ACIT, Circle-14(2) (TDS), Range-14, Hyderabad V. M/s. Margadarsi Chit Fund Pvt.Ltd., Hyderabad

ITA 1119/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66565 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: V SIVA KUMAR
• Section: 143(3); 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1119/HYD/2012 ASSESSMENT YEAR : 2007-08 THE ASST. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 14(2), HYDERABAD. VS. M/S MARGADARSHI CHIT FUND (P) LTD., RESPOND ENT HYDERABAD. (PAN NO. AABCM4751G) APPELLANT BY : SHRI M.H. NAIK RESPONDENT BY : SHRI V. SIVAKUMAR DATE OF HEARING : 06/11/2012 DATE OF PRONOUNCEMENT : 07/12/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, HYDERABAD DATED 10/05/2012 FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING CHIT FUNDS. THE AO NOTICED THAT THE ASSESSEE HAD DISTRIBUTED CHIT DIVIDENDS TO SUBS CRIBERS WITHOUT DEDUCTING TAX AT SOURCE AS REQUIRED U/S 194A OF THE ACT DURING THE FY RELEVANT TO THE AY 2007-08. THE ASSESSEE WAS REQ UESTED TO EXPLAIN THE REASONS WHY THE TDS WAS NOT DEDUCTED ON THE CHIT 2 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. DIVIDEND PAID TO THE CUSTOMERS TO WHICH THE ASSESSE E STATED THAT THE ADDITION ON THIS ISSUE U/S 40(A)(IA) IN THE ASS ESSMENT ORDER U/S 143(3) IN ITS OWN CASE FOR AYS 2005-06 TO 2007-08 B Y THE DCIT, CIRCLE 16(2), HYDERABAD WAS DELETED BY THE CIT(A)-V , HYDERABAD FOLLOWING THE DECISION OF THE DELHI HIGH COURT IN T HE CASE OF SAHIB CHITS AND THE DECISION OF THE ITAT, VISAKHAPATNAM B ENCH IN THE CASE OF DASPALLA CHITS & INVESTMENTS LTD. THE AO ALSO NO TICED FROM THE ASSESSMENT ORDER U/S 143(3) BY THE DCIT, CIRCLE 16( 2), HYDERABAD THAT THE ASSESSEE HAD NOT DEDUCTED TAXES AT SOURCE FROM THE PAYMENTS MADE OF RS. 2,32,28,557/- ON ACCOUNT OF PR INTING OF STATIONERY, VISITING CARDS, CALENDARS, DAIRIES ETC. NOT SATISFIED WITH THE ASSESSEES EXPLANATION, THE AO PASSED ORDER DAT ED 15/03/2011 DETERMINING THE TDS DEFAULTS U/S 201(1) AND 201(1A) AS UNDER: SECTION TDS NOT DEDUCTED U/S 201(1) INTEREST U/S 201(1A) TOTAL 194A PAYMENT TO INDIVIDUAL @ 11.22% 242,17,04,427 27,17,15,236 16,30,29,141 43,47,44,377 194A PAYMENT TO CORPORATE @ 22.44% 36,54,14,786 8,19,99,077 4,91,99,446 13,11,98,523 194C ON CONTRACTS 2.24% 2,32,28,557 5,20,319 3,12,191 8,32,510 TOTAL 35,42,34,632 21,25,40,778 56,67,75,410 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSE E FILED WRITTEN SUBMISSION AND STATED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT ORDERS IN OTHER CHIT FUND COMP ANIES. IT WAS 3 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. CONTENDED THAT IN THE SCHEME OF CHIT FUNDS, THE ASS ESSEE ACTS AS A FOREMAN FOR THE CHIT SUBSCRIBERS, THE FOREMANS JOB IS TO COLLECT CHIT INSTALMENT FROM SUBSCRIBERS, CONDUCTS AUCTION OF CH ITS AMONG SUBSCRIBERS, DISTRIBUTES THE DISCOUNT REMAINING AFT ER FOREMANS COMMISSION AMONG THE CHIT SUBSCRIBERS EQUALLY WHICH IS CALLED AS DIVIDEND IN THE CHIT FUND BUSINESS. IT WAS FURTHER SUBMITTED THAT IN THIS ACTIVITY, THE FOREMAN NEITHER LENDS HIS MONEY TO THE SUBSCRIBERS NOR BORROWS MONEY FROM THE SUBSCRIBERS AND THUS THE RE IS NO CREDITOR AND DEBTOR RELATIONSHIP BETWEEN THE FOREMA N AND THE CHIT SUBSCRIBERS AND, THEREFORE, ISSUE OF PAYMENT OF INT EREST DOES NOT ARISE AT ALL. IT WAS ALSO SUBMITTED THAT THE DIVIDE ND PAID BY THE FOREMAN TO THE SUBSCRIBER CANNOT BE TREATED AS INTE REST SINCE IT DOES NOT FIT INTO THE DEFINITION OF INTEREST AS PROVIDED IN THE IT ACT AND AS IT IS ALSO NOT KNOWN WHETHER ANY SURPLUS WOULD BE E ARNED OR LOSS WOULD BE SUFFERED BY SUBSCRIBERS TO CONSIDER IT AS INCOME BY WAY OF INTEREST. THEREFORE, PROVISIONS OF SECTION 194A OF THE IT ACT CANNOT BE APPLIED TO THE CHIT DIVIDENDS. IT WAS FURTHER SU BMITTED THAT IN THE ASSESSEES CASE IN RESPECT OF ASSESSMENT ORDER U/S 143(3) WHERE DISALLOWANCE U/S 40(A(IA) WAS MADE FOR NON DEDUCTIO N OF TAX AT SOURCE FOR THE AYS 2005-06 TO 2007-08, THE CIT(A)-V , HYDERABAD BY HIS ORDERS DATED 17/09/2010 FOLLOWING THE DECISION OF DELHI HIGH COURT IN THE CASE OF SAHIB CHITS (DELHI) (P) LTD., 328 ITR 342, THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CA SE OF ITO VS. DASPALLA CHITS AND INVESTMENTS LTD. IN ITA NOS. 151 , 154, 155 & 157/V/2007 DATED 20/07/2009 (41 ITRS TRIBUNAL TAX REPORTS 732) HAD ALLOWED THE APPEAL OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE SAID ORDER OF CIT(A)-V HAD BEEN CONFIRMED BY TH E ITAT VIDE ORDER IN ITA NOS. 526, 527, 528 & 529/HYD/2011 DATE D 29/09/2011. 4 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) DIRECTED THE AO TO DELETE THE DEMAND RAISED U/S 201 (1) & 201(1A) R.W.S. 194 OF THE ACT, BY RECORDING THE FINDINGS AS UNDER:- 1)IT IS PERTINENT TO MENTION THAT IN THE CASE OF SO ME OTHER CHIT FUND COMPANIES, ORDERS WERE PASSED BY HIM IN FAVOUR OF THE CHIT FUND COMPANIES AFTER ELABORAT3ELY DISCUSSING A ND ANALYZING THE VARIOUS CASE LAWS. 2) IN THE CASE OF M/S VIJAY BHARGAVI CHIT FUND(P) L TD. FOR THE AY 2004-05, VIDE ORDER IN ITA NO. 00437/CIT(A)-II, HYD/2005- 06D 09/03/2011, IT WAS HELD BY HIM THAT THE CHIT DI VIDEND PAID TO VARIOUS PERSONS DOES NOT PARTAKE THE CHARACTER O F INTEREST PAYMENT AND THERE WAS NO APPLICABILITY OF SECTION 1 94A OF THE ACT, WHICH WAS CONFIRMED BY THE HONBLE JURISDICTIO NAL TRIBUNAL, A-BENCH VIDE ITS ORDER IN ITA NO. 820/HYD /2001, DATED 26/12/2011. 3) THE ITA, A-BENCH, HYDERABAD WHILE CONFIRMING THE DECISION OF CIT(A)-V, HYDERABAD VIDE ORDER IN ITA NOS. 526,5 27,528 & 529/HYD/2011 DATED 29/09/2011 FOR AYS. 2004-05, 200 5-06, 2007-08 & 2007-08, IN ASSESSEES OWN CASE, HAD HELD THAT THE PAYMENT OF DIVIDEND TO THE SUBSCRIBERS OF A CHIT TO WARDS DIVIDEND DOES NOT PARTAKE THE CHARACTER OF INTEREST AND ACCORDINGLY THE ASSESSEE IS NOT LIABLE TO DEDUCT TD S U/S 194A OF THE ACT AND NOT LIABLE FOR INTEREST U/S 201(1) A ND 201(1A) OF THE ACT. 4) IN ASSESSEES OWN CASE FOR AY 2005-06 VIDE ORDER IN ITA NO. 0064/CIT(A)-II/HYD/2011-12, DTED 18/04/2012, THE CI T(A) DELETED THE DEMAND RAISED U/S 201(1) & 201(1A) BY T HE AO. 5 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. 6. AS REGARDS THE GROUND CONCERNING TDS DEFAULT U/S 194-C ON VARIOUS PAYMENTS MADE TOWARDS PURCHASE OF ARTICLES/ THINGS, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT IT HAD PU RCHASED PRINTING STATIONERY, DIARIES, CALENDARS, ETC. FOR RS. 2,26,6 5,453/-, THE DETAILS OF WHICH WERE EXTRACTED BY THE CIT(A) IN A TABULAR FORM IN HIS ORDER AT PAGE 5. IT WAS SUBMITTED THAT IT HAD PURCHASED A LL THE ITEMS UPTO ITEM NO. XIV) IN THE TABLE WITH APPELLANTS LOG/NAME ON IT AND SUBMITTED THAT NO WORK WITHIN THE MEANING OF SECT ION 194C OF THE ACT WAS CARRIED OUT BY THE PARTIES SO AS TO ATTRACT THE PROVISIONS OF SECTION 194-C OF THE ACT AND ALSO THAT IT HAD PAID SALES TAX ON PURCHASE OF ALL THESE ITEMS, THEREFORE, THE PROVISI ONS OF SECTION 194- C ARE NOT ATTRACTED TO RS. 2,26,65,453/-. THE ASSES SEE HAD RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS C LAIM. IT WAS ALSO SUBMITTED THAT IN RESPECT OF THE ORDER U/S 143(3) F OR AY 2007-08, CIT(A)-V, IN HIS ORDER IN ITA NO. 176/ADDL.CIT-16/C IT(A)-V/2009- 10, DATED 17/09/2010 HAS DELETED THE ADDITION MADE U/S 40(A)(IA) OF THE IT ACT FOR NON DEDUCTION OF TDS U/S 194C. 7. REGARDING ITEM XV FOR RS. 3,17,104/- WHICH WAS P AID TO USHODAYA ENTERPRISES LTD. TOWARDS ADVERTISEMENT CHA RGES, IT WAS SUBMITTED THAT USHODAYA ENTERPRISES LTD. FILED ITS RETURN OF INCOME FOR AY 2007-08 ALREADY AND PAID TAXES DUE THEREON. IT WAS SUBMITTED THAT SINCE THE DEDUCTEE HAS ALREADY PAID THE TAX, DEMAND CANNOT BE RAISED FOR PAYMENT OF TAX U/S 201(1) FOLL OWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HI NDUSTAN COCO COLA BEVERAGES PVT. LTD. VS. CIT 293 ITR 226. 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) NOTED THAT THE AO HAD MADE THE DISALLOWANCE OF RS. 2,32,28,558/- 6 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. ON THE GROUND THAT THE SAME WAS DISALLOWED FOR NON DEDUCTION OF TAX IN THE ASSESSMENT ORDER U/S 143(3) DATED 14/12/ 2009. HOWEVER, THE CIT(A)-V DELETED THE ADDITION HOLDING THAT THE ITEMS UPTO XIV IN THE TABLE WERE STRAIGHT FORWARD PURCHASES AND DO NO T INVOLVE ANY WORKS CONTRACT WHATSOEVER BECAUSE THE PURCHASE OF P OCKET DIARIES, CALENDARS, DESK TOP CALENDARS, VISITING CARDS, CLOT H COVERS CANNOT BE CLASSIFIED AS WORKS CONTRACT AND SINCE NO TDS WAS T O BE DEDUCTED ON THESE PURCHASES, THERE WAS NO APPLICABILITY OF SEC. 40(A)(IA) OF THE IT ACT. HE FURTHER NOTED THAT THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GLENMARK PHARMACEUTICALS LTD., 324 ITR 199 HAS HELD THAT TAKING INTO ACCOUNT THE AMENDMENT TO SECTION 194-C (W.E.F. 01/10/2009) THAT WORK WILL NOT INCLUDE MANUFACTUR E AND SUPPLY OF PRODUCTS ACCORDING TO SPECIFICATION OF CUSTOMERS BY USING MATERIALS PURCHASED FROM THIRD PARTIES. IN VIEW OF THE ABOVE FINDINGS, THE CIT(A) HELD THAT THERE IS NO TDS LIABILITY IN RESPE CT OF PRINTED MATERIAL PURCHASED AND THEREFORE THE DEMAND RAISED U/S 201(1) IN RESPECT OF RS. 2,26,65,453/- WAS ORDERED TO BE DELE TED ALONG WITH INTEREST U/S 201(1A) OF THE IT ACT. 9. AS REGARDS THE ITEM NO. XVI FOR AN AMOUNT OF RS. 2,46,000/- TOWARDS PRINTER HEAD REPAIRING, THE CIT(A) HELD THA T THIS AMOUNT DOES NOT ATTRACT THE PROVISIONS OF TDS. HOWEVER, IT EM NO. XV AS ADMITTED BY THE ASSESSEE HAD BEEN MADE TOWARDS ADVE RTISEMENT CHARGES FOR RECRUITMENT TO M/S USHODAYA ENTERPRISES LTD. WITHOUT DEDUCTION OF TAX AT SOURCE, THE CIT(A) HELD THAT SI NCE THE ASSESSEE HAD ADMITTED THAT THERE WAS LIABILITY TO DEDUCT TAX BUT NO TDS WAS MADE ON THE AMOUNT OF RS. 3,17,104/- AND THE DEDUCT EE HAD PAID TAXES IN THE RETURN FILED BY IT, THE DEMAND U/S 201 (1) WAS DELETED, BUT HE RETAINED THE INTEREST U/S 201(1A), WHICH IS MANDATORY. 7 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. 10. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. THE ORDER OF THE CIT(A) IS CONTRARY TO LAW. THE CIT(A) OUGHT TO HAVE SUSTAINED THE ORDER U/S 201 & 201(1A) OF THE ACT. 2. THE CIT(A) OUGHT TO HAVE HELD THAT THE DIVIDEND ALLOWED TO NON PRIZED SUBSCRIBERS, BY DUE DRAWAL OF THE CHITS, PARTAKES THE CHARACTER OF INTEREST AND HENCE THE ASSESSEE IS UNDER LEGAL OBLIGATION TO CAUSE DEDUCTION OF TAX AT SOURCE U/S 194A OF THE INCOME-TAX ACT. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE EXPRESS ION INTEREST AS DEFINED IN SECTION 2(28A) OF THE INCOME TAX ACT IS WIDE ENOUGH TO COVER DIVIDEND IN QUESTION BEING PAID TO THE SUBSCRIBERS BY A CHIT FUND COMPANY. 4. THE CONCEPT OF INTEREST AS DEVELOPED IN THE CO MMERCIAL WORLD MEANS THE AMOUNT PAID BY WAY OF COMPENSATION FOR THE DEFERRED PAYMENT OF THE SUM DUE. THE NON PRIZED SU BSCRIBER BY REASON OF POSTPONING HIS ENTITLEMENT TO DRAW CHI T, GETS PAID WHAT IS CALLED A DIVIDEND, WHICH IS NOTHING BUT AN EUPHEMISTIC EXPRESSION FOR INTEREST. THEREFORE, THE ASSESSEE IS OBLIGED TO CAUSE DEDUCTION OF TAX AT SOURCE, WHILE REMITTING D IVIDEND OR INTEREST AS THE CASE MAY BE. 5. THE CIT(A) DID NOT CONSIDER, OR ATTACH ANY SIGNI FICANCE TO THE EXPRESSION IN RESPECT OF SECTION 2(28A) REFERS TO ANY MONEYS BORROWED OR DEBT INCURRED (INCLUDING A DEPOS IT, A CLAIM OR SIMILAR RIGHT OR OBLIGATION). DIVIDEND BEING NOT HING BUT DISCOUNTED AMOUNT FOREGONE BY PRIZED SUBSCRIBER ON ACCOUNT OF HIS DRAWAL OF CHIT, IT IS NOTHING BUT A DEBT INCURR ED BY HIM. THE AMOUNT PAID BY WAY OF DIVIDEND THEREFORE PARTAKES T HE CHARACTER OF INTEREST. THE ASSESSEE, WHO ACTS ON BE HALF OF CHIT SUBSCRIBERS, IS THEREFORE, UNDER LEGAL OBLIGATION T O CAUSE TAX DEDUCTION AT SOURCE. 6. THE EXPRESSION SIMILAR RIGHT OR OBLIGATION FOU ND IN SECTION 2(28A) OF THE IT ACT IS EQUALLY RELEVANT IN THE CONTEXT. IN AS MUCH AS THE NON-PRIZED SUBSCRIBER GETS PAID D IVIDEND ON ACCOUNT OF HIS POSTPONING THE RIGHT OF DRAWAL OF CH IT, SUCH 8 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. DIVIDEND PARTAKES THE CHARACTER OR INTEREST WITHIN THE MEANING OF SAID SECTION. 7. THE CIT(A) ERRED IN HOLDING THAT THE WORK WILL NOT INCLUDE MANUFACTURE AND SUPPLY OF PRODUCTS ACCORDING TO SPE CIFICATION OF CUSTOMERS BY USING MATERIALS PURCHASED FROM THIR D PARTIES AND DELETING TDS DEFAULT U/S 194C. 11. WITH RESPECT TO GROUND NOS. 2 TO 6, THE REVENUE HAS CONTESTED THE DECISION OF THE CIT(A) TO THE EFFECT THAT THE P AYMENT OF DIVIDEND TO THE SUBSCRIBERS DOES NOT PARTAKE THE CHARACTER O F INTEREST AND ACCORDINGLY, THE ASSESSEE IS NOT LIABLE TO DEDUCT T DS U/S 194A OF THE IT ACT. 12. WE FIND THAT THIS ISSUE IN QUESTION IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO. 973/HYD/2011 FOR AY 2008-09 VIDE OR DER DATED 24/02/2012 WHEREIN THE COORDINATE BENCH HELD AS UND ER:- 3. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. AS IS EVIDENT FROM THE ABOVE GROUNDS OF APPEAL, THE ONLY ISSUE THAT AR ISES FOR CONSIDERATION IN THIS APPEAL RELATES TO THE NATURE OF 'DIVIDEND' DISTRIBUTED BY THE ASSESSEE COMPANY TO THE SUBSCRIB ERS OF ITS CHIT FUND SCHEMES EVERY MONTH, AND ASSESSEE'S LIABILITY TO DEDUCT TAX AT SOURCE WHILE DISTRIBUTING SUCH DIVIDEND, SO AS TO W ARRANT DISALLOWANCE IN TERMS OF THE PROVISIONS OF S.40(A)( IA) OF THE ACT. WE FIND THAT VARIOUS COORDINATE BENCHES OF THIS TRIBUN AL, INCLUDING THE ONES AT HYDERABAD, HAVE TAKEN A CONSISTENT VIEW ON THE POINT AT ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE. W E MAY REFER TO A FEW OF THEM HEREIN FOR READY REFERENCE. 4. EXAMINING THE NATURE OF THE 'DIVIDEND' DISTRIBUT ED BY A CHIT FUND COMPANY AMONG ITS CHIT SUBSCRIBERS AND CONSEQUENT L IABILITY OF THE ASSESSEE TO DEDUCT TAX IN RELATION THERETO, IN THE CONTEXT OF PROCEEDINGS INITIATED BY THE ASSESSING OFFICER, UND ER S.201 AND 201(1A) OF THE ACT, DEALING WITH THE CROSS-APPEALS IN THE CASE OF VIPANCHI CHIT FUNDS LTD., (ITA NO.804-805/HYD/2011) , THE TRIBUNAL VIDE ITS ORDER DATED 11TH AUGUST, 2011, FOLLOWING T HE EARLIER DECISIONS OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF 9 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. MARGA SOOCHI CHIT PVT. LTD. IN ITA NO.965/BANG/2008 );BESIDES OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SAHIB C HITS(DELHI)(P)LTD. IN I.T.A. NO.44 OF 2008 DATED 24.7.2009; AND OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V/S. BILAHARI INVESTM ENT PVT. LTD.(288 ITR 39), WHICH HAS BEEN AFFIRMED BY THE APEX COURT IN 299 ITR 1, HELD THAT THE PAYMENT OF DIVIDEND TO THE SUBSCRIBER S OF A CHIT TOWARDS DIVIDEND DOES NOT PARTAKE THE CHARACTER OF INTEREST AND ACCORDINGLY, THE ASSESSEE IS NOT LIABLE TO DEDUCT T DS UNDER S.194A OF THE ACT, AND NOT LIABLE TO INTEREST U/S. 201(1) AND 201(1A) OF THE ACT. 5. FOLLOWING THE ABOVE DECISION OF THE HYDERABAD BE NCH 'B' OF THIS TRIBUNAL, TO WHICH BOTH OF US ARE MEMBERS, IN THE C ASES OF M/S. VINUTNA CHIT FUNDS (P) LTD.(ITA NOS.1280-1281/HYD/2 011 FOR ASSESSMENT YEAR 2006-07 AND 2007-08), VIDE ORDER DA TED 31.10.2011, HELD THAT THE ASSESSEE-COMPANY IN THOSE CASES IS NOT LIABLE TO DEDUCT TDS U/S. 194A OF THE ACT AND NOT L IABLE FOR INTEREST U/S. 201(1) AND 201(1A) OF THE ACT, AND CONSEQUENTL Y, DISMISSED THE APPEALS OF THE REVENUE. 6. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN THE CASES OF M/S. VINUTNA CHIT FUNDS (P) LTD. (ITA NOS.1280-1281/HYD/ 2011 FOR ASSESSMENT YEARS 2006-07 AND 2007-08), NOTED ABOVE, HYDERABAD BENCH 'A' OF THE TRIBUNAL, TO WHICH AGAIN BOTH OF U S ARE PARTIES, IN THE CASES OF ITO V/S. LAXMAN CHIT FUND & FINANCE (P ) LTD., HYDERABAD (ITA NOS.526 TO 529/HYD/2011 FOR ASSESSME NT YEARS 2004-05 TO 2007-08), HELD THAT THE ASSESSEE-COMPANY IN THOSE CASES WAS NOT LIABLE TO DEDUCT TDS U/S. 194A OF THE ACT AND NOT LIABLE FOR INTEREST U/S. 201(1) AND 201(1A) OF THE ACT, AND CONSEQUENTLY, DISMISSED THE APPEALS OF THE REVENUE. 7. THOUGH THE REVENUE SOUGHT TO DISTINGUISH THE DEC ISION OF THE MADRAS HIGH COURT IN THE CASE OF BILAHARI INVESTMEN TS (SUPRA) AND OTHER DECISIONS, REFERRED TO BY THE CIT(A) IN THE I MPUGNED ORDER AND ALSO CITED CERTAIN DECISIONS IN THE GROUNDS OF THIS APPEAL, IN THE ABSENCE OF ANY CONTRARY DECISION OF JURISDICTIONAL HIGH COURT OR APEX COURT BROUGHT TO OUR NOTICE BY THE REVENUE, WE ARE INCLINED TO FOLLOW THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL IN SIMILAR MATTERS, DISCUSSED ABOVE RENDERED BY THE COORDINATED BENCHES OF THIS TRIBUNAL, TO SOME OF WHICH BOTH OF WHICH ARE PARTIE S, INVOLVING THE DETERMINATION OF NATURE OF 'DIVIDEND' DISTRIBUTED B Y THE ASSESSEE- COMPANY AMONG ITS CHIT SUBSCRIBERS MONTH AFTER MONT H, AND ALSO FOLLOWING IN THAT PROCESS THE DECISION OF THE HON'B LE MADRAS HIGH COURT IN THE CASE OF BILAHARI INVESTMENTS (P)LTD.(2 88 ITR 39), AND HOLD THAT THE DIVIDEND DISTRIBUTED BY THE ASSESSEE HEREIN DOES NOT PARTAKE THE CHARACTER OF 'INTEREST', AND CONSEQUENT LY, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE. 10 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. 8. WE ARE FORTIFIED IN FOLLOWING THE CONSISTENT VIE W TAKEN BY THE DECISION IN SIMILAR MATTERS BY THE RATIO OF THE DEC ISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V/S. L.G.RAMAMURTHY A ND OTHERS (110 ITR 453), WHEREIN EMPHASIZING THE NECESSITY OF UNIF ORM CONCLUSION ON SAME MATTER, AND SCOPE OF ADJUDICATION BY A TRIB UNAL, IT HAS BEEN HELD BY THE HON'BLE HIGH COURT AS FOLLOWS- 'NO TRIBUNAL OF FACT HAS ANY RIGHT OR JURISDICTION TO COME TO A CONCLUSION ENTIRELY CONTRARY TO THE ONE REACHED BY ANOTHER BENCH OF THE SAME TRIBUNAL ON SAME FACTS. IT MAY BE THAT THE MEMBERS WHO CONSTITUTED THE TRIBUNAL AND DECIDED ON THE EARLIER OCCASION WERE DIFFERENT FROM THE MEMBERS WH O DECIDED ON THE PRESENT OCCASION. BUT WHAT IS RELEVANT IS NO T THE PERSONALITY OF THE OFFICERS PRESIDING OVER THE TRIB UNAL OR PARTICIPATING IN THE HEARING BUT THE TRIBUNAL AS AN INSTITUTION. IF IT IS TO BE CONCEDED THAT SIMPLY BECAUSE OF THE CHANGE IN THE PERSONNEL OF THE OFFICERS WHO MANNED THE TRIBUN AL, IT IS OPEN TO THE NEW OFFICERS TO COME TO A CONCLUSION TO TALLY CONTRADICTORY TO THE CONCLUSION WHICH HAD BEEN REAC HED BY THE EARLIER OFFICERS MANNING THE SAME TRIBUNAL, ON THE SAME SET OF FACTS, IT WILL NOT ONLY SHAKE THE CONFIDENCE OF THE PUBLIC IN JUDICIAL PROCEDURE AS SUCH, BUT IT WILL ALSO TOTALL Y DESTROY SUCH CONFIDENCE. THE RESULT OF THIS WILL BE CONCLUSIONS BASED ON ARBITRARINESS AND WHIMS AND FANCIES OF THE INDIVIDU ALS PRESIDING OVER THE COURTS OR THE TRIBUNALS AND NOT REACHED OBJECTIVELY ON THE BASIS OF THE FACTS PLACED BEFORE THE AUTHORITIES. IF A BENCH OF A TRIBUNAL ON THE IDENTICAL FACTS IS ALLOWED TO COME TO A CONCLUSION DIRECTLY OPPOSED TO THE CONCLU SION REACHED BY ANOTHER BENCH OF THE TRIBUNAL ON AN EARL IER OCCASION, THAT WILL BE DESTRUCTIVE OF THE INSTITUTI ONAL INTEGRITY ITSELF. ....' IN THIS VIEW OF THE MATTER, THE PROVISIONS OF S.40( A)(IA) OF THE ACT ARE NOT ATTRACTED, AND ACCORDINGLY THE CIT(A) WAS J USTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY RESORTING TO DISALLOWANCE IN TERMS OF S.40(A)(IA) OF THE ACT.. W E ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPE AL OF THE REVENUE. 13. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICA L TO THE ONE DECIDED BY THE COORDINATE BENCH IN ASSESSEES OWN C ASE FOR AY 2008-09 (SUPRA), RESPECTFULLY FOLLOWING THE SAME WE CONFIRM THE 11 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. ORDER OF THE CIT(A) AND WE DISMISS THE GROUNDS 2 TO 6 OF THE REVENUE. 14. IN GROUND NO. 7 THE REVENUE HAS CONTESTED THE D ECISION OF THE CIT(A) HOLDING THAT EXPENDITURE INCURRED ON PURCHAS E OF VARIOUS ITEMS DID NOT PARTAKE THE CHARACTER OF THE PAYMENTS UNDER THE WORKS CONTRACT AND TAX WAS DEDUCTIBLE U/S 194C, WHI CH WAS NOT DEDUCTED. 15. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SIVAK UMAR SUBMITTED BEFORE US THAT IT CAN BE SEEN FROM THE DETAILS OF T HE ITEMS AT 1 TO 14, THE ASSESSEE PURCHASED PRINTED STATIONERY ETC., FOR RS. 2,26,65,453/-. THE LEARNED COUNSEL SUBMITTED THAT I T PURCHASED ALL THESE ITEMS WITH THE ASSESSEES LOGO ON THE ITEMS A ND THAT NO WORK WITHIN THE MEANING OF SECTION 194C OF THE IT ACT IS CARRIED OUT BY THE PARTIES SO AS TO ATTRACT THE PROVISIONS OF SECT ION 194C OF THE IT ACT. IT WAS SUBMITTED THAT IT HAD PAID SALES TAX ON PURCHASE OF ALL THE SAID ITEMS. THE LEARNED COUNSEL INVITED OUR ATT ENTION TO THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CI T VS. GLENMARK PHARMACEUTICALS LTD., 324 ITR 199 (BOM) WHEREIN THE BOMBAY HIGH COURT TOOK NOTE OF THE AMENDMENT TO SEC. 194C (W.E. F. 01/10/2009 AND HELD THAT WORK DOES NOT INCLUDE MANUFACTURE AND SUPPLY OF PRODUCTS ACCORDING TO SPECIFICATION OF CUSTOMERS BY USING MATERIALS PURCHASED FROM THIRD PARTIES. THE LEARNED COUNSEL ALSO RELIED UPON THE FOLLOWING CASES IN SUPPORT OF ITS CASE: 1. BDA LTD. VS. ITO, 281 ITR 99 (BOM.) 2. CIT VS. DY. CHIEF ACCOUNTS OFFICER, MARKFED, KHA NNA 304 ITR 17 (P&H) 3. CIT VS. DABUR INDIA LTD., 283 ITR 197 (DEL.) 4. CIT VS. REEBOK INDIA CO., 306 ITR 124 (DEL.) 12 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. 5. CIT VS. GIRNAR FOOD AND BEVERAGES PVT. LTD., 306 ITR 23 (GUJ) 6. CIT VS. HINDUSTAN LEVER LTD. 306 ITR 25 (GUJ.) 7. ITO VS. MILAN DAIRY FOODS (P) LTD., 7 SOT 901 DE L. 8. ITO VS. DR. WILMAR SCWAABE INDIA (P) LTD., 95 TT J 53 DEL. 9. WADILAL DAIRY INTERNATIONAL LTD. VS. ACIT 81 ITD 238 (PUNE) 10. JINDAL PHOTO FILMS LTD. VS. ITO, 5 SOT 272 DEL. 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSING THE RECORD AS WELL AS DECISIONS CITED. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE JUDICIAL PRONOUNCEMENTS CITED AT P ARA 15, WE HOLD THAT THE EXPENDITURE TO THE EXTENT OF RS. 2,26,65,4 53/- DOES NOT ATTRACT THE PROVISIONS OF SECTION 194C OF THE ACT. 17. THE LAST ISSUE IS WITH RESPECT TO THE EXPENDITU RE OF RS. 3,17,104/- TOWARDS ADVERTISEMENT CHARGES PAID TO M/ S USHODAYA ENTERPRISES LTD., FOR WHICH DEMAND WAS RAISED BY TH E AO U/S 201(1), THE CIT(A) DELETED THE SAME, HOWEVER, THE C IT(A) HAS SUSTAINED THE INTEREST U/S 201(1A) RELATING THERETO . 18. WITH RESPECT TO THIS ISSUE, WE UPHOLD THE ORDER OF THE CIT(A) RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LD. VS. CIT, 293 I TR 226 (SC) WHEREIN IT HAS BEEN HELD THAT WHERE DEDUCTEE, RECIP IENT OF INCOME, HAS ALREADY PAID TAXES ON AMOUNT RECEIVED FROM DEDU CTOR, DEPARTMENT ONCE AGAIN CANNOT RECOVER TAX FROM DEDUC TOR ON SAME INCOME BY TREATING DEDUCTOR TO BE ASSESSEE-IN-DEFAU LT FOR SHORTFALL IN ITS AMOUNT OF TAX DEDUCTED AT SOURCE. THE APEX C OURT ALSO REFERRED TO THE CBDT CIRCULAR NO. 275/201/95-IT(B), DATED 29/01/1997. HOWEVER, THIS WILL NOT ALTER THE LIABIL ITY TO CHARGE INTEREST, THEREFORE, THEREFORE, WE CONFIRM THE ORDE R OF THE CIT(A) 13 ITA NO. 1119/HYD/2012 M/S MARGADARSHI CHIT FUND (P) LTD. FOR CHARGING OF INTEREST TILL THE DATE OF PAYMENT O F TAX BY THE ASSESSEE. 19. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 07/12/2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 7 TH DECEMBER, 2012 KV COPY TO:- 1) ACIT, CIR-14(2)(TDS), HYDERABAD. 2) M/S MARGADARSHI CHIT FUND P. LTD., 5-10-195, FATEH MAIDAN OPP: POLICE CONTROL ROOM, HYDERABAD 500 00 4. 3) THE CIT(A)-II, HYDERABAD 4) CIT(TDS), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYD ERABAD.