M/s. Gondals Press (India) Ltd., New Delhi V. ITO, New Delhi

ITA 3883/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97027 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 08-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3883 /DEL/201 4 A.Y. : 200 8 - 0 9 M/S GONDALS PRESS (INDIA) LTD., VS. ITO, WARD - 12(2), P - 12, CONNAUGHT PLACE, C.R. BUILDING, NEW DELHI 110 002 NEW DELHI (PAN : AAACT3481D) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING : 08.07.2015 DATE OF ORDER : 2 4 - 08 - 2015 O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XV, NEW DELHI DATED 1 3 . 6 .201 2 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - I) THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DETERMINING THE TOTAL INCOME AT ( - ) RS. 2,98,178/ - AGAINST RETURNED INCOME OF ( - ) RS. 7,62,820/ - BY CONFIRMING THE ADDITIONS OF RS. 4,20,504/ - MADE BY THE ITO IN THE ASSESSMENT ORDER. 2 II) THAT THE L D. CIT(A) HAS PASSED THE ORDER IN HASTE AND WITHOUT PROVIDING FAIR AND REASONABLE OPPORTUNITY TO THE APPELLANT. HENCE THE ORDER IS BAD IN LAW AND ILLEGAL. III) THAT THE LD. CIT(A) HAS GROSSLY ERRED IN DISALLOWING PAYMENT MADE TO M/S JMD COLOR SCAN PVT. A ND RAVE SCAN PVT. LTD, AMOUNTING TO RS. 4,20,504/ - ON THE GROUND THAT THE APPELLANT DID NOT DEDUCT TDS UNDER SECTION 194C OF THE INCOME TAX ACT, 1961. IV) THAT THE LD. CIT(A) HAS NOT CONSIDERED THE FACT THAT THE APPELLANT HAD DURING ASSESSMENT PROCEEDINGS VOLUNTARILY OFFERED A SUM OF RS. 84,101/ - BEING 20% OF THE TOTAL AMOUNT ON ACCOUNT OF LABOUR CHARGES ON WHICH TDS HAS NOT BEEN DEDUCTED. V) THAT THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, DELETE OR ADD ALL OR ANY GROUND BEFORE OR AT THE TIME OF HEARING . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED E - RETURN VIDE PROVISIONAL DATED 29.9.2008 DECLARING LOSS OF RS. 7,62,820/ - . THE RETURN WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 AND THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY. STATUTO RY NOTICES U/S. 143(2) OF THE I.T. ACT, 1961 WERE ISSUED IN THIS CASE AND IN RESPONSE TO WHICH ASSESSEE S REPRESENTATIVE ATTENDED THE ASSESSMENT PROCEEDINGS AND FILED THE REQUISITE DETAILS. THE ASSESSEE COMPANY WAS INCORPORATED ON 30.6.1939 WITH A VIEW TO CARRY ON THE BUSINESS OF PRINTING PRESS. THE DETAILS FILED BY THE AR OF THE COMPANY WERE EXAMINED BY THE AO ON TEST CHECK BASIS WITH REFERENCE TO THE BOOKS OF ACCOUNTS PRODUCED. 3 DURING THE ASS E SSMENT PROCEEDING AO FOUND THAT THE ASSESSEE COMPANY HAD AS SIGNED A JOB W ORK TO M/S JMD CALOR SCAN PVT. LTD. AND M /S RAVE SCAN PVT. LTD. A MOUNTING TO RS. 4,20,504/ - DURING THE ASSESSMENT YEAR AND SAME WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT . ON THE SAID EXPENDITURE TDS WAS REQUIRED TO BE DEDUCTED AT SOURCE W HERE THE AMOUNT C REDITED OR PAID TO A CONTRACTOR OR SUB CONTRACTOR EXCEEDS RS. 20 , 000 / - IN RESPECT OF SINGLE CONTRACT/ TRANSACTION OR RS. 50,000 / - IN THE AGGRE GA TE DURING A FIN A NCIAL YEAR UNDER SE C TION 194C OF THE IT. ACT, 1961. AO ASKED THE ASSESSEE W HY TH E AMOUNT PAID TO JMD COLOUR SCAN ( P ) LTD. AND M/ S RAVE S CAN PVT. LTD. DIS A L L OW ANCE U / S 40(A)(IA) OF I.T.ACT.19G1 AND MAY N OT BE ADDED BACK TO THE INCOME OF THE ASSESSEE COMPANY. IN RESPONSE TO THE ABOVE QUERY, THE ASSESSEE ADMITTED VIDE LETT ER DATED NIL FILED ON 15 - 11 - 2009 THAT NO TDS IS DEDUCTED ON THESE B ILLS FOR DESIGN AND PRINT AS THE ASSESSEE HAS P UR CHASED MATERIAL FROM THEM A ND AS PER BILLS ONLY VAT HAS BEEN C HARGED ON 80% OF THE INVOICE BEING MATERIAL COST. BALAN CE 20% IS ON ACCOUNT O F LABOUR CHARGES. THE ASSESSEE IS WILLING TO OFFER A SUM OF RS. 84 101/ - OUT OF RS. 4,20 , 504/ - FOR TAXATION ON TH E GROUND THAT N O PENALTY PROCEEDING U/ S . 271 (1 ) ( C) BE INITIATED A G AINST THE ASSESSEE. THE ASSESSEE HAS ALSO RELIED ON NUMBER OF CASE LAWS I . E. WHIRL POOL OF INDIA LTD. V / S JCIT , ITAT DELHI - L B ENCH DELHI(2007) AND CIT VIS DABUR INDIA LTD(2005) 19 8 CTR(DEL)375. THE CONTENTS OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO BECAUSE THE CONTRACTOR HAS RAISED VARIOUS BIL LS IN WHICH, IT W OULD NOT BIFURC ATED WHETHER IT IS COST OF MATERIAL OR LABOUR CHARGES . THE CONTRACTOR HAS RAISED CONSOLIDATE BILLS, HENCE, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE. THE AMOUNT OF RS. 4,20,504/ - DEBITED IN THE JOB WORK EXPENSES. THE SAME IS BEING 4 DISALLOWED U/S. 40(A)(IA ) OF THE I.T. ACT AND ADDED TO THE INCOME OF THE ASSESSEE S COMPANY. 4. UPON ASSESSEE S APPEAL LD. COMMISSIONER OF INCOME TAX (A) CONFIRMED THE ASSESSING OFFICER S ACTION. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN V IEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 7. LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND FROM THE RECORDS THAT IT WAS THE ASSESSEE S CONTENTION BEFORE THE LD. CIT(A) AS WELL AS BEFORE THE TRIBUNAL THAT AUTHORITIES BELOW PASSED THE ORDER IN HASTE AND WITHOUT PROVIDING FAIR AND REASONABLE OPPORTUNITY TO THE ASSESSEE . I NOTE THAT DURING THE ASSESSMENT PROCEEDINGS AO HAS HELD THAT THE ASSESSEE PURCHASED THE MATERIAL ON WHICH VAT HAS BEEN CHARGED NO 80% OF INVOICE VALUE THEREFORE, IF AT ALL DISALLOWANCE IS TO BE MADE UNDER SECTION 40(A)(IA) THEN 20% OF THE INVO ICE WHICH RELATES TO THE LABOUR CHARGES, MAY BE 5 MADE. THIS CONTENTION WAS NOT ACCEPTABLE BY THE AO, BECAUSE THE CONTRACTOR HAS RAISED VARIOUS BILLS IN WHICH, IT WAS NOT BIFURCATED WHETHER IT IS COST OF MATERIAL OR LABOUR CHARGES. THE CONTRACT HAS RAISE D CONSOLIDATE BILLS, HENCE, TAX IS REQUIRED TO BE DEDUCTED AT SOURCE. THE AMOUNT OF RS. 4,20,504/ - DEBITED IN JOB WORK EXPENSE AND THE SAME WAS BEING DISALLOWED U/S. 40(A)(IA) OF THE I.T. ACT AND ADDED TO THE INCOME OF THE ASSESSEE COMPANY. I FURTHER FI ND THAT LD. CIT(A) HAS ADJUDICATED THE ISSUE IN DISPUTE AND HELD AS UNDER: - I HAVE GONE THROUGH THE ABOVE SUBMISSIONS OF THE APPELLANT, THE EVIDENCE AND FACTS PLACED ON RECORD AND I HAVE ALSO CONSIDERED THE A O 'S ORDER. IN THE FACTS OF THE PRESENT CASE IT IS SEEN THAT THE APPELLANT HAS DEBITED RS. 4,20,504 IN THE 'JOB WORK ACCOUNT' AND FURTHER ADMITTED THAT THER E IS A COMPONENT OF 'LABOUR CHARGES' WHICH IS SUBJECT TO TDS UNDER SECTION 19 4C. IN MY VIE W , IT IS VERY CLEAR THAT AS PER PROVISION OF SECTION 19 4C, THE TDS IS TO BE DEDUCTED ON THE SU M PAID MEANING THEREBY ONCE IT IS DETERM I NED THAT ANY PART OF THE AMOUNT, WHICH IS SUBJECT TO TDS, THEN IN THAT CASE, THE TDS HAS TO BE DEDUCTED ON THE TOTAL AMOUNT. IT IS FURTHER SUPPORTED BY THE BOARD'S CIRCULAR NO. 715 DATED 08.08.1995 QUESTION NO. 30 WHICH IS REPRODUCED AS UNDER: 'WHETHER THE DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C AND 194) HAS TO BE MADE OUT OF THE GROSS AMOUNT OF THE BILL INCLUDING REIMBURSEMENT OF EXCLUDING REIMBURSEMENT OF ACTUAL EXP ENSES? 6 ANSWER: SECTION 194C AND 194J REFER TO ANY SUM PAID. OBVIOUSLY, REIMBURSEMENT CANNOT BE DEDUCTED OUT OF THE BILL AMOUNT FOR THE PURPOSE OF TAX DEDUCTED AT SOURCE.' SINCE IN THE PRESENT CASE THE APPELLANT ADMITS THAT IT GOT THE JOB WORK DONE, THER EFORE, THE FACTS OF THE CASE IN HAND ARE DIFFERENT FROM THE FACTS IN THE CASES OF WHIRLPOOL INDIA LTD. (SUPRA) AND DABUR INDIA LTD. (SUPRA), HENCE NO RELIANCE CAN BE PLACED ON THE THESE DECISION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES I HOLD THAT A O WAS RIGHT IN DISALLOWING THE EXPENSES UNDER SECTION 40A(IA). 9. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND THE CONCLUSIONS DRAWN BY THE AO AS WELL AS LD. CIT(A), THERE IS A NEED TO VERIFY THE CONTRACTOR BILLS IN WHICH, IT WAS NOT BIFURCATED WHE THER IT IS COST OF MATERIAL OR LABOUR CHARGES, WHICH NEITHER THE AO NOR THE LD. CIT(A) HAS VERIFIED / EXAMINED PROPERLY AND MADE THE ADDITION IN DISPUTE WITHOUT CONSIDERING IT. IN VIEW OF THE ABOVE, I REMIT BACK THE ISSUE IN DISPUTE TO THE FILE OF THE AO WITH THE DIRECTIONS TO VERIFY THE SAME ACCORDINGLY AND DECIDE THE ISSUE IN DISPUTE AFRESH, UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 1 0 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 7 ORDER PRONOUNCED IN THE OPEN COURT ON 2 4 / 8 /201 5 . S D / - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 2 4 / 8 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES