ACIT, CHENNAI V. M/s. Sahuwala flour mills, CHENNAI

ITA 1784/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57780 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: G RAMAKRISHNAN
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER] I.T.A.NO.1784/MDS/2011 ASSESSMENT YEAR : 2008-09 THE ASST. COMMISSIONER OF INCOME-TAX BUSINESS RANGE VII CHENNAI VS M/S SAHUWALA FLOUR MILLS NO.56, NAMIAH MAISTRY STREET TONDIARPET CHENNAI - 81 [PAN - AABFS8827N] (APPELLANT) (RESPONDENT) C.O.NO.165/MDS/2011 ASSESSMENT YEAR : 2008-09 M/S SAHUWALA FLOUR MILLS NO.56, NAMIAH MAISTRY STREET TONDIARPET CHENNAI - 81 VS THE ASST. COMMISSIONER OF INCOME-TAX BUSINESS RANGE VII CHENNAI (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI R.B.NAIK, CIT/DR ASSESSEE BY : SHRI G.RAMAKRISHNAN, CA DATE OF HEARING : 05-01-2012 DATE OF PRONOUNCEMENT : 05-01-2012 ITA 1784/11 CO 165/11 :- 2 -: O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THE APPEAL BY THE REVENUE AND THE CROSS O BJECTION BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2008-09, A RE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), CHENNAI, DATED 12.9.20 11. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, IS INVOLVED IN THE BUSINESS OF TR ADING IN WHEAT; AND MANUFACTURE AND TRADING IN WHEAT FLOUR, MAIDA, SOOJ I, ATTA AND BRAN AND SELLS ABOVE PRODUCTS IN THE WHOLESALE MARKET. IT ALSO DERIVES INCOME FROM SELLING OF POWER THROUGH WINDMILL. T HE ASSESSEE FILED THE COPIES OF THE BALANCE SHEET, PROFIT & LOSS ACCO UNT, AUDITORS REPORT AND STATEMENT OF INCOME. ON PERUSAL OF THE TRADIN G AND P & L ACCOUNT, THE ASSESSING OFFICER NOTICED THAT ASSESSE E HAS SHOWN THE AMOUNT OF ` 1,40,75,000/- AS SUNDRY INCOME. ON PERUSAL OF THE BREAK UP FOR RECEIPT OF SUNDRY INCOME, IT IS SEEN THAT TH E ASSESSEE HAD RECEIVED AN AMOUNT OF ` 1,80,75,000/- TOWARDS SETTLEMENT FOR CANCELLING OF WHEAT BARGAINED FROM VARIOUS PARTIES. OUT OF THE ABOVE AMOUNT, THE ASSESSEE HAD REPAID AN AMOUNT OF ` 20,00,000/- TO M/S. V.V. AGRO FOODS, HYDERABAD AND ` 20,00,000/- TO M/S. COIMBATORE ROLLER FLOUR MILLS PVT. LTD. THIS PAYMENT HAS BEEN MADE BY THE ITA 1784/11 CO 165/11 :- 3 -: ASSESSEE AS PER THE CONTRACT AGREEMENT (BUY BACK AG REEMENT) ENTERED. THE ASSESSEE WAS ASKED TO SUBMIT THE DETAI LS OF TAX DEDUCTED ON THE ABOVE AMOUNT AND COPY OF THE CHALLAN FOR THE SAME. THE ASSESSEE HAD STATED THAT THE ABOVE AMOUNT HAS BEEN REPAID TO M/S. V.V. AGRO FOODS HYDERABAD AND TO M/S COIMBATORE ROLLER FLOUR MILLS PVT. LTD. WITHOUT DEDUCTING TDS. AS PER SECTION 40 (A)(IA) OF THE ACT, ANY AMOUNT PAID WITHOUT DEDUCTING TDS AS PER THE CO NTRACT HAS TO BE DISALLOWED. IN VIEW OF THE ABOVE, AS THE ASSESSEE P AID THE AMOUNT ` 40,00,000/- AS PER THE CONTRACT AGREEMENT WITHOUT DEDUCTING TDS , HAS BEEN DISALLOWED BY INVOKING THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT AND ADDED AS INCOME. DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08, THE ASSESS ING OFFICER HAS MADE ADDITION UNDER THE SAME ISSUE (THE ASSESSEE HA S PAID TO M/S CARGIL INDIA FOR CANCELLING OF WHEAT PURCHASE). THE FIRM FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30.9.2008 ADMITTING TOTAL INCOME OF ` 97,48,042/- FROM THE ABOVE ACTIVITIES. TOTAL INCO ME WAS ASSESSED U/S 143(3) AT ` 1,37,48,040/- BECAUSE AN ADDITION OF ` 40 LAKHS WAS MADE U/S 40(A)(IA) AS THE ASSESSING OFFI CER FOUND THAT TDS U/S 194C OF THE ACT HAD NOT BEEN DEDUCTED OUT OF PAYMENT MADE TO TWO PARTIES NAMELY, (I) M/S V.V.AGRO FOODS; AND (2) M/S COIMBATORE ROLLER FLOUR MILLS PVT. LTD. BEING AGGRIEVED, T HE ASSESSEE PREFERRED ITA 1784/11 CO 165/11 :- 4 -: FIRST APPEAL AND WAS SUCCESSFUL IN GETTING THE IMPU GNED DELETION. NOW THE REVENUE IS AGGRIEVED AND HAS FILED THIS SECOND APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CIRCUMSPEC TED THE ENTIRE RECORD. ACCORDING TO THE LD. CIT/DR, THE ASSESSEE WAS BOUND TO DEDUCT TAX AT SOURCE FROM THE PAYMENT OF ` 40 LAKHS MADE TO THE ABOVE TWO CONCERNS PURSUANT TO THE CONTRACT/BUY-BAC K AGREEMENT. ACCORDING TO HIM, THE PAYMENT WAS ON ACCOUNT OF REN DERING SERVICES AND FACILITATING SUCH SUPPLY/PROCUREMENT AND NOT FO R THE SUPPLY OF A PRODUCT. ON THE OTHER HAND, THE LD.AR HAS SUBMITTE D THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES, SUCH PAYMENTS MA DE BY THIS VERY ASSESSEE WERE FOUND TO BE NOT HIT BY THE PROVISIONS OF SECTION 40A(IA) OF THE ACT BY THE TRIBUNAL WHILE DECIDING SIMILAR ISSUE IN ASSESSMENT YEAR 2007-08. A COPY OF THE TRIBUNAL ORDER PASSED IN I.T.A.NO. 1837/MDS/2010 FOR ASSESSMENT YEAR 2007-08, DATED 10.3.2011, HAS BEEN PRODUCED FOR OUR PERUSAL. 4. AFTER GOING THROUGH THE RECORDS IN THE LIGHT OF O RAL SUBMISSIONS, AND THE TRIBUNAL ORDER (SUPRA) IN ASSESSEES OWN CA SE FOR ASSESSMENT YEAR 2007-08, WE HAVE NOTICED THAT THE CONTRACTS BE TWEEN THE ASSESSEE FIRM AND M/S V.V.AGRO FOODS AND M/S COIMBA TORE ROLLER FLOUR MILLS, ARE ONLY FOR THE SUPPLY OF FOOD GRAINS ON CO NTRACT BASIS AND NOT ITA 1784/11 CO 165/11 :- 5 -: FOR RENDERING ANY SERVICES. ACCORDINGLY, THESE CO NTRACTS CANNOT BE TREATED AS SERVICE CONTRACTS AND AS SUCH DEDUCTION OF TAX AT SOURCE U/S 194C IS NOT REQUIRED. THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 IS ALSO ON SIMILAR LINES AND WE ARE BOUND TO FOLLOW THE SAME IN VIEW OF THE PRINCIPLE OF STARE DECISIS . ACCORDINGLY, WE CONFIRM THE IMPUGNED DELETION AND CANNOT ALLOW THE APPEAL OF TH E REVENUE. 5. THE CROSS OBJECTION, CONCOMITANTLY, BECOMES INFRU CTUOUS AND STANDS DISMISSED. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COUR T ON 05.01.2012. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 05 TH JANUARY, 2012 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR