ITO, CHENNAI V. Sri S.Sankarram, CHENNAI

ITA 1790/CHNY/2009

• Counselvise Citation: 179021714 RSA 2009
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: N DEVANATHAN
• Section: 143(3); 194C

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.1790 /MDS/2009 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, MEDIA WARD III, CHENNAI 34. VS. SRI S. SANKARRAM, 137, M.M. COMPLEX, KODAMBAKKAM HIGH ROAD, CHENNAI 600 017. [PAN:ABJPS9079F] (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI GURU BASHYAM, IRS, JCIT RESPONDENT BY : SHRI N. DEVANATHAN, ADVOCATE DATE OF HEARING : 29.10.2012 DATE OF PRONOUNCEMENT : 29.10.2012 ORDER PER S.S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) VI CHENNAI DAT ED 24.06.2009 IN ITA NO. 122/08-09 FOR THE ASSESSMENT YEAR 2006-07 IN PR OCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE; WHO RUNS A MUSICAL TROOP, FILED HIS RETURN FOR THE IMPUGNED ASSESSME NT YEAR DECLARING INCOME OF ` .1,39,150/-. IN SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED FROM I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1790 790790 790/M/ /M/ /M/ /M/09 0909 09 2 THE P & L ACCOUNT ATTACHED WITH THE RETURN THE AS SESSEE HAD CLAIMED AN AMOUNT OF ` .36,34,760/- IN THE SHAPE OF CO-ARTISTES SALARY & BATTA. IN SUPPORT THEREOF, HIS PLEA WAS THAT THE PAYMENTS WER E MADE TO PERFORMERS IN DIFFERENT DISCIPLINES LIKE, KEYBOARD PLAYER, GUITAR IST, AND OTHER INSTRUMENT PLAYERS, ETC. THE ASSESSING OFFICER WAS NOT CONVINC ED WITH ASSESSEES EXPLANATION. THEREFORE, HE TOOK COGNIZANCE OF THE F ACT THAT THERE WERE TOTAL 23 PAYEES UNDER VARIOUS CATEGORIES, WHOSE TOTAL PAY MENT OF ` .30,85,057/- EXCEED ` .50,000/- LIMIT. THE ASSESSEE MADE VARIOUS SUBMISSI ONS INTER ALIA THAT MOST OF THE PAYEES KEPT ON CHANGING AND THEREF ORE, THE PAYMENTS WERE NOT LIABLE TO BE SUBJECTED TO TDS AND THERE WAS NO SALARY PAID TO ANY ARTIST BY HIM SINCE THEY WERE FREELANCERS WITHOUT ANY ORGA NIZED MUSICAL TROOP. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES SUB MISSION AND THEREFORE ADDED THE ABOVE SAID AMOUNT OF ` .30,85,057/- IN ASSESSEES INCOME BY HOLDING THAT THE PAYMENTS EXCEEDED ` .50,000/- AND EVEN IF, THE SAID PAYEES WERE NOT ASSESSED TO INCOME TAX; STILL, THE ASSESSE E COULD CLAIM CREDIT FOR THE AMOUNT PAID AND THE ASSESSEES BUSINESS ACTIVIT Y IMPLIED THAT THE INCOME OF THE PAYEES IN QUESTION COULD BE MUCH MORE SINCE THEY ARE FREELANCERS. IN THIS BACKDROP, THE ASSESSING OFFICE R ADDED THE ABOVE SAID AMOUNT IN ASSESSEES TOTAL INCOME VIDE ASSESSMENT O RDER DATED 29.12.2008. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL, WHERE IN AFTER EXAMINING NECESSARY STATUTORY PROVISIONS I.E. SECTION 194C OF THE ACT, CBDT CIRCULAR I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1790 790790 790/M/ /M/ /M/ /M/09 0909 09 3 NOS. 108, 126, 528, 684, 717, 08/02, 07/03, 05/05, ETC. AS WELL AS SECTION 44AA OF THE ACT, THE CIT(A) HAS HELD THAT THE ASS ESSEE UTILIZED THE PAYEES IN VARIOUS DISCIPLINES TO PERFORM. IN TURN, HE RECE IVED MONEY FOR THE SERVICES OFFERED BY THEM TO THE CLIENTS. THEREFORE, HIS ACTI VITY WAS NOT COVERED BY CIRCULAR NO. 715. FURTHER, AFTER JOINTLY CONSIDERIN G SECTION 194(J) AS WELL AS SECTION 44AA OF THE ACT, IT HAS BEEN HELD THAT TH E ASSESSEES BUSINESS ACTIVITY WAS NOT COVERED BY ANY OF THE ACTIVITIES C OMPRISED THEREIN. ACCORDINGLY, THE ASSESSEES APPEAL HAS BEEN ALLOWED BY THE CIT(A). IT IS IN THIS BACKGROUND THAT THE REVENUE HAS RAIS ED THE GRIEVANCE BY PLEADING THE FOLLOWING SUBSTANTIAL GROUND: 2. THE LEARNED CIT(A) ERRED IN DELETING THE DISAL LOWANCE OF ` .30,85,057/- MADE U/S 40(A)(IA). 4. BEFORE US, THE DR REPRESENTING THE REVENUE HAS REITERATED THE SUBMISSIONS MADE IN THE GROUNDS AND PRAYED FOR REST ORING THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE AR, ON BE HALF OF THE ASSESSEE, HAS CHOSEN TO SUPPORT THE ORDER OF THE CIT(A) AS WE LL AS REASONS CONTAINED THEREIN. 5. WE HAVE HEARD RIVAL CONTENTIONS AND ALSO PERUSE D THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS CIT(A) . UNDISPUTEDLY, THE ASSESSEE IS A SMALL-TIME MUSICAL PERFORMER, WHO IS RUNNING HIS BUSINESS OF MUSICAL TROOP WITH THE HELP OF PAYEES IN VARIOUS MU SICAL DISCIPLINES. IT IS NOT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1790 790790 790/M/ /M/ /M/ /M/09 0909 09 4 THE CASE OF THE REVENUE THAT THE ASSESSEE HAS EMPLO YED ANY PERFORMER OR PAYEE ON CONTRACTUAL PERMANENTLY. NEVERTHELESS, IT IS BORNE OUT FROM THE RECORD THAT IT IS NOT A CASE OF ENGAGING THE PAYEES IN LIEU OF REMUNERATION ON MONTHLY BASIS. RATHER, REMUNERATION HAS BEEN PAID A SSIGNMENT-WISE. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE NAMES OF VARIOUS PAYEES IN THE SAME DISCIPLINE HAVE BEEN MENTIONED WHICH PROVES TH AT THE FREELANCERS ARE ENGAGED BY THE ASSESSEE ONLY AFTER GETTING PARTICUL AR ASSIGNMENT. WE ALSO FIND THAT THERE IS NO EVIDENCE OF EITHER ANY PERMAN ENT ENGAGEMENT OR ANY CONTRACT BETWEEN THE ASSESSEE AND THE PAYEES. RATHE R, ALL PAYMENTS HAVE BEEN MADE IN THE SHAPE OF REMUNERATION IN CONSEQUEN CE TO AD-HOC ARRANGEMENTS BY THE ASSESSEE FROM TIME TO TIME WITH OUT ANY CONSISTENCY EITHER IN ENGAGING THE PERFORMERS OR ANY PAYMENTS I N VIEW OF THE FACT THAT ALL ASSESSEES PAYMENTS ARE IN LIEU OF ELEVENTH HOUR AR RANGEMENTS OF VARIOUS ARTISTS IN CONCERNED DISCIPLINES, WE REGRET TO ACCE PT THE ARGUMENT OF THE REVENUE THAT SUCH AN ARRANGEMENT IS COVERED BY CHAP TER XVII OF THE ACT I.E. TDS PROVISIONS. ONCE WE HAVE HELD HEREINABOVE THAT NO CONTRACT OR PERMANENT NATURE OF ENGAGEMENT OF PAYEES MADE BY TH E ASSESSEE COULD BE SUBJECTED TO TDS PROVISIONS, WE EXPRESS OUR AGREEME NT ON THE WELL REASONED FINDINGS OF THE CIT(A) IN UPSETTING THE FI NDINGS OF THE ASSESSING OFFICER QUA THE APPLICABILITY OF TDS PROVISIONS IN ASSESSEES CASE. SO, WE SEE NO REASON TO INTERFERE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1790 790790 790/M/ /M/ /M/ /M/09 0909 09 5 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 29 TH OF OCTOBER, 2012 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 29.10.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.