Income Tax Officer, Ward-2, Nizamabad V. M/s. Maruthi Movies, Nizamabad

ITA 1138/HYD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6146 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 01-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2012
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Section: 143(3); 194C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ITA NO. 1138/HYD/2012 ASSESSMENT YEAR: 2006-07 ITO, WARD 2, NIZAMABAD VS. M/S MARUTHI MOVIES, NIZAMABAD. PAN AACFM 2765N (APPELLANT) (RESPONDENT) REVENUE BY : SMT. SUMAN MALIK ASSESSEE BY : NONE DATE OF HEARING : 13-02-2017 DATE OF PRONOUNCEMENT : 17-02-2017 ORDER PER G. PAVAN KUMAR, J.M.: THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD VIDE ITA. NO. 0276/11-12/C IT(A)- VI/, DATED 25-05-2012. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LEARNED CIT(A) ERRED BOTH THE FACTS AND LAW . 2. THE LEARNED CIT(A) ERRED IN APPRECIATING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND DIRECTIONS OF THE HON 'BLE ITAT VIDE ORDER IN ITA NO.1163/HYD/09 DATED.31. J 2.20 1 0. 3. THE LEARNED CIT(A) ERRED IN APPRECIATING THE GRO UNDS OF APPEAL OF THE ASSESSEE AND ALLOWED ON THE GROUNDS W HICH IS NOT PRAYED BY THE ASSESSEE. 4. THE CIT(A) ERRED IN HOLDING THAT THE SECTION 40( A)(IA) OF INCOME-TAX ACT,196. THE VERY SECTION HAS NOT GIVEN LIBERTY TO THE ASSESSEE THAT THE TDS SHOULD NOT BE DEDUCTED ON THE AMOUNTS/EXPENDITURE HAS ALREADY BEEN PAID. 2 ITA NO. 1138/HYD/2012 M/S MARUTHI MOVIES, HYD. 5. THE PROVISION U/S.40(A)(IA) HAS NOT DISCUSSED TH AT THE TDS IS APPLICABLE ONLY ON THE AMOUNTS OUTSTANDING AS ON 31 ST MARCH OF THE RESPECTIVE YEAR. 6. THE CIT(A) OUGHT TO HAVE AFFORDED AN OPPORTUNITY TO THE AO BEFORE DETERMINING THAT AMOUNTS HAVE WITHOUT DOUBT ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR. 7. THE ORDER OF THE CIT(A) IS DEFEATING THE VERY PU RPOSE 01' INTRODUCING THE TDS PROVISIONS AND 40(A)(IA) OF INC OME-TAX ACT, 1961. 8. THE CIT(A) IS OUGHT TO HAVE BEEN DISTINGUISH THE APPLICABILITY OF PROVISIONS U/S.194.1 & 194C HAS NOT DONE. 9. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS IN BUSINESS OF FILM DISTRIBUTION AND FILED THE R ETURN OF INCOME ON 31-10-2006 FOR THE A.Y. 2005-06 ADMITTING TOTAL INCOME OF RS. 2,66,380/- AND ASSESSMENT ORDER U/S 1 43(3) OF THE ACT WAS PASSED ON 31.12.2008, DISALLOWING RS . 95,31,855/- PAID TOWARDS PRINTING & PROCESSING CHAR GES TO THE FILM LABORATORIES U/S 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TAX. 2.1 SUBSEQUENTLY, THE TRIBUNAL IN ITA NO. 1163/HYD/ 2009, DT. 31/12/2010 HAS SET ASIDE THE SAID ASSESSM ENT TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE APPLICABILITY OF PROVISIONS OF SECTION 194C OF THE ACT TO THE PRINTING & PROCESSING CHARGES. AS PER THE DIRECTION S, THE LD. AO ISSUED NOTICE U/SEC. 143(2) AND ALSO SHOW CA USE NOTICE DATED 17/12/2011. IN REPLY TO SHOW CAUSE NOT ICE, THE LD. AR OF THE ASSESSEE APPEARED AND FILED WRITT EN SUBMISSIONS REFERRED AT PAGE 3 TO 6 AT PARA 4 OF TH E ORDER EXPLAINING THE APPLICABILITY, LEGAL PROVISIONS AND DECISIONS. 3 ITA NO. 1138/HYD/2012 M/S MARUTHI MOVIES, HYD. BUT LD. AO TREATED THE PAYMENT AS CONTRACTUAL PAYME NT AND DISALLOWED THE PRINTING AND PROCESSING CHARGES PAID TO THE FILM LABORATORIES U/S 40(A)(IA) OF THE ACT AND PASSED ORDER U/SEC. 143(3) RWS 253 OF THE ACT DT. 30-12-20 11. 3. AGGRIEVED BY THE ADDITION, THE ASSESSEE HAS FILE D AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDI NGS, THE LD.CIT(A), ON THE ISSUE OF PAYMENT TOWARDS PRINTING AND PROCESSING CHARGES TO FILM LABORATORIES, RELIED ON THE DECISION OF THE SPECIAL BENCH OF THE ITAT VISAKHAP ATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORT VS ACIT IN ITA NO. 477/VIZ/2008 DATED 29-03-2012 AND ALLOWED THE APPEAL AND OBSERVED AT PAGE 3 PARA 4 & 5, WHICH REA D AS UNDER: 4.0 THE ASSESSEE HAS PAID PRINTING AND PROCESSING CHARGES TO FILM LABORATORIES WHICH HAVE BEEN DISALL OWED U/S 40(A)(IA). THESE AMOUNTS HAVE WITHOUT DOUBT ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR ITSELF AND THERE IS NO AMOUNT LEFT PAYABLE AT THE END OF THE Y EAR. THE ASSESSEE'S CASE IS THUS, SQUARELY COVERED BY TH E DECISION OF THE ITAT, SPECIAL BENCH, VISHAKHAPATNAM IN ITA NO. 477/VIZ/200S DATED 29.3.2012 IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS V ADDL. CIT WHICH HELD THAT SECAO(A)(IA) IS APPLICABLE ONLY TO EXPEND ITURE WHICH IS PAYABLE ON 31ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW AMOUNTS WHICH HAVE ALREADY BEEN PAID DURING THE YEAR. 5.0 IN THE LIGHT OF THIS DECISION, THE QUESTION WHE THER THE APPROPRIATE SECTION FOR TDS MAY BE SEC.194J OR 194C BECOMES ACADEMIC AND IS NOT ADJUDICATED UPON. THE ASSESSEE'S APPEAL IS ALLOWED. 4. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED AN APPEAL. AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE AND WE PROCEED TO DISPOS E OF 4 ITA NO. 1138/HYD/2012 M/S MARUTHI MOVIES, HYD. THE APPEAL AFTER HEARING THE LD. DR AND ON MERITS O F THE CASE. 5. WE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD AND JUDICIAL DECISIONS. THE ONLY SUBSTANTIVE GROUND ARGUED BY THE REVENUE BEING THAT THE CIT(A) HAS ERR ED IN DELETING THE DISALLOWANCE OF PAYMENTS MADE IN THE FINANCIAL YEAR WITHOUT DEDUCTION OF TDS AND THE AMO UNT WAS NOT REMAINING OUTSTANDING AT THE END OF THE FIN ANCIAL YEAR. THE LD. CIT(A) RELIED ON THE DECISION OF THE MERILYN SHIPPING & TRANSPORT VS ACIT IN ITA NO. 477/VIZ/200 8 DATED 29-03-2012 CITED (SUPRA) AND GRANTED RELIEF T O THE ASSESSEE AND WHERE THERE IS NO AMOUNT IS OUTSTANDIN G AT THE END OF THE ACCOUNTING YEAR/FINANCIAL YEAR DISAL LOWANCE U/S 40(A)(IA) OF THE IT ACT CANNOT BE APPLIED. THE ABOVE SAID DECISIONS WAS CONSIDERED BY THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING S ERVICES (P) LTD., [38 TAXMANN.COM (ALL)] WHICH CONFIRMED TH E SPECIAL BENCH DECISION, WE AGREE WITH THE DECISION OF THE SPECIAL BENCH AS APPROVED BY THE HIGHER JUDICIAL FO RUMS AND FOLLOW THE JUDICIAL PRECEDENCE. WE ARE OF THE OPINION THAT THIS COORDINATE BENCH OF THE TRIBUNAL IS BIND BY THE DECISION OF THE SPECIAL BENCH. SIMILAR ISSUE WAS D EALT BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS M/S. JANAPRIYA PROPERTIES PVT. LTD., IN ITA NOS. 1614 & 1622 TO 1624/HYD/2012 DATED 19-01-2015 HELD AT PARA 7 WHICH IS READ AS UNDER: 7. UPON HEARING THE RIVAL SUBMISSIONS, WE ARE OF T HE VIEW THAT THE DECISION OF THE ITAT SPECIAL BENCH IS BIND ING ON THE TRIBUNAL, PARTICULARLY IN VIEW OF THE CLARIFICATORY ORDER PASSED BY THE HONBLE HIGH COURT OF JUDICATURE AT HYDERABA D IN THE INSTANT CASE, AND THUS, WE RESPECTFULLY FOLLOW THE DECISION OF 5 ITA NO. 1138/HYD/2012 M/S MARUTHI MOVIES, HYD. SPECIAL BENCH IN THE CASE OF MERILYIN SHIPPING & TR ANSPORT (SUPRA) AND HOLD THE PROVISIONS OF S. 40(A)(IA) CAN NOT BE INVOKED WHERE THE PAYMENTS WERE ALREADY MADE BY THE ASSESSE E. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. IN THE R ESULT, APPEALS OF THE REVENUE INSOFAR AS THE ABOVE ISSUE IS CONCER NED, ARE HEREBY DISMISSED. 7.1 WE RESPECTFULLY FOLLOW THE COORDINATE BENCH DE CISION AND FIND THAT THE LD. CIT(A) HAS DEALT ON THE PROVI SIONS OF THE ACT AND JUDICIAL DECISIONS AND CONSIDERED THE ASSESSEES EXPLANATIONS VIS-A-VAS FINDINGS OF THE A.O. AND ALLOWED THE APPEAL. ACCORDINGLY WE ARE NOT INCLINE D TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHELD THE SAME AND DISMISS THE REVENUES GROUNDS OF APPEAL. 8. IN THE RESULT THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) (G.PAVAN KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 17 TH FEBRUARY, 2017 KRK COPY TO 1) ITO, WARD 2, NIZAMABAD 2) M/S MARUTHI MOVIES, 5-5-114, KHALLELWADI, NIZ AMABAD. 3) CIT(A) -VI HYDERABAD 4) CIT V, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE