ITO, Ward 2(2), Pune V. Shri Suresh Himmatlal Oza, Pune

ITA 2108/PUN/2012

• Counselvise Citation: 210824514 RSA 2012
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.2107 TO 2109/PN/2012 (ASSESSMENT YEARS : 2005-06 TO 2007-08) INCOME TAX OFFICER, WARD 2 (2), PUNE . APPELLANT VS. SHRI SURESH HIMMATLAL OZA 326, RASTA PETH, PUNE. PAN : AAFPO5026M . RESPONDENT DEPARTMENT BY : MR. RAJIV JAIN ASSESSEE BY : MR. P. D. KUDVA DATE OF HEARING : 19-09-2013 DATE OF PRONOUNCEMENT : 19-09-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED THREE APPEALS HAVE BEEN PREFERRED BY THE REVENUE WHICH ARE DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS)-II, PUNE DATED 25.06.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 07.12.2011 PASSED BY THE ASSESSING OFFICER, U NDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERT AINING TO THE ASSESSMENT YEARS 2005-06 TO 2007-08. 2. IN ALL THE THREE APPEALS THE SOLITARY ISSUE IS W ITH REGARD TO THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE AC T OUT OF EXPENDITURE ON PURCHASES OF PRINTED PACKAGING MATERIAL ON THE GROU ND THAT ASSESSEE FAILED TO DEDUCT TAX AT SOURCE IN RESPECT OF SUCH PURCHASES W HICH WAS REQUIRED TO BE MADE IN TERMS OF SECTION 194C OF THE ACT. 3. THE RESPONDENT-ASSESSEE IS, AN INDIVIDUAL, ENGAG ED IN CARRYING ON PROPRIETORY BUSINESS OF MANUFACTURE AND SALE OF INC ENSE STICKS. IN THE COURSE ITA NOS.2107 TO 2109/PN/2012 A.YS. 2005-06 TO 2007-08 OF HIS BUSINESS, HE PURCHASES PRINTED PACKAGING MAT ERIAL FROM OUTSIDE AGENCIES AND SUCH EXPENDITURE FOR ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08 AMOUNTED TO RS.1,49,83,190/-, RS.1,58,42,55 0/- AND RS.2,36,28,470/- RESPECTIVELY. THE ASSESSING OFFICER TOOK THE VIEW T HAT ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT ON THE PAYMENTS MADE FOR SUCH PURCHASES OF PRINTED PACKAGING MATERI AL. NOTICING THE FAILURE OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE IN TERMS O F SECTION 194C OF THE ACT, THE CORRESPONDING EXPENDITURE WAS DISALLOWED IN TER MS OF SECTION 40A(IA) OF THE ACT. ACCORDINGLY, DISALLOWANCE OF RS.1,49,83,19 0/-, RS.1,58,42,550/- AND RS.2,36,28,470/- WAS MADE FOR ASSESSMENT YEARS 2005 -06, 2006-07 AND 2007-08 RESPECTIVELY. 4. THE CIT(A) HAS DELETED THE DISALLOWANCE FOR ALL THE THREE ASSESSMENT YEARS I.E. A.YS. 2005-06, 2006-07 & 2007-08 BY WAY OF A COMMON ORDER. AS PER THE CIT(A), THE EXPENDITURE IN QUESTION WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT AS CONTENDE D BY THE ASSESSING OFFICER. THE CIT(A) FURTHER NOTED THAT SIMILAR ISSU E HAD ARISEN IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 WHEREBY HE HAD UPHELD THE STAND OF THE ASSESSEE AND DELETED THE DISALLOWANCE MADE U NDER SECTION 40(A)(IA) OF THE ACT. FOLLOWING THE PRECEDENT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09, THE DISALLOWANCE FOR THE THREE CAPTIO NED YEARS WAS DELETED BY HIM. AGGRIEVED WITH THE AFORESAID STAND OF THE CIT( A), REVENUE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US, IT WAS A COMMON GROUND BETWEEN THE PA RTIES THAT THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2008-09, WHICH HA S BEEN FOLLOWED BY HIM IN DISPOSING OF APPEAL FOR THE THREE CAPTIONED YEARS, WAS A SUBJECT-MATTER OF APPEAL BEFORE THE TRIBUNAL VIDE ITA NO.1142/PN/2012 DATED 28.08.2013 WHEREBY THE STAND OF THE CIT(A) WAS UPHELD AND THE APPEAL OF THE REVENUE ITA NOS.2107 TO 2109/PN/2012 A.YS. 2005-06 TO 2007-08 DISMISSED. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 28.08.2013 (SUPRA) IS AS UNDER :- 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS CONTESTED THE DISALLOW ANCE OF RS.1,39,58,352/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF PRINTING AND PACKAGING MATERIAL SHOWN BY THE ASSESSEE AS PURCHASES FROM SUPPLIERS AND TRE ATED BY THE ASSESSING OFFICER AS WORKS CONTRACT. THE SUBJECT PAYMENTS DO NOT FALL WITHIN THE SCOPE U/S 194C OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD FAILED TO DEDUCT TDS TOWARDS PRINTING AND PACKAGING MATERIAL PURCHASED FROM OUTSIDE AGENCIES. ON RECEIPT OF DIRECTIONS FROM THE ADDL. CIT RANGE 2, THE ASSESSING OFFICER DISALLOWED RS. 1,39,58,352/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF FAILURE TO DEDUCT THE TDS ON SPRINTING A ND PACKAGING MATERIAL. WE FIND THAT THE PURCHASES OF RS. 1,39,58,352/- MADE B Y THE ASSESSEE ARE IN THE NATURE OF CONTRACT FOR SALE SIMPLICITER AND NOT CON TRACTS FOR WORKS OR LABOUR AND THERE IS NOTHING ON RECORD TO INDICATE THAT THERE W AS ANY CONTRACT FOR CARRYING OUT WORK FALLING WITHIN THE SCOPE OF SEC. 194C OF T HE ACT AND HENCE THERE WAS NO FAILURE TO DEDUCT TAX ON THE PART OF THE ASSESSE E. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS BEYOND THE SCOPE OF SEC TION AS THE SAID SECTION BEGINS WITH A NON-OBSTANTE CLAUSE WHICH REFERS TO S EC. 30 TO 38 OF THE ACT. THE SECTION 194C APPLIES NOT WITH REFERENCE TO THE STAT US OF THE CONTRACTOR BUT THE STATUS OF THE PERSON WHO IS CONTRACTEE OR THE PERSO N WHO GIVES CONTRACT. THE PURCHASE OF PACKAGING MATERIAL CANNOT BE SEGREGATED FOR THE PURPOSE OF PRINTING AND THE SAME IS PART OF THE PURCHASES. THE ASSESSING OFFICER HAS NOT DISPUTED THAT A CONTRACT OR AGREEMENT WRITTEN OR OR AL HAS BEEN ENTERED INTO THE ASSESSEE AND THE PACKAGING AND PRINTING SUPPLIE RS OF GOODS. UNDER ALL THESE CIRCUMSTANCES, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S 194C OF THE ACT AS THE TRANSACTION ENTERED INTO BY THE ASSE SSEE FOR THE PURCHASE OF PRINTED PACKAGING MATERIAL WAS A CONTRACT FOR SALE AND HENCE OUTSIDE THE PURVIEW OF SECTION 194C OF THE ACT AND ONCE SECTION 194C IS NOT ATTRACTED THE PROVISIONS OF SEC. 40(A)(IA) WAS NOT APPLICABLE. I N THIS VIEW OF THE MATTER, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT. WE UPHOLD THE SAM E. 6. FOLLOWING THE AFORESAID PRECEDENT, WHICH IS REND ERED IN THE ASSESSEES OWN CASE ON AN IDENTICAL ISSUE, WE FIND THAT THE CI T(A) MADE NO MISTAKE IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT. IN VIEW OF THE AFORESAID PRECEDENT, THE OR DER OF THE CIT(A) IS HEREBY AFFIRMED FOR THE CAPTIONED ASSESSMENT YEARS AND THE REVENUE FAILS. ITA NOS.2107 TO 2109/PN/2012 A.YS. 2005-06 TO 2007-08 7. IN THE RESULT, THE CAPTIONED THREE APPEALS OF TH E REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 19 TH SEPTEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE