ACIT, Coimbatore V. M/s. Vjayaraja & Co., Coimbatore

ITA 1121/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64110 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAGHU
• Assessee Lawyers: K E B RENGARAJAN JR
• Keywords: Condonation of delay
• Section: 194C; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL M EMBER ITA NO.1121/MDS/2011 (ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-II, COIMBATORE. VS. M/S. VIJAYARAJA & CO., NO.120, SENGUPTA STREET, RAM NAGAR, GANDHIPURAM COIMBATORE-641 009. PAN:AACFV1532G (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.E.B .RENGARAJAN, JR.STANDING COUNSEL REVENUE BY : MR. K.RAGHU, C.A. DATE OF HEARING : 23 RD JULY, 2012 DATE OF PRONOUNCEMENT : 7 TH AUGUST, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNING THE ORDER OF THE CIT(A)-I, COIMBATORE DATED 9.2.201 1 RELEVANT TO THE ASSESSMENT YEAR 2007-08. THE ONLY POINT ASS AILED BY THE REVENUE IN APPEAL IS DELETING DISALLOWANCE OF ` 22,66,754/- UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR NON -DEDUCTION OF TDS. 2. THE PRESENT APPEAL HAS BEEN FILED WITH A DELAY OF 39 DAYS. AN APPLICATION FOR CONDONATION OF DELAY HAS B EEN FILED. ITA NO.1121/MDS/2011 2 AN AFFIDAVIT IN SUPPORT OF THE APPLICATION FOR COND ONATION OF DELAY IN FILING OF APPEALS CITING REASONS FOR DELAY IS ALSO FILED. WE HAVE PERUSED THE AFFIDAVIT AND ARE SATISFIED WIT H THE REASONS CAUSING DELAY IN FILING OF THE APPEAL. THUS THE DELAY OF 39 DAYS IN FILING OF THE APPEAL IS CONDONED AN D THE APPEAL IS ADMITTED TO BE HEARD ON MERITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING INCOME OF ` 44,12,060/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 7.8.2008. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 29.1 2.2009 HELD THAT NO TDS WAS DEDUCTED ON PAYMENT MADE TO S HRI G.S.SUBRAMANIAM FOR THE BILL AMOUNTING TO ` 21,53,688/- AND ALSO TO SHRI SUBBIAH FOR WORK BILL AMOUNTING TO ` 1,13,066/-. THE ASSESSING OFFICER DISALLOWED THESE AMOUNTS [TOT ALING TO `22,66,754 /-]UNDER SECTION 40(A)(IA) FOR NON-DEDUCTION OF TDS. ITA NO.1121/MDS/2011 3 AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A), INTER-ALIA, ASSAILING THE ADDITION MADE BY THE ASSESSING OFFICER. THE CIT(A) VIDE ORDER DATED 9.2.2011 ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE HOLDING THAT SINCE THE EXPENDITURE HAS NOT BEEN CLAIMED AS A DEDUCTION IN COMPUTING THE PROFITS OF THE APPELLANT FOR THE ASSESSMENT YEAR 2007-08 THE PROVI SIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. 4. SHRI K.E.B.RENGARAJAN, REPRESENTING THE DEPARTME NT SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TDS UND ER SECTION 40(A)(IA). THE DR SUBMITTED THAT EVEN IF TH E AMOUNT IS SHOWN AS WORK-IN-PROGRESS IN THE BALANCE SHEET, TDS IS LIABLE TO BE DEDUCTED ON THE BILLS OUTSTANDING. THE DR ST RONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER ON TH E ISSUE. 5. ON THE OTHER HAND, SHRI K.RAGHU, AUTHORIZED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) IS A WELL-RE ASONED ORDER, THEREFORE, THE SAME SHOULD BE SUSTAINED. ITA NO.1121/MDS/2011 4 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RESPEC TIVE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE CIT (A) AND THE ASSESSING OFFICER. THE PROVISIONS OF SECTION 1 94C OF THE ACT PROVIDES FOR THE PAYMENT TO CONTRACTORS AND DED UCTION OF TAX THEREON. THE RELEVANT EXTRACT OF SECTION 194C I S REPRODUCED HEREIN BELOW:- 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIM E OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I) ONE PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II) TWO PER CENT WHERE THE PAYMENT IS BEING MADE O R CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY. ITA NO.1121/MDS/2011 5 FURTHER, THE PROVISIONS OF SECTION 40(A)(IA) PROVID ES AS UNDER:- 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [38], THE FOLLOWING AMOUNTS SHALL NO T BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', (A) IN THE CASE OF ANY ASSESSEE (IA) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FO R TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNT S PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPP LY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED I N SUB-SECTION (1) OF SECTION 139 7. THE SINE QUA NON FOR ATTRACTING THE PROVISIONS OF SECTION 194C IS THAT INTEREST, COMMISSION OR BROKERAGE, PR OFESSIONAL FEE ETC. CREDITED OR PAID TO A CONTRACTOR FOR CARRY ING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT AN Y WORK ON WHICH TAX IS DEDUCTIBLE AT SOURCE. IN THE PRESENT C ASE, SINCE THE ASSESSEE HAS NOT CLAIMED THE EXPENDITURE ON ACC OUNT OF PAYMENT OF ANY LABOUR CHARGES AND NO TDS IS TO BE ITA NO.1121/MDS/2011 6 DEDUCTED ON PURCHASE OF THE MATERIAL. THEREFORE, TH E PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. THE CIT(A) HAS RIGHTLY POINTED OUT THAT SINCE THE EXPENDITURE HAS NOT BEEN CLAIMED AS DEDUCTION IN COMPUTING THE PROFITS, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE . WE CONCUR WITH THE FINDING OF THE CIT(A) AND UPHOLD THE SAME . THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED B EING DEVOID OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, TH E 7 TH DAY OF AUGUST, 2012 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) ( VIKAS AWASTHY ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 7 TH AUGUST, 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .