Deputy Commissioner of Income-tax, Pune V. Shri Sant Tukaram SSK Ltd., Pune

ITA 2180/PUN/2012

• Counselvise Citation: 218024514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.2180/PN/2012 (ASSESSMENT YEAR 2005-06) DY.CIT, CIRCLE-1(2), PUNE .. APPELLANT VS. SHRI SANT TUKARAM SSK LTD., KASAR SAI DARUMBRE, TAL : MULSHI, DIST: PUNE .. RESPONDENT PAN NO.AAAJS0091J ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 13-03-2014 DATE OF PRONOUNCEMENT : 13-03-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 16-04-2012 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT YEAR 2005-06. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE, M/S. SHRI SANT TUKARAM SAHAKARI SAKHAR KARKHANA LTD., IS A COOPERA TIVE SUGAR FACTORY REGISTERED UNDER THE MAHARASHTRA CO-OPERATI VE SOCIETIES ACT, 1960 CARRYING OUT BUSINESS OF MANUFACTURING WHITE C RYSTAL SUGAR. IT FILED RETURN OF INCOME FOR AY 2005-06 DECLARING NIL INCOME. ASSESSMENT U/S 143(3) WAS COMPLETED ON 7/12/2007 DE TERMINING THE TOTAL INCOME AS NIL. SUBSEQUENTLY, THE AO NOTICED T HAT THE ASSESSEE HAS PAID AN AMOUNT OF RS.4,95,74,667/- TO PAWANA PA RISAR SERVA SEVA 2 SANGH ON WHICH TAX WAS NOT DEDUCTED AND THE TAX AUD ITORS HAVE MENTIONED THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 40(A). HE, THEREFORE, PASSED AN ORDER U/S 154 OF THE INCOME TA X ACT, 1961 TO RECTIFY THE MISTAKES APPARENT FROM RECORD AND ADDED THE SAME TO TOTAL INCOME. 3. IN APPEAL THE LD.CIT(A) DIRECTED THE ASSESSING O FFICER TO VERIFY THE FACTS FROM THE BOOKS OF THE ASSESSEE AND ASCERT AIN WHETHER THE PROVISIONS OF SECTION 40(A) WOULD APPLY TO THE FACT S OF THE CASE OR NOT BY OBSERVING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS AND THE C IRCUMSTANCES OF THIS CASE. THE ASSESSING OFFICER HAS DISALLOWED THE PAYMENT OF RS.4,95,14,667/- AND ADDED THE SAME TO THE TOTAL INCO ME OF THE APPELLANT. APPELLANT ARGUED THAT ACCORDING TO THE R ESOLUTION PASSED BY THE APPELLANT, PAWNA PARISAR SERVA SEVA SANGH HAS BEEN ASSIGNED THE WORK OF ONLY SUPERVISING THE WORK AND PAYMENT MAD E TO HARVESTING LABOUR AND TRANSPORT OPERATORS. AS PER APPEL LANT I.E. SHRI SANT TUKARAM SAHAKARI KARKHANA LTD., THE PAYME NTS WERE DIRECTLY MADE TO HARVESTING LABOUR AND CONTRACT OPER ATORS UNDER SUPERVISION OF PAWNA PARISAR SEVA SANGH. HENCE, IN THI S CONTEXT, THE APPELLANT CONTENDED THAT THE TAX IS NOT DEDUCTIBLE U /S. 40(A) FROM ABOVE PAYMENTS. THE APPELLANT TRIED TO ASSERT THE SAME AS PER NOTE- 8 FILED WITH RETURN OF INCOME AND ALSO ON THE STRENGT H OF BOOKS OF ACCOUNT, CHEQUE REGISTER ETC. PRODUCED BEFORE THE ASSE SSING OFFICER. IN VIEW OF THE ABOVE THE ASSESSING OFFICER IS DIRECTED T O VERIFY THE FACTS FROM THE BOOKS OF APPELLANT AND ASCERTAIN WHET HER PAYMENT WAS DIRECTLY MADE TO HARVESTING LABOUR AND TRANSPORT O PERATOR AND HENCE 40(A) WOULD APPLY OR NOT. THE ASSESSING OFFICER MAY ACCORDINGLY DELETE THE ADDITIONS MADE IF THE CLAIM O F THE APPELLANT IS FOUND CORRECT AND RECTIFY THE COMPUTATION OF INCOME . FOR STATISTICAL PURPOSE THE GROUND NO.1 IS ALLOWED SUBJECT TO ABOVE RE MARKS. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 2. THE LD.CIT(A) GROSSLY ERRED IN CONSIDERING THA T, AS PER ANNEXURE 17 TO THE AUDIT REPORT I.E. AMOUNTS INADMI SSIBLE U/S.40 OF THE INCOME-TAX ACT, 1961, THE AUDITOR HAD CLEARLY M ENTIONED ABOUT AMOUNT OF RS.4,95,14,667/- ON WHICH TAX WAS NOT DEDUC TED AT SOURCE ON PAYMENTS MADE TO PAWANA PARISAR SERVA SEVA SANGH. 3. THE LD.CIT(A) GROSSLY ERRED IN CONSIDERING THE F ACT THAT PAWANA PARISAR SERVA SEVA SANGH IS A DIFFERENT ENTITY . 4. THE LD.CIT(A) GROSSLY ERRED IN APPRECIATING THA T THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE DURING THE ASSESSMENT PR OCEEDINGS U/S.143(3) NOR IN RESPONSE TO NOTICE ISSUED U/S.154 OF TH E INCOME-TAX ACT, 1961 REGARDING PAYMENT DIRECTLY MADE TO HARVEST ING LABOUR AND CONTRACT OPERATORS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THAT THE REASON BEHIND INSERTIN G, SEC. 40(A) AND THEREBY DISALLOWING THE DEDUCTION OF EXPENDITURE WHI CH HAS BEEN INCURRED FOR THE BUSINESS PURPOSE IS TO FORBID THE ASSESSEE FROM NON PAYMENT OR NON DEDUCTION OF TAX PAYABLE TO THE GOVT . UNDER CHAPTER XVII-B THAT OUGHT TO BE PAID. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIN D FROM THE ORDER OF THE CIT(A) THAT HE HAS SIMPLY DIRECTED THE ASSESSIN G OFFICER TO VERIFY THE FACTS FROM THE BOOKS OF ACCOUNTS AND ASCERTAIN WHETHER PAYMENT WAS DIRECTLY MADE TO HARVESTING LABOUR TRANSPORT OP ERATOR AND THEREFORE WHETHER THE PROVISIONS OF SECTION 40(A) A RE APPLICABLE OR NOT. SINCE THE LD.CIT(A) HAS GIVEN DIRECTION TO THE ASSE SSING OFFICER TO VERIFY AS TO WHETHER THE PROVISIONS OF SECTION 40(A ) ARE APPLICABLE OR NOT AND TO DECIDE ACCORDINGLY, THEREFORE, WE ARE OF THE OPINION THAT THE REVENUE SHOULD NOT HAVE ANY GRIEVANCE. THE LD.CIT( A) HAS NOT DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITI ON. THE DIRECTION IS THAT THE ASSESSING OFFICER HAS TO VERIFY WHETHER TH E PROVISIONS OF SECTION 40(A) WOULD APPLY UNDER THE FACTS AND CIRCU MSTANCES OF THE CASE AND IF HE FINDS THE CLAIM OF THE ASSESSEE AS C ORRECT HE MAY TAKE 4 APPROPRIATE DECISION. THIS DIRECTION OF LD.CIT(A) IN OUR OPINION, DOES NOT SUFFER FROM ANY INFIRMITY. WE, THEREFORE UPHOLD THE ORDER OF LD.CIT(A) AND DISMISS THE GROUNDS RAISED BY THE RE VENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E. ON 13-03-2014. SD/- SD/- (R.S.PADVEKAR ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 13 TH MARCH, 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE