ACIT, Circle-3, Kolkata, Kolkata V. M/s. Wilson Engineering Industries(P)Ltd, Kolkata

ITA 1315/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8058 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2012
• Court: TRIBUNAL
• Department Lawyers: D K RAKSHIT
• Assessee Lawyers: K M ROY F
• Keywords: Non-deduction of tax
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [ () , ,, , , !!' #$ !!' #$ !!' #$ !!' #$ ] ]] ] [BEFORE HONBLE SRI PRAMOD KUMAR, AM & HONBLE SR I GEORGE MATHAN, JM] & & & & /ITA NO.1315/KOL/2012 '$( )*/ ASSESSMENT YEAR : 2009-2010 (#, / APPELLANT ) - $ - ( .#, /RESPONDENT) A.C.I.T., CIRCLE-3, M/S.WILSON ENGINEERING INDU STRIES KOLKATA -VERSUS- PVT. L TD., KOLKATA (PAN:AAACW 2689 J) #, / 0 / FOR THE APPELLANT: SHRI D.K.RAKSHIT, SR.(DR) .#, / 0 / FOR THE RESPONDENT: SHRI K.M.ROY, F.C.A. $1 / 2 /DATE OF HEARING : 30.10.2012. 3) / 2 /DATE OF PRONOUNCEMENT : 30.10.2012. 4 / ORDER ( (( (!!' #$ !!' #$ !!' #$ !!' #$) )) ), , , , PER SHRI GEORGE MATHAN, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-I, KOLKATA IN APPEAL NO.1168/CIT(A)-I/CIR-3(2)/11-12 D ATED 27.06.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. SHRI D.K.RAKSHIT, SR.DR REPRESENTED ON BEHALF O F THE REVENUE AND SHRI K.M.ROY, F.C.A. REPRESENTED ON BEHALF OF THE ASSES SEE. 3. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS.2,77,286/- MADE U/S. 14A R.W.R. 8D WITHOUT APPRECIATING THE FACT THAT THE ASSESSE FAILED TO DISCHARGE THE O NUS TO PROVE THAT NO INTEREST BEARING FUND WAS UTILIZED FOR INVESTMENTS. 2. THAT THE ORDER OF THE A.O. BE UPHELD IN VIEW OF THE JUDGMENT OF JURISDICTIONAL TRIBUNAL IN THE CASE OF DHANUKA & SONS VS. CIT(CENT RAL)-I, KOLKATA [12 TAXMAN .COM 227 (CAL)201 1]. 2 3. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON MADE FOR NON- DEDUCTION OF TAX AT SOURCE IN RESPECT OF EXPENSES; COMMISSION(RS.1,59,6 14), PROFESSIONAL CHARGES(RS.4,23,251/ -) AND JOBBING CHARGES( RS.3,5 8,606 )WITHOUT APPRECIATING THE FACT THAT THE PROVISION OF CHAPTER XVII B R.W.S. 40A(IA) APPLIES TO ALL EXPENDITURE WHICH IS ACTUALLY PAID AND WHICH IS PAYABLE AT THE END OF TH E YEAR. 4. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, ALTER O R MODIFY ANY GROUND OF APPEAL DURING THE HEARING. 4. IN REGARD TO GROUND NO.1 AND 2 THE LD. DR SUBMI TTED THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION O F RS.2,77,286/- REPRESENTING THE DISALLOWANCE BY INVOKING THE PROVISION OF SECTION 1 4A.. IT WAS THE SUBMISSION THAT THE LD. CIT(A)DELETED THE ADDITION BY HOLDING THAT THE ASSESSEE HAD SUBSTANTIAL INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVE S AND NO FRESH INVESTMENT WAS MADE DURING THE YEAR. IT WAS THE SUBMISSION THAT THE ISS UE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL KOLKATA HIGH COURT IN THE CASE OF DHANUKA & SONS VS CIT IN ITA NO.633 OF 2004 JUDGEMENT ON 19 TH APRIL, 2011 WHEREIN THE HONBLE JURISDICTIONAL HIGH COURT HAD CATEGORICALLY HELD AS FOLLOWS :- IN OUR OPINION, THE MERE FACT THAT THOSE SHARES WE RE OLD ONES AND NOT ACQUIRED RECENTLY IS IMMATERIAL. IT IS FOR THE ASSESEE TO SHOW THE SO URCE OF ACQUISITION OF THOSE SHARES BY PRODUCTION OF MATERIALS THAT THOSE WERE ACQUIRED FR OM THE FUNDS AVAILABLE IN THE HANDS OF THE ASSESSEE AT THE RELEVANT POINT OF TIME WITHO UT TAKING BENEFIT OF ANY LOAN. IF THOSE SHARES WERE PURCHASED FROM THE AMOUNT TAKEN IN LOAN , EVEN FOR INSTANCE, FIVE OR TEN YEARS AGO, IT IS FOR THE ASSESSEE TO SHOW BY THE PR ODUCTION OF DOCUMENTARY EVIDENCE THAT SUCH LOANED AMOUNT HAD ALREADY BEEN PAID BACK AND FOR THE RELEVANT ASSESSMENT YEAR, NO INTEREST IS PAYABLE BY THE ASSESSEE FOR ACQUIRIN G THOSE OLD SHARES. IN THE ABSENCE OF ANY SUCH MATERIALS PLACED BY THE ASSESSEE, IN OUR O PINION, THE AUTHORITIES 7 BELOW RIGHTLY HELD THAT PROPORTIONATE AMOUNT SHOUL D BE DISALLOWED HAVING REGARD TO THE TOTAL INCOME AND THE INCOME FROM THE EXEMPT SOU RCE. IN THE ABSENCE OF ANY MATERIAL DISCLOSING THE SOURCE OF ACQUISITION OF SHARES WHIC H IS WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE, THE ASSESSING AUTHORITY TOOK A MOST R EASONABLE APPROACH IN ASSESSMENT. 4.1. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NO T SHOWN THAT THE INVESTMENT IN THE SHARES WERE OUT OF INTEREST FREE FUNDS, THE ASSESSE E WAS NOT ENTITLED TO THE RELIEF GRANTED BY LD. CIT(A). 5. IN REPLY THE LD. AR SUBMITTED THAT IN THE AUDIT REPORT IN CLAUSES (XVI) AND (XVII) WHICH ARE SHOWN AT PAGE 5 OF THE PAPER BOOK THE AUD ITOR HAD CONFIRMED THAT SHORT TERM FUNDS HAVE NOT BEEN USED FOR LONG TERM INVESTMENTS AND THE TERM LOANS WERE APPLIED FOR THE PURPOSES FOR WHICH SUCH LOANS WERE OBTAINED . IT WAS THE SUBMISSION THAT NO 3 INTEREST BEARING FUNDS HAD BEEN USED FOR MAKING THE INVESTMENT AND THERE WERE NO FRESH INVESTMENTS DURING THE RELEVANT ASSESSMENT YE AR AND FURTHER THE ASSESSEE HAD SUBSTANTIATED NON INTEREST BEARING FUNDS FOR MAKIN G THE INVESTMENT IN THE SHARES. THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(A) . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DHANUKA & SONS REFERRED TO SUPRA HAS CATEGORICALLY HELD THAT IT IS FOR THE ASSESSEE TO S HOW BY PRODUCTION OF DOCUMENTARY EVIDENCES THAT THE SHARES WERE PURCHASED OUT OF NON INTEREST BEARING FUNDS AND THIS HAS NOT BEEN SPECIFICALLY SHOWN BEFORE AO OR CIT(A) NOR BEFORE US, WE ARE OF THE VIEW THAT THIS ISSUE IS LIABLE TO BE RESTORED TO THE AO FOR RE-ADJUDICATION AFTER GRANTING ASSESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS C LAIM. 7. IN THE RESULT THIS ISSUE IS RESTORED TO THE AO F OR ADJUDICATION. THE ASSESSEE SHALL BE AT LIBERTY TO PRODUCE ALL THE EVIDENCES TO SHOW THAT THE INVESTMENTS IN THE SHARES WERE OUT OF NON INTEREST BEARING FUNDS. 8. IN REGARD TO GROUND NO.3, IT WAS SUBMITTED BY TH E LD. DR THAT THE ISSUE IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION M ADE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE. IT WAS THE SUBMISSION THAT THE LD. C IT(A) HAD DELETED THE ADDITION BY RELYING UPON THE DECISION OF THE SPECIAL BENCH OF T HIS TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VISHAKAPATNAM VS ADDL.CIT REP ORTED IN 136 ITD 23. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ALSO FAILED TO APPRECIATE THAT THE ASSESSEE HAVING NOT DEDUCTED TAX AT SOURCE ON THE COMMISSION , PROFESSIONAL CHARGES AND JOBBING CHARGES THE SAME WAS LIABLE TO BE DISALLOWE D U/S 40(A)(IA) OF THE IT ACT. IT WAS THE SUBMISSION THAT ORDER OF LD. CIT(A) BE REVE RSED. 9. IN REPLY THE LD. AR VEHEMENTLY SUPPORTED THE ORD ER OF LD. CIT(A). IT WAS THE SUBMISSION THAT ALL THE AMOUNTS HAVE BEEN PAID AT THE END OF THE RELEVANT ASSESSMENT YEAR AND IN VIEW OF THE DECISION OF THE SPECIAL BEN CH OF THIS TRIBUNAL IN THE CASE OF 4 MERILYN SHIPPING & TRANSPORTS REFERRED TO SUPRA THE ORDER OF LD. CIT(A) WAS LIABLE TO BE UPHELD. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE AMOUNTS ON WHICH TDS WAS REQUIRED TO BE DEDUCTED HAS ALREADY B EEN PAID AND THERE IS NO OUTSTANDING AS AT THE END OF THE RELEVANT ASSESSMEN T YEAR, IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL THE ORDER OF LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED. 11. IN THE RESULT THE APPEAL OF REVENUE STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.10.2012. SD/- SD/- [ , ,, , ] [ .!!' #$ , ] [PRAMOD KUMAR] [ GEORGE MATHAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (2 2 2 2) )) ) DATE: 30.10.2012. R.G.(.P.S.) 5 4 / ''6 76)8- COPY OF THE ORDER FORWARDED TO: 1. M/S. WILSON ENGINEERING INDUSTRIES PVT. LTD., 24, P ARK STREET, BLOCK-7B, 7 TH FLOOR, ANUJ CHAMBERS, KOLKATA-700016. 2 A.C.I.T., CIRCLE-3, KOLKATA 3. THE CIT- 4. THE CIT(A)-I, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA .6 '/ TRUE COPY, 4$/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES