Empee Sugars and Chemicals Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1504/CHNY/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8688 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R ANITA
• Assessee Lawyers: M KAUSHIK
• Keywords: Corroborative evidences; Revised return; TDS
• Section: 143(3); 115JB; 40(a)(ia)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.1504/CHNY/2014 / ASSESSMENT YEAR :2008-09 M/S. EMPEE SUGARS AND CHEMICALS LTD., EMPEE TOWERS, NO. 59, HARRIS ROAD, PUDUPET, CHENNAI 600 002. [PAN- AABCE5658G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I(2), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI M. KAUSHIK, ADVOCATE / RESPONDENT BY : MS. R. ANITA, JCIT / DATE OF HEARING : 22.10.2019 /DATE OF PRONOUNCEMENT : 13.11.2019 / O R D E R PER DUVVURUL RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I, CHENNAI, DATED 26.03.2014 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THE GROUNDS RAISED BY THE ASSESSEE ARE THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF .3,27,821/-, .1,50,000/- AND .2,94,000/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30.09.2008 ADMITTING .5,47,26,083/-. ITA NO. 1504/CHNY/2014 2 SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN ON 25.03.2010 ADMITTING NIL INCOME AND PAID TAX ON BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT [ACT IN SHORT]. AFTER CONSIDERING THE DETAILS AND SUBMISSIONS OF THE ASSESSEE AGAINST STATUTORY NOTICES, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT .5,61,76,484/- AFTER MAKING ADDITIONS ON ACCOUNT OF (I) MISCELLANEOUS EXPENDITURE OF .3,27,821/-, (II) PROFESSIONAL CHARGES OF .1,50,000/- AND (III) COMMISSION PAID OF .2,94,000/-. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) SUSTAINED THE ADDITIONS UNDER NORMAL PROVISIONS. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WITH REGARD TO THE DISALLOWANCE OF MISCELLANEOUS EXPENSES, THE ASSESSEE HAS CLAIMED OF .6,55,643/- UNDER MISCELLANEOUS EXPENSES. IN THE ABSENCE OF EVIDENCES PRODUCED APART FROM AUDITED FINANCIAL STATEMENTS, THE ASSESSING OFFICER RESTRICTED THE EXPENSES AT 50% AND THE BALANCE OF .3,27,821/- WAS BROUGHT TO TAX. SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE EXPENSES CLAIMED BY THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITION. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BY REITERATING THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE ITA NO. 1504/CHNY/2014 3 HAS SUBMITTED THAT 50% DISALLOWANCE IS VERY HIGH AND PRAYED FOR NOMINAL DISALLOWANCE. ADMITTEDLY, THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPPORT OF THE MISCELLANEOUS EXPENSES OF .6,55,643/- EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR EVEN BEFORE THE TRIBUNAL. HOWEVER, IN THE LINE OF BUSINESS OF THE ASSESSEE, INSTEAD OF DISALLOWING THE ENTIRE EXPENSES CLAIMED WITHOUT ANY SUPPORTING EVIDENCE AND INCURRING OF MISCELLANEOUS EXPENSES IS INEVITABLE, THE ASSESSING OFFICER ALLOWED THE EXPENSES TO THE EXTENT OF 50% OF THE CLAIM, WHICH WAS CONFIRMED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 5. WITH REGARD TO THE DISALLOWANCE OF .1,50,000/- UNDER SECTION 40(A)(IA) OF THE ACT TOWARDS PROFESSIONAL CHARGES, THE ASSESSING OFFICER DISALLOWED THE SAME SINCE THE ASSESSEE FAILED TO DEDUCT TDS FROM THE PAYMENTS MADE TO THE CEO UNDER THE HEAD CONSULTATION CHARGES. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT, AGAINST WHICH, THE ASSESSEE IS IN APPEAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS. AGAINST THE DISALLOWANCE PROFESSIONAL CHARGES PAID WITHOUT DEDUCTING TDS, THE RELIANCE PLACED BY THE AR OF THE ASSESSE BEFORE THE LD. CIT(A) IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CIT 16 ITR (TRIB)1 (VIZAG) (SB), THE LD. CIT(A) HAS ITA NO. 1504/CHNY/2014 4 OBSERVED THE SAID CASE LAW HAS NO APPLICATION IN VIEW OF VARIOUS HIGH COURTS DECISION AND CONFIRMED THE DISALLOWANCE. ADMITTEDLY, THE ASSESSEE HAS NOT DEDUCTED TDS ON AMOUNT PAID AS PROFESSIONAL CHARGES. THE SAID CASE LAW RELIED ON BEFORE THE LD. CIT(A) HAS NO LEGS TO STAND IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICES V. CIT 394 ITR 300 REVERSING THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) AND OVERRULED THE SAID DECISION, IN WHICH, THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CIT (SUPRA) HAS BEEN FOLLOWED AND NOW THE SAID SPECIAL BENCH DECISION BECOME BAD IN LAW. UNDER THE ABOVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE ABOVE JUDGEMENT OF THE HONBLE SUPREME COURT, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 7. THE NEXT GROUND RELATES TO CONFIRMATION OF DISALLOWANCE OF COMMISSION PAYMENT OF .2,94,000/- UNDER SECTION 40(A)(IA) OF THE ACT. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS CLAIMED .2,94,000/- UNDER THE HEAD COMMISSION PAID. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TDS ON THIS COMMISSION PAYMENT, WHICH WAS NOT PRODUCED. HENCE, THE ASSESSING OFFICER DISALLOWED THE COMMISSION PAYMENT IN THE ABSENCE OF NON DEDUCTION OF TDS AND BROUGHT TO TAX. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE ITA NO. 1504/CHNY/2014 5 MADE UNDER SECTION 40(A)(IA) OF THE ACT, AGAINST WHICH, THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CLAIMED COMMISSION PAYMENT WITHOUT DEDUCTING TDS AND THEREBY THE ASSESSING OFFICER DISALLOWED THE SAME AND BROUGHT TO TAX. TDS IS MANDATED WHILE MAKING COMMISSION PAYMENT. SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS, THE DISALLOWANCE OF COMMISSION PAYMENT UNDER SECTION 40(A)(IA) OF THE ACT WAS RIGHTLY CONFIRMED BY THE LD. CIT(A). THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 13 TH NOVEMBER, 2019 AT CHENNAI. SD/- SD/- (S JAYARAMAN) ACCOUNTANT MEMBER (DUVVURUL RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 13.11.2019 VM/- /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. ( )/CIT(A), 4. /CIT, 5. /DR & 6. /GF.