DCIT, Hyderabad V. M/s Peace India Ltd, Hyderabad

ITA 1235/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3394 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Keywords: TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1235/HYD/2010 : ASSESSMENT YEAR 2006- 07 DY. COMMISSIONER OF INCOME - TAX , CIRCLE 16(3), HYDERABAD VS M/S. PEACE INDIA LTD., HYDERABAD (PAN AACCP 0936 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.SUNIL BABU RESPONDENT BY : NONE O R D E R PER G.C.GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEA R 2006-07 IS DIRECTED IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME-TAX(APPEALS). 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE-RESPONDENT, IN SPITE OF SERVICE OF NOTICE THROUGH THE DEPARTMENT. ACCORDINGLY, APPEAL OF THE REVENUE IS BEING DECIDED EX- PARTE -QUA THE ASSESSEE-RESPONDENT- AFTER HEARING T HE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. GROUND OF APPEAL NO.1 OF THE REVENUE IS AS UNDE R- THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,50,289/-, MADE ON ACCOUNT OF NON-DEDUCTION OF TDS, IN SO FAR AS THE DECISION IS NOT BASED ON THE FACTS O F THE CASE BILLS AND LEDGER DETAILS CLEARLY SHOW THAT SPECIFIC JOBS WERE GOT DONE BY ASSESSEE FOR THE VARIOUS CLIENTS. THES E WERE NOT ITA NO.1235/H/2010 M/S. PEACE INDIA LTD., HYDERABAD 2 MERE PURCHASES BUT WERE IN THE NATURE OF CONTRACT A ND HENCE THERE WAS DEFAULT U/S. 40A(IA) OF THE I.T. ACT. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE CIT(A) OUGHT TO HAVE CALLED FOR A REMAND REPOR T ON THE ISSUE BEFORE DELETING THE ADDITION OF RS.9,50,289 MADE BY THE ASSESSING OFFICER. HE REFERRED TO THE RELEVANT PORTIONS OF T HE ASSESSMENT ORDER AND ALSO PARA 6 OF THE ORDER OF THE CIT(A) IN SUPPO RT OF HIS ARGUMENT. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED THE OR DERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PLAIN AND PRINTED ENVELOPES. THE CLAIM OF THE ASSESSEE WAS THAT THESE PAYMENTS WERE MADE TO FOUR DIFFERENT PARTIES, NOT ON ACCOUNT OF O UTSOURCE CONTRACT OR JOB WORK. THE CLAIM OF THE ASSESSEE WAS THAT TH ESE WERE IN FACT PURCHASES MADE BY THE ASSESSEE OF VARIOUS ARTICLES FROM THE PARTIES IN THE FORM OF PURCHASE OF PRINTED COVERS, PLAIN CO VERS, ETC. AND THERE WAS NO ELEMENT OF SUB-CONTRACTING INVOLVED AND THE CIT(A) HAS RECORDED IN HIS APPELLATE ORDER THAT THE ASSESSEE H AD PRODUCED BILLS, ETC. TO SUBSTANTIATE ITS CLAIM. WE FIND THAT IN THE FACTS OF THE CASE, THE CIT(A) HELD THAT THERE WAS NO ELEMENT OF JOB WO RK OR CONTRACT INVOLVED IN THESE PURCHASES AND THEY WERE CLEAR PUR CHASE OF VARIOUS ITEMS FROM THE SUPPLIER AND THEREFORE, TDS WAS NOT EFFECTED. WE FIND THAT THERE WAS NO GROUND OF APPEAL BY THE REVE NUE REGARDING THE ISSUE OF REMAND REPORT WHICH WAS NOT CALLED FOR BY THE CIT(A) FROM THE ASSESSING OFFICER. IN THE FACTS OF THE CASE AN D PARTICULARLY IN VIEW OF THE FACTS RECORDED BY THE CIT(A) IN HIS ORDER TH AT THE ASSESSEE HAS ITA NO.1235/H/2010 M/S. PEACE INDIA LTD., HYDERABAD 3 PRODUCED THE BILLS ETC. TO SUBSTANTIATE ITS CLAIM A ND THE FINDING OF THE CIT(A) THAT THERE WAS NO ELEMENT OF JOB WORK OR CON TRACT INVOLVED IN THESE PURCHASES, WE HOLD THAT THE TDS PROVISIONS AR E NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND ACCORDINGLY, THE O RDER OF THE CIT(A) IS CONFIRMED AND THE GROUND OF APPEAL NO.1 OF THE R EVENUE IS REJECTED. 5. GROUND OF APPEAL NO.2 OF THE REVENUE IS AS UNDE R- THE CIT(A) ERRED IN DELETING DISALLOWANCE U/S. 40A (IA) OF RS.89,394/- ON ACCOUNT OF NON-DEDUCTION OF TDS ON T ECHNICAL SERVICES PAID, IN SO FAR AS DECISION IS TO BASED ON THE FACTS OF THE CASE AS THE DETAILS OF BILLS RAISED BY SRI DIGI TAL ARTS SHOW SPECIFIC WORK EXECUTED AS PER REQUIREMENT WHICH DEF INITELY FALLS UNDER THE AMBIT TO TDS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE SAME ARGUMENTS OF THE REVENUE CANVASSED WITH R EGARD TO GROUND OF APPEAL NO.1 ARE APPLICABLE TO THE ISSUE I N GROUND OF APPEAL NO.2 ALSO. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED THE OR DERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE PAYMENT WAS MADE TO M/S.SRI DIGITAL ARTS AND THE ASSESSEE HAS C LAIMED THAT THIS PAYMENT COULD NOT BE SAID TO HAVE BEEN MADE FOR ANY TECHNICAL SERVICES INVOLVED IN THE WORK OF FILM PROCESSING. W E FIND THAT THE CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSE SSEE BY FOLLOWING THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNA L DATED 5.6.2009 IN MARUTI MOVIES (ITA NOS. 861 TO 864/HYD/2006 FOR ASSESSMENT YEARS 2002-03 TO 2005-06, WHEREIN IT WAS HELD THAT PURCHASE OF FILMS AND ITS PROCESSING DOES NOT ATTRACT THE PROVI SIONS OF S.194J OF ITA NO.1235/H/2010 M/S. PEACE INDIA LTD., HYDERABAD 4 THE ACT THERE BEING NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE, WE CONFIRM THE SAME AND THE GROUND OF APPEAL NO.2 OF THE REVENUE IS REJECTED. 8. GROUND OF APPEAL NO.3 OF THE REVENUE IS AS UNDE R- THE CIT(A) ERRED IN FACTS AND IN LAW IN DELETING T HE ADDITION OF FOREIGN TRAVEL EXPENSES OF RS.36,090/- AS THE AS SESSEE HAD NOT PRODUCED ANY EVIDENCE OF EXAMINATION OF MACHINE RY ETC. AND NEGOTIATIONS WITH MACHINERY SUPPLIERS AND THAT THE SAME WAS INCURRED FOR BUSINESS PURPOSES. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT NO BUSINESS PURPOSE FOR INCURRING THE EXPENDITURE O N FOREIGN TRAVEL COULD BE PROVED BY THE ASSESSEE. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED THE OR DERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND THAT THE DIRECTOR OF THE ASSESSEE COMPANY HAD VISITED NETHERLAND AND IT IS S TATED THAT THE VISIT WAS TO EXAMINE THE VARIOUS KINDS OF MACHINERY FOR UPGRADATION. WE FIND THAT NO MACHINERY WAS PURCHASED DURING THE RELEVANT PERIOD AND NO EVIDENCE WAS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER OR THE CIT(A) IN SUPPORT OF ITS CLAIM THAT THE VISIT TO NETHERLAND MADE BY THE DIRECTOR WAS FOR BUSINESS PURPOSE OF TH E ASSESSEE COMPANY. IN THESE FACTS, WE REVERSE THE ORDER OF T HE CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER ON THIS ISSUE , AND ACCORDINGLY GROUND OF APPEAL NO.3 OF THE REVENUE IS ALLOWED. 11. GROUND OF APPEAL NO.4 OF THE REVENUE IS AS UND ER- ITA NO.1235/H/2010 M/S. PEACE INDIA LTD., HYDERABAD 5 THE CIT(A) ERRED IN FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.2,13,187/-. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDER OF THE ASSESSING OFFICER. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED THE OR DERS OF THE ASSESSING OFFICER AND THE CIT(A). THE CLAIM OF THE ASSESSEE WAS THAT ALL THE EXPENSES WERE RIGHTLY CLAIMED AND THAT THER E WAS A TYPOGRAPHICAL ERROR ON ACCOUNT OF WHICH EXPENDITUR E ON ACCOUNT OF PAPER PURCHASE AND CONSUMPTION WAS WRONGLY STATED. ASSESSEE FURTHER CONTENDED BEFORE THE ASSESSING OFFICER AND THE CIT(A) THAT THE TYPOGRAPHICAL ERROR OCCURRED IN THE NOTES AND NOT IN THE PROFIT AND LOSS ACCOUNT. THE CIT(A) HAS GIVEN A FINDING THAT FROM THE DETAILS PROVIDED BY THE ASSESSEE, IT IS CLEAR THAT THERE WA S A TYPOGRAPHICAL MISTAKE AND HE HAS TALLIED THE CLAIM OF THE ASSESSE E WITH REGARD TO PAPER PURCHASES AND CONSUMPTION WITH THE FIGURE OF THE CLOSING STOCK AND HAS ACCORDINGLY DELETED THE ADDITION MADE BY TH E ASSESSING OFFICER. THERE BEING NO MISTAKE IN THE ORDER OF TH E CIT(A) ON THIS ISSUE, THE SAME IS CONFIRMED AND THE GROUND OF APPE AL NO.4 OF THE REVENUE IS REJECTED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE COURT ON 84.2011 SD/- SD/- (CHANDRA POOJARI) ( G.C. G UPTA) A CCOUNTANT MEMBER V ICE PRESIDENT DATED THE 8 TH APRIL, 2011 ITA NO.1235/H/2010 M/S. PEACE INDIA LTD., HYDERABAD 6 COPY FORWARDED TO: 1. M/S. PEACE INDIA LTD., 2 - 92/4, KHANNAMET, OPP. SILPARAMAM, HYDERABAD 2. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 16(3) , HYDERABAD 3. CIT (A) - V , HYDERABAD. 4. COMMISSIONER OF INCOME - TAX IV , HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S.