Sampark, Kolkata V. Income Tax Officer, Ward - 56(4), Kolkata, Kolkata

ITA 2427/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4479 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 13-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH LAHIRI J CITSR
• Assessee Lawyers: PINKY TIBREWAL ACA
• Keywords: Non-deduction of tax
• Section: 133(6); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM] I.T.A NO. 2427/KOL/20 13 ASSESSMENT YEAR : 2005-0 6 SAMPARK -VS.- I.T.O., WARD-56(4), KOLKATA KOLKATA [PAN : AAWFS 2366 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : MS.PINKY TIBREWAL, ACA FOR THE RESPONDENT : SHRI DEBASISH LAHIRI, J CIT,SR.DR DATE OF HEARING : 14.07.2016. DATE OF PRONOUNCEMENT : 20.07.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30.08.2013 OF CIT(A)- XXXVI, KOLKATA RELATING TO AY 2005-06. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ S AS FOLLOWS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. AO ERRED IN ADDING BACK RS.853351 U/S 40(A)(IA) READ WITH SECTION 194C OF T HE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADDUCE ADDITIONAL GROUNDS ON OR BEFORE THE HEARING OF THE APPEAL. 3. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS EN GAGED IN THE BUSINESS OF RENDERING ADVERTISING AGENCY SERVICES. THE RETURN OF INCOME FOR AY 2005-06 WAS FILED BY THE ASSESSEE ON 28.10.2005 SHOWING TOTAL INCOME OF RS.128876/-. THE CASE WAS ORIGINALLY COMPLETED U/S.143(3) OF THE INCOME TAX A CT, 1961 (ACT) COMPUTING TOTAL INCOME RS.28,59,540/- ON 28.12.2007. SUBSEQUENTLY, THE ASSESSEE WENT ON APPEAL AND WAS ALLOWED CERTAIN RELIEFS BY THE LD. CIT (A)-XXXV I, KOLKATA VIDE ORDER DATED 2 ITA NO.2427/KOL/2013 SAMPARK A.YR.2005-06 2 31.08.2009 AND EFFECT TO THE SAID ORDER WAS GIVEN O N 12.10.2009 REVISING TOTAL INCOME AT RS.1885480/-. THEREAFTER, LD. CLT, KOLKATA-XXI, KOL KATA PASSED U/S.263 ON 3.11.2009 TO REDECIDE THE ISSUE OF DEBIT AMOUNT OF RS.85.26 L AKHS ON HOARDING HIRE, SALES OF RS.1.41 CRORES AND SUNDRY CREDITORS OF RS.29.48 LAK HS. DEPARTMENTAL APPEAL FILED AGAINST THE CIT(A)-XXXVI, KOL.'S, ORDER DATED 31.8. 2009 BEFORE TRIBUNAL WAS ALSO ALLOWED FOR STATISTICAL PURPOSE BY SETTING ASIDE TH E SAID ORDER OF CIT(A) AND REMANDING THE ISSUE RAISED THEREIN FOR CONSIDERATION AFRESH A S SOME OTHER ISSUES WERE ALSO REFERRED BACK TO AO IN AN ORDER PASSED U/S.263 OF THE ACT. 4. IN THE ASSESSMENT PROCEEDINGS PURSUANT TO THE ORDER OF THE TRIBUNAL, THE AO EXAMINED THE REPLY TO THE ENQUIRY LETTER U/S 133(6) OF PURCHASE LEDGER AND FOUND THAT THE ASSESSEE HAS SHOWN RS.8,53,3511- ON ACCOUNT OF IRON PURCHASE FROM M/S.ASHOK KUMAR BROS. IN THE ORIGINAL ASSESSMENT COMPLETED U/S.143( 3) OF THE ACT, THE AO HAD DISALLOWED A SUM OF RS.6,57,371/- U/S.40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX U/S.194C OF THE ACT, BEFORE PAYMENT TO THE PARTY M/S. ASHOK KUMAR & BROS. ON APPEAL BY THE ASSESSEE AGAINST THE ORIGINAL ORDER OF ASSESSMENT, THE CIT(A)-XXXVI, KOLKATA HELD THAT THE PAYMENT TO THE AFORESAID PERSON WAS COMPOS ITE IN NATURE AND SHOULD BE SUBJECT TO DEDUCTION OF TAX AT SOURCE U/S.194C OF THE ACT A ND CONFIRMED THE ADDITION MADE IN THE ORIGINAL ASSESSMENT U/S.143(3) OF THE ACT. IN THE P ROCEEDINGS PURSUANT TO THE ORDER OF THE TRIBUNAL REMANDING THE ISSUE TO THE AO FOR FRESH CO NSIDERATION, THE ASSESSEE FURNISHED THE LEDGER COPY OF M/S. ASHOK KUMAR & BROS. FROM P ERUSAL OF THE SAME, THE AO NOTICED THAT THE SUM PAYABLE TO THE AFORESAID PARTY WAS RS.8,53,351/- AND THIS SUM OUGHT TO HAVE BEEN DISALLOWED AND ADDED TO THE TOTA L INCOME U/S.40(A)(IA) OF THE ACT. 5. WHEN THE ABOVE ASPECT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD PURCHASED THE IRON MATERIALS FOR THE PURPOSE OF ERECTION OF ADVERTISEMENT BOARD AND THERE IS NO PROVISION FO R DEDUCTION OF TAX AT SOURCE FOR PURCHASE OF MATERIALS. THE AO HOWEVER REJECTED THE CONTENTION AS NOT TENABLE AT THIS 3 ITA NO.2427/KOL/2013 SAMPARK A.YR.2005-06 3 STAGE AS THE ASSESSEE HAS NOT RAISED THE QUESTION D URING THE APPELLATE STAGE IN THE ORIGINAL PROCEEDINGS AND HAD ACCEPTED THE DECISION OF THE LD . CIT(A) IN THE MATTER. THE AO THEREFORE DISALLOWED THE REMAINING OF RS.2,05,980/ - (RS.8,53,351 RS.6,57,377) AND ADDED BACK THE SAID SUM TO THE TOTAL INCOME U/S.40( A)(IA). 6. ON APPEAL BY THE ASSESSEE THE CIT(A) UPHELD TH E ORDER OF AO BY OBSERVING AS FOLLOWS :- I HAVE CAREFULLY CONSIDER THE APPELLANT'S SUBMISSI ON. I HAVE PERUSED THE FACTS AVAILABLE IN RECORD. AS HAS BEEN DISCUSSED EARLIER, IN THE FIRST GROUND OF APPEAL, THE CIT(A) HAD CONCLUDED THAT THE PAYMENT MADE TO M/S. ASHOK KUMAR & BROTHERS WAS IN THE NATURE OF COMPOSITE CONTRACT, FOR SUPPLY OF MATERIAL AND LABO UR WHICH ATTRACTED TDS U/S 194C OF THE LT. ACT. AS NO TDS WAS DONE, THE ENTIRE SUM WAS DIS ALLOWED U/S 40(A)(IA) OF THE LT. ACT. THE APPELLANT HAS IMPLICITLY ACCEPTED THE ABOVE FIN DING, BY NOT PREFERRING ANY APPEAL AGAINST THE ORDER OF CIT(A). THEREFORE THE ADDITION TO THE EXTENT OF RS.6,57,377/- HAS REACHED A FINALITY. AS REGARDS THE BALANCE ADDITION MADE OUT FOR THE PAYMENT MADE, BUT WRONGLY NOT CONSIDERED IN ORIGINAL ASSESSMENT, THE FACTS BEING SAME, I CONCUR WITH THE FINDING OF THE EARLIER CIT(A), THAT THE PAYMENT WAS FOR A COMPOSITE CONTRACT, WHICH ATTRACTED TDS U/S 194C OF THE I.T. ACT. AS NO TDS W AS DONE, THE EXPENSE NEEDS TO BE DISALLOWED U/S. 40(A)(IA) OF THE I.T. ACT. THEREFOR E, THE A.O.'S DISALLOWANCE UPTO THE EXTENT OF [8,53,351-6,57,377] = RS.1,95,974/- IS CO NFIRMED, THE BALANCE BEING ALLOWED, BEING AN ARITHMETIC MISTAKE OF THE A.O. 7. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE, WHO FILED BEFORE US A COPY OF THE BILLS EVIDENCING PURCHASE OF STEEL BY THE ASSESSEE FROM ASHOK KUMAR & BROTHERS. THERE ARE IN ALL ABOUT 34 BILLS. PERUSAL OF THE BILLS SO PRODUCED SHOWS THAT ALL OF THESE BILLS EVIDENCE PURCHASE OF M.S.ANGLE, M.S CHANNEL, R S JOIST ETC. IT IS CLEAR FROM THE BILLS THAT THE CONCLUSIONS OF THE REVENUE AUTHORITIES THAT THE PAYMENTS MADE BY THE ASSESSEE TO M/S. ASHOK KUMAR & BROTHERS WAS OF A COMPOSITE NATURE CONSISTING OF PURCHASE OF IRON MATERIAL AS WELL AS FOR SERVICES R ENDERED BY ASHOK KUMAR & BROTHERS, WAS AN ERRONEOUS CONCLUSION. IT CANNOT BE DISPUTED THAT THERE IS NO OBLIGATION TO DEDUCT TAX AT SOURCE WHEN MATERIALS ARE PURCHASED. THE PAY MENT IN QUESTION THEREFORE DOES NOT 4 ITA NO.2427/KOL/2013 SAMPARK A.YR.2005-06 4 FALL WITHIN THE PARAMETERS OF SECTION 194C OF THE A CT. WE THEREFORE ARE OF THE VIEW THAT THE ADDITION MADE BY INVOKING THE PROVISION OF SECT ION 40(A)(IA) OF THE ACT BY THE REVENUE AUTHORITIES CANNOT BE SUSTAINED. THE SAME I S DIRECTED TO BE DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20.07.2016. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20.07.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SAMPARK, 9A, ESPLANADE EAST, KOLKATA-700069. 2. I.T.O., WARD-56(4), KOLKATA. 3. CIT(A)-XXXVI, KOLKATA. 4. CIT-XXI, KOLK ATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 5 ITA NO.2427/KOL/2013 SAMPARK A.YR.2005-06 5