South Point Housing Developers Pvt. Ltd. & Madhumita Enterprise, Kolkata V. ITO, Wd-28(3), Kolkata, Kolkata

ITA 539/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1528 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MONOJ DUTT
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 539/KOL/201 4 ASSESSMENT YEAR : 2007-0 8 SOUTH POINT HOUSING DEVELOPERS PVT.LTD. -VS.- I.T.O., WARD-28(3) & MADHUMITA ENTERPRISE, KOLKATA KOLKATA [PAN : AAAAS 9789 D] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI MONOJ DUTT, FCA FOR THE RESPONDENT : NONE (SR.DR) DATE OF HEARING : 10.07.2017. DATE OF PRONOUNCEMENT : 14.07.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11.12.2013 OF C.I.T.(A)-XIV, KOLKATA RELATING TO A.Y.2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS FOLLOWS :- 1. FOR THAT THE CIT(A) WAS UNJUSTIFIED IN DISMISSIN G THE GROUND OF APPEAL WITHOUT PROPER EXPLAINING THE REASON IN SPITE OF HIS ADMISS ION THAT THE EXPENSES WERE IN THE NATURE OF PURCHASE. THE APPELLANT COULD NOT UNDERST AND THE REASONS FOR CONFIRMING THE ADDITION MADE BY THE A.O. AND SEEMS TO BE CONTR ADICTORY. THE CIT(A) OUGHT TO HAVE CONSIDERED THE CONTENTION OF THE APPELLANT AS QUESTION OF APPLICABILITY OF SEC. 194C NOT AT ALL TENABLE. 2. THE APPELLANT FURTHER PRAYS BEFORE YOUR HONOUR T HAT THE ADDITION U/S. 40(A)(I) AS MADE BY THE A.O., CONFIRMED BY CIT(A) HAS NO JUSTIF ICATION AND BAD IN LAW AND HENCE SHOULD BE DELETED 3. FOR THAT OTHER GROUND OF APPEAL MAY BE URGED AT THE TIME OF BEARING. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF LAND DEVELOPMENT. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THA T THE ASSESSEE HAS CLAIMED LAND 2 ITA NO.539/KOL/2014 SOUTH POIN T HOUSING DEVELOPERS PVT. LTD. & MADHUMITA ENTERPRI SE A.YR.2007-08 2 DEVELOPMENT EXPENSES OF RS.2,23,775/- AND HAD CLAIM ED THE SAME AS DEDUCTIBLE EXPENDITURE WHILE COMPUTING THE INCOME FROM BUSINES S. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD PAID THE AFORESAID SUM OF RS.2,23, 775/- TO THE FOLLOWING THREE PERSONS, VIZ., A SUM OF RS.78,775/- TO M/S. B.S.ENTERPRISE, A SUM OF RS.55,000/- TO SRI NITAI PATRA AND A SUM OF RS.90,000/- TO M/S.BAJRANGBALI CONSTRUCTION. THE AFORESAID PAYMENTS WERE MADE BY THE ASSESSEE FOR PURCHASE OF RUBBISH FOR USE IN HIS BUSINESS OF LAND DEVELOPMENT TO LEVEL THE LAND. ACCORDING TO T HE AO THE AFORESAID AMOUNT PAID NOT ONLY INCLUDED COST OF RUBBISH BUT ALSO LABOUR CHARG ES. ACCORDING TO THE AO THE ASSESSEE THEREFORE OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON T HE AFORESAID PAYMENTS U/S 194C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) BEING A PAYMENT FOR EXECUTION OF A CONTRACT OF WORK. SINCE THE ASSESSE E HAD NOT DEDUCTED TAX AT SOURCE, THE AO INVOKING THE PROVISION OF SECTION 40(A)(IA) OF T HE ACT, DISALLOWED A SUM OF RS.2,23,775/- WHICH WAS PAYMENTS MADE WITHOUT DEDUC TING TAX AT SOURCE (RS.78,775/- + RS.55,000/- + RS.90,000/-). THE AFORESAID SUM OF RS.2,23,775/- WAS ADDED BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THE BILL S EVIDENCING PAYMENT OF THE SUM WAS DISALLOWED BY THE AO. THE ASSESSEE CONTENDED THAT T HE AMOUNT IN QUESTION WAS MADE FOR PURCHASE OF MATERIALS AND THEREFORE NO TAX WAS DEDUCTIBLE AT SOURCE U/S 194C OF THE ACT AS IT WAS NOT A PAYMENT FOR EXECUTION OF A CONT RACT OF WORK. THE CIT(A) DID NOT EXPRESS ANY OPINION ON THE AFORESAID CONTENTION RAI SED BY THE ASSESSEE BUT NEVERTHELESS CONFIRMED THE ORDER OF THE AO FOR THE REASON THAT T HE EXPENSES IN QUESTION WERE NOT SUPPORTED BY PROPER RECEIPTS OR VOUCHERS. THUS THE BASIS OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO WAS THAT EXPENSES WERE NOT PROPERLY VOUCHED AND NOT ON THE BASIS OF NON DEDUCTION OF TAX AT SOURCE U/S 194 C R.W.S. 40(A)(IA) OF THE ACT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT (A):- 4.1 I HAVE CAREFULLY PERUSED OBSERVATION OF THE AO IN THE IMPUGNED ORDER OF ASSESSMENT. SHRI R. S. MUKHOPADHYAY, LD. AR OF THE APPELLANT APPEARED BEFORE ME WITHOUT ANY WRITTEN ARGUMENTS. HE FILED FOUR BILLS DATED 12.03.2007, 21.02.2007, 3 ITA NO.539/KOL/2014 SOUTH POIN T HOUSING DEVELOPERS PVT. LTD. & MADHUMITA ENTERPRI SE A.YR.2007-08 3 02.03.2007 AND 14.01.2007. THESE BILLS WERE ALSO SU BMITTED BEFORE THE A.O. ON A CAREFUL EXAMINATION OF THESE BILLS, IT IS SEEN THAT THESE BILLS ARE NOT PROPER, EXCEPTING BILL DATED12.03.2007, ALL THESE BILLS WER E ABOVE RS.20,000/- AND WITHOUT ANY MONEY RECEIPTS/VOUCHERS. THE APPELLANT CONTENDE D THAT THESE BILLS ON PURCHASE OF MATERIALS DO NOT ATTRACT ANY TDS. IN MY OPINION, EVEN IF THESE DO NOT ATTRACT T08, THE EXPENSES WERE NOT PROPERLY VOUCHED. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE. NONE APPEARED ON BEHALF OF THE DEPARTMENT. IT IS CLEAR FROM THE O RDER OF AO THAT DISALLOWANCE WAS MADE BY THE AO ONLY FOR NON DEDUCTION OF TAX AT SOU RCE U/S 194C OF THE ACT. THE AO NEVER RAISED AN OBJECTION THAT THE EXPENSES IN QUES TION WERE NOT SUPPORTED BY PROPER RECEIPTS OR VOUCHERS. FROM THE FACT THAT THE AO HAS INVOKED THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IT IS CLEAR THAT THE AO WAS TH OROUGHLY SATISFIED ABOUT THE GENUINENESS OF THE EXPENSES IN QUESTION. THE CIT(A) IN EXERCISE OF HIS POWERS U/S 251 OF THE ACT THEREFORE COULD NOT HAVE SUSTAINED THE D ISALLOWANCE ON THE GROUND THAT THE EXPENSES IN QUESTION WERE NOT GENUINE. COPY OF THE BILLS EVIDENCING THE PURCHASE OF RUBBISH IS PLACED AT PAGES 5 TO 10 OF THE ASSESSEE S PAPER BOOK. A PERUSAL OF THE SAME SHOWS THAT THE AMOUNTS IN QUESTION HAD BEEN PAID ON LY FOR PURCHASE OF RUBBISH. THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT ATTRA CTED WHEN THE PAYMENTS ARE MADE FOR PURCHASE OF MATERIALS. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE ACT CANNOT BE S USTAINED AND THE SAME OUGHT TO HAVE BEEN DELETED BY CIT(A). WE THEREFORE HOLD THA T THE AMOUNT DISALLOWED U/S 40(A)(IA) OF THE ACT SHOULD BE DELETED. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 4 ITA NO.539/KOL/2014 SOUTH POIN T HOUSING DEVELOPERS PVT. LTD. & MADHUMITA ENTERPRI SE A.YR.2007-08 4 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14.07.2017. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDEVA N ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14.07.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SOUTH POINT HOUSING DEVELOPERS PVT. LTD. & MADHU MITA ENTERPRISE, 1, SOURIN ROY ROAD, (2 ND FLOOR), BEHALA, KOLKATA-700034. 2. I.T.O., WARD-28(3), KOLKATA. 3. CIT(A)-XIV, KOLKATA 4. C.I.T.-X, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT KOLKATA BENCHE S