DCIT, New Delhi V. M/s. Maryan Apparel (P) Ltd., New Delhi

ITA 2808/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65238 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV RANKA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `E : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2808/DEL./2012 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 6(1), VS. MARYAN APPAREL (P) LTD., NEW DELHI. A-201, VARDHMAN APARTMENTS, MAYUR VIHAR, PHASE-I, NEW DELHI. (PAN/GIR NO.AAECM5087C) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAJIV RANKA, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-IX, NEW DELHI, DATED 29.02.2012, RELEVANT TO ASSESSMENT YEA R 2008-09 WHEREBY CIT(A)S ACTION IN ALLOWING RELIEF OF RS.1,57,99,104/- OUT OF DISAL LOWANCE OF RS.1,95,40,212/- U/S 40(A)(IA) OF THE I.T. ACT, 1961 FOR NON-DEDUCTION O F TAX AT SOURCE HAS BEEN CHALLENGED.. 2. FACTS INDICATE THAT RETURN OF INCOME WAS FILED O N 29.9.2008 DECLARING NIL INCOME. THE CASE WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 AND SUBSEQUENTLY SELECTED FOR SCRUTINY AND A NOTICE U/S 143(2) WAS ISSUED AND SER VED UPON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATE D 22.12.2010 AT A LOSS OF RS.3,07,89,520/- MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN REGARD TO ASSESSMENT UNDER APPEAL AS UNDER: 'THE DETAILS OF MANUFACTURING EXPENSES FURNISHED DU RING THE COURSE OF PROCEEDINGS, THE ASSESSEE HAS HIMSELF MENTIONED THA T NO TDS ON THE ABOVE EXPENSES HAS BEEN DEDUCTED. THE AR OF THE ASSESSEE ALSO ADMITTED THAT TDS ON I.T.A. NO.2808/DEL./2012 (A.Y. : 2008-09) 2 2 THE ABOVE PAYMENT HAS NOT BEEN DEDUCTED AS PER THE PROVISIONS OF ACT. ACCORDINGLY, THE AMOUNT OF RS.1,95,40,212/- IS DISA LLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 40(1)(IA) WHICH STIPULATES THAT NO EXPENSES SHALL BE ALLOWED, IF TD S ON THE PAYMENTS SPECIFIED THEREIN AND CLAIMED AS EXPENSES, HAS NOT BEEN DEDUC TED AND DEPOSITED IN THE GOVERNMENT ACCOUNT. THEREFORE, AN ADDITION OF RS.1, 95,40,212/- IS MADE ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE I. T. ACT. 3. AGGRIEVED WITH THE ORDER OF ASSESSING OFFICER, A SSESSEE FILED APPEAL AND CIT(A) NOTED THAT ASSESSEE MADE WRITTEN AND ORAL SUBMISSIO NS AND CIT(A) AFTER NOTING THE OBSERVATIONS OF THE WRITTEN SUBMISSION OF THE ASSES SEE, HAS CONCLUDED TO ALLOW PART RELIEF AS PER PARA. 6 OF HIS ORDER, WHICH IS REPRODUCED A S UNDER: I HAVE CONSIDERED THE FINDINGS RECORDED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. A R AND THE FACTS OF THE CASE ON RECORD. AS PER THE ASSESSMENT ORDER, THE ID. AO DIS ALLOWED MANUFACTURING EXPENSES TOTALING TO RS.1,95,40,212/- IN VIEW OF TH E PROVISIONS OF SECTION 40(A)(IA) AS ADMITTEDLY TDS WAS NOT MADE THEREON.. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE COMPANY HAD TWO UNITS ONE EXPORT ORIENTED UNIT AND OTHER DTA UNIT. IT WAS FURTHER EXPLAINED THAT OUT OF THE TOTAL MANUFACTURING EXPENSES OF RS.1,95,40,212/- AN AMOUNT OF RS.1,57,99, 1041REPRE SENTED CREDIT 1 ADJUSTMENT ON ACCOUNT OF PAYMENTS SHOWN TO HAVE BEEN RECEIVED BY ONE UNIT OF THE COMPANY I.E. EXPORT ORIENTED UNIT FROM THE OTHER UNIT I.E D TA BEING JOB WORK CHARGES. IT WAS SUBMITTED THAT MOST OF THE DUTY GOODS WERE PROD UCED AT THE EOU, FOR WHICH IT WAS JOB WORK CHARGES RECEIVED AND FOR DTA, IT WAS A JOB WORK CHARGES PAID. THUS, ONLY A DEBIT AND CREDIT ENTRIES AMOUNTING TO RS.15799104 WERE PASSED IN THE ACCOUNTS AS THE BILLS WERE DRAWN BY ONE UNIT ON THE OTHER UNIT FOR THE PURPOSE OF REQUIREMENTS OF THE CUSTOMS DEPARTMENT. FROM THE ABOVE, IT CAN BE SEEN THAT THE AO HAS WRONGLY DISALLOWED MANUFACTURING EXPENSE S OF RS.1,57,99,104/- ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE WHEREAS T HE SAME REPRESENTED INTERNAL ENTRY / ADJUSTED OF TWO UNIT OF THE COMPANY. THE EX PORT ORIENTED UNIT DID JOB WORK FOR ANOTHER UNIT I. E. DTA AND THEREFORE, THE BILLS DRAWN WERE FROM SELF TO SELF FOR THE PURPOSE OF CUSTOM DEPARTMENT RECORDS. SINCE THE PAYMENTS REPRESENTED INTERNAL ADJUSTMENTS, NO TDS WAS REQUIR ED TO BE MADE AS THE PROVISIONS OF TDS ARE APPLICABLE WHEN A PAYMENT IS MADE BY A SPECIFIED PERSON TO ANOTHER PERSON. IN THE CASE UNDER CONSIDERATION, THE ENTRIES SO PASSED WERE BETWEEN THE TWO UNITS OF THE SAME PERSON I.E. THE C OMPANY AND HENCE, THE PROVISIONS OF TDS WERE NOT ATTRACTED ON THE AMOUNT OF RS. 1,57,99,104/-. I, THEREFORE, DIRECT THE AO TO EXCLUDE THE SAID SUM OF RS.1,57,99, 104/- OUT OF THE I.T.A. NO.2808/DEL./2012 (A.Y. : 2008-09) 3 3 DISALLOWANCE OF RS.1,95,40,212/-. ACCORDINGLY, THE DISALLOWANCE IS CONFIRMED TO THE EXTENT OF RS.37,41,108/- (1,95,40,212 - 1,57,99 ,104) AND THE GROUND NO. 1 IS PARTLY ALLOWED. 4. AGAINST SUCH ACTION OF THE CIT(A), DEPARTMENT HA S COME UP IN APPEAL. WHILE RELYING UPON ASSESSING OFFICERS ORDER, IT WAS PLEA DED FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 5. DESPITE SENDING NOTICE SUFFICIENTLY IN ADVANCE, NOBODY ATTENDED ON BEHALF OF HE ASSESSEE. SO, WE PROCEEDED TO DECIDE THIS APPEAL E X-PARTE QUA-THE-ASSESSEE AFTER CONSIDERING THE SUBMISSIONS OF LD.DR. 6. AFTER HEARING LD.DR AND CONSIDERING THE MATERIAL ON RECORD, WE FIND THAT CIT(A) HAS CONSIDERED EACH AND VERY ASPECT OF THE MATTER I N RELATION TO ISSUE UNDER APPEAL AND ALLOWED PART RELIEF WHILE UPHOLDING PART DISALLOWAN CE GIVING VALID AND APPROPRIATE REASONS. NEITHER ANY CONTRARY MATERIAL HAS BEEN PL ACED ON RECORD BY THE DEPARTMENT NOR ANY INFIRMITY OR FLAW HAS BEEN POINTED OUT OR NOTIC ED IN THE ORDER PASSED BY THE CIT(A). THEREFORE, WHILE CONCURRING WITH THE FINDING OF THE CIT(A), WE UPHOLD HIS ORDER AND DISMISS THE APPEAL OF THE REVENUE BEING DE VOID OF ANY MERITS. 7. AS A RESULT, THE APPEAL FILED BY THE REVENUE G ETS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09.08.2012. SD/- SD/- (B.C. MEENA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : AUG. 09, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-IX, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NO.2808/DEL./2012 (A.Y. : 2008-09) 4 4