ACIT, CHENNAI V. Shri S.Arjun, CHENNAI

ITA 1848/CHNY/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7190 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 15-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Non-deduction of tax
• Section: 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1848/MDS/2012 ( / ASSESSMENT YEAR: 2006-07) ASSISTANT COMMISSIONER OF INCOME TAX, MEDIA CIRCLE-I CHENNAI-600 034. VS MR. S.ARJUN 78, 1B RAHUL MANOR, CHAMIERS ROAD, R.A.PURAM, CHENNAI-600 028. PAN: AAIPA1965A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR .P.RADHAKRISHNAN, JCIT /RESPONDENT BY : MR. A.S.SRIRAMAN, ADVOCATE / DATE OF HEARING : 16 TH DECEMBER, 2014 /DATE OF PRONOUNCEMENT : 19 TH DECEMBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, CH ENNAI DATED 04.07.2012 FOR THE ASSESSMENT YEAR 2006-07. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON THE PAYMENTS MADE TOWARDS EXPENDITURE INCURRED IN CONNE CTION WITH FILM MADARASI AND SIVAKASHI. 2 ITA NO.1848/MDS/2012 2. AT THE TIME OF HEARING, COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE HAS MADE ALL THE PAYMENTS TO VARIOUS PARTIES INCURRING THESE EXPENDITURE BEFORE THE END OF THE ACCOUNTING YEAR AND THEREFORE PROVISIONS OF SECTION 40(A)(IA) INVOKED BY THE ASSESSING OFFICER HAVE NO APPLICATION. COUNSEL SUBMITS THAT THIS TRIBUNAL IS CONSISTENTLY HOLDING THAT ONCE THE PAYMENTS WERE AL READY MADE TO THE PARTIES AND ARE NOT OUTSTANDING SUCH PA YMENTS CANNOT BE DISALLOWED BY INVOKING PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT FOR NOT DEDUCTING TDS ON SUCH PAYMENTS IN VIEW OF THE DECISIONS OF VARIOUS HIGH C OURTS. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER. 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DISALLOWED EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH PRODUCTION OF THE FILMS MADARASI AND SIVAKASHI FOR THE REASON THAT ASSESSEE HAS NOT D EDUCTED TDS AND THEREFORE SUCH EXPENDITURE IS LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. T HE 3 ITA NO.1848/MDS/2012 COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINING T HE ISSUE IN DETAIL AND FOLLOWING THE DECISION OF THE S PECIAL BENCH OF TRIBUNAL (VISAKHAPATNAM) IN THE CASE OF ME RILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (136 ITD 23) (S B) DELETED THE DISALLOWANCE SINCE ALL THE EXPENDITURE WERE PAID BY THE ASSESSEE BEFORE THE END OF THE RELEVANT ACCOUNTING YEAR. WE FIND THAT THIS ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNA L IN THE CASE OF M/S. ANABOND LTD. VS. DCIT IN ITA NOS.1576 & 1577/MDS/2014 DATED 13.11.2014 OBSERVING AS UNDER: - 7. THE NEXT ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS WITH REGARD TO DIS-ALLOWANCE U/S.40(A)(IA ). THE ASSESSING OFFICER HAS MADE DIS-ALLOWANCE OF ` 47,98,284/- FOR NON-DEDUCTION OF TAX AT SOURCE ON PAYMENTS EXCE EDING ` 50,000/- MADE TO TRANSPORTERS. THE CLAIM OF THE ASSESSEE IS THAT THE PAYMENTS WERE MADE FOR TRANSPORTATION OF GOODS. THE EXPENDITURE ON TRANSPORTATION IS DIRECT EXPENDITURE AND FALLS U/S. 28 OF THE ACT AND NOT UNDER THE PROVISIONS OF SECTION 30 TO 3 8. THE LD.AR MADE ALTERNATE SUBMISSION THAT EVEN IF THE PAYMENTS ARE HELD TO BE COVERED U/S.30 TO 38 OF THE ACT, THE PROVISIONS OF SECTION 40(A)(IA) APPLY TO EXPEND ITURE WHICH IS PAYABLE AND NOT IN THE CASES WHERE EXPEN DITURE IS PAID. THE LD.AR IN ORDER TO STRENGTHEN HIS SU BMISSIONS DRAWS SUPPORT FROM THE JUDGMENT OF THE HON'BLE ALLA HABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICE PVT. LTD., IN ITA NO.122 OF 2013 D ECIDED ON 09-07-2013 AND THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. THEEKATHIR PRES S (SUPRA). ON THE OTHER HAND, THE DEPARTMENT DRAWS SUPPORT FROM THE JUDGMENTS RENDERED BY THE HON'BLE HIGH COURTS IN THE CASE OF CIT VS. CRESCENT EXPORT SYND ICATE (SUPRA) AND CIT VS. SIKANDAR KHAN N.TUNVAR (SUPRA). 4 ITA NO.1848/MDS/2012 SIMILAR ISSUE HAD COME UP BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. THEEKA THIR PRESS (SUPRA). THE BENCH OBSERVED THAT, IN CIRCUMSTANCES, WHERE TWO DIFFERENT POSSIBLE VIEW AR E AVAILABLE, THE RULE OF JUDICIAL PRECEDENCE DEMANDS THAT THE VIEW FAVOURABLE TO THE ASSESSEE MUST BE ADOPTED , AS HAS BEEN HELD BY THE HONBLE SUPREME COURT OF INDI A IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., REPORT ED AS 88 ITR 192 (SC). APPLYING THE PRINCIPLE LAID DOWN BY THE HON'BLE APEX COURT, WE FOLLOW THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT, WHICH IS IN FAVOUR OF THE ASS ESSEE. WE HOLD THAT DIS-ALLOWANCE U/S.40(A)(IA) APPLIES TO AMOUNT PAYABLE AND NOT THOSE AMOUNTS WHICH HAVE ALREADY BEEN PAID. ACCORDINGLY, THE FINDINGS OF CIT(APPEALS) ON THIS ISSUE ARE SET ASIDE AND DELETE THE ADDITION MADE U/S.40(A)(IA). THIS GROUND OF APPEAL OF THE ASSESS EE IS ALLOWED. 5. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPH OLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND REJECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 19 TH DAY OF DECEMBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGEND RA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED, 19 TH DECEMBER, 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .