Amit Jain, Kolkata V. ITO, Ward - 32(1), Kolkata, Kolkata

ITA 1673/KOL/2010

• Counselvise Citation: 167323514 RSA 2010
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2010
• Court: TRIBUNAL
• Department Lawyers: GAUTAM MONDAL LD D
• Assessee Lawyers: A C BAID LD
• Keywords: Business income; Business expenditure; Bad and doubtful debts
• Section: 234B; 194C

Judgement Text

ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 1 , C IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH: KO LKATA BEFORE HONBLE SHRI MAHAVIR SINGH, JM & HONBLE SHR I C.D. RAO, AM () , . !., , , , '# $ / I.T.A NOS. 1673 & 1674/KOL/2010 %& '(/ ASSESSMENT YEARS : 2006-07 & 2007-08 AMIT JAIN VS. INCOME-TAX OFFICER PAN : ACIPJ1990N WARD 32(1), KOLKATA (*+ /APPELLANT ) (,-*+/ RESPONDENT ) *+ / FOR THE APPELLANT/ASSESSEE : . / SHRI A.C BAID, LD. AR ,-*+ / FOR THE RESPONDENT/DEPARTMENT : . / SHRI GAUTAM MONDAL, LD.DR '/ / ORDER , SHRI MAHAVIR SINGH, JUDICIAL MEMBER : THESE TWO APPEALS FILED BY ASSESSEE ARE ARISING OUT OF SEPARATE ORDERS OF CIT(A)- XIX, KOLKATA IN APPEAL NOS. 143&395/CIT(A)-XIX/ITO, WD.32(1)/08-09 & 09-10 VIDE DATED 09-02-2009 AND 19-02-2010. ASSESSMENTS WERE FRAMED BY I.T.O, WARD 32(1), KOLKATA FOR ASSESSMENT YEARS 2006-07 AND 20 07-08 U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDERS DATED 31-12-2008 AND 31-12-2009. 2. THE FIRST ISSUE IN ITA NO.1673/K/2010 IS AS REGA RDS TO THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF AO DISALLOWING BAD DEBTS A MOUNTING TO RS.4,580. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ID. A.O. AS WELL THE LD. CIT(A)-XIX, KOL WERE NOT JUSTIFIED IN NOT ALLOWING THE BAD DEBTS OF RS.4,580/- ON THE ALLEGED GROUND BY IGNORING THE FACT THAT SAID AMOUNT WAS ACTUALLY IRRECOVERABLE. EVEN OTHERWISE THE SAME IS ALLOWABLE AS DISCOUNT ALLOWED. HENCE, THE ADDITION MADE BY AO AND SUSTAI NED BY THE LD. CIT(A)- XIX, KOL AS AFORESAID IS UNJUSTIFIED, ARBITRARY, EX CESSIVE AND BASED ON SURMISES AND GUESS AND THEREFORE LIABLE TO BE DELET ED IN FULL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF CASE. THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS NOTED THAT ASSESSEE CLAIMED ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 2 DISCOUNT/BAD DEBTS AT RS.4,580/-, BUT IN THE NOMENC LATURE OF BAD DEBTS. THE AO OBSERVED THAT ASSESSEE DID SOME CONSULTANCY AND SUP ERVISION JOB FOR ORIENTAL APARTMENT (P) LTD AND RAISED BILL AGAINST THE SAME AT RS.1,10 ,200/-. THE ASSESSEE RECEIVED RS.1 LAC AS ADVANCE AND BALANCE AMOUNT OF RS.10,200/- WAS CL AIMED AS BAD DEBT. THE ASSESSEE EXPLAINED THAT HE HAS NOT RECEIVED BALANCE AMOUNT A ND CLAIMED THE SAME AS BAD DEBT. THE AO FOUND FROM NSDL SITE THAT ORIENTAL APARTMENT PVT. LTD. HAS DEPOSITED TDS ON ACCOUNT OF ASSESSEE AT RS.5,620/-, HENCE BALANCE CL AIM OF ASSESSEE OF BAD DEBT OF RS.4,580/- WAS DISALLOWED. WE FIND THAT ASSESSEE H AS WRITTEN OFF THIS AMOUNT IN ITS BOOKS OF ACCOUNT, THIS CAN BE TREATED AS DISCOUNT OR BAD DEBT, BECAUSE THE CLAIM OF THE ASSESSEE WILL NOT BE DEFEATED BY MENTIONING NOMENCLATURE. A CCORDINGLY, WE ALLOW THIS CLAIM OF ASSESSEE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWE D. 4. THE NEXT ISSUE IN ITA NO.1673/K/2010 OF ASSESSEE IS AS REGARD TO DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. FOR THIS, THE ASSESSEE HA S RAISED THE FOLLOWING GROUND: 2. THAT THE ID. A.O. AS WELL AS THE LD CIT (A)-XIX , KOL WAS NOT JUSTIFIED IN NOT ALLOWING THE EXPENSES TO THE EXTEN T OF RS.29,030/- ON FOREIGN TRAVEL EXPENSES BY IGNORING THE FACT THAT T HE ABOVE TRIPS WERE PURELY FOR BUSINESS PURPOSE AND THERE WAS NO P ERSONAL ELEMENT INVOLVED THEREIN AS ALLEGED BY THE BOTH LD. A.O. AN D CIT(A)XIX, KOL NOR AT ALL. HENCE, THE ADDITION MADE BY THE LD. A.O . BEING UNJUSTIFIED AND ARBITRARY IS LIABLE TO BE DELETED IN FULL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE MADE A FOREIGN TRI P TO ROAM, DUBAI AND KATHMANDU AND CLAIMED EXPENSES AT RS.1,45,151/-. ASSESSING OFFIC ER REQUIRED THE ASSESSEE TO PRODUCE THE EVIDENCE AND ALSO BUSINESS PURPOSES. ASSESSEE STATED THAT FOREIGN TOUR WAS FOR SURVEYING INTERIORS OF FOREIGN HOTELS AND RESORTS A T THE REQUEST OF HIS CLIENT ARNEJA CREATION & HOTELS (P) LTD. WHO WANTED INTERIORS OF THEIR HOTEL PROJECT AT DARJEELING IN SIMILAR FASHION AS THOSE AT KATHMANDU. ASSESSEE EX PLAINED THAT TOUR TO ROAM WAS FOR THE PURPOSE OF EXPLORING PROSPECTUS OF IMPORTING SPECIA L TYPE OF MARBLES FOR INTERIOR DECORATION AND DUBAI WAS A STOP-OVER EN-ROUTE TO RO ME. ASSESSING OFFICER IN THE ABSENCE OF EVIDENCE TREATED 20% OF FOREIGN TRIP EXPENSES AS PERSONAL IN NATURE AND DISALLOWED A SUM OF RS.29,003/-. WE FIND THAT NONE OF THE AUTHO RITIES BELOW HAVE DENIED THAT THIS IS NOT FOR THE PURPOSE OF BUSINESS. ONCE IT IS NOT DE NIED, THE FOREIGN TRIP EXPENSES CANNOT BE ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 3 DISALLOWED ON AD-HOC BASIS. ACCORDINGLY, WE DELETE THE DISALLOWANCE AND ORDERS OF THE AUTHORITIES BELOW ARE REVERSED. THIS ISSUE OF ASSE SSEES APPEAL IS ALLOWED. 6. THE NEXT COMMON ISSUE IN THESE TWO APPEALS OF TH E ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES ON L ABOUR CHARGES BY INVOKING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT FOR NON-DE DUCTION OF TDS U/S. 194C OF THE ACT. FOR THIS, ASSESSEE RAISED THE FOLLOWING GROUND NO.3 IN ASSESSMENT YEAR 2006-07 AND GROUND NO.2 IN ASSESSMENT YEAR 2007-08:- A.Y. 2006-07 3. THAT THE LD. CIT(A). WAS NOT JUSTIFIED IN NOT A LLOWING THE BALANCE LABOUR CHARGES AMOUNTING TO RS.7,64,521/- AGAINST T OTAL ADDITIONS OF MADE BY THE LD. AO ON THE ALLEGED GROUND RS.8,49,46 8/- BY IGNORING THE FACT THAT THE SAID PAYMENT TOWARDS LABOUR CHARG ES DID NOT REQUIRE T.D.S. FOR THE YEAR UNDER APPEAL. EVEN OTHE RWISE NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE MADE I N RESPECT OF AMOUNT ALREADY/ACTUALLY PAID DURING THE YEAR TO THE RESPECTIVE PAYEES. HENCE, THE ADDITION BEING UNJUSTIFIED, ILLE GAL AND/OR ARBITRARY IS LIABLE TO BE DELETED IN FULL. A.Y. 2007-08 2. THAT THE LD. A.O. WAS NOT JUSTIFIED IN NOT ALLOW ING THE LABOUR CHARGES AMOUNTING TORS.33,15,894/- BY IGNORING THE FACT THAT THE SAID PAYMENT TOWARDS LABOUR CHARGES DID NOT REQUIRE T.D.S. FOR THE YEAR UNDER APPEAL, EVEN OTHERWISE NO DISALLOWANCE U /S40(A)(IA) OF THE ACT CAN BE MADE IN RESPECT OF AMOUNT ALREADY/AC TUALLY PAID DURING THE YEAR TO THE RESPECTIVE PAYEES. HENCE THE LD. CIT(A)-XIX, KOL ALSO WAS NOT JUSTIFIES IN CONFIRMING/SUSTAINING SAID ADDITIONS ON THE ALLEGED GROUND. HENCE, THE ADDITION MADE BY THE LD. AO AND SUSTAINED BY THE LD. CIT(A)-XIX, KOL BEING UNJUSTIF IED, ILLEGAL AND/OR ARBITRARY IS LIABLE TO BE DELETED IN FULL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS CLAIMED EXPENDI TURE OF RS.6,42,000/- AND RS.33,15,894/- ON ACCOUNT OF LABOUR CHARGES IN THES E TWO ASSESSMENT YEARS. ASSESSING OFFICER DISALLOWED THE EXPENDITURE BY OBSERVING THA T ASSESSEE HAS NOT DEDUCTED TDS AND ACCORDINGLY INVOKED PROVISIONS OF SECTION 40A(IA) O F THE ACT. CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER. WE FIND THAT THIS ISS UE HAS BEEN SETTLED BY THIS BENCH OF TRIBUNAL, KOLKATA IN THE CASE OF ACIT VS SMT. KEYA SETH IN ITA NO.842 & 843/K/2010 ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 4 FOR ASSESSMENT YEARS 2006-07 & 2007-08 VIDE ORDER D ATED 11.03.2011, WHEREIN EXACTLY THE SAME ISSUE HAS BEEN DECIDED AS UNDER: 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED POSITI ON THAT THE ASSESSEE AN INDIVIDUAL CARRYING ON THE BUSINESS OF AYURVEDIC (C OSMETIC DIVISION) AND THE CONSULTANCY ON BEAUTICIAN AND ALSO RELATED THERAPIE S . AS CLAIMED BY THE ASSESSEE, WHETHER THE PROVISIONS OF SECTION 194(1) AS EXISTED IN ASSESSMENT YEARS 2006-07 & 2007-08 WILL APPLY TO THE ASSESSEE OR NOT? ADMITTEDLY, ASSESSEE HAS NOT DEDUCTED ANY TDS ON ADVERTISEMENT PAYMENT AND ACCORDING TO HER, PROVISIONS OF SECTION 194C(1) AS EXISTED IN THE RELEVANT ASSESSMENT YEARS WILL NOT OBLITERATE ANY DUTY ON ASSESSEE TO D EDUCT TDS. NOW, WE HAVE TO EXAMINE THIS. THE RELEVANT PROVISIONS OF SECTION 194C(1) & (2) AS EXIST IN ASSESSMENT YEAR 2006-07 & 2007-08 READS AS UNDER :- (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTR ACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRA CTOR AND-- (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT ;OR (B) ANY LOCAL AUTHORITY ; OR (C) ANY CORPORATION ESTABLISHED BY OR UNDER A CENT RAL, STATE OR PROVINCIAL ACT ; OR (D) ANY COMPANY, OR (E) ANY CO-OPERATIVE SOCIETY ; OR (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURP OSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH ; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES RE GISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA ; OR (H) ANY TRUST ; OR (I) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTIO N DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956 (3 OF 1956), OR (J) ANY FIRM, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO-- (I) ONE PER CENT. IN CASE OF ADVERTISING, (II) IN ANY OTHER CASE TWO PER CENT. OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THE REIN. ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 5 (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING AN Y SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT, OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CONTRACTOR OR FO R SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTR ACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE TIME OF CREDIT O F SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAY MENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. XXXX XXXX XXXX 6. FROM THE ABOVE PROVISIONS OF SECTION 194C(1), IT IS CLEAR THAT THE PAYMENTS MADE BY INDIVIDUAL OR HINDU UNDIVIDED FAMILY DOES N OT COME WITHIN THE AMBIT OF TDS I.E. THE EXPENDITURE INCURRED FOR ADVE RTISEMENT AS INDIVIDUAL AND HUF ARE SPECIFICALLY EXCLUDED IN THE ABOVE PROV ISIONS. THE PROVISION OF SUB-SECTION (2) APPLIES ONLY TO PAYMENTS MADE TO SU B-CONTRACTORS AND NOT TO CONTRACTORS. ACCORDINGLY, ASSESSING OFFICER CAN NOT MADE DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 40A(IA), AS PRESENT ASSESSEE BEING AN INDIVIDUAL IS NOT LIABLE TO DEDUCT TAX IN VIEW OF P ROVISIONS OF SECTION 194C(1) AS EXISTED IN THE RELEVANT ASSESSMENT YEARS. NO DOU BT, ASSESSEES TURNOVER EXCEEDS THE MONETARY LIMIT AS SPECIFIED UNDER CLAUS E (A) OR CLAUSE (B) OF SECTION 44AB AND THE ASSESSEES ACCOUNTS ARE SUBJEC T TO AUDIT AND THE ASSESSEE HAS AUDITED HER ACCOUNTS AND FILED TAX AUD IT REPORT ALONG WITH RETURN OF INCOME. WE FIND THAT THE ASSESSING OFFICE R HAS MADE DISALLOWANCE IN VIEW OF THE AMENDED PROVISIONS OF SECTION 194C(1 ) BY THE FINANCE ACT, 2007 WITH EFFECT FROM 01.06.2007 WHEREIN IT IS PRO POSED TO AMEND SUB- SECTION (1) IN SECTION 194C SO AS TO INCLUDE PAYMEN TS MADE BY ANY INDIVIDUAL OR HINDU UNDIVIDED FAMILY WHOSE TOTAL SALES / GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM E XCEED MONETARY LIMIT SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OR SECTION 44AB DURING THE FINANCIAL YEAR OR IMMEDIATELY PRECEDING FINANCIAL YEAR IN WHI CH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS AMEN DMENT TAKES EFFECT FROM 1 ST DAY OF JUNE, 2007 AND IS APPLICABLE FOR AND FROM A SSESSMENT YEAR 2008- 09. IN SECTION 194C(1) WITH EFFECT FROM 01.06.2007, BY THE FINANCE ACT, 2007, CLAUSE AS INSERTED, READS AS UNDER :- (K) ANY INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WH OSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BU SINESS OR PROFESSION CARRIED ON BY HIM EXCEED THE MONETARY LI MITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANC IAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT O F THE ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 6 CONTRACTOR, SHALL, AT THE TIME OF CREDIT OF SUCH SU M TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO - (I) ONE PER CENT IN CASE OF ADVERTISING, (II) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN : PROVIDED THAT NO INDIVIDUAL OR A HINDU UNDIVIDED FA MILY SHALL BE LIABLE TO DEDUCT INCOME-TAX ON THE SUM CRE DITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDI VIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. 7. WE FIND FROM THE ARGUMENTS OF LD.SR. DR THAT REV ENUE WANT TO INVOKE PROVISIONS OF SUB-SECTION (2) OF SECTION 194C FOR F URTHERANCE OF THIS CASE BUT WE ARE OF THE CONSIDERED VIEW THAT SECTION 194C(2) WILL APPLY TO THE PAYMENTS MADE TO SUB-CONTRACTORS BY THE CONTRACTOR AND NOT B Y THE ASSESSEE. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT THE A SSESSEE HAS MADE PAYMENTS ON ADVERTISEMENT TO THE CONTRACTORS AND NOT TO SUB- CONTRACTORS. FURTHER AS REFERRED BY LD. COUNSEL FOR THE ASSESSEE, THIS PROV ISION WAS EXPLAINED BY CBDT CIRCULAR NO.3 OF 2008 DATED 12.03.2008 WHICH I S REPORTED IN (2008)299 ITR 8 (STATUTE) AND THE RELEVANT CIRCULAR AS REPORTED AT PAGE 71, READS AS UNDER :- 54. EXPANSION OF SCOPE OF THE PROVISIONS OF SECTIO N 194C. 54.1 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C PROVIDED FOR DEDUCTION OF INCOME-TAX AT SOURCE FROM ANY SUM CREDITED OR PA ID TO THE RESIDENT CONTRACTOR FOR CARRYING OUT ANY WORK (INCL UDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURS UANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE GOVERNMENT, LOCAL AUTHORITIES, STATUTORY CORPORATIONS, COMPANIES, CO- OPERATIVE SOCIETIES, STATUTORY AUTHORITIES ENGAGED IN PROVIDI NG HOUSING ACCOMMODATION, ETC., REGISTERED SOCIETIES, TRUSTS, UNIVERSITIES AND FIRMS. THE RATE OF TDS IS 1% IN RESPECT OF ADVE RTISING CONTRACTS AND 2% IN OTHER CASES. 54.2 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C DID NOT PROVIDE FOR DEDUCTION OF TAX AT SOURCE ON P AYMENTS MADE BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY T O A CONTRACTOR. 54.3 CONSIDERING THE RISING NUMBER OF CONTRACTS BEI NG AWARDED BY INDIVIDUALS AND HUFS CARRYING ON BUSINES S OR ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 7 PROFESSION AND THE INCREASING VOLUME OF SUCH PAYMEN TS TO CONTRACTORS, IT WAS FELT THAT THERE IS NEED TO REQU IRE SUCH PERSONS TO DEDUCT TAX AT SOURCE FROM PAYMENTS MADE BY THEM TO CONTRACTORS. 54.4 THERE WOULD BE GENUINE DIFFICULTIES IF INDIVID UALS OR HUFS WITH SMALL BUSINESS TURNOVERS OR GROSS RECEIPTS OF PROFESSION ARE REQUIRED TO DEDUCT TAX AT SOURCE. AN EXCEPTION IN SUCH CASES WOULD BE JUSTIFIED. SIMILARLY THE CONTRACTS A WARDED BY AN INDIVIDUAL OR A MEMBER OF HUF OF HUF EXCLUSIVELY FO R PERSONAL PURPOSES MERIT EXCLUSION. 54.5 ACCORDINGLY, THE FINANCE ACT, 2007, HAS SUBSTI TUTED THE SAID SUB-SECTION (1) TO INCLUDE IN ITS AMBIT SUCH I NDIVIDUAL OR A HINDU UNDIVIDED WHOSE TOTAL SALES, GROSS RECEIPTS O R TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON EXCEED T HE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING FIN ANCIAL YEAR IN WHICH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS AMENDMENT SHALL NOT APPLY IN RESPE CT OF PAYMENTS MADE TO A CONTRACTOR BY ANY INDIVIDUAL OR A MEMBER OF A HINDU UNDIVIDED FAMILY EXCLUSIVELY FOR THEIR P ERSONAL PURPOSES. 54.6 APPLICABILITY - THIS AMENDMENT WILL TAKE EFFEC T FROM THE 1ST DAY OF JUNE, 2007. 8. IN VIEW OF THE ABOVE CLEAR PROVISIONS OF SECTION 194(1) AS EXISTING IN ASSESSMENT YEARS 2006-07 & 2007-08, I.E. RELEVANT A SSESSMENT YEARS IN THE PRESENT APPEALS, IT IS CLEAR THAT THE ASSESSEE IS U NDER NO OBLIGATION TO DEDUCT TDS ON THE EXPENDITURE OF ADVERTISEMENT, AS THE ASS ESSEE BEING AN INDIVIDUAL, AND THE CLAIM OF THE ASSESSEE IS AS PER PROVISIONS OF LAW. ONCE THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS UNDER THE PROVISION OF SEC TION 194C(1), THE PROVISIONS OF SECTION 40A(IA) FOR MAKING DISALLOWANCE OF EXPEN DITURE FOR NON-DEDUCTION OF TDS WILL NOT APPLY. WE FURTHER FIND THAT, IT IS NOT THE CASE OF THE REVENUE THAT THE EXPENSES ARE BOGUS OR UNREASONABLE OR EXCESSIVE BUT THE DISALLOWANCE IS MADE MERELY FOR NON-DEDUCTION OF TDS. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT CIT(A) HAS RIGHTLY DELETED THE DISALLOWAN CE AND WE CONFIRM THE SAME. 6. AS THE LEGAL ISSUE RAISED BY THE ASSESSEE IS EXA CTLY ON SIMILAR FACTS IN THE PRESENT CASE, TAKING A CONSISTENT VIEW, WE ARE OF T HE VIEW THAT THE AMENDED PROVISIONS OF SECTION 194C(1) OF THE ACT WILL NOT A PPLY TO THE PRESENT ASSESSMENT YEAR OF THE ASSESSEE. ACCORDINGLY, THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 8 FOLLOWING THE AFORESAID DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE FOR BOTH THE ASSES SMENT YEARS UNDER APPEAL. 8. THE NEXT ISSUE IN ITA NO. 1674/K/2010 IS AS REGA RDS TO THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISAL LOWING DONATION OF RS.29,400/-. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING GROUND NO.1 : I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. A.O. AS WELL THE LD. CIT(A)-XIX, KOL WAS NOT JUSTIF IED IN NOT ALLOWING THE SUBSCRIPTION AND/OR DONATIONS OF RS. 2 9,400/- ON THE ALLEGED GROUND BY IGNORING THE FACT THAT SAID AMOUN T WAS ACTUALLY FOR THE PURPOSE OF BUSINESS EXIGENCIES. EVEN OTHERW ISE SAME IS ALLOWABLE AS BUSINESS EXPENDITURE. 9. AT THE OUTSET, LD. COUNSEL FOR THE ASSESEE FAIRL Y AGREED THAT ASSESSEE IS NOT INTERESTED IN PURSUING THIS ISSUE AND ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 10. THE NEXT ISSUE IS IN REGARD TO CHARGING OF INTE REST U/S. 234A, 234B AND 234C OF THE ACT, WHICH IS CONSEQUENTIAL IN NATURE AND REQUI RES NO ADJUDICATION. 11. IN THE RESULT, APPEAL FOR A.Y 2006-07 IS ALLOWE D AND APPEAL FOR 2007-08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.6.2011 SD/- SD/- [ . !., , , , '# ] [ , ] C.D. RAO, ACCOUNTANT MEMBER MAHAVIR SINGH, JUDICIAL MEMBER (!#) DATED : 30TH JUNE, 2011 *PP 01 %23 4 /SR.P.S. ITA NO.1673&1674/KOL/2010 AMIT JAIN A.Y. 06-07 & 07 -08 9 '/ 5 ,6 7'6'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ /APPELLANT- SHRI AMIT JAIN, BAID & CO. CHARTERED ACCOUNTANTS, 2, ROWLAND ROAD, BLOCK F, FLAT GC, MAN GALAM APARTMENT, KOLKATA-700 020. 2 ,-*+ / RESPONDENT : INCOME TAX OFFICER WARD 32(1), KOLKA TA 3 . /% / THE CIT, 4 . /% ( )/ THE CIT(A), KOLKATA 5 . ?@ ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY , '/%A/ BY ORDER , 3 /ASSTT. REGISTRAR