The ACIT, Circle-4(1), Visakhapatnam V. M/s Sri Mahadeo Jute Twine Mills, Rajam

ITA 272/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2589 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: V KASI VISWESWARA RAOCA
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

ITA 272 OF 10 SRI MAHADEO JUTE TWINE MILLS RAJAM PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.272/VIZAG/2010 ASSESSMENT YEAR: 2007-08 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4(1) VISAKHAPATNAM VS. SRI MAHADEO JUTE TWINE MILLS, RAJAM (APPELLANT) (RESPONDENT) PAN NO.AANRS 6003 N APPELLANT BY: SHRI D.S. SUNDER SINGH, DR RESPONDENT BY: SHRI V. KASI VISWESWARA RAO,CA ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11.02.2010 PASSED BY LEARNED CIT(A), VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. ALL THE GROUNDS RAISED BY THE REVENUE ARE DIRECT ED AGAINST THE DECISION OF THE LEARNED CIT (A) IN DELETING THE ADD ITION OF RS.11,34,000/- MADE UNDER SECTION 40(A)(IA) OF THE ACT. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE FIRM HAS TAKEN ON LEASE A FACTORY FROM M/S SRI VARALAKSH MI JUTE & TWINE MILLS (P) LTD ON A MONTHLY LEASE RENT OF RS.5,67,000/-. THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE ON THE SAID LEASE RENT PAYMENT UNDER SECTION 194I OF THE ACT. THE ASSESSEE DEDUCTED THE TAX FROM THE REN T PAID FOR THE MONTH OF APRIL, 2006. THEREAFTER IT DID NOT DEDUCT THE TDS ON SUBSEQUENT PAYMENTS ON THE STRENGTH OF A CERTIFICATE OBTAINED UNDER SEC TION 197(1) OF THE ACT ITA 272 OF 10 SRI MAHADEO JUTE TWINE MILLS RAJAM PAGE 2 OF 3 FROM THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III, HYDERABAD. HOWEVER, THE CERTIFICATE WAS DATED 11-7 -2006 AND IT STATED THAT THE SAID CERTIFICATE REMAIN IN FORCE UPTO 31-3 -2007. HENCE THE ASSESSING OFFICER TOOK THE VIEW THAT THE SAID CERTI FICATE WOULD BE APPLICABLE FROM JULY, 2006 ONWARDS ONLY. SINCE THE ASSESSEE D ID NOT DEDUCT TDS ON THE LEASE PAYMENT MADE FOR MAY 2006 AND JUNE, 2006, I.E. PAYMENTS MADE PRIOR TO THE CERTIFICATE REFERRED (SUPRA), THE ASSE SSING OFFICER DISALLOWED THE AMOUNT OF RS.11,34,000/- RELATING TO THE LEASE RENT FOR MAY AND JUNE 2006 UNDER SECTION 40(A)(IA) OF THE ACT. IN THE APPEAL P REFERRED BY THE ASSESSEE, THE LEARNED CIT (A) NOTICED THAT THE ASSESSEE HAD O BTAINED CERTIFICATES FOR THE PRIOR YEAR AS WELL AS FOR THE SUBSEQUENT YEAR, I.E. FOR THE YEAR ENDING 31-3-2006 AND 31-3-2008. ACCORDINGLY THE LEARNED C IT (A) HELD THAT THERE IS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE FOR THE IMPUGNED TWO MONTHS ALSO. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE RECORD. THE FACT WHICH IS NOT DISPUTED IS THAT THE ASSESSEE HAD OBTAINED THE CERTIFICATE UNDER SECTION 197(1) FOR NON DEDUCTION OF TDS IN THE IMMEDIATELY PRECEDING YEAR AND ALSO IN THE IMMEDIAT ELY SUCCEEDING YEAR. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO TH E ASSESSEE HAS OBTAINED CERTIFICATE, HOWEVER, THE CERTIFICATE WAS GIVEN ONLY ON 11-7-2006 AND IT HAS BEEN STATED THAT THE CERTIFICATES REMAIN IN FORCE UPTO 31-3-2007. CONSIDERING THE FACT THAT THE ASSESSEE HAD OBTAINED THE NO DEDUCTION CERTIFICATES FOR CONTINUOUSLY FOR THREE YEARS, IN O UR VIEW IT CAN ONLY BE PRESUMED THAT THE IMPUGNED CERTIFICATES IS APPLICAB LE FOR THE WHOLE OF FINANCIAL YEAR UNDER CONSIDERATION, I.E. FINANCIAL YEAR 2006-07. HENCE, THERE IS NO REQUIREMENT ON THE PART OF THE ASSESSEE FOR D EDUCTION OF TDS ON THE LEASE RENT PAYMENT MADE DURING THE YEAR UNDER CONSI DERATION AND CONSEQUENTLY THERE IS NO REQUIREMENT FOR MAKING ANY DISALLOWANCE OF LEASE RENTAL PAYMENT UNDER SECTION 40(A)(IA) OF THE ACT. IN VIEW OF THE FOREGOING ITA 272 OF 10 SRI MAHADEO JUTE TWINE MILLS RAJAM PAGE 3 OF 3 DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE DE CISION OF LEARNED CIT(A) AND ACCORDINGLY UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 29-11-2010 COPY TO 1 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 4(1) 3 RD FLOOR, DIRECT TAXES BUILDING, DOUBLE ROAD, MVP COLONY, VISAKHAPAT NAM 17. 2 M/S SRI MAHADEO JUTE TWINE MILLS, PO BOX NO.22, B OBBILI ROAD, RAJAM- 532 127, SRIKAKULAM 3 4. THE CIT 2, VISAKHAPATNAM THE CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM