ITO WD 3(2), KALYAN V. YASH LAMINATES, THANE

ITA 2353/MUM/2010

• Counselvise Citation: 235319914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 27-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Non-deduction of tax; Bad and doubtful debts
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.2353/ MUM/2010 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER, WARD 3(2) .. APPELLANT WARD 3(2), KALYAN VS M/S. YASH LAMINATES, ,. RESPONDENT PLOT NO.20, SURVEY NO.11/A-1, VILLAGE ASANGAON, SHAHAPUR, THANE PA NO.AAAFY 0154 F C.O.NO.128/M/2010 (ARISING OUT OF ITA NO.2353/M/2010) M/S. YASH LAMINATES, ,. CROSS OBJECTOR PLOT NO.20, SURVEY NO.11/A-1, VILLAGE ASANGAON, SHAHAPUR, THANE VS INCOME TAX OFFICER, WARD 3(2) .. RESPONDENT WARD 3(2), KALYAN APPEARANCES: A.K. NAYAK, FOR THE REVENUE K.SHIVRAM & AJAY SINGH, FOR THE ASSESSEE O R D E R PER PRAMOD KUMAR: I.T.A NO.2353/ MUM/2010 C.O.NO.127/M/2010 M/S. YASH LAMINATES 2 1. THE APPEAL FILED BY THE ASSESSING OFFICER AND CROSS OB JECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 30.1.2.200 9 OF THE CIT (A)-1, THANE, FOR THE ASSESSMENT YEAR 2005-06. 2. THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IN ITS A PPEAL IS AS UNDER:- THE LD CIT(A) ERRED IN FACT AND IN LAW IN DELETING THE ADDITIONS MADE U/S.40(A)(IA) ON ACCOUNT OF DISALLOWANCE OF EXPENSES AN D INTEREST PAYMENTS BY VIOLATING RULE 46A OF THE INCOME TAX RUL ES, 1961 AND NOT ALLOWING OPPORTUNITY TO AO BEFORE CONSIDERING FRESH EVIDENCE. 3. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF FACT S. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS. 90,755 TO NOBLE SHIPPING PVT LTD., BUT HAS NOT DEDUCTED TAX AT SOURCE UNDER SECTION 194C FROM THE SAME. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE FROM THIS PAY MENT, THE RELATED EXPENDITURE IS TO BE DISALLOWED IN TERMS OF PROVISION S OF SECTION 40(A)(IA) OF THE ACT. THE AO FURTHER NOTED THAT THE ASSESSEE HAS ALSO NOT DEDU CTED TAX AT SOURCE IN RESPECT OF CERTAIN PAYMENTS MADE ON ACCOUNT OF INTEREST ON UN SECURED LOANS. HAVING NOTED THIS AND TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 40(A)(IA), THE AO DISALLOWED THE RELATED INTEREST EXPENDITURE ALSO. AGGRIEVED, TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. THE CIT(A)NOTED THAT IN VIEW OF BOARD CIRCULAR N O.723 DATED 19.5.99, IN THE LIGHT OF WHICH, IT IS CLEAR THAT PAYMENT OF FREIGHT TO NON RESIDENT COMPANIES DOES NOT REQUIRE TAX DEDUCTION AT SOURCE AND IN VIEW OF FACT THAT FORM NOS.15G AND 15H WERE FURNISHED IN RESPECT OF PERSONS TO WHOM INTEREST WAS PAID WITHOUT TAX DEDUCTION AT SOURCE, THERE WAS NO TAX DEDUCTION AT SOURCE REQUIREME NTS IN THESE CASES. ACCORDINGLY, HE DELETED THE IMPUGNED DISALLOWANCE. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLI CABLE LEGAL POSITION. I.T.A NO.2353/ MUM/2010 C.O.NO.127/M/2010 M/S. YASH LAMINATES 3 6. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE CAN BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR ASCERTAINING ; I) WHETHER OR NOT THE FREIGHT WAS PAID TO A NON-RESI DENT COMPANY AND ; II) WHETHER OR NOT APPROPRIATE FORM NO.15G & 15H WE RE ON RECORD IN RESPECT OF THE PERSONS WHO WERE PAID INTEREST WITHOUT DEDUCTI ON OF TAX AT SOURCE. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS NOT GIVEN SPECIFIC FINDINGS ON THESE ASPECTS OF THE MATTER. IN VIEW OF THESE DISCUSSIONS AND W ITH THE CONSENT OF THE PARTIES, THE MATTER IS REMITTED TO THE FILE OF THE A O FOR LIMITED ADJUDICATION IN TERMS INDICATED ABOVE. 7. IN THE RESULT, APPEAL OF THE ASSESSING OFFICER IS THUS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE:- 1,. THE LD CIT (A) ERRED IN CONFIRMING THE ORDER O F AO DISALLOWING BAD DEBTS OF RS. 3,20,694 WITHOUT APPRECIATING THAT ASSESSEE HAD WRI TTEN OFF THE BAD DEBTS AS IRRECOVERABLE AND THEREBY HAD COMPLIED WITH THE P ROVISION OF SECTION 36(10(VII). 2. WITHOUT PREJUDICE TO ABOVE THE AMOUNT NOT RECEIV ED FROM M/S. PRIME CAE WHOLESALE AMOUNTING TO RS.77,740 AND RS. 2,42,954 BY M /S. BAY LIQUIDATOR MAY BE ALLOWED AS BUSINESS LOSS. 9. ON THIS ISSUE ALSO, LEARNED REPRESENTATIVES AGREE THAT THE MATTER CAN BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR LIMI TED ADJUDICATION ON THE QUESTION AS TO WHETHER THE RELATED INCOME IN RESPECT OF CLAIM OF BAD DEBTS WAS TAKEN INTO ACCOUNT OR NOT. LEARNED REPRESENTATIVES FAIRLY AGREE THAT IN PRINCIPLE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE SUPREME C OURTS JUDGMENT IN THE CASE OF TRF LTD. VS CIT 323 ITR 397 (SC) AND THE DISPUTE IS CONFINED TO THE QUESTION AS TO WHETHER THE INCOME IN RESPECT OF WHICH DEBT IS CLAIME D AS BAD DEBT HAS BEEN TAKEN INTO ACCOUNT IN THE ACCOUNTS OF THE ASSESSEE IN THE PRESE NT YEAR, PARTICULARLY, AS BAD DEBTS RELATE TO DEBT WHICH IS INCURRED IN THE PRESENT YEAR ITSELF. I.T.A NO.2353/ MUM/2010 C.O.NO.127/M/2010 M/S. YASH LAMINATES 4 10. ACCORDINGLY, THE GRIEVANCE RAISED BY THE ASSESSEE IS UPHELD IN PRINCIPLE BUT REMITTED THE ISSUE TO THE FILE OF THE AO FOR FACTUAL VERIFICATION. 11. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OB JECTION OF THE ASSESSEE ARE ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARI NG ITSELF I.E. ON 27.4.2011. SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 27 TH APRIL, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),THANE 4. COMMISSIONER OF INCOME TAX, II, THANE 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI