Kalyani & Kalyani Devlopers India Ltd, Berhampur V. ACIT, Berhampur

ITA 222/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4425 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 28-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2010
• Court: TRIBUNAL
• Department Lawyers: J KHANRADR
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, (SMC) CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. / ITA NO. 222/CTK/2010 / ASSESSMENT YEAR 2006 - 07 KALYANI & KALYANI DEVELOPERS INDIA LTD., BUSTAND ROAD, BERHAMPUR. PAN: AACCK 8267 C - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, BERHAMPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELL ANT : NONE / FOR THE RESPONDENT: / SHRI J.KHANRA,DR / ORDER (SMC) . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (AP PEALS) IN CONFIRMING THE DISALLOWANCE MADE U/S.40(A)(IA) WITH RESPECT TO PAYMENTS TO M/S.21 ST CENTURY MARKET AND ADVERTISING AGENCIES AMOUNTING TO 85,700 AND 2, 79,520 AS PAYMENTS TO LABOURERS. A WRITTEN SUBMISSIONS HAVE BEEN FILED BY THE ASSESSEE APPELLA NT INSPITE OF HAVING GRANTED SEVERAL OPPORTUNITIES TO THE ASSESSEE APPELLANT TO BE PRESENT AT THE TIME OF HEARING OF THE APPEAL. NONE HAVE APPEARED ON BEHALF OF THE ASSESSEE. I PROPOSED TODISPOSE OF THE APPEAL PERUSING THE MATERIAL ON RECORD AND AFTER HEAR ING THE LEARNED D EPARTMENTAL REPRESENTATIVE. 2. THE LEARNED DR AGITATED THAT THE ASSESSEE IS A WORKS CONTRACTOR AND FILED THE RETURN DECLARING 52,813 INCOME WHICH WAS SCRUTINIZED U/S.143(3). THE ASSESSING OFFICER OBSERVED THAT NO TDS HAD BEEN DEDUCTED ON PAYMENTS MADE TO M/S.21 ST CENTURY MARKET AND ADVERTISING AGENCIES AMOUNTING TO 85,700 WHICH UNDER THE PROVISIONS OF SECTION 194C WAS SUBJECT T O TAX ITA NO.222/CTK/2010 2 DEDUCTION AT SOURCE. SIMILARLY , PAYMENTS WERE MADE TO THE HEAD MASON , THE ASSESSEE HAVING UNDERTAKEN CONTRACT FOR CIVIL CONSTRUCTIN AT 2 DIFFERENT SITES . THE TWO SUB - CONTRACTORS WERE PAID 1,43,020 AND 1,36,683 ON WHICH NO TAX HAD BEEN DEDUCTED AT S OURCE U/S.194C.THE ASSESSING OFFICER DISALLOWED THE CLAIM U/S.40(A)(IA) TOTALING 2,79,520. THE ASSESSEE APPEAL ED BEFORE THE FIRST APPELLATE AUTHORITY WHO AFTER NOTING THAT THE ASSESSEE HAD NOT DIRECTLY MADE ANY PAYMENT TO THE INDIVID UAL LABOURERS BUT TO THE HEAD MA SON WAS HELD DISALLOWABLE FOR NOT DEDUCTING TAX U/S.194C AND SIMILARLY IN THE CASE OF ADVERTISING AGENT CONFIRMED THE DISALLOWANCE U/S.40(A)(IA). HE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART SUBMISSIONS. 3. THE ASSESSEE HAS ENC LOSED WRITTEN SUBMISSIO NS AND INDIVIDUAL VOUCHERS WHICH INDICATE THAT THE MUSTER ROLL FOR IN DIVIDUAL PAYMENTS BY THE HEAD MA SON WAS FOR THE PURPOSE OF CLAIMING EXPENSES NOT TO A SUB - CONTRACT OR INVOKINGTHEPROVISIONS OF SECTION 194C. THE LEARNED DR HAS NOT O PPOSED THE FACT THAT IT WAS NOT UNDER ANY CONTRACT TO PAY THE HEAD MA SON INSOFAR AS THE MUSTER ROLL PREPARED BY THE HEAD MASON INCLUDE D HIS NAME FOR RECEIPT OF WAGES WHICH CLEARLY INDICATE THAT THE PAYMENTS AMOUNTING TO 2,79,520 W ERE NOT ON ACCOUNT OF A C ONTRACT ENTERED INTO BETWEEN THE HEAD MA SON AND THE ASSESSEE AS A SUB - CONTRACT OR . THE LABOURERS, WHO ARE COLLECTED B Y THE HEAD MASON ARE AVAILABLE AT THE SITE GATE WAS NOTED BY THE ASSESSING OFFICER AND THE LEARNED CIT(A). THE ASSESSEE WAS ABLE TO OBTAIN THE INDIVIDUAL NAMES AND ADDRESSES OF THE LABOURERS WHO WERE PAID BY THE HEAD MASON THEREFORE CANNOT BE ON THE BASIS OF ANY ORAL OR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE HEAD MASON TO BE SUBJECTED TO DEDUCTION OF TAX AT SOURCE. IT WAS NEVER THE CAS E OF THE ASSESSEE TO CLAIM EXPENSES ON THE BASIS OF ENTERING INTO CONTRACT EITHER FOR THE PURPOSE OF RENDERING INCOME OR FOR THE PURPOSE OF RAISING A BILL FOR THE PURPOSE OF TAXATION FROM THE GROSS ITA NO.222/CTK/2010 3 RECEIPTS. SIMILARLY THE PAYMENT OF 85,700 TO THE ADVERTIS INGAGENT, SPREAD OVER THE FINANCIAL YEAR , WAS ON THE BASIS OF COMPOSITION OF THE ADVERTISING MATERIAL WHICH ART WORK WAS RENDERED BY THE INDIVIDUAL ARTIST OF M/S.21 ST CENTURY MARKET AND ADVERTISING AGENCIES BUT NOT ITS EMPLOYEES . ON SIX DIFFERENT OCCASIONS THE ASSESSEE WHO DOES NOT REQUIRE ACCREDITATION FOR ADVERTISING AS SUCH PAID FOR THE WRITING S ON THE WALL AND ERECTING THE HOARDINGS NOT FOR CLAIMING EXPENSES INSOFAR AS THE PAYMENT IS MADE TO THE COMPANY WHEN THE INDIVIDUAL WHO ARE ASSOCIATED WITH THE C OMPANY ARE NOT THEIR EMPLOYEES. THE ASSESSEE HAD NEVER ENTERED INTO CONTRACT WITH THE INDIVIDUAL EMPLOYEES WHO HAD RENDERED THE WORK FOR THE ASSESSEE THEREFORE, CANNOT BE SUBJECTED TO DEDUCTION OF TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C. THERE W AS NO CONTRACT ENTERED INTO EITHER WITH THE ADVERTISING AGENTS OR WITH THE INDIVIDUAL ARTISTS WHO HAD ERECTED THE HOARDING SITE OR PAINTED THE WALL. I AM , THEREFORE, OF THE CONSIDERED VIEW THAT BOTH THE PAYMENTS MADE BY THE ASSESSEE CANNOT BE HELD TO BE SU BJECTED TO DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE INVITING THE PROVISIONS OF SECTION 194C. THE CONSEQUENTIAL DISALLOWANCE MADE U/S.40(A)(IA) IS, THEREFORE, DIRECTED TO BE DELETED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 26 TH APRIL, 2011 S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 26 TH APRIL, 2011 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. ITA NO.222/CTK/2010 4 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : KALYANI & KALYANI DEVELOPERS INDIA LTD., BUSTAND ROAD, BERHAMPUR. 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - T AX, BERHAMPUR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY