ACIT, Madurai V. Shri P.Rajasekaran, Madurai

ITA 2068/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61203 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 2068/MDS/2011 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, MADURAI. (APPELLANT) V. SHRI P. RAJASEKARAN, M/S P.R. TRADERS, 10/1, DEPUTY COLLECTOR COLONY, 1 ST STREET, K.K. NAGAR, MADURAI. PAN : ABZPR3772L (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR RESPONDENT BY : SHRI M.P. SENTHIL KUMAR, ADVOCATE FOR SHRI C.V. RAJAN, ADVOCATE DATE OF HEARING : 14.06.2012 DATE OF PRONOUNCEMENT : 14.06.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT THE CIT(APPEALS) DELETED A DISALLOWANCE MADE BY THE A.O . UNDER SECTION 40(A)(IA) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE AC T'). 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD CLAIME D A SUM OF ` 50,38,918/- AS ROYALTY PAYMENT. ASSESSING OFFICER , DURING THE COURSE OF 2 I.T.A. NO. 2068/MDS/11 ASSESSMENT PROCEEDINGS, PUT ASSESSEE ON NOTICE THAT THE SAID PAYMENT ATTRACTED SECTION 194J OF THE ACT SINCE ASSESSEE HA D NOT DEDUCTED TAX IN ACCORDANCE WITH SAID SECTION. ACCORDING TO HIM, RIGOURS OF SECTION 40(A)(IA) OF THE ACT WERE ATTRACTED. THOUGH THE AS SESSEE CONTENDED THAT THE PAYMENT WAS NOT IN THE NATURE OF ROYALTY, THIS WAS NOT ACCEPTED BY THE ASSESSING OFFICER, WHO PROCEEDED TO MAKE A DISA LLOWANCE. 3. IN HIS APPEAL BEFORE CIT(APPEALS), ASSESSEE REIT ERATED THE CONTENTION MADE BEFORE THE A.O. THAT THE PAYMENT WA S NOT ROYALTY . AS PER THE ASSESSEE, THE TYPE OF PAYMENT WHICH HE HAD MADE WAS FOR QUARRYING GRANITES FROM QUARRIES OWNED BY VARIOUS P ARTIES AND THIS COULD NOT BE CONSIDERED AS ROYALTY. CIT(APPEALS), AFTER CONSIDERING THE ARGUMENT, WAS OF THE OPINION THAT THE ARGUMENT OF T HE ASSESSEE HAD SUBSTANCE. ACCORDING TO HIM, THE PAYMENTS MADE FOR QUARRYING IN LAND FOR THE PURPOSE OF OBTAINING GRANITES IN VIEW OF TH E AGREEMENTS WITH CONCERNED PARTIES, COULD NOT BE CONSIDERED AS ROYAL TY AND ASSESSEE COULD NOT BE FASTENED WITH A LIABILITY TO DEDUCT TA X UNDER SECTION 194J OF THE ACT. HE, THEREFORE, DELETED THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER. 4. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT EVEN IF THE PAYMENTS COULD NOT BE BR OUGHT WITHIN THE PURVIEW OF SECTION 194J OF THE ACT, IT WOULD DEFINI TELY BE COVERED UNDER 3 I.T.A. NO. 2068/MDS/11 SECTION 194-I OF THE ACT. ACCORDING TO HIM, THE AM OUNTS PAID FELL WITHIN THE DEFINITION OF RENT AS GIVEN UNDER SECTION 194 -I OF THE ACT. 5. PER CONTRA, LEARNED A.R. SUPPORTED THE ORDER OF CIT(APPEALS). HE ALSO RELIED ON THE DECISION OF SPECIAL BENCH OF THI S TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT V. ACIT (2012) 16 ITR (TRIB.) 1 (SB). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. LEAVING ALONE THE ISSUE WHETHER THE PAYMENT FELL UN DER SECTION 194J OR 194-I OF THE ACT, ONE THING THAT CLEARLY COMES OUT FROM THE ASSESSMENT ORDER IS THAT ROYALTY OR BY WHATEVER NAME THE AMO UNT WAS CALLED, STOOD PAID BEFORE THE END OF THE RELEVANT PREVIOUS YEAR. ASSESSING OFFICER HAS HIMSELF MENTIONED THAT THE PAYMENTS OF ` 32,43,820/- TO M/S R.R. GRANITES, MADURAI AND ` 17,95,098/- TO SHRI V. SHANMUGAM WERE MADE. SINCE THE AMOUNTS STOOD PAID BEFORE THE END OF THE RELEVANT PREVIOUS YEAR, IN OUR OPINION, THE RIGOURS OF SECTION 40(A)( IA) WOULD NOT BE ATTRACTED IN VIEW OF THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). IT WAS HELD BY THE SPECIAL BENCH THAT THE RIGOURS OF SECTION 40(A)(IA) OF THE ACT WERE ATTRACTED ONLY WHEN THE AMOUNTS STOOD PAYABLE AS AT THE END OF RELEVANT PREVIOUS YEAR. WE, THEREFORE, FIND NO MERIT IN THE APPEAL FILED BY THE REVENUE. 4 I.T.A. NO. 2068/MDS/11 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 14 TH OF JUNE, 2012, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 14 TH JUNE, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I, MADURAI (4) CIT-I, MADURAI (5) D.R. (6) GUARD FILE