ACIT, Cir.2, Nashik, V. Holden Medical Laboratories P.Ltd.,

ITA 12/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7603 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT C LEUVA
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 12/PN/09 (ASSTT YEAR: 2005-06) ASSTT. COMMISSIONER OF INCOME-TAX, CIR. 2, NASHIK APPELLANT VS. HOLDEN MEDICAL LABORATORIES P. LTD., C-35, MIDC, MALEGAON, SINNER, DIST. NASHIK RESPONDENT PAN AABCH2172G APPELLANT BY : SHRI HEMANT C LEUVA RESPONDENT BY : SHRI SUBODH L RATNAPARKHI ORDER PER G.S. PANNU, A.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NASHIK DATE D 30.10.2008 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.1 2.2007 PASSED BY THE ASSESSING OFFICER UNDER SEC. 143(3) OF THE INCO ME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT Y EAR 2005-06. 2. THE SOLITARY GROUND RAISED IN THIS APPEAL BY THE REVENUE RELATES TO THE ISSUE OF THE DISALLOWANCE OF ASSESSE ES CLAIM UNDER SECTION 40(A)(IA) OF THE ACT. THE BRIEF FACTS PERTA INING TO THE ISSUE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGA GED IN THE BUSINESS OF MANUFACTURING OF PHARMACEUTICAL PRODUCT S. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTI CED THAT THE ITA NO 12/PN/09 HOLDEN MEDICAL LAB. P.LTD. NASH IK . 2 ASSESSEE HAD MADE PAYMENT FOR LAB TESTING AND ANALY SIS CHARGES OF RS 47,48,548/- TO IMRES B V, A CONCERN SITUATED IN HOLAND WHICH IS A FOREIGN CONCERN HAVING NO PRESENCE IN INDIA. THE AS SESSEE SUBMITTED THAT THE PAYMENTS WERE IN TURN REIMBURSED BY THE AB OVE CONCERN AND, THEREFORE, IT DID NOT MAKE ANY TDS ON PAYMENT OF LA B TESTING AND ANALYSIS CHARGES MADE ON BEHALF OF THIS CONCERN. TH E ASSESSING OFFICER DISALLOWED THE LAB TESTING AND ANALYSIS CHA RGES OF RS 39,99,394/- UNDER SECTION 40(A)(IA) OF THE ACT ON T HE GROUND THAT AS THE AMOUNT REIMBURSED IS SHOWN AS INCOME, THE EXPEN DITURE INCURRED BY THE ASSESSEE IS LIABLE FOR T.D.S. THE LAB TESTIN G AND ANALYSIS CHARGES PAID ARE LIABLE TO DEDUCT TAX SOURCE IN VIE W OF C.B.D.T CIRCULAR NO 715 DATED 08.08.1995. THE ASSESSING OFF ICER ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT IT HAD WRONGLY ROUTED THE TRANSACTION OF PAYMENT OF LAB TESTING AND ANALYSIS CHARGES AND REIMBURSEMENT OF THE SAME THROUGH THE PROFIT & LOSS ACCOUNT, AS THE ASSESSEE HAD FOLLOWED THE SAME METHOD CONSISTENTLY. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), TH E ASSESSEE RAISED VARIOUS CONTENTIONS CHALLENGING THE ORDER OF THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (APPEALS), AFTER CONSIDERING THE SUBMISSIONS IN DETAIL, AS ALSO PLACING RELIANCE ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SH RI KAMREJ VIBHAG SAHAKARI KHAND UDYOG MANDLI LTD. V.ITO 116 TTJ 425 (AHD) (SB), HELD THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS 39,99,394/- IS NOT JUSTIFIED AND HENCE THE SAME IS CANCELLED. THE A.O IS DIRECTED ACCORDINGLY. AGAINST THE SAID DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS), THE REVENUE I S IN APPEAL BEFORE US. ITA NO 12/PN/09 HOLDEN MEDICAL LAB. P.LTD. NASH IK . 3 3. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE, APPEARING FOR THE REVENUE, SUBMITTED THAT THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS) MAY BE SET ASIDE AND THAT OF T HE ASSESSING OFFICER BE AFFIRMED. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) WAS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE AND NO INTERFERENCE IS CALLED FOR IN THE SAID ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). HE ACCORDINGLY DEFENDED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS P ASSED A WELL REASONED ORDER AND WE ARE IN FULL AGREEMENT WITH TH E VIEW TAKEN BY HIM. SECTION 194J(1) IS APPLICABLE TO ANY PERSON, N OT BEING AN INDIVIDUAL OR HINDU UNDIVIDED FAMILY, WHO IS RESPON SIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF FEES FOR PROFESSIONAL SERVICES OR TECHNICAL SERVICES. IN THE INSTANT CASE, CONTENTION OF THE ASSESSEE IS THAT IT IS NOT RESPONSIBLE FOR PAYMENT OF PROFESSIO NAL AND TECHNICAL FEES TO LABORATORIES, RATHER IT IS THE CONCERN M/S I.M.R.E.S (HOLLAND) WHICH IS EFFECTIVELY LIABLE FOR THE SAID PAYMENT IN VIEW OF THE AGREEMENT BETWEEN THE ASSESSEE COMPANY AND M/S I.M. R.E.S. (HOLLAND), AND AS SUCH, ASSESSEE IS NOT LIABLE TO D EDUCT OF TAX AT SOURCE. WE FIND THAT THE ASSESSEES CASE IS COVERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SHRI KAMREJ VIBHAG KHAND UDYOG MANDALI LTD (SUPRA), WHEREIN IT HAS BEE N LAID DOWN THAT THE PAYMENTS MADE BY THE ASSESSEE ON BEHALF OF CANE GROWERS TO TRANSPORTERS AND LABOUR IS NOT LIABLE TO T.D.S AS T HE RESPONSIBILITY WAS OF THE CANE GROWERS. WE ACCORDINGLY FIND NO GROUND TO INTERFERE WITH ITA NO 12/PN/09 HOLDEN MEDICAL LAB. P.LTD. NASH IK . 4 THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) AND AFFIRM HIS DECISION ON THIS ASPECT. THE REVENUE FAILS ON THIS GROUND OF APPEAL. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF FEBRUARY, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 11TH FEBRUARY, 2011 COPY TO:- 1) HOLDEN MEDICAL LAB. P. LTD. NASHIK 2) THE ACIT, CIR.2, NASHIK 3) THE CIT (A)-I NASHIK 4) THE CIT-I, NASHIK 5) THE D R, B BENCH, ITAT, PUNE. BY ORDER TRUE COPY ASSTT. REGISTRAR, I.T.A.T., PUNE B