ACIT, Nanded V. Bhaurao Chavan SSK Ltd, Nanded

ITA 1172/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84907 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-10-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Assessee Lawyers: SHUBHADA A KOPPA
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1172 /PN/20 1 2 ASSESSMENT YEAR : 200 4 - 05 ACIT, CIR. - 3, NANDED VS. BHAUR AO CHAVAN S.S.K. L TD., AT LAXMI NAGAR, DEGAON - YELEGAON, TQ. - ARDHAPUR, DISTT. - NANDED (APPELLANT) (RESPONDENT) PAN NO. AAAAB0959Q APPELLANT BY: SMT. S. PRAVEENA RESPONDENT BY: SHRI S HUBHADA A. KOPPA DATE OF HEARING : 16 - 0 7 - 2014 DATE OF PRO NOUNCEMENT : 26 - 08 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL , THE REVENUE HAS CHALLENGED T HE IMPUGNED ORDER OF THE LD. CIT(A) , AURANGABAD DATED 20 - 03 - 2012 FOR THE A.Y. 200 4 - 05. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. WHET HER O THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS CORRECT IN ALLOWING PROVISION MADE BY THE ASSESSEE FOR PAYMENT O F VSI CONTRIBUTION THOUGH IS NOT ACTUALLY PAID & DELETING THE ADDITION AND BY IGNORING THE PROVISIONS OF SEC. 35(1)(II) & SECTION 4 3(2). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS CORRECT IN DELETING THE ADDITION ON ACCOUNT OF INCOME TAX THOUGH IT WAS NOT THE LIABILITY OF THE ASSESSEE BUT OF H & T CONTRACTORS? AND WHEN IT IS CLEAR THAT THE PAYMENT OF INCOME T AX IS NOT ALLOWABLE? 3. THE ORDER OF THE A.O. BE RESTORED AND THAT THE CIT(A) BE VACATED. . 2 ITA NO. 1172 /PN/2012, BHAURAO CHAVAN S.S.K. LTD., NANDED 2. THE GROUND NO. 1 IS IN RESPECT OF THE PROVISIONS MADE BY THE ASSESSEE FOR PAYMENT OF VSI CONTRIBUTION. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS ENGAGED IN THE MANUFACTURING AND SALE OF SUGAR AND ITS BY - PRODUCTS. SO FAR AS A.Y. 2004 - 05 IS CONCERNED, I T WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE THE PROVISIONS IN RESPECT OF THE ABOVE SAID AMOUNT AND NO PAYMENT WAS MADE TO VASANTDADA SUGAR INSTITUTE. THE PROVISION WAS TO THE EXTENT OF RS.6,22,800/ - . THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A), WHO DELETED THE ADDITION FOLLOWING THE DECISIONS OF THE ITAT, PUNE IN THE CASES OF : (I). VIGHNAHAR SSK LTD. VS. DCIT, CIRCLE - 1, PUNE, ITA NOS. 901 & 902/PN/1995 DATED 15 - 10 - 2003. (II). SHRI DOODHGANGA VEDGANGA SSK LTD. VS. DCIT, ITA NO. 297/PN/1997 DATED 18 - 11 - 2003. (III). PURNA SSK LTD. VS. ACIT, CIRCLE - 3, NANDED, ITA NO. 440/PN/20 07 DATED 31 - 08 - 2007 (IV). ACIT, CIRCLE - 3, NANDED VS. SHANKAR SSK LTD., ITA NO. 805/PN/2005 DATED 20 - 08 - 2007. (V). HUTAMTA JAYANTRAO PATIL SSK LTD. VS. ACIT, CIRCLE - 3, NANDED, ITA NO. 434/PN/2006 DATED 12 - 10 - 2007. 3. THE CONTENTION OF THE ASSESSEE IS THAT THE LIABILITY FOR PAYMENT OF CONTRIBUTION TO VSI HAS NOT BEEN CEASED. THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT O N MERCANTILE BASIS. IT IS ALSO PLEADED THAT THE SAME IS PAYABLE AS AND WHEN DEMAND ED BY CONCERNED AUTHORITY. THE ASSESSEE ALSO PLEADED TH AT THE VSI CONTRIBUTION IS COMPULSORILY PAYABLE BY SUGAR FACTORIES EVERY YEAR AS PER THE DIRECTIONS OF MANTRI COMMITTEE AND THE CONTRIBUTION REQUIRED TO BE MADE IS @ RS.1/ - PER BAG. 4. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AS THE IDENTI CAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE ABOVE REFERRED 3 ITA NO. 1172 /PN/2012, BHAURAO CHAVAN S.S.K. LTD., NANDED CASES AND THE SAME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THOSE CASES HAVING THE IDENTICAL SET OF FACTS AND REASONS. IN OUR OPINION THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, GROUND NO. 1 IS DISMISSED. 5. IN RESPECT OF GROUND NO. 2, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.22,02,523/ - ON ACCOUNT OF INCOME T AX PAID BY THE ASSESSEE. THE ASSESSEE STATED THAT THE TDS OF H & T CONTRACT AMOUNT PAID TO THE CONTRACTORS AND THE ASSESSEE HAS DEPOSITED TDS DEDUCTIBLE ON THE H & T CONTRACT AMOUNT PAID TO CONTRACTOR TO THE EXTENT OF RS.22,02,523/ - FROM ITS O WN FUNDS AND HENCE, THE SAME IS TO BE ALLOWED AS A BUSINESS EXPENDITURE. THE ASSESSEES CONTENTION WAS REJECTED BY THE ASSESSING OFFICER AND HE MADE THE ADDITION TO THE EXTENT OF RS.22,02,523/ - . THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE TDS WAS NOT DEDUCTED FROM THE PAYMENTS MADE TO H & T C ONTRACTORS. IT WAS ALSO PLEADED THAT IF THE TAX IS DEDUCTED FROM THEIR PAYMENTS , THEY MAY NOT COME TO WORK AND THE ASSESSEES BUSINESS WOULD SUFF ER AND HENCE, IT WAS BUSINESS EXPEDIENCY . ON ABOVE REASON THE ASSESSEE ACCORDINGLY, UNDERTOOK THE LIABILITY TO DEPOSIT THE TDS. THE ASSESSEE ALSO PLEADED THAT THE TDS IS NOT THE INCOME TAX OR THE INCOME OF THE ASSESSEE U/S. 40(II) OF THE ACT. THE CONTEN TION OF THE ASSESSEE WAS ACCEPTED BY THE LD. CIT(A) AND HE DELETED THE ENTIRE ADDITION. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. W E HAVE HEARD THE PARTIES. IN THIS CASE IT NOT DISPUTED THAT THE ASSESSEE HAS NOT MADE THE TDS FROM THE PAYMENTS TO H & T C ONTRACTORS. THE LD. COUNSEL ARGUES THAT IF THE TAX IS DEDUCTED FROM THE H & T C ONTRACTORS THEN THERE IS A PROBLEM TO GET THE NEW CONTRACTORS AS THOSE CONTRACTORS MAY NOT TURN UP FOR WORK AS THOSE ARE ILLITERATE PEOPLE. IT IS ALSO CONTENDED THAT THE ASS ESSEE HAS DEPOSITED THE TDS WHICH IS 4 ITA NO. 1172 /PN/2012, BHAURAO CHAVAN S.S.K. LTD., NANDED ADDITIONAL BUSINESS EXPENDITURE AS ADMITTEDLY, NO TDS WAS MADE. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE, THE ASSESSEE IS THE BEST BUSINESS MAN TO DECIDE WHICH EXPENDITURE HE SHOULD INCUR FOR PROTECTING THE INTERE ST IN THE BUSINESS. IN OUR OPINION THE TAX DEPOSITED ON BEHALF OF THE H & T C ONTRACTORS IS THE BUSINESS LIABILITY OF THE ASSESSEE AND SAME IS ALLOWABLE AND THE LD. CIT(A) RIGHTLY HAS ALLOWED THE SAME. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD. CIT(A) FROM THIS ISSUE AND GROUND NO. 2 IS DISMISSED. THE GROUND NO. 3 IS GENERAL IN NATURE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 - 0 8 - 201 4 SD/ - SD/ - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBE R JUDICIAL MEMBER RK /PS PUNE , DATED : 26 TH AUGUST, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE