Sri Parameswari Projects Private Limited, Srikakulam V. Income Tax Officer, Ward-3, , Srikakulam

ITA 374/VIZ/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3687 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 11-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RAMA MOHAN
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 194C; 201(1); 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 374 /VIZ/201 8 ( / A SSESSMENT Y EAR : 20 1 3 - 1 4 ) M/S SRI PARAMESWARI PROJECTS PVT. LTD. REGIDI VILLAGE, REGIDI AMADALAVALASA MANDALAM SRIKAKULAM [PAN :A AICS3336E ] VS INCOME TAX OFFICER WARD - 3 SRIKAKULAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHR I Y.A.RAO , AR / RESPONDENT BY : S HRI V.RAMA MOHAN, DR / DATE OF HEARING : 2 7 .02.2020 / DATE OF PRONOUNCEMENT : 04 .0 3 . 20 20 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 9 , HYDERABAD IN ITA NO.1 0 502 / ITO - 3, SRIKAKULAM / 2017 - 18 DATED 0 5 . 04 .201 8 FOR THE ASSESSMENT YEAR (A.Y.) 20 1 3 - 1 4 . 2 I.T.A. NO. 374 /VIZ/201 8 , A.Y.20 1 3 - 1 4 M/S SRI PARAMESWARI PROJECTS PVT. LTD., SRIKAKULAM 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION OF RS.26,79,887/ - U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). BRIEF FACTS OF THE CASE ARE THAT D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 26,79,887/ - UNDER THE HEAD DISTRIBUTOR HIRE CHARGES AND T HE AO WAS UNDER THE IMPRESSION THAT THAT THE SAID PAYMENT WAS IN THE NATURE OF CONTRACTUAL OBLIGATION, THEREFORE VIEWED THAT THE ASSESSEE IS LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. SINCE THE ASSESSEE HAS FAILED TO DEDUCT THE TAX AT SOURCE, THE AO HELD THAT THE EXPENDITURE IS NOT ALLOWABLE AS PROVIDED U/S 40(A)(IA) OF THE ACT. THE AO ALSO OBSERVED THAT THE PAYMENT WAS EITHER RENTAL PAYMENT OR THE CONTRACT PAYMENT, THUS THE PROVISIONS OF DEDUCTION OF TAX AT SOURCE IS APPLICABLE ON BOTH THE EVENTS . 3. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 4. AGAINST THE ORDER OF THE LD.CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US . DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSE E IS IN THE ACTIVITY OF EXHIBITING FILMS AND IT HAS MADE THE PAYMENT TO THE FILM DISTRIBUTORS. THE REVENUE IS SHARED BETWEEN THE FILM DISTRIBUTOR AS WELL AS THE THEATRE OWNER, THEREFORE, THE SAME CANNOT BE TREATED AS CONTRACTUAL 3 I.T.A. NO. 374 /VIZ/201 8 , A.Y.20 1 3 - 1 4 M/S SRI PARAMESWARI PROJECTS PVT. LTD., SRIKAKULAM PAYMENT AND CONSEQUENTLY T DS PROVISIONS ARE NOT APPLICABLE. THE LD.AR FURTHER ARGUED THAT THE PAYMENT WAS NE ITHER CONTRACTUAL PAYMENT NOR IS THE RENT PAYMENTS AND IT WAS SHARING OF THE REVENUE FOR EX HI BITING THE FILMS BETWEEN THE DISTRIBUTOR AND THE THEATRE OWNER. THE LD.AR FURT HER SUBMITTED THAT IDENTICAL ISSUE HAS COME UP BEFORE THE AO FOR THE A.Y.2011 - 12, 2012 - 13 AND THE AO CONSIDERED THE DISALLOWANCE, WHEREAS THE LD.CIT(A) DELETED THE ADDITION. THE LD.AR FURTHER SUBMITTED THAT IN THE SUBSEQUENT YEARS ALSO , THE IDENTICAL ISSU E HAS COME UP BEFORE THE AO AND THE AO ALLOWED THE RELIEF AND DID NOT MAKE THE ADDITION FOLLOWING THE BOARD CIRCULAR NO.681 DATED 08.03.1994 AND 736 DATED 13.06.1996. THEREFORE, REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MAD E BY THE AO AND ALLOW THE APPEAL OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS EXHIBITING THE FILMS AND MAKING PAYMENTS TO THE DISTRIBUTOR. THE ASSESSEE ARGUED THAT THE REVENUE WAS SHARED BETWEEN THE THEATRE OWNER AND THE F ILM DISTRIBUTOR AND IT IS NEITHER A CONTRACTUAL PAYMENT NOR A RENT PAYMENT. THE ASSESSEE RELIED ON CIRCULAR 4 I.T.A. NO. 374 /VIZ/201 8 , A.Y.20 1 3 - 1 4 M/S SRI PARAMESWARI PROJECTS PVT. LTD., SRIKAKULAM NO .681 DATED 08.03.1994 AND CIRCULAR NO.736 DATED 13.06.1996 TO SUPPORT THAT THE PAYMENT WAS NEITHER IN THE NATURE OF CONTRACTUAL PAYMENT NOR RENTAL PAYMENT AND FOR THE PAYMENTS WERE MADE TO THE FILM DISTRIBUTOR TOWARDS ITS SHARE FOR SCREENING THE FILM, THE REFORE SUBMITTED THAT THE TDS PROVISIONS ARE NOT COVERED. THE ASSESSEE ALSO PLACED RELIANCE ON EARLIER ASSESSMENTS AND SUBSEQUENT ASSESSMENTS MADE BY THE AO. IN THE EARLIER ASSESSMENTS, ON IDENTICAL FACTS, THE LD.CIT(A) DELETED THE ADDITION AND IT APPEA RED THAT THE DEPARTMENT HAS NOT FILED THE APPEAL. IN THE SUBSEQUENT YEAR, THOUGH THE ASSESSMENT WAS MADE ON IDENTICAL FACTS, NO SUCH ADDITION WAS MADE BY THE AO. THE AO DID NOT DISPUTE THAT THE PAYMENT IS THE SHARING OF REVENUE BETWEEN THE THEATRE OWNER AND THE ASSESSEE. THE AO ALSO HAS NOT MADE OUT A CASE, TO ESTABLISH THAT THE PAYMENT WAS EITHER IN THE NATURE OF CONTRACT PAYMENT OR IN THE NATURE OF RENTAL PAYMENT. IN THE INSTANT CASE, THE PAYMENT WAS MADE BY THE THEATRE OWNER WHO IS EXHIBITING THE FI LMS, THEREFORE, IT CANNOT BE HELD AS RENTAL PAYMENT. IN THE CASE OF RENT, THE ASSESSEE OUGHT TO HAVE RECEIVED THE PAYMENT, BUT IN THE INSTANT CASE, THE ASSESSEE IS MAKING THE PAYMENT TO FILM DISTRIBUTOR. SIMILARLY, THE ASSESSEE IS SCREENING THE FILMS BEIN G THE THEATRE OWNER, IT CANNOT BE HELD THAT THE SAME IS CONTRACT PAYMENT. THEREFORE, WE ARE OF THE VIEW THAT THE AO HAS NOT MADE OUT THE CASE OF EITHER CONTRACTUAL PAYMENT OR RENTAL 5 I.T.A. NO. 374 /VIZ/201 8 , A.Y.20 1 3 - 1 4 M/S SRI PARAMESWARI PROJECTS PVT. LTD., SRIKAKULAM PAYMENT FOR HOLDING THAT IT ATTRACTS THE TDS. DEPARTMENT ALSO DID NOT MA KE OUT A CASE OF ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOURCE U/S 201(1) OF THE ACT . HENCE, THE ORDER OF THE LD.CIT(A) IS UNSUSTAINABLE AND A CCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. 7 . IN THE RE SULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH , 2020. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 04 . 0 3 .20 20 L.RAMA, SPS 6 I.T.A. NO. 374 /VIZ/201 8 , A.Y.20 1 3 - 1 4 M/S SRI PARAMESWARI PROJECTS PVT. LTD., SRIKAKULAM / COPY OF THE ORDER FORWARDED TO : - 1. / THEASSESSEE M/S SRI PARAMESWARI PROJECTS PVT. LTD. , REGIDI VILLAGE, REGIDI, AMADALAVALASAMANDALAM, SRIKAKULAM 2 . / THE REVENUE INCOME TAX OFFICER, WARD - 3, SRIKAKULAM 3. THE PR.COMMISSIONER OF INCOME TAX - 2, VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM