M/s Sri Prabhulingeshwar Sugars & Chemicals Ltd., Bagalkot V. The Assistant Commissioner of Income Tax, Central Circle, Belgaum., Belgaum

ITA 29/PAN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2074 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 25-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK RATKAL LD
• Assessee Lawyers: PRAVEEN P TARIKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI NARENDRA S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 15 /PAN/ 2016 : (ASST. Y EA R : 2012 - 13 ) ASST. COMMISSIONER OF INCOME TAX CIRCLE - 2(1), HDUDA BUILDING, NAVNAGAR, HUBLI 580 025 VS . M/S SRI PRABHULINGESHWAR SUGARS & CHEMICALS LTD., 1 ST FLOOR, SUKRUT BUILDING, OPP. K C PARK, MAIN GATE, DHARWAD. ( APPELLANT) PAN : AACCS7864B (RESPONDENT) AND ITA NO.29/PAN/2016 : (ASST. YEAR : 2012 - 13) M/S SRI PRABHULINGESHWAR SUGARS & VS. ASST. COMMISSIONER OF INCOME TAX CHEMICALS LTD., CENTRAL CIRCLE, SIDDAPUR, JAMKHINDI, BELGAUM. BAGALKOT DISTRICT PAN : AACCS7864B ( APPELLAN T) (RESPONDENT) A SSESSEE BY : SHRI PRAVEEN P. TARIKAR, C . A. DEPARTMENT BY : SHRI ABHISHEK RATKAL, LD. D.R. DATE OF HEARING : 08/06 /2016 DATE OF ORDER : 08 / 06 /2016 O R D E R PER GEORGE MATHAN , J.M : ITA NO. 15/PAN/2016 IS AN APPEAL FILED BY REVENUE AND ITA NO.29/PAN/2016 IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF THE LD. CIT(A), PANAJI - 2 IN ITA NO. 403/CIT(A) - 2/PNJ/14 - 15 , DATED 16.12.2015 FOR THE ASSESSMENT YEAR 2012 - 13. 2 ITA NOS. 15 & 29 /PAN/20 16 (ASST. YR: 2012 - 13 ) 2. SHRI ABHISHEK RATKAL, LD. D.R REPRESENTED ON BEHALF OF THE REVENUE AND SHRI PRAVEEN P. TARIKAR, C .A, REPRESENTED ON BEHALF OF THE ASSESSE E . 3. ITA NO. 15/PAN/2016 IN THE REVENUES APPEAL THE REVENUE CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) BY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSE E S OWN CASE FOR THE ASSESSMENT YEAR 20 09 - 10 AND 2010 - 11. IT WAS SUBMITTED BY THE LD. D.R THAT IN VIEW OF THE EXPLANATORY CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO.715 OF 1995 DATED 08.08.1995 THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) IN RESPECT OF THE PACKING MATERIAL BEIN G GUNNY BAGS AND PP BAGS WAS LIABLE TO BE SUSTAINED. 4 . IN REPLY, THE LD. A.R SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO S . 107& 157/PNJ/2014 DATED 07.07.2015 FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS : - 13. IT WAS SUBMITTED BY THE LEARNED AR THAT THE SECOND ISSUE RAISED IN ASSESSEES APPEAL WAS AGAINST THE ACTI ON OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF THE EXPENSES RELATING TO PURCHASE OF PACKING MATERIAL. IT WAS THE SUBMISSION THAT ASSESSING OFFICER, ON THE GROUND THAT THE PACKING MATERIAL PURCHASED BY THE ASSESSE WAS WORKS CONTRACT AND ON THE GROU ND THAT NO TDS HAS BEEN DEDUCTED, HAD INVOKED THE PROVISIONS OF SEC. 40(A)(IA) AND HAD DISALLOWED THE TOTAL PURCHASES OF THE PACKING MATERIAL. IT WAS THE SUBMISSION THAT THIS ISSUE IS SQUARELY BY THE DECISION OF THE HON BLE BOMBAY HI GH COURT IN THE CASE O F CIT VS. GLENMARK PHARAMCEUTICALS LTD REPORTED IN 324 ITR 199 AND THE DELHI HIGH COURT IN THE CASE OF CIT VS. DABUR INDIA LTD. REPORTED IN 283 ITR 197. 14. IN REPLY, LEARNED DR VEHEMENTLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 3 ITA NOS. 15 & 29 /PAN/20 16 (ASST. YR: 2012 - 13 ) 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 16. AS IT IS NOTICED THAT THE ASSESSE HAS PURCHASED THE PACKING MATERIAL AND HAS ALSO PAID CST ON THE SAME, THE SAID PURCHASE OF THE PACKING MATERIAL REPRESENTING GUNNY BAGS CANNOT BE TREATED AS A WORKS CONTRACT AND CONSEQUENTLY T DS IS NOT LIABLE TO BE MADE. THIS VIEW OF OURS ALSO FINDS SUPPORT FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GLENMARK PHARMACEUTICALS LTD. (SUPRA) AND HONBLE DELHI HIGH COURT IN THE CASE OF DABUR INDIA LTD. (SUPRA). IN THESE CIRCUMSTAN CES, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT IN RESPECT OF PURCHASE OF PACKING MATERIALS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IN THE REVENUES APPEAL IN RESPECT OF THE DISALLOWANCE U/S 40(A)(IA) IN RESPECT OF THE PURCHASE OF THE PACKING MATERIAL IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE, RESPECT FUL LY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSES OWN CASE THE FINDING OF THE LD. CIT(A) STANDS CONFIRMED AND THE REVENUES APPEAL STANDS DISMISSED. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN COURT ON 08.06 .2016. 7. ITA NO. 29 /PAN/2016 IN THE ASSESSEES APPEAL THE ASSESSE E HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF THE INTEREST ON THE LOAN TAKEN FROM M/S SRI PRABHULINGESHWAR SUGARS AND CHEMICALS LTD ON ACCOUNT OF THE NON - DEDUCTION OF TDS U/S 194A OF THE ACT. 8. IT WAS SUBMITTED BY THE LD. A.R THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA, DHARWAD BENCH IN THE CASE OF M/S.SRI PRA BHULINGESHWAR SOUHARDA CREDIT CO - OPERATIVE LTD IN I.T.A. NO.100078/2015 DATED 06.01.2016 WHEREIN IT HAS BEEN HELD THAT THE CO - OPERATIVE 4 ITA NOS. 15 & 29 /PAN/20 16 (ASST. YR: 2012 - 13 ) SOCIETY M/S.SRI PRABHULINGESHWAR SOUHARDA CREDIT CO - OPERATIVE LTD IS ENTITLED TO CLAIM THE BENEFIT U/S 80P(2)(A)(I) AND THAT THE SAID CO - OPERATIVE SOCIETY WAS CARRYING ON THE BUSINESS OF LENDING MONEY TO ITS MEMB ERS. IT WAS A SUBMISSION THAT AS M/S.SRI PRABHULINGESHWAR SOUHARDA CREDIT CO - OPERATIVE LTD HAS BEEN HELD TO BE A CO - OPERATIVE SOCIETY ENGAGED IN THE ACTIVITIES OF BANKING, THE ASSESSE IS NOT BOUND TO DEDUCT TDS U/S 194A ON THE PAYMENT OF INTEREST MADE TO THE CO - OPERATIVE SOCIETY. 9. IN REPLY, THE LD. D.R SUBMITTED THAT THE DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN TAKEN UP IN SLP . 10. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT M/S SRI PRABHULINGESHWAR SUGARS AND CHEMICALS LTD IS A CO - OPERATIVE SOCIETY ENGAGED IN THE ACTIVITY OF BANKING. RESPECTFUL LY FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, DHARWAD BENCH IN I.T.A. NO.100078/2015 REFERRED TO (SUPRA) THE DISALLOWANCE OF THE INTEREST O N THE LOAN TAKEN FROM M/S SRI PRABHULINGESHWAR SUGARS AND CHEMICALS LTD, AS CONFIRMED BY THE LD.CIT(A) STANDS DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWE D 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 08.06 .2016. SD/ - (NARENDRA S. SAINI) ACCOUNTANT MEMBER SD/ - (GEORGE MATHAN) JUDICIAL MEMBER PLACE : PANAJI - GOA DATED : 08/06 /2016 *A* 5 ITA NOS. 15 & 29 /PAN/20 16 (ASST. YR: 2012 - 13 ) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY O RDER ASSISTANT REGISTRAR ITAT, PANAJI BENCH, PANAJI