ITO 4(2)(2), MUMBAI V. SSJ FINANCE & SECURITIES P. LTD, MUMBAI

ITA 271/MUM/2011

• Counselvise Citation: 27119914 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANS
• Assessee Lawyers: VINITA SHAH
• Section: 143(3); 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA SINGH , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER . / ITA NO. 271 / MUM ./ 2011 ( / ASSESSMENT YEAR : 200 7 08 ) INCOME TAX OFFICER WARD 4 ( 2 ) 4 , AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S SSJ FINANCE & SECURITIES PVT. LTD. SURYA MAHAL, NEAR STOCK EXCHANGE TOWER FORT, MUMBAI 400 023 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AABCS4245H / REVENUE BY : MR. ASHUTOSH RAJHANS / A SSESSEE BY : MS . VINITA SHAH / DATE OF HEARING 17 .09.2013 / DATE OF ORDER 27.09.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE, CHALLENGING THE IMPUGNED ORDER DATED 4 TH NOVEMBER 2010, PASSED BY THE LEARNED COMMISSIONER (APPEALS) VIII, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE SSJ FINANCE & SECURITIES PVT. LTD. 2 ACT ) FOR THE ASSESSMENT YEAR 2007 08. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF ` 33,34,808, MADE UNDER SECTION 40(A)(IA) IN RESPECT OF TRAINING EXPENDITURE PAID , WITHOUT DEDUCTING TDS. 2. FACTS IN BRIEF : THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INCURRE D AN AMOUNT OF ` 33,34,808, BEING TRAINING EXPENDITURE. I N RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS SUBMITTED BY THE ASSESSEE THAT THESE PAYMENTS WERE MADE AS SALARY TO TEMPORARY EMPLOYEES WHO WERE ON PROBATION PERIOD AND THEY WERE NOT ON THE ROLL OF THE ASSESSEE COMPANY. HENCE, THIS AMOUNT WAS DEBITED TO TRAINING EXPENDITURE. THE ASSESSING OFFICER NOTED THAT THESE PAYMENTS FALL WITHIN THE AMBIT OF SECTION 194C AND THE ASSESSEE WAS REQUIRED TO DEDUCT TDS. SINCE ALL THE PAYMENTS MADE WERE ABOVE ` 50,000, HE MADE THE DISALLOWANCE UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE TDS HAVE NOT BEEN DEDUCTED. 3. BEFORE THE LEARNED COMMISSIONER (APPEALS), IT WAS SUBMITTED THAT THESE PAYMENTS WERE IN THE NATURE OF SALARY PAID TO TEMPORARY EMPLOYEES AND, THEREFORE, PROV ISIONS OF SECTION 194C AND 40(A)(IA) WILL NOT ATTRACT AND MOREOVER, THE LEARNED COMMISSIONER (APPEALS), IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 07, HAS DELETED THE SIMILAR ADDITION. THE LEARNED COMMISSIONER (APPEALS), FOLLOWING THE EARLIER YEARS O RDER HAS DELETED THE DISALLOWANCE. 4. THE LEARNED COUNSEL, MS. VINITA SHAH, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT, FIRST OF ALL, THE EARLIER DECISION OF THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 2006 07, WHEREIN THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, HAS NOT BEEN CONTESTED BY THE REVENUE IN THE SECOND APPEAL BEFORE THE TRIBUNAL , EVEN THOUGH THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL ON DIFFERENT GROUND S . IN SUPPORT OF THIS CONTENTION, SHE HAD SUBMITTED FORM 36 AND GROU ND S OF APPEAL RAISED BY THE REVENUE IN ITA NO.3653/MUM./2010 AND ALSO FURNISH ED A COPY OF THE TRIBUNAL ORDER DATED 23 RD JUNE 2011. WITHOUT PREJUDICE, SHE SUBMITTED THAT SSJ FINANCE & SECURITIES PVT. LTD. 3 ALL THESE PAYMENTS WERE IN THE NATURE OF SALARY AND NONE OF THE SALARY PAID TO THE TEMP ORARY EMPLOYEES EXCEEDED THE TAXABLE LIMIT AND, THEREFORE, THERE WAS NO REQUIREMENT FOR DEDUCTING THE TDS. ACCORDINGLY, THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) SHOULD BE CONFIRMED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UP ON THE ORD ER OF THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ON A PERUSAL OF THE NATURE OF PAYMENT, IT IS SEEN THAT THE PAYMENTS HAVE BEEN MADE TO THE TEMPORARY EMPLOYEES WHO WERE IN PROBATION PERIOD A ND THESE SALARIES HAVE BEEN DEBITED AS TRAINING EXPENSES. IN THE EARLIER YEAR, THE LEARNED COMMISSIONER (APPEALS) HAS GIVEN VERY CATEGORICAL FINDING THAT THE PROVISIONS OF TDS IS NOT APPLICABLE ON THE AMOUNT OF SALARY PAID BECAUSE IT WAS LESS THAN TAXABLE LIMIT. MOREOVER, THESE PAYMENTS TO THE EMPLOYEES ARE NOT IN THE NATURE OF CONTRACT AS ENVISAGED UNDER SECTION 194C , AS T HESE PAYMENTS FALL WITHIN THE PROVISIONS OF SECTION 192 AND THE TDS CAN ONLY BE DEDUCTED , ONCE THESE PAYMENTS CROSSES MAXIMUM AMOUNT OF CHARGEABLE TO TAX IN CASE OF THE PARTY DEDUCTING THE TAX. HERE ALSO, IT HAS NOT BEEN DISPUTED THAT THE PAYMENTS MADE TO THE TEMPORARY EMPLOYEES HAD NOT EXCEEDED THE TAXABLE LIMIT AND ONCE THAT IS SO, THERE WAS NO REQUIREMENT TO DEDUCT TAX UNDER SECTION 192 . HOWEVER, THIS IS NOT THE CASE OF THE ASSESSING OFFICER , AS HE HAS TREATED THE NATUR E OF PAYMENT UNDER SECTION 194C. I T IS NOT CLEAR , AS TO H OW SUCH A PAYMENT FALLS WITHIN THE AMBIT OF PAYMENT MADE TO A PERSON FOR CARRYING OUT ANY WORK IN PURSUANCE OF A C ONTRACT. THE PAYMENT TO AN EMPLOYEE DOES NOT FALL WITHIN THE AMBIT OF SECTION 194C , UNLESS IT HAS BEEN SHOWN THAT THE ASSESSEE HAS SOME KIND OF AGREEMENT WITH SOME CONTRACTOR FOR SUPPLY OF WORKERS TO THE ASSESSEE. ONCE THIS HAS NOT BEEN ESTABLISHED BY THE REVENUE, THEN, WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE MADE BY ASSESSING OFFICER AND, ACCORDINGLY, UPHOLD THE ORDER OF THE COMMISSIONER (APPEALS) . THE GROUND RAISED BY THE REVENUE IS, THUS, TREATED AS DISMISSED. SSJ FINANCE & SECURITIES PVT. LTD. 4 7. 7. IN THE RESULT, REVENUES APPEAL IS TREATED AS DISMISSED. 27 TH SEPTEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER 2013 SD / - RAJENDRA SINGH ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 27 TH SEPTEMBER 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIV ATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI