Migma Minerals Pvt. Ltd., Kolkata V. ITO, Ward - 12(2), Kolkata, Kolkata

ITA 1647/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2558 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2009
• Court: TRIBUNAL
• Department Lawyers: P KOLHE
• Assessee Lawyers: N C BANERJEE
• Section: 194C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH - C , KOLKATA ( ) BEFORE . . , , SHRI D.K.TYAGI, JUDICIAL MEMBER. /AND . . , , SHRI C.D. RAO, ACCOUNTANT M EMBER . / I.T.A.NO. 1647/KOL/2009 / ASSESSMENT YEAR 2005 - 06 MIGMA MINERALS PVT. LTD., 86B, MONOHAR PUKU ROAD, KOLKATA 700 029 PAN - AAECM 0418 M - - - VERSUS - . ITO, WARD 12(2), K OLKATA . ( / A PPELLANT ) ( / RES PONDENT ) / FOR THE APPELLANT : / SHRI N.C.BANERJEE, AR / FOR THE RESPONDENT : / SHRI P.KOLHE, DR / ORDER . . , , SHRI C.D. RAO, ACCOUNTANT MEMBER . THE ASSESSEE HAS FILED THIS APPEAL AGAI NST ORDER DT.30.7.2009 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) XXIV, KOLKATA FOR THE ASSESSMENT YEAR 2005 - 06. 2. GROUNDS NO.1 AND 5 ARE OF GENERAL NATURE AND THEY NEED NO SPECIFIC ADJUDICATION. 3. IN GROUNDS NO.2 AND 3, THE ASSESSEE DISPUTES THE DISALL OWANCE U/S.40(A)(IA) OF THE INCOME - TAX ACT,196. 3.1. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS AS DEVELOPER & CONTRACTOR. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE GO ITS ENTIRE CONSTRUCTIONAL WORKS DONE THROUGH ONE CONT RACTOR M/S.PIONEER CONSTRUCTION. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE (TDS) ON THE PAYMENTS OF RS.19,34,998 TO M/S.PIONEER CONSTRUCTION AND OF RS.1,07,000 PAID TO ARC HITECT, WHICH ACCORDING TO THE ASSESSING OFFICER SHOULD HAVE BEEN DEDUCTED IN VIEW OF THE PROVISIONS CONTAINED IN SECTIONS 194C AND 194J OF THE INCOME - TAX ACT,1961. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE ABOVE 2 EXPENSES TOTALING TO RS.20,41,998 ( I .E., RS.19,34,99 8 + RS.1,07,000 ) U/S.40(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). 3.2. BEFORE THE LEARNED CIT(A), AS REGARDS THE DISALLOWANCE OF RS.19,34,998 PAID TO M/S.PIONER CONSTRUCTION, IT WAS CONTENDED ON BEHALF OF T HE ASSESSEE THAT THERE WAS NO QUESTION OF DEDUCTION OF TDS ON THE AMOUNT OF RS.15.68 LAKHS PAID FOR PURCHASE OF MATERIALS. IT WAS FURTHER CONTENDED THAT IN ADDITION TO THE PURCHASE OF NEXT YEARS ORDER MATERIALS, AN AMOUNT OF RS.3.67 LAKHS WAS ADVANCED TO SUB - CONTRACTOR AS THE PAYMENT FOR SUPPLY OF LABOUR AND AS THE PAYMENT WAS MADE AS ADVANCE TO THE SUB - CONTRACTOR, THE ASSESSEE HAS NOT DEDUCTED TDS ON THE SAME. THE LEARNED CIT(A) CONSIDERED THE CONTENTION OF THE ASSESEE, EXAMINED THE AGREEMENT DT. 16.9.200 4 AND THE SUPPLEMENTARY DEED OF AGREEMENT DT.10.11.204 AND ALSO THE COPY OF ACCOUNT OF CONTRACTOR , BILLS RAISED BY THE SUB - CONTRACTOR ETC., AND CAME TO THE CONCLUSION THAT RS.5,20,000 CAN BE EXCLUDED FROM THE PURVIEW OF SECTION 194C AS THIS WAS FOR PURCHAS E OF MATERIAL AND THUS, ALLOWED A RELIEF OF RS.5,20,000 OUT OF THE DISALLOWANCE OF EXPENSES OF RS.19,34,998 PAID TO M/S.PIONEER CONSTRUCTION. THE RELEVANT CONCLUDING PORTION OF THE ORDER OF THE CIT(A) IS REPRODUCED AS UNDER: FROM THE RECORD IT IS SEEN THA T AS PER THE COPY OF ACCOUNT OF ADVANCE FOR MATERIALS PURCHASED THE APPELLANT HAS PAID RS.5,20,000/ - AFTER 10.11.04 AND THE SUB - CONTRACTOR HAS RAISED TWO BILLS AFTER 10.11.04 WHICH ARE DATED 15.12.04 (FOR RS.4,73,000/ - ) AND 30.03.05 (FOR RS.2,67,000/ - ). THE TOTAL PAYMENT WHICH HAS BEEN MADE TO THE SUB - CONTRACTOR IS RS.19,34,998/ - OUT OF WHICH RS.3,67,000/ - IS FOR LABOUR SUPPLY. IN ANY CASE TDS WAS REQUIRED TO BE MADE ON THE PAYMENTS FOR LABOR SUPPLY WHICH WAS NOT DONE. FROM THE BALANCE PAYMENT OF RS.15,67 ,998/ - ONLY RS.5,20,000/ - CAN BE EXCLUDED FROM THE PURVIEW OF SECTION 194C AS THIS WAS FOR PURCHASE OF MATERIAL. ON THE BALANCE PAYMENT OF RS.10,47,998/ - DUE DEDUCTION OF TAX SHOULD HAVE BEEN MADE AT THE TIME OF CREDIT/PAYMENT WHICH WAS NOT DONE. AS THE AP PELLANT FAILED TO DO SO PROVISIONS OF SECTION 40(A)(IA) WERE ATTRACTED. THE DISALLOWANCE U/S 40(A)(IA) SHOULD 3 THEREFORE BE RESTRICTED TO RS.14,14,998/ - . THE APPELLANT GETS RELIEF TO THE EXTENT OF RS.5,20,000/ - . 3.3. AS REGARDS THE DISALLOWANCE OF RS.1,07 ,000 PAID TO ARCHITECT, THE ASSESSEE SUBMITTED THE DETAILS OF PAYMENT TO THE ARCHITECT BEFORE THE LEARNED CIT(A), AND IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE OUT OF THE TOTAL AMOUNT OF RS.1,07,000 PAID TO THE ARCHITECT, ONLY RS.48,000 WAS THE FEE PAID TO THE ARCHITECT AND THE BALANCE WAS REIMBURSEMENT FOR VARIOUS EXPENSES INCURRED ON GETTING THE PLAN SANCTIONED ETC., AS UNDER : 3.4. THE LEARNED CIT(A) OBSERVED THAT EXCEPT FOR BILL OF RS.6,500 FOR SOIL TESTING WHICH IS INCLUDED IN RS.1,07,000 NO OTHER BILLS HAVE BEEN SUBMITTED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER ALLOWED THE CLAIM OF RS.6,500 ONLY AND CONFIRMED THE BALANCE AMOUNT OF DISALLOWANCE OF RS.1,00,500. 4. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THERE WAS AN ORAL C ONVERSATION WITH THE PROPRIETOR OF M/S. PIONEER CONSTRUCTION (SUB - CONT RACTOR) ON OR ABOUT 2 0.2.2004 FOR SUPPLY OF THE LABOUR FOR CONSTRUCTION OF THE PROJECTE D BUILDING AND THERE WAS NO ORA L AGREEMENT FOR ANY SUPPLY OF MATERIALS BY THE SUB - CONTRACTOR. THE L EARNED CIT(A) HAS WRONGLY STATED IN HIS ORDER THAT THE PIONEER CONSTRUCTI O N SHA LL SU PPLY MATERIALS AS WELL AS LABOUR WITHOUT ENTERING INTO CONTRACT . FURTHER HE CONTENDED THAT THE LEARNED CIT(A) HAS WRONGLY CONSIDERED THAT THE SUPPLY OF MATERIALS FOR RS.10, 47,998 HAD BEEN MADE BY THE SUB - CONTRACTOR AS PER THEIR AGREEMENT DT.16.9.2004 WHICH IS ABSOLUTELY INCORRECT . THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT AS THERE WERE CERTAIN MISUNDERSTANDING AND 4 COMPLICATION IN THE AGREEMENT DT.16.9.2004, FOR THE PURP OSE OF CLARIFICATION OF THE SAME, A SUPPLEMENTARY DEED OF AGREEMENT DT.10.11.2004 WAS ENTERED INTO BETWEEN THE ASSESSEE AND M/S. PIONEER CONSTRUCTION, WHEREIN IT HAS BEEN AGREED BY BOTH THE PARTIES THAT THE SUPPLY OF MATERIALS SHALL BE EXCLUDED FROM THE AG REEMENT DT.16.9.2004. THE LEARNED AR OF THE ASSESSEE SUBMITTED COPIES OF BOTH THE AGREEMENTS DT.16.9.2004 AND 10.11.2004 AND CONTENDED THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE SAID AGREEMENTS IN THEIR PROPER PERCEPTIVE AND DRAWN A WRONG CONCLUSIO N RESULTING IN DISALLOWANCE OF THE EXPENDITURE U/S.40(A)(IA) OF THE ACT. AS REGARDS THE DISALLOWANCE OF RS.1,00,500 SUSTAINED BY THE LEARNED CIT(A) OUT OF THE PAYMENTS MADE TO THE ARCHITECT OF RS.1,07,000, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT SINC E THE ASSESSEE SUBMITTED THE STATEMENT OF RECEIPTS MADE BY THE ARCHITECT FOR DRAFTING THE PLAN FOR SUBMISSION TO CORPORATION OF CALCUTTA AND THE EXPENSES MADE BY THEM FOR PASSING THE PLAN FROM CORPORATION OF CALCUTTA TOGETHER WITH THEIR BILL FOR THE FEES O F ARCHITECT FOR RS.48,000, THE ENTIRE AMOUNT OF EXPENDITURE OF RS.1,07,000 SHOULD HAVE BEEN ALLOWED AS EXPENDITURE. 5. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). 6. HAVING HEARD BOTH PARTIES AND P ERUSING THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND ALSO THE PAPERS SUBMITTED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE ENTERED INTO CONTRACT WITH M/S.PIONEER CONSTRUCTION ON 16.9.2004. AS THERE WAS CERTAIN MISUNDERSTANDING AND COMPLICATION IN THE SA ID AGREEMENT, THE SAID AGREEMENT WAS AMENDED BY EXECUTING A SUPPLEMENTARY AGREEMENT DT.10.11.2004 FOR CLARIFICATION OF CERTAIN POINTS OF THE AGREEMENT. THIS FACT IS NOT DISPUTED BY THE REVENUE. THEREFORE, IN OUR CONSIDERED VIEW, BOTH THE AGREEMENTS NEEDS C ONSIDERATION BEFORE DECIDING THE NATURE OF PAYMENT TO M/S.PIONEER CONSTRUCTION IN ORDER TO DETERMINE AS TO WHETHER THE AMOUNT PAID TO M/S.PIONEER CONSTRUCTION WAS SUBJECT TO DEDUCTION OF TDS. AS IT APPEARS, NONE OF THE AUTHORITIES BELOW HAVE EXAMINED THE I SSUE AS TO THE LIABILITY TO DEDUCT TAX AT SOURCE IN THE LIGHT OF THE ABOVE AGREEMENTS. THEREFORE, FOR THE ENDS OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDE THE I SSUE AFRESH IN THE LIGHT OF THE 5 AGREEMENT DT.16.9.2004 AND THE SUPPLEMENTARY AGREEMENT DT.10.11.2004 AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE . AS REGARDS THE DISALLOWANCE MADE OUT OF PAYMENT TO ARCHITECT, IT IS THE CLAIM OF THE ASSESSEE THAT THE ASS ESSEE HAS PAID TO THE ARCHITECT FOR DIFFERENT EXPENDITURES INCURRED BY THE AR CHITECT BY WAY OF REIMBURSEMENT, WHICH HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW PROPERLY. THEREFORE, FOR THE ENDS OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ISSUE IN THE LIGHT OF SUBMISSION OF THE ASSESSEE AND ON THE BASIS OF EVIDENCE AS MAY BE PRODUCED BY THE ASSESSEE IN THIS REGARD AFTER ALLOWING PROPER OPPORTUN ITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 11.06.2010 SD/ - SD/ - ( . . ) , (D.K.TYAGI), JUDICIAL MEMBER. ( . . ) (C.D. RAO), ACCOUNTANT MEMBER. ( ) DATE : 11.06.2010 - COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : 2 / THE RESPONDENT - 3. / THE CIT, 4. ( )/ THE CIT(A), 5. / DR, KOLKATA BENCH 6. GUARD FILE . / TRUE COPY , / BY ORDER , / DEPUTY REGISTRAR . ( /) H.K.PADHEE / SNR.PRIVATE SECRETARY.