Chandimata Management Pvt. Ltd., , Kolkata V. ACIT, CC - 3(1), Kolkata , Kolkata

ITA 2387/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2977 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Retrospective amendment; TDS
• Section: 40(a)(ia); 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B, KOLKATA BEFORE SH. S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. C/O. SUBASH AGARWAL & ASSOCIATES SIDDHA GIBSON, 1, GIBSON LANE, 2 ND FLOOR, SUITE-213, KOLKATA-700 107. PAN- AAABA 0406 G VS ASSISTANT COMMISSIONER OF INCOME TAX CC-3(1), KOLKATA. (APPELLANT) (RESPONDENT) APPELLANT BY SH. SUBASH AGARWAL , ADV. RESPONDENT BY SH. A.K. NAYAK , CIT(DR) DATE OF HEARING 22.07 .201 9 DATE OF PRONOUNCEMENT 21 .08.2019 ORDER PER SH. S.S.GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 RAISED AGAINST THE ORDER OF CIT(A)-21, KOLKATAS ORDER DATED 18.10.2017 IN CASE NO. 587/DCIT, CC- 3(1)/CIT(A)-21/KOL/2015-16 PASSED U/S 263/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 3. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CHALLENGES BOTH THE LOWER AUTHORITIES ACTION INVOKING SECTION 40(A)(IA) DISALLOWANCE OF RS. 11,02,88,000/- IN RESPECT OF PAYMENTS MADE FROM SUPPLY OF SOIL. THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE ASSESSING OFFICERS ACTION READ AS UNDER: ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. PAGE | 2 ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. PAGE | 3 ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. PAGE | 4 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTIONS. THE ASSESSEES DETAILS PAPER BOOK COMPRISING OF ITS FINAL ACCOUNTS OF THE IMPUGNED ASSESSMENT YEAR, DETAILS OF CONTRACTUAL & OTHER INCOME, COPY OF SAMPLE AGREEMENT WITH M/S. PACL INDIA, COPIES OF PURCHASE BILLS OF SOILS DISALLOWED IN ASSESSMENT PROCEEDINGS, FINAL ACCOUNTS OF FOUR SOIL SUPPLIERS M/S. DEESHA TIMBER PVT. LTD, M/S. LAMBODAR MACHINE TOOLS PVT. LTD., M/S MAA PAHARI MERCANTILES PVT. LTD., AND M/S. RASIKA GARMENTS PVT. LTD., CBDTS CIRCULAR NO. 13/06 DATED 13.12.2006, WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) AND ITS LEDGER ACCOUNTS IN THE BOOKS OF ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. PAGE | 5 THE ABOVE STATED FOUR PARTIES; RUNNING INTO SIXTY FIVE PAGES STANDS PERUSED. SUFFICE TO SAY, THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE HEREIN READS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING ITS SOIL PURCHASES BY TREATING THE SAME AS CONTRACTUAL PAYMENTS U/S 194C OF THE ACT. THE ASSESSEE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THIS IS AN INSTANCE OF OUTRIGHT PURCHASE OF SOIL THAN CONTRACTUAL PAYMENTS NOT ATTRACTING TDS DEDUCTION U/S 194C OF THE ACT. THE REVENUE STRONGLY SUPPORTS BOTH THE LOWER AUTHORITIES ACTION THAT THE RECIPIENTS P&L ACCOUNTS RECOGNIZED THE CORRESPONDING PAYMENT AS CONTRACTUAL INCOME AND NOT OUTRIGHT SALES. WE FIND NO MERIT IN REVENUES INSTANT ARGUMENTS. IT IS CLEAR FROM A PERUSAL OF THE ASSESSEES DETAILS INCLUDING THE PAYEES ACCOUNTS THAT THEY HAVE NOWHERE RECOGNIZED THE IMPUGNED PAYMENTS COMPRISING OF VARYING SUMS AS CONTRACTUAL INCOME(S). WE REFER TO PAGES-22 TO 54 OF THE ASSESSEES PAPER BOOK REVEALING THIS CLINCHING POSITION. THE FACTUAL POSITION IS NO DIFFERENT IN OTHER RECIPIENTS CASES AS WELL AS ADMITTED BY BOTH THE PARTIES BEFORE US. WE REFER TO THE CBDTS CIRCULAR (SUPRA) MAKING IT CLEAR THAT SECTION 194C OF THE ACT WOULD APPLY IN A CASE OF CONTRACT FOR WORK AND NOT IN A CONTRACT FOR SALE. WE THUS CONCLUDE THAT THE LOWER AUTHORITIES HAVE ERRED IN INVOKING SECTION 40(A)(IA) DISALLOWANCE ON ASSESSEES SOIL PURCHASES. 5. WE FURTHER NOTICE THAT THERE IS YET ANOTHER CLINCHING ASPECT INVOLVED IN THE INSTANT CASE. SECTION 40(A)(IA) SECOND PROVISO INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 STIPULATES THAT THE IMPUGNED DISALLOWANCE PROVISION DOES NOT APPLY IN CASE AN ASSESSEE FAILS TO DEDUCT WHOLE OR ANY PART OF TDS BUT IT IS NOT AN ASSESSEE IN DEFAULT U/S 201(1) FIRST PROVISO I.E. THE RECIPIENT STANDS ASSESSED QUA THE CORRESPONDENCE INCOME IN ITS HANDS. WE MAKE IT CLEAR THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE TAKEN NOTE OF THE ASSESSEES PAYEES BOOKS OF ACCOUNTS/RETURNS (SUPRA). HONBLE DELHI HIGH COURTS DECISION IN PCIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD. [2015] 377 ITR 635 DELHI HOLDS THAT THE ABOVE STATED SECOND PROVISO TO BE A CURATIVE ONE HAVING RETROSPECTIVE EFFECT. WE THEREFORE SEE NO REASON TO SUSTAIN THE IMPUGNED SECTION 40(A)(IA) DISALLOWANCE QUA THIS ALTERNATIVE ASPECT AS WELL. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE IS ACCEPTED. THE IMPUGNED DISALLOWANCE IS DELETED ACCORDINGLY. ITA NO. 2387/KOL/2017 [ASSESSMENT YEAR: 2009-10] CHANDIMATA MANAGEMENT PVT.LTD. PAGE | 6 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.08.2019. SD/- SD/- (DR. A.L. SAINI) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:- 21.08.2019 BIDHAN COPY FORWARDED TO: 1. APPELLANT- CHANDIMATA MANAGEMENT PVT.LTD., C/O. SUBASH AGARWAL & ASSOCIATES SIDDHA GIBSON, 1, GIBSON LANE, 2ND FLOOR, SUITE-213, KOLKATA-700 107. 2. RESPONDENT- ASSISTANT COMMISSIONER OF INCOME TAX, CC-3(1), KOLKATA. 3. CIT-KOLKATA 4. CIT(APPEALS)-21, KOLKATA (SENT THROUGH MAIL) 5. DR: ITAT-KOLKATA BENCHES (SENT THROUGH MAIL) AR/H.O.O ITAT, KOLKATA