DCIT, Trichy V. Parameswari Textiles, Karur

ITA 1153/CHNY/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9908 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: N QUADIR HOSEYN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . !' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO. 1153/MDS/2015 / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), TRICHY 620 001. APPELLANT) V. M/S. PARAMESWARI TEXTILES, NO.1-B, KULATHUPALAYAM ROAD, VENGAMEDU POST, KARUR-639 006. PAN AAAFP6753H RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT / RESPONDENT BY : SHRI N. QUADIR HOSEYN, ADVOCATE ! / DATE OF HEARING : 30.06.2015 '# ! / DATE OF PRONOUNCEMENT: 09.07.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 5. 2.2015. - - ITA 1153/15 2 2. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD T O GRANTING OF DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF INCOME FROM WINDMILL BUSINESS WITHOUT SETTING OFF OF LOSS FOR THE EARLIE R ASSESSMENT YEARS. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN OUR OPINION, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE JURIS DICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (340 ITR 477). THE LD. DR IS NOT ABLE TO PLAC E BEFORE US ANY JUDGMENT CONTRARY TO THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. L TD. (SUPRA). BEING SO, IN OUR OPINION, THE ISSUE, AS OF NOW, IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THE JURISDICTIONAL HIGH COURT CITED SUPRA, WHICH IS BINDING TO THE PRECEDENT TO BE FOLLOWED. ACCORDINGLY, WE ARE INCL INED TO DISMISS THE GROUND TAKEN BY THE REVENUE. 4. THE NEXT GROUND IN THIS APPEAL IS WITH REGARD TO DELETING THE ADDITION OF ` 7,60,425/-, WHICH REPRESENTS MEMBERSHIP FEE PAID TO M/S. KARUR EFFLUENT TREATMENT PLANT WITHOUT DEDUCTION OF TDS. - - ITA 1153/15 3 5. THE BRIEF FACT OF THE CASE ARE THAT THE ASSESSIN G OFFICER DISALLOWED THE MEMBERSHIP FEE OF ` 7,60,425/- MADE TO M/S. KARUR COMMON EFFLUENT TREATMENT PLANT U/S.40A(IA) O F THE ACT FOR MAKING PAYMENT WITHOUT DEDUCTING TDS. THE LD. AR SUBMITTED THAT THE ASSESSEE IS A MEMBER IN M/S. KAR UR COMMON EFFLUENT TREATMENT PLANT. THE PAYMENT OF ` 7,60,425/- WAS MADE ONLY AS A MEMBERSHIP FEE AND NOT AS A PAYMENT FOR CLAIMING SUB CONTRACT OF WORK. THEREFORE, THERE IS NO LIABILITY ARISES UNDER SEC.194C OF THE ACT. ACCEPTING THE CO NTENTION OF THE ASSESSEE, THE CIT(APPEALS) OBSERVED THAT ONCE T HERE IS NO CONTRACTOR AND CONTRACTEE RELATIONSHIP, LIABILITY U /S.194C DOES NOT ARISE AND HENCE, THE ASSESSEE IS NOT REQUIRED TO D EDUCT TDS ON THE MEMBERSHIP FEE PAID TO M/S. KARUR COMMON EFFLUE NT TREATMENT PLANT. ACCORDINGLY, THE CIT(APPEALS) DIR ECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. BEFORE THE AO, THE ASSESSEE CLAIMED EFF LUENT TREATMENT EXPENSES AND NO EVIDENCE WAS PRODUCED REG ARDING - - ITA 1153/15 4 THE NATURE OF EXPENDITURE. HOWEVER, BEFORE THE CIT (APPEALS), THE ASSESSEE CLAIMED IT AS PAYMENT MADE TOWARDS MEM BERSHIP FEE. HENCE, WE ARE INCLINED TO REMIT THE ISSUE BAC K TO THE FILE OF THE AO TO EXAMINE THE NATURE OF PAYMENT. IF IT IS AN EXPENDITURE TOWARDS EFFLUENT TREATMENT, PROVISIONS OF SEC.40(A) (IA) ARE APPLICABLE. HOWEVER, THE SAME SHOULD BE CONSIDERED IN THE LIGHT OF THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF N. PALANIVELU V. ITO (40 ITR (TRIB) 325), WHEREIN I T WAS HELD AS UNDER : WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CIT (2012) 16 ITR (TRIB) 1 (VISAKHAPATNAM) (SB) AND JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P.) LTD. IN I.T.A.NO.122 OF 2013 DATED JU LY 9, 2013 (2013) 357 ITR 642 (ALL) HELD THAT SECTION 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTA NDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVAN T TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, TH E DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUND RY CREDITORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. - - ITA 1153/15 5 WITH THIS OBSERVATION, WE REMIT THIS ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 9 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- ( . $ % ) ( & ' ( ) ) *+,-./01023 45067.082290.:3 ; $< /JUDICIAL MEMBER ! $<=>>2-6?06?@ABCA. &; /CHENNAI, D$ /DATED, THE 9 TH JULY, 2015. MPO* $E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I3 /CIT(A) 4. I /CIT 5. GJ% K /DR 6. %LM /GF.