RSR Lemon Media Private Limited, Hyderabad, Hyderabad V. ITO, Ward-3(2), Hyderabad, Hyderabad

ITA 1533/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2650 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA.NO.1301/HYD/2016 ASSESSMENT YEAR 2012 - 2013 THE INCOME TAX OFFICER, WARD 3(2), HYDERABAD. VS. M/S. RSR LEMON MEDIA PVT LTD, PLOT # A - 122, 3 RD FLOOR, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD. PAN: AAECR3514K (APPELLANT) (RESPONDENT) ITA.NO.1533/HYD/2016 ASSESSMENT YEAR 2012 - 2013 M/S. RSR LEMON MEDIA PVT LTD, PLOT # A - 122, 3 RD FLOOR, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD. PAN: AAECR3514K VS. THE INCOME TAX OFFICER, WARD 3(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI A. SRINIVAS FOR REVENUE : SHRI V. SREEKAR, DR DATE OF HEARING : 28.08.2017 DATE OF PRONOUNCEMENT : 28.08.2017 ORDER PER D. MANMOHAN, VP. THESE TWO APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) - 3, HYDERABAD AND THEY PERTAIN TO THE ASSESSMENT YEAR 2012 - 2013. INVOCATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY THE ASSESSING OFFICER IS THE SUBJECT MATTER OF CONSIDERATION BEFORE THE TRIBUNAL. 2 2. THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES RELATING TO THEATRE ADVERTISEMENT BUSINESS. FOR THE A.Y. 2012 - 13 IT DECLARED A TOTAL INCOME OF RS. 38,29,621/ - . THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY WHEREIN THE A.O. MADE CERTAIN DISALLOWANCES AND COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS. 86,49,430/ - . WE ARE CONCERNED HEREIN WITH THE DISALLOWANCE OF RS. 45,41,272/ - U/S 40(A)(IA) OF THE ACT. IN THIS REGARD, A.O. OBSERVED THAT THE ASSESSE MADE CERTAIN PAYMENTS TO 8 PERSONS WHICH ATTRACT TDS PROVISIONS BUT, ACCORDING TO THE ASSESSEE, THE PAYMENTS HAVING BEEN OFFERED TO TAX IN THE HANDS OF THE RECIPIENTS, NO DIS ALLOWANCE CAN BE MADE U/S 40(A) (IA) OF THE ACT. THE A.O. OBSERVED THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS MADE APPLICABLE BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013 AND THEREFORE IT IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. MOREOVER, ASSESSEE HAS NOT FURNISHED ANY CERTIFICATES SUCH AS FORM NO. 26AS . HE THUS INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED THE EXPENDITURE OF RS. 45,41,272/ - . 3. AGGRIEVED ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THE PAYMENTS H AVING BEEN OFFERED TO TAX IN THE RECIPIENTS HANDS , NO TDS NEED TO BE DEDUCTED. 4. LD. CIT(A) OBSERVED THAT THE ACTUAL PAYMENTS BY THE ASSESSEE WERE ONLY TO THE TUNE OF RS. 43,27,828/ - WHEREAS THE DISALLOWANCE MADE BY THE A.O. WAS RS . 45,41,272/ - . AS REGARDS THE PAYMENTS MADE TO M/S. USHAKIRON MOVIES LTD, IT WAS EXPLAINED THAT OUT OF RS. 32,17,905/ - AN AMOUNT OF RS. 25,03,777/ - WAS ALREADY PAID DURING THE YEAR AND THE BALANCE OF AMOUNT OF RS. 7,14,128/ - IS OUTSTANDING WHIC H I S REFLECTED I N THE BALANCE SHEET. AS REGARDS THE OTHER PERSONS, PAYMENTS HAVE ALREADY BEEN MADE WITHIN THE YEAR AND THEREFORE IT WAS CONTENDED THAT AS PER THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD VS. ACIT (136 ITD 23) NO DI SALLOWANCE CAN BE MADE ON PAYMENTS ALREADY MADE. RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF JANPRIYA ENGINEERING SYNDICATE. 5. LD. CIT(A) FOLLOWED THE AFORECITED DECISIONS TO HOLD THAT WITH REGARD TO PAYMENT S ALREADY MADE THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS NOT APPLICABLE AND ACCORDINGLY THE DISALLOWANCE WAS RESTRICTED TO 7,14,128/ - . 3 6. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) BOTH THE A.O. AS WELL AS THE ASSESSEE PREFERRED APPEALS. IN T HE APPEAL FILED BY THE REVENUE FOLLOWING GROUNDS WERE URGED: - 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN GRANTING RELIEF OF RS. 38,27,144/ - OUT OF RS. 45,41,272/ - MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(I A) OF THE ACT. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE HONBLE HIGH COURT OF ANDHRA PRADESH HAS PLACED THE ORDER OF SPECIAL BENCH OF ITAT IN THE CASE OF M/S. MARILYN SHIPPING & TRANSPORT UNDER SUSPENSION. 7. WHEREAS IN THE APPEA L OF THE ASSESSEE IT WAS CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 7,14,128/ - U/S 40(A)(IA) OF THE ACT. 8. DURING THE COURSE OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT IN THE LIGHT OF THE DECISION OF APEX COURT IN THE CASE OF PALAM GAS SERVICE VS. CIT ( 394 ITR 300 ) (SC) THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF JANPRIYA ENGINEERING SYNDICATE (SUPRA) IS NO LONGER A GOOD LAW AND HENCE SECTION 40(A)(IA) IS NOT APPLICABLE EVEN WITH RESPECT TO THE PAYMENTS ALREADY MADE BY THE ASSESSEE. IN OTHER WORDS, SECTION 40(A)(IA) CAN BE APPLIED IF THE AMOUNT IS PAID OR PAYABLE TO ANY RESIDENT ON WHICH IF THE TAX IS DEDUCTIBLE AT SOURCE BUT IT HAS NOT BEEN DEDUCTED. HAVING REGARD TO THE BINDING DECISION O F THE APEX COURT WE ARE OF THE VIEW THE DISALLOWANCE MADE BY THE A.O. U/S 40(A)(IA) OF THE ACT IS IN ACCORDANCE WITH LAW AND THEREFORE WE PARTLY MODIFY THE ORDER OF THE LD. CIT(A) AND HOLD THAT IRRESPECTIVE OF WHETHER THE AMOUNT IS PAID OR PAYABLE, SO LONG AS THERE IS DEFAULT IN DEDUCTION OF TAX AT SOURCE, PROVISIONS OF SECTION 40(A)(IA) HAS TO BE INVOKED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED WHEREAS THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. S D / - S D / - ( INTURI RAMA RAO ) (D. MAN MOHAN) ACCOUNTANT MEMBER VICE PRESIDEN T HYDERABAD, DATED: 28.08. 2017 OKK, SR.PS 4 COPY TO 1. M/S. RSR LEMON MEDIA PVT LTD, PLOT # A - 122, 3 RD FLOOR, JOURNALIST COLONY, JUBILEE HILLS, HYDERABAD. 2. ITO, WARD - 3(2), O/O. 7 TH FLOOR, SIGNATURE ATOWERS, KONDAPUR HYDERABAD. 3. CIT (A) - 3 , HYDERABAD. 4 PR. CIT 3 , HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE