DCIT, Circle - 3(1), Kolkata , Kolkata V. M/s. Bhaskar Shrachi Alloys Limited , Kolkata

ITA 330/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9313 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: S M SURANA
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

1 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI A. T. VARKEY, JM] I.T.A. NO. 65/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. BHASKAR SHRACHI ALLOYS LTD. (PAN: AABCB8956C) VS. JOINT COMMISSIONER OF INCOME-TAX (OSD) OSD TO CIT-III, KOLKATA. APPELLANT RESPONDENT I.T.A. NO. 330/KOL/2018 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/ S. BHASKAR SHRACHI ALLOYS LTD. CIRCLE-3(1), KOLKATA. APPELLANT RESPONDENT & C.O. NO.47/KOL/2018 IN I.T.A. NO. 330/KOL/2018 ASSESSMENT YEAR: 2009-10 M/S. BHASKAR SHRACHI ALLOYS LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), KOLKATA (CROSS OBJECTOR) RESPONDENT DATE OF HEARING 14.01.2019 DATE OF PRONOUNCEMENT 03.04.2019 FOR THE ASSESSEE SHRI S. M. SURANA, ADVOCATE FOR THE REVENUE SHRI C. J. SINGH, JCIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THESE CROSS APPEALS BY ASSESSEE AND REVENUE AND THE CROSS OBJECTION BY ASSESSEE ARE ARISING OUT OF THE ORDER OF LD. CIT(A)-15, KOLKATA DATED 21.11.2017 FOR AY 2009-10. BOTH 2 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 THESE CROSS APPEALS AND THE CROSS OBJECTION ARE TAK EN UP TOGETHER FOR THE SAKE OF CONVENIENCE. 2. THE SECOND GROUND OF APPEAL OF ASSESSEE, THE 1 ST GROUND OF APPEAL OF THE REVENUE AND THE 1 ST GROUND OF APPEAL OF THE CROSS OBJECTION OF ASSESSE E ARE AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION ON ACCOUNT OF FRE IGHT AND CARRIAGE IN WARD EXPENSES TO THE EXTENT OF RS.25,79,530/- U/S. 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED TH AT THE ASSESSEE COMPANY INCURRED A SUM OF RS.1,76,66,048/- ON ACCOUNT OF FREIGHT AND T RANSPORT EXPENSES UNDER THE HEAD SELLING AND DISTRIBUTION EXPENSES. THE AO TOOK NOTE THAT OU T OF THIS SUM RS.21,06,224/- HAS BEEN CAPITALIZED AS RELATING TO SGCI AND SILICO MANGANES E BEING WIP. THE AO NOTED THAT THESE PAYMENTS WERE MADE AS PER CONTRACT TO 14 TRANSPORTE RS OUT OF WHICH 2 TRANSPORTERS PAYMENTS WERE BELOW RS. 50,000/- VIZ. RS.42,547/-. ACCORDING TO AO, THE BALANCE PAYMENTS WERE MADE IN EXCESS OF RS.50,000/- TO EACH CONTRACTOR. THEREFORE, ACCORDING TO AO AS PER SEC. 194C OF THE ACT, THE ASSESSEE COMPAN Y SHOULD HAVE MANDATORILY DEDUCTED TDS U/S. 194C ON THE AFORESAID SUM AND SINCE THE AS SESSEE FAILED TO DEDUCT TDS ON THE SUM OF RS.1,76,23,501/- HE ADDED BACK THE SAME INVOKING SEC. 40(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHO WAS PLEASED TO RESTRICT THE DISALLOWANCE TO AN AMOUNT OF RS.25,79,530/-. AGGRI EVED, BOTH THE REVENUE AS WELL AS THE ASSESSEE IS IN APPEAL AND THE ASSESSEE HAS ALSO FIL ED CROSS OBJECTION BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS NOTED BY THE AO IS NOT REPEATED FO R THE SAKE OF BREVITY. WE NOTE THAT THE LD. CIT(A) HAS MADE A FINDING OF FACT THAT THE ASSE SSEE HAS DEDUCTED TDS ON THE FREIGHT PAYMENT AMOUNTING TO RS.1,55,59,824/-. THEREAFTER, THE LD. CIT(A) NOTED THAT SINCE THE ASSESSEE HAS NOT DEDUCTED TDS FOR EXPENSES OF RS.25 ,79,530/- THE LD. CIT(A) HAS DISALLOWED RS.25,79,530/- AND ALLOWED RELIEF TO ASS ESSEE OF RS.1,50,87,078/- (RS.1,76,66,608 RS.25,79,530). WE NOTE THAT THE FINDING OF THE FACT MADE BY THE LD. 3 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 CIT(A) THAT THE ASSESSEE HAS DEDUCTED TDS OF FREIGH T PAYMENT AMOUNTING TO RS.1,55,59,824/- HAS NOT BEEN SPECIFICALLY CHALLENG ED BY THE REVENUE, THEREFORE, THE FINDING OF FACT OF THE LD. CIT(A) HAS CRYSTALLIZED AND, THE REFORE, WE FIND NO GROUND TO DISTURB THE FINDING OF FACT AS RECORDED BY THE LD. CIT(A) AND, THEREFORE, THE REVENUE APPEAL AGAINST THE RELIEF GRANTED BY THE LD. CIT(A) STANDS DISMISSED. 5. COMING TO THE DISALLOWANCE CONFIRMED BY AN AMOU NT OF RS.25,79,530/-, WE NOTE THAT IT COMPRISES OF TWO FIGURES RS.21.06,224/- WHICH TH E ASSESSEE HAD CLAIMED TO HAVE BEEN CAPITALIZED AND RS.3,49,682/- GIVEN TO UNITED TRADE RS CO. AND VIVEK ENTERPRISES AMOUNTING TO RS.1,23,624/- OUT OF WHICH WE NOTE THAT RS.21,06 ,224/- HAS NEVER BEEN CLAIMED BY THE ASSESSEE AS DEDUCTION. THEREFORE, THE QUESTION OF DISALLOWANCE DOES NOT ARISE AND, THEREFORE, THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THIS AMOUNT BECAUSE THE ASSESSEE HAS NEVER CLAIMED THIS AMOUNT AS EXPENDITURE SO, TH EREFORE, QUESTION OF DISALLOWANCE BY INVOKING SECTION 40(A)(IA) OF THE ACT DOES NOT ARI SE, THEREFORE, WE DELETE THE DISALLOWANCE OF AN AMOUNT OF RS.21,06,224/-. IN RESPECT TO THE OTHE R DISALLOWANCE CONFIRMED BY THE LD. CIT(A) OF RS.4,73,306/- (RS.3,49,682/- PLUS RS.1,23 ,624/-), THE LD. AR DOES NOT PRESS AGAINST THIS DISALLOWANCE AND, THEREFORE, WE CONFIR M THE DISALLOWANCE MADE BY THE LD. CIT(A) OF RS.4,73,306/-. 6. THE NEXT GROUND OF APPEAL OF THE ASSESS EE IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING RS.60,199/- U/S. 40(A)(IA) OF THE ACT WH ICH IS NOT PRESSED, SO DISMISSED. 7. COMING TO THE REVENUES APPEAL. GROUND NO.2 IS AGAINST THE ACTION OF THE LD. CIT(A) IN RESTRICTING THE DISALLOWANCE OF FREIGHT I N WARD OF RS.60,199/-, WE NOTE THAT BRIEF FACTS OF THE CASE ARE THAT AO IN THE ASSESSMENT OR DER HAS OBSERVED THAT THE ASSESSEE COMPANY HAS INCURRED A SUM OF RS.33,47,565/- ON ACC OUNT OF FREIGHT AND CARRIAGE IN WARD EXPENSES UNDER THE HEAD MANUFACTURING EXPENSES. WHEN THE ASSESSEE COMPANY WAS ASKED THE DETAILS OF TDS DEDUCTED IT FAILED TO PRODUCE A NY DETAILS. SO, THE AO WAS OF THE OPINION THAT IT IS NOT POSSIBLE TO ASCERTAIN WHETHER THE AS SESSEE COMPANY COMPLIED WITH THE PROVISIONS OF SEC. 194C OF THE ACT AND THE AO WONDE RED AS TO HOW THE ENTIRE EXPENDITURE 4 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 CLAIMED RELATED TO MANUFACTURING ACTIVITY OF GOODS INWARD OR IS RELATED TO CAPITAL WORK IN PROGRESS OF NEW UNIT. SINCE THE ASSESSEE FAILED T O PRODUCE THE REQUISITE DETAILS 1/5 TH OF THE EXPENDITURE WHICH WORKS OUT TO RS.66,95,130/- WAS D ISALLOWED AND ADDED BACK. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHO WAS PLEASED TO RESTRICT THE DISALLOWANCE TO RS.60,199/-. AGGRIEVED, THE REVENU E IS BEFORE US AND THE ASSESSEE THOUGH APPEALED AGAINST THE CONFIRMATION OF RS.60,199/- HA S NOT PRESSED THIS GROUND BEFORE US. SO, WE DISMISS THE ASSESSEES APPEAL IN RESPECT OF THE ACTION OF LD. CIT(A) IN CONFIRMING RS.60,199/-. SO, WHAT WE NEED TO ADJUDICATE IS TH E ACTION OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE NOT REPEATING THE FACTS NOTED BY THE AO, SUPRA, FOR THE SAKE OF BREVITY. WE NOTE THAT DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS NOTED THAT THE ASSESSEE HAS CLAIMED TOTAL EXPENDITURE OF RS.3,34,75,651/- ON A CCOUNT OF FREIGHT AND CARRIAGE EXPENSES. HOWEVER, THE AO HAS ALLOWED ONLY 1/5 TH OF THE EXPENSES CLAIMED ON THE PLEA THAT IT IS RELATED TO CAPITAL WORK. WE NOTE THAT THE LD. CIT( A) HAS MADE A FINDING OF FACT THAT ASSESSEE HAS DEDUCTED TDS WHEREVER IT WAS APPLICABL E. THE LD. CIT(A) HAS MADE A FINDING OF FACT THAT THE ASSESSEE HAS NOT DEDUCTED TDS WHER E PAYMENTS WERE LESS THAN RS. 20,000/- OR WHERE MADE TO GOVERNMENT AGENCIES. THIS FINDING OF FACT HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT SO IT HAS CRYSTALLIZED. THE LD. CIT (A) HAS ONLY FOUND OUT THAT IN RESPECT TO PAYMENT OF FREIGHT AND CARRIAGE IN WARD MADE TO XPS , 1/1, CAMAC STREET, KOLKATA-16 AMOUNTING TO RS.33,233/- AND CLEARING AND FORWARDIN G CHARGES AMOUNTING TO RS.26,966/- ASSESSEE HAS NOT DEDUCTED TDS, THEREFORE, HE HAS RE STRICTED THE DISALLOWANCE TO RS.60,199/- (RS.33,233 + RS.26,966) IN THE PLACE OF THE EXPENDI TURE CLAIMED OF RS.3,34,75,651/- SO, GIVING RELIEF TO THE ASSESSEE TO THE TUNE OF RS.3,3 4,15,452/-. WE NOTE THAT THIS FINDING OF FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE SO, THE FI NDING OF FACT HAS CRYSTALISED AND THE LD. DR COULD NOT PRODUCE ANY MATERIAL BEFORE US TO CONT ROVERT THE FINDING OF FACT OR THE DECISION OF AO TO TREAT THE EXPENSES AS RELATED TO CAPITAL W ORK. SO, WE ARE INCLINED NOT TO INTERFERE 5 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 WITH THE ORDER OF THE LD. CIT(A) SO, WE CONFIRM THE ORDER OF LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 9. COMING TO GROUND NO. 3 OF REVENUES APPEAL WHICH IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS.1,80,000/ - OUT OF RENT PAYMENT. BRIEF FACTS OF THE ISSUE, ACCORDING TO AO, ARE THAT ON EXAMINATION OF DETAILS THE AO FOUND THAT THE ASSESSEE COMPANY PAID RENT FOR RESIDENTIAL FLAT AMOUNTING TO RS.1,80,000/- TO TIRUPATI PROPERTIES & INVESTMENT (P) LTD. FOR STAFF ACCOMMODATION. ACCORD ING TO AO, NEITHER COPY OF AGREEMENT NOR UTILIZATION OF THE SAID FLAT AND WHETHER THE SA ID RESIDENTIAL FLAT WAS ALLOTTED TO EXECUTIVE STAFF OF THE COMPANY, REMUNERATION PAID TO SUCH STA FF WITH TERMS OF APPOINTMENT ETC. WERE FURNISHED. SO, ACCORDING TO AO, SINCE THE ASSESSEE HAS NOT EVEN FURNISHED DETAILS OF TDS DEDUCTED OUT OF AFORESAID RENT PAYMENT, CLAIMED FOR RESIDENTIAL ACCOMMODATION REMAINED UNVERIFIED, HENCE HE DISALLOWED AND ADDED BACK THE SAID AMOUNT. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION OF RS.1,80,000/- BY OBS ERVING THAT THE BOOKS OF ACCOUNT HAVE BEEN VERIFIED AND THE TDS HAS BEEN DEDUCTED ON RENT PAYMENT. AGGRIEVED, REVENUE IS BEFORE US. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO DISALLOWED THE CLAIM OF RENT PAYMENT FOR WANT OF DETAILS AND EVIDENCE AND ACCORDING TO HIM, THE ASSESSEE HAS NOT EVEN FURNISHED DETAILS OF TDS DEDUCTED OUT OF AFORESAID RENT PAYMENT. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE BOOKS OF ACCOUNT HAVE BEEN VERIFIED AND TH E TDS HAS BEEN DEDUCTED ON RENT PAYMENT. THIS FINDING OF FACT HAS NOT BEEN CHALLEN GED BY THE REVENUE SO, IT HAS CRYSTALLIZED. WE NOTE THAT FLAT WAS TAKEN ON RENT FOR UTILISATION OF EXECUTIVE STAFF OF THE ASSESSEE COMPANY, WHO COME TO KOLKATA FROM THE ASSESSEES WO RKSHOP AND FACTORY SITUATED AT DURGAPUR FOR THE PURPOSE OF BUSINESS AND SO IS AN A LLOWABLE EXPENDITURE. SO, WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS THE GROUND OF A PPEAL OF REVENUE. 6 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 11. NEXT GROUND OF APPEAL OF REVENUE IS AGAINST TH E ACTION OF LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS.1,20,000/- ON ACCOUNT OF RETAINE R-SHIP FEES. THE AO DISALLOWED THE CLAIM OF ASSESSEE AS IT REMAINED UNVERIFIED FOR WA NT OF DETAILS OF TDS DEDUCTED ON THE AFORESAID SUM AND NATURE OF SERVICE RENDERED BY PRO FESSIONAL. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED, REVENUE IS BEFORE US. 12. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO DISALLOWED THE CLAIM OF ASSESSEE AS IT REMAINED UNVERIFIED FOR WANT OF DETAILS OF TDS DEDUCTED ON THE AFORESAID S UM AND NATURE OF SERVICE RENDERED BY PROFESSIONAL ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE BOOKS OF ACCOUNT HAVE BEEN VERIFIED AND THE TDS HAS BEEN DED UCTED ON THIS PAYMENT TO PROFESSIONAL ENGAGED IN ADVISING THE ASSESSEE ON TAXATION. THIS FINDING OF FACTS HAS NOT BEEN CHALLENGED BEFORE US. SO, WE ARE NOT INCLINED TO INTERFERE WI TH THE ORDER OF LD. CIT(A). SO, WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE. 13. NEXT GROUND OF APPEAL OF REVENUE IS AGAINST THE ACTION OF LD. CIT(A) IN RESTRICTING THE DISALLOWANCE OF RS.1,95,218/- TO RS.10,000/- ON ACCOUNT OF DONATION. BRIEF FACTS OF THE CASE ACCORDING TO AO ARE THAT THE ASSESSEE COMPANY CLAIMED DONATION PAID OF RS.1,95,218/- WHICH IT INCLUDED UNDER THE HEAD MISCELLANEOUS EXPE NSES. THE AO DISALLOWED THE SAME AND ADDED IT TO THE INCOME OF THE ASSESSEE BECAUSE THE ASSESSEE IN ITS COMPUTATION NOR DID FURNISH ANY DETAILS AND EVIDENCE OF THE AFORESAID C LAIM. MOREOVER, ACCORDING TO AO, THE SAID EXPENSES WAS NOT RELATED TO ASSESSEES BUSINES S, HENCE HE DISALLOWED AND ADDED BACK. ON APPEAL, THE LD. CIT(A) RESTRICTED THE DISALLOWAN CE TO RS.10,000/-. AGGRIEVED, THE REVENUE IS BEFORE US. 14. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE CLAIMED EXPENDITUR E OF RS.1,95,218/- ON ACCOUNT OF GIVING DONATION. SINCE NO EVIDENCE WAS FURNISHED BEFORE A O, HE DISALLOWED THE CLAIM OF ASSESSEE. BEFORE THE LD. CIT(A), IT WAS BROUGHT TO HIS NOTICE THAT THE PAYMENTS WERE MADE FOR 7 ITA NOS. 65,330 & 47/KOL/2018 BHASKAR SHRACHI A LLOYS LTD., AY- 2009-10 PRINTING ADVERTISEMENT MATERIALS IN SOUVENIRS AND NEWS PAPERS, SO IT WAS CONTENDED BY THE ASSESSEE THAT THE EXPENDITURE WAS FOR BUSINESS PURP OSES. SO, THE LD. CIT(A) ALLOWED THE EXPENDITURE AFTER EXAMINING THE LEDGER ACCOUNT AS B USINESS EXPENDITURE. FOR DOING SO, HE RELIED ON THE ORDER OF THE JURISDICTIONAL HIGH COUR T IN CIT VS. BATA INDIA LTD. 201 ITR 884 (CAL). THE FACTS AFORESAID COULD NOT BE CONTROVERT ED BY THE REVENUE, SO THE IMPUGNED ORDER OF LD. CIT(A) IS CONFIRMED. SINCE CO NOT PRESSED, I T STANDS DISMISSED. 15. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED AND THAT OF REVENUE IS DISMISSED & CO OF ASSESSEE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3RD APRIL , 2019 SD/- SD/- (P. M. JAGTAP) (ABY. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED :3RD APRIL, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. BHASKAR SHRACHI ALLOYS LTD., 8/ 1, MIDDLETON ROW, KOLKATA-700 071. 2 RESPONDENT JCIT (OSD) OSD TO CIT-III, KOLKATA. 3. 4. CIT(A)-15, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR