ITO (TDS)-3(3), MUMBAI V. SIYARAM SILK MILLS LTD, MUMBAI

ITA 159/MUM/2010

• Counselvise Citation: 15919914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Assessee Lawyers: SANJAY M SHAH
• Section: 194C; 2

Judgement Text

1 ITA NO. 159 & 160/MUM/2010 M/S SIYARAM SILK MILLS LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAN DA, A.M. ITA NO. 159/MUM/2010 (ASST YEAR 2007-08) ITA NO. 160/MUM/2010 (ASST YEAR 2008-09) INCOME TAX OFFICER (TDS)- 3(3), 10 TH FLOOR, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BUILDING, CHARNI ROAD (W), MUMBAI 400 002. VS M/S SIYARAM SILK MILLS LTD., B-5, TRADE WORLD, KAMALA CITY, SENAPATI BAPAT MARG, MUMBAI. 400013. (APPELLANT) (RESPONDENT) PAN NO. AAACS6995D APPELLANT BY S HRI B. JAYAKUMAR RESPONDENT BY SHR I SANJAY M. SHAH DATE OF HEARING 14.12.2011 DATE OF PRONOUNCEMENT 21.12.2011 ORDER PER R K PANDA, AM THE ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE SEPARATE ORDERS DATED 28.10.2009 OF THE LD. CIT(A) - 14, MUMBAI RELATING TO A.YRS. 2007-08 & 2008-09 RESPECTIVELY. SINCE IDENTI CAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN BOTH THESE APPEALS, THEREFO RE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. ITA NO. 159/MUM/2010 FOR A.Y. 2007-08 (BY REVENUE) 2. GROUND OF APPEAL NO. (A) & (D) READS AS UNDER:- (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT SECTION 2 ITA NO. 159 & 160/MUM/2010 M/S SIYARAM SILK MILLS LTD. 194C IS ATTRACTED FOR PAYMENT FOR SUPPLY OF PACKING MATERIAL AS PER SPECIFICATIONS WHICH AMOUNTS TO WORKS CONTRACT . (D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING ASSESSEES AP PEAL ON THE ISSUE OF NON DEDUCTION OF TDS ON PACKING MATERIAL C ONSUMED AS PER SPECIFICATION OF RS. 16.94 CRORES WITHOUT APPRE CIATING THE FACT THAT THERE WAS NO BIFURCATION OF THE LABOUR CHARGES , PRINTING LOGOS ON PACKING MATERIAL. 3. AFTER HEARING BOTH THE SIDES WE FIND THE ASSESSE E IN THE IMPUGNED ASSESSMENT YEAR HAS CONSUMED PACKING MATERIAL FOR A N AMOUNT OF RS. 16.94 CRORES. SINCE NO TAX WAS DEDUCTED, THE A.O. HELD T HE ASSESSEE AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX U/S 194-C OF THE ACT. IN APPEAL, THE LD. CIT(A) HELD THAT PROVISIONS OF SECTION 194- C ARE NOT ATTRACTED FOR PAYMENT TOWARDS SUPPLY OF PACKING MATERIAL AS PER S PECIFICATIONS. WE FIND THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSES SE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. GLENMARK PHARMACEUTICALS LTD. REPORTED I N 324 ITR 199. IN THE SAID DECISION, IT HAS BEEN HELD THAT SUPPLY OF PHAR MACEUTICAL PRODUCTS TO THE ASSESSEE BY THE MANUFACTURER WHICH WERE MANUFAC TURED BY IT ACCORDING TO SPECIFICATIONS AND STANDARDS PROVIDED BY THE ASS ESSEE UNDER THE TRADEMARK OF THE ASSESSEE BY PURCHASING THE RAW MAT ERIAL FROM ITS OWN SOURCE AMOUNTED TO SALE AND NOT A CONTRACT FOR CARR YING ON ANY WORK WITHIN THE MEANING OF S. 194C AND, THEREFORE, THE ASSESSEE COULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOU RCE UNDER S. 194C . RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT CITED ABOVE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUG HT TO OUR NOTICE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT( A) IN ALLOWING THE GROUND OF THE ASSESSEE. ACCORDINGLY THE GROUNDS RAISED BY TH E REVENUE ARE DISMISSED. 4. GROUND OF APPEAL NO. (B) & (C) READS AS UNDER:- 3 ITA NO. 159 & 160/MUM/2010 M/S SIYARAM SILK MILLS LTD. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT VEHICLE HIRING FALLS UNDER SECTION 1941 AFTER THE AMENDMENT OF SECTION 1941 W.E.F. 13.07.2006. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING ASSESSEES AP PEAL ON THE ISSUE OF NON DEDUCTION OF TDS ON PAYMENT MADE FOR H IRING OF VEHICLES ON RS. 1,13,786/- WITHOUT CONSIDERING CBDT S CIRCULAR NO. 4/2008 DATED 28.04.2008. 4.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSESS EE COMPANY DEDUCTED TAX U/S 194C ON PAYMENT MADE TO M/S BHARAT TOURS A ND TRAVELS FOR HIRING OF VEHICLES. THE A.O. WAS OF THE OPINION THAT PROV ISIONS OF SECTION 194-1ARE ATTRACTED FOR PAYMENT MADE FOR HIRING OF VEHICLES. SINCE THE ASSESSEE HAS DEDUCTED TAX AT LOWER RATE, HE TREATED THE ASSESSEE AS AN ASSESSEE IN DEFAULT. IN APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT PROVISIONS OF SECTION 194-1 ARE NOT ATTRACTED FOR S UCH PAYMENT AND, THEREFORE, THE ASSESSEE IS NOT IN DEFAULT FOR DEDUC TION OF TAX U/S 194C ON PAYMENT MADE TO BHARAT TOURS AND TRAVELS. WE FIND THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF TATA AIG GENERAL INSURA NCE CO. LTD. V. ITO REPORTED IN (2011) 55 DTR (MUMBAI) (TRIB) 254. IT HAS BEEN HELD IN THE SAID DECISION THAT CARS HAVING BEEN HIRED FROM TIME TO T IME FOR TRANSPORTATION OF EMPLOYEES AND VISITORS FOR THE PURPOSE OF ASSESSEE S BUSINESS, TAX AT SOURCE WAS RIGHTLY DEDUCTED BY IT FROM THE PAYMENT OF CAR HIRE CHARGES AS PER THE PROVISIONS OF SECTION 194C AND SECTION 194-1 ARE NO T APPLICABLE. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) HOLDING THAT PROVISIONS OF SECTION 194-1 ARE NOT APPLICABLE FOR PAYMENT TO BHARAT TOURS AND TRAVELS FOR MOTOR CAR HIRE CHARGES. THE GROUNDS RAISED BY THE REVENUE ARE ACC ORDINGLY DISMISSED. ITA NO. 160/MUM/2010 FOR A.Y. 2008-09(BY REVENUE) 5. GROUND OF APPEAL NO. (A) & (D) READS AS UNDER:- 4 ITA NO. 159 & 160/MUM/2010 M/S SIYARAM SILK MILLS LTD. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT SECTION 194C IS ATTRACTED FOR PAYMENT FOR SUPPLY OF PACKING MATERIAL AS PER SPECIFICATIONS WHICH AMOUNTS TO WORKS CONTRACT . (D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING ASSESSEES AP PEAL ON THE ISSUE OF NON DEDUCTION OF TDS ON PACKING MATERIAL C ONSUMED AS PER SPECIFICATION OF RS. 21.27 CRORES WITHOUT APPRE CIATING THE FACT THAT THERE WAS NO BIFURCATION OF THE LABOUR CHARGES , PRINTING LOGOS ON PACKING MATERIAL. 5.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS OF APPEAL NO. (A) & (D) IN ITA NO. 159/MUM/ 2010. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REV ENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 6. GROUND OF APPEAL NO. (B) & (C) READS AS UNDER: - (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT VEHICLE HIRING FALLS UNDER SECTION 1941 AFTER THE AMENDMENT OF SECTION 1941 W.E.F. 13.07.2006. (C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING ASSESSEES AP PEAL ON THE ISSUE OF NON DEDUCTION OF TDS ON PAYMENT MADE FOR H IRING OF VEHICLES ON RS. 6,23,500/- WITHOUT CONSIDERING CBDT S CIRCULAR NO. 4/2008 DATED 28.04.2008. 6.1 AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS OF APPEAL NO. (B) & (C) IN ITA NO. 159/MUM/ 2010. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REV ENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 5 ITA NO. 159 & 160/MUM/2010 M/S SIYARAM SILK MILLS LTD. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED ON 21.12.2011. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 21.12.2011. COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT, (TDS)-, MUMBAI 4 CIT(A) - 14 MUMBAI 5 DR BENCH E 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI