M/s Oriental Medicines P.ltd, Alappuzha V. DCIT, Alappuzha

ITA 210/COCH/2010

• Counselvise Citation: 21021914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 31-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: R SREENIVASAN
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S .GANESAN, JM I.T.A NO. 210/COCH/2010 ASSESSMENT YEAR:2007-08 M/S. ORIENTAL MEDICINES PVT. LTD., DHANAWANTHARI BHAVAN, BALABHAVAN ROAD, ALAPPUZHA [PAN:AAAC0 2329P] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, ALAPPUZHA.. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI R.SREENIVASAN, CA REVENUE BY MS. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 31/10/2011 DATE OF PRONOUNCEMENT 25/11/2011 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A)-IV, KOCHI DATED 20.1.2010 AND PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE ARISING FOR CONSIDERATION IS THE DISALLOWANCE OF ` 3,82,510/- U/S. 40(A)(IA) FOR NON-DEDUCTION OF TAX AT SOURCE. SHRI R.SREENIVASAN, THE LD. CHARTERED ACCOUNTANT-REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEE USED THE MACHINERY OF M/S. S.D.PHARMACY AND THE PAYMENT WAS MADE FOR THE UTILISATION OF THE MACHINERY. HOWEVER, IT WAS CLAIMED AS TECHNICAL AN D PROCESSING CHARGES. ACCORDING TO THE LD.REPRESENTATIVE FOR THE ASSESSEE THE MERE USE OF MACHINERY OF M/S.S.D.PHARMACY CANNOT BE TREATED AS PAYMENT FOR PROFESSIONAL SERV ICES. THEREFORE, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE PROVISION OF E ITHER SECTION 194 OR 194J WOULD NOT COME INTO OPERATION I.T.A. NO. 210/COCH/2010 2 3. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD. DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE UTILISED THE MACHINERY OF M/S. S .D.PHARMACY AND PAID CHARGES IN THE FORM OF RENT. RELYING ON THE PROVISIONS OF SECTION 194I, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT WHEN THE ASSESSEE MA DE PAYMENT IN WHATEVER NAME IT WAS CALLED, BY WAY OF AN ARRANGEMENT FOR USE OF LAND, B UILDING AND MACHINERY, PLANT OR EQUIPMENT, THEN IT HAS TO BE TREATED AS RENT U/S. 1 94I OF THE INCOME TAX ACT. THEREFORE, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IF THE PAYMENT DOES NOT FALL U/S. 194J, IT WOULD DEFINITELY FALL U/S. 194I. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. 4. RIVAL CONTENTIONS OF EITHER SIDE WERE CONSIDERED IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE PAI D ` 3,82,510/- TO ITS SISTER CONCERN M/S. S.D.PHARMACY FOR USING ITS MANUFACTURING FACILITY A ND MACHINERY. THE CLAIM OF THE ASSESSEE IS THAT MERE PAYMENT MADE TO THE SISTER C ONCERN FOR USING THE FACILITIES CANNOT BE CONSTRUED AS PAYMENT FOR TECHNICAL AND PROFESSIONAL SERVICES WITHIN THE MEANING OF EITHER S. 194I OR S. 194J OF THE ACT. ADMITTEDLY, THE ASS ESSEE USED THE MACHINERY FOR ITS OWN MANUFACTURING ACTIVITY AND PAID CHARGES. THEREFORE , SUCH PAYDMENT WOULD FALL WITHIN THE MEANING OF RENT U/S. 194I OF THE ACT. ACCORDINGL Y, THE ASSESSEE HAS TO NECESSARILY DEDUCT TAX. SINCE THE TAX WAS NOT DEDUCTED, THIS T RIBUNAL FINDS NO INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW AND CONFIRM THE ORDERS OF BOTH THE AUTHORITIES BELOW. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 25TH NOVEMBER, 2011 GJ COPY TO: I.T.A. NO. 210/COCH/2010 3 1. M/S. ORIENTAL MEDICINES PVT. LTD., DHANAWANTHARI BHAVAN, BALABHAVAN ROAD, ALAPPUZHA. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, ALAPPUZHA. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.VT.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .