M/s SRL Limited, Delhi V. Addl. CIT, New Delhi

ITA 3230/DEL/2013

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5528 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: AJAY VOHAR
• Keywords: Opportunity of being heard; Additional evidence
• Section: 194C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. K. N. CHARY , JM ITA NO. 3465 /DEL/201 3 : ASSTT. YEAR : 2007 - 08 DCIT, CIRCLE - 9(1), NEW DELHI VS SUPER RELIGARE L ABORATORIES LTD., 3 RD FLOOR, DEVIKA TOWER, NEHRU PLACE, NEW DELHI (APPELLANT) (RESPONDENT) PAN /GIR NO. AAACS2809J ITA NO. 3230/DEL/2013 : ASSTT. YEAR : 2007 - 08 SUPER RELIGARE LABORATORI ES LTD., D3, P3B, 2 ND FLOOR, SAKET DISTRICT CENTRE, NEW DELHI - 110017 VS ADDL. COMMISSIONER OF INCOME TAX, RANGE - 9, NEW DELHI (APPELLANT) (RESPONDENT) PAN /GIR NO. AAACS2809J ASSESSEE BY : SH. AJAY VOHAR, SR. ADV. & MS. SHAILY GUPTA, CA REVENUE BY : SH. S. S. RANA, CIT DR DATE OF HEARING : 02 .04 .201 8 DATE OF PRONOUNCE MENT : 13 . 04 .201 8 ORDER PER N. K. SAINI, AM : THESE CROSS APPEALS BY THE DEPARTMENT AND THE ASSESSEE ARE DIRECTED AGAIN ST THE ORDER DATED 11.02.2013 OF LD. CIT(A) - XII , NEW DELHI . 2. FIRST WE WILL DEAL WITH THE DEPARTMENTAL APPEAL IN ITA NO. 3465/DEL/2013. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE AD DITIONS MADE U/S 40(A)(IA) OF INCOME TAX, 1961 AMOUNTING TO RS.1,15,84,52,723/ - . ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 2 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIONS MADE U/S 40(A)(I) OF INCOME TAX ACT, 1961 AMOUNTING TO RS.1,04,76,991/ - . 3. THE APPELLANT CRAVES TO AMEN D MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. VIDE GROUND NO. 1, THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF RS.1,15,84,52,723/ - MADE BY THE AO U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SATED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 16.12.2011 IN ITA NO. 434/DEL/ 2011 FOR THE ASSESSMENT YEAR 2006 - 07, IN ASSESSEE S OWN CASE. 5 . IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 6 . WE HAVE CONSID ERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE ASSESSEE S APPEAL FOR THE ASSESSMENT YEAR 2006 - 07 IN ITA NO. 434/DEL/2011 WHE REIN THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 16.12.2011. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 20 TO 25 WHICH READ AS UNDER: 20. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE ASSESSEE IS BOUND TO THE COLLECTION CENTRES I N TERMS OF THE REPORT ISSUED IN RESPECT OF SAMPLES REFERRED BY THE CENTRES TO THE ASSESSEE AND TESTED BY THE ASSESSEE. HOWEVER, IT HAS NOT BEEN SHOWN AS TO HOW THIS ACTS ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 3 DETRIMENTALLY TO THE ASSESSEE. NO PRINCIPAL AGENT RELATIONSHIP STANDS ESTABLISHED BY THIS SOLE FACT. OBVIOUSLY, SINCE THE ASSESSEE RENDERS PROFESSIONAL SERVICES, AND THAT TOO, PROFESSIONAL SERVICES BY WAY OF MEDICAL TESTING, THERE IS A STRICT PROFESSIONAL CONDUCT WHICH HAS TO BE ABIDED BY THE ASSESSEE. THE ASSESSEE IS UNDER A STRICT OBLIG ATION. IF THERE IS ANY NEGLIGENCE OR DEFICIENCY ON THE PART OF THE ASSESSEE, IT IS THE ASSESSEE WHO IS ANSWERABLE. 21. AS SEEN FROM THE ABOVE, IT IS EVIDENT THAT THERE IS NO PRINCIPAL AGENT RELATIONSHIP EXISTING BETWEEN THE ASSESSEE AND THE COLLECTION CENTRES. THE FINDINGS OF THE LEARNED CIT(A) IN THIS REGARD ARE, THEREFORE, INCORRECT AND WE HOLD SO. 22. BESIDES THE ABOVE, IT IS PATENT ON RECORD THAT THE ASSESSEE DOES NOT PAY OR CREDIT ANY AMOUNT TO THE ACCOUNT OF THE COLLECTION CENTRES, EITHER DIRECT LY OR INDIRECTLY. THAT BEING SO, THE PROVISIONS OF SECTION 194 H OF THE ACT DO NOT GET ATTRACTED ON THIS SCORE ALSO. IT IS OBVIOUS THAT THE OBLIGATION OF DEDUCTION OF TAX AT SOURCE U/S 194 H OF THE ACT COMES UP ONLY AT THE TIME OF PAYMENT OR CREDIT OF THE AMOUNT IN THE BOOKS OF ACCOUNT OF THE PAYER, WHICHEVER IS EARLIER. HEREIN, THE AMOUNT RECEIVED BY THE ASSESSEE HAS BEEN CREDITED IN ITS BOOKS OF ACCOUNT. THIS IS BASED ON THE INVOICES RAISED BY THE ASSESSEE ON THE COLLECTION CENTRES. NO DEBIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR ANY DISCOUNT AND/OR COMMISSION PAID TOWARDS THE COLLECTION CENTRES HAS BEEN SHOWN TO EXIST. ON THE CONTRARY, THE ASSESSEE HAS BEEN TAXED ON THE GROSS RECEIPT OF RS. 50.42 CRORES, WHICH STANDS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 23. THEN, THE DISALLOWANCE IN TERMS OF SECTION 40(A)(IA) READ WITH SECTION 194 H OF THE ACT CAN BE MADE ONLY IN RESPECT OF EXPENDITURE IN THE NATURE OF COMMISSION PAID/CREDITED TO THE ACCOUNT OF THE RECIPIENT, OR TO ANY OTHER ACCOUNT. IN THE PRESENT CASE, THE ASSESSEE RECEIVES THE AMOUNT OF THE INVOICE RAISED, NET OF DISCOUNT, FROM THE COLLECTION CENTRES. THIS, DISCOUNT, INDISPUTABLY, CANNOT, IN ANY MANNER, BE SAID TO BE EXPENDITURE INCURRED BY THE ASSESSEE AND SO, SECTION 40(A)(IA) OF TH E ACT IS NOT ATTRACTED. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 4 24. IN UNITED EXPORTS V. CIT , 330 ITR 549(DEL), IT WAS HELD, WITH REFERENCE TO SECTION 40 A(2) (B) OF THE ACT, THAT SINCE TRADE DISCOUNT OFFERED BY THE ASSESSEE COULD NOT BE SAID TO BE EXPENDITURE INCURRED, THERE WAS NO QUESTION OF DISALLOWANCE UNDER THE SAID SECTION. 25. FROM THIS ANGLE ALSO, THE AUTHORITIES BELOW ERRED IN DISALLOWING THE DISCOUNT OFFERED BY THE ASSESSEE, BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 7 . SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER IN ASSESSEE S OWN CASE, WE DO NOT SEE ANY MERIT IN THE DEPARTMENTAL APPEAL ON THIS ISSUE. 8 . VIDE GROUND NO. 2, THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF RS.1,04,76,991/ - MADE BY THE AO U/S 40(A)(I) OF THE ACT. 9 . AS REGARDS TO THIS ISSUE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS COVERED IN ASSESSEE S FAVOUR VIDE ORDER DATED 07.05.2015 IN ITA NO. 1548/DEL/2011 FOR THE ASSESSMENT YEAR 2006 - 07. 10 . IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR ALTHO UGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 11 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL FOR THE ASSESSMENT YEAR 2006 - 07 IN ITA NO. 1548 /DEL/2011 IN ASSESSEE S OWN CASE WHEREIN THE ISSUES HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 07.05.2015 . THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 36 TO 40 WHICH READ AS UNDER: 36. IN DELHI MILK SCHEME (SUPRA), THE ASSESSEE APPOINTED A LARGE NUMBER OF AGENTS/CONCESSIONAIRES ALL OVER DELHI TO SELL MILK/ ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 5 MILK PRODUCTS OWNED BY THE ASSESSEE. THE ASSESS EE DID NOT CHARGE ANY RENT FOR THE USE OF BOOTHS FROM THE CONCESSIONAIRES. THE MILK BOOTHS WERE, IN FACT, OWNED BY THE ASSESSEE. THE ASSESEE HAD A RIGHT TO ENTER THE MILK BOOTH AND TAKE CHARGE THEREOF AT ANY TIME, WITHOUT ASSIGNING ANY REASON OR WITHOUT AN Y INTIMATION TO THE CONCESSIONAIRES. THE UNSOLD MILK WAS TAKEN BACK BY THE ASSESSEE FROM THE CONCESSIONAIRES. THE CASH COLLECTION WAS DAILY HANDED OVER TO THE ASSESSEE BY THE CONCESSIONAIRES. THE CONCESSIONAIRES ONLY RENDERED A SERVICE TO THE ASSESSEE FOR SELLING MILK TO THE CUSTOMERS, AND THE OWNERSHIP OF THE GOODS DID NOT PASS FROM THE ASSESSEE TO THE CONCESSIONAIRES, INASMUCH AS THERE WAS NO SALE OF THE MILK/MILK PRODUCTS TO THE CONCESSIONAIRES. 37. IT WAS OBSERVED THAT LOOKING AT THE FACTS OF THE CASE , NAMELY, THAT THE OWNERSHIP OF THE MILK BOOTH RESTS WITH THE ASSESSEE WHO DOES NOT CHARGE ANY RENT FOR THE USE OF THE BOOTHS FROM THE CONCESSIONAIRES; THE UNSOLD MILK IS TAKEN BACK BY THE ASSESSEE FROM THE CONCESSIONAIRES WHO ARE PROHIBITED FROM SELLING A NY OTHER PRODUCT OF ANY OTHER BRAND; THE SALE COLLECTIONS OF THE CONCESSIONAIRES ARE COLLECTED IN CASH BY THE ASSESSEE FROM CONCESSIONAIRES ON A DAILY BASIS, THERE CAN BE NO DOUBT THAT THE CONCESSIONAIRES ARE SELLING MILK FOR AND ON BEHALF OF THE ASSESSEE AND WERE BEING PAID A COMMISSION FOR IT. 38. ON THE BASIS OF THE AFORESAID UNDISPUTED FACTS, IT WAS HELD BY THE HON BLE HIGH COURT, CONFIRMING THE DECISION OF THE TRIBUNAL, THAT THE COMMISSION PAID TO THE AGENTS FOR THE GOODS SOLD ATTRACTED THE MISCHIEF OF SECTION 194H OF THE ACT. 39. IN THE PRESENT CASE, HOWEVER, THE COLLECTION CENTRE HAS ITS OWN PREMISES, INFRASTRUCTURE, STAFF AND NECESSARY LICENSES/APPROVALS. THE COLLECTION CENTRE ACTS AS AN AUTHORIZED COLLECTOR FOR COLLECTING SAMPLES AND AVAILS THE PROFESSIONAL SERVICES OF THE APPELLANT WITH RESPECT TO TESTING OF SAMPLES AND ISSUE OF NECESSARY REPORTS. THE ASSESSEE RAISES PERIODICAL INVOICES ON THE COLLECTION CENTERS. THE AMOUNT COLLECTED BY THE COLLECTION CENTER FROM THE PATIENTS IS NOT ON ACCOUNT O F OR ON BEHALF OF THE ASSESSEE. THE COLLECTION CENTER, IN TURN, MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING TAX AT SOURCE U/S 194J OF THE ACT FOR THE PROFESSIONAL SERVICES RENDERED. THE COLLECTION CENTRE HAS THE FLEXIBILITY AND FREEDOM TO CHOOSE THE ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 6 LABO RATORY TO WHICH SAMPLES HAVE TO BE SENT FOR TESTING, UNLESS THE SAME IS MANDATED BY THE PATIENT/CUSTOMER. MOREOVER, THE COLLECTION CENTRE CHARGES THE CUSTOMER RATES FIXED BY THE COLLECTION CENTRE (AND NOT DECIDED BY THE ASSESSEE) THOUGH AT THE SAME TIME, K EEPING IN MIND THE AMOUNT THAT WOULD HAVE TO BE PAID BY THE COLLECTION CENTRE TO THE ASSESSEE OR TO ANY OTHER LABORATORY TO WHICH THE SAMPLES HAVE TO BE SENT FOR TESTING. IN FACT, IN CERTAIN CASES, THE COLLECTION CENTERS HAVE, AS ALSO BROUGHT ON RECORD BEF ORE US, CHARGED OVER AND ABOVE THE STANDARD PRICE LIST PROVIDED BY THE ASSESSEE TO ALL COLLECTION CENTERS, WHICH AVERMENT HAS GONE UNREBUTTED. HENCE, DELHI MILK SCHEME (SUPRA) IS ALSO NOT OF ANY AVAIL TO THE DEPARTMENT. 40. IN BHARTI CELLULAR (SUPRA), THE ASSESSEE WAS PROVIDING CELLULAR MOBILE TELEPHONE SERVICES IN SPECIFIC AREA THROUGH DISTRIBUTORS BY PROVIDING SIM AND PRE - PAID CARDS AT FIXED RATES BELOW THE MARKET PRICE, WHICH WERE FURTHER SOLD TO RETAILERS, WHO ULTIMATELY SOLD THE SIM CARDS AND PRE - P AID CARDS TO CUSTOMERS. AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE FRANCHISEES, THE RIGHTS, TITLE, OWNERSHIP AND PROPERTY RIGHTS IN THE PRE - PAID CARDS, AT ALL TIMES, VESTED WITH THE ASSESSEE. THE FRANCHISEE S PRICE AND PAYMENT THEREOF WAS DECIDED BY THE ASSESSEE ITSELF, WHICH SHOWED THAT THE DIFFERENCE BETWEEN PRICE CHARGED BY THE ASSESSEE AND THAT CHARGED BY THE FRANCHISEE WAS COMMISSION AND NOT DISCOUNT. 12 . SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER IN ASSESSEE S OWN CASE, WE DO NOT SEE ANY MERIT IN THE DEPARTMENTAL APPEAL ON THIS ISSUE. 13 . NOW WE WILL DEAL WITH THE APPEAL OF THE ASSESSEE IN ITA NO. 3230/DEL/2013. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT( A) ERRED IN NOT HOLDING THAT THE REASSESSMENT ORDER DATED 10.12.2010 PASSED BY THE ASSESSING OFFICER UNDER SECTION 147/143(3) OF THE INCOME - TAX ACT, 1961 ('THE ACT') WAS WITHOUT JURISDICTION, BAD IN LAW AND VOID AB INITIO. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 7 1.1 THAT ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSING OFFICER HAD ASSUMED JURISDICTION UNDER SECTION 147 OF THE ACT, WITHOUT ANY NEW TANGIBLE INFORMATION/ MATERIAL COMING TO THE POSSESSION OF THE ASSES SING OFFICER. 1.2 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE CIT(A) ERRED IN LAW IN FAILING TO APPRECIATE THAT THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS BEYOND JURISDICTION, BEING IN VIOLATION OF PROVISIONS OF SECTIO NS 147/148 OF THE ACT. 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING DISALLOWANCE OF RS.20,00,000, MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA), FOR ALLEGED NON - DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT. 2.1 THAT THE C IT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE AFORESAID DISALLOWANCE WITHOUT ASSIGNING ANY REASON(S) WHATSOEVER IN SUPPORT THEREOF. 2.2 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT DISPOSING OF APPLICATION FILED BY THE APPELLANT FOR ADMISSION OF AD DITIONAL EVIDENCE UNDER RULE 46A OF THE ACT. 2 .3 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN FINALLY DISPOSING OF THE APPEAL PREFERRED BY THE APPELLANT BEFORE THE CIT(A), WITHOUT DISPOSING OF APPLICATION FILED BY THE APPELLANT FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE ACT, BEING CONTRARY TO THE LAW DECLARED BY THE HON'BLE SUPREME COURT, INTER ALIA, IN THE CASES OF MALAYAM PLANTATIONS LTD: (2010) 13 SCC 487; JATINDER SINGH V. MEHAR SINGH. AIR 2009 SC 354; SHYAM GOPAL BINDAL V. LAND ACQUISI TION OFFICER, (2010) 2 SCC 316. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 8 2.4 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN FAILING TO APPR ECIATE THAT THE AMOUNT OF RS.20, 00,000 DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT REPRESENTED AD HOC PROVISION MADE BY THE APPELLAN T IN RESPECT OF EITHER (I) FUTURE LIABILITIES TOWARDS UNKNOWN PARTIES; OR, (II) REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED BY THIRD PARTIES, WHERE KNOWN. 2.5 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN FAILING TO APPRECIATE THAT OUT OF THE AMOUNT DISALL OWED BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT: - PAYMENT AGGREGATING TO RS.6,73,440 REPRESENTED RETAINERSHIP FEES PAID BY THE APPELLANT, IN RESPECT OF WHICH THE APPELLANT DULY DEDUCTED TAX AT SOURCE; - PAYMENT AGGREGATING TO RS.2,58,474 REPRESENTED REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED BY THIRD PARTIES, WITH RESPECT TO WHICH THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE; AND, - THE BALANCE REPRESENTED AD HOC PROVISION MADE BY THE APPELLANT IN RESPECT OF AMOUNTS PAYABLE TO VARIOUS THIRD PARTIES, WHOSE IDENTITY AS WELL AS THE EXACT AMOUNT PAYABLE WAS NOT KNOWN AT THE CLOSE OF THE PREVIOUS YEAR WHEN SUCH PROVISION WAS CREATED. 2.6 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN LEVYING I NTEREST UNDER SECTIONS 234B/234D OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 14 . GROUND NOS. 1 TO 1.2 WERE NOT PRESSED SO THESE ARE DISMISSED AS NOT PRESSED. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 9 15 . VIDE G ROUND NOS. 2 TO 2.5, THE GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS.20,00,000/ - MADE BY THE AO U/S 40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. 16 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE T HAT THE AO MADE THE IMPUGNED ADDITION BY OBSERVING AS UNDER: ANNEXURE XIV, TO TAX AUDIT REPORT U/S 44AB HAS IDENTIFIED A CONTRACTUAL PAYMENT OF RS.20,00,000/ - UNDER THE HEAD BUSINESS PROMOTION ON WHICH TAX WAS DEDUCTIBLE TO THE TUNE OF RS.44,800/ - BUT W AS NOT DEDUCTED. AS TAX HAS NOT BEEN DEDUCTED U/S 194C, ON THIS CONTRACTUAL PAYMENT OF RS.20,00,000/ - . THE SAME IS DISALLOWED U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. (NET ADDITION RS.20,00,000/ - ) 17 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: FURTHER, AS REGARDS GROUND OF APPEAL WITH RESPECT TO DISALLOWANCE OF RS 20,00,000 UNDER SECTION 40(A)(IA) OF THE ACT, RAISED BEFORE YOUR OFFICE, IT IS SUBMITTED THAT WE ARE IN THE PROCESS OF COLLATING NECESSARY DETA ILS AND THEREFORE REQUEST YOUR OFFICE TO GRANT SOME TIME FOR THE SAME. IN CASE ANY CLARIFICATION IN RESPECT OF ABOVE IS REQUIRED, WE WOULD BE PLEASED TO PROVIDE THE SAME.' 18 . THE ASSESSEE ALSO FURNISHED CERTAIN DETAILS/DOCUMENTS. THE LD. CIT(A) ON THE S UBMISSIONS OF THE ASSESSEE ASKED THE REMAND REPORT FROM THE AO WHO SUBMITTED AS UNDER: 'THE ASSESSEE FILED ITS RETURN OF INCOME CLAIMING AN EXPENDITURE OF RS, 20,00,000/ - IN ITS P&L A/C UNDER THE HEAD 'BUSINESS PROMOTION' AS PER THE ANNEXURE - XIV TO ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 10 TAX AUD IT REPORT IDENTIFIED AS CONTRACTUAL PAYMENT ON WHICH TAX WAS NOT DEDUCTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE ORDER SHEET ENTRY DATED 14.12.09 , THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY DISALLOWANCE U/S 40(A)(IA) OF THE ACT NOT BE MADE AS TDS HAS NOT BEEN DEDUCTED ON THE PAYMENTS. THE ASSESSEE WAS ASKED TO SUBMIT ITS REPLY. ON 18.12.2009, THE AR OF THE ASSESSEE SH. V.K.CHOUDHARY, G.M.(FINANCE) APPEARED, HOWEVER NO REPLY/SUBMISSION WAS FILED BY THE ASSESSEE IN THIS REGARD. AGAIN THE ASSES SEE APPEARED ON 21.12.2009 BUT NO SUBMISSION WAS FILED IN THIS REGARD. ON 18.12.2010, SH. SUMIT MALIK, MANAGER FINANCE(F&A) TAXATION APPEARED ON BEHALF OF THE ASSESSEE COMPANY AND WAS AGAIN ASKED TO FILE ITS REPLY AS TO WHY THE PAYMENTS DISALLOWANCE U/S 40 (A)(IA) OF THE ACT SHOULD NOT BE MADE AS THE ASSESSEE HAS FILED TO DEDUCT TDS ON THE PAYMENTS MADE AND THE CASE WAS ADJOURNED FOR 28.10.2010. THE AR OF THE ASSESSEE SH. SUMIT MALIK APPEARED ON 27.10.10 AND SOUGHT AN ADJOURNMENT FOR A WEEK. THE CASE WAS ADJ OURNED FOR 4.11.2010. ON 4.11.2010, SH. NAMII SABHARWAL, AR OF THE ASSESSEE APPEARED BUT NO REPLY WAS FILED REGARDING NON DEDUCTION OF TDS ON THE EXPENSES CLAIMED UNDER THE HEAD BUSINESS PROMOTION. THE CASE WAS ADJOURNED FOR 11.11.2010. ON 11.11.2010 , THE ASSESSEE WAS AGAIN SHOW CAUSED AS TO WHY PAYMENTS MADE TO VARIOUS AGENCIES ON WHICH TDS HAS NOT BEEN MADE SHOULD NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT AND THE CASE WAS ADJOURNED FOR 29.11.2010. THE ASSESSEE APPEARED ON 29.11.2010 & 6.12.2010, BUT FAI LED TO SUBSTANTIATE ITS CLAIM FOR NON DEDUCTION OF TDS. THE ASSESSMENT ORDER WAS PASSED ON 10.12.2010. THE ASSESSEE DURING APPEAL BEFORE THE CIT(A) - XII, NEW DELHI REQUESTED TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES, 1962 CLAIMING THAT THE AO HAS PASSED THE ORDER WITHOUT GIVING ANY OPPORTUNITY TO ADDUCE EVIDENCE AND THAT IT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE AO RELEVANT FACTS AND CIRCUMSTANCES. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 11 THE ASSESSEE'S CONTENTION THAT IT WAS NOT GIVEN ANY OPPORTUNITY OF B EING HEARD IN REGARD TO THE ADDITION MADE U/S 40(A)(IA) IS NOT CORRECT AS THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES AS STATED IN PARA 3. THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM REGARDING NON DEDUCTION OF TDS ON EXPENSES CLAIMED UNDER THE HEAD BUSINESS PROMOTION WHEREIN THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME ON VARIOUS DATES AS PARA3. SINE THESE WERE NOT FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE OPPORTUNITIES THE ADDITIONAL EVIDENCE SHOULD NO T BE ADMITTED. IN VIEW OF THIS, THE ADDITION MADE BY THE AO U/S 40(A)(IA) THE ACT NEEDS TO BE SUSTAIN.' 19 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO UPHELD THE DISALLOWANCE OF RS.20,00,000/ - BY OBSE RVING IN PARA 8 OF THE IMPUGNED ORDER AS UNDER: I HAVE PERUSED THE FACTS STATED IN THE ASSESSMENT ORDER AS WELL AS FACTS STATED BY THE ASSESSEE. THE ASSESS ING OFFICER DISALLOWED RS. 20,00 ,000/ - U/S 194C. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER HAS S TATED THAT '.... ANNEXURE XIV, TO TAX AUDIT REPORT U/S 44AB HAS IDENTIFIED A CONT RACTUAL PAYMENT OF RS.20,00,000 / - UNDER THE HEAD 'BUSINESS PROMOTION' ON WHICH TAX WAS DEDUCTIBLE TO THE TUNE OF RS.44,800 / - BUT WAS NOT DEDUCTED. AS TAX HAS NOT BEEN DEDUCTED U/S 1 94C ON THIS CONTRACTUAL PAYMENT OF RS.20,00,000 / - , THE SAME IS DISALLOWED U/S 40(A)( IA) OF THE INCOME TAX ACT, 1961. ' SECTION 194C ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 12 [(1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE CONTRA CTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACT AND . [EXPLANATION III - FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE - (A)ADVERTISI NG; (B)BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMERS FOR SUCH BROADCASTING OR TELECASTING; (C)CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D)CATERING.] KEEPING IN VIEW OF THE ABOVE FACTS, I UPHOLD T HE DECISION TAKEN BY THE ASSESSING OFFICER AND HENCE THE APPEAL IS DISMISSED ON THIS GROUND. 20 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NEITHER THE AO NOR THE LD. CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE I N RIGHT PERSPECTIVE AND DID NOT COMMENT ON THE DOCUMENTS/EVIDENCES FURNISHED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) MERELY REPRODUCED THE SUBMISSION OF THE ASSESSEE AT PAGE NO. 36 OF THE IMPUGNED ORDER AND SUSTAINED THE ADDITION MADE BY THE AO IN SLIP - SHOD MANNER. IT WAS CONTENDED THAT THE ASSESSEE HAD ALREADY DEDUCTED TDS ON THE PAYMENT OF RS.6,73,440/ - AND PAYMENT OF RS.2,58,474/ - WAS ON ACCOUNT OF REIMBURSEMENT OF EXPENSES BY THIRD PARTY. THEREFORE, THERE WAS NO QUESTION OF DEDUCTI NG THE TDS ON THE SAID AMOUNT S . IT WAS ALSO CONTENDED THAT THE REMAINING AMOUNT WAS RELATING TO THE PROVISIONS CREATED ON AD - HOC BASIS WHICH WAS ALSO NOT LIABLE TO DEDUCT THE TDS. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 13 21 . IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR STRONGLY SUPPORTED THE ORDER O F THE AO AND FURTHE R SUBMITTED THAT THE OPPORTUNITIES WERE GIVEN BY THE AO AND THE LD. CIT(A) BUT THE ASSESSEE FAILED TO EXPLAIN ITS CASE. IT WAS FURTHER SUBMITTED THAT IN THE TAX AUDIT REPORT U/S 44AB OF THE ACT, THE AUDITORS IDENTIFIED A CONTRACTUAL PAYM ENT ON WHICH TAX WAS DEDUCTIBLE BUT NOT DEDUCTED AND THE ASSESSEE HAD NOT GIVEN ANY EXPLANATION TO THE AUDITOR ALSO. THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT FULLY JUSTIFIED. 22. WE HAVE CONSIDERED THE SUBMISSIONS OF THE BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT NEITHER THE AO NOR THE LD. CIT(A) COMMENTED UPON THE DOCUMENTS AND EVIDENCES FURNISHED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. IT IS ALSO NOT CLEAR AS TO WHETHER THE ASSESSEE HAD DEDUCTED TDS ON THE PAYMENT OF RS.6,73,440/ - AND THAT THERE WAS REIMBURSEMENT OF EXPENSES AMOUNTING TO RS.2,58,474/ - AS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE. WE, THEREFORE, IN THE ABSENCE OF CLEAR FA CTS ON RECORD, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 23. AS REGARDS TO GROUND NO. 2.6 R ELATING TO CHARGING OF INTEREST U/S 234B/234D OF THE ACT, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT IT IS CONSEQUENTIAL. WE ORDER ACCORDINGLY. ITA NO S. 3465 & 3230 /DE L/2013 SUPER RELIGARE LABORATORIES LTD. 14 24 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 13 /04 / 2018 ) SD/ - SD/ - ( K. N. CHARY ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13 /04 /20 18 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR