DCIT, Mohali V. M/s CBSL Cable Networks Ltd., Mohali

ITA 1191/CHANDI/2011

• Counselvise Citation: 119121514 RSA 2011
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Keywords: Business income; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1191/CHD/2011 ASSESSMENT YEAR: 2008-09 THE DCIT, CIRCLE 6(1), VS M/S CBSL CABLE NETWORKS LTD., MOHALI MOHALI PAN NO. AACCC4084F (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAISHREE SHARMA RESPONDENT BY : S/SHRI SUDHIR SEHGAL & NARESH KUMAR DATE OF HEARING : 25.1.2012 DATE OF PRONOUNCEMENT : 05.03.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), CHANDIGARH DATED 4.9.2011 RELATING TO ASSES SMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF SALARY TO 40% AGAINST 50% MADE BY THE ASSESSING OFFICER AND THEREBY GIVING A RELIEF O F RS. 12,78,390/- 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY, DURING THE PERIOD UNDER REFERENCE WAS IN THE BUSINE SS OF SERVICE PROVIDER AND 2 OPERATOR FOR DISTRIBUTION OF CABLE TELEVISION NETWO RK. IT PROVIDED CABLE TELEVISION SERVICES TO THE SUBSCRIBERS THOUGH CABLE COOPERATORS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD DEBITED EXPENSES OF RS. 1,27,83,910/- UNDER THE HEADS SALARY AND ALLOW ANCE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD SHOWN BUSINESS RECEIPTS OF RS. 2,16,68,490/- AGAINST WHICH THE ASSESSEE COMPAN Y HAD DEBITED THE SAID EXPENSES OF RS. 1,27,83,910/- ON ACCOUNT OF SALARY. THE ASSESSING OFFICER OPINED THAT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM AND THE EXPENSES CLAIMED UNDER THIS HEAD WAS ON HIGHER SIDE. HE, TH EREFORE, DISALLOWED RS. 63,91,955/- BEING 50% OF THE TOTAL SALARY CLAIMED B Y THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT (A), THE ASSESSEE FILED A DETAILED WRITTEN SUBMISSIONS WHEREIN IT WAS SUBMITT ED THAT THE COMPANY HAD FILED THE RETURN ON THE BASIS OF AUDITED BOOKS OF A CCOUNT AND THE SALARY HAD BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT AND ALL THE PAYMENT OF SALARY HAVE BEEN MADE BY WAY OF ACCOUNT PAYEE CHEQUE AND NECESS ARY TDS WHEREVER APPLICABLE HAVE BEEN DEDUCTED. IT WAS ALSO EXPLAINE D THAT THE BOOKS OF ACCOUNT WERE NOT AVAILABLE WITH THE COMPANY WHICH H AD BEEN TAKEN OVER IN AUGUST, 2010 AND THEREFORE, DETAILS OF SALARY COULD NOT BE FURNISHED IN A PROPER MANNER DUE TO THE REASONS AS STATED ABOVE. THE ASSESSEE FURNISHED THE DETAILS OF GROSS SALARY ALONGWITH EX.GRATIA DETAILS OF PAYMENTS AND ALSO DETAILS OF NEW EMPLOYEES TO WHOM THE PAYMENT OF JOI NING EXPENSES WERE GIVEN. THE ASSESSEE ALSO FURNISHED THE DETAIL OF S ALARY BY GIVING THE NAME OF THE EMPLOYEE, HIS PAN NUMBER AND AMOUNT DRAWN BY HI M MONTH-WISE AND ALL 3 SUCH EXPENSES WHICH HAVE BEEN INCURRED FOR THE PURP OSE OF BUSINESS OF THE COMPANY. 5. THE ABOVE WRITTEN SUBMISSION WAS GIVEN TO THE AS SESSING OFFICER FOR HIS REPORT. IN RESPONSE, THE ASSESSING OFFICER SUB MITTED HIS REPORT STATING THAT THE ASSESSEE HAS GIVEN THE DETAILS OF SALARY G IVING THE NAMES OF EMPLOYEES, AMOUNT, WITHDRAWN BY HIM MONTH-WISE AND PAN NUMBER AND THE TDS HAVE BEEN DEDUCTED. THE ASSESSING OFFICER ALSO CLARIFIED THAT THE ADDITION WAS MADE SINCE THE ASSESSEE DID NOT FURNIS H THE COMPLETE INFORMATION. HE FURTHER STATED THAT EVEN THE LIST OF EMPLOYEES NOW SUBMITTED INDICATED THAT THERE WERE EMPLOYEES WHICH ARE NOT O N THE ROLL OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER HAS MENTIONED THE NA MES OF SUCH EMPLOYEES AS SHRI DALJIT SINGH AND SHRI SATISH SHUKLA. ACCOR DING TO ABOVE, TOTAL AMOUNTS OF SALARY PAID TO THESE EMPLOYEES HAVE BEEN MENTIONED AT RS. 51,10,156/-. 6. THE CIT(A) AFTER CONSIDERING THE WRITTEN SUBMISS IONS OF THE ASSESSEE AND ALSO THE REPORT OF THE ASSESSING OFFICER HELD AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE APPELLANT, REMAND REPORT ON THE IS SUE AND REPLY OF THE COUNSEL ON THE REMAND REPORT. THE APPELLANT HAS GIVEN DETAILS OF SALARY, NAMES OF THE EMPLOYEES, AMOUNT WITHDRAWN AND TDS DETAILS. THE ADDITION WAS MADE BECAUSE THE APPELLANT DID NOT FUR NISH THE COMPLETE INFORMATION. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS SPECIFICALLY POINTED OUT THE NAMES OF TWO EMPLOYEES NAMELY SH. DALJIT SINGH AND SH. SA TISH SHUKLA THAT THEY WERE NOT ON THE ROLLS OF THE APPEL LANT COMPANY, WERE EMPLOYED WITH HFCL AND TOTAL SALARY P AID TO THESE PERSONS WAS MORE THAN RS. 51 LACS. THE ASSESSING OFFICER HAS ALSO SUBMITTED THAT NATURE OF DUTIES PERFORMED BY THE EMPLOYEES HAS NOT BEEN INDICATED. THE APPELLANT SUBMITTED IN ITS REPLY THAT SALARY PAID T O SH. DALJIT SINGH WAS RS. 2,36,584/- ONLY AND SALARY TO SH. 4 SATISH SHUKLA WAS RS. 17,02,260/- FOR 3 MONTHS ONLY . ACCORDING TO THE APPELLANT, THESE TWO PERSONS ARE H AVING REQUISITE QUALIFICATION AND EXPERIENCE IN THE APPEL LANT'S LINE OF BUSINESS AND THEY WERE ABLE TO CORRECT THE COMPLAINTS IN THE SYSTEM. AS THE EXISTING STAFF WAS UNABLE TO RECTIFY ERRORS, THESE PERSONS WERE CALLED FROM MUMBAI AND DUE TO THEIR SERVICES, THE SYSTEM STARTE D FUNCTIONING. THE LD. COUNSEL FOR THE APPELLANT HAS REPLIED IN DETAIL BUT HAS NOT GIVEN ANY EVIDENCE IN SUPPORT OF, HIS SUBMISSION TO JUSTIFY THE PAYMENT OF SUCH HEAVY AMO UNT ESPECIALLY WHEN THESE TWO PERSONS WERE NOT ON THE R OLLS OF THE APPELLANT COMPANY. IT IS ALSO SEEN THAT THE SAL ARY PAID TO ALL THE PERSONS WHO WERE NOT ON THE ROLLS O F THE APPELLANT COMPANY WAS RS. 51 LACS AND NOT ONLY TO S H. DALJIT SINGH AND SH. SATISH SHUKLA, AS MENTIONED BY THE ASSESSING OFFICER. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSION OF THE LD. COUNSEL FOR THE APPELLANT, THE DETAILS OF SALARY, C OUPLED WITH THE FACT THAT THE APPELLANT HAS NOT BEEN ABLE TO PROPERLY JUSTIFY PAYMENT/SALARY TO SOME PERSONS WHO WERE NOT EVEN ON THE ROLLS OF THE APPELLANT COMPANY , IT IS HELD THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING PART DISALLOWANCE OF SALARY, BUT DISALLOWANCE OF 50% OF SALARY IS A BIT ON HIGHER SIDE AND HENCE, THE SAME IS REDU CED TO 40%. THE APPELLANT GETS RELIEF OF RS. 12,78,390/-. GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE AL SO PERUSED THE IMPUGNED ORDER. IT IS APPARENT FROM THE RECORD THA T THE ASSESSEE HAD GIVEN DETAILS OF SALARY, NAMES OF THE EMPLOYEES, AMOUNT W ITHDRAWN AND TDS DETAILS. AS PER THE REMAND REPORT OF THE ASSESSING OFFICER, THE ADDITION WAS MADE BECAUSE THE ASSESSEE DID NOT FURNISH THE COMPL ETE INFORMATION. HOWEVER, DURING THE APPELLATE PROCEEDINGS BEFORE TH E CIT(A) AND ALSO BEFORE THE ASSESSING OFFICER, WHO SUBMITTED THE REMAND RE PORT, THE ASSESSEE DID FURNISH THE COMPLETE INFORMATION. HOWEVER, THE ASS ESSING OFFICER HAS STATED IN THE REMAND REPORT THAT SHRI DALJIT SINGH AND SHR I SATISH SHUKLA WERE NOT ON THE ROLL OF THE ASSESSEE COMPANY AND, THEREFORE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THERE WAS NO JUSTIFICATION IN ALLOW ING THE SALARY ALLEGEDLY PAID TO THESE TWO EMPLOYEES. CONSIDERING THE ENTIRE FAC TS AND CIRCUMSTANCES OF 5 THE PRESENT CASE, THE CIT(A) HAS CORRECTLY OBSERVED THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING PART DISALLOWANCE OF SA LARY, BUT DISALLOWANCE OF 50% OF SALARY IS A BIT ON HIGHER SIDE AND HE, THERE FORE, REDUCED THE SAME TO 40%. IN OUR VIEW, THE DISALLOWANCE OF 40% IS REASO NABLE KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THEREFORE, WE DO NOT SEE ANY VALID GROUND IN INTERFERING WITH THE ORDER OF C IT(A) ON THIS ISSUE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) AND DISM ISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 5 TH MARCH, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR