DCIT, Jaipur V. M/S COMPUCOM SOFTWARE LTD., Jaipur

ITA 1343/JPR/2010

• Counselvise Citation: 134323114 RSA 2010
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Non compliance
• Section: 194C

Judgement Text

1 ITA 1343-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1343/JP/2010 ASSTT. YEAR : 2007-08. THE DCIT, CIRCLE-6, VS. M/S. COMPUCOM SOFTWARE L TD., JAIPUR. 5A, TILAK BHAWAN, TILAK MARG, C-SCHEME, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI RAJEEV SOGANI DATE OF HEARING : 29.09.2011 DATE OF PRONOUNCEMENT : 21.10.2011. ORDER DATE OF ORDER : 21/10/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2007-08. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 85,56,827/- MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE IT ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE WA S AWARDED A CONTRACT FROM THE BOARD OF SECONDARY EDUCATION, AJMER, RAJASTHAN TO I MPLEMENT COMPUTER EDUCATION IN APPROX. 600 SCHOOLS IN THE STATE OF RAJSTHAN. THE COMPANY IN TURN SUB CONTRACTED THE ASSIGNMENT TO VARIOUS VENDORS WHICH WERE CALLED AUT HORIZED BUSINESS ASSOCIATES (ABA). CONSEQUENT TO SOME DISPUTE THE PAYMENTS WERE WITHHELD BY THE SCHOOLS BUT THE 2 COMPANY PROVIDED FOR EXPENSES UNDER THE ABA POOL AC COUNT AGAINST THE LIABILITY TO BE PAID TO ABAS. HOWEVER, THE AO HAS FOUND THAT TDS W AS NOT DEDUCTED IN RESPECT OF PAYMENT CREDITED UNDER ABA POOL ACCOUNT. IN THIS R ESPECT, DURING THE COURSE OF SURVEY ON 14.9.2009 THE STATEMENT OF DIRECTOR WAS RECORDED AND WITH REFERENCE TO SAID STATEMENT GIVEN A SHOW CAUSE NOTICE WAS ISSUED ON 16.12.2009 PROPOSING THE DISALLOWANCE OF RS. 84,56,827/- FOR NON COMPLIANCE OF TDS PROVISIONS. THEREAFTER, THE AFFIDAVIT FURNISHED IN REPLY TO THE SHOW CAUSE NOTICE WAS REPRODUCED IN TH E BODY OF ASSESSMENT ORDER BUT IT HAS NOT BEEN CONSIDERED SATISFACTORY ON THE GROUND THAT AS PER STATEMENT GIVEN IN THE PRESENCE OF THE ADVISOR SH. S. MISHRA THE DISALLOWANCE HAS B EEN OFFERED AND DEDUCTION OF TDS IN RESPECT OF PAYMENT TO SUB CONTRACTOR IS GOVERNED BY PROVISIONS OF SECTION 194C OF I.T. ACT AND SINCE THIS TDS WAS NOT DEDUCTED THEREFORE, WITHIN THE MEANING OF SECTION 40(A)(IA) OF I.T. ACT A DISALLOWANCE OF RS. 84,56,8 27/- HAS BEEN MADE. 4. IT WAS ARGUED BEFORE LD. CIT (A) THAT THERE WAS NO RESPONSIBILITY TO PAY TO THE SUB CONTRACTOR AND THEREFORE, PROVISIONS OF SECTION 194 C WERE NOT APPLICABLE. BY REFERRING PARA 13 OF THE AGREEMENT WITH THE ABA IT WAS ARGUED THAT THE RESPONSIBILITY TO PAY TO THE ABA WAS DEFERRED TILL THE AMOUNT WAS CREDITED IN TH E BANK ACCOUNT OF APPELLANT COMPANY AND SINCE THE AMOUNT WAS NOT CREDITED TO THE ACCOUN T OF INDIVIDUAL ABA THEREFORE, DURING THE INTERVENING PERIOD THERE WAS NO CONSTRUCTIVE CR EDIT TO THE INDIVIDUAL ACCOUNT OF ABA. IT IS FURTHER ARGUED THAT THE INCOME WAS DISPUTED B ECAUSE GOVT. OF RAJASTHAN VIDE ORDER DATED 23.1.2004 HAS STOPPED THE PAYMENT TO THE ASSE SSEE COMPANY AND SUCH DISPUTE COULD NOT BE RESOLVED AND, THEREFORE, THE APPELLANT COMPA NY HAD TO APPROACH THE HONBLE RAJASTHAN HIGH COURT FOR APPOINTMENT OF ARBITRATOR IN THE MATTER AND HONBLE HIGH COURT VIDE THEIR ORDER DATED 25.1.2008 HAS APPOINTED MR. JUSTICE F.C. BANSAL, RETD. JUDGE AS 3 THE ARBITRATOR AND IN VIEW OF THE ABOVE A REQUEST W AS MADE TO DELETE THE SAID DISALLOWANCE. HOWEVER, WITHOUT PREJUDICE TO THIS LE GAL VIEW SHRI S. MISHRA HAS SUBMITTED AN ACCOUNT OF TDS PAYABLE WITH REFERENCE TO BSER SC HOOLS FOR THE RELEVANT ACCOUNTING YEAR ACCORDING TO WHICH A TDS DEDUCTION OF RS. 7,10 ,178/- WAS MADE ON COURSE EXECUTION EXPENSES CLAIMED AT RS. 6,05,44,205/- WHI LE AS PER PRESCRIBED TDS RATE APPLICABLE ON THE PAYMENTS TO BE MADE TO THE SUB CO NTRACTOR THE TDS LIABILITY WAS ONLY RS. 6,23,605/- AND THE ENTIRE AMOUNT OF TDS WAS DEP OSITED IN TIME AND IN SUPPORT OF THAT THE COPIES OF CHALLANS WERE ALSO FURNISHED. AFTER SUBMISSION OF SAID ACCOUNT AND EVIDENCE IT WAS ARGUED THAT IN ANY CASE THE SAID DI SALLOWANCE WAS FACTUALLY INCORRECT AND THEREFORE, A REQUEST WAS MADE TO DELETE THE SAID DI SALLOWANCE. 5. AFTER CONSIDERING THE ORDER OF AO AND SUBMISSION S OF THE ASSESSEE, THE LD. CIT (A) CONFIRMED THAT TDS HAVE ALREADY BEEN DEPOSITED AS COPY OF CHALLAN WAS FILED BEFORE HIM. THEREFORE, HE HELD THAT NO ADDITION CAN BE MAD E IN VIEW OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY HE DELETED THE AD DITION. 6. THE LD. D/R FAIRLY STATED THAT THOUGH LD. CIT (A ) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT TDS HAS ALREADY BEEN DEP OSITED, HOWEVER, IT SHOULD BE VERIFIED AT THE END OF THE A.O. 7. IN REPLY, IT WAS SUBMITTED THAT COPY OF CHALLAN OF TDS WAS FILED BEFORE LD. CIT (A) AND IT WAS ALSO SUBMITTED THAT IN SUBSEQUENT YE ARS A SURVEY WAS CONDUCTED AND THIS FACT WAS NOTED BY THE SURVEY PARTY. ATTENTION OF T HE BENCH WAS DRAWN ON PAPER BOOK AT PAGES 6 TO 19. 4 8. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. C IT (A) AND SUBMISSIONS OF BOTH THE PARTIES, WE FIND NO INFIRMITY IN THE FINDINGS O F LD. CIT (A). FINDINGS OF LD. CIT (A) HAVE BEEN RECORDED AT PAGES 3 & 4 OF HIS ORDER ARE AS UNDER :- I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENT S TAKEN BY SH. SOGANI AND BY SH. MISHRA QUITE CAREFULLY. WITHOUT GOING INTO THE MERIT OF THE ARGUMENTS THAT TDS WAS DEDUCTIBLE OR N OT ON THE PAYMENTS TO THE ABAS CREDITED IN ABAS POOL ACCOUNT, IT IS NOTICED THAT ON SUCH PAYMENT CLAIMED AS AN EXPENDIT URE AT RS. 6,05,44,205/- THE REQUISITE TDS AT THE PRESCRIBED R ATE U/S 194C COMES RS. 6,23,605/- AND AS AGAINST THAT THE PAYMEN T OF TDS DURING THE F.Y. WAS MORE AT RS. 6,49,547/- FOR WHIC H THE SUMMARY OF MONTHLY TRANSACTION, COPY OF TDS PAYABLE AND COP IES OF THE CHALLANS FOR THE DEPOSIT OF TDS WERE ALSO FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS. AFTER GOING THROU GH THE SAME IN MY CONSIDERED VIEW, WHEN THE REQUISITE TDS LIABILIT Y HAS BEEN PAID IN TIME THEN THERE REMAINS NO QUESTION OF ANY DISALLOWANCE WITHIN THE MEANING OF SECTION 40(A)(IA) OF I.T. ACT AND WITH THIS DISCUSSION THE AFORESAID DISALLOWANCE OF RS. 84,56, 827/- IS HEREBY DELETED. THE COPY OF CHALLAN WAS FILED BEFORE LD. CIT (A) AN D THE SAME HAS BEEN VERIFIED BY HIM AND THEN HE HAS DELETED THE ADDITION. IT IS ALSO A MATTER OF FACT THAT IN SUBSEQUENT YEAR SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSE E AND THIS FACT WAS NOTED. THEREFORE, THERE IS NO NEED TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR VERIFICATION PURPOSES. EVEN AND OTHERWISE, IF THIS FACT WAS FOUND INCORREC T, THEN THE DEPARTMENT CAN TAKE RECOURSE FOR MAKING THE ADDITION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE CONFIRM THE ORDER OF LD. CIT (A). 5 9. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 10. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .10.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE DCIT, CIRCLE-6, JAIPUR. M/S. COMPUCOM SOFTWARE LTD., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1343/JP/2010) BY ORDER, AR ITAT JAIPUR.