Dy.CIT, Circle-16(2), Hyderabad V. M/s Margadarsi Chit Fund Private Limited, Hyderabad

ITA 1620/HYD/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8975 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: K GOPAL RAO
• Keywords: Additional evidence; Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1620/HYD/2013 (ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(2) HYDERABAD VS. M/S. MARGADARSI CHIT FUND PRIVATE LIMITED HYDERABAD PAN: AABCM 4751 G (APPELLANT) (RESPONDENT) ITA NO.1564/HYD/2013 (ASSESSMENT YEAR: 2010-11) M/S. MARGADARSI CHIT FUND PRIVATE LIMITED HYDERABAD PAN: AABCM 4751 G VS. DY. COMMISSION ER OF INCOME TAX, CIRCLE 16(2) HYDERABAD (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. G. APARNA RAO, DR ASSESSEE BY: SHRI K. GOPAL RAO, A DVOCATE DATE OF HEARING: 27/01/2015 DATE OF PRONOUNCEMENT: 11/02/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE ARE CROSS APPEALS BY THE DEPARTMENT AND THE ASSESSEE AGAINST THE ORDER OF THE CIT (A)-V HYDERAB AD, DATED 30.08.2013, PASSED FOR A.Y 2010-11. 2. BRIEF STATED, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING CHIT FUND BESIDES OTHER THINGS. FOR THE A.Y 2010-11 THE ASSESSEE COMPANY FILED ITS RETURN OF IN COME ON 13.10.2010 ADMITTING TOTAL INCOME OF RS.99,26,19,48 7. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AND DETERMINED ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 2 OF 10 THE TOTAL INCOME AT RS.460,69,81,030/- AFTER MAKING CERTAIN DISALLOWANCES. 3. ON APPEAL, THE CIT (A) DELETED THE ADDITION TOWA RDS DIVIDEND/INTEREST PAID WITHOUT MAKING TDS U/S 40(A) (IA) OF THE ACT. THE CIT (A) HELD THAT THE DIVIDEND PAID BY THE ASSESSEE COMPANY TO VARIOUS CHIT MEMBERS WAS NOT IN THE CHAR ACTER OF THE INTEREST PAYMENT AND THEREFORE, THE PROVISIONS OF S ECTION 194 OF THE ACT WAS NOT APPLICABLE TO THE ASSESSEE. HE HELD THAT NO LIABILITY WAS FOUND ON THE PART OF THE ASSESSEE TO DEDUCT CHIT FUND DIVIDEND AND CONSEQUENTLY APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT IS INCORRECT. THE DEPARTMENT HAS AGITATED THIS ISSUE IN GROUND NOS. 2, 3 AND 4 WHICH ARE AS FOLLOWS: 2. THE LD CIT (A) ERRED IN DELETING THE ADDITION M ADE TOWARDS DIVIDEND/INTEREST PAID IN SUBSCRIPTION FALL S WITHIN THE AMBIT OF SECTION 194H WHETHER PAID DIREC TLY OR INDIRECTLY AND FAILURE TO DEDUCT TAX AT SOURCE CALL S FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 3. THE LD CIT (A) ERRED IN DIRECTING TO DELETE TH E ADDITION MADE TOWARDS DIVIDEND/INTEREST AS SUBSCRIBERS PAY T HE SUBSCRIPTION AMOUNT AS PER THE HIGHEST BIDDER. THE PROFIT IS EARNED BY OTHERS AT THE COST OF HIGHEST BIDDER I .E. THE BIDDER PAYS THE INTEREST AS HE NEEDS THE MONEY MOST AND OTHER SUBSCRIBERS ENJOY INTEREST THROUGH THE ASSESS EE COMPANY. 4. THE LD CIT (A) ERRED IN DELETING THE ADDITION MA DE TOWARDS DIVIDEND/INTEREST PAID IN SUBSCRIPTION WHEN THE ASSESSEE IS TREATING THE HIGHEST BIDDER AS DEBTOR A ND EARNING INTEREST. 4. WE FIND THAT THIS ISSUE HAS BEEN DECIDD BY THE I TAT IN THE ASSESSEES OWN CASE FOR A.Y. 2005-06 IN ITA NO.1553 /HYD/2010 DATED 24 TH SEPTEMBER, 2014 WHEREIN IT HAS BEEN HELD AS FOLLOW S: 15. NOW, WE SHALL TAKE THE REVENUES APPEAL, BEING ITA NO.1553/HYD/2010, WHICH INVOLVES A SOLITARY ISS UE RELATING TO DELETION BY THE LEARNED CIT(A) OF THE DISALLOWA NCE OF ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 3 OF 10 RS.188.44 CRORES MADE BY THE ASSESSING OFFICER UNDE R S.40A(IA) OF THE ACT, ON ACCOUNT OF DIVIDEND PAID BY THE ASSESSEE COMPANY TO ITS CHIT SUBSCRIBERS WITHOUT DE DUCTION OF TAX AT SOURCE, TREATING THE SAME AS EXPENDITURE IN THE NATURE OF INTEREST. 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY THE LEARNED REPRESENTATIVES OF BOTH THE SIDES, T HE ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSM ENT YEAR 2008-09 RENDERED VIDE ORDER DATED 24.2.2012 IN ITA NO.973/HYD/2011, WHEREIN A SIMILAR DISALLOWANCE MAD E BY THE ASSESSING OFFICER WAS HELD TO BE UNSUSTAINABLE, FOL LOWING THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF BI LAHARI INVESTMENTS (P)LTD.(288 ITR 39), WHEREIN IT WAS HEL D THAT THE DIVIDEND DISTRIBUTED BY THE ASSESSEE DID NOT PART-T AKE THE CHARACTER OF INTEREST AND CONSEQUENTLY, THE ASSESSE E WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. THE SAID DECISION O F THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 HAS BEEN UPHELD BY THE HONBLE ANDHRA PRADESH HIGH COURT VIDE ITS JUDGMENT DATED 10 TH JULY, 2013 PASSED IN ITTA NO.228 OF 2013 AND EVEN THE SLP FILED BY THE REVENUE AGAIN ST THE ORDER OF THE HONBLE ANDHRA PRADESH HIGH COURT HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT RECENTLY ON 3 0 TH JULY, 2014 IN PETITION FOR SPECIAL LEAVE TO APPEAL (C) NO .9457/2014. RESPECTFULLY FOLLOWING THESE JUDICIAL PRONOUNCEMENT S IN ASSESSEES OWN CASE ON SIMILAR ISSUE, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A), DELETING THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER UNDER S.40A(IA) ON ACCOUNT OF DIVIDEND PAID BY THE ASSESSEE TO THE CHIT SUBSCRIBERS FOR N ON-DEDUCTION OF TAX AT SOURCE AND DISMISS THE APPEAL OF THE REVE NUE'. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE DI SMISS THE DEPARTMENTAL GROUNDS OF APPEAL ON THIS ISSUE. 6. THE NEXT ISSUE IS WITH RESPECT TO PROPORTIONAL D ISALLOWANCE OF EXPENSES AMOUNTING TO RS.18,87,903. THE FOLLOWIN G REASONS WERE GIVEN BY THE A.O: 5.1 ON GOING THROUGH INFORMATION SUBMITTED BY ASSESSEE COMPANY, IT IS OBSERVED THAT DIFFERENT OFF ICES OF ASSESSEE COMPANY HAVE MADE COLLECTIONS ON BEHALF OF ITS SUBSIDIARY COMPANIES. IN THIS CONNECTION THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN WHY PROPORTIONATE EXPENSES SHOULD NOT BE DISALLOWED AS ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 4 OF 10 THE EXPENDITURE IS NOT INCURRED IN CONNECTION WITH ASSESSEES BUSINESS. IN RESPONSE TO THIS ASSESSEE SUBMITTED THAT THESE COLLECTIONS ARE VERY MEAGER AN D IT IS ONLY A MUTUAL HELP AMONGST HOLDING AND SUBSIDIARY COMPANIES IN FURTHERING THEIR BUSINESS. IN THIS CONNECTION THE ASSESSEE COMPANY RELIED ON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SA BUILDERS LTD V. CIT (2007) 288 ITR 1. ON GOING THROUGH THE DECISION IT IS OBSERVED THAT THE DECISI ON IS IN THE CONTEXT OF ALLOWANCE OF INTEREST WHEREAS FAC TS OF THE PRESENT CASE ARE DIFFERENT AND HENCE NOT CONSIDERED AND PROPORTIONATE EXPENDITURE OF NET COLLECTIONS MADE BY ASSESSEE COMPANY IS WORKED OUT AS UNDER: NET SUBSCRIPTIONS COLLECTED BY M/S MARGADARSI CHIT FUND PVT. LTD 4,11,93,126 TOTAL EXPENDITURE AS PER PROFIT & LOSS ACCOUNT 120,81,98,504 TOTAL TURNOVER OF THE COMPANY 2636,23,00,000 PROPORTIONATE DISALLOWANCE 120,81,98,504 X 4,11,93,126/2636,23,00,000 = 18,87,903 7. THE ASSESSEE STATED DURING APPEAL PROCEEDINGS TH AT IT IS NOT JUST THE ASSESSEE COMPANY WHICH MAKES CERTAIN COLLE CTIONS ON BEHALF OF THE OTHER GROUP COMPANIES, BUT THE OTHER GROUP COMPANIES ALSO RECIPROCATE. HOWEVER, IT WAS STATED THAT THE AO HAD MADE THE DISALLOWANCE PROPORTIONATE TO THE ENTI RE EXPENDITURE DEBITED TO THE P&L A/C. IT WAS SUBMITTE D THAT IF AT ALL PROPORTIONAL DISALLOWANCE WAS TO BE MADE, IT WA S TO BE MADE FROM THE SUBSCRIPTION EXPENSES AND NOT FROM THE ENT IRE EXPENSE. 8. THE CIT (A) HELD THAT A VERY SMALL PORTION OF EX PENSE CAN ACTUALLY BE IMPUTED TO COLLECTION OF SUBSCRIPTIONS FOR OTHER GROUP COMPANIES AND THE ENTIRE EXPENDITURE OF RS.120.00 C RORES ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 5 OF 10 CANNOT BE PROPORTIONATELY ALLOCATED AS IT IS ONLY T HE STAFF IN CERTAIN BRANCHES WHO WOULD BE COLLECTING SUCH SUBSC RIPTIONS ALONG WITH THEIR OWN WORK. THE CIT (A) OBSERVED THA T SUCH EXPENDITURE CANNOT BE CLEARLY DISCERNED FROM P&L A/ C AND HENCE RESTRICTED THE DISALLOWANCE TO RS.2.00 LAKHS AS EXP ENDITURE ON COLLECTION OF SUBSCRIPTION FOR OTHER GROUP COMPANIE S. AGGRIEVED, REVENUE HAS RAISED GROUND 5 AS FOLLOWS: GROUND NO. 5. THE CIT (A) OUGHT TO HAVE CONFIRMED THE ADDITION REGARDING PROPORTIONATE EXPENSES DISALLOWED AS THE EXPENDITURE WHICH IS NOT INCURRED IN CONNECTION WITH ASSESSEES BUSINESS 9. THE LD DR STATED THAT THE ORDER OF THE CIT (A) W AS NOT BASED ON PROPER REASONING, WHILE THE LD COUNSEL RELIED ON THE ORDER OF THE CIT (A). 10. WE HEARD BOTH THE PARTIES. WE FIND THAT THE AO HAS WRONGLY DISALLOWED PROPORTIONATE EXPENDITURE FROM THE ENTIR E EXPENDITURE DEBITED TO THE P&L A/C. AS SUBMITTED BY THE ASSESSE E, PROPORTIONATE DISALLOWANCE IS TO BE MADE FROM ONLY SUBSCRIPTION EXPENSES. THE CIT (A) HAS RIGHTLY HELD THAT SOME AM OUNT HAS TO BE DISALLOWED BEING EXPENDITURE OF COLLECTION OF SU BSCRIPTION FOR OTHER GROUP COMPANIES. SINCE IT WAS STATED THAT CER TAIN STAFF IN PARTICULAR BRANCHES WERE COLLECTING SUBSCRIPTION AL ONG WITH THEIR OWN WORK. 11. WE DO NOT FIND ANY INFIRMITY IN THE CIT (A)S D ISALLOWING MEAGER EXPENDITURE OF RS.2.00 LAKHS ONLY, AS A VERY LITTLE EXPENSES WOULD BE ACTUALLY DEPLOYED FOR COLLECTION OF SUBSCRIPTION FROM OTHER GROUP COMPANIES. COLLECTION WAS DONE ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 6 OF 10 AS MINOR ADDITIONAL WORK ALONG WITH THEIR REGULAR E MPLOYMENT. WE CONFIRM THE ORDER OF THE CIT (A) ON THIS ISSUE. 11.1 IN THE RESULT, THE REVENUE APPEAL IS DISMISSED . ITA NO.1564/HYD/2013 ASSESSEES APPEAL 12. THE ASSESSEE HAS COME UP ON APPEAL ON THE DISAL LOWANCE MADE BY THE AO U/S 40(A)(IA) FOR NON DEDUCTION OF T AXES ON THE PAYMENT MADE BY THE ASSESSEE TO M/S USHAKIRON MOVIE S LTD OF RS.52,12,366. AO MADE THE ADDITION BY GIVING THE FO LLOWING REASONS: 4.1 NON DEDUCTION OF TAXES ON PAYMENTS MADE TO M/S USHA KIRON MOVIES LTD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS MADE DIFFERENT PAYMENTS TO M/S USHAKIRON MOVIES LTD. OUT OF THESE PAYMENTS, TDS IS MADE ON SOME OF THE PAYMENTS WHEREAS TDS IS NOT MADE ON SOME OTHER PAYMENTS. DURING FINANCIAL YEAR 2008-09, IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS MADE A PAYMENT OF RS.1,36,88,882 TO M/S USHAKIRON MOVIES LTD ON WHICH NO TAX IS DEDUCTED AT SOURCE. IN THIS CONNECTION, THE ASSESSEE COMPANY ASKED TO EXPLAIN WHY THESE PAYMENTS SHOULD NOT BE DISALLOWED AS THESE PAYMENTS ARE MADE TOWARDS COMPOSITE CONTRACT ENTERED INTO WITH M/S USHAKIRON MOVIES LTD. IN RESPONSE TO THIS THE ASSESSEE COMPANY REPLIED THAT THESE PAYMENTS MADE TO M/S USHAKIRON MOVIES LTD AMOUNTING TO RS.52,12,366 WILL NOT ATTRACT TDS AS MOST OF THE HEAD OF ACCOUNT S INVOICES INCLUDE VAT WHICH WERE TREATED AS PURCHASES IN NATURE. FURTHER IT IS SUBMITTED BY THE ASSESSEE THAT ALL PAYMENTS ARE MADE AS PER MOU ENTERED BY BOTH PARTIES. ON VERIFICATION OF MOU IT IS OBSERVED THAT M/S MOVIES LTD HAS TO PROVIDE MARKETING SERVICES TO M/S MARGADARSI CHIT FUND PVT LTD FOR THE PURPOSE OF COMMERCIAL EXPLOITATION OF THE VARIOUS FACILITIE S CREATED IN FILM CITY. IN THIS MOU THERE IS A CLAUSE AS PER WHICH M/S MARGADARSI CHIT FUND PVT LTD HAS TO REIMBURSE ALL THE CHARGES/COSTS FOR UTILIZING ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 7 OF 10 INFRASTRUCTURAL FACILITIES. THIS CLEARLY SHOWS THAT ALL THE PAYMENTS MADE BY M/S MARGADARSI CHIT FUND PVT LTD TO M/S USHAKIRON MOVIES LTD IS AS PER THIS MOU. OUT OF THESE PAYMENTS SOME ARE SUBJECTED TO TDS IN THEPRETEXT OF PURCHASES. THIS IS NOT ACCEPTABLE. BECAUSE ALL THE PAYMENTS ARE MADE IN CONNECTION WITH A COMPOSITE CONTRACT WITH M/S USHAKIRON MOVIES LTD IN CONNECTION WITH MARKETING OF VARIOUS FACILITIES CREATED IN FILM CITY. HENCE IRRESPECTIVE OF NATURE OF EACH PAYMENT, ALL THE PAYMENTS SHOULD HAVE SUBJECTED TO TDS. IN THIS CONNECTION IT IS RELIED ON HON'BLE SUPREME COURT DECISION IN CASE OF CHATTURBHUJ VITHALDAS JASARI V. MORESHWAR PARASHRAM (1954) AIR 1954 S.C 236. IN THIS CASE HON'BLE APEX COURT OPINED AS UNDER: WHEN A CONTRACT CONSISTS OF A NUMBER OF TERMS AND CONDITIONS, EACH CONDITION DOES NOT FORM A SEPARATE CONTRACT BUT IS AN ITEM IN THE ONE CONTRACT OF WHICH IT IS A PART. THE CONSIDERATION FOR EACH CONDITION IN A CASE LIKE THI S IS THE CONSIDERATION FOR THE CONTRACT TAKEN AS A WHOLE. IT IS NOT SPLIT UP INTO SEVERAL CONSIDERATIONS APPORTIONED BETWEEN EACH TERM SEPARATELY. IN VIEW OF THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE COMPANY DEFAULTED IN DEDUCTING TAX ON PAYMENTS OF RS.52,12,366 MADE TO M/S USHAKIRON MOVIES LTD. HENCE THE SAME IS DISALLOWED U/S 40(A)(IA) AND ADDED TO THE INCOME RETURNED 13. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE STATED THAT THE PAYMENTS IN QUESTION, DID NOT REQUIRE DEDUCTION OF TDS AS THEY DID NOT FALL UNDER ANY SECTION OF THE INCOME T AX ACT. 14. THE CIT (A) HELD AS FOLLOWS: THAT SECTION 194C OF THE ACT STATES THAT ALL THE PAYMENTS MADE TO CONTRACTORS WITH RESPECT TO ANY COMPREHENSIVE CONTRACT ARE SUBJECTED TO TDS. IN THI S REGARD THE AO HAS RIGHTLY OBSERVED THAT THERE IS MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE APPELLANT AND M/S USHAKIRON MOVIES. AS PER THIS MOU, THE APPELLANT OBTAINS MARKETING SERVICES FROM M/S USHA KIRON MOVIES FOR THE PURPOSE OF COMMERCIAL EXPLOITATION OF VARIOUS FACILITIES CREAT ED IN FILM CITY. AO HAS INVESTIGATED THE ISSUE AND HAS CATEGORICALLY OBSERVED THAT ALL PAYMENTS MADE ARE ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 8 OF 10 ON ACCOUNT OF THIS CONTRACT OR MOU. THE CIT (A) AGREED WITH THE AO THAT THE APPELLANT MAKES ALL PAYMENTS AS A PART AND PARCEL OF THIS COMPREHENSIVE CONTRACT. THEREFORE, IT CAN CHOOSE TO MAKE ONE COMPREHENSIVE PAYMENT OR BREAKUP THE MARKETING SERVICES INTO VARIOUS PARTS AND THEN MAKE THE PAYMENT. THE ESSENCE AND NATURE OF THE CONTRACT OR PAYMENT DOES NOT CHANGE. FOR EXAMPLE, THE APPELLANT HAS MADE A PAYMENT OF RS.32,81,230 ON WATER CHARGES FOR GARDENS. ON THIS PAYMENT, TDS HAS NOT BEEN DEDUCTED AS THE APPELLANT CLAIMS THAT THIS WAS A PURCHASE OF WATER. THE APPELLANTS EXPLANATION IS NOT THE CORRECT INTERPRETATION BECAU SE M/S USHA KIRON MOVIES IS NEITHER IS A SELLER OR RESELLER OF WATER. THE MOU IS COMPREHENSIVE IN THAT IT PROVIDES FOR PAYMENTS WITH REGARD TO ALL OF MARKETING SERVICES. OBVIOUSLY M/S USHAKIRON MOVIES WILL HAVE SOME EXPENSES PERTAINING TO MARKETING SERVICES. BY ARTIFICIALLY BREAKING UP THE MARKETING SERVICE EXPENSES INTO REIMBURSEMENT OF EXPENSES AND OTHER PAYMENTS, THE NATURE OF THE PAYMENT MADE BY THE APPELLANT DOES NOT CHANGE. FOR EXAMPLE, IF THERE IS A CONTRACT FOR CONSTRUCTIO N, TDS IS TO BE DEDUCTED ON THE ENTIRE PAYMENT MADE TO THE CONTRACTOR. IF THE CONTRACTOR ARTIFICIALLY B REAKS UP THE PAYMENT INTO REIMBURSEMENT OF EXPENSES ON CEMENT, LABOUR, STEEL ETC AND THE BALANCE AMOUNT NOT CONNECTED TO MATERIALS, IT IS NOTHING BUT A METHODOLOGY FOR NON DEDUCTION OF TDS. IN THE SAME WAY, THE APPELLANT CANNOT ARTIFICIALLY BREAK UP THE CONTRACT INTO TDS VS. NON-TDS COMPONENTS. THE CONTRACT WITH M/S USHAKIRON MOVIES WAS FOR PROVIDING MARKETING SERVICES AND ALL COMPONENTS ARE PART AND PARCEL OF THIS CONTRACT. HENCE, THE CIT(A) AGREED WITH THE AO AND CONFIRMED THE ADDITION OF RS.52,12,366 U/S 40(A)(IA) OF THE ACT. 15. ON APPEAL BEFORE US, THE LD COUNSEL FOR THE ASS ESSEE FILED PETITION TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 29 OF THE I.T. RULES WHICH READ AS FOLLOWS: 3. THE APPLICANT SUBMITS THAT THE PAYMENT MADE BY IT TO M/S USHAKIRON MOVIES LTD IS INCLUDED BY THEM IN THEIR REGULAR INCOME AND THE SAME WAS OFFERED FOR T AX. ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 9 OF 10 THUS, AS PER THE AMENDED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, NO DISALLOWANCE CAN BE MADE I F THE PAYEE HAS ACCOUNTED THE INCOME RECEIVED FROM THE PAYER AND OFFERED THE SAME FOR TAX. YOUR HONOURS WOULD APPRECIATE THAT THE PROVISO INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 IS HELD TO BE DECLARATORY AND CURATIVE IN NATURE AND IS APPLICABL E RETROSPECTIVELY FROM 1.4.2005 AS HELD BY THE HON'BL E BANGALORE APPELLATE TRIBUNAL IN THE CASE OF DCIT VS . ANANDA MARKALA REPORTED IN (2014) 150 ITD 323 (BANG.) AND ALSO BY THE HON'BLE AGRA APPELLATE TRIBUNAL IN THE CASE OF RAJEEV KUMAR AGARWAL VS. AC IT (ITA NO.337/AGRA/2013 A.Y. 2006-07 ORDER DATED 29.05.2013. 4. THUS, AS THE PAYEE HAS ALREADY OFFERED THE AMOUN T IN QUESTION IN THEIR REGULAR INCOME AND PAID THE TA XES, THE PROVISIONS OF SECTION 40(A)(IA) IS NOT APPLICAB LE IN ITS CASE AND THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES IS UNCALLED FOR. THE APPELLANT TO SUPPO RT ITS CONTENTION IS FURNISHING HEREWITH CERTIFICATES AND LEDGER ACCOUNTS RECEIVED FROM M/S. USHAKIRON MOVIES LTD TO SHOW THAT THE AMOUNT IN QUESTION HAD ALREADY BEEN OFFERED FOR TAX. THE APPELLANT FURTHER SUBMITS THAT THERE HAS BEEN NO OCCASION TO FURNISH THE ABOVE CERTIFICA TES BEFORE THE LOWER AUTHORITIES, THOUGH THE RELEVANT D ETAILS OF PAYMENTS HAVE ALREADY BEEN FURNISHED. THE APPLICANT, THEREFORE, PRAYS THAT, IN THE INTEREST O F JUSTICE, THE HON'BLE BENCH MAY BE PLEASED TO ADMIT THE ADDITIONAL EVIDENCE FURNISHED AT S.NO.112 AND S.NO.189 OF PAPER BOOK-II. 5. THE APPELLANT SUBMITS THAT THE DOCUMENT COMPLIED AT S.NOS.112 AND 189 HAVE GOT A DIRECT BEARING ON THE ISSUES INVOLVED IN THE PRESENT APPEAL. THE APPELLAN T SUBMITS THAT THE HON'BLE BENCH HAS BEEN VESTED WITH THE DISCRETION TO ADMIT THE ADDITIONAL EVIDENCE UND ER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. 16. WE ADMIT THE ADDITIONAL EVIDENCE AS THE SAME SUBSTANTIATED THE MERITS OF THE CASE AND THE EVIDEN CE GOES TO THE ROOT OF THE ISSUE, RELYING ON THE DECISION OF THE H ON'BLE BOMBAY ITA NOS.1620 AND 1564 OF 2013 MARGADARSI CHIT FUND (P) LTD HYDERABAD. PAGE 10 OF 10 HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH V S COMMISSIONER OF INCOME-TAX (231 ITR 1) (BOM.) AND A BHAY KUMAR SHROFF VS. INCOME TAX OFFICER (63 ITD 144) (P ATNA 3 RD MEMBER). WE SET ASIDE THE ISSUE TO THE FILE OF THE AO TO CONSIDER THE ADDITIONAL EVIDENCE AND RE-DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 17. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 18. THUS, APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 11 TH FEBRUARY, 2015. VNODAN/SPS COPY TO: 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(2) HYDERA BAD 2. M/S MARGADARSI CHIT FUND (P) LTD.,5-10-195 FATEH MA IDAN ROAD, HYDERABAD 500004 3. THE CIT(A)-V HYDERABAD 4. THE CIT HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER