Circle - 49, Kolkata, Kolkata V. Shri Smriti Kumar Mukherjee, Kolkata

ITA 1084/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54778 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N DUTTA GUPTA
• Assessee Lawyers: N O N E
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #$ #$ #$ #$ / I.T.A NO. 1084/KOL/2011 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2007-08 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SHRI SM RITI KUMAR MUKHERJEE CIRCLE-49, KOLKATA. (PAN: AELPM 1307 F) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 28.12.2011 DATE OF PRONOUNCEMENT: 28.12.2011 FOR THE APPELLANT: SHRI N. DUTTA GUPTA FOR THE RESPONDENT: N O N E . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXXII, KOLKATA IN APPEAL NO.57/CIT(A)-XXXII/10-11/CIR-49/KOL DATED 30.03.201 1. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-49, KOLKATA U/S.143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DA TED 30.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN HOLDING THE ACTIVITY OF ASSESSEE AS BUSINESS AND NOT PROFESSION . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE ACTIVITY OF THE ASSESSEE IN THE LINE OF AD VERTISING WOULD CONSTITUTE BUSINESS AND NOT PROFESSION, THEREBY EXONERATING HIM FROM THE LIABIL ITY OF TDS AS HIS CASE WOULD FALL OUTSIDE THE PURVIEW OF THE SECTION 44AB? 3. WE HAVE HEARD LD. SR. DR SHRI N. DUTTA GUPTA AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS ING OFFICER MADE DISALLOWANCE OF PAYMENT MADE TO SUB CONTRACTORS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TDS U/S. 194C OF THE ACT. BEFORE THE ASSESSING OFFICER, THE ASSESSEE CONTENDED THAT IT IS CARRYING ON THE BUSINESS OF ADVERTISING AGENCY AND FOR THIS IT HAS RECEIVED CONSULTANCY SERVICE CHARGES AND ALSO PAID CONSULTANCY CHARGES T O SUB-CONTRACTORS. THE ASSESSEES TURNOVER IS BELOW RS. 40 LACS AND CASE DOES NOT FALL UNDER T HE PROVISIONS OF SECTION 44AB OF THE ACT, IT IS NOT REQUIRED TO DEDUCT TDS U/S. 194C OF THE ACT. H OWEVER, ASSESSING OFFICER HELD THAT THE 2 ITA 1084/K/2011 SMRITI KUMAR MUKHERJEE A.Y.07-08 ASSESSEE IS A PROFESSIONAL AND THE GROSS RECEIPTS O F THE ASSESSEE EXCEED RS.10 LACS AS PRESCRIBED U/S. 44AB OF THE ACT, THE ASSESSEE IS OBLIGED TO DE DUCT TDS U/S. 194C OF THE ACT, THEREBY HE DISALLOWED THE PAYMENTS MADE TO SUB-CONTRACTORS. HO WEVER, WHETHER THIS AMOUNT IS RS.24,35,272/- OR RS.15,88,959/- IS TO BE VERIFIED, IT IS NOT CLEAR FROM THE ASSESSMENT ORDER OR THE ORDER OF CIT(A). HOWEVER, THIS IS NOT THE DISP UTE BEFORE US. THE ASSESSEES TURNOVER I.E. THE GROSS RECEIPTS ARE TO THE TUNE OF RS.35,75,587/ -. THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDING: FROM THE ABOVE DISCUSSION IT IS GATHERED THAT A PR OFESSION IS A JOB WHICH WILL DEPEND PRIMARILY UPON PERSONAL QUALIFICATIONS AND SKILLS O F A PERSON. IN THE INSTANT CASE THE ASSESSEE SUPPLIES ADVERTISING MATERIAL AND SERVICES TO ITS CUSTOMERS. THE ASSESSEE EITHER PRODUCES THE GOODS OR CAUSES TO PRODUCE GOODS WHICH ARE SOLD FOR CONSIDERATION. THE FACT THAT THE ASSESSEE HAD INCURRED EXPENDITURE BY WAY O F PAYMENT TO OTHER PERSONS FOR GOODS/SERVICES TO PRODUCE GOODS OR/AND PROVIDE SERV ICES TO HIS CUSTOMERS SHOWS THAT ACTIVITIES CARRIED OUT BY HIM ARE PRIMARILY IN THE NATURE OF BUSINESS TO WHICH PROVISIONS OF CLAUSE (A) OF SECTION 44AB APPLY TO THIS CASE AN D NOT A PROFESSION TO WHICH THE PROVISIONS OF CLAUSE (B) OF THAT SECTION WOULD APPL Y. THEREFORE, HE WAS NOT REQUIRED TO GET HIS ACCOUNTS AUDITED AS PER THE PROVISIONS OF SECTI ON 44AB SINCE THE TURNOVER OF HIS BUSINESS DID NOT EXCEED THE THRESHOLD LIMIT OF RS.4 0,00,000/- EVEN DURING THE PRECEDING FINANCIAL YEAR. AS THE ACCOUNTS OF THE ASSESSEE WE RE NOT LIABLE AUDIT U/S. 44AB, HE WAS NOT UNDER OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194C FROM THE PAYMENTS MADE BY HIM TO THE FOUR PERSONS MENTIONED BY THE A.O. IN THE ASSESSMEN T ORDER IN LIGHT OF THE PROVISO BELOW SUB-SECTION (2) OF THAT SECTION. THAT BEING SO, TH E DISALLOWANCE OF RS.24,35,272/- MADE BY THE A.O. IS FOUND TO BE ERRONEOUS AND NOT SUSTAINAB LE, THEREFORE, THE SAME IS DELETED. AS A RESULT, GROUNDS NO. 2 & 3 OF THE APPEAL ARE ALLOWED . 4. WE FIND THAT THE ASSESSEE IS IN THE BUSINESS OF PRODUCTION OF ADVERTISING MATERIAL WHICH WERE USED IN HOARDING, KIOSKS, GLOW SIGNS, PRINTING OF BROCHURES AND LEAFLETS. THE ASSESSEE PRODUCED ADVERTISING MATERIALS, WHICH WERE SOLD TO DIFFERENT CLIENTS AT AN AGREED CONSIDERATION AND THE GROSS RECEIPTS EARNED FROM SUCH ACTIVITY AR E DISCLOSED IN THE P&L ACCOUNT OF THE ASSESSEE. FROM THE DETAILS FILED THE AO AS WELL AS CIT(A) OBSERVED THAT THE JOB DONE BY ASSESSEE RELATES TO PAINTING OF HOARDINGS, WALL SIG NS, PRINTING OF LABELS, BANNERS, POSTERS, PAMPHLETS, MAKING OF ADVERTISEMENT FILM, ART WORK D ESIGN ETC. ETC., WHICH ARE NOT IN THE NATURE OF ANY CONSULTANCY BUT IN THE NATURE OF SUPPLY/JOB WORK. FOR CARRYING OUT THE WORK THE ASSESSEE HIRED THE SERVICES OF OTHER FIRMS AND INDIVIDUALS E NGAGED IN SIMILAR BUSINESS TO GET THE WORK DONE. THESE WERE ALSO IN THE NATURE OF PURCHASE/JO B WORK AND NOT IN THE NATURE OF CONSULTANCY SERVICES. THE ASSESSEE FILED COMPLETE DETAILS INCL UDING NAMES AND ADDRESSES OF THE PARTIES THROUGH WHOM THE WORK WAS DONE. THE ASSESSEE WAS C ARRYING ON THE BUSINESS OF ADVERTISING MATERIALS/JOB WORK WHICH FALLS WITHIN THE AMBIT OF CLAUSE (A) OF SECTION 44AB OF THE ACT WHICH STATES THAT TAX AUDIT IS REQUIRED TO BE DONE IF THE TOTAL SALES, TURNOVER OR GROSS RECEIPTS EXCEEDS RS.40 LACS IN ANY PREVIOUS YEAR. IT IS AN ADMITTED FACT THAT THE ASSESSEES GROSS RECEIPT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, INCLUSIVE OF ADVANCES RECEIVED FROM CLIENTS DISCLOSED IN THE P&L ACCOUNT ARE AT RS.36.84 LACS. HENCE, ASSESSEE IS NOT 3 ITA 1084/K/2011 SMRITI KUMAR MUKHERJEE A.Y.07-08 OBLIGED TO GET HIS ACCOUNTS AUDITED U/S. 44AB OF TH E ACT. AS PER THE PROVISIONS OF SECTION 194C OF THE ACT, ANY PERSON RESPONSIBLE FOR PAYING ANY S UM TO ANY RESIDENT FOR CARRYING OUT ANY WORK, INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK, IN PURSUANCE TO A CONTRACT IS REQUIRED TO DEDUCT TAX AT SOURCE. HOWEVER, AS PER EXPLANATION (1)(B) OF SECTION 194C OF THE ACT, ANY PERSON BEING AN INDIVIDUAL OR A HUF OR AN ASSOCIATION OF PERSON IS REQUIRED TO DEDUCT TAX AT SOURCE FROM THE AMOUNTS PAID/CREDITED TO THE CONTRACTOR, IF THEY ARE LIABLE TO GET THEIR ACCOUNTS AUDITED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB OF THE ACT. SINCE THE ASSESSEE IS NOT REQUIRED TO GET HIS ACCOUNTS AUDITED U/S. 44AB OF THE ACT, HE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FOR THE AMOUNT PAID/CREDITED BY HIM U/S. 194 C OF THE ACT. HENCE, WE ARE OF THE VIEW THAT THERE IS NO NEED TO INTERFERE IN THE ORDER OF CIT(A) AND THE SAME IS CONFIRMED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 28 TH DECEMBER, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT, CIRCLE-49, KOLKATA. 2 ,-*+ / RESPONDENT, SHRI SMRITI KUMAR MUKHERJEE, K-8, 69/ 1, S. K. DEB ROAD, KOLKATA-700 048. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .