Addl. CIT, New Delhi V. M/s. Moser Baer Entertainment Ltd., New Delhi

ITA 3578/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8449 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.3578/DEL/2017 ASSESSMENT YEAR: 2012-13 ADDL. CIT, SPECIAL RANGE-6, C.R. BUILDING, NEW DELHI VS. M/S. MOSER BAER ENTERTAINMENT LTD., 43B, OKHLA INDUSTRIAL AREA, PHASE-III, NEW DELHI PAN :AAFCM0114K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OR DER DATED 20/03/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-33, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2012-13, RAISING FOLLOWING GROUNDS: 1. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS LEGALLY JUSTIFIED IN, DIETING DISALLOWANCE OF RS. 2 ,86,84,361/- ON ACCOUNT OF PAYMENT MADE TO THE PARENT COMPANY (MB1L) AGAINS T SLUMP SALE UNDER BUSINESS TRANSFER AGREEMENT (BTA) U/S 40(A)(I A) OF THE INCOME TAX ACT (THE ACT) DUE TO NON-DEDUCTION OF TDS BY IG NORING FINDINGS RECORDED BY THE ASSESSING OFFICER (THE AO) FOR MAKI NG THESE DISALLOWANCES? APPELLANT BY MS. PRAMIT M. BISWAS, SR. DR RESPONDENT BY NONE DATE OF HEARING 06.01.2020 DATE OF PRONOUNCEMENT 15.01.2020 2 ITA NO.3578/DEL/2017 2. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE AO AMOUNTING TO RS 2,86,84,361/- U/S 40(A)(IA) OF THE ACT FOR NO T DEDUCTING THE TAX AT SOURCE ON PAYMENT MADE TO PARENT COMPANY (MBIL) ON PURCHASE OF RIGHTS UNDER THE BUSINESS TRANSFER AGREEMENT (BTA) ? 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. AT THE OUTSET, WE MAY LIKE TO MENTION THAT DESPITE NOTIFYING, NONE ATTENDED ON BEHALF OF THE ASSESSES, NOR ANY AD JOURNMENT WAS FILED. ACCORDINGLY, WE HAVE HEARD THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE PURCHASED A UNIT FROM THE PARENT COMPANY (MBIL) AGA INST SLUMP SALE UNDER BUSINESS TRANSFER AGREEMENT (BTA). THE A SSESSEE MADE PAYMENT OF RS. 2,86,84,361/- TO THE PARENT COMPANY FOR THIS PURCHASE UNDER THE BTA BUT NO TAX WAS DEDUCTED AT S OURCE (TDS) ON SUCH PAYMENT. THE ASSESSING OFFICER DISALLOWED T HIS PURCHASE EXPENDITURE IN THE HANDS OF THE ASSESSEE UNDER SECT ION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DUE T O NON-REDUCTION OF TAX AT SOURCE OBSERVING AS UNDER : IV) DISALLOWANCE U/S 40(A) (IA): DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED VIDE LETTER DATED 18.02.2015 ASSESSEE WAS ASK ED TO FURNISH DETAILS OF TDS DEDUCTED AND DEPOSITED ON 'ALL RIGHT S PURCHASED' THE ASSESSEE VIDE ITS REPLY DATED 09.03.2015 HAS SU BMITTED AS UNDER: 'DETAILS OF TDS DEDUCTED AND DEPOSITED ON ALL 'RIGH TS PURCHASED' DURING THE YEAR. DETAILS IS GIVEN IN ANN EXURE II.' 3 ITA NO.3578/DEL/2017 THE REPLY OF THE ASSESSEE IS EXAMINED ON MERIT AND NOT TO BE FOUND TENABLE. THE ASSESSEE HAS SUBMITTED THE LIST OF EXP ENSES ON WHICH TDS IS DEDUCTED. ON PERUSAL OF THE LIST IT IS OBSER VED THAT ASSESSEE HAS PURCHASED RIGHTS AMOUNTING TO RS.2,86,84,361/- FROM M/S MOSER BAER INDIA LTD. ON WHICH NO TDS HAS BEEN DEDU CTED. IN ALL OTHER CASES EXCEPT ABOVE THE TDS HAS BEEN DEDUCTED. IN THE REMARKS GIVEN AGAINST THE SAID PURCHASES OF RIGHT F ROM M/S MOSER BAER INDIA LTD. ASSESSEE MENTIONED ' BTA TRANSACTIO N' WITHOUT ANY FURTHER EXPLANATION WHY THE TDS IS NOT DEDUCTIBLE O N THE SAID AMOUNT OF RS.28684361/-. IN THE ABSENCE OF PROPER E XPLANATION FOR NON DEDUCTION OF TDS, I AM OF THE VIEW, THAT ASSESS EE HAS FAILED TO DEDUCT TDS AND ACCORDINGLY THE EXPENSES CLAIMED IN THE P & L ACCOUNTS AMOUNTING TO RS28684361/- IS DISALLOWED AN D ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY FO R THE YEAR. (DISALLOWANCE OF RS.2,86,84,361/-) 4. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT UNDER THE SLUMP SALE ALL ASSETS AND LIABILITIES INCLUDING RIG HT PURCHASE RELATED TO ENTERTAINMENT BUSINESS GET VESTED WITH T HE ASSESSEE. THE ASSESSEE SUBMITTED THAT SUCH RIGHTS WERE ACQUIR ED BY THE ASSESSEE OUT OF BTA TRANSACTION AS SUCH AS THE STOC K-IN-TRADE. THE ASSESSEE SUBMITTED THAT LIABILITY TO DEDUCT TDS ON PURCHASE ON SUCH RIGHT WAS ON MBIL AND THE MBIL HAS DEDUCTED THE TDS ON SUCH RIGHT PURCHASE. ACCORDING TO THE ASSESSEE, THESE RIGHTS VESTED TO THE ASSESSEE UNDER THE SLUMP SALE AND NO INDIVIDUAL ITEM PURCHASED BY THE ASSESSEE, THEREFORE, QUESTION OF DEDUCTING TDS ON SUCH RIGHT DOES NOT ARISE. IN VIEW OF THE SU BMISSION OF THE ASSESSEE, THE LD. CIT(A) DELETED THE DISALLOWANCE O BSERVING AS UNDER: 8.3 I HAVE CONSIDERED THE REASONING OF THE ASSESSI NG OFFICER AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO NOTED THAT THE APPELLANTS PARENT COMPANY, M/S. BOSER BAER INDIA L TD. HAD DEDUCTED TAX AT SOURCE AT THE TIME OF PURCHASE OF T HESE RIGHTS FROM 4 ITA NO.3578/DEL/2017 VARIOUS PARTIES. I HAVE ALSO GIVEN DUE CONSIDERATIO N TO THE FACT THAT THE APPELLANT BECAME THE OWNER OF THESE RIGHTS NOT BY WAY OF SPECIFIC PURCHASE OF THESE RIGHTS BUT BY VIRTUE OF TRANSFER OF BUSINESS INCLUDING ALL ASSETS AND LIABILITIES FROM ITS PAREN T COMPANY, M/S. MOSER BAER INDIA LTD. 8.5 UNDER THE ABOVE NARRATED CIRCUMSTANCES, I AM UN ABLE TO SUSTAIN THE ADDITION MADE BY THE ASSESSING OFFICER. 5. BEFORE US, THE LD. DR RELIED ON THE ORDER OF THE A SSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE WAS REQUIRE D TO DEDUCT TDS ON THE PAYMENTS MADE FOR PURCHASE OF RIGHTS I.E . ASSETS UNDER THE SLUMP SALE. 6. WE HAVE HEARD THE SUBMISSION OF THE LD. DR AND PERU SED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSES SING OFFICER HAS NOT POINTED OUT ANY SPECIFIC SECTION UNDER WHIC H THE ASSESSEE WAS REQUIRED TO DEDUCT TDS. BEFORE THE LD.CIT(A), T HE ASSESSEE HAS EXPLAINED THAT THE PAYMENT WAS MADE FOR PURCHAS E OF THE UNIT AGAINST SLUMP SALE UNDER BUSINESS TRANSFER AGR EEMENT AND IT WAS NOT PURCHASE OF INDIVIDUAL ITEM AND THEREFORE, THERE WAS NO LIABILITY OF THE ASSESSEE TO DEDUCT THE TDS. THE LD . CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND DELETED THE DISALLOWANCE. THE AO HAS TO DISCHARGE HIS ONUS OF E XPLAINING THE ASSESSEE THE RELEVANT PROVISION OF LAW APPLICABLE I N THE CASE OF ASSESSEE. BEFORE US, THE LD. DR COULD NOT EXPLAIN T HE RELEVANT PROVISION. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A) ON THE ISSUE IN DISPUTE IN VIEW OF NO SPECIFIC SECTION CITED BY THE ASSESSING OFFICER TO HOLD THE ASSESSEE LIABLE FOR N ON-DEDUCTION OF TAX AT SOURCE ON THE TRANSACTION OF SLUMP SALE. WE, ACCORDINGLY, 5 ITA NO.3578/DEL/2017 UPHOLD THE FINDING OF THE LD. CIT(A) ON THE ISSUE I N DISPUTE AND DISMISS THE GROUND OF THE REVENUE RAISED IN THIS RE GARD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2020. SD/- SD/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH JANUARY, 2020. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI