ITO Wd - 58(2)/TDS/ KOLKATA, Kolkata V. M/s kanoi Tea Pvt Ltd, Kolkata

ITA 1655/KOL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3098 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2013
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 12-11-2012
• Court: TRIBUNAL
• Department Lawyers: DILIP KUMAR RAKSHIT
• Assessee Lawyers: N O N E
• Keywords: Business income
• Section: 143(3); 194C

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . . . . . . . , !' /AND #! $'# , ) [BEFORE SHRI K. K. GUPTA, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NOS. 1653 TO 1656/KOL/2012 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEARS: 200 2- 0 3 TO 2005-06 INCOME-TAX OFFICER, WD-58(2)/TDS/KOL VS. M/S. K ANOI TEA PVT. LTD. (PAN: AABCK2868E) (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 18.04.2013 DATE OF PRONOUNCEMENT: 18.04.2013 FOR THE APPELLANT: SHRI DILIP KUMAR RAKSHIT, SR. DR FOR THE RESPONDENT: N O N E / / ORDER PER BENCH: ALL THESE APPEALS BY REVENUE ARE ARISING OUT OF COM MON ORDER OF CIT(A)-I, KOLKATA IN APPEAL NO. 135,136,137&138/CIT(A)-I/58(2)/11-12 DAT ED 01.08.2012. ASSESSMENTS WERE FRAMED BY ITO, WARD-58(2), KOLKATA U/S. 201(1)/201( 1A) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEARS 2002-03 TO 2005-06 SEPARATELY VIDE HIS ORDER DATED 31.03.2011. 2. AT THE OUTSET, IT IS NOTICED THAT THESE FOUR AP PEALS BY REVENUE ARE DELAYED BY ONE DAY AND CONDONATION PETITION ALONG WITH AFFIDAVIT WAS F ILED BY REVENUE. SINCE THERE IS NONE PRESENT FROM ASSESSEES SIDE AND WE FIND THAT THERE IS REAS ONABLE CAUSE FOR CONDONATION OF DELAY, WE CONDONE THE DELAY AND ADMIT THESE APPEALS. 3. THE ONLY ISSUE IN THESE FOUR APPEALS OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE CHARGING OF DIFFERENTIAL TDS ON ACCOUNT OF SHOR T DEDUCTION. FOR THIS, REVENUE HAS RAISED COMMON GROUND IN ALL THE FOUR YEARS AND WE WILL TAK E THE GROUND AS RAISED IN AY 2002-03, WHICH READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN TREATING THE SERVIC E CHARGES AS COVERED U/S 194C AND NOT U/S 1941 OF THE I T ACT, 1961 OVERLOOKING THE F ACT THAT THE AGREEMENT BETWEEN M/S KANOI TEA PVT. LTD. & M/S PRESTIGE TRADING CO. CLEA RLY SHOWS THAT M/S KANOI TEA PVT. LTD. HAS TAKEN GODOWN SPACE FOR STORAGE OF TEA AND ANY PAYMENT FOR OCCUPYING THAT GODOWN INCLUDING SOME OTHER MINOR SERVICES IS COVER ED U/S 1941 OF THE I T ACT IRRESPECTIVE OF THE NOMENCLATURE GVEN BY THE ASSES SE TO THOSE CHARGES. 2 ITA NOS.1653 TO 1656/K/2012 KANOI TEA PVT. LTD.. AY: 2002-03 TO 05-06 2. THE LD. CIT(A) HAS ERRED IN OVERLOOKING THE FACT , AS MENTIONED IN THE CLAUSE 9 OF THE AGREEMENT THAT IF ANY MECHANICAL SERVICES ARE REQUI RED INSIDE THE GODOWN THEN THE PAYMENT FOR THE SAME WILL BE BOME BY THE DEDUCTOR- ASSESSE, M/S KANOI TEA PVT. LTD., HENCE ALI OTHER MINOR SERVICES SHOULD BE TERMED AS INCIDENTAL FOR STORAGE OF TEA AND OTHER GOODS. 3. THAT THE LD CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT AT BEST THE AGREEMENT/ CONTRACT BETWEEN THE TWO PARTIES IS IN THE NATURE O F COMPOSITE AGREEMENT WHEREIN THE PRIMARY FOCUS IS FOR TAKING THE GODOWN ON RENT FOR STORAGE OF TEA. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TEA HANDLING. THE ASSESSEE UNDERTAKES DELIVERY OF TEA FROM COMPANIES, ARRANGES FOR STORAGE OF TEAS, LOADING UNLOADING OF CHESTS, UNDERTAKING ALL MEASURES FOR P ROPER UPKEEP OF STOCK TILL DELIVERY TO THE FINAL BUYERS. THE ASSESSEE ENTERED INTO AN AGREEME NT I.E. AGREEMENT FOR SERVICES WITH M/S. PRESTIGE TEA CO., 2, HIDE ROAD, KOLKATA-43, WHOSE P ROPRIETOR MR. RAN VIJAY SINGH IS REGULARLY ASSESSED TO TAX WITH DCIT, CIRCLE-28, KOLKATA UNDER P.A.NO. AMHPS8770J. THE ASSESSEE PAID SERVICE CHARGES FOR THE USE OF THE PROPERTY HE LD BY M/S. PRESTIGE TEA CO. AND THESE SERVICE CHARGES ARE PAID INCLUDING PACKING CHARGES, RATES A ND TAXES, ELECTRICITY CHARGES, WHICH WERE TO BE PAID TO OWN STAFF OF PRESTIGE AND ALSO BORNE BY PRESTIGE EXCLUDING LABOUR CHARGES AND OTHER INCIDENGTAL CHARGES. CONSEQUENTLY, FOR THESE FOUR YEARS FOLLOWING PAYMENTS WERE MADE: ASSTT. YEAR SERVICE CHARGES LABOUR CHARGES INCIDENT AL CHARGES TOTAL PAYMENT 2002-03 2003-04 2004-05 2005-06 9,16,000 22,63,200 22,63,200 26,40,000 1,12,920 3,05,618 3,67,428 7,53,575 6,000 99,000 80,000 89,760 10,34.920 26,67,818 27,10,628 34,83,335 AND CONSEQUENTLY, TDS WAS DEDUCTED U/S. 194C OF THE ACT BUT THE AO TREATED THE SERVICE CHARGES AS RENT AND CREATED DIFFERENTIA U/S. 194-I OF THE ACT AND THE RELEVANT DETAILS ARE AS UNDER: ASSTT. YEAR DEEMED RENT TDS DEDUCTIBLE TDS DEDUCTED SHORT DEDUCTION INTEREST U/S. 201(1A) NET DEMAND 2002-03 2003-04 2004-05 2005-06 10,34,920 26,67,818 27,10,628 34,83,335 1,58,343 4,20,181 4,47,254 5,85,200 21,111 56,083 59,443 78,167 1,37,232 3,64,098 3,87,811 5,07,033 1,60,905 3,81,393 3,49,030 3,95,486 2,98,137 7,45,196 7,36,841 9,02,519 5. THE ASSESSEE BEFORE CIT(A) AS WELL AS BEFORE AO CONTEDED THAT IT HAD PAID SERVICE CHARGES TO PRESTIGE TEA CO. AND PRESTIGE TEA CO. RE TURNED ITS INCOME IN THESE YEARS TAKING THESE SERVICE CHARGES AS BUSINESS INCOME AND NOT INCOME F ROM HOUSE PROPERTY. DEPARTMENT HAS ALSO ACCEPTED THE SAME BUT THE AO CHARGED DIFFERENTIAL S HORTFALL IN TDS BY INVOKING THE PROVISIONS OF SECTION 194-I OF THE ACT INSTEAD OF TDS DEDUCTED BY ASSESSEE U/S. 194C OF THE ACT. 3 ITA NOS.1653 TO 1656/K/2012 KANOI TEA PVT. LTD.. AY: 2002-03 TO 05-06 6. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO DELETED THE DIFFERENTIAL TDS BY OBSERVING AS UNDER: AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDE RS U/S 201 AND WRITTEN SUBMISSIONS, IT IS NOTICED THAT APPELLANT COMPANY MADE PAYMENT OF S ERVICE CHARGES TO M/S PRESTIGE TRADING COMPANY WHOSE PROPRIETOR WAS REGULARLY ASSE SSED TO TAX FOR STORAGE OF TEA, LOADING & UNLOADING AND PROPER UPKEEP OF STOCK AT T HE INSTRUCTION OF THE SELLER. THE APPELLANT MADE PAYMENT OF SERVICE CHARGES INCLUDING PACKING CHARGES, STAKING CHARGES RATES & TAXES, ELECTRICITY CHARGES AND LABOUR CHARG ES AND DEDUCTED TAX U/S 194C OF I.T. AC 1961 WHILE THE ASSESSING OFFICER COVERED THE ABO VE SERVICE CHARGES U/S 1941 OF THE I.T. ACT. ASSESSEE HAD FILED PAPER BOOK CONTAINING THE SERVICE CONTRACT AND COPY OF RETURN OF SHRI RAN VJAY SINGH IN ALL THE FOUR YEAR S RESULTING IN CLAIM OF REFUND AND HAD ALSO FILED U/S 143(3) ORDERS IN CASE OF THE APPELLA NT WERE THE ASSESSEES INCOME HAD BEEN ASSESSED AS BUSINESS INCOME FROM STORING OF TEA CHE ST. AFTER CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, THE WAREHOUSING CHARGES FO R HANDLING THE TEA CANNOT BE COVERED U/S 194 OF THE I.T. ACT. MOREOVER, SHRI RAN VIJAY S INGH WAS REGULARLY ASSESSED INCOME- TAX AND THE RETURNS FILED BY HIM RESULTED IN REFUND , THEREFORE ASSESSEES GROUND NO. 1 & 2 ARE ALLOWED. 7. WE HAVE HEARD LD. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. LD. SR. DR COULD NOT CONTROVERT THE FINDING OF THE CIT(A) T HAT M/S. PRESTIGE TEA CO. IS ASSESSED TO TAX AND THESE SERVICE CHARGES RECEIVED FROM ASSESSEE WA S ASSESSED AS BUSINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. SECONDLY, THE ASSESSEE HAS NOT HIRED PREMISES ON RENT RATHER IT IS PAYING SERVICE CHARGES AND QUA THAT AN AGREEMENT WA S ENTERED INTO BY ASSESSEE AND TDS WAS DEDUCTED U/S. 194C OF THE ACT. WE FIND NO REASON T O INTERFERE IN THE SAME AND THIS ISSUE OF REVENUES APPEAL IN ALL FOUR YEARS IS DISMISSED. 8. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 18.04.2013 SD/- SD/- . . . . . . . . , #! #! #! #! $'# $'# $'# $'# , (K. K. GUPTA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 18TH APRIL, 2013 !12 $&34 $5! JD.(SR.P.S.) 4 ITA NOS.1653 TO 1656/K/2012 KANOI TEA PVT. LTD.. AY: 2002-03 TO 05-06 / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT ITO, WARD-58(2)/TDS, KOLKATA. 2 -.+, / RESPONDENT M/S. KANOI TEA PVT. LTD., 3, TRANSPORT DEPOT ROAD, KOLKATA-700 088 3 . $/& ( )/ THE CIT(A), KOLKATA 4. 5. $/& / CIT KOLKATA 7!>$ -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&?/ BY ORDER, # '4 /ASSTT. REGISTRAR .