Hiren Valves Pvt.Ltd., Ahmedabad V. The Income tax Officer,(OSD)-1, Range-4, Ahmedabad

ITA 411/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80354 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 08-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2011
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: S N DIVETIA A R

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 00 0 0 00 0 , , , , ! ! ! ! ' #$% ' #$% ' #$% ' #$% #& #&#& #&0 00 0# ## #0 00 0 '& '& '& '&, , , , () * () * () * () * ( ' ( ' ( ' ( ' BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI, ACCOUNTANT % % % %./ ././ ./ ITA NO. 411/AHD/2011 & - $.- & - $.- & - $.- & - $.-/ // / ASSESSMENT YEAR: 2007-08 HIREN VALVES PVT. LTD., 86/1, AGARWAL ICE FACTORY COMPOUND, MAHENDIKUVA, O/S. SHAHPUR GATE, DUDESHSAR ROAD, AHMEDABAD. PAN: AABCA3820K VS INCOME TAX OFFICER, RANGE-4, AHMEDABAD. /0/ (APPELLANT) 12 /0/ (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR, SR. D.R. ASSESSEE(S) BY : SHRI S.N. DIVETIA, AR &$3 4 )/ // / DATE OF HEARING : 08/09/2014 56. 4 ) / DATE OF PRONOUNCEMENT: 12/09/2014 (7 (7 (7 (7/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VIII, AHMED ABAD DATED 06.12.2010. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE DISALLOWANCE MADE U/S. 40(A)(IA) OF RS 1,80,000/- B Y THE ASSESSING OFFICER ON ACCOUNT OF PAYMENTS MADE TO SHRI S.J. CH ADDHA AND SHRI ITA NO. 411/AHD/2011 HIREN VALVES PVT. LTD., AHMEDABAD. FOR A.Y. 2007-08 - 2 - RAJKUMAR SHARMA FOR SERVICES OF MARKET SURVEY AS TH E AFORESAID PAYMENTS TO THE SAID PARTIES WERE NOT LIABLE TO TDS U/S. 194J OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION FOR RS 1,80,000/- UNDER THE HEAD MARKET SURVEY. ACCORDING TO THE ASSESSI NG OFFICER, THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S. 194J IN RESP ECT OF AFORESAID PAYMENT AND CONSEQUENTLY HE DISALLOWED THE DEDUCTIO N FOR PAYMENT BY INVOKING THE PROVISIONS OF 40(A)(IA) OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT THE MARKET SURVEY PAYMENTS WERE NOT COVERED U/ S. 194J AND THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED I N MAKING THE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ACTION OF THE ASSESSING OFFICER FOR THE REASON THAT THE PAYMENTS MADE FOR MARKET SURVEY WERE FOR PROFESSIONAL WORK A ND HENCE WERE LIABLE TO TDS U/S. 194J OF THE ACT. 5. THE ISSUE WHICH REQUIRES OUR ADJUDICATION IS WH ETHER THE MARKET SURVEY FEE PAID BY THE ASSESSEE IS A PROFESS IONAL SERVICE WITHIN THE MEANING OF SECTION 194J OR NOT? 6. THE PROVISIONS OF SECTION 194J READ AS FOLLOWS: 194J. (1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FEES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES, OR ITA NO. 411/AHD/2011 HIREN VALVES PVT. LTD., AHMEDABAD. FOR A.Y. 2007-08 - 3 - (C) ROYALTY, OR (D) ANY SUM REFERRED TO IN CLAUSE (VA) OF SECTION 28, SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER I S EARLIER, DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME TAX ON INCOME COMPRISED THEREIN: EXPLANATION: - FOR THE PURPOSES OF THIS SECTION; (A) PROFESSIONAL SERVICES, 'PROFESSIONAL SERVICES' MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARR YING ON LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFES SION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADVERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION.' 7. THE ABOVE DEFINITION ASSUMES GREAT SIGNIFICANCE FOR ADJUDICATING THE ISSUE ON HAND. FEE FOR PROFESSIONA L SERVICES-FPS IS DEFINED IN THE EXPLANATION TO SECTION 194J OF THE A CT AND IT IS EXHAUSTIVE DEFINITION AND OF COURSE, WITH THE POWER TO NOTIFY THE PROFESSIONS. THEREFORE, THE DEFINITION IS EXHAUSTIV E IN FORM IN VIEW OF THE USE OF EXPRESSION 'MEANS' AND INCLUSIVE IN SUBS TANCE AS THE BOARD HAS POWER TO EXTEND THE LIST OF PROFESSIONAL SERVICES. AS PER THE SAID EXPLANATION QUA FEE FOR PROFESSIONAL SERVI CES, THE SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON L ISTED PROFESSIONS AND OTHER NOTIFIED PROFESSIONS CONSTITUTES FEE FOR PROFESSIONAL SERVICES AND THUS THE PAYMENTS IN CONNECTION WITH S UCH SERVICES ATTRACTS THE PROVISIONS OF SECTION 194J OF THE ACT. THE PAYER IS LEGALLY BOUND TO MAKE TDS AT THE RATE OF 10 PER CENT OF SUC H PAYMENT. 8. FURTHER, WE HAVE ALSO EXAMINED THE NOTIFICATION ISSUED BY THE BOARD FOR THE PURPOSE OF EXPLANATION (A) TO SEC TION 194J OF THE ACT, VIDE NOTIFICATION NO. S.O. 2085(E), DATED AUGU ST 21, 2008 AND FIND THE BOARD NOTIFIED THE SERVICES RENDERED BY FO LLOWING PERSONS IN RELATION TO THE SPORTS ACTIVITIES AS 'PROFESSIONAL SERVICES' FOR THE ITA NO. 411/AHD/2011 HIREN VALVES PVT. LTD., AHMEDABAD. FOR A.Y. 2007-08 - 4 - PURPOSE OF THE SAID SECTION, NAMELY, SPORTS PERSONS , UMPIRES AND REFEREES, COACHES AND TRAINERS, TEAM PHYSICIANS AND PHYSIOTHERAPISTS, EVENT MANAGERS, COMMENTATORS, ANCHORS AND SPORTS CO LUMNISTS. 9. THE HONBLE KARNAKATA HIGH COURT IN THE CASES O F COMMISSIONER OF INCOME TAX VS. VIJAYA BANK [2006] 2 85 ITR 97/ [2005] 149 TAXMAN 674 STATED THAT (PAGE 110) WHEN THE DEFINITION OF A WORD BEGINS WITH MEANS IT IS INDICATIVE OF T HE FACT THAT THE MEANING OF THE WORD HAS BEEN RESTRICTED; THAT IS TO SAY, IT WOULD NOT MEAN ANYTHING ELSE BUT WHAT HAS BEEN INDICATED IN T HE DEFINITION ITSELF 10. WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT MARKET SURVEY HAS ALSO BEEN NOTIFIED AS PROFES SIONAL SERVICE WITHIN THE MEANING OF SECTION 194J OF THE ACT. IN ABSENCE OF ANY SUCH MATERIAL BROUGHT BEFORE US, IN OUR CONSIDERED VIEW, MARKET SURVEY IS NOT COVERED BY THE PROVISIONS OF SECTION 194J OF THE ACT. CONSEQUENTLY, THE ORDERS OF THE LOWER AUTHORITIES I N DISALLOWING THE EXPENSE OF RS 1,80,000/- ARE NOT SUSTAINABLE. WE, THEREFORE, DELETE THE DISALLOWANCE OF RS 1,80,000/- AND ALLOW THE GRO UND OF APPEAL OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 12 TH OF SEPTEMBER, 2014 AT AHMEDABAD. SD/- SD/- (G.C. GUPTA) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 12/09/2014 GHANSHYAM MAURYA, SR. P.S. ITA NO. 411/AHD/2011 HIREN VALVES PVT. LTD., AHMEDABAD. FOR A.Y. 2007-08 - 5 - TRUE COPY (7 4 18 9(8. (7 4 18 9(8. (7 4 18 9(8. (7 4 18 9(8./ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. %% : / CONCERNED CIT 4. :() / THE CIT(A)-III, AHMEDABAD 5. 8$= 1& , , / DR, ITAT, AHMEDABAD 6. - >3 / GUARD FILE. (7& (7& (7& (7& / BY ORDER, / // / % % % % ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD