THE ITO(TDS), WARD -3(4), Guntur V. The Projector Director Mission for Elimination of Poverty in Municipal Arears, Nellore

ITA 141/VIZ/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5309 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 133A; 194C; 12AA; 201(1); 10

Judgement Text

ITA NOS.140,141&142/V/2013 & CO NOS.71,72&73/V/2013 MEPMA, NELLORE IN THE INCOME TAX APPEL TE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO S . 140,141&142 /VIZAG/ 20 13 ASSESSMENT YEAR S : 2009 - 10 TO 2011 - 12 RE SPECTIVELY ITO (TDS), WARD-3(4) GUNTUR VS. THE PROJECT DIRECTOR , MISSION FOR ELIMINATION OF POVERTY IN MUNICIPAL AREAS, NELLORE ( ASSESSEE ) (RESPONDENT) TAN NO.HYDP06948E CO NOS.71,72&73/VIZAG/2013 (ARISING OUT OF ITA NOS.140,141&142/VIZAG/2013) A SSESSMENT YEARS : 2009 - 10 TO 2011 - 12 RESPECTIVELY THE PROJECT DIRECTOR MISSION FOR ELIMINATION OF POVERTY IN MUNICIPAL AREAS NELLORE VS. ITO (TDS), WARD-3(4) GUNTUR ( ASSESSEE ) (RESPONDENT) ASSESSEE BY: S MT. KOMALI KRISHNA, DR RESPONDENT BY: SHRI G.V .N. HARI, ADVOCATE DATE OF HEARING : 02.12.2013 DATE OF PRONOUNCEMENT : 06.12.2013 ORDER PER BENCH:- THE THREE REVENUES APPEALS ARE AGAINST THE ORDER S OF THE CIT(A) DATED 6.12.2012. THE ASSESSEE RAISED CROSS OBJECTI ONS IN SUPPORT OF THE ORDER OF THE CIT(A). 2. A SURVEY U/S 133A WAS CARRIED OUT IN THE BUSINES S PREMISES OF THE ASSESSEE ON 13.12.2010. DURING THE COURSE OF SURVE Y, IT WAS OBSERVED THAT THE ASSESSEE HAD MADE TOTAL PAYMENTS TO THE TUNE OF RS.31,54,681/- FOR FINANCIAL YEARS 2008-09 TO 2010-11 (TILL NOVEMBER, 2010) TO VARIOUS ENTITIES ITA NOS.140,141&142/V/2013 & CO NOS.71,72&73/V/2013 MEPMA, NELLORE 2 AND FAILED TO EFFECT TDS ON THESE PAYMENTS AS REQUI RED U/S 194J OF THE ACT. FURTHER, IT WAS OBSERVED THAT CERTAIN PAYMENTS WERE ALSO MADE, WHICH FALLS UNDER THE AMBIT OF SECTION 194C OF THE ACT, WITHOUT EFFECTING TDS. ACCORDINGLY, THE ASSESSING OFFICER RAISED DEMANDS F OR NON DEDUCTION OF TAX ON THESE PAYMENTS. 3. BEFORE THE CIT(A), THE ASSESSEE WAS SUCCESSFUL I N BOTH THE ISSUES RAISED. THE FIRST ISSUE RAISED WAS WHETHER THE PAY MENTS MADE TO NELLORE SANGA RAKSHA WAS COVERED BY SECTION 194C OR 194H? THE LD. CIT(A) HELD THAT AMOUNT TO THE EXTENT OF THE COMMISSION ONLY CA N BE CONSIDERED AND ACCORDINGLY ASSESSEES CONTENTIONS ARE ACCEPTED. T HE REVENUE IS NOT IN APPEAL ON THAT ISSUE. THE ONLY ISSUE CONTESTED IS WITH REFERENCE TO THE PAYMENTS MADE TO PRAGATHI CHARITIES OF RS.1,66,000 /- IN THE A.Y. 2009-10 AND RS.3,32,000/- IN THE A.Y. 2010-11. SIMILAR PAY MENTS WERE ALSO MADE TO SUPPORT ORGANIZATIONS OF RS.45,000/- AND RS.1,33,2 00/- RESPECTIVELY IN THE ABOVE TWO ASSESSMENT YEARS. IT WAS THE CONTENTION OF THE ASSESSING OFFICER THAT THESE DEMANDS ARE COVERED BY THE PROVISIONS OF SECTION 194J AND SINCE ASSESSEE FAILED TO DEDUCT TAX ON THE ABOVE AMOUNTS, HE HAS RAISED DEMAND INVOKING THE PROVISIONS OF SECTION 201(1) AND SECTI ON 201(1A). THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE ALLOWED THE ASSESSEES CONTENTIONS BY HOLDING AS UNDER:- 5.3 FOR ASSESSMENT YEARS 2009-10 AND 2010-11, A PER USAL OF THE ORDERS U/S 201(1) AND 201(1A) OF THE ACT REVEALED T HAT THERE ARE TWO PARTIES BY NAME PRAGATHI CHARITIES AND SUPPORT ORGANISATION S, IN WHOSE CASES THE RECIPIENTS HAVE ADMITTED THESE PAYMENTS AS RECEIPTS IN THEIR HANDS AND FILED RETURNS OF INCOME. IT IS FURTHER SEEN THAT THOSE R ECIPIENTS WERE SUBJECTED TO THE PROVISIONS OF SECTION 12AA OF THE ACT. THUS, I N THESE TWO CASES, WHERE THE APEX COURT JUDGEMENT IN THE CASE OF HINDUSTAN COCO COLA BEVERAGE (P) LTD. VS. CIT -211 CTR 545 (SC) IS APPLICABLE AND AS SUCH THE A.O. WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS IN DE FAULT IN AS MUCH AS THE PAYMENTS TO THESE PARTIES WERE CONCERNED, WITHOUT D EDUCTING TDS AND ACCORDINGLY THE A.O. IS DIRECTED NOT TO DEDUCT TDS IN RESPECT OF THESE PAYMENTS AND MODIFY THE ORDER U/S 201(1)/201(1A) RE DUCING THE DEMANDS SO RAISED TO ZERO FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 4. THE LD. D.R. CONTESTED THE ORDERS OF THE CIT(A) TO SUBMIT THAT THESE AMOUNTS ARE COVERED BY THE PROVISIONS OF SECTION 19 4J AND THE ASSESSING ITA NOS.140,141&142/V/2013 & CO NOS.71,72&73/V/2013 MEPMA, NELLORE 3 OFFICER HAS CORRECTLY RAISED THE DEMANDS U/S 201. THE LD. A.R. IN REPLY SUBMITTED THAT THE DEMANDS RAISED ARE LESS THAN RS. 3 LAKHS. THE REVENUE CANNOT PREFER THE APPEAL IN THE IMPUGNED YEARS AND FURTHER THE REVENUE HAS RAISED THEIR APPEAL IN A.Y. 2011-12, WHEREIN THERE ARE NO PAYMENTS MADE TO PRAGATHI CHARITIES AND SUPPORT ORGANIZATIONS. ACCO RDINGLY, IT WAS SUBMITTED THAT THE REVENUE APPEALS ARE NOT MAINTAINABLE. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED TH E FACTS ON RECORD. AS FAR AS THE APPEAL FOR ASSESSMENT YEAR 2011-12 IS CONCER NED, IT IS A FACT THAT THERE ARE NO PAYMENTS MADE TO PRAGATHI CHARITIES AN D SUPPORT ORGANIZATIONS. THE LD. CIT(A) HAS CONSIDERED THE ISSUE ONLY FOR AS SESSMENT YEARS 2009-10 AND 2010-11. THEREFORE RAISING THE APPEAL ON THE I SSUE SIMILARLY FOR A.Y. 2011-12 IS NOT CORRECT. ACCORDINGLY, SINCE THE ISS UE IS NOT ARISING FROM THE ORDERS OF THE A.O. AND CIT(A), THE APPEAL PREFERRED BY THE REVENUE IS DISMISSED. 6. COMING TO THE ASSESSMENT YEARS 2009-10 AND 2010- 11 AS SEEN FROM THE ORDERS OF LD. CIT(A), HE HAS CONSIDERED THE ISS UE BOTH FACTUALLY AS WELL AS LEGALLY. THE RECIPIENTS HAVE ADMITTED THAT THESE D EMANDS HAVE BEEN SHOWN IN THEIR HANDS AND THEY WERE SUBJECT TO THE PROVISI ONS OF SECTION 12AA OF THE ACT, THEREBY CLAIMING EXEMPTION OF THE INCOME THER EIN. ACCORDINGLY, THERE IS NO NEED TO DEDUCT TAX AT THIS POINT OF TIME AND THE PRINCIPLES ESTABLISHED BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA BEVERAGES PVT. LTD, (SUPRA) IS APPLICABLE TO THE FACTS OF THE CASE. 7. THE A.O. SHOULD HAVE VERIFIED THESE ASPECTS AT T HE TIME OF RAISING THE DEMAND. BE THAT AS IT MAY, THE APPEALS ARE NOT MAI NTAINABLE ON THE TAX EFFECT ITSELF. IN BOTH THE YEARS, THE DEMAND INVOL VED IS EVEN LESS THAN RS.1 LAKH. WE ARE NOT SURE HOW THE LD. CIT APPROVED PRE FERRING THE SECOND APPEAL WHEN THE BOARD CIRCULAR STRICTLY PROHIBITS F ILING OF APPEALS WHERE TAX EFFECT IS LESS THAN RS.3 LAKHS. FOR THIS REASON AL SO, THE REVENUE APPEALS ARE NOT MAINTAINABLE. ACCORDINGLY, ALL THE THREE REVEN UE APPEALS ARE DISMISSED. THE C.OS RAISED BY THE ASSESSEE ARE IN SUPPORT OF O RDERS OF THE CIT(A). SINCE THE REVENUE APPEALS ARE DISMISSED UPHOLDING THE ORD ERS OF THE CIT(A), THERE ITA NOS.140,141&142/V/2013 & CO NOS.71,72&73/V/2013 MEPMA, NELLORE 4 IS NO NEED TO ADJUDICATE THE CROSS OBJECTIONS. ACC ORDINGLY, THEY ARE TREATED AS THE ACADEMIC IN NATURE AND ARE DISMISSED. 8. IN THE RESULT, ALL THE THREE REVENUE APPEALS AND THREE C.OS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 06.12.2013 SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 6 TH DECEMBER, 2013 COPY TO 1 ITO (TDS), WARD - 3(4), GUNTUR 2 THE PROJECT DIRECTOR, MISSION FOR ELIMINATION OF PO VERTY IN MUNICIPAL AREAS, DR. AMBEDKAR SAMKSHEMA BHAVAN, SUBEDAR PET, NELLORE 3 THE CI T, VIJAYAWADA 4 THE CIT (A) , VIJAYAWADA 5 TH E DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM