DR. RAJU L. BHATIA, MUMBAI V. JCIT RG 20(2), MUMBAI

ITA 1454/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55639 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALEXANDER CHANDY
• Section: 143(3); 194C

Judgement Text

ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH, MUMBAI BEFORE SHRI D K AGARWAL (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005-06 DR RAJU L BHATIA ...APPELLANT FLAT NO. 302, SEA PRINCESS CHS JUHU TARA ROAD, SANTACRUZ (WEST) MUMBAI 400 049, [PAN : AACPB8646H] VS. JOINT COMMISSIONER OF INCOME TAX RANGE 20(2), MUMBAI RESPONDENT APPEARANCES: NITESH JOSHI, ALONG WITH V K MODY, FOR THE APPELLANT ALEXANDER CHANDY, FOR THE RESPONDENT DATE OF RESERVING THE ORDER : 13.10.2011 DATE OF PRONOUNCING THE ORDER: 25 .10.2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF CIT(A)S ORDER DATED 1 ST JANUARY 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT 1961. 2. GRIEVANCES OF THE ASSESSEE, AS SET OUT IN THE ME MORANDUM OF APPEAL, ARE AS FOLLOWS: ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 2 OF 11 1. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER DISALLOWING A SUM OF RS 1 4,74,932 UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE APPELLANT FAILED TO DEDUCT TAX AT SOURCE UNDER SECTION 194 C OF THE ACT, ON PA YMENTS MADE TOWARDS PRINTING/ PURCHASE OF STATIONERY AND ADVERT ISEMENT EXPENSES. 2. THE LEARNED CIT(A) ERRED IN ENHANCING THE INCOME OF THE APPELLANT BY RS 39,26,528 BY DISALLOWING RS 32,61,9 94 OUT OF AUDITORIUM HIRE CHARGES AND RS 6,64,534 OUT OF STAG E ERECTION CHARGES UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE APPELLANT HAD FAILED TO DEDUCT TAX AT SOURCE UNDER SECTION 19 4 C OF THE ACT. 3. THE SHORT ISSUE THAT REALLY NEEDS OUR ADJUDICATI ON IS WHETHER OR NOT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THIS CASE, PR OVISIONS OF TAX WITHHOLDING REQUIREMENTS UNDER SECTION 194C CAN BE PRESSED INTO SERVICE AT ALL. IT IS ON THIS SHORT BUT CONTENTIOUS ISSUE THAT THE LEARNED R EPRESENTATIVES HAVE ADVANCED THEIR ERUDITE ARGUMENTS BEFORE US. 4. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE BEFORE US IS AN INDIVIDUAL. AS THE MATERIAL BEFORE US UNAMBIGUOUSLY INDICATES, HE IS A HIGHLY ACCOMPLISHED MANAGEMENT CONSULTANT, WITH UNIMPEACHABLE ACADEMIC CREDENTIALS FROM INDIAN AND FOREIGN INSTIT UTIONS, AND PROFESSIONAL EXPERIENCE IN VARIOUS PARTS OF THE WORLD. HE HAS WR ITTEN SEVERAL BOOKS, AND ONE OF THE ACTIVITIES HE HAS CARRIED OUT IN THE REL EVANT PREVIOUS YEARS IS CONCEPTUALIZING AND ORGANIZING VARIOUS SUMMITS, SEM INARS AND CONFERENCES IN FIELD OF MANAGEMENT. THIS ACTIVITY HAS REVENUES FROM TWO STREAMS ONE, ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 3 OF 11 FROM THE PARTICIPANTS, WHO PAY PARTICIPATION FEES; AND SECOND, FROM THE SPONSORS WHO USE THESE EVENTS FOR THEIR OWN PROMOTI ON PRODUCTS BY BEING ASSOCIATED WITH THESE EVENTS. IT IS IN THIS BACKDR OP THAT WE CAN TAKE NOW TAKE A LOOK AT THE DEVELOPMENTS LEADING TO THIS LITIGATI ON BEFORE US. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER N OTED WHILE THE ASSESSEE HAS MADE PAYMENTS FOR PRINTING AND STATIONERY CHARG ES, AUDITORIUM HIRE CHARGES AND ADVERTISEMENT CHARGES, THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE FROM THESE PAYMENTS. THE ASSESSING OFFICER A LSO NOTED THAT THE SPONSORS OF THE PROGRAM HAVE DULY DEDUCTED TAXES AT SOURCE FROM PAYMENTS MADE TO THE ASSESSEE, BUT THE ASSESSEE HAS NOT DEDU CTED THE TAXES FROM PAYMENTS MADE BY HIM. IN RESPONSE TO THE ASSESSING OFFICERS REQUISITION TO SHOW CAUSE FOR NOT DEDUCTING TAX AT SOURCE FROM THE SE PAYMENTS, IT WAS SUBMITTED THAT THE ASSESSEE, BEING AN INDIVIDUAL, I S NOT COVERED BY THE SCOPE OF SECTION 194 C(1) [AS IT STOOD AT THE MATERIAL POINT OF TIME] WHICH DEALS WITH TAX WITHHOLDING REQUIREMENTS ON THE PAYMENTS MADE T O CONTRACTORS, AND THAT SECTION 194C(2) DOES NOT COME INTO PLAY AT ALL SINC E THE ASSESSEE HAS NOT MADE ANY PAYMENTS TO ANY SUB-CONTRACTORS WHEREAS TH E SCOPE OF THIS PROVISION RELATES ONLY TO THE PAYMENTS MADE BY THE CONTRACTORS TO THE SUB- CONTRACTORS. THIS CLARIFICATION, HOWEVER, DID NOT IMPRESS THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT PROVISIONS OF SEC TION 194C(2) APPLY ON THE FACTS OF THIS CASE, AS THE ASSESSEE IS REQUIRED TO BE TREATED AS A SUB- CONTRACTOR. HIS LINE OF REASONING WAS THIS. WHEN PAYMENTS WERE MADE TO THE ASSESSEE, TAXES UNDER SECTION 194 C(1), WHICH IS AP PLICABLE ONLY IN RESPECT OF PAYMENTS TO CONTRACTORS, WERE DULY WITHHELD, AND TH E ASSESSEE, IN HIS RETURN OF INCOME, HAS CLAIMED TAX CREDIT IN RESPECT OF THE SE TAX WITHHOLDINGS. HE ALSO NOTED THAT MANY OF THE CLIENTS ( I.E. SPONSORS) HAVE CONSIDERED THE ASSESSEE AS A CONTRACTOR, THE PAYMENTS MADE TO HIM ARE TREAT ED AS PAYMENTS MADE FOR EXECUTING A WORK CONTRACT, AND DEDUCTED TDS UNDER S ECTION 194C. THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE TDS C ERTIFICATES ARE CONCLUSIVE PROOF THAT THE ASSESSEE HAS BEEN CARRYING OUT THE W ORK OF ORGANIZING EVENTS UNDER CONTRACT WITH THE CLIENTS AND THESE RECEIPT S MAKE HIM A CONTRACTOR ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 4 OF 11 AND PLACE HIM WITHIN THE SCOPE OF SECTION 194C(2). HE THEN REFERRED TO THE FACTS REGARDING ASSESSEES TURNOVER FOR THE PRECEDI NG YEAR TO POINT OUT THAT EVEN THOUGH THE ASSESSEE IS AN INDIVIDUAL, SINCE HE IS A SUB-CONTRACTOR AND SINCE HIS TURNOVER EXCEEDS SPECIFIED AMOUNT, HE IS HIT BY THE PROVISIONS REGARDING TAX WITHHOLDING REQUIREMENTS. THE ASSESS ING OFFICER NOTED THAT THE ASSESSEE HAS MADE PAYMENTS AGGREGATING TO RS 8,43,5 70, IN RESPECT OF PRINTING AND STATIONERY CHARGES, AND AGGREGATING TO RS 6,31,362, IN RESPECT OF ADVERTISING CHARGES, FROM WHICH NO TAXES HAVE BEEN DEDUCTED AT SOURCE. IT WAS ALSO NOTED THAT WHEN ASSESSEE DOES NOT COMPLY W ITH THE TAX DEDUCTION AT SOURCE REQUIREMENTS, THE RELATED EXPENDITURE IS REQ UIRED TO BE DISALLOWED, IN TERMS OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSIN ESS AND PROFESSION. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED RS 14 ,74,932 UNDER SECTION 40(A)(IA). AGGRIEVED, ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. NOT ONLY THAT THE CIT(A) C ONFIRMED THE STAND OF THE ASSESSING OFFICER IN PRINCIPLE, HE ALSO ENHANCED TH E DISALLOWANCE BY OBSERVING THAT WHILE THE ASSESSEE HAS CLAIMED DEDUC TION IN RESPECT OF AUDITORIUM HIRING CHARGES (RS 32,61,994) AND IN RES PECT OF PROGRAM AND STAGE ERECTION CHARGES (RS 8,15,243), THE ASSESSEE HAS FAILED TO FULFILL HIS TAX DEDUCTION AT SOURCE OBLIGATIONS IN RESPECT OF THESE S EXPENSES TO THE EXTENT OF RS 39,26, 528 ( ENTIRE AMOUNT OF AUDITORIUM CHARGE S, AND A PART OF PROGRAM AND STAGE ERECTION CHARGES). THE DISALLOWANCE WAS T HUS ENHANCED BY RS 39,26,528. THE ASSESSEE IS AGGRIEVED OF THE STAND S O TAKEN BY THE CIT(A) AND IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 5 OF 11 6. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE PROVISIONS OF SECTION 194 C(1) CANNOT BE PRESSED INTO SERVICE IN THIS CAS E, SINCE, AT THE MATERIAL POINT OF TIME, THIS TAX WITHHOLDING REQUIREMENTS DI D NOT EXTEND TO INDIVIDUALS AND THAT, IT WAS ONLY AS A RESULT OF THE AMENDMENT BY THE VIRTUE OF FINANCE ACT 2008 W.E.F 1 ST JUNE 2008, THAT INDIVIDUALS WERE IMPOSED TAX DEDUCTION OBLIGATIONS UNDER SECTION 194 C(1). TH E CASE OF THE REVENUE THUS HINGES ON APPLICATION OF SECTION 194 C(2), WHICH, F OR READY REFERENCE, IS REPRODUCED BELOW: ( 2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY), RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB- CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB -CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRY ING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTO R OR FOR SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE T IME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRI SED THEREIN. PROVIDED THAT AN INDIVIDUAL OR A HINDU UNDIVIDED FA MILY, WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BU SINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURI NG THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WH ICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE SUB-CONTRACT OR, SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SUB-SECTION. ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 6 OF 11 EXPLANATION I : FOR THE PURPOSES OF SUB-SECTION (2) , THE EXPRESSION 'CONTRACTOR' SHALL ALSO INCLUDE A CONTRACTOR WHO IS CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRI SE OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA. EXPLANATION II : FOR THE PURPOSES OF THIS SECTION, WHERE ANY SUM REFERRED TO IN SUB-SECTION (1) OR SUB-SECTION (2) I S CREDITED TO ANY ACCOUNT, WHETHER CALLED 'SUSPENSE ACCOUNT' OR BY AN Y OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SEC TION SHALL APPLY ACCORDINGLY. EXPLANATION III : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTI ON OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING. 7. A PLAIN READING OF THE ABOVE PROVISION INDICATES THAT IN ORDER TO ATTRACT THE APPLICABILITY OF SECTION 194 C(2), THE PAYMENT HAS TO BE MADE BY A CONTRACTOR TO A SUB-CONTRACTOR FOR CARRYING OUT OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UND ERTAKEN BY THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOU R WHICH THE CONTRACTOR HAS ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 7 OF 11 UNDERTAKEN TO SUPPLY. IT IS, THEREFORE, A CONDITION PRECEDENT, FOR INVOKI NG SECTION 194C(2), THAT THE PAYMENT IN QUESTION HAS T O BE FOR CARRYING OUT A PART OF THE WORK, OR THE WORK ITSELF, UNDERTAKEN BY THE CONTRACTOR, OR THE SUPPLY UNDERTAKEN BY THE CONTRACTOR. IN THE PRESEN T CASE, THE ASSESSEE HAS RECEIVED THE MONIES FROM ITS CLIENTS AS SPONSORSHIP MONEY. THE QUESTION, THEREFORE, ARISES WHETHER SPONSORSHIP MONEY CAN IND EED BE SAID TO HAVE BEEN PAID TO THE ASSESSEE FOR ORGANIZING THE EVENT AS HAS BEEN CLAIMED BY THE ASSESSEE. UNLESS THE PAYMENT RECEIVED BY THE A SSESSEE CAN BE SAID TO HAVE BEEN RECEIVED FOR ORGANIZING THE CONFERENCE OR SEMINAR, IN RESPECT OF WHICH THE ASSESSEE HAS RECEIVED THE SPONSORSHIP AMO UNT, THE PROVISIONS OF SECTION 194C(2) CANNOT COME INTO PLAY. IN THIS LIG HT, LET US SEE THE OBLIGATIONS IMPOSED ON THE ASSESSEE ON ACCEPTING TH E SPONSORSHIP MONEY. IN THE CASE PICKED UP BY THE CIT(A) HIMSELF, AS SET O UT BY HIM AT PAGE 4 OF THE IMPUGNED ORDER, ING VYSYA BANK, WHILE ACCEPTING BEI NG ONE OF THE SPONSORS OF INDIA RETAIL SUMMIT, ONE OF THE CONFERENCES ORGA NISED BY THE ASSESSEE, INTER ALIA STATED AS FOLLOWS: REG : SPONSORSHIP SUPPORT FOR INDIA RETAIL SUMMIT NOVEMBER 24 TH AND 25 TH , 2005 AT MUMBAI PLEASE REFER TO YOUR EMAIL DATED 22.09.2005 ADDRESS ED TO OUR COUNTRY HEAD- RETAIL BANKING, ON THE ABOVE SUBJEC T. IN THIS REGARD, WE ARE PLEASED TO INFORM YOU THAT I T IS AGREED TO COSPONSOR THE SUMMIT, WITH A CONTRIBUTION OF RS 1.2 5 LAKHS. WE FURTHER NOTE THAT, AS A CO-SPONSOR, THE BANK WOULD DERIVE FOLLOWING BENEFITS AT THE SUMMIT: BRANDING ON THE BACKDROP. BRANDING ON THE BROCHURES TO PROMOTE INDIA RETAIL S UMMIT. BRANDING ON ADMIT CARDS FOR BOTH DAYS OF THE SUMMIT . ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 8 OF 11 INSERTS IN SEMINAR KIT. STRATEGIC REHEARSED ANNOUNCEMENTS AT REGULAR INTERV ALS. PASSES FOR BOTH DAYS OF THE SUMMIT. INVITATIONS TO THE AWARDS FOR THE RETAIL EXCELLENCE . THE AWARDS FOR THE RETAIL EXCELLENCE WILL BE FOLLOWED B Y COCKTAILS AND DINNER. STALL SPACE IN PRE FUNCTION AREA. PLAYING OF COMMERCIALS/ PRESENTATIONS DURING THE BR EAKS. ANY OTHER WAY, AS IS MUTUALLY DECIDED. ON SUCCESSFUL COMPLETION OF THE SUMMIT, YOU MAY PLE ASE SEND A BILL TO US, TOWARDS CO-SPONSORSHIP AMOUNT OF RS 1.2 5 LAKHS TO ENABLE US TO DO THE FURTHER NEEDFUL. ALONG WITH THE BILL, YOU MAY ALSO ARRANGE TO HAVE A FEW PHOTOGRAPHS OF THE BANK S STAFF AT THE SEMINAR SESSION, SENT FOR OUR RECORDS.. 8. THE ABOVE ARRANGEMENT DOES NOT, BY ANY STRETCH O F LOGIC, AMOUNT TO THE ASSESSEE HAVING UNDERTAKEN TO CARRY OUT THE WORK OF ORGANIZING THE CONFERENCE, I.E. INDIA RETAIL SUMMIT IN THIS CASE. IT IS SIMPLY A CASE IN WHICH THE ASSESSEE HAS RECEIVED THE MONEY, FROM A COMMERC IAL ORGANIZATION, IN RESPECT OF THAT ORGANIZATION BEING ASSOCIATED WITH THE SAID CONFERENCE AND, IN THE PROCESS, BENEFITTING FROM SUCH ASSOCIATION. THE ASSESSEE HAS NOT MERELY EXECUTED THE WORK OF ORGANIZING A CONFERENCE AT THE INSTANCE OF ONE OR MORE SPONSORS, BUT, AS LEARNED COUNSEL RIGHTLY EMPHASIZE S, CONCEPTUALIZING A CONFERENCE WHICH HAS, AT A STAGE POSTERIOR TO SUCH CONCEPTUALIZATION AND ORGANIZATION, FOUND SPONSORSHIP FROM ORGANIZATION I N THEIR COMMERCIAL INTERESTS. ONE CAN PERHAPS UNDERSTAND A CASE BEING MADE OUT FOR APPLICABILITY OF SECTION 194C (2) IN A SITUATION IN WHICH SPONSOR SHIPS HAVE COME FIRST AND THE EVENT IS CONCEPTUALIZED LATER, BUT NOT VICE VERSA . THE CASE MADE OUT BY THE ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 9 OF 11 ASSESSING OFFICER, AND SUSTAINED BY THE CIT(A), IS THUS DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. WE ARE UNABLE TO SHARE LEARNED CIT(A)S PERCEPTION THAT THE ABOVE LETTER, WHICH HE TOOK AS A SAMPLE CASE, D EMONSTRATES THAT THE ASSESSEE HAD UNDERTAKEN TO ORGANIZE THE SAID CONFER ENCE AT THE INSTANCE OF THE SPONSORS. IT IS NOT THE CASE THAT THE ASSESSEE WAS ASSIGNED, OR HAS UNDERTAKEN, SOME WORK WHICH THE ASSESSEE HAS SUB CO NTRACTED WHICH ALONE COULD HAVE INVITED APPLICABILITY OF SECTION 194C(2) IN THE PRESENT CASE. 9. A LOT OF EMPHASIS HAS BEEN PLACED BY THE AUTHORI TIES BELOW ON THE FACT THAT TAXES HAVE BEEN DEDUCTED AT SOURCE FROM THE PA YMENTS RECEIVED BY THE ASSESSEE, ON ACCOUNT OF SPONSORSHIP FEES, AND FOR T HIS REASON ALONE, THE ASSESSEE SHOULD BE TREATED AS A CONTRACTOR. WE DO NOT SEE ANY MERITS IN THIS LINE OF ARGUMENTS EITHER. IT IS ONLY ELEMENTARY TH AT EVEN IF THE ASSESSEE IS TO BE TREATED AS CONTRACTOR, THE TAX DEDUCTION OBLIGAT IONS UNDER SECTION 194C (2) CAN ONLY COME INTO PLAY WHEN THE PAYMENT IN QUESTI ON IS FOR CARRYING OUT A PART OF THE WORK, OR THE WORK ITSELF, UNDERTAKEN BY THE CONTRACTOR, OR THE SUPPLY UNDERTAKEN BY THE CONTRACTOR. THE WORK UND ERTAKEN BY THE ASSESSEE, AS WE HAVE SEEN A LITTLE EARLIER IN THIS ANALYSIS, IS NOT ORGANIZING THE CONFERENCE, AND, THEREFORE, PAYMENTS ASSOCIATED WIT H ORGANIZATION OF CONFERENCE CANNOT BE SAID TO BE TOWARDS SUB CONTRAC T WORK. THAT APART, JUST BECAUSE THE ASSESSEE IS SUBJECTED TO TAX DEDUCTIONS UNDER SECTION 194 C(1), AND THE ASSESSEE HAS CLAIMED CREDITS IN RESPECT OF TAXES SO DEDUCTED, THE ASSESSEE CANNOT BE TREATED AS A CONTRACTOR. WHEN TA XES ARE DEDUCTED BY THE PERSONS MAKING THE PAYMENTS TO THE ASSESSEE, RIGHTL Y OR WRONGLY OR DUE TO CORRECT APPLICATION OF LAW OR BY WAY OF ABUNDANT CA UTION, THE ASSESSEE HAS TO, IN ACCORDANCE WITH THE LAW, CLAIM TAX CREDIT IN RES PECT OF THE SAME. THIS CLAIM FOR TAX CREDIT CANNOT PREJUDICE THE STAND OF THE ASSESSEE IN DETERMINATION OF MERITS OF THE APPLICABILITY OF SEC TION 194C(2); THAT HAS TO BE ADJUDICATE ON ITS MERITS AND IN ACCORDANCE WITH THE LAW. WE MAY ALSO MENTION THAT DURING THE COURSE OF THE HEARING A REF ERENCE WAS MADE TO ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 10 OF 11 DECISION OF A COORDINATE BENCH IN THE CASE OF EMC V S INCOME TAX OFFICER (37 SOT 31), BUT, HAVING PERUSED THE SAME AND HAVING NO TICED THAT IN THE SAID CASE THE EVENTS WERE ORGANIZED BY EMC ON A JOB WORK BASIS AS ASSIGNED BY THE CLIENTS AS AGAINST THE FACTS OF THE PRESENT CAS E WHEREIN EVENTS ARE CONCEPTUALIZED AND EXECUTED BY THE ASSESSEE AND THE CLIENT PAYS SPONSORSHIP MONIES ONLY FOR COLLATERAL BENEFITS FROM THE SAME , WE FIND THAT IT DOES NOT HAVE MUCH BEARING ON THE ISSUES ARISING OUR ADJUDIC ATION IN THIS CASE. WE, THEREFORE, SEE NO NEED TO DEAL WITH THE SAME IN DET AIL. 10. FOR THE REASONS SET OUT ABOVE, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT SECTION 19 4 C(2) HAS NO APPLICATIONS ON THE FACTS OF THIS CASE. THE ASSESSEE DID NOT, TH EREFORE, HAVE ANY TAX WITHHOLDING OBLIGATIONS FROM THE PAYMENTS MADE BY T HE ASSESSEE TO VARIOUS PARTIES IN QUESTION. SINCE THE ASSESSEE DID NOT HAV E ANY TAX WITHHOLDING OBLIGATIONS, THE PROVISIONS OF DISALLOWANCE UNDER S ECTION 40(A)(IA) DONOT COME INTO PLAY AT ALL, WHICH COME INTO FORCE ONLY W HEN AN ASSESSEE HAS A TAX WITHHOLDING OBLIGATION AND HE DOES NOT DISCHARGE TH E SAME. THE IMPUGNED DISALLOWANCES, ON THE FACTS AND IN THE CIRCUMSTANCE S OF THIS CASE, WERE, THEREFORE, UNWARRANTED. WE DIRECT THE ASSESSING OFF ICER TO DELETE THE SAME. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 11. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON 25 TH DAY OF OCTOBER, 2011. SD/- SD/- (D K AGARWAL) (PRAMOD KUMA R) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 25 TH `_ DAY OF OCTOBER , 2011 . ITA NO. : 1454/MUM/2010 ASSESSMENT YEAR: 2005- 06 PAGE 11 OF 11 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER , MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI