Indo Nabin Projects Ltd., Kolkata V. DCIT, CIR-10, KOLKATA, Kolkata

ITA 1323/KOL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4681 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 07-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2015
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: JUNGIV
• Assessee Lawyers: SMIRITI RANJAN B HATTACHARY; SUJAY KR BASAK
• Keywords: Business expenditure; Additional evidence
• Section: 37; 194C; 143(3); 40(a)(ia)

Judgement Text

1 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 1323/KOL/2015 A.YS. 2011-12 INDO NABIN PROJECTS LTD VS. D.C.I.T, CIR-10, PAN: AAAC16515M KOLKATA (APPELLANT) (RESPONDENT) FOR THE APPELLANT/ASSESSEE : SMIRITI RANJAN B HATTACHARY & SH.SUJAY KR. BASAK, AR, FOR THE RESPONDENT/DEPARTMENT: SHRI JUNGIV, JCIT DATE OF HEARING : 07-06-2016 DATE OF PRONOUNCEMENT: 10 -08-2016 ORDER SHRI S.S. VISWANETHRA RAVI, JM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE CIT(A)-4, KOLKATA IN APPEAL NO.1251/CIT(A)-4/KOL/ /14-15 DATED 17-08- 2015 FOR THE ASSESSMENT YEAR 2011-12 2. ALL GROUNDS INVOLVED IN THIS APPEAL ARE AGAINST DISALLOWANCES MADE U/SEC 40(A)(IA) OF THE ACT AND TO DECIDE IS AS TO WHETHER CIT-A JUSTIFIED CONFIRMING THE ORDER OF AO IN IN THE CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY AND IS A ELECTRICAL CONTRACTOR, SUPPLIER AND RENDERS SE RVICES. THE ASSESSEE FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER 2011 DECLARING A TOTAL INCOME OF RS.7,56 ,01,050/-AND AN 2 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD ASSESSMENT ORDER WAS PASSED DETERMINING TOTAL INCOM E AT RS.8,00,57,050/-UNDER SECTION 143 (3) OF THE ACT WHEREIN THE ASSESSING OF FICER MADE SEVERAL ADDITIONS. 4. THE APPELLANT ASSESSEE RAISED THE GROUND NO-1AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT-A 4 KOLKATA WAS WRONG IN CONFORMING THE DISALLOWANCE OF THE COMMISSION OF RS.2,58,315.000 DISREGARDING THE SUBMISSION OF THE APPELLANT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSE SSEE SUBMITTED THAT THE SAID AMOUNT WAS PAID TO 2 PARTIES WHO ARE ENGAGED TO DRO P TENDERS FORMS AND TO COORDINATE WITH THE ALIAS DEPARTMENTS. ACCORDING TO THE ASSESS ING OFFICER THE ASSESSEE DID NOT PRODUCE ANY DOCUMENT TO SUBSTANTIATE ITS CLAIM. BEF ORE THE CIT-A ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THAT THE A SSESSEE ENGAGED IN ELECTRIC AND CIVIL CONTRACT BUSINESS IN VARIOUS STATES LIKE ASSAM, MAN IPUR, TRIPURA AND ARUNACHAL PRADESH AND ENGAGED CONSULTANTS TO COORDINATE WITH VARIOUS DEPARTMENTS AND TO GET THE WORKS CONTRACTS IN THE AFORESAID STATES. THE CIT-A CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. BEFORE US THE LEARNED AR REITERATED THE SUBMISSI ONS MADE BEFORE THE AUTHORITIES AND FURTHER STATED THAT BOTH THE PARTIES FOR WHOM C OMMISSION PAID ARE AFFILIATED TO GOVERNMENT OF BHUTAN AND DREW OUR ATTENTION TO THE ADDITIONAL EVIDENCE IN THE FORM OF PAPER BOOK SPECIFICALLY POINTED OUT LEDGER COPY OF M/S JANU HUSSAIN AND BILL COPIES OF D.M. ENTERPRISES. LEARNED DR SUBMIT THAT NO MAT ERIAL HAS BEEN SHOWN BEFORE THE AUTHORITIES BELOW AND RELIED ON THE ORDER OF CIT-A AND ASSESSING OFFICER. 7. HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD AND PAPER BOOK. WE FIND THAT THE FACT REMAINS UNDISPUTED THAT THE ASSESSEE WAS ENGAGED IN RURAL 3 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD ELECTRIFICATION WORKS IN THE AFORESAID STATES HAVIN G HEAD OFFICE AT KOLKATA AND ALSO WE NOTICED THAT OUT OF SUCH 2 PARTIES THE ASSESSEE DED UCTED TDS TO AN EXTENT OF RS.12,000/- FROM DM ENTERPRISES AND THE COMPLETE AD DRESS OF SUCH PARTY WAS PROVIDED TO THE ASSESSING OFFICER. IT IS THEREFORE VERY CLEA R THAT THE ASSESSEE HAS BEEN INCURRING SUCH EXPENSES DURING THE COURSE OF ITS BUSINESS AND IS A GENUINE EXPENDITURE INCURRED FOR THE PURPOSE OF ITS BUSINESS. WE FIND THAT THE I MPUGNED DISALLOWANCE WAS MADE FOR THE REASON FOR NOT PRODUCING ANY DOCUMENTS ON WHATS OEVER IN SUPPORT OF CLAIM OF ASSESSEE. NOW, THE LD.AR BEFORE US FILED ADDITIONAL EVIDENCES IN SUPPORT OF ITS CLAIM AND SUBMITTED THAT THE AMOUNT OF RS.1,38,315/- WAS PAID TO M/S. BHUTAN FOREIGN RECRUITMENT AGENCY FOR CERTAIN CHARGES E.G. PROCESS ING TP, WEB PHOTO, SERVICE CHARGES, COST OF FORMS ETC. THROUGH M/S. JANU HUSSA IN AN AUTHORIZED AGENT. THE COPIES OF THE BILLS ARE ENCLOSED IN PAGES 3-14 OF T HE ADDITIONAL PAPER BOOK. SIMILARLY, THE DETAILS OF THE COMMISSION PAID TO M/S. D.M ENTE RPRISES IS ALSO ENCLOSED AT PAGES 15 TO 30 OF THE ADDITIONAL PAPER BOOK. THESE ARE THE A DDITIONAL EVIDENCES FILED BEFORE US, WHICH IN OUR CONSIDERED VIEW NEEDS TO BE VERIFIED BY THE LOWER AUTHORITIES. IN VIEW OF ABOVE, WE, THEREFORE, ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF AO IN THE INTEREST OF JUSTICE AND FAIR PLAY FOR FRESH ADJUDICATION AS PER LAW. HENCE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 8. GROUND NUMBER 2 IS RELATING TO DISALLOWANCE OF RS.4,20,494/- WHEREIN THE ASSESSEE CLAIMED THE SAID AMOUNT AS BUSINESS EXPEND ITURE UNDER THE HEAD PRINTING AND STATIONARY WHEREIN THE ASSESSING OFFICER FOUND THE ASSESSEE DID NOT DEDUCT TDS WHERE ALL THE AMOUNTS EXCEEDED RS.75,000/- WITH EACH OF T HE PARTIES SHOWN THEREIN. ACCORDING TO ASSESSING OFFICER THAT THE ASSESSEE CO NFESSED THAT BY INADVERTENCE DID NOT DEDUCT TDS FROM THE PAYMENTS MADE TO SAID PARTIES, THEREBY THE ASSESSING OFFICER ADDED ABOVE SAID AMOUNT TO THE INCOME OF THE ASSESS EE. BEFORE THE CIT-A THE ASSESSEE 4 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD CONTENDED THAT THE AO OUGHT TO HAVE ALLOWED AN AMOU NT OF RS.44,814/- WHERE THE SAID AMOUNT IS WITHIN LIMIT OF RS.75,000/- AS CONTEMPLAT ED UNDER SECTION 194C OF THE ACT. THE CIT-A HOWEVER CONFIRMED THE SAID DISALLOWANCE M ADE BY THE AO. 9. BEFORE US LD.AR SUBMITS THAT THE ASSESSEE INCURR ED VARIOUS EXPENSES FOR THE PURPOSE OF ITS BUSINESS AND CHARGED UNDER THE HEAD PRINTING AND STATIONARY LIKE I.E XEROX COPIES ETC.. AND THERE WAS NO ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSE AND THE SAID TWO PARTIES AND APPLICATION OF U/S 194C OF THE ACT IS BAD UNDER LAW. FURTHER LEARNED AR POINTED TO THE PAPER BOOK PAGE NUMBER 19 TO 29 WHEREIN THE STATEMENT OF AMOUNTS PAID TO STATE BANK OF INDIA AND COPIES OF C ASH MEMOS OF ELITE XEROX, DETAILS OF PAYMENTS TO PRASANTA KUMAR GHOSH AND SRI SAI GRA PHICS. THE LEARNED DR RELIED ON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 10. HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND P ERUSED THE RELEVANT MATERIAL ON RECORD. IN VIEW OF THE ADDITIONAL EVIDENCE FILED BE FORE THIS TRIBUNAL WERE OF THE VIEW THAT THE ISSUE SHALL GO TO THE FILE OF ASSESSING OF FICER FOR FRESH CONSIDERATION. THEREFORE ASSESSEE IS LIBERTY TO FILE ANY EVIDENCE BEFORE THE AO IN SUPPORT OF HIS CLAIM. ACCORDINGLY THE GROUND NUMBER 2 IS ALLOWED FOR STAT ISTICAL PURPOSES. 11. GROUND NUMBER 3 INVOLVING AN AMOUNT OF RS.13, 30,115/- WHEREIN THE ASSESSEE CLAIMANT SAID AMOUNT AS BUSINESS EXPENSES UNDER THE HEAD THAT EXPENSES ON CONTRACT, THE ASSESSING OFFICER ADDED SUCH AMOUNT FOR NOT DED UCTING TDS UNDER SECTION 40 (A)(IA) OF THE ACT. IN CHALLENGE BEFORE THE CIT-A THE ASSES SEE CONTENDED THAT THE TDS WAS COLLECTED BUT HOWEVER IT WAS A SHORT DEDUCTION AND IT IS NOT A CASE OF NON DEDUCTION OF TDS. THE CIT-A CONFIRMED THE ORDER OF AO FOR NOT PR ODUCING ANY EVIDENCE BEFORE THE AUTHORITIES. 5 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD 12. BEFORE US THE LEARNED AR SUBMITS THAT THE ASSES SEE DEDUCTED TDS FROM THE PARTIES BUT IT WAS A SHORT DEDUCTION AND RELIED ON THE ORDER DT: 16-6-2015 OF B BENCH KOLKATA TRIBUNAL IN ITA 1076/KOL/2014. THE LEARNED DR RELIED ON THE ORDERS OF CIT-A AND AO. 13. HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. WE FIND THAT B BENCH KOLKATA TRIBUNAL IN ITA 1076/KOL/2014 DECIDED THE SAME ISSUE WHEREIN THE ASSESSEE THEREIN MADE SHORT DEDUCTION TDS AT 1% AND HELD THAT FOR THE SHORT DEDUCTION NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISI ONS OF SECTION 40 (A)(IA) OF THE ACT, THE RELEVANT PORTION IS REPRODUCED HERE UNDER: - 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS IS MER ELY A CASE OF SHORT DEDUCTION OF TDS. ADMITTEDLY, THE ASSESSEE HAS MADE LABOUR PAYMENT OR DEBITED LABOUR PAYMENT IN THE P & L ACCOUNT AT R S.82,40,116/- AND DEDUCTED TDS AT RS.87,490/- I.E. @ 1%. AT BEST THIS CAN BE A CASE FOR SHORT DEDUCTION. IN THE CASE OF SHORT DEDU CTION NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT. THIS VIEW OF OURS IS FORTIFIE D BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K TEKRIWAL (2014) 361 ITR 432 (CAL), WHEREIN HONBLE HIGH COUR T HAS CONFIRMED THE FINDINGS OF TRIBUNAL BY OBSERVING AS UNDER : S. 40(A)(IA) CAN BE INVOKED ONLY WHEN THE TWO CON DITIONS, NAMELY, THAT TAX IS DEDUCTIBLE AT SOURCE AND SUCH T AX HAS NOT BEEN DEDUCTED IS SATISFIED. WHERE TAX IS DEDUCTED BY THE ASSESSEE UNDER A WRONG PROVISIONS OF TDS AND THERE IS A SHORTFALL, S . 40(A)(IA) DISALLOWANCE CANNOT BE MADE. AS THE ISSUE OF SHORT DEDUCTION IS SETTLED BY HON BLE JURISDICTIONAL HIGH COURT IN THE ABOVE CITED CASE, THE REVISION PROCEEDINGS INITIATED BY CIT U/S. 263 OF THE ACT AR E INVALID AND HENCE, QUASHED. APPEAL OF ASSESSEE IS ALLOWED. 6 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD 14. THE B BENCH KOLKATA TRIBUNAL IN ITA 1076/KOL/ 2014 DECIDED THE AFORESAID ISSUE BY TAKING SUPPORT FROM THE DECISION OF HONOUR ABLE HIGH COURT OF CALCUTTA AND IN VIEW OF THE SAME WE ALLOW GROUND NUMBER -3 RAISED B Y THE ASSESSE. 15. THE ASSESSEE FILED AN APPLICATION DATED 29 TH OF JANUARY 2016 PRAYING TO ADMIT AN ADDITIONAL GROUND STATING THAT THE ASSESSEE INADVER TENTLY OMITTED TO RAISE A SPECIFIC GROUND BEFORE THE CIT-A BUT HOWEVER MENTIONED AND D ISCUSSED IN THE WRITTEN STATEMENT. BEFORE THE AO THE ASSESSEE CLAIMED AN AM OUNT OF RS.4,38,762.75 UNDER THE HEAD SUBSCRIPTION EXPENSES AS BUSINESS EXPENDITURE. THE ASSESSING OFFICER DISALLOWED SUCH EXPENSES NOT PERMISSIBLE AS PER SECTION 37 OF THE ACT AS IT WERE PAID TO VARIOUS UNDERGROUND OUTFIT AND POLITICAL PARTIES. THE LEARN ED AR SUBMITS THAT THE ASSESSEE PAID SUCH AMOUNTS TO 32 PARTIES UNDER THE CORPORATE SOCI AL OBLIGATIONS TO ACHIEVE SMOOTH AND PEACEFUL EXCLUSION OF JOBS WORKS IN THE REMOTES T AREAS. THE LEARNED DR SUBMITS THAT IT IS NOT A BUSINESS EXPENDITURE AND IT WAS NO T RAISED BEFORE THE CIT-A. 16. HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS INCURRED THESE EXPENSES BY DONATING THE MONEY T O THE UNDERGROUND OUTFIT AND POLITICAL PARTIES, WHICH IS NOT BUSINESS CONNECTED EXPENSES AND THERE IS NO PROVISION TO ALLOW THE SAME UNDER THE INCOME-TAX ACT. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT-A AND HENCE THIS GROUND OF AP PEAL OF ASSESSEE IS DISMISSED. 7 ITA M O. 1323/KOL/2015 INDO NAB IN PROJECTS LTD 17. IN THE RESULT THE APPEAL OF THE ASSESSE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016 SD/- SD/- WASEEM AHMED S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.08.2016 **PP/SPS COPIES OF ORDER FORWARDED TO :- (1) M/S. INDO POWER PROJECTS LIMITED NOW KNOWN AS INDO NABIN PROJECTS LIMITED 1582 RAJDA NGA MAIN ROAD, SOUTH END ENCLAVE, 7 TH FLOOR, KOLKATA-107. (2) THE DCIT, CIR-10, AAYKAR BHAVAN, 3 RD FLOOR, P-7 CHOWRINGHEE SQUARE, KOL-69. (3) COMMISSIONER OF INCOME-TAX (APPEALS)-, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA