DCIT, Circle - 49, Kolkata, Kolkata V. Smt. Gargi Poddar, Kolkata

ITA 1345/KOL/2010

• Counselvise Citation: 134523514 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-06-2010
• Court: TRIBUNAL
• Department Lawyers: P B PRAMANIK LD JCIT SR DR
• Assessee Lawyers: DILIP KUMAR SAHA FCA LD
• Keywords: Additional evidence
• Section: 43B

Judgement Text

, B , , INCOME TAX APPELLATE TRIBUNAL, BENCH- B KOL KATA ( ) BEFORE . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER !' /AND #$# 1 & ' , ) SHRI GEORGE MATHAN, JUDICIAL MEMBER '( / ITA NO. 1345/KOL/2010 A.Y 2006-07 D.C.I.T, CIR-49, KOLKATA - !' - - VERSUS - . SMT. GARGI PODDAR PAN: AGQPP6634B ( &* / APPELLANT ) ( +,&* / RESPONDENT ) &* /FOR THE APPELLANT //SHRI P.B. PRAMANIK, LD. JCIT, SR.DR +,&* / FOR THE RESPONDENT: / SHRI DILIP KUMAR SAHA, FCA, LD.AR .'!/ 0 1 /DATE OF HEARING : 12-12--2013 23 0 1 /DATE OF PRONOUNCEMENT: 12-12-2013 / ORDER . , SHRI R.C. SHARMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER PASSED BY THE LD. CIT(A), DATED 30/03/2010 FOR THE ASSESSMENT YEAR 2006-07, WHEREIN FOLLOWING THREE GROUNDS HAVE BEEN TAKEN BY THE REVENUE:- I) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A), HAS ERRED IN DELETING THE ADDITION OF R S.7,71,100/- IN RESPECT OF DELAYED PAYMENT OF EMPLOYERS CONTRIBUTIO N TOWARDS PF & ESI BY NOT APPRECIATING THE FACTS THAT ADDITIO N WAS MADE U/S. 2(124)(X) OF THE ACT READ WITH SECTION 36(1)(V A) OF THE ACT AND NOT U/S. 43B OF THE ACT. II) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .5,00,420/- ON THE BASIS OF FRESH EVIDENCE PRODUCED BEFORE HIM VIO LATING RULE 46(A) OF THE I.T RULES. III) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,20,650/- ON ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 2 2 THE BASIS OF FRESH EVIDENCE PRODUCED BEFORE HIM VIO LATING RULE 46(A) OF THE I.T RULES. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSE D THE RECORD. 3. THIS APPEAL WAS ORIGINALLY DECIDED BY THE TRIBU NAL VIDE ITS ORDER DATED 23-03- 2012, WHICH WAS SUBSEQUENTLY RECALLED VIDE ORDER D ATED 23-11-2012 ON THE PLEA THAT TWO GROUNDS COULD NOT BE DECIDED BY THE TRIBUNAL AND IN GROUND NO.1 EMPLOYEES CONTRIBUTION HAS BEEN TREATED AS EMPLOYERS CONTRIBUTION AS ENTIRE APPEAL HAS BEEN RECALLED VIDE THE SAID ORDER, THE SAME IS NOW FIXED FOR ADJUDICATION BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND FOUND T HAT DISALLOWANCE OF PF & ESI CONTRIBUTION WAS PARTLY DELETED BY THE LD.CIT(A) BY FOLLOWING THE AMENDED PROVISIONS OF LAW. PRECISE OBSERVATION OF THE LD.CIT(A) IS AS UNDER:- I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND SUBMISSIONS OF THE A/R. SECOND PROVISO TO SECTION 43B HAS SINC E BEEN OMITTED FROM THE STATUTE WITH EFFECT FROM 01.04.04. AFTER SUCH AMENDMENT, AS PER THE PROVISIONS OF SECTION 43B, CONTRIBUTION MADE BY AN ASSESSEE TOWARDS ANY PROVIDENT FUND AND SUPERANNUAT ION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES IS TO BE ALLOWED DURING THE YEAR IN WHICH ACTUALLY PAYME NT IS MADE OR IF THE PAYMENT IS ACTUALLY MADE BY THE ASSESSEE BEF ORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S. 139(1). THE A/R OF THE ASSESSEE HAS CLAIMED THAT THE ASSESSEE HAD PAID THE CONTRIBUT ION TO PF AND ESI BEFORE THE DUE DATE OF FILING OF RETURN U/S. 139(1) IN THIS CASE, THEREFORE, SUCH CONTRIBUTION IS ALLOWABLE TO THE AS SESSEE. FROM THE AUDIT REPORT OF THE RELEVANT YEAR, A COPY OF WHICH HAS BEEN PRODUCED BY THE A/R, IT IS CLEAR THAT THE ASSESSEE HAD MADE THE PAYMENT OF CONTRIBUTION TO THE PF AND ESI BEFORE THE DUE DAT E OF FILING OF RETURN U/S. 139(1) EXCEPT PROVIDENT FUND CONTRIBUTI ON OF RS.3,002/- AND ESI CONTRIBUTION TO THE TUNE OF RS.512/-. THERE FORE, THE DISALLOWANCE MADE BY THE AO IN THIS CONNECTION IS D ELETED TO EXTENT OF RS.7,67,485/- AND DISALLOWANCE TO THE TUNE OF RS.3,515/- IS CONFIRMED. AS A RESULT THIS GROUND IS PARTLY ALLOWE D. 4.1 THE ISSUE WITH REGARD TO ALLOWING THE CONTRIBU TIONS MADE TO PF & ESI BY THE EMPLOYEES IS SQUARELY COVERED BY THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD REPORTED IN (2009) 313 ITR (ST.1) (SC). THIS ISSUE IS ALSO DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD REPORTED IN ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 3 3 (2009) 319 ITR 306(SC). THE HONBLE SUPREME COURT I N THE AFORESAID CASES HAS HELD THAT AMENDMENT TO SECOND PROVISO TO SECTION 43B, A S INTRODUCED BY THE FINANCE ACT 2003 WAS CURABLE IN NATURE AND REQUIRE TO BE APPLI ED RETROSPECTIVELY W.E.F 1-4-98. SUCH BEING THE POSITION THE DELETION OF SUCH AMOUNT PAID TOWARDS EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE WAS DEDUCTIBLE IN TERMS OF TH E AFORESAID AMENDMENT AMENDED IN THE PROVISIONS OF SECTION 43 OF THE I.T ACT 1961. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) I N DELETING THE SAME. THE SAME IS HEREBY UPHELD. 5. THE REVENUE IS AGGRIEVED FOR VIOLATION OF RULE 46(A) OF THE I.T RULES 1962 IN RESPECT OF ADDITION OF RS.5,00,420/-. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM RECORD THAT THIS ADDITION WAS MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN THE AMOUNT OF JOB WORK RECEIPTS AS PER P & L ACCOUNT AND AS CREDITED IN THE BOOKS OF ACCO UNT. THE AO HAS TREATED THE DIFFERENCE OF RS. 5,00,420/- AS ASSESSEES UNDISC LOSED INCOME AND ADDED THE SAME IN THE ASSESSEES INCOME. 7. VIDE THE IMPUGNED ORDER, THE LD.CIT(A) HAS DELE TED THE SAME, AFTER HAVING THE FOLLOWING OBSERVATIONS:- AS REGARD THE CLAIM OF THE ASSESSEE THAT OUT OF THE SUM OF RS.5,00,420/- ADDED BY THE AO TO ASSESSEES INCOME, A SUM OF RS.60,000/- WAS RELATED TO REIMBURSEMENT OF UNIFORM AND OTHER CHARGES RECEIVED FROM SAHARA AIRLINES LTD AND THE REFORE, NOT ASSESSEES INCOME. FROM THE COPY OF LEDGER A/C P RODUCED BY THE A/R IT IS OBSERVED THAT THE SAID AMOUNT WAS DEBITED TO THE A/C OF M/S. SAHARA AIRLINES LTD. DURING THE APPELLATE PROCEEDI NGS THE A/R HAD PRODUCED A COPY OF AN AGREEMENT DATED 30.12.2006 BE TWEEN THE ASSESSEE AND M/S. SAHARA AIRLINES LTD IN CLAUSE 14 OF WHICH IT IS SPECIFIED THAT EXPENSES ON UNIFORM, EXPENSES ON MAI NTENANCE OF UNIFORM AND ANY OTHER EXPENSES OF SUCH NATURE SHALL BE BORNE BY THE CONTACTOR, I.E. THE ASSESSEE. A COPY OF THE SAID AGREEMENT ALONG WITH THE WRITTEN SUBMISSIONS AND OTHER DOCUMENTS SUBMITT ED BY THE A/R WERE SENT TO THE AO FOR HIS COMMENTS/REPORT UPON T HE SAME, VIS--VIS THE ADDITIONS MADE IN THE ASSESSMENT. AS ALREADY S TATED ABOVE, THE AO DID NOT SUBMIT REMAND REPORT DESPITE SEEKING EXT ENSION OF TIME TWICE FOR SUBMISSIONS OF SUCH REPORT. THEREFORE, I PROCEED TO DECIDE ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 4 4 THE APPEAL WITHOUT SUCH REMAND REPORT, ON THE BAS IS OF THE MATERIAL AVAILABLE BEFORE ME. AS DISCUSSED IN THE PRECEDING PARA, UNDER CLAUSE 14 OF THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. SAHARA AIRL INES LTD, IT WAS AGREED THAT THE EXPENDITURE RELATED TO UNIFORM A ND THE MAINTENANCE OF THE SAME WAS TO BE BORNE BY THE ASSESSEE, THEREF ORE, EXPENDITURE ON THAT ACCOUNT HAS TO BE ALLOWED TO THE ASSESSEE. THE A/R HAS DEMONSTRATED FROM THE COPY OF THE RELEVANT LEDGE R ACCOUNT THAT THE ASSESSEE HAD NOT CHARGED THE EXPENDITURE OF RS.60 ,000/- ON ACCOUNT OF UNIFORM AND THE MAINTENANCE OF THE SAME TO HER P ROFIT AND LOSS ACCOUNT RATHER, FOR ACCOUNTING PURPOSES, THE SAME HAS BEEN DEBITED TO THE ACCOUNT OF SAHARA AIRLINES LTD. THUS, THE A SSESSEE INSTEAD OF SPECIFICALLY CLAIMING THE SAID AMOUNT OF RS.60,0 00/- AS AN EXPENDITURE, REDUCED THE SAME FROM THE AMOUNT RECE IVED/RECEIVABLE FROM SAHARA AIRLINES LTD. THE NET EFFECT OF SUCH ACCOUNTING REMAINS THAT SUCH AMOUNT IS REDUCED FROM THE ASSESSEES IN COME. IN ANY CASE, AS HAS BEEN HELD ABOVE, THE SAID AMOUNT OF RS.60,00 0/- SPENT TOWARD THE UNIFORM BY THE ASSESSEE IS TO BE ALLOWED TO HER AS EXPENDITURE, THEREFORE, I FIND NO INFIRMITY WITH THE ACCOUNTING ENTRIES MADE IN HER BOOKS OF ACCOUNT BY THE ASSESSEE IN THIS RESPECT. IN THE LIGHT OF THE ABOVE DISCUSSION, THE DISALLOW ANCE OF THE SUM OF RS.60,000/-, WHICH IS PART OF THE AMOUNT OF RS.5,00 ,420/- DISALLOWED BY THE AO IN THE ASSESSMENT, IS NOT SUSTAINABLE. AC CORDINGLY, THE SAME IS DELETED. 7.1. IT IS CLEAR FROM THE ABOVE FINDINGS OF THE LD. CIT(A) THAT ADDITIONAL EVIDENCE SO PRODUCED BY THE ASSESSEE IN THE FORM OF AN AGREEME NT DATED 30-12-2006 WITH M/S. SAHARA AIRLINES LTD WAS ALREADY FORWARDED TO THE AO FOR HIS COMMENTS. HOWEVER, INSPITE OF GIVING OPPORTUNITIES THE AO DID NOT SEN D HIS COMMNENTS/REPORT. THE LD.CIT(A) AFTER GIVING DETAILED FINDING WITH REGAR D TO THE ADDITIONAL EVIDENCE OBSERVED THAT THERE WAS NO SUPPRESSION OF INCOME ON ACCOUNT OF JOB WORK RECEIPTS. THE DETAILED FINDINGS OF THE LD.CIT(A) AS REPRODUCED HEREINABOVE HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINING ANY POSITIVE MATERIAL ON RECO RD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) F OR DELETING THE SAME. WE UPHOLD THE SAME. 8. THE REVENUE IS ALSO AGGRIEVED FOR DELETION OF A DDITION OF RS.3,20,650/- U/S. 40(A)(IA) OF THE I.T ACT 1961 BY VIOLATION OF RULE 46(A) OF THE I.T RULES 1962. ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 5 5 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THE DOCUMENTS AS SUBMITTED BEFORE THE LD.CIT(A) WERE SENT TO THE AO FOR HIS COMMENTS/REMAND REPORT. HOWEVER, INSPITE OF GIVING OPPORTUNITY, NO REMAND REPORT WAS SENT BY THE AO. THEREAFTER, THE LD. CIT(A) HAS DEALT WITH THE ADD ITIONAL EVIDENCE AND AFTER RECORDED THE FOLLOWING FINDINGS DELETED THE DISALLOWANCE OF RS. 3,22,650/-:- BEFORE ME, THE A/R ALSO PRODUCED COPIES OF APPOIN TMENT LETTERS ISSUED BY THE ASSESSEE TO THE PERSONS TO WHOM SUPER VISORY CHARGES WERE PAID. A PERUSAL OF THOSE DOCUMENTS SHOWS THAT THOSE PERSONS NAMELY, SH. NABA KUMAR CHATTERJEE, SH. SWAPAN SHAR MA AND SH. BAPI GHOSH WERE APPOINTED AS SUPERVISIONS BY THE AS SESSEE IN HER BUSINESS CONCERN AT A MONTH REMUNERATION. THESE DOCUMENTS, ALONG WITH OTHER DOCUMENTS FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WERE SENT TO THE AO FOR HIS COMMENTS/REPORT VIS--VIS THE DISALLOWANCE MADE BY HIM. AS ALREADY STATED ABOVE DESPITE SEEKING EXTENSION FOR SUBMITTI NG THE REMAND REPORT THE AO DID NOT SUBMIT ANY REPORT TILL THE TI ME OF PASSING THIS ORDER. THEREFORE, I PROCEED TO DECIDE THE APPEAL ON THE BASIS OF THE MATERIAL AVAILABLE BEFORE ME, WITHOUT THE BENEFIT OF THE REMAND REPORT OF THE A.O A PERUSAL OF THE DOCUMENTS RELIED UPON BY THE A/R IT IS OBSERVED THAT THE PERSONS TO WHOM SUPERVISION CHARGES WERE P AID BY THE ASSESSEE WERE APPOINTED ON A MONTHLY REMUNERATION. FROM THE TERMS OF APPOINTMENT IT DOES NOT APPEAR THAT THE NATURE OF JOB TO BE PERFORMED BY THEM WAS IN THE NATURE OF PROFESSIONA L OR TECHNICAL SERVICES. PROFESSIONAL SERVICES HAS BEEN DEFINED UNDER EXPLANATION BELOW SECTION 194J TO MEAN SERVICES RENDER BY A PER SON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING OR ARCH ITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSU LTANCY OR INTERIOR DECORATION OR ADVERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA OR OF S ECTION 194J. FEE FOR TECHNICAL SERVICES HAS BEEN DEFINED UNDE R THE SAID EXPLANATION TO HAVE THE SAME MEANING AS IN EXPLANAT ION-2 TO SECTION 9(1)(VII) OF THE ACT. EXPLANATION-2 TO SECTION 9(1) (VII) DEFINES FEE FOR TECHNICAL SERVICES TO BE CONSIDERATION FOR THE RE NDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCL UDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONN EL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBL Y, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATIO N WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 6 6 THE A/R OF THE ASSESSEE SUBMITTED THAT THE SUPERV ISORY CHARGES PAID WERE NEITHER FOR ANY PROFESSIONALS SERVICES OR FOR THE SERVICES OF TECHNICAL NATURE AND THAT SUCH PAYMENTS WERE MA DE TO THE STAFF OF THE ASSESSEES BUSINESS CONCERN. A PERUSAL OF THE APPOINTMENT LETTERS, WHICH HAVE BEEN REFERRED TO ABOVE, SHOW T HAT ALL THE THREE PERSONS TO WHOM SUPERVISION CHARGES WERE PAID BY T HE ASSESSEE WERE APPOINTED AT A MONTHLY REMUNERATION, INITIALLY ON T EMPORARY BASIS AND THEIR APPOINTMENT WAS TO BE MADE PERMANENT ON COMPLETION OF ONE YEAR FROM THE DATE OF THEIR ACTUAL JOINING THE SERVICE WITH THE ASSESSEE. THESE FACTS CLEARLY BRING OUT THAT THOSE PERSONS WERE APPOINTED TO WORK AS EMPLOYEES OF THE ASSESSEE AND NOT AS PROFESSIONALS OR PERSONS TO PROVIDE TECHNICAL SERVI CES TO THE ASSESSEE. IN THE LIGHT OF THE ABOVE FACTS IT IS HELD THAT THE IMPUGNED SUPERVISORY CHARGES OF RS.3,22,650/- WERE NOT FEES PAID FOR PR OFESSIONAL OR TECHNICAL SERVICES, THEREFORE, SUCH PAYMENTS WERE NOT LIABLE FOR DEDUCTION TAX AT SOURCE UNDER THE PROVISIONS OF SE CTION 194J. ACCORDINGLY, THE DISALLOWANCE OF SUCH AMOUNT UND ER THE PROVISIONS OF SECTION 40(A)(IA) IS NOT JUSTIFIED. THEREFORE, THE DISALLOWANCE OF RS.3,22,650/- IS DELETED AND GROUND NO.4 OF THE APP EAL IS ALLOWED. 9.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT 3 PERSONS TO WHOM SUPERVISION CHARGES WERE PAID BY THE ASSESS EE, WERE APPOINTED AT A MONTHLY REMUNERATION. THUS, 3 PERSONS WERE APPOINTED AS E MPLOYEES OF THE ASSESSEE AND NOT AS PROFESSIONAL OR PERSONS TO PROVIDE TECHNICAL SERVIC ES TO THE ASSESSEE. THUS, THE PAYMENTS OF RS.3,22,650/- MADE TO 3 PERSONS WERE N OT FEE FOR TECHNICAL SERVICES. THEREFORE, SUCH PAYMENT WAS NOT LIABLE FOR DEDUCTIO N OF TAX U/S. 194J. THE DETAILED FINDING RECORDED BY THE LD.CIT(A) AS REPRODUCED HER EIN ABOVE HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINGING ANY POSI TIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) IN DELETING THE SAME. WE UPHOLD THE SAME. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 12-1 2-2013 SD/- SD/- ( #$# 1 & ' , ) ( GEORGE MATHAN, JUDICIAL MEMBER ( . , ) ( R.C. SHARMA, ACCOUNTANT MEMBER ( (( ( 1 1 1 1 ) )) ) DATE 12-12-2013 ITA NO.1345 KOL 2010-B- DCIT C 49, KOL VS. SMT. GARGI PODDAR-AM . 7 7 ** PRADIP SPS 0 +4 5436 / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : DCIT,CIR-49, R.NO.16, 8 TH FL., 169 AJC BOSE RD, KOL-14. 2 +,&* / THE RESPONDENT- SMT. GARGI PODDAR, VIDYASAGAR PALLY, JAYNAGAR,KOL-69. 3 4. . ' / THE CIT, ' ( )/ THE CIT(A) 5 . !78 +' / DR, KOLKATA BENCH 6 . GUARD FILE . ,4 +/ TRUE COPY, './ BY ORDER, 9 '# /ASSTT REGISTRAR