ITO, CHENNAI V. M/s. Shree Lakshmi Associates, CHENNAI

ITA 1928/CHNY/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1157 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGAR AJAN JR
• Assessee Lawyers: V D GOPAL
• Keywords: TDS

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI.ABRAHAM P. GEORGE, A.M. I.T.A. NO.1928/MDS/2008 ASSESSMENT YEAR: 2005-06 THE INCOME TAX OFFICER, BUSINESS WARD II(4), 3RD FLOOR, NEW BLOCK, 121, M.G. ROAD, CHENNAI 34. VS. M/S. SHREE LAKSHMI ASSOCAITES, MOOKAMBIKA COMPLEX, III FLOOR, 4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. [PAN:AAVFS9518H] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.E.B. RANGAR AJAN, JR. STANDING COUNSEL ASSESSEE BY : SHRI V.D. GOPAL ORDER PER U.B.S. BEDI, J.M . THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)VI, CHENNAI DATED 12.05.2008 RELEVANT TO THE ASSESSMENT YEAR 2005-06, WHEREBY THE ACTION OF THE LD. CI T(A) IN DELETING T HE DISALLOWANCE OF ` .17,25,000/- MADE UNDER SECTI ON 40(A)(1A) OF THE INCOME TAX ACT BY HOLDING THAT PAYMENT DOES NOT ATTR ACT THE PROVISIONS OF SE CTION 194J, DESPITE THE ASSESSEE HAVING ADMITTED TO THE NATURE OF SERVICES R ENDERED BY THE RECIPIENT OF THE PAYMENTS HAS BEEN CHALLENGED. 2. AT THE VERY OUTSET, THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF D BENCH OF IT AT, CHENNAI IN ITA NO. 1871/MDS/2009 FOR THE ASSESSMENT YEAR 2006-07 DATED 03.12.2010 TAKEN IN THE CASE OF ITO VS. M/S. V & R AS SOCIATES, THE SISTER CONCERN OF THE ASSESSEE. SINCE FACTS IN THE CASE IN HAND AND FACTS AND ISSUE INVOLVED IN THE CASE DECIDED BY THE D BENCH OF T HE TRIBUNAL ARE SIMILAR AND IDENTICAL, I.T.A. NO.1928/MDS/08 2 THEREFORE, THE DECISION TAKEN IN THAT CASE SHOULD BE FOLLOWED HERE TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THE AS SESSEES COUNSEL HAS ALSO FILED COPY OF THE TRIBUNAL ORDER DATED 03. 12.2010 FOR REFERENCE. 3. THE LD. DR COULD NOT CONTROVERT TH IS FACTUAL ASPECT AND RATHER CONCEDED THAT THE ISSUE IS SQUARELY COVERED BY EARLIER DECISION OF D BENCH OF THE TRIBUNAL AS RELIED UPON BY THE LD. COUNS EL FOR THE ASSESSEE AND APPEAL OF THE DEPARTMENT SHOULD BE DECIDED ACCORDINGLY. 4. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT SIMILAR ISSUE WAS RAISED BEFOR E THE D BENCH OF THE TRIBUNAL IN PRECEDENT RELIED UPON BY THE LD. COUNSEL FO R THE ASSESSEE, IN WHICH CONCLUSION HAS BEEN DRAWN AT PARA 6 OF THE SAID ORDER, WHICH IS REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE ASSESSMENT OR DER AND THE ORDER OF THE LEARNED CIT(A). A PERUSAL OF THE ASSESSMENT ORDER S HOWS THAT THE ASSESSING OFFICER HAS RECOGNIZED THAT THE ASSESSEE HAS RE IMBURSED THE CHARGES TO THE THREE SISTER CONCERNS. HOWEVER, THE ASSE SSING OFFICER HAS TREATED THE SAID THREE COMPANIES AS SERVICE PROVIDE RS. THE ASSESSING OFFICER HAS ALSO TREATED THE PAYMENTS AS PROFESSION AL CHARGES. A PERUSAL OF THE EXPLANATION TO SEC. 194J SHOWS T HAT THE PAYMENTS WHICH HAVE BEEN MADE DO NOT FALL IN ANY OF THE EXPL ANATIONS PROVIDED TO SECTION 194J IN RELATION TO PROFESSIONAL CHAR GES/PROFESSIONAL FEES. IN THE CIRCUMSTANCES WE ARE OF THE VIEW T HAT THE PROVISIONS OF SECTION194J THEMSELVES DO NOT APPLY TO THE PAYME NTS MADE BY THE ASSESSEE TO THE THREE SISTER CONCERNS. EVEN OTHERWISE, THE ASSESSEE HAS ONLY REIMBURSED ITS SHARE OF EXPENSES TO THE THREE SISTER CONCERNS IN PROPORTION TO THE AREA OCCUPIED BY THE ASSESSEE. IT IS ALSO NOT DISPUTED THAT THE THREE SISTER CONCERNS HAVE DEDUCTED TDS ON THE PAYMENTS MADE BY THEM. THIS BEING SO, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) IS ON A RIGHT F OOTING AND DOES NOT CALL FOR ANY INTERFERENCE. THE NON-FILING OF THE APPEAL BY THE REVENUE IN RELATION TO THE ORDER OF THE LEARNE D CIT(A) FOR THE ASSESSMENT YEAR 2005-06 IS NOT BEING ADJUDICATED HERE AS WE HAVE ALREADY HELD THAT THE PAYMENTS DO NOT FALL WITHIN THE PR OVISIONS OF SECTION 194J FOR THE I.T.A. NO.1928/MDS/08 3 PURPOSE OF TDS. IN THE CIRCUMSTANC ES, THE APPEAL OF THE REVENUE IS DISMISSED. 4. SINCE THIS IS A COVERED MATTER IN FAVOUR OF THE ASSESSEE BY EARLIER DECISION OF D BENCH OF T HE TRIBUNAL, CONCLUSION OF WH ICH IS REPRODUCED ABOVE AND IN THE ABSENCE OF ANY CONTRARY MATERI AL OR EVIDENCE ON RECORD, WE FOLLOW THE SAID CONCLUSION IN PRECEDENT RE LIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE AND UPHOLD THE ACTION OF THE LD. CIT(A) IN THIS REGARD WHILE DISMISSING THE APPEAL OF THE DEPARTMENT. 5. IN THE RESULT, THIS APPEAL BY THE DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN T HE OPEN COURT ON 09.02.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE. 09.02.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.