Binayak Prasad Lenka, Jagatsinghpur V. ACIT, Circle-1(1), Cuttack, Cuttack

ITA 463/CTK/2013

• Counselvise Citation: 46322114 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHARI
• Assessee Lawyers: S K SAHOO
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 463 / CTK /2013 (ASST. YEAR : 200 9 - 1 0 ) SHRI BINAYAK PRASAD LENKA, PROP. M/S. SRI SRI GOURI GANANATYA, DIST. JAGATSINGHPUR . VS. A CIT, CIRCLE - 1(1), CUTTACK. PAN NO. ABSPL 4953 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. SAHOO AR DEPARTMENT BY : SHRI RABIN CHOUDH A RI - DR DATE OF HEARING : 04 / 0 2 /2015 . DATE OF PRONOUNCEMENT : 24 / 0 3 /201 5 . O R D E R PER D.T. GARASIA , J .M THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A), CUTTACK DATED 14 /0 8 /201 3 FOR THE A.Y. 200 8 - 0 9 . 2. THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESSEE : 1. THAT THE LD. CIT(A) , CUTTACK IS NOT JUSTIFIED IN CONF I RMING THE DISALLOWANCE MADE U/S. 40(A)(IA) BY THE ASSESSING OFFICER AMOUNTING TO RS. 15,64,310/ - AGAINST THE SUBMISSIONS MADE BY THE ASSESSEE. 2. THAT THE LD. CIT(A), CUTTACK IS NOT JUSTIFIED IN CONFIRMING THE INTEREST PAID TO THE BANK USED FOR NON - BUSINESS 2 PURPOSES TO THE TUNE OF RS. 96,565/ - IS AGAINST THE FACTS AND SUBMISSIONS MADE BY THE ASSESSEE IN HIS WRITTEN NOTE OF ARGUMENT. 3. THAT THE WRITTEN NOTE OF AGREEMENT SUBMITTED BEFORE THE LD. CIT(A) , CUTTACK ON ALL THE POINTS RAISED MAY KINDLY BE CONSIDERED AS PART OF THE GROUNDS OF APPEAL. 4. THAT THE ASSESSEE CRAVES TO LEAVE, TO ADD, ALTER, MODIFY OR RESCIND ANY OF THE GROUND OR GROUNDS OF APPEAL BEFORE OR DURING THE HEARING OF THE APPEAL. 3. SHORT FACTS OF THE CASE ARE THAT ON VERIFICATION OF THE AUDITED BOOKS OF ACCOUNTS , THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEBITED RS. 15,64,310/ - UNDER THE SUB - HEAD TENT HOUSE PAYMENTS TO ITS P & L ACCOUNT. ON EXAMINATION OF THE SAME, THE ASSESSING OFFICER NOTICED THAT THE ENTIRE PAYMENT HAS BEEN MADE IN CASH ON DIFFERENT DATES OF THE YEAR AND EACH PAYMENT WAS LESS THAN RS. 20,000/ - AND THE ENTIRE AMOUNT WAS PAID TO ONE PERSON SRI SIBA PRASAD LENKA , WHO IS THE FATHER OF THE ASSESSEE. IT IS CLARIFIED BY THE ASSESSEE THAT P A YM E NT WAS MADE FOR PUTTING UP TENTS FOR CONDUCTING OF OPERA SHOWS AT DIFFERENT PLACES OF O DISHA AND OUTSIDE. THUS, THE ASSESSING OFFICER DEDUCTED THAT THERE I S CONTRACT EXISTING BETWEEN THE ASSESSEE AND HIS FATHER FOR EXECUTING THE JOB OF PUTTING UP TENT HOUSES FOR RUNNING THE BUSINESS OF OPERA HOUSE. A SSESSEE DID NOT DEDUCT TDS ON SUCH PAYMENTS, THEREFORE , THE AMOUNT WAS DISALLOWED U/S. 40(A)(IA) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT', FOR SHORT) . 3 4 . DURING THE COURSE OF HEARING BEFORE US, LEARNED AR SUBMITTED THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE ASSESSEES OWN CASE IN I.T.A.NO. 54/CTK/2013 & I.T.A.NO. 85/CTK/2013 WHEREIN SIMILAR PAYMENT WAS MADE BY THE ASSESSEE AND THE TRIBUNAL HELD THAT IF THE PAYMENT MADE IN DIFFERENT DATES AND TO DIFFERENT PERSONS WHICH IS BELOW RS. 20,000/ - THE P ROVISIONS OF SEC. 194C OF THE ACT IS NOT ATTRACTED. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS MADE EACH PAYMENT LESS THAN RS. 20,000/ - , THEREFORE TDS PROVISIONS U/S. 194 C IS NOT ATTRACTED. 5. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS MADE PAYMENT FOR PUTTING UP TENT HOUSE TO HIS FATHER. IT IS A CONVENIENT ARRANGEMENT BETWEEN THE ASSESSEE AND HIS FATHER AND HE HAS PAID RS. 15,64,310/ - DURING THE YEAR FOR THE SAME WORK WHERE EACH PAYMENT IS LESS THAN RS. 20,000/ - . THE ASSESSING OFFICER AND THE LD. CIT(A) WERE OF THE VIEW THAT THE ENTIRE PAYMENT HAS BEEN MADE TO ONE PERSON FOR PUTTING UP THE TENT HOUSE WHICH IS A CONTRACT WORK . LEARNED CIT( A) ALSO IN HIS ORDER OBSERVED THAT HE DOES NOT AGREE WITH THE ASSESSING OFFICER THAT THESE PAYMENT S 4 ARE IN THE NATURE OF CONTRACT PAYMENTS FOR THE JOB OF PUTTING UP TENT HOUSES AND COME WITHIN THE PU RVIEW OF SEC. 194C OF THE ACT. WE FIND THAT THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW THAT IF THE PAYMENT IS BELOW RS. 20,000/ - , THEN SEC. 194C OF THE ACT IS NOT APPLICABLE . THEREFORE , WE DELETE THE SAME. 7. THE SECOND GROUND RELATES TO THE INTEREST PAID TO THE BANK USED FOR NON - BUSINESS PURPOSES. THE ASSESSEE HAS ADVANCED RS. 7,42,811/ - TO HIS RELATIVE AND THE CONCERN OF HIS RELATIVE BUT NO INTEREST HAS BEEN CHARGED BY THE ASSESSEE FORM SUCH ADVANCE. THE ASSESSEE HAS TAKEN BANK LOAN FOR WHICH INTEREST OF RS. 5,23,136/ - HAS BEEN DEBITED TO P & L AC COUNT . THE ASSESSEE WAS HAVING CC FACILITY IN COOPERATIVE BANK WHEREIN HE IS PAYING TH E INTEREST AT 13% PER ANNUM . THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT 13% INTEREST HAS TO BE DISALLOWE D AND ACCORDINGLY DISALLOWED INTEREST OF RS. 96,565/ - FROM THE INTEREST PAID TO THE BANK LOAN. 8. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS NOT CHARGED INTEREST AGAINST THE ADVANCE GIVEN TO HIS RELATIVE OF RS. 7,42,811/ - . WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND FIND THAT ASSESSEE HAD ADVANCED THE LOAN OF RS. 1,45, 868/ - TO HIS MOTHER AND 5 RS. 5,96,943/ - TO HIS ELDER BROTHER . WE FIND THAT THE ADVANCES ARE NOT INCIDENTAL TO THE BUSINESS ACTIVITIES OF THE ASSESSEE AND HE D ID NOT HAVE ANY INTEREST FREE FUNDS , BUT HAS GIVEN LOAN TO HIS RELATIVES WITHOUT ANY REASON. THE ASSESSEE IS INCURRING HUGE EXPENDITURE ON INTEREST AGAINST SECURED LOAN FROM THE BANK; ADVANCEMENT OF FUNDS FOR BUSINESS ON NON - PRODUCTIVE BASIS DOES NOT FIND ANY JUSTIFICATION. THEREFORE , WE CONFIRM THE ACTION OF ASSESSING OFFICER. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 24 TH MARCH, 2015. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH MARCH , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., CUTTACK.