Unique Ship Breaking Corporation, Bhavnagar V. The ACIT.,Circle-2, Bhavnagar

ITA 1362/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76781 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2011
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: A C SHAH
• Section: 194C; 2

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , !'# !$ !'# !$ !'# !$ !'# !$0 00 0! !! !0 00 0 %$ %$ %$ %$, , , , &' ( &' ( &' ( &' ( & & & & BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO. 1362/AHD/2011 ASSESSMENT YEAR 2008-09 UNIQUE SHIP BREAKING CORPORATION PLOT NO. 107, SOYA SHIP BREAKING YARD,,BHAVNAGAR. PAN: AAAFU9986H V S ACIT, CIR-2, BHAVNAGAR. )*/ APPELLANT ,-)* / RESPONDENT REVENUE BY : SHRI ROOPCHAND, SR. DR ASSESSEE(S) BY : SHRI A.C. SHAH, AR $'. / 0'/ // / DATE OF HEARING : 26/05/2014 123 / 0' / DATE OF PRONOUNCEMENT : 30/05/2014 &4 &4 &4 &4/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER; THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XX, AHMEDABAD DATED 11.02.2011. 2. THE SOLE GROUND INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING DISALLO WANCE OF RS 2,47,500/- BEING GUJARAT MARITIME BOARD DEVELOPMENT FEE U/S. 4 0(A)(IA) ON THE GROUND THAT THE, ASSESSEE FAILED TO DEDUCT TAX AT SOURCE U /S. 194C OR SECTION 194I AS THE GUJARAT MARITIME BOARD PLOT DEVELOPMENT FEE IS NOT A WORKS ITA NO. 1362/AHD/2011 UNIQUE SHIP BREAKING CORPORATION ASSESSMENT YEAR 2008-09 - 2 - CONTRACT U/S. 194C NOR IT IS RENT WITHIN THE MEANIN G OF SECTION 1941 AND THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE. HENCE, THE DISALLOWANCE MADE IS NOT PROPER. 3. FURTHER, THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING DISALLOWANCE OF RS 90,000/- BEING PLOT R ENT PAID TO GUJARAT MARITIME BOARD U/S. 40(A)(IA) AS TDS IS NOT REQUIRE D TO BE MADE U/S. 1941 SINCE THE TOTAL RENT PAID FOR THE ENTIRE YEAR DOES NOT EXCEED RS 1,20,000/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER DISALLOWED RS 3,37,500/- BY INVOK ING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE BESIDES MAKING PAYMENT OF RENT OF RS 90,00 0/- TO THE GUJARAT MARITIME BOARD HAS ALSO MADE PAYMENT OF RS 2,47,500 /- AS DEVELOPMENT CHARGES DURING THE YEAR. THE ASSESSING OFFICER STAT ED AS UNDER: 'ON PERUSAL OF P&L ACCOUNT, IT HAS BEEN FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS 2,47,500 ON ACCOUNT OF GMB DEVELOPMENT FEE AND RS 90,000 ON ACCOUNT OF GMB PLO T RENT. THOUGH THE SAME IS LIABLE FOR TDS U/S. 1941 OF THE ACT, NO TDS HAS BEEN DEDUCTED BY THE ASSESSEE. IN VIEW OF THIS, THE EXPENSE CLAIM OF RS 3,37,500 (RS 2,47,500 + RS 90,000) IS D ISALLOWED AS U/S. 40(A)(IA) OF THE ACT.' 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE DISALLOWANCE OF ENTIRE AMOUNT OF RS 3 ,37,500/- BY OBSERVING AS UNDER: ITA NO. 1362/AHD/2011 UNIQUE SHIP BREAKING CORPORATION ASSESSMENT YEAR 2008-09 - 3 - '3.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE SUBMISSIONS OF THE AR OF THE APPELLANT CAREFULLY. I T IS SEEN THAT THE AMOUNT OF VENT AND DEVELOPMENT CHARGES HAVE BEE N PAID TO THE GUJARAT MARITIME BOARD UNDER AN AGREEMENT DATED 2/2/2002 ENTERED INTO BY THE APPELLANT WITH GUJARAT MARITIME BOARD. THE SAID AGREEMENT CLEARLY SPECIFIES THE RENT TO BE PAI D BY THE APPELLANT. IN VIEW OF THE ABOVE THE CONTENTION OF T HE AR OF THE APPELLANT THAT NO TDS WAS DEDUCTIBLE BY THE APPELLA NT ON THE RENT PAID TO GUJARAT MARITIME BOARD IS NOT CORRECT. 3.3(I) AS FAR AS THE DEVELOPMENT CHARGES ARE CONCER NED, IT WOULD BE SEEN THAT THE DEVELOPMENT CHARGES ARE ALSO CHARG ED BY THE GUJARAT MARITIME BOARD AS PER THE CLAUSES OF THE AF ORESAID AGREEMENT ITSELF. THIS AGREEMENT IS A CONTRACT BETW EEN THE GUJARAT MARITIME BOARD AND THE APPELLANT. ELEMENT O F PROFIT IS IN BUILT IN THE DEVELOPMENT WORK CARRIED OUT BY DIE GU JARAT MARITIME BOARD. THUS THE APPELLANT SHOULD HAVE DEDU CTED TDS ON THE PAYMENT MADE ON THIS COUNT AS WELL. FURTHER IT IS SEEN THAT THE DEVELOPMENT CHARGES ARE ALSO LINKED TO THE SIZE OF THE PLOT AND ARE AKIN TO RENT. EVEN IF IT IS HELD THAT THE SAID PAYMENT OF DEVELOPMENT CHARGES WAS NOT RENT, EVEN THEN TDS WOULD HAVE TO BE DEDUCTED U/S 194C BEING PAYMENT FOR DEVE LOPMENT CONTRACT. IT IS SEEN THAT THE APPELLANT HAS ADMITTE DLY NOT DEDUCTED TDS ON ANY OF THE PAYMENTS MADE TO GUJARAT MARITIME BOARD.' 6. WE FIND THAT IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE PAID RS 90,000/- UNDER THE HEAD RENT' AND RS 2,47,500/- UNDER THE HEAD 'DEVELOPMENT CHARGES' TO GUJARAT MARITIME BOARD WHICH IS AN AUTHORITY CONSTITUTED BY THE GOVERNMENT OF GUJARAT UNDER THE GUJARAT MARITIME BOARD ACT, 1981 (GUJARAT NO. - 30 OF 1981 ). IT IS ALSO NOT IN DISPUTE THAT THE AGREEMENT ENTERED INTO WITH A BOAR D CONSTITUTED BY THE GOVERNMENT CLEARLY ENVISAGES PAYMENT OF TWO DIFFERE NT CONSIDERATIONS I.E. RENT AND DEVELOPMENT CHARGES. FURTHER, AS PER THE LAW, WHICH WAS IN FORCE AT THE MATERIAL TIME, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE U/S. 194I OF THE ACT IN RESPECT OF RENT WHEN PAYMEN T TO A PERSON EXCEEDS RS 1,20,000/- DURING THE PREVIOUS YEAR. WE FIND THAT ABSOLUTELY NO REASON HAS BEEN STATED IN THE ASSESSMENT ORDER FOR TREATING TH E DEVELOPMENT CHARGES ITA NO. 1362/AHD/2011 UNIQUE SHIP BREAKING CORPORATION ASSESSMENT YEAR 2008-09 - 4 - AS RENT AND THEREBY HOLDING THAT THE ASSESSEE WAS L IABLE TO DEDUCT TAX AT SOURCE ON ENTIRE SUM OF RS 3,37,5007- U/S. 1941 OF THE ACT. 7. FURTHER, THE COMMISSIONER OF THE INCOME TAX (AP PEALS) HAS ALSO NOT GIVEN ANY CATEGORICAL FINDING ABOUT THE NATURE OF DEVELOPMENT CHARGES. ON ONE HAND, THE COMMISSIONER OF THE INCOME TAX (AP PEALS) OBSERVES THAT EVEN IF DEVELOPMENT CHARGES WERE NOT RENT, THEN THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON DEVELOPMENT CHARGES OF RS 2 ,47,500/- U/S. 194C OF THE ACT WITHOUT BRINGING ON RECORD ANY MATERIAL TO SHOW THAT THE SUM WAS A PAYMENT MADE BY THE ASSESSEE TO GUJARAT MARITIME BO ARD FOR UNDERTAKING ANY WORK ON BEHALF OF THE ASSESSEE. 8. FURTHER, NO MATERIAL WAS ALSO BROUGHT ON RECORD BY THE COMMISSIONER OF THE INCOME TAX (APPEALS) TO SHOW TH AT DEVELOPMENT CHARGES PAID BY THE ASSESSEE WAS FOR USE OF ANY LAN D OR OTHER PROPERTY. IN OUR CONSIDERED OPINION, SIMPLY BECAUSE DEVELOPMENT CHARGES WERE PAID IN PURSUANCE OF THE AGREEMENT WHEREBY THE ASSESSEE ALS O AGREED TO PAY RENT OR SIMPLY BECAUSE THE DEVELOPMENT CHARGES WERE MEAS URED ON THE BASIS OF AREA RENTED OUT TO THE ASSESSEE, IT CANNOT BE CONCL UDED THAT THE DEVELOPMENT CHARGES WAS A CONSIDERATION PAID FOR US E OF LAND ONLY. 9. WE FIND THAT NO MATERIAL COULD BE BROUGHT BEFOR E US BY EITHER OF THE PARTIES TO SHOW THE ACTUAL NATURE OF DEVELOPMEN T CHARGES THOUGH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CLAIMED B EFORE US THAT THE SAID PAYMENT WAS IN CONSIDERATION OF BASIC FACILITIES PR OVIDED BY THE GUJARAT MARITIME BOARD TO THE ASSESSEE. IN THESE CIRCUMSTAN CES, IN OUR CONSIDERED VIEW, IT SHALL BE FAIR AND IN THE INTEREST OF JUSTI CE TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF ITA NO. 1362/AHD/2011 UNIQUE SHIP BREAKING CORPORATION ASSESSMENT YEAR 2008-09 - 5 - THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AFTER DECIDING THE ACTUAL NATURE OF DEVELOPMENT CHARGES BY PASSING A SPEAKING ORDER. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF HEARING SHALL BE ALLOWED TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 30 TH OF MAY, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/05/2014 GHANSHYAM MAURYA, SR. P.S. TRUE COPY &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53 &4 / ,5 6&53/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. ,-)* / THE RESPONDENT. 3. ## 7 / CONCERNED CIT 4. 7() / THE CIT(A)-III, AHMEDABAD 5. 5': ,$ , , / DR, ITAT, AHMEDABAD 6. ;< =. / GUARD FILE. &4$ &4$ &4$ &4$ / BY ORDER, / // / # # # # ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD