ACIT, UDAIPUR V. M/s. Moon Light Marble P. Ltd., UDAIPUR

ITA 289/JODH/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7991 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Section: 194C; 6; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 289/JU/2012 ASSESSMENT YEAR : 2009-10 THE ACIT, CIRCLE-2, VS M/S MOON LIGHT MARBLE P. LT D., UDAIPUR RAJSAMAND, UDAIPUR PAN NO. AAACN9924G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.KHANDELWAL RESPONDENT BY : NONE DATE OF HEARING : 10.12.2012 DATE OF PRONOUNCEMENT : 20.12.2012 ORDER PER N.K.SAINI, A.M. THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER DATED 15.5.2012 OF CIT(A), UDAIPUR. 2. DURING THE COURSE OF HEARING, NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE NEITHER ANY ADJOURNMENT WAS SOUGHT, WE, TH EREFORE, PROCEED EX.PARTE QUA THE ASSESSEE AND THE APPEAL IS DECIDE D ON MERIT AFTER HEARING THE LD. DR. 2 3. THE ONLY GROUND RAISED IN THIS APPEAL BY THE DEP ARTMENT READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 36 ,75,189/- MADE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE E-FILED HIS RETURN OF INCOME ON 30.9.2010 DECLARING AN INCOME OF RS. 9 2,46,980/- WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 [H EREINAFTER REFERRED TO AS 'THE ACT' IN SHORT]. LATER ON, THE CASE WAS SELEC TED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED RS. 36,75,189/- UNDER THE HEAD SAWING CHARGES TO M/S LUCKY MARBLES PVT LTD, M/S CHIRAG MARBLES AND OTHER S. THE ASSESSING OFFICER OBSERVED THAT NO TDS WAS DEDUCTED BY THE AS SESSEE ON THE SAWING CHARGES, HE THEREFORE, ASKED THE ASSESSEE TO EXPLAI N AS TO WHY THE ENTIRE PAYMENT MADE UNDER THIS HEAD MAY NOT BE CONSIDERED U/S 40(A)(IA) OF THE ACT. HE ALSO ASKED WHETHER THE ASSESSEE HAD MADE T DS ON JOB CHARGES / SAWING CHARGES. IN RESPONSE, THE ASSESSEE SUBMITTE D AS UNDER;- DURING THE YEAR THE ASSESSEE COMPANY HAS INCURRED A SUM OF RS. 36,75,189/- TOWARDS SAWING CHARGES. COPY OF LEDGER ACCOUNTS OF SAWING CHARGES ALONG WITH NAME OF PERSONS ARE ENCLOSED. S AWING CHARGES PAID FOR CONVERSION OF MARBLE BLOCKS INTO MARBLE SLABS AND T ILES TO THE GANGSAW, IS NOT COVERED WITHIN THE MEANING CONTRACT. AS PROVIDED IN SECTION 194C(1), THE RESPONSIBILITY FOR DEDUCTING TDS TOWARDS PAYMENT MA DE TO CONTRACTOR ARISES ONLY WHEN THE CONTRACT IS FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF CONTRACT. IN A VERY BROAD 3 SENSE WORK DONE BY ONE PERSON IS SERVICE RENDERED T O ANOTHER AND INDEED ONE OF THE DICTIONARY MEANINGS OF THE WORD SERVICE IS WORK. WHEREAS IN THE PRESENT CASE CONVERTING OF MARBLE BLOCK IN TO SLABS IS NOT RESTRICTED TO SERVICES BUT INVOLVES HIGH VALUE OF CONSUMABLES LIK E DIAMOND BLADES, SEGMENTS, PLASTER OF PANS, WOOD WOOL, OTHER CONSUMA BLES ETC. THIS TASK INVOLVES HIGH VALUE ADDITION BY DEPLOYING MECHANICA L PROCESS AND THEREFORE CONVERSION OF MARBLE BLOCKS INTO SLABS IS NOT COVER ED UNDER LABOUR CONTRACT OR WORK CONTRACT. THE SAID CONVERSION IS MORE DEPEN DENT ON EFFICIENCY OF MACHINERY ELEMENT AND QUALITY OUTPUT DEPENDING ON H ARDNESS OF THE MATERIAL IN CONVERSION. THE ASSIGNMENT BE WRITTEN OR ORAL OF SAWING OF THE MARBLE BLOCKS INTO SLABS NEITHER STIPULATED AS TO TIMING N OT QUANTITY IS NOT CONTRACT TO BE COVERED U/S 194C BECAUSE THE SAWING OF EVERY IND IVIDUAL MARBLE BLOCK IS AN INDEPENDENT WORK WITH INCONSISTENT OUTCOME THAT MAY BE ZERO IF THE NATURAL STONE NAMED MARBLE BLOCK IS RUPTURED INSIDE OR MAXIMUM OUTPUT OTHERWISE. THE SAWING OF EVERY MARBLE BLOCK CANNOT HAVE ANY CONSISTENCY IN RESULT WHICH IS THE VERY ESSENCE OF ANY CONTRACT. I T IS ON THE CONTRARY AMOUNTS TO VALUE ADDITION IN THE PRODUCT TAKING PLA CE FOR INDIVIDUAL MARBLE BLOCK INDEPENDENTLY AND THEREFORE LIABILITY TO DEDU CT TDS AS PER PROVISION OF SECTION 194( C) IS NOT APPLICABLE. WITHOUT PREJUDICING TO THE ABOVE, IT IS SUBMITTED T HAT EACH G.R. OF MARBLE BLOCK FOR ITS SAWING CAN BE SAFELY TREATED A SEPARA TE CONTRACT. THE VALUE OF SAWING INVOLVED TOWARDS EACH G.R. DO NOT EXCEED THE LIMIT LAID IN ACT, THERE IS NO LIABILITY TO DEDUCED TDS. BUT IS THE EVENT OF SA WING TAKING PLACE IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD OR QU ANTITY, SAWING RELATING TO THAT PERIOD / QUANTITY COULD BE AGGREGATED FOR THE PURPOSE OF TAX DEDUCTION AS PROVIDED IN CIRCULAR NO. 715 DATED 08.08.1995. IN PRESENT CASE THE ASSESSEE COMPANY DID NOT HAVE ANY PERIOD/QUANTITY C ONTRACT AND ABSENCE THEREOF THE COMPANY WAS NOT LIABLE TO DEDUCT TDS. T HE ABOVE VIEW WAS ACCEPTED BY THE HONORABLE CIT (APPEAL) WHILE DECIDI NG THE APPEAL FOR THE ASSESSMENT YEAR 2007-08. 4 5. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE ABOVE SUBMISSIONS OF THE ASSESSEE AND MADE THE ADDITION OF RS. 36,75,866/- BY OBSERVI NG AS UNDER:- AFTER CONSIDERING SUBMISSION OF THE ASSESSEE AND F ACT OF THE CASE IT IS CLEAR THAT THERE IS A CONTRACT BETWEEN ASSESSEE AND ABOVE MENTIONED PARTIES. IN VIEW OF THESE FACTS IT IS CLEAR THAT TH E ASSESSEE FAILED TO DEDUCT TAX ON JOB CHARGES/SAWING CHARGES HENCE, THE ENTIRE PAYMENT DEBITED BY THE ASSESSEE IS DISALLOWED U/S 40(A)(IA) OF THE IT ACT. THIS WOULD RESULT IN AN ADDITION OF RS 36,75,866/-. PENA LTY PROCEEDINGS U/S 271 (L)(C) OF THE IT ACT ARE BEING INITIATED SEPARATELY ON THIS ACCOUNT. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A) AND THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD CIT(A) AS MENTIO NED IN PARA 2.2 OF THE IMPUGNED ORDER ARE REPRODUCED VERBATIM AS UNDER:- 'SECTION 40(A)(IA) PROVIDES FOR DISALLOWANCE OF AMO UNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CARRYING OUT A NY WORK INCLUDING SUPPLY OF LABOR ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CH APTER XXII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN P AID ON OR BEFORE SPECIFIED DATES STIPULATED IN THE ACT. IT HAS BEEN GIVEN IN C HAPTER XXII IN SECTION 194C THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RE SIDENT (REFERRED TO AS CONTRACTOR) FOR CARRYING OUT ANY WORK INCLUDING SUP PLY OF LABOR IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND THE SPECIFIED P ERSON SHALL AT THE TIME OF CREDIT OF SUCH SUM OR AT THE TIME OF PAYMENT THEREO F IN CASH OR BY ANY MODE WHICHEVER IS EARLIER DEDUCT STIPULATED AMOUNT AS IN COME TAX ON INCOME COMPRISED THEREIN. THUS IF THERE EXIST ANY CONTRACT, THE TAX IS REQUIRED TO BE DEDUCTED AT SOURCE HAS EITHER NOT BEEN DEDUCTED OR AFTER DEDUCT ION HAS NOT BEEN PAID ON OR BEFORE SPECIFIED DATES, THE AMOUNT PAYABLE SHALL BE DISALLOWED U/S 40(A)(IA) OF THE ACT. ON FACT, HERE IN BELOW IS THE LIST OF PARTIES THE C OMPANY DID THE BUSINESS OF PURCHASE & SALES OF MARBLE SLABS AND SAWING OF MARB LE BLOCKS: 5 NAME OF COMPANY SAWING CHARGES PURCHASE SALES CHIRAG MARBLES PVT LTD 1,868,649.00 8,591,641.00 8,527,605.00 LUCKY MARBLE PVT LTD 327,800.00 780,197.00 - SHREE ROOPRAJAT MARBLE & STONE PVT LTD 546,640.00 1,122,930.00 - PARSHWANATH MARBLE 757,200.00 259,999.00 - LUCKY GREEN MARBLE INDUSTRIES 174,900.00 - - TOTAL 3,675,189.00 10,754,767.00 8,527,605.00 COPY OF LEDGER ACCOUNT OF THESE PARTIES MAY BE REFE RRED AT PAGE NO. 1-25. IT REVEALS THAT BUSINESS WITH THESE PARTIES ARE IN NO MANNER OF ANY CONTRACT OR AGREEMENT OF THE NATURE OF CARRYING OUT ANY WORK BU T AMOUNTS TO PURCHASES, SALES AND SAWING OF MARBLE BLOCKS. EVERY TRANSACTION OF P URCHASE OR SAWING OR SALES ARE INDEPENDENT AND IT IS BY NATURE EXPRESSLY VISIB LE THAT THERE DO NOT EXIST SPIRIT OF ANY WRITTEN OR VERBAL CONTRACT AGREEMENT. EVEN B Y STRETCH OF IMAGINATION THESE TRANSACTION HAS NO CHAIN LIKE RELATION OR INTER-CONNECTION TO INFER THAT THESE HAVE TAKEN PLACE FOR A DEFINITE TIME PERIOD OR DEFI NITE QUANTITY OR DEFINITE AMOUNT. EVEN SAWING OF MARBLE SIMPLY AMOUNTS TO CONVERSION MARBLE BLOCKS INTO MARBLE SLABS ARE NOT COVERED WITHIN WORK AS THE CONVERSION INVOLVES HIGH VALUE OF CONSUMABLES LIKE DIAMOND BLADES, SEGMENTS, PLASTER OF PARIS, WOOD WOOL, OTHER CONSUMABLES ETC. THERE IS HIGH VALUE ADDITION BY DE PLOYING MECHANICAL PROCESS. THE SAID CONVERSION IS MORE DEPENDENT ON EFFICIENCY OF MACHINERY ELEMENT ON THE ONE HAND AND QUALITY OF MARBLE BLOCK ON THE OTHER AS SA WING OF EVERY INDIVIDUAL MARBLE BLOCK IS AN INDEPENDENT WORK GOT DONE SUBJECT TO ME ETING OF CRITERIA FOR THE SAWING ADDED WITH INCONSISTENT OUTCOME THAT MAY BE ZERO IF THE NATURAL STONE NAMED MARBLE BLOCK IS RUPTURED INSIDE OR MAXIMUM OUTPUT OTHERWIS E. THUS APPLICABILITY OF SEC 6 194C CAN AT THE MOST BE VIEWED FOR EVERY INDIVIDUAL INVOICE FOR THE SAWING OF MARBLE BLOCK AND IF IT DOES NOT EXCEED RS 20000/ TH E PROVISIONS OF TDS ARE EXPRESSLY NOT APPLICABLE. IN VIEW OF NATURE OF TRAN SACTION BEING PURCHASE & SALES ALONG WITH SAWING WITHOUT ANY CONTRACT EXPRESS OR I MPLIED IN WRITING OR ORAL AND NONE OF INDIVIDUAL TRANSACTION OF SAWING EXCEED RS 20000/ IN PRESENT APPEAL, PROVISIONS OF SECTION 194C ARE NOT APPLICABLE AND T HEREFORE THE COMPANY DID NOT DEDUCTED TAX AT SOURCE RESULTING INTO NON APPLICABI LITY OF SECTION 40 (A) (IA). IN RESULT DISALLOWANCE MADE BY THE LD AO IS GROSSLY IN CORRECT AND UNLAWFUL BE DELETED. WITHOUT PREJUDICING TO THE ABOVE, IT IS ALTERNATIVE LY SUBMITTED THAT EVEN OTHERWISE THESE PAYMENTS ARE NOT HIT BY SECTION 40(A) (IA). T HE PROVISION OF THIS SECTION ARE APPLICABLE FOR ANY AMOUNT OF WORK ON WHICH TAX IS D EDUCTABLE AT SOURCE UNDER CHAPTER XXII-B WAS PAYABLE. IF THE AMOUNT PAYABLE H AS BEEN ACTUALLY PAID, SECTION 40(A)(IA) WOULD NOT APPLY. THE BARE PROVISION OF SE CTION PROVIDES FOR NON DEDUCTION OF AMOUNT WHICH REMAINS PAYABLE. IT IS NOT APPLICAB LE WHERE EXPENDITURE IS PAID. IT IS APPLICABLE ONLY IN CASE WHERE PAYMENTS ARE DUE A ND OUTSTANDING. IN PRESENT CASE THE COMPANY HAS PAID THE SAWING CHARGES BEFORE THE END OF FINANCIAL YEAR MAY KINDLY BE REFERRED IN THE COPY OF LEDGER ACCOUNT IN THE BOOKS OF THE COMPANY AND THAT OF THE RESPECTIVE PARTIES AT PAGE NO. THE LD . AO MADE THIS DISALLOWANCE IN MECHANICAL MANNER WITHOUT CONSIDERING OUR SUBMISSIO N DATED 26.09.2011 MAY BE REFERRED AT PAGE NO. 39-44. IT MAY FURTHER BE PLACED BEFORE YOUR HONOR THAT CON SIDERING THE FACTS AND FINDING BY THE JAIPUR ITAT IN JAIPUR VIDYUT VITRAN NIGAM LTD V /S DCIT 2009-123 TTJ JP 888, SIMILAR ADDITION MADE IN THE AY 2007-08 HAS BEEN DE LETED BY THE THEN LD. CIT (APPEALS) MAY VERY KINDLY BE REFERRED AT PAGE NO. . IT HAS BEEN FURTHER AFFIRMED IN RECENT JUDGMENT BY VIZ BENCH IN MERILYN SHIPPING & TRANSPORT ITA 477/ VIZ/2008.' IT WAS FURTHER SUBMITTED AS UNDER: - 'FURTHER TO OUR ALTERNATIVE ARGUMENT AT PG. NO.: 3 VIDE LETTER DATED 14 TH INSTANT AS TO NON APPLICABILITY OF SEC. 40(A) (IA) WHERE AMOUN T PAYABLE HAS BEEN ACTUALLY PAID BEFORE THE END OF FINANCIAL YEAR. IN THIS REGARD IT IS FURTHER CLARIFIED THAT ALL THE 5 PARTIES WHO HAD SAWN MARBLE BLOCKS AMOUNTING TO RS. 3675189/ HAD TRANSACTION OF 7 PURCHASES OF RS. 10754767/ ALSO AND ALL THE PARTIES HAVE BEEN PAID BEFORE 31.03.2009 EXCEPT RS. 208200/ OUTSTANDING IN THE CA SE OF ROOP RAJAT MARBLE AND STONE P. LTD. (RRMSPL). WHEREAS IN CASE OF RRMSPL, THE CO. HAS PURCHASED MARBLE SLABS OF RS. 1122930/ IN ADDITION TO SAWING OF RS. 546640/ OF WHICH RS. 1461370/ HAVE BEEN PAID LEAVING PAYABLE OF RS. 2082 00/ CANNOT BE CONSIDERED PAYABLE TOWARDS SAWING CHARGES AND THUS BE HELD AS PAID BEFORE 31.03.2009 AND ADDITION MADE BY THE LD. AO BE DELETED IN TOTAL. IT IS ALTERNATIVELY SUBMITTED THAT ALL THE PARTIES NAMED ABOVE ARE REGULARLY ASSESSED TO TAX AND VIDE COPY OF LEDGER ACCOUNTS IN THEIR BOOKS (TO BE REFERRED AT PG. NO. 26-38 OF THE EARLIER ENCLOSURE) ALONG WITH ACKNOWLEDGEMENT OF RECEIPT OF FILING OF THEIR RESPECTIVE ROI FOR THE AY 2009-10 ( TO BE REFERRED AT PG.NO.(L-5) CLEARLY PROVES THAT THEY HAVE CONSIDERED THESE RECE IPTS IN THEIR BOOKS THUS HAS TAKEN THE SAME IN COMPUTING INCOME AND HAS PAID TAX ES THEREON AND THEREFORE IT WOULD BE HIGHLY UNJUSTIFIED AND UNLAWFUL TO FURTHER TAX THE COMPANY CAUSING DUPLICITY. THE CONTENTION OF APPELLANT GET SUPPORT FROM THE FI NDING OF HON. SUPREME COURT IN HINDUSTAN COCA-COLA BEVERAGES PVT. LTD. V/S CIT (20 07) 293 ITR 226 WHERE IT HAS BEEN HELD IN CASE THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE BUT THE DEDUCTEE HAS FILED ITS ROI U/S 139 AND HAS TAKEN THE SAME INTO A CCOUNT SUCH SUM WHILE COMPUTING ITS INCOME IN THE RETURN FILED THEN FOR T HE PURPOSE OF SEC. 40 (A)(IA) IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED TAX AND PAID THE TAXES ON SUCH INCOME. THE FINDING OF HON. SUPREME COURT HAS BEEN GIVEN STATUTORY RECOGNITION WITH AMENDMENT IN SEC. 40(A) (IA) R.W.S. 201 IN FIN ANCE BILL 2012 TO CURE THE HIGHLY DISPROPORTIONATE DISALLOWANCES TO THE ACTUAL INCOME CAUSING UNDER THE GIVEN CIRCUMSTANCES. THOUGH THE AMENDMENT IN SEC. 2 01 NOT TO TREAT THE DEDUCTOR IN DEFAULT IS MADE EFFECTIVE IN THESE CIRCUMSTANCES FROM AY 2013-14, CONSIDERING THE FACT THAT A DEEMING FICTION IS CREATED UNDER TH E AMENDMENT HAS TO BE INTERPRETED TO BE CLARIFICATORY AND HENCE APPLICABL E RETROSPECTIVELY. THE CALCUTTA HIGH COURT RECENTLY IN THE CASE OF CIT V/S VIRGIN C REATIONS HAS HELD THAT AMENDMENT MADE TO SEC 40(A) (IA) BY THE FINANCE ACT , 2010 OF ALLOWING BENEFIT OF PAYMENT MADE BEFORE THE DUE DATE OF FILING OF RETUR N U/S 139(1) IS CLARIFICATORY 8 AND HAS RETROSPECTIVE OPERATION. THIS FINDING IS BA SED ON JUDGMENT BY HON. SUPREME COURT IN THE CASE OF R. B. JHODAMAL V/S CIT (1971) 82 ITR 570 IT WAS HELD THAT ANY PROVISION INSERTED AS A REMEDY TO MAK E THE PROVISION WORKABLE REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION . CONSIDERING THESE FINDINGS AT PAR WITH THE FACTS INVOLVED IN THE PRESENT ISSUE DI SALLOWANCE MADE BY THE LD. AO DESERVES KNOCKED OFF. IN VIEW OF THE ABOVE DISALLOWANCE MADE MAY VERY KIN DLY BE DELETED. 7. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD PURCHASED MARBLE BLO CKS FROM THE PARTIES AS WELL AS HAD PAID SAWING CHARGES SEPARATELY FOR CONV ERTING THE BLOCKS INTO SLABS OR TILES. HE FURTHER OBSERVED THAT THE PART IES HAD SEPARATELY BILLED THE SAWING CHARGES TO THE ASSESSEE AND THE JOB WORK WAS DONE AT THE RATE DECIDED BETWEEN THE ASSESSEE AND THE PARTIES IN QUE STION. HE FURTHER OBSERVED THAT THE SAWING CHARGES WERE NOT PART OF T HE PURCHASE PRICE FOR THE MARBLE BLOCK AS SEPARATE BILLS HAD BEEN RAISED FOR PURCHASE OF BLOCKS AS WELL AS FOR THE SAWING CHARGES, THEREFORE, CONDUCT OF THE PARTIES AND THE ABOVE FACTS SHOWED THAT THERE WAS CONTRACT BETWEEN THE ASSESSEE AND THE ABOVE PARTIES THOUGH NOT IN WRITING. THE LD CIT(A) OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD INC URRED EXPENDITURE OF RS. 36,75,189/- AS SAWING CHARGES FOR CONVERTING MARBLE BLOCKS IN TO MARBLE SLABS AND TILES AND PAYMENT TO VARIOUS PARTIES HAVE BEEN MADE PRIOR TO THE END OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND NO AMOUNT WAS PAYABLE TO ANY PARTY AT THE END O F THE YEAR EXCEPT THE AMOUNT OF RS. 2,08,200/- PAYABLE, TO SHREE ROOPRAJA T MARBLE STONE P. LTD, THEREFORE, THE PROVISIONS OF SECTION 40A(IA) OF THE ACT WERE NOT APPLICABLE 9 EXCEPT FOR AN AMOUNT OF RS. 2,08,200/-. THE LD CI T(A) ACCORDINGLY DELETED THE DISALLOWANCE OF RS. 34,67,666/- AND CONFIRMED T HE BALANCE AMOUNT OF RS. 2,08,200/- U/S 40(A)(IA) OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS :- MERILYN SHIPPING & TRANSPORTS VS. ADDL CIT IN ITA N O. 477/VIZ/2008 (2012) 70 DTR (VISAKHA (SB) (TRIB) 81 JAIPUR VIDYUT VITRAN NIGAM LTD VS. DCIT (2009) 123 TTJ (JP) 888 CIT VS. ANJUM M.H. GHASWALA (2001) 119 TAXMAN 352 ( SC) HARI NARAIN SONI VS. ITO 322 ITR 444 (RAJ.) 8. NOW THE DEPARTMENT IS IN APPEAL. 9. THE LD DR SUPPORTED THE ORDER OF THE ASSESSING O FFICER BUT COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD CIT(A). 10. AFTER CONSIDERING THE SUBMISSIONS OF LD DR AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THE ASSESSEE ALTHOUGH INCURRED AN EXPENDITURE OF RS. 36,75,189/- AS SAWING CHARGES FOR CONVERTING THE MARBLE BLOCKS INTO MARBLE SLABS AND TILES AND PAYMENT TO VARIOUS PARTI ES HAD BEEN MADE BEFORE THE END OF THE YEAR RELEVANT TO ASSESSMENT YEAR UND ER CONSIDERATION EXCEPT AN AMOUNT OF RS. 2,08,200/- WHICH REMAINED PAYABLE TO M/S ROOPRAJAT MARBLE STONE P. LTD. 11. ON A SIMILAR ISSUE, THE ITAT VISHAKHAPATNAM, SP ECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL CIT IN ITA N O. 477/VIZ/2008 (2012) 70 DTR (VISAKHA (SB) (TRIB) 81 HELD AS UNDER:- 10 PROVISIONS OF S. 40(A)(IA) ARE APPLICABLE ONLY TO T HE AMOUNT OF EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW THE EXPEN DITURE WHICH HAS BEEN ACTUALLY PAID DURING THE PREVIOUS YE AR WITHOUT DEDUCTION OF TDS. 12. SINCE IN THE INSTANCE CASE, THE AMOUNT PAYABLE AT THE END OF THE YEAR WAS ONLY RS. 2,08,200/-, THEREFORE, THE LD CIT(A) W AS JUSTIFIED IN SUSTAINING THE DISALLOWANCE FOR THE SAID AMOUNT AND DELETING T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR RS. 34,67,989/- (RS. 36,7 5,189/- - RS. 2,08,200/-). WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD CIT(A). 13. IN THE RESULT, THE APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2012 ) SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 20 TH DECEMBER, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR 11