ITO, Ward-3(1), Hyderabad, Hyderabad V. Saranya Electronics Private Limited, Hyderabad, Hyderabad

ITA 386/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2594 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: N O N E
• Section: 142(1); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B BENCH: HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA. NO.386/HYD/2017 ASSESSMENT YEAR: 2012 - 2013 INCOME TAX OFFICER, WARD - 3(1), HYDERABAD. VS. SARANYA ELECTRONICS PRIVATE LIMITED, HYDERABAD. PAN: AAHCS 7505 G (APPELLANT) (RESPONDENT) FOR ASSESSEE: N ONE FOR REVENUE : SMT. N. SWAPNA, DR DATE OF HEARING : 01.02.2018 DATE OF PRONOUNCEMENT : 0 7 .02.2018 ORDER PER D. MANMOHAN , VP. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) - 3, HYDERABAD AND IT PERTAINS TO THE A.Y. 2012 - 2013. FOLLOWING GROUNDS WERE URGED BEFORE THE TRIBUNAL: - 1. THE LD. CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 57,93,447/ - OUT OF THE TOTAL DISALLOWANCE MADE OF RS. 83,60,775/ - BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT. 3. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDI TURE U/S 40(A)(IA) OF THE ACT, HOLDING THAT THE AMOUNTS ARE NOT PAYABLE AS AT THE END OF THE YEAR, IGNORING THAT THE PROVISIONS ARE APPLICABLE IN RESPECT OF PAYMENTS MADE DURING THE YEAR WITHOUT TDS BEING MADE. 4. THE LD. CIT(A) ERRED IN RELYING UPON THE D ECISION OF HONBLE ITAT, SPECIAL BENCH, VISAKHAPATNAM, IN THE CASE OF M/S. MERILLYN SHIPPING &J TRANSPORT NOT CONSIDERING THE CIRCULAR OF CBDT IN NO. 10/DV/2013 (F.NO.279/MISC./M - 61/2012 - ITJ, DT. 16.12.2013) 5. THE LD. CIT(A) ERRED IN RELYING UPON THE DECI SION OF HONBLE ITAT, SPECIAL BENCH, VISAKHAPATNAM, IN THE CASE OF M/S. MERILLYN SHIPPING & TRANSPORT NOT CONSIDERING THE FACT THAT THE SAID 2 DECISION IS PLACED UNDER INTERIM SUSPENSION BY HONBLE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELAN GANA AND STATE OF ANDHRA PRADESH. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE, TRADING, DESIGN AND DEVELOPMENT OF ELECTRONICS. FOR THE PREVIOUS YEAR RELEVANT TO THE A.Y 2012 - 2013 IT DECLARED A TOTAL INCOME OF RS. 89,57,480/ - WHICH WAS ORIGIN ALLY ACCEPTED U/S 143(1) OF THE AC T BUT , LATER CONVERTED INTO SCRUTINY CASE AND ACCORDINGLY ISSUED NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961. DURING THE COURSE OF EXAMINATION OF BOOKS IT WAS NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TAX A T SOURCE WHILE INCURRING THE FOLLOWING EXPENDITURE. SL. NO. NATURE OF PAYMENT SECTION AMOUNT IN RS. 1. AUDIT FEES & PROFESSIONAL CHARGES 194J 2,05,493 2. INTEREST OTHER THAN ON SECURITIES 194A 13,50,876 3. RENT 194I 21,97,140 4. COMMISSION 194H 3,01,400 5. CONTRACT AMOUNT 194C 43,05,866 83,60,775 THEREFORE, THE A.O. INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO MAKE AN ADDITION OF RS. 83,60,775/ - . 3. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT NO DISALLOWANCE U/S 40(A ) (IA) OF THE ACT IS PERMISSIBLE IN RESPECT OF THE PAYMENTS ALREADY MADE BY THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE ITAT SPECIAL BENCH, VISAKHAPATNAM IN THE CASE OF MERYLIN SHIPPING & TRANSPORT VS. ADDL. CIT AS WELL AS THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JANAPRIYA ENGINEERS SYNDICATE. 3 4. HAVING REGARD TO THE DECISION OF THE ITAT SPECIAL BENCH AS WELL AS THE DECISION OF HONBLE HIGH COURT OF JUDICATURE AT HYDERABAD, THE CLAIM OF THE ASSESSEE WAS ACCEPTED AND ACCORDINGLY ADDITION OF RS. 57,93,447/ - MADE BY THE A.O. WAS SET ASIDE. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. SHRI T. CHAITANYA KUMAR APPEARED BEFORE THE LD. CIT(A) AND WAS ALSO PRESENT IN THE COURT TODAY. 7. WE HAVE CAREFULLY GONE THROUGH THE RECORD. SINCE THE DECISION OF THE ITAT SPECIAL BENCH, VISAKHAPATNAM IN THE CASE OF MERYLIN SHIPPING & TRANSPORT VS. ADDL. CIT (16 ITR 1) WAS REVERSED BY THE HONBLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICE VS. CIT (CIVIL APPEAL NO. 5512 OF 2017, DATED 03.05.2017) , WE SET ASIDE THE MATTER TO THE FILE OF THE LD. CIT(A) , WHO IS DIRECTED TO RECONSIDER THE MATTER IN ACCORDANCE WITH THE LATEST RULING OF THE APEX COURT. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH FEBRUARY, 2018. SD/ - SD/ - ( D.S. SUNDER SINGH ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 07 TH FEBRUARY , 2018. OKK, SR.PS 4 COPY TO 1. M/S. SARANYA ELECTRONICS PRIVATE LIMITED, PLOT NO.A - 7/1, SECOND FLOOR, ELECTRONIC COMPLEX, KUSHAIGUDA, HYDERABAD 500 026. 2. INCOME TAX OFFICER, WARD 3(1), HYDERABAD. 3. CIT (A) - 3, HYDERABAD. 4. PR. COMMISSIONER OF INCOME TAX - 3, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE