ACIT, Circle-16(2), Hyd, Hyderabad V. Mahaveer Auto Diagnostic (P) Ltd., Hyd, Hyderabad

ITA 268/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6187 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Section: 143(3); 194C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 268/HYD/2016 ASSESSMENT YEAR: 2008-09 ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 16(2), HYDERABAD. VS. MAHAVEER AUTO DIAGNOSTICS (P) LTD., HYDERABAD. PAN AABCM 3690 C (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : NONE DATE OF HEARING 08-09-2016 DATE OF PRONOUNCEMENT 28-09-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-4, HYDERABAD FOR AY 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY IS A DEALER IN SKODA AUTO CARS AND SERVICE. FOR THE AY 2 008-09, IT FILED ITS RETURN OF INCOME ON 14/11/2008 ADMITTING AN INCOME OF RS. 3,73,38,970/-. SUBSEQUENTLY, THE ASSESSMENT WAS COM PLETED U/S 143(3) ON 28/12/2010 BY ASSESSING THE INCOME AT RS. 3,74,11,345/- AFTER MAKING CERTAIN ADDITIONS. THE CASE WAS REOPE NED AND THE ASSESSMENT WAS COMPLETED U/S 143(3) RWS 147 BY MAKI NG AN ADDITION OF RS. 1,73,48,772/- ON ACCOUNT OF UNDISCLOSED INCO ME. 2.1 THE AO OBSERVED THAT THE GROSS RECEIPTS AS PER TDS CERTIFICATES FILED ALONG WITH RETURN OF INCOME IS RS. 173,48,772 /- WHICH WAS PAID MOSTLY BY VARIOUS INSURANCE COMPANIES AS COMMISSION PAID BY THEM 2 ITA NO. 268/H/16 MAHAVEER AUTO DIAGNOSTICS (P) LTD. FOR THE INSURANCE BUSINESS DERIVED FROM THE ASSESSE E ON THE VEHICLES SOLD. THIS AMOUNT OF RS. 1,73,48,772/- WAS NOT INCL UDED UNDER THE HEAD OTHER SOURCES NOR UNDER THE HEAD INDIRECT INCO ME IN ITS PROFIT & LOSS ACCOUNT. DURING THE ASSESSMENT PROCEEDINGS, TH E REPLY IS FILED BY THE ASSESSEE COMPANY, WHICH IS REPRODUCED AS UND ER: 1. IT IS PRACTICE OF THE COMPANY TO SHOW THE AMOUN TS RECEIVED FROM THE VARIOUS INSTITUTIONS UNDER THE HEAD 'SALES LABOUR', PURSUANT TO THIS PRACTICE, THE COMPANY HAS BEEN CON SISTENTLY OFFERING THE AMOUNTS UNDER HEAD. 2. DURING THE YEAR UNDER CONSIDERATION, A SUM OF RS . 3,31,16,877.37 HAS BEEN SHOWN IN THE FINANCIAL STAT EMENTS UNDER THE MAIN HEAD 'INDIRECT INCOME' WITH SUBHEAD ' SALE S LABOUR AP. 3. AS PER DETAILS OF TDS CERTIFICATES AVAILABLE, TH E TOTAL AMOUNT RECEIVED FROM THE DIFFERENT INSTITUTIONS UNDER DIFF ERENT HEADS OF INCOME IS RS. 1,73,32,894.00. THE DETAILS OF THE SA ME ARE AS UNDER: S.NO. HEAD OF INCOME SECTION AMOUNT 1 CONTRACTS 194C 15601024.00 2 PROFESSIONAL SERVICES 194J 649228.00 3 OTHER INTEREST 194A 427888.00 4 COMMISSION 194H 654754.00 TOTAL 17332894.00 4. THE DETAILS OF 'SALES LABOUR AP' IS APPENDED HER ETO AND MARKED AS ANNEXURE A. FURTHER, THE RECONCILIATION S TATEMENT OF THE AMOUNTS SHOWN IN THE BOOKS AND AS PER THE DETAI LS IS APPENDED HERE TO AND MARKED AS ANNEXURE - B. 5. IT IS SEEN FROM THE ANNEXURE A THAT THE GROSS RE CEIPTS UNDER THE HEADS SALES LABOUR IS RS. 33116877.37 RELATING TO THE WORKSHOP AT FOUR DIFFERENT LOCATIONS, WHEREAS THE G ROSS RECEIPTS AS PER THE DETAILS UNDER THE DIFFERENT HEADS IS RS. 15601024.00 AS PER THE ANNEXURE B. THIS AMOUNT RECEIVED IS TOWA RDS SALES LABOR COMPONENT AND ON SPARE PARTS. THUS, THERE IS A DIFFERENCE OF RS. 17515833.37. THIS AMOUNT RELATES TO THE INCO ME ON WHICH THERE IS NO DEDUCTION OF TAX AT SOURCE, BECAUSE THE AMOUNT WILL NOT WITHIN THE TDS LIMITS AND HENCE THERE IS NO TDS REQUIREMENT FOR THE SAME. 6. IN SO FAR AS THE AMOUNT OF RS. 649228/- IS CONCE RNED, THIS AMOUNT REPRESENTS COMMISSION FROM HDFC CHUBB. HOWEV ER, THE 3 ITA NO. 268/H/16 MAHAVEER AUTO DIAGNOSTICS (P) LTD. TDS CERTIFICATE IS ISSUED BY HDFC CHUBB THROUGH THE IR ASSOCIATE COMPANY STYLED AS PANMAC FIN SERVE PVT. LTD. THIS A MOUNT HAS BEEN CREDITED UNDER THE HEAD 'INSURANCE EXPENSES'. THE RELEVANT LEDGER EXTRACT IS APPENDED HERETO AND MARK ED AS ANNEXURE - C. 7. SIMILARLY, COMMISSION INCOME AMOUNTING TO RS. 65 4754/- RECEIVED FROM SKODA AUTO INDIA PVT. LTD. HAS BEEN I NCLUDED UNDER THE HEAD 'SALES LABOR ' 8. FURTHER, THE INTEREST INCOME FOR RS. 427888/- HA S BEEN SHOWN SEPARATELY. THIS-AMOUNT HAS BEEN REDUCED FROM THE I NTEREST ACCOUNT. THIS HEAD OF ACCOUNT IS SHOWN UNDER THE HE AD 'FINANCIAL CHARGES '. THE RELEVANT LEDGER ACCOUNT I S APPENDED HERETO AND MARKED AS ANNEXURE-D. ' 2.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, THE AO HELD THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEP TED AS THE GROSS RECEIPTS PAID BY THE VARIOUS INSURANCE COMPANIES WE RE NOT OFFERED TO TAX UNDER THE HEAD OTHER SOURCES NOR INDIRECT INCOM E IN THE PROFIT & LOSS ACCOUNT. FURTHER, THE ASSESSEE COMPANY COULD NOT ESTABLISH ANY CONCRETE EVIDENCE FOR ITS CONTENTION MADE. HE, THER EFORE, ADDED THE AMOUNT OF RS. 1,73,48,772/- AS UNDISCLOSED INCOME O F ASSESSEE. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 4. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER MADE BY THE AO, GROUNDS OF APPEAL, STATEMENT OF FACTS, S UBMISSIONS MADE BY THE APPELLANT AND ALSO THE REMAND REPORT SU BMITTED BY THE AO. DURING THIS YEAR, THE AO MADE THE ADDITION OF RS. 1,73,48,772/- AS UNDISCLOSED INCOME AS PER 26AS, AS TOTAL AMOUNT RECEIVED FROM DIFFERENT INSTITUTIONS UNDER H EADS THAT IS CONTRACTS, PROFESSIONAL SERVICES OTHER INTEREST AND COMMISSION. ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT AS O N FOR THE YEAR ENDING 31/03/2008, THE TOTAL INDIRECT INCOME CREDIT ED BY THE APPELLANT WAS OF RS.3,72,28,844/- AND THE NET PROFI T DISCLOSED WAS OF RS.3,95,76,898/-. THE INDIRECT INCOME BREAK UP AS PER SCHEDULE '11 INCLUDES SALES LABOUR OF ANDHRA PRADE SH OF RS.3,31,16,877/- AND SALES LABOUR OF BHUBANESWAR OF RS.15,51,973/-. THIS SALES LABOUR OF RS.3,31,16,877 /- INCLUDES SALES LABOUR VIZAG OF RS.24,40,836/-. THE TDS U/S 1 94C WAS DEDUCTED ON RS. 1,56,01,024/- OF RS. 3,55,207/-. ON PROFESSIONAL SERVICES, TDS U/S. 194J DEDUCTED WAS OF RS.57,025/- ON 4 ITA NO. 268/H/16 MAHAVEER AUTO DIAGNOSTICS (P) LTD. RS.6,49,228/-. THE TDS OF RS.96,963/- U/S 194A ON R S.4,27,888/- WAS DEDUCTED. U/S 194H AN AMOUNT OF RS.74,184/- ON RS.6,54,754/-. THEREFORE, THE TOTAL TDS WAS OF RS.5 ,83,379/- WHICH WAS TALLIED AS PER 26AS ADOPTED BY THE AO IN HIS ASSESSMENT ORDER AS DISCUSSED ABOVE. THEREFORE, RS.3,31,16,877/- AS POINTED OUT BY THE AO AS INDIRE CT INCOME UNDER THE HEAD SALES LABOUR WAS ALREADY FIGURED IN RS.3,72,28,844/- WHICH WAS DISCLOSED BY THE APPELLA NT AS OTHER INCOME UNDER SCHEDULE '11' OF THE PROFIT AND LOSS A CCOUNT. THEREFORE, AS OBSERVED BY THE AO, THERE IS NO ESCAP EMENT OF INCOME OF RS.1,73,48,772/-. THEREFORE, THE ADDITION MADE BY THE AO IS DELETED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF LD CIT(A) IS ERRONEOUS ON FACTS AND CIRCUMSTANCES IN LAW. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F RS. 1,73,48,772/- TOWARDS SUPPRESSION OF SALES. 6. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE. HOWEVER, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. DR AND ON MERITS OF THE CASE. 7. LD. DR SUBMITTED THAT THE ASSESSEE ALONG WITH IT S RETURN OF INCOME FILED A NUMBER OF TDS CERTIFICATES AND CREDI T TO THE SAME WAS GIVEN WHILE COMPLETING THE ASSESSMENT. AO HAS DONE THE RECONCILIATION WITH 26AS AND P&L A/C. AS PER THE TD S CERTIFICATES, THE TDS WAS DEDUCTED ON FOLLOWING INCOME: I) PAYMENT TO CONTRACTS RS . 1,53,96,012 II) PROFESSIONAL FEES RS. 6,49,227 III) INTEREST RS. 4,27,888 IV) COMMISSION RS. 8,75,595 TOTAL RS. 1,73,48,772 ============= 7.1 THE LD. DR SUBMITTED THAT, SINCE THE SAID INCOM E IS OTHER INCOME, IT CANNOT BE INCLUDED IN THE SALES OF THE A SSESSEE. HE, THEREFORE, SUBMITTED THAT THE AO HAS RIGHTLY MADE T HE ADDITION AND CIT(A) WAS WRONG IN DELETING THE ADDITION. 5 ITA NO. 268/H/16 MAHAVEER AUTO DIAGNOSTICS (P) LTD. 8. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ASSESSEE IS RUNNI NG A DEALERSHIP OF CARS AND HAS RECEIVED INDIRECT INCOMES LIKE CAR SER VICES, INSURANCE COMMISSION ETC. THE INDIRECT INCOME INCLUDES CAR SE RVICE, WHICH INVOLVES REPLACEMENT OF SPARE PARTS AND LABOUR SERV ICES. THE LABOUR SERVICES WILL COME UNDER TDS PROVISIONS. AGAIN IT M AY BE FOR THE COMPANY OR INDIVIDUAL CUSTOMERS. ONLY THE COMPANY C USTOMERS WILL COME UNDER TDS PROVISIONS. THESE INDIRECT INCOMES W ERE INCLUDED IN THE MAJOR HEAD SALES LABOUR. IN OUR VIEW, THE CIT (A) HAS ALREADY COMPLETED THE ITEM-WISE RECONCILIATION OF TDS WITH 26AS STATEMENT. HENCE, NEED NO FURTHER INVESTIGATION. ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH SEPTEMBER, 2016 KV COPY TO:- 1) ACIT, CIRCLE 16(2), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) M/S MAHAVEER AUTO DIAGNOSTICS (P) LTD., 6-3-1099 /1/B, RAJ BHAVAN ROAD, SOMAJIGUDA, HYDERABAD. 3) CIT(A) - 4, HYDERABAD 4 PR. CIT - 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 6 ITA NO. 268/H/16 MAHAVEER AUTO DIAGNOSTICS (P) LTD. S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER