ANILKUMAR B. SARAF, MUMBAI V. ITO 25(1)(3), MUMBAI

ITA 4285/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59676 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-11-2011
• Assessment Year: misc
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Section: 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO.4285/M/2010 ASSESSMENT YEAR: 2005-2006 SHRI ANILKUMAR B. SARAF, 235, BLUE ROSE INDUSTRIAL ESTATE, NEW CABLE CORPORATION, WESTERN EXPRESS HIGHWAY, BORIVALI (E), MUMBAI 400 066. PAN: AHEPS6433N VS. THE INCOME TAX OFFICER- 25(1)(3), C-11, 2 ND FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. GOPAL RESPONDENT BY : MRS. USHA NAIR DATE OF HEARING : 05-01- 2012 DATE OF PRONOUNCEMENT : 13-01-2012 O R D E R PER V. DURGA RAO, J.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-25, MUMBAI, DATED 30.03.2010 FOR THE ASSESSM ENT YEAR 2005- 2006. 2. BRIEFLY STATED, THE FACTS IN THIS APPEAL ARE THA T THE ASSESSEE IS IN AN INDIVIDUAL AND PROPRIETOR OF M/S. DRISTI INTE RNATIONAL. THE BUSINESS OF THE ASSESSEE IS MANUFACTURING AND EXPOR T OF READYMADE GARMENTS. IN THE SAID BUSINESS, THE ASSESSEE HAD G OT JOB WORK DONE FROM THE OTHER CONTRACTORS LIKE EMBROIDERY, IRONING , STITCHING ETC. THE ASSESSEE HAD DEDUCTED TDS U/S 194C ON PAYMENT M ADE TO ITA NO. 4285/M/2010 2 CONTRACTOR BUT DEPOSITED AFTER DUE DATE. THE COMMI SSIONER WHILE EXERCISING THE POWER U/S 263, ISSUED A SHOW CAUSE N OTICE AND DISALLOWED ENTIRE EXPENDITURE INCURRED BY THE ASSES SEE U/S 40(A)(IA) OF THE ACT. IN THIS CASE, THE ASSESSEE HAD FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 8,07,361/-, WHEREIN, THE ASSESSEE HAS CLAIMED PAYMENT MADE TO THE CONTRACTORS AS AN EXPEN DITURE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER HAS ISSUED A NOTICE DATED 10.8.2007 CALLING EXPLANATION FROM THE ASSESSEE THAT THE EXPENDITURE OF RS. 15,88,799/- RE QUIRED TO BE DISALLOWED AS PER THE PROVISIONS OF SEC. 40(A)(IA) OF THE INCOME TAX ACT 1961. IN RESPONSE TO THE ABOVE, THE ASSESSEE H AS SUBMITTED A DETAILED REPLY DATED 23.8.2007 STATING THAT THE ASS ESSEE IS AN INDIVIDUAL AND HE HAS GIVEN JOB WORK TO THE CONTRAC TORS AND THE PAYMENT THEREON TDS WAS DEDUCTED BUT THERE WAS A DE LAY IN DEPOSITING IN THE GOVERNMENT ACCOUNT. ALTERNATIVEL Y HE WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE EXI STING PROVISION OF SEC. 194C SUB-SECTION (1) DO NOT PROVIDE FOR DEDUCT ION OF TDS ON PAYMENT MADE BY AN INDIVIDUAL OR A HUF TO THE CONTR ACTOR AND ASSESSEE UNDER NO OBLIGATION TO DEDUCT THE TDS. AF TER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSMENT ORD ER WAS PASSED AND ASSESSING OFFICER ALLOWED THE EXPENDITURE CLAIM ED BY THE ASSESSEE. THE COMMISSIONER, WHILE EXERCISING THE P OWER U/S 263 DIRECTED THE ASSESSING OFFICER AGAIN TO VERIFY NATU RE OF THE PAYMENTS AND SUB-SECTION (2) TO SEC.194C AND MAKE A DE NOVO ASSESSMENT. ITA NO. 4285/M/2010 3 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED BEFORE US THAT THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSI NG OFFICER AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE AND THE ASSESSMENT ORDER CANNOT BE SAID THAT IT IS AN ERRONEOUS. IT WAS FUR THER SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL WITH REGARD TO DE DUCTION OF TDS PERTAINS TO AY 2005-2006, SEC. 194C NO APPLICATION TO THE ASSESSEE BEING AN INDIVIDUAL. THEREFORE, THE ORDER PASSED B Y THE ASSESSING OFFICER IS ACCORDING TO THE LAW. IT IS NOT ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER PASSED BY THE CIT (A) AND SUBMI TTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS NOT A POSSIB LE VIEW AND WHATEVER THE AMOUNTS CREDITED TO THE P & L ACCOUNT HAS TO BE DEPOSITED IN TIME. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 6. WE FIND FROM THE PAPER BOOK FILED BY THE ASSESSE E PAGE 1 THAT THE ASSESSING OFFICER HAS ASKED SPECIFICALLY A QUES TION WITH REGARD TO DEDUCTION OF TDS U/S 40(A)(IA). AFTER HIS EXPLANAT ION DATED 23.8.2007 THE A.O. ALLOWED THE CLAIM OF THE ASSESSE E. IN SO FAR AS APPLICATION OF SEC. 194C IS CONCERNED, WE HAVE GONE THROUGH THE SEC. 194C SUB-CLAUSE (1) WAS SUBSTITUTED BY FINANCE ACT 2007 W.E.F., 1.6.2007 AND INDIVIDUAL WAS BROUGHT UNDER 194C (1). PRIOR TO THIS DATE, THERE WAS NO LIABILITY ON THE INDIVIDUAL TO D EDUCT THE TDS ON MAKING THE PAYMENT TO THE CONTRACTOR. WE FIND THAT THE ASSESSING ITA NO. 4285/M/2010 4 OFFICER HAS PASSED THE ORDER AFTER EXAMINING THE IS SUE AS PER LAW. IN OUR OPINION, THE ORDER PASSED BY THE ASSESSING OFFI CER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THEREFORE, THE ORDER PASSED BY THE CIT (A) IS SET ASIDE AND TH E APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2012. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13 TH JANUARY, 2012. OKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- CONCERNED 4. COMMISSIONER OF INCOME TAX, CONCERNED 5. DEPARTMENTAL REPRESENTATIVE, BENCH A, MUMBAI TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI