J.K. Enterprises, CHENNAI V. ITO, CHENNAI

ITA 3070/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7932 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 31-01-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 02-11-2016
• Court: TRIBUNAL
• Department Lawyers: K N DHANDA
• Assessee Lawyers: LAKSHMICHAND NAHATA
• Keywords: Business income

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.3070 /MDS./2016 ( / ASSESSMENT YEAR :2013-14) M/S.J.K.ENTERPRISES , 271, MINT STREET, CHENNAI -3. VS. THE ITO, NON-CORPORATE WARD 4(2), CHENNAI. PAN AAHFJ 3895 R ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.LAKSHMICHAND NAHATA, C.A $% ! ' # / RESPONDENT BY : MR.K.N.DHANDAPANI, JCIT, D.R & ' ' ( ) / DATE OF HEARING : 31.01.2017 *+ ' ( ) /DATE OF PRONOUNCEMENT : 02.02.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-5, CHENNA I DATED 17.10.2016 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO. 3070/MDS/2016 2 2. THE MAIN ISSUE IN ITS APPEAL IS WITH REGARD TO DISALLOWANCES U/S.40(A)(IA) OF THE ACT. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE MA DE A PAYMENT TO THE ADVERTISEMENT EXPENSES OF ` 1,88,202/- TO M/S.INDIA MART INTERMESH LTD., ON 01.09.2012 WITHOUT DEDUCTION OF TDS. THEREFORE, THE AO DISALLOWED THE ADVERTISEMENT EXPENSES AND AD DED IT TO THE INCOME OF ASSESSEE UNDER THE BUSINESS INCOME. AGGRI EVED WITH THE ORDER OF AO, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A) . ON APPEAL, LD.CIT(A) CONFIRMED THE ACTION OF THE AO . NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE AO INVOKED THE PROVISIONS OF THE SECTI ON 40(A)(IA) OF THE ACT ON THE REASON THAT PAYMENTS TOWARDS ADVERTISEME NT EXPENSES ARE LIABLE FOR DEDUCTION OF TDS U/S.194C OF THE ACT AND THE ASSESSEE MADE PAYMENTS WITHOUT DEDUCTING TDS. BEFORE US, LD .A.R SUBMITTED THAT THE IMPUGNED AMOUNT IS ALREADY PAID AND NOTHIN G IS OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSMENT YEAR UNDE R CONSIDERATION. HE RELIED ON THE JUDGEMENT OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CI T [2012] 16 ITR ITA NO. 3070/MDS/2016 3 (TRIB) 1 (VISAKHAPATNAM) [SB]. LD.D.R RELIED ON THE ORDER OF CIT(A). THE SIMILAR ISSUE CAME BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI N.PALANIVELU VS. ITO REPORTED I N [2015] 40 ITR (TRIB) 325 [CHENNAI] VIDE ORDER DATED 29.04.2015 WH EREIN HELD THAT:- 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBUN AL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CIT [2012 ] 16 ITR (TRIB) 1 (VISAKHAPATNAM) [SB] AND JUDGMENT OF THE GU JARAT HIGH COURT IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P.) LTD. IN I. T. A. NOS. 122 OF 2013 DATED JULY 9, 2013 [2013] 357 ITR 642 (ALL) HELD THAT SECTION 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS . HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUNDRY CREDITOR S SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE EN D OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. H ENCE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BAC K TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE C LAIM OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVI DENCE IN SUPPORT OF HIS CLAIM. 5. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED AM OUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSME NT YEAR IN ITA NO. 3070/MDS/2016 4 RESPECT OF THE EXPENSES EITHER AS OUTSTANDING EXPEN SES OR AS SUNDRY CREDITORS, THIS AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTED BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDINGLY, WE ARE OF THE OPINION THAT SINCE PAYME NT IS ALREADY MADE, NO PAYMENT IS OUTSTANDING AT THE END OF CLOSE OF THE FINANCIAL YEAR, THE ADVERTISEMENT EXPENSES CANNOT BE DISALLOW ED U/S.40(A)(IA) OF THE ACT. HENCE, THIS GROUND RAISED BY THE ASSESS EE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 02 ND FEBRUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 02 ND FEBRUARY, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF