DCIT, Circle - 1, Durgapur, Durgapur V. Elgie Engineering Works, Durgapur

ITA 178/KOL/2010

• Counselvise Citation: 17823514 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 12-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2010
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR LD
• Assessee Lawyers: D K SAHA LD ARS; R K DUTTA

Judgement Text

, B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B , CALCUTTA () BEFORE , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . !., '# , SHRI C.D. RAO, ACCOUNTANT MEMBER. $ / ITA NO. 178/KOL/2010 %& '(/ ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME-TAX CIRCLE-1, DURGAPUR M/S. ELGIE ENGINEERING WORKS PAN: AAFE-7976R (*+ / APPELLANT ) - % - - VERSUS -. (-.*+/ RESPONDENT ) *+ / 0 '/ FOR THE APPELLANT: / SHRI S.K. MALAKAR, LD.DR -.*+ / 0 '/ FOR THE RESPONDENT: / S/SHRI R.K. DUTTA & D.K.SAHA, LD.ARS 1%2 / !# /DATE OF HEARING : 09-11-2011 3' / !# /DATE OF PRONOUNCEMENT :15-12-2011 '4 / ORDER . !., '# , ,, , SHRI C.D.RAO, ACCOUNTANT MEMBER.: REVENUE HAS FILED THIS APPEAL AGAINST ORDER DATED 26-11-2009 OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KOLKATA FOR T HE ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS RELATING TO DELETION OF ADDITION/DISALLOWANCE OF RS.36,57,034/- MADE BY THE ASSESSING OFFICER U/S. 4 0(A)(IA) OF THE I.T.ACT61. 3. BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER HAS DISALLOWED THE DISALLOWANCE BY OBSERV ING AS UNDER:- ON EXAMINATION OF THE BOOKS OF ACCOUNTS IT IS OBSE RVED THAT NO TAX ON SUCH PAYMENT/CREDIT HAS BEEN DEDUCTED AT SOURCE DURING T HE RELEVANT PREVIOUS YEAR OR WITHIN THE TIME PRESCRIBED U/S.200(1) OF THE I.T AC T61. ACCORDINGLY, THE SAID EXPENDITURE ON THE AFOREMENTIONED TOTAL EXPENDITUR E TO THE TUNE OF RS.64,36,384/- , COMPRISING OF SUB-CONTRACTOR PAYMENT OF RS.62,06, 084/- AND TRANSPORT ITA NO. 178/KOL/2010-CDR-B 2 CHARGES RS.2,30,300/-, IS, THEREFORE, NOT DEDUCTIB LE IN COMPUTING TOTAL INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BU SINESS OR PROFESSION AS PER THE PROVISIONS OF SEC.40(A)(IA) OF THE I.T ACT61 R EAD WITH PROVISO THERETO. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) BY SENDING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE CALLED FOR THE RE MAND REPORT AND AGAIN, TAKEN ASSESSEE S COMMENTS ON THE REMAND REPORT. AFTER GOING THROUGH THESE DOCUMENTS, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ADDITION OF RS. 26,19,050/-. HOWEVER, HE DELETED THE ADDITION BALANCE AMOUNT OF RS.3,657, 034/- BY OBSERVING AS UNDER:- 6. COMING TO THE ASSESSEES CONTENTION REGARDING PAYMENT MADE FOR SALES CONTRACT, IT IS SEEN THAT THE ASSESSEE MADE PAYMENT S TO 7 PARTIES WHOSE NAMES ARE AS UNDER: 1. MIRA ENGINEERING & CO. RS.535,733.00 2. J.E.W (INDIA) PVT. LTD. 539,106.00 3. IND-TECH INDUSTRIES 430,695.00 4. UPENDRA SHARMA 541,895.00 5. BENGAL INDUSTRIES 553,620.00 6. KALIMATA ENGINEERING WORKS 490,279.00 7. EMINENT ENGINEERS 565,706.00 TOTAL RS.3,657,034.00 ON PERUSAL OF THE BILLS OF THESE PARTIES, IT IS SEE N THAT THE PAYMENTS ARE FOR MANUFACTURE AND SUPPLY OF ITEMS SUCH AS BUCKSTAY SL INGS, ECONOMISER COILS, LIFTING BEAMS ETC. THE BILLS SHOW THAT THE PRICE IS INCLUSIVE OF THE MATERIAL WHICH INDICATES THAT THE TRANSACTIONS WERE IN THE N ATURE OF SALES CONTRACTS. I HAVE PERUSED THE CBDTS GUIDELINES IN THIS REGARD A S GIVEN IN CIRCULAR NO.681 DATED 08.03.1994. HEREIN, IT HAS BEEN STATED THAT WHERE CONTRACTOR UNDERTAKES TO SUPPLY ANY ARTICLE OR THING FABRICATE D ACCORDING TO SPECIFICATIONS GIVEN BY THE GOVT. OR ANY OTHER SPECIFIED PERSONS A ND THE PROPERTY IN SUCH ARTICLE OR THING PASSES TO THE GOVT. OR SUCH PERSON ONLY AFTER SUCH ARTICLE OR THING IS DELIVERED, THE CONTRACT WILL BE A CONTRACT FOR SALE AND SHALL BE OUTSIDE THE PURVIEW OF SECTION 194C. FURTHER, REFERENCE IS INVITED TO THE PUNJAB AND HARYANA HIGH COURTS DECISION IN THE CASE OF CIT VS . DEPUTY CHIEF ACCOUNTS OFFICER, MARKFED, KHANNA 304 1TR 17. IN THIS CASE, THE ASSESSEE HAD PURCHASED PRINTED PACKING MATERIAL MADE ACCORDING TO ITS SPEC IFICATIONS BUT DID NOT DEDUCT TAX AT SOURCE. THE COURT HELD THAT THE FACTU M OF SUCH MATERIAL CARRYING SOME PRINTED WORK COULD ONLY BE REGARDED AS THE WOR K EXECUTED BY THE SUPPLIER INCIDENTAL TO THE SALE MADE TO THE ASSESSEE. THE RA W MATERIAL FOR THE MANUFACTURING OF SUCH PACKING MATERIAL WAS NOT SUPP LIED BY THE ASSESSEE. IT WAS, THEREFORE, HELD THAT, THE PURCHASE OF PARTICUL AR PRINTED MATERIAL BY THE ASSESSEE WAS A CONTRACT FOR SALE AND OUTSIDE THE PU RVIEW OF SECTION 194C. IN ITA NO. 178/KOL/2010-CDR-B 3 THE PRESENT CASE UNDER APPEAL, THE BILLS CLEARLY SH OW THAT MATERIAL HAS NOT BEEN SUPPLIED BY THE ASSESSEE IN RESPECT OF THE PURCHASE OF EQUIPMENT/MACHINERY. I, THEREFORE, IN VIEW OF THESE FACTS AND THE CBDTS CI RCULAR REFERRED TO ABOVE, HOLD THAT PAYMENT AMOUNTING TO RS.36,57,034/- MADE TO 7 PARTIES WAS FOR PURCHASE OF EQUIPMENT/MACHINERY AND THE ASSESSEE WA S NOT REQUIRED TO DEDUCT TAX U/S. 194C. THE DISALLOWANCE U/S.40(A)(IA) TO TH E EXTENT OF RS.36,57,034/- IS, THEREFORE, DELETED. 5. AGGRIEVED BY THIS, NOW THE REVENUE IS IN APPEA L BEFORE US. 6. AT THE TIME OF HEARING BEFORE US THE LD. DR APPE ARING ON BEHALF OF THE REVENUE HAS RELIED ON THE ORDER OF THE AO AND CONTENDED THAT T HE ORDER OF THE AO MAY BE UPHELD. 7. ON THE OTHER HAND, THE LEARNED COUNSEL APPEARI NG ON BEHALF OF THE ASSESSEE HAS HEAVILY RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) AND FILED THE COPIES OF ALL PURCHASE/WORK ORDER, WHICH WERE PLACED BEFOR E THE REVENUE AUTHORITIES. HE CONTENDED THAT SINCE THE ASSESSEE HAS SUPPLIED THE MATERIAL A S PER THE SPECIFICATIONS OF ALL 7 PARTIES AS MENTIONED IN THE IMPUGNED ORDER OF THE LEARNED COMM ISSIONER OF INCOME-TAX (APPEALS), THE ACTION OF THE LEARNED COMMISSIONER OF INCOME-TAX(A PPEAL) IN DELETING THE SAME MAY BE JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. THEREFORE, HE REQUESTED TO UPHOLD THE SAME. 8. AFTER HEARING THE RIVAL SUBMISSIONS, ON CAREFU L PERUSAL OF THE MATERIAL AVAILABLE ON RECORD INCLUDING THE COPIES OF THE BILLS IN RESPEC T OF 7 PARTIES, WHERE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS DELETED TH E ADDITION. WE ARE OF THE VIEW THAT ALL THE WORKS ARE RELATING TO PURCHASE OF MATERIAL WITH SOME SPECIFICATIONS. IT IS FURTHER OBSERVED THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) HAS FOLLOWED THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DEPUTY CHIEF ACCOUNTS OFFICER, MARKFED, KHANNA [304 ITR 17]. THEREFORE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF. INCOME-TAX (APPEALS) IN DE LETING THE ADDITION MADE BY THE ASSESSING OFFICER. WE UPHOLD THE SAME. ITA NO. 178/KOL/2010-CDR-B 4 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. '4 #1' 5 1% 6 7 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT.15-12- 2011 SD/- SD/- ( , ) ( MAHAVIR SINGH, JUDICIAL MEMBER) ( . !. , '# ) ( C.D. RAO ,ACCOUNTANT MEMBER ) ( (( (!# !# !# !#) )) ) DATE: 15-12-2011 '4 / -8 9'8': / COPY OF THE ORDER FORWARDED TO: 1. . *+ / THE APPELLANT : ASSTT./DY. COMMISSIONER OF INCOM E-TAX, CIR-1, DURGAPUR, AAYKAR BHAWAN, CITY CENTRE, DURGAPUR-7132 16. 2 -.*+ / THE RESPONDENT- M/S. ELGIE ENGG WORKS, NANCHAN ROAD, BENACHITY, DURGAPUR-13, BURDWAN. 3. 4% / THE CIT, 4. 4% ( )/ THE CIT(A), 5 . ;6 -% / DR, KOLKATA BENCH 6 . GUARD FILE . .8 -/ TRUE COPY, '4%1/ BY ORDER, < /ASSTT REGISTRAR . *PRADIP* => %?< @