ACIT, V. M/s Central Co-operative Bank ltd.,

ITA 28/PAT/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9593 (ITAT-PATNA)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAU SHIK KUMAR DAS
• Assessee Lawyers: A K RASTOGI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE SH. N. K. SAINI, AM AND SH. AMIT SHUKLA , JM ITA NO. 28 /PAT. /2015 : ASSTT. YEAR : 2010 - 11 ITA NO. 29/PAT. /2015 : ASSTT. YEAR : 2011 - 12 ASSTT. C OMMISSIONER OF INCOME TAX, CIRCLE - 1, PATNA VS M/S CENTRAL CO - OPERATIVE BANK LTD., TAPESHWAR BHAWAN, MANGAL PANDEY PATH, ARA, BHOJPUR (APPELLANT) (RESPONDENT) PAN NO. A A BTC0114A CO NO. 02/PAT. /2015 : ASSTT. YEAR : 2010 - 11 CO NO . 03/PAT. /2015 : ASSTT. YEAR : 2011 - 12 M/S CENTRAL CO - OPERATIVE BANK LTD., TAPESHWAR BHAWAN, MANGAL PANDEY PATH, ARA, BHOJPUR VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, PATNA (APPELLANT) (RESPONDENT) PAN NO. AABTC0114A ASSESSEE BY : SH. A. K. RASTOGI & SH. RAKESH KUMAR REVENUE BY : SH. KAUSHIK KUMAR DAS, SR. DR DATE OF HEARING : 05.03 .201 8 DATE OF PRONOUNCE MENT : 07 .0 3 .201 8 ORDE R PER BENCH : THE APPEALS BY THE DEPARTMENT AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER EACH DATED 25.02.2015 OF THE LD. CIT(A) - I, PATNA. 2 . SINCE THE ISSUES INVOLVED ARE COMMON IN THESE APPEALS AND THE CROSS OBJECT IONS WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 2 3 . AT THE FIRST INSTANCE, WE WILL DEAL WITH THE APPEAL IN ITA NO. 28/PAT./2015 FOR THE ASSESSMENT YEAR 2010 - 11. THE ONLY GRI EVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO THE DELETION OF DISALLOWANCE OF RS.45,65,546/ - MADE BY THE AO ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER THE PROVISIONS OF SECTION 194H OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . T HE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 24.09.2010 DECLARING AN INCOME OF RS.2,60,01,300/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESS EE HAD DEBITED A SUM OF RS.45,65,546/ - UNDER THE HEAD COMMISSION ON D.D. AGENT , ON WHICH THE TDS PROVISIONS WERE APPLICABLE. THE ASSESSEE SUBMITTED THAT THE TDS WAS NOT TO BE MADE IN RESPECT OF SUCH COMMISSION IN VIEW OF THE INSTRUCTION OF CBDT AND THE P RONOUNCEMENT OF JUDGMENT OF THE HONBLE COURTS . THE AO OBSERVED THAT HE WAS NOT AWARE OF THE INSTRUCTION OF CBDT OR PRONOUNCEMENT OF ANY OF THE HONBLE COURTS AND THAT THE ASSESSEE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE. HE, THEREFORE, MADE THE ADDITIO N OF RS.45,65,546/ - . 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: THAT THE APPELLANT DID NOT MAKE TDS ON THE ADVICE OF THE INDIAN BANKS ASSOCIATION, MUMBAI. THE INDIAN BANKS ASSOCIATION, MUMBAI HAS GIVEN AD VICE TO THE BANKS IN TERMS OF THE OPINION GIVEN BY THE CENTRAL BOARD OF DIRECT TAXES BY TAKING INTO ACCOUNT THE JUDGMENT OF THE HONBLE SUPREME COURT THAT THE COMMISSION PAID TO THE PIGMY AGENTS OF BANKS ARE NOT SUBJECT TO TDS U/S 194H OF THE ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 3 I.T. ACT. THE REFORE, IN LIGHT OF THE DIRECTIONS GIVEN BY THE INDIAN BANKS ASSOCIATION, THE PETITIONER HAS NOT MAKE TDS ON COMMISSION PAID TO PIGMY AGENTS. A LETTER IN THIS REGARD WAS ALSO SUBMITTED AT THE TIME OF HEARING. A COPY OF THE SAID LETTER IS SUBMITTED BEFORE Y OUR HONOUR IN SUPPORT OF THE FACTS. THAT IT IS VERY PERTINENT TO MENTION HERE THAT DURING THE COURSE OF HEARING FOR THE ASSESSMENT YEAR 2009 - 10, THE ADDITIONAL COMMISSIONER OF INCOME - TAX, RANGE - 1 HAS ALSO ASKED QUESTION UPON THIS ISSUE. THE PETITIONER HAS EXPLAINED THE REASONS AS STATED ABOVE BEFORE HIM. AND AFTER BEING SATISFIED THE ADDL. CIT DID NOT MAKE ANY ADDITION ON THIS COUNT. THE COPY OF LETTER OF QUERIES MADE BY ADDL. CIT, RANGE - 1 AND THE REPLY GIVEN TO HIM IS SUBMITTED BEFORE YOUR HONOUR IN SUPPO RT OF THE FACTS. A REFERENCE WAS ALSO MADE TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF INDIAN BANK ASSOCIATION VS WORKMEN OF SYNDICATE BANK REPORTED IN (2001) 1 LLJ 1045 WHEREIN IT WAS HELD THAT THE COMMISSION RECEIVED BY THE COLLECTOR IS NOTHING ELSE BUT THE WAGES DEPENDS ON PERIOD OF ACTIVITY. 6 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: I FIND THAT (I) THE PIGMY DEPOSIT COLLECTOR WERE HELD AS EMPLOYEE S OF THE ESTABLISHMENT FOR WHOM THEY WORKED, BY THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI (AS DISCUSSED ABOVE). (II) IN THE CASE OF INDIAN BANK ASSOCIATION VS WORKMEN OF SYNDICATE BANK (AS DISCUSSED ABOVE) ALSO THE HONBLE APEX COURT HAS HELD THAT THE COMMISSION RECEIVED BY THE PIGMY COLLECTOR WERE WAGES. IN VIEW OF THE ABOVE, THE COMMISSION PAID TO PIGMY AGENTS IS TO BE TREATED AS WAGES AND ACCORDINGLY THE TDS PROVISIONS OF SECTION 194H WILL NOT BE APPLICABLE, HENCE THE DISALLOWANCE MADE BY THE ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 4 AO FOR NON - DEDUCTION OF TDS U/S 194H IN RESPECT OF COMMISSION AMOUNT OF RS.45,65,546/ - IS NOT SUSTAINABLE AND HENCE DELETED. 7 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. SR. DR SUPPORTED THE ORDER OF THE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. 8 . IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND REITERATED THE OBSERVATIONS MADE IN THE IMPUGNED ORDER. 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH T HE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE AO DISALLOWED THE CLAIM OF THE ASSESSEE SINCE THE DECISION OF THE HONBLE APEX COURT WAS NOT IN HIS KNOWLEDGE AND THAT HE WAS NOT AWARE OF ANY INSTRUCTION OF THE CBDT IN RELATION TO THE EXPENDITURE INCURRED ON D.D. AG ENTS. HOWEVER, THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF INDIAN BANK ASSOCIATION VS WORKMEN OF SYNDICATE BANK (SUPRA) WAS CONSIDERED BY THE LD. CIT(A) WHO DELETED THE IMPUGNED ADDITION BY FOLLOWING THE SAID JUDGMENT AND THE DECISION OF THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI . B EFORE US NO CONTRARY DECISION WAS FURNISHED. WE, THEREFORE, ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER O F THE LD. CIT(A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 10 . IN ITA NO. 29/PAT./2015, IDENTICAL ISSUE IS INVOLVED, THEREFORE, OUR FINDINGS GIVEN IN RESPECT OF IN ITA NO. 28/PAT./2015 (SUPRA) SHALL APPLY MUTATIS MUTANDIS. ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 5 11 . ONE ANOTHER ISSUE HAS BEEN TAKEN BY THE DEPARTMENT RELATING TO DELETION OF DISALLOWANCE OF RS.6,71,813/ - MADE BY THE AO UNDER THE HEAD PROVISION OF STAFF INCENTIVE. 1 2 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO MADE THE SAID DISALLOWA NCE BY OBSERVING THAT SCHEDULE 16 OF THE AUDIT REPORT REVEALED THAT THERE WAS THE DEBIT OF RS.6,71,813/ - UNDER THE HEAD PROVISION FOR INCENTIVE TO STAFF OVER AND ABOVE THE ACTUAL EXPENDITURE OF RS.9,73,328/ - . HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY IT SHOULD NOT BE ADDED BACK AS IT WAS NOT AN ACTUAL EXPENDITURE. THE AO CONSIDERED THE REPLY OF THE ASSESSEE AS VAGUE AND ALSO OBSERVED THAT NO EVIDENCE COULD BE PRODUCED WHETHER ANY LIABILITY HAD EVER BEEN CREATED UNDER THIS HEAD FOR THE YEAR UNDER CONSIDER ATION. HE, THEREFORE, DISALLOW ED A SUM OF RS.6,71,813/ - . 13 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD PAID THE INCENTIVE DURING THE YEAR UNDER CONSIDERATION AND HAD FURNISHED THE DETAILS OF NAME S OF THE EMPLOYEES, AMOUNT OF INCENTIVE AND DATE OF PAYMENT BEFORE THE AO WHICH INDICATED THAT THE PAYMENT OF RS.6,71,813/ - WAS MADE BY 31.03.2011. IT WAS EXPLAINED THAT THE NOMENCLATURE OF THE HEAD OF EXPENSES REMAINED PROVISION FOR STAFF INCENTIVE AND THUS, THE CONFUSION AROSE DURING THE ASSESSMENT PROCEEDINGS. 14 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANCE BY OBSERVING THAT THE EXPENSES WERE PAID BY 31.03.2011. 15 . NOW THE DEPARTMENT IS IN APPEAL. THE LD . SR. DR SUPPORTED THE ASSESSMENT ORDER DATED 10.02.2014 PASSED BY THE AO AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE AO. ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 6 16 . IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW. 17 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, THE LD. CIT(A) CATEGORICALLY STATED THAT THE PAYMENT OF RS.6,71,813/ - WAS MADE BEFORE 31.03.2011. THE SAID CATEGORICAL FINDING OF THE LD. CIT(A) WAS NOT CONTROVERTED. IN THE PRESENT CASE, WHEN THE EXPENSES FOR THE INCE N TIVE TO STAFF WERE INCURRED AND PAID BY THE ASSESSEE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THAN THE MERE NOMENCLATURE OF THE EXPENSES I.E. PROVISION FOR STAFF INCENTIVE CANNOT CHANGE THE NATURE OF THE EXPENSES INCURRED BY THE ASSESSEE FOR INCENTIVE TO THE STAFF , SO IT WAS NOT THE PROVISION BUT AN ACTUAL EXPENDITURE. THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO. WE DO NOT SEE ANY INFIRMITY IN THE IMPUGNED ORDER ON THIS ISSUE. 18 . AS REGARDS TO THE CROSS OBJECTIONS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS THE INSTRUCTION NOT TO PRESS THESE CROSS OBJEC TIONS. THE LD. SR. DR DID NOT OBJECT IF THE CROSS OBJECTIONS ARE DISMISSED AS NOT PRESSED. 19 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, IN THE PRESENT CASE, THE LD. COUNSEL FOR THE ASSESSEE SOUGH T PERMISSION TO WITHDRAW THESE CROSS OBJECTIONS AND GAVE IN WRITING AS UNDER: CO WITHDRAWN SD/ - (ADV.) 20 . IN VIEW OF THE ABOVE, THE CROSS OBJECTIONS ARE DISMISSED AS WITHDRAWN. ITA NO S. 28 & 29 /PAT. /201 5 CO NOS. 2 & 3/DEL/2015 CENTRAL CO - OPERATIVE BANK LTD. 7 21 . IN THE RESULT, THE APPEAL S OF THE DEPARTMENT AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED . (ORDER P RONOUNCED IN THE COURT ON 07 /03 /2018 ) SD/ - SD/ - ( AMIT SHUKLA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 07 /0 3 /2018 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR