The ACIT, 3 (1), Bhopal V. M/s. Rewa Publication, Bhopal

ITA 389/IND/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3064 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 25-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: S S DESH
• Keywords: TDS
• Section: 194C

Judgement Text

PAGE 1 OF 5 - I.T.A.NO. 389/IND/08 REWA PUBLICATION PVT.LTD., BHOPAL.. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AABCR9980K I.T.A.NO.389/IND/2008 A.Y. : 2005-06 ACIT, M/S. REWA PUBLICATION PVT.LTD., 3(1), VS 33, JAGRAN BHAWAN, BHOPAL PRESS COMPLEX, M.P.NAGAR, BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI K.K.SINGH, CIT DR RESPONDENT BY : SHRI S.S.DESHPANDE, C.A. DATE OF HEARING : 06.04.2010 O R D E R PER BENCH THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A), UJJAIN , DATED 11.06.2008, FOR THE ASSESSME NT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 25 ,00,000/- PAGE 2 OF 5 - I.T.A.NO. 389/IND/08 REWA PUBLICATION PVT.LTD., BHOPAL.. MADE BY THE ASSESSING OFFICER U/S 40(IA) AS THE ASS ESSEE HAD FAILED TO DEDUCT TDS. 4. THE FACTS, IN BRIEF, ARE THAT THE A.O. DISALLOWED A SUM OF RS. 25 LAKHS U/S 40(IA) FOR THE REASON THAT THE ASSESSEE H AD FAILED TO DEDUCT THE TAX ON THE AMOUNT PAID BY IT TO M/S. GURUDEV PRINTE RS, WHOSE PLANT AND MACHINERY HAD BEEN TAKEN BY THE ASSESSEE ON HIRE. T HE ASSESSEE, IN APPEAL, BEFORE THE LD. CIT(A) SUBMITTED THAT IT WAS NOT A CASE OF WORK CONTRACT, BUT WAS IN THE NATURE OF RENT AND MERELY BECAUSE THE MACHINERY WAS HIRED ALONGWITH THE STAFF, THE SAME WOULD NOT C HANGE THE NATURE THEREOF. THE ASSESSEE ALSO SUBMITTED THAT THE PROVI SIONS OF SECTION 194I WERE BROUGHT ON STATUTE SUBSEQUENTLY AND, THEREFORE , THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE. IT WAS ALSO CONTENDED THAT THE PROVISIONS OF SECTION 194C WERE NOT APPLICABLE. THE LD. CIT(A) AF TER TAKING INTO CONSIDERATION, CIRCULAR NO.3 OF C.B.D.T. DATED 26.9 .1972, HELD THAT THE TRANSACTION WAS IN THE NATURE OF RENT AND PROVISION S OF SECTION 194C WERE NOT APPLICABLE FOR HIRING OF EQUIPMENT. THEREFORE, THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE CONSEQUENTLY THE PROVISION S OF SECTION 40(IA) WERE NOT APPLICABLE. AGGRIEVED BY THIS, THE REVENUE IS I N APPEAL BEFORE US. 5. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). PAGE 3 OF 5 - I.T.A.NO. 389/IND/08 REWA PUBLICATION PVT.LTD., BHOPAL.. 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 7. IT IS NOTED THAT THE NATURE OF PAYMENT HAS BEEN FOU ND TO BE OF THE NATURE OF RENT AND IN THE YEAR UNDER CONSIDERAT ION PROVISIONS OF SECTION 194-I ARE NOT APPLICABLE. HENCE, IN OUR VIE W, THE ASSESSEE HAS NOT COMMITTED ANY DEFAULT IN REGARD TO THE DEDUCTION OF TAX AT SOURCE. CONSEQUENTLY, THE PROVISIONS OF SECTION 40(IA) ARE NOT APPLICABLE. IN THIS VIEW OF THE MATTER, WE CONFIRM THE FINDINGS OF THE LD. CIT(A). THUS, THIS GROUND OF THE REVENUE IS DISMISSED. 8. GROUND NO.2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 56 ,36,908/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CESSATI ON OF LIABILITY U/S 41(1)(A). 9. THE FACTS, IN BRIEF, ARE THAT THE A.O. FOUND THAT OUTSTANDING BALANCE OF RS. 56,36,908/- EXISTED IN THE ACCOUNT O F SUNDRY CREDITOR, NAMELY, M/S. SHREEPUBLICATION PRIVATE LIMITED. THE A.O. FOUND THAT IT WAS OUTSTANDING FROM FINANCIAL YEAR 2002-03, HENCE, THE A.O., HELD THAT TRADING LIABILITY CEASED TO EXIST AND, ACCORDINGLY, HE TREATED THE SAME AS PROFIT TO THE ASSESSEE 41(1) OF THE ACT. IN DOING SO, THE A.O. REJECTED THE CLAIM OF THE ASSESSEE THAT THE AMOUNT HAD TO BE PAI D WAS DULY CONFIRMED PAGE 4 OF 5 - I.T.A.NO. 389/IND/08 REWA PUBLICATION PVT.LTD., BHOPAL.. BY THE DIRECTOR OF REWA PUBLICATION PRIVATE LIMITE D, AND SHRI PUBLICATION PRIVATE LIMITED, HAD NOT CEASED TO EXIS T. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A), WHO FOUND THAT THE AMOUNT WAS EXISTING IN THE BALANCE S HEET OF THE ASSESSEE COMPANY AND NONE OF THE PARTIES HAD SHOWN/CLAIMED T HE SAID AMOUNT WAS NO LONGER PAYABLE. THE LD. CIT(A) ALSO HELD THAT IN VIEW OF THE CONFIRMATION OF THE BALANCE ALONGWITH COMPLETE ADDR ESS AND PAN DETAILS AND IN THE ABSENCE OF ANY OTHER MATERIAL, THE A.O. WAS NOT JUSTIFIED TO TREAT THE OUTSTANDING LIABILITY AS A CASE OF REMISS ION OR CESSATION. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 10. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 12. IT IS NOTED THAT THE AMOUNT IS STILL OUTSTANDING IN THE BOOKS OF ACCOUNT AND NO EVENT HAS OCCURRED IN THE YEAR UNDER CONSIDERATION , WHICH MAY GIVE AN OPPORTUNITY TO THE A.O. TO BELIEVE THAT THE SAID LIABILITY HAS CEASED TO EXIST. IN THIS VIEW OF THE MATTER, WE HOL D THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESS ING OFFICER. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. PAGE 5 OF 5 - I.T.A.NO. 389/IND/08 REWA PUBLICATION PVT.LTD., BHOPAL.. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :8 TH APRIL, 2010. CPU* 674