ITO (OSD), CHENNAI V. M/s. RMP Infotech Pvt. Ltd., CHENNAI

ITA 1972/CHNY/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90610 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 02-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2010
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NO. 1972/MDS/2010 / ASSESSMENT YEAR : 2007-08 THE INCOME-TAX OFFICER(OSD), COMPANY CIRCLE-V(4), CHENNAI -34. APPELLANT) V. M/S. RMP INFOTECH PVT. LTD., OLD NO.183, NEW NO.300, THAMBU CHETTY STREET, CHENNAI 600 001. PAN AACCR1462N RESPONDENT) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE ! / DATE OF HEARING : 04.06.2015 '# ! / DATE OF PRONOUNCEMENT: 30.06.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 24 .8.2010. - - ITA 1972/2010 2 2. THE FIRST ISSUE RAISED BY THE REVENUE IS WITH R EGARD TO DELETING THE DISALLOWANCE OF `2,43,28,479/- THOUGH THERE WAS NO DEDUCTION OF TDS FROM PAYMENTS MADE TO COURIER C OMPANIES. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE MA DE PAYMENT OF ` 2,43,28,479/- IN RESPECT OF VARIOUS PARTIES WITHOU T DEDUCTING TDS. THE ASSESSING OFFICER INVOKED THE P ROVISIONS OF SEC.40(A)(IA) OF THE ACT AND DISALLOWED THE SAME. ON APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING THAT THERE IS NO CONTRACT BE TWEEN THE ASSESSEE AND THE RECIPIENTS, WHO ARE COURIER COMPAN IES. THEREFORE, HE DELETED THE ADDITION. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. DR SUBMITTED THAT THOUGH THER E IS NO CONTRACT IN WRITTEN BETWEEN THE ASSESSEE AND THE RE CIPIENTS, THE ASSESSEE IS LIABLE FOR DEDUCTION OF TDS. FURTHER, HE SUBMITTED THAT EVEN IF THE AMOUNT HAS BEEN ALREADY PAID BY TH E ASSESSEE WITHOUT DEDUCTING TDS, THE AMOUNT IS NOT ALLOWABLE IN VIEW OF THE ORDER OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF ITO V. M/S. PRATIBHUTI VINIYOG LTD. IN ITA NO. 1689/MDS/20 11 DATED - - ITA 1972/2010 3 22.8.2014, WHEREIN IT WAS OBSERVED THAT THE JUDGMEN T OF THE ALLAHABAD HIGH COURT IN VECTOR SHIPPING SERVICES PV T. LTD. IN ITA NO. 122 OF 2013 DATED 09.07.2013, CANNOT LAY DOWN A RATIO DECIDENDI ON THE PHRASE PAID AND PAYABLE BY D ISAPPROVING THE DECISION OF THE SPECIAL BENCH IN MERILYN SHIPPI NG AND TRANSPORT LTD. (136 ITD 23). ACCORDING TO LD. DR, THE ASSESSEE IS LIABLE TO DEDUCT TDS AS PROVIDED IN SEC.194C OF THE ACT, WHICH WAS NOT DONE BY THE ASSESSEE. THEREFORE, THE EXPEN DITURE IS DISALLOWABLE. 5. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT EVE N THERE IS NO ORAL CONTRACT BETWEEN THE SERVICE PROVIDER AND T HE ASSESSEE. THE COURIER CHARGES WERE PAID BY THE ASSESSEE AND I T IS NOT POSSIBLE TO DEDUCT TDS, MORE SO, THE ASSESSEE PAID THE COURIER CHARGES BEFORE 31.3.2007. HE RELIED ON THE JUDGMEN T OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI N. PALANIVELU V. ITO IN ITA NO.618/MDS/2015, WHEREIN IT WAS HELD THAT WHEN THE PAYMENT IS NOT OUTSTANDING AT THE END OF THE CL OSE OF THE FINANCIAL YEAR, THE EXPENDITURE CANNOT BE DISALLOWE D. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL - - ITA 1972/2010 4 ON RECORD. IN THIS CASE, THE ASSESSEE HAS PAID CO URIER CHARGES TO VARIOUS PARTIES LISTED IN THE ASSESSMENT ORDER A T PAGE 6 WITHOUT DEDUCTION OF TDS. ACCORDING TO THE LD. AR, THERE IS NO CONTRACT EITHER WRITTEN OR ORAL BETWEEN THE ASSESSE E AND THE PARTIES AND MOST OF ALL THE PAYMENTS ARE LESS THAN ` 20,000/- AND IT WAS ACTUALLY PAID BEFORE THE END OF THE CLOSE OF THE FINANCIAL YEAR. IN OUR OPINION, THE ASSESSEE IS LIABLE FOR D EDUCTION EVEN IF THERE IS NO CONTRACT BETWEEN THE PARTIES. FURTHER, WHEN THE PAYMENT IS EXISTED, IT ENTITLED FOR TDS. HOWEVER, CONSIDERING THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE PAYMENTS WERE ALREADY MADE BEFORE THE END OF THE CLOSE OF THE FINANCIAL Y EAR AND THE PAYMENT IS NOT OUTSTANDING AS PAYABLE THEN, SEC.40( A)(IA) OF THE ACT CANNOT BE APPLIED. FURTHER, THE ANDHRA PRADESH HIGH COURT IN ITS JUDGMENT DATED 24.6.2014 IN THE CASE OF CIT VS. JANAPRIYA ENGINEERING SYNDICATE IN ITA NO.352/2014 HAS HELD T HAT UNTIL AND UNLESS THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD. IS REVERSED BY THE HIGH COURT, IT WILL BE BINDING ON LOWER AUTHORITIES AS W ELL AS THE CO- ORDINATE BENCHES OF THE TRIBUNAL AND THE HIGH COURT EXPRESSED THE VIEW THAT THE DECISION OF THE TRIBUNAL IN THE C ASE OF MERILYN - - ITA 1972/2010 5 SHIPPING AND TRANSPORT LTD. IS TO BE FOLLOWED ON TH E ABOVE ISSUE. IN VIEW OF THE ABOVE, WE ARE INCLINED TO FOLLOW THE AFORESAID SPECIAL BENCH DECISION OF THE TRIBUNAL. ACCORDI NGLY, WE DIRECT THE AO TO CONSIDER THE OUTSTANDING PAYMENT EITHER B Y SHOWING AS OUTSTANDING EXPENSES OR AS OUTSTANDING TO PARTIE S/SUNDRY CREDITORS AND TO VERIFY WHETHER THE SAID PAYMENT IS OUTSTANDING OR NOT AND DISALLOW THE OUTSTANDING AMOUNT ONLY U/S .40(A)(IA) OF THE ACT. 7. THE NEXT GRIEVANCE OF THE REVENUE IS WITH REGARD TO DELETING THE DEMAND OF ` 1,56,75,200/- MADE ON ACCOUNT OF MISSING VOUCHERS AND EVIDENCES. 8. THE FACTS OF THE ISSUE ARE THAT THE ASSESSING OF FICER MADE AN ADDITION OF ` 1,56,75,200/- TOWARDS RESORT PACKAGE CHARGES ON THE REASON THAT THERE IS MISSING VOUCHER S AND BILLS. HOWEVER, THE CIT (A) DELETED THE ADDITION ON THE GR OUND THAT THE ASSESSEE HAS OFFERED A SUM OF ` 5 CRORES IN THE ASSESSMENT YEAR 2007-08 TOWARDS OMISSIONS/MISTAKES AND MISSING VOUC HERS. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. - - ITA 1972/2010 6 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IT IS TO BE NOTED THAT IN THE ASSESS MENT ORDER AT PARA III IN PAGE 2, BY THE AO THAT THE ASSESSEE HAD MADE A PROVISION FOR OFFER OF INCOME OF ` 5 CRORES FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEES COUNSEL SUBMITTED TH AT THE ASSESSEE HAS ALREADY OFFERED ` 5 CRORES AS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2007-08 TOWARDS DISCREPANCIES I N VOUCHERS AND THERE CANNOT BE FURTHER ADDITION TOWARDS THIS. FIRST OF ALL, IN OUR OPINION, THERE IS NO MATERIAL ON RECORD TO SUGG EST THAT THE ASSESSEE HAS MADE ADDITIONAL OFFER OF ` 5 CRORES SOLELY TOWARDS OMISSIONS/MISTAKES AND ABSENCE OF VOUCHERS AND WE A RE NOT IN A POSITION TO EXPRESS ANY OPINION WHETHER THE ADDIT IONAL INCOME OFFERED AT ` 5 CRORES WAS INCLUDED IN RETURNED INCOME OF ` 6,75,61,910/-. 10. FURTHER, THERE IS NO MATERIAL ON RECORD TO SUG GEST THAT THERE IS AN OFFER OF AMOUNT OF ` 1,56,75,200/- SOLELY TOWARDS ABSENCE OF VOUCHERS IN RESPECT OF RESORT PACKAGE CH ARGES. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSMEN T OF THE ASSESSEE IS TO BE CONCLUDED IN ACCORDANCE WITH LAW AND AS PER THE PROVISION OF THE ACT. WHENEVER THE ASSESSEE CL AIMS ANY - - ITA 1972/2010 7 EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS, T HE ASSESSEE SHOULD PRODUCE NECESSARY EVIDENCE IN SUPPORT OF ITS CLAIM. THE CONSENT CANNOT BE JURISDICTION TO THE TAXING AUTHOR ITY TO MAKE ANY ADDITION AND TAXING AUTHORITY CAN ACT ONLY IF THERE IS POWER UNDER THE STATUTE TO DO SO. IF THE ASSESSMENT IS REQUIRE D TO BE COMPLETED AS PER OFFER MADE BY THE ASSESSEE, THERE IS NO NECESSITY IN FILING OF THE RETURN AND PRODUCING BOO KS OF ACCOUNT, EXAMINE THE SAME AND PASSING THE ASSESSMENT ORDER B Y THE ASSESSING AUTHORITY. THE ACCEPTANCE COULD BE FINAL , IF WE ACCEPT THE CONTENTION OF THE ASSESSES COUNSEL. BEING SO, IN THE PRESENT CASE, WE ARE NOT IN A POSITION TO APPRECIAT E THE ARGUMENT OF ASSESSEES COUNSEL THAT THE ASSESSEE HA S OFFERED ADDITIONAL INCOME TOWARDS OMISSION OF VOUCHERS AND THE ADDITION CANNOT BE MADE TOWARDS THIS ISSUE. THIS PLEA OF TH E LD. A.R. HAS NO MERIT. HOWEVER, IN THE INTEREST OF JUSTICE, WE REMIT THE ISSUE TO THE FILE OF THE A.O. TO DECIDE THE ISSUE AFRESH. THE ASSESSEE IS DIRECTED TO PRODUCE NECESSARY EVIDENCE TO SUPPOR T THE CLAIM OF RESORT PACKAGE CHARGES. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. - - ITA 1972/2010 8 ORDER PRONOUNCED ON TUESDAY, THE 30 TH OF JUNE, 2015 AT CHENNAI. SD/- SD/- ( $% &'( ) ) ( $ ( * + ) ,-.//.0.12345.65.7.48 ,-.345.699:.5 ;8 ' )< /JUDICIAL MEMBER ! )<=>>9?3@.3@A2BC25 $' /CHENNAI, D) /DATED, THE 30 TH JUNE, 2015. MPO* )E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I8 /CIT(A) 4. I /CIT 5. GJ& K /DR 6. &LM /GF.