ACIT., Circle-16(2), Hyderabad, Hyderabad V. M/s Ushodaya Enterprises Limited, Hyderabad

ITA 1598/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6257 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 12-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-10-2014
• Court: TRIBUNAL
• Department Lawyers: S NARASAMMA
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER I.T.A. NO. 1598/HYD/2014 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD VS M/S. USHODAYA ENTERPRISES LTD., HYDERABAD [PAN: AAACU2690P] (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. S. NARASAMMA, DR FOR ASSESSEE : SHRI V. SIVA KUMAR, AR DATE OF HEARING : 25-07-2016 DATE OF PRONOUNCEMENT : 27-07-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD, DATED 11-08-2014. REVENUE IS CONTENDING VARIOUS ISSUES IN THE GROUNDS RAISED. 2. WE HAVE HEARD THE LD. DR AND LD. COUNSEL AND DEC IDED THE ISSUES AS UNDER: ITA NO.1598/HYD/2014 M/S. USHODAYA ENTERPRISES LTD., :- 2 -: GROUND NO. 1 : 3. THIS GROUND PERTAINS TO THE ISSUE OF DISALLOWANCE OF RS. 56,03,53,091/- U/S. 40(A)(IA) OF THE ACT. ASSESSEE RECEIVES ADVERTISEMENT REVENUE AND AS PART OF RECEIPT, COMMISSIO N AMOUNT OF RS. 56,03,53,091/- WAS PAID OUT OF THE AMOUNTS RE CEIVED. ASSESSEES ACCOUNTING PROCEDURE IS THAT AGENTS DEDUCTS TH E COMMISSIONS AND PAYS NET AMOUNT TO ASSESSEE. IT WAS CO NTENDED THAT THERE WAS NO OCCASION TO DEDUCT TAX. AO NOT SATISFI ED WITH THE REPLY MADE AND MADE DISALLOWANCE OF THE ABOVE AMOUNT U/S 40(A)(IA) OF THE ACT. 3.1. LD. CIT(A) RELYING ON MANY OTHER CASES OF ITA T IN ITA NO. 426/H/2010 DT. 09-07-2012 AND ALSO ITA NO. 1552/ H/2010, IN ASSESSEE CASE, THE DISALLOWANCE WAS DELETED. AGG RIEVED, REVENUE RAISED THE PRESENT APPEAL. 3.2. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE OR DER OF THE LD. CIT(A) AS IT IS IN COMPLIANCE TO THE ORDER OF I TAT IN EARLIER YEARS. MOREOVER, CBDT ALSO HAS RECENTLY ISSUED A CI RCULAR BEARING F.NO. 275/2006/2016-IT(B) DT. 29-02-2016 CLARIFYING THAT TDS IS NOT REQUIRED TO BE MADE ON PAYMENTS MADE BY TV CHANNEL S/NEWS PAPER COMPANIES TO THE ADVERTISING AGENCY FOR BOOKING OR PROCURING OR CANVASSING FOR ADVERTISEMENT. IN VIEW OF THAT, WE DO NOT SEE ANY REASON TO DEFER FROM THE FINDINGS. THIS GROUND IS RE JECTED. GROUND NO. 2 : 4. THIS GROUND PERTAINS TO DISALLOWANCE OF DEPRECIA TION ON COMPUTER ACCESSORIES AMOUNTING TO RS. 5,27,929/-. A SSESSEE PURCHASED THE ACCESSORIES LIKE PRINTERS, SCANNERS, M ODEMS AND ITA NO.1598/HYD/2014 M/S. USHODAYA ENTERPRISES LTD., :- 3 -: ROUTERS ETC., AND CLAIMED DEPRECIATION UNDER THE HEAD COMPUTERS AT 60%. AO HELD THAT THESE ARE PLANT & MACHINERY AND AL LOWED DEPRECIATION AT 15%. LD. CIT(A) FOLLOWING THE ORDER O F ITAT IN EARLIER YEARS I.E., ITA NO. 426/H/2010 DT. 09-07-201 2 AND ALSO ITA NO. 1552/H/2010 (SUPRA), DELETED THE DISALLOWANCE A ND ALLOWED THE DEPRECIATION AT 60%. 4.1. THIS ISSUE IS COVERED AGAINST THE DEPARTMENT BY TH E ORDERS OF ITAT IN EARLIER YEARS. SINCE ACCESSORIES LIKE PRINTERS, SCANNERS AND MODEMS ETC., ARE PART OF COMPUTER MACHINE RY, ASSESSEE IS ELIGIBLE FOR DEPRECIATION AT 60%. ACCORD INGLY, THE GROUND IS REJECTED. GROUND NO. 3 : 5. THIS GROUND PERTAINS TO THE ISSUE OF DISALLOWANC E OF EMPLOYEES CONTRIBUTION TO ESI AT RS. 3,38,689/-. AO DI SALLOWED THE ABOVE AMOUNT HOLDING THAT THE AMOUNTS WERE PAID BEYO ND THE DUE DATE. LD. CIT(A) FOUND THAT ITEMS AT SR. NOS. 2, 4 & 5 IN THE TABLE AT PG. 10 OF THE CIT(A) ORDER WERE MADE WITHIN TH E TIME I.E., INCLUDING GRACE PERIOD. THE OTHER TWO PAYMENTS AT SR. NOS. 1 & 3 WERE MADE WITH A DELAY OF ONE DAY AND THREE RESPECTIVE LY, BUT WERE MADE WITHIN THE ACCOUNTING YEAR. HE DELETED THE ADDITI ON FOLLOWING THE ORDER IN ASSESSEES OWN CASE FOR AY. 2010-11. 5.1. THIS ISSUE IS ALSO COVERED AGAINST THE REVENUE AND IN FAVOUR OF ASSESSEE BY THE ORDER OF THE ITAT IN ITA N OS. 134, 144, 120 AND 121/H/2013 DT. 08-05-2015. SINCE THE PAYMENTS ARE MADE WITHIN THE YEAR, THE AMENDMENT BROUGHT TO THE ACT I S ITA NO.1598/HYD/2014 M/S. USHODAYA ENTERPRISES LTD., :- 4 -: EQUALLY APPLICABLE. THEREFORE, THERE IS NO MERIT IN REVENUES GROUND. HENCE, THE SAME IS DISMISSED. GROUND NO. 4 : 6. THIS GROUND PERTAINS TO DISALLOWANCE OF PRIOR PE RIOD EXPENSES OF RS. 11,14,301/- AND RS. 9,36,420/-. AO DISALLOWED A SUM OF RS. 25,32,365/- BEING AMOUNT DEBITED AS PRI OR PERIOD EXPENDITURE. IT WAS THE CONTENTION THAT AO DID NOT MENTION ANY REASONS FOR DISALLOWANCE. IN THE FIRST APPEAL LD. CI T(A) DELETED THE DISALLOWANCE IN RESPECT OF DISALLOWANCE OF RS. 11,14 ,301/- BEING EMPLOYEES GRATUITY PAYMENT STATING THAT THE AMOUNT REALLY PERTAINS TO CURRENT YEAR BUT WAS MISTAKENLY BOOKED UNDER PRIOR PERIOD EXPENDITURE. ASSESSEE IT SEEMS PAID AN AMOUN T OF RS. 19,00,263/- IN THE IMMEDIATELY PRECEDING PREVIOUS YE AR FROM THE GROUP GRATUITY PREMIUM WHICH RELATED TO PERIOD 01-11 -2009 TO 31- 10-2010. PART OF THE AMOUNT PERTAINING TO EARLIER YEAR WAS CLAIMED IN FINANCIAL YEAR 2009-10 AND BALANCE RS. 11,14,301 /- IN THE CURRENT YEAR. SINCE THE PAYMENT WAS MADE IN THE EARLIE R YEAR, IT WAS ACCOUNTED AS PRIOR PERIOD EXPENDITURE BUT THE AMO UNT PERTAINS TO THE CURRENT YEARS LIABILITY. ACCORDINGLY, WE DO NOT FIND ANY REASON TO DEFER FROM THE FINDINGS OF THE LD. CIT(A ). 6.1. AS REGARDS THE AMOUNT OF RS. 9,36,420/-, IT WAS FOUND THAT THE SAME RELATED TO EXCESS BILLING OF EARLIER YEAR S REVERSED IN THE CURRENT YEAR. RELYING ON THE DECISION OF THE CO-O RDINATE BENCH OF ITAT IN ASSESSEES OWN CASE FOR AY. 2007-08 IN I TA NO. 1535/H/2010 DT. 10-05-2013, LD. CIT(A) DELETED THE DI SALLOWANCE. WE DO NOT SEE ANY REASON TO INTERFERE WITH SUCH ORDER. THE ITA NO.1598/HYD/2014 M/S. USHODAYA ENTERPRISES LTD., :- 5 -: EXPENDITURE CLAIM IS ALLOWABLE IN THE YEAR UNDER CONS IDERATION. GROUND DISMISSED. GROUND NO. 5 : 7. THIS GROUND PERTAINS TO EMPLOYEES GROUP GRATUI TY SCHEME OF RS. 1,43,44,721/-. THE AO DISALLOWED RS. 1,43,44,721/- ON THE GROUND THAT THE SCHEMES TO WHICH ASSESSEE CONTRIBUTED THE AMOUNTS WERE APPROVED W.E.F. 18-08-2011 . 7.1. IN FIRST APPEAL, ASSESSEE SUBMITTED BEFORE THE CI T(A) THAT IT NEITHER DEBITED THE SAID AMOUNT TO ITS P&L A/C NO R CLAIMED THE SAME AS DEDUCTION WHILE COMPUTING TOTAL INCOME. THE CIT(A) DELETED THE DISALLOWANCE ACCEPTING ASSESSEES CONTENTIO N AND RECORDING A FINDING THAT THE PAYMENT DOES NOT BELONG TO ASSESSEE. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 7.2. ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF DETAILS PERTAINING TO TRANSACTION AND ACCOUNT COPIES OF DEMERGE D COMPANIES. ASSESSEE PAID RS. 1,43,44,721/- TO M/S. METLIFE INSURANCE CO. LTD., DURING THE YEAR UNDER ACCOUNT. AF TER TAKING INTO ACCOUNT THE AMOUNTS APPROPRIATED TOWARDS PREMIUM FOR EMPLOYEES GROUP INSURANCE AND GRATUITY, PAYMENTS MA DE DURING THE YEAR AND ALSO AFTER ADDING INTEREST RECEIVED, NET A MOUNT OF RS. 1,35,67,598/- WAS TRANSFERRED TO THE ACCOUNTS OF DEMERG ED COMPANIES INCLUDING THE UNPAID LIABILITY. THE DEMER GED COMPANIES VIZ., EENADU TELEVISION PVT. LTD., PRISM TV PVT. LTD., AND PANORAMA TV PVT. LTD., REFLECTED THE PAYMENTS IN THEIR BOOKS. SI NCE THE AMOUNT WAS TRANSFERRED TO THE ACCOUNT OF DEMERGED COMPAN IES AND SINCE THERE WAS NO CLAIM FOR DEDUCTION FOR THE IMP UGNED ITA NO.1598/HYD/2014 M/S. USHODAYA ENTERPRISES LTD., :- 6 -: AMOUNT IN COMPUTING TOTAL INCOME IN ASSESSEES CASE, THE ORDER OF CIT(A) IS TO BE UPHELD. AS ASSESSEE SUBMITTED ADDITION AL EVIDENCE TO EXPLAIN THE ENTRIES IN ASSESSEE BOOKS AND ITS DEMER GED COMPANIES, WE ARE OF THE OPINION THAT THIS CAN BE EXAM INED BY THE AO. INCASE ASSESSEE HAS NOT CLAIMED THE ABOVE AMOUNT QUESTION OF DISALLOWANCE DOES NOT ARISE. AO IS DIRECTED TO DECIDE AFRESH ON EXAMINATION OF FACTS. ASSESSEE SHOULD BE GIVEN AN OP PORTUNITY TO MAKE SUBMISSIONS. GROUND IS ALLOWED FOR STATISTICAL P URPOSES. 8. IN THE RESULT, APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2016 SD/- SD/- (LALIET KUMAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 27 TH JULY, 2016 TNMM COPY TO : 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD. 2. M/S. USHODAYA ENTERPRISES LIMITED, 6-3-570, EENA DU COMPLEX, SOMAJIGUDA, HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-V, HYDERABAD , 4. THE COMMISSIONER OF INCOME TAX-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.