Seed Innovations Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-15(1), Hyd, Hyderabad

ITA 17/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6217 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 07-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 133A; 40(a)(ia); 201(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 17/HYD/2016 ASSESSMENT YEAR: 2012-13 SEED INNOVATIONS PVT. LTD., HYDERABAD. PAN AAIC S0120J VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 15(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING : 02-02-2017 DATE OF PRONOUNCEMENT : 10-02-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS IS AN APPEAL OF THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 8, HYDE RABAD, DATED 26 TH OCTOBER, 2015 FOR AY 2012-13. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF RESEARCH, PRODUCTION AND MARKETING OF SEEDS & VEGETABLE CROPS. IN THIS CASE, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 10/10/2012. ORDER U/S 201(1) AND 2 01(1A) OF THE ACT WAS PASSED ON 31/03/2014 RAISING A DEMAND OF RS . 2,16,03,647/- TOWARDS NON DEDUCTION OF TAX ON ADVERTISEMENT EXPEN SES, CAR HIRE CHARGES AND LEGAL & PROFESSIONAL CHARGES, AUDIT FEE , COURIER CHARGES ETC. 2 ITA NO. 17/H/16 M/S SEED INNOVATIONS PVT. LTD. 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE FOR NON -COMPLIANCE BEFORE HIM DESPITE PROVIDING SUFFICIENT OPPORTUNITI ES. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (A)-8, HYDERABAD IS ER RONEOUS BOTH ON FACTS AND IN LAW WHILE PASSING THE APPELLATE ORD ER UNDER CONSIDERATION. 2. THE LD. CIT (A), ERRED IN NON-ADJUDICATION THE G ROUNDS FILED BY THE ASSESSEE WHICH ARE BASED ON MERITS OF THE CASE. 3. THE LEARNED CIT (A), OUGHT TO HAVE APPRECIATED T HE FACT THAT NO DISALLOWANCE U/S 40(A)(IA) HAS BEEN MADE BY ASSE SSING OFFICER WHILE PASSING THE ORDER U/S 143(3) OF THE A CT. 4. THE LEARNED CIT (A), OUGHT TO HAVE APPRECIATED T HE FACT THAT THE ASSESSEE HAS COMPLIED WITH ALL THE PROVISION O F TDS AND PAYMENT IN RESPECT OF EXPENDITURE TO WHICH TDS PROV ISIONS ARE ATTRACTED HAVE ALREADY SUFFERED TDS. 5. THE LEARNED CIT (A), ERRED IN SUSTAINING THE ACT ION OF AO IN QUANTIFYING THE TDS AS DEDUCTIBLE AT RS. 1,49,600 O N THE WHOLE OF THE ADVERTISING EXPENSES OFRS.74,79,929, BUT THE ASSESSEE HAS ALREADY DEDUCTED AND PAID TDS ON AMOUNT OFRS.16 ,02,752 AND BALANCE RS.58,77,177 IS NOT LIABLE FOR DEDUCTIO N OF TDS. 6. THE LEARNED CIT (A), ERRED IN SUSTAINING THE ACT ION OF AO IN QUANTIFYING THE TDS DEDUCTIBLE AT RS.25,834 ON CAR HIRE CHARGES OFRS.L2,91,724, WAS PAID TO VARIOUS DIFFERENT PARTI ES COMES BELOW THE TAXABLE LIMIT OF TDS. 7. THE LEARNED CIT (A), ERRED IN SUSTAINING THE ACT ION OF AO IN QUANTIFYING THE TDS OF RS.68,481 ON LEGAL & PROFESS IONAL CONSULTANCY CHARGES OFRS.6,84,907, WHERE EACH PARTY PAYMENT IS LESS THAN 20,000, COMES BELOW THE TAXABLE LIMIT OF TDS. 8. THE LEARNED CIT (A), ERRED IN SUSTAINING THE ACT ION OF AO IN QUANTIFYING THE TDS OF RS.20,485 ON AUDIT FEES OF R S.2,04,850, BUT THE ASSES HAS ALREADY DEDUCTED AND PAID TDS ON AMOUNT OF RS. 1,68,450 AND FOR BALANCE OFRS.36,400 IS NOT LIA BLE FOR DEDUCTION OF TDS. 3 ITA NO. 17/H/16 M/S SEED INNOVATIONS PVT. LTD. 9. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO IN QUANTIFYING THE TDS OF RS.23,715 ON COURIER CHARGES OF RS. 11,85,772, BUT THE ASSESSEE HAS ALREADY DEDUCTED AN D PAID TDS ON AMOUNT OFRS.8,21,026 AND BALANCE 3,64,746 IT IS NOT LIABLE FOR DEDUCTION OF TDS. 10. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO IN QUANTIFYING THE TDS OF RS.76,71,666 ON REMUNERATION , SALARIES AND WAGES OFRS.5,11,44,444 BUT THE ASSESSEE HAS ALR EADY DEDUCTED AND PAID TDS ON AMOUNT OFRS.6,65,61,897 AN D BALANCE OF RS.3,57,26,991 IS NOT LIABLE FOR DEDUCTION OF TD S. 11. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO IN QUANTIFYING THE TDS OF RS. 47,55,532 ON THE ENTIRE AMOUNT OF RS.4,75,55,318 WITHOUT VERIFYING WHETHER PAYMENT TO EACH PARTY HAS EXCEEDED THE LIMITS AS PRESCRIBED FOR DEDUCTION OF TDS. 12. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO IN CALCULATING TDS OF RS.96,000 ON RENT CHARGES OF RS. 9,60,000, BUT THE ASSESSEE HAD ALREADY DEDUCTED AND PAID THE TDS. HENCE NO TDS LIABILITY. 13. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO IN CALCULATING TDS OF RS.2,49,418 ON FARM MAINTENANCE CHARGES OF RS.1,24,70,890, BUT TDS IS NOT DEDUCTABLE ON FARM M AINTENANCE CHARGES AS IT IS A CULTIVATION AND LABOUR EXPENSES WAS PAID TO LARGE NUMBER OF FARM WORKERS, ON WHICH TDS IN NOT D EDUCTIBLE. 14. THE LEARNED CIT(A), ERRED IN SUSTAINING THE ACT ION OF AO DETERMINING THE TDS DEDUCTIBLE AT RS.2502549 ON THE ENTIRE AMOUNT OF BUSINESS PROMOTION EXPENSES OF RS.2,50,25 ,487, BUT THE ASSESSEE HAS ALREADY DEDUCTED AND PAID TDS ON A MOUNT OF RS.38,35,141 AND FOR BALANCE OFRS.2,11,90,326 IS NO T APPLICABLE. 15. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO CALCULATING TDS OF RS.4,92,190 ON SALES C & F COMMI SSION CHARGES OF RS.49,21,903, THE ASSESSEE HAD ALREADY D EDUCTED AND PAID THE TDS. 16. THE LEARNED CIT (A), ERRED IN SUSTAINING THE AC TION OF AO CALCULATING TDS OF RS.94,14,770 ON COMMISSION & DIS COUNT CHARGES OF RS.9,41,47,960, BUT THE AMOUNT PAID OF RS.37,65,90,761 IS ONLY ON DISCOUNT BUT NOT ON COMM ISSION. 17. THE LEARNED CIT (A), OUGHT TO HAVE CONSIDERED THAT WHERE THE DEDUCTEE, RECIPIENT OF INCOME, HAS ALREADY PAI D TAXES ON THE AMOUNT RECEIVED FROM DEDUCTOR, DEPARTMENT ONCE AGAI N CANNOT RECOVER TAX FROM DEDUCTOR ON THE SAME INCOME BY TRE ATING THE 4 ITA NO. 17/H/16 M/S SEED INNOVATIONS PVT. LTD. DEDUCTOR TO BE ASSESSEE-IN-DEFAULT FOR THE SHORTFAL L IN ITS AMOUNT OF TAX DEDUCTED AT SOURCE. 18. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T (A) OUGHT TO HAVE APPRECIATED THE JUDGEMENT OF HONOURABLE SUPREM E COURT IN THE CASE OF HINDUS TAN COCA COLA BEVERAGES PVT LTD VS. COMMISSIONER OF INCOME TAX CIVIL APPEAL NO: 3765 OF 2007. 19. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBSTI TUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BE FORE OR AT THE TIME OF HEARING OF THE APPEAL 5. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AO HAS COMPLETED THE ASSESSMENT U/S 143(3) ON 25/03/2015 I N WHICH THE AO HAS NOT DISALLOWED ANY THING U/S 40(A)(IA) NOR TREA TED THE ASSESSEE IN DEFAULT. HE, THEREFORE, CONTENDED THAT THE PROCEEDI NGS U/S 201 CANNOT BE INITIATED. FURTHER, HE SUBMITTED THAT THE RECIP IENT HAS DECLARED THE INCOME IN THE RETURN OF INCOME AND PAID RELEVANT TA XES ON INCOME, THEREFORE, THE SAME CANNOT BE RECOVERED FROM THE AS SESSEE. FOR THE ABOVE PROPOSITION, HE RELIED ON THE FOLLOWING CASE LAWS: 1. M/ COUNTRY CLUB (INDIA) LTD., ITA NO. 1628/HYD/2 014, ORDER DATED 30/06/2015. 2. HINDUSTAN COCA COLA BEVERAGES (P) LTD., 163 TAXM AN 355(SC). FURTHER, HE SUBMITTED A TABULATED CHART IN WHICH HE HAS EXPLAINED THAT TDS NEED NOT BE DEDUCTED ON THE VARIOUS HEADS OF EX PENDITURE WHICH WERE CONSIDERED FOR PROCEEDING U/S 201. 6. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED A CHART , WHICH IS A PART OF THE RECORD FILED BEFORE US IN WH ICH HE HAS GIVEN THE DETAILS LIKE THE AMOUNTS ON WHICH TDS IS REQUIRED T O BE DEDUCTED, WHICH WERE ACCORDINGLY PAID BY THE ASSESSEE AND THE BALANCE AMOUNTS ON WHICH TDS NEED NOT BE DEDUCTED WITH VARI OUS REASONS 5 ITA NO. 17/H/16 M/S SEED INNOVATIONS PVT. LTD. SUPPORTING THE CLAIM ALONG WITH SUPPORTING PAPERS W ERE FILED BEFORE US. THE PROVISIONS OF CHAPTER XVII HAVE UNDERGONE V ARIOUS CHANGES OVER THE YEARS. THE LEGISLATURE HAS MODIFIED THE PR OVISIONS TO AVOID CHARGING OF TAX ON INCOME TWICE IN THE HANDS OF ASS ESSEE AS WELL AS RECIPIENT. IN THAT PROCESS, IT HAS AMENDED SECTIONS 40(A)(IA) AND 201 IN THE RECENT YEARS. AS PER THE SET OF NEW RULES, A O HAS TO INITIATE THE PROCEEDINGS U/S 201 TO DETERMINE WHETHER THE ASSESS EE IS IN DEFAULT IN RESPECT OF PAYMENT OF TDS, WITHOUT WHICH, NO ACT ION CAN BE INITIATED. AS PART OF PROCEEDINGS U/S 201, WHEN TH E RECIPIENT OF THE INCOME, DECLARES THE SAME AS HIS INCOME AND PAYS RE LEVANT TAXES AS PER THE PROVISION, RECIPIENT CAN ISSUE A CERTIFICAT E TO THE OTHER PARTY AND THE OTHER PARTY CAN USE THE SAME AS PROOF OF CO MPLIANCE. CONSIDERING THE ABOVE PROVISIONS AND THE DETAILS SU BMITTED BY THE ASSESSEE, WE ARE INCLINED TO REMIT THIS ISSUE BACK TO THE FILE OF THE AO TO VERIFY THE CLAIMS OF THE ASSESSEE AND DETERMINE THE ALLOWABILITY OF THE CLAIM OF THE ASSESSEE AS PER THE PROVISIONS OF THE ACT. ASSESSEE MAY BE GIVEN AN OPPORTUNITY OF BEING HEARD IN THE M ATTER. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED: 10TH FEBRUARY, 2017. KV 6 ITA NO. 17/H/16 M/S SEED INNOVATIONS PVT. LTD. COPY TO:- 1) M/S SEED INNOVATIONS PVT. LTD., P. MURALI & CO., CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82.. 2) DCIT, CIRCLE 15(1), HYD. 3) CIT(A) - 8, HYDERABAD 4 CIT (TDS), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER