The ITO, Ward-4(3), Baroda V. Shri Jambur Prakash Ramanna, Baroda

ITA 2819/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67947 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-10-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 13-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Corroborative evidences
• Section: 143(3); 194C; 147; 148

Judgement Text

ITA NO 2819/A/2012 & CO NO.58/A/2013 . A.Y. 2005- 06 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 2819/AHD/2012 & CO. NO. 58/AHD/2013 (ASSESSMENT YEAR: 2005-06) I.T.O, WARD-4(3), BARODA (APPELLANT) VS. SHREE JAMBUR PRAKASH RAMANNA PROP. OF SAI TECHNOLOGIES 230, GIDC IND. ESTATE, MAKARPURA, BARODA-390010 (RESPONDENT) PAN: ABMPJ8197Q APPELLANT BY : SHRI P. L. KUREEL, SR. D.R . RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 07-10-201 3 DATE OF PRONOUNCEMENT : 22 -11-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-III, BARODA DATED 10.09.2012 FOR A.Y. 2005-06. 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE THE APPEAL IS DECIDED ON MERITS EX PARTE QUA THE ASSESSEE. 3. THE FACTS AS CULLED OUT FROM THE ORDER OF LOWER AUT HORITIES ARE AS UNDER:- ITA NO 2819/A/2012 & CO NO.58/A/2013 . A.Y. 2005- 06 2 4. ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF SAI TEC HNOLOGIES ENGAGED IN MANUFACTURING OF INTEGRATED CONTROL PANELS, PROVIDI NG TECHNICAL BACK UP IN THE FIELD OF PROCESS AUTOMATION SYSTEMS/ PROGRAM MING. HE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 05-06 ON 19.10.2005 DECLARING TOTAL INCOME OF RS. 6,34,619/-. INITIALLY , THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED U/S. 143 (3) VIDE ORDER DATED 29.03.2007 AND THE TOTAL INCOME WAS DETERMINED AT R S. 6,53,960/-. LATER ON, NOTICE UNDER SECTION 148 WAS ISSUED ON 30.04.20 10 AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) READ WIT H SECTION 147 VIDE ORDER DATED 27.10.2010 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 19,86,386/-. AGGRIEVED BY THE ORDER OF A.O., ASSES SEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 10.09.2012 G RANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED A C.O. WHICH IS BASICALLY IN SUPPORT OF THE ORDER OF CIT(A ). THE GROUNDS RAISED BY THE REVENUE READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 5,25,600/- U/S 40( A)(IA) OF THE ACT, IN RESPECT OF PAYMENT MADE TO MANDAR ELECTRIC SERVICES, COMPLETEL Y OVERLOOKING THE FACT THAT AS PER PROVISIONS OF SECTION 40(A)(IA), THE TAX IS TO BE DEDUCTED AT SOURCE UNDER CHAPTER XVIIB WHICH PRESCRIBES DIFFERENT RATE UNDER DIFFERENT SECTIONS AND IN THE INSTANT CASE, THE ASSESSEE DEDUCTED TAX AT A LOWER RATE THAN PRESCRIBED U/S 194C OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS 98,600/- U/S 40(A)( IA) OF THE ACT, IN RESPECT OF PAYMENT MADE TO AUTO CADS, HOLDING THAT THE ASSESSE E HAD PAID TO THE CREDIT OF GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN, COMPLETELY OVERLOOKING THE FACT THAT THE ASSESSEE HAD MADE PAY MENT UP TO DEC 2004 ON WHICH TDS WAS DEDUCTED AND CREDITED INTO GOVERNMENT ACCOUNT ON 23.06.2005 INSTEAD OF 31,03,2005 AS MANDATED BY PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 1,33,420/- U/S 40( A)(IA) OF THE ACT, IN RESPECT OF PAYMENT MADE TO DIFFERENT PERSONS IN THE NATURE OF CONSULTING FEES, WITHOUT ITA NO 2819/A/2012 & CO NO.58/A/2013 . A.Y. 2005- 06 3 APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE ITS CLAIM WITH SUPPORTING EVIDENCES AND HENCE THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT WERE CLEARLY ATTRACTED. 5. SINCE ALL THE THREE GROUNDS ARE WITH RESPECT TO DIS ALLOWANCE MADE UNDER 40(A)(IA), ALL THE THREE GROUNDS ARE CONSIDERED TOG ETHER. 6. A.O. NOTICED THAT ASSESSEE HAD PAID LABOUR CHARGES, FREIGHT CHARGES, PROGRAMMING CHARGES, CONSULTING FEES, COMMISSION EX PENSES BUT HAD NOT DEDUCTED TDS AS PER THE PROVISIONS OF THE ACT. HE N OTICED THAT ASSESSEE HAD PAID LABOUR CHARGES AMOUNTING TO RS. 5,25,600/- TO MANADAR ELECTRIC BUT HAD DEDUCTED TDS @ 1%. A.O. WAS OF THE VIEW TH AT ASSESSEE SHOULD HAVE DEDUCTED TDS U/S. 194C AT 2%. HE ACCORDINGLY D ISALLOWED RS. 2,62,500/-(BEING 50% OF THE PAYMENT) U/S 40(A)(IA) OF THE ACT. HE ALSO NOTICED THAT ASSESSEE HAD DEBITED PROGRAMMING CHARG ES OF RS. 98,600/- TO ITS PROFIT AND LOSS ACCOUNT OUT OF WHICH PAYMENT OF RS. 77,900/- WAS MADE UP TO DECEMBER, 2004 ON WHICH TDS OF RS. 2,454 /- WAS DEDUCTED BUT THE SAME WAS CREDITED INTO THE GOVERNMENT ACCOU NT ON 23.06.2005. ACCORDING TO THE A.O. SINCE THE ASSESSEE HAD FAILED TO DEPOSIT THE TDS AMOUNT BEFORE THE DUE DATE PRESCRIBED, THE EXPENSES OF RS. 77,900/- WAS LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(IA) AND ACCORDINGLY DISALLOWED THE SAME. A.O. ALSO NOTICED THAT ASSESSE E HAD MADE PAYMENT OF RS. 1,33,420/- ON ACCOUNT OF CONSULTING FEES ON WHICH NO TDS WAS DEDUCTED BY THE ASSESSEE. IN THE ABSENCE OF COMPLE TE DETAILS, A.O. HELD THAT THE ASSESSEE HAS NOT DEDUCTED TDS AND THEREFOR E THE ENTIRE EXPENSES OF RS. 1,33,420/- WAS DISALLOWED UNDER 40(A)(IA) AN D ADDED TO THE INCOME. AGGRIEVED BY THE AFORESAID ADDITIONS MADE B Y THE A.O., ITA NO 2819/A/2012 & CO NO.58/A/2013 . A.Y. 2005- 06 4 ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 6.1 I HAVE CONSIDERED THE APPELLANTS SUBMISSIONS AND T HE ASSESSMENT ORDER. A) DISALLOWANCE OUT OF LABOUR CHARGES: I) SO FAR AS THIS DISALLOWANCE OUT OF LABOUR PAYMEN T MADE TO MANDAR ELECTRIC SERVICE IS CONCERNED, THE APPELLANT HAS DE DUCTED TDS @ 1% AS APPLICABLE TO SUB-CONTRACTOR. HENCE THIS AMOUNT CA NNOT BE DISALLOWED U/S. 40(A)(IA). HENCE THIS DISALLOWANCE IS DIRECTE D TO BE DELETED. C) THE TDS DEDUCTED ON PROGRAMMING CHARGES HAS BE EN PAID TO THE CREDIT OF CENTRAL GOVERNMENT BEFORE THE DUE DATE OF FILING OF RETURN AS STATED IN THE ASSESSMENT ORDER ITSELF. HENCE, THIS DISALLOWANCE IS DIRECTED TO BE DELETED. E) SO FAR AS THE DISALLOWANCE OF CONSULTING EXPENSE S ARE CONCERNED, SINCE THE PAYMENT HAS BEEN MADE TO DIFFERENT PERSONS OF A MOUNTS BELOW 20,000/- IN EACH ASSESSEE, HENCE TDS IS NOT DEDUCTABLE. ACCO RDINGLY, THE DISALLOWANCE IS DIRECTED TO BE DELETED. 7. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. RELIED ON THE ORDER OF ASSESSING OFFICER. 8. WE HAVE HEARD THE LEARNED D.R. AND PERUSED THE MATE RIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION OF LAB OUR PAYMENT TO MANADAR ELECTRIC SERVICES HAS HELD THAT THE ASSESSE E BEING A SUBCONTRACTOR HAS CORRECTLY DEDUCTED TDS AT 1%. WI TH RESPECT TO THE TDS ON PROGRAMMING CHARGES, HE HAS HELD THAT THE AS SESSEE HAD PAID TDS TO THE CREDIT OF CENTRAL GOVERNMENT BEFORE THE DUE DATE OF FILING OF RETURN. WITH RESPECT TO CONSULTANCY EXPENSES, HE HA S HELD THAT THE PAYMENTS WERE MADE TO DIFFERENT PERSONS AND IN EACH CASE, THE PAYMENT WAS LESS THAN 20,000/- AND THEREFORE NO DISALLOWANC E UNDER SECTION 40(A)(IA) WAS CALLED FOR. 9. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE FIN DINGS OF CIT(A) BY BRINGING ANY CONTRARY MATERIAL ON RECORD. IN VIEW O F THE AFORESAID FACTS, ITA NO 2819/A/2012 & CO NO.58/A/2013 . A.Y. 2005- 06 5 WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CI T(A) AND THUS THESE GROUNDS OF REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 11. SINCE THE C.O. IS SUPPORTING THE ORDER OF CIT(A), I T DOES NOT REQUIRE ANY ADJUDICATION AND THEREFORE THE SAME IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE C. O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22 -11 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD