DCIT (TDS) 2(2), MUMBAI V. PLATINUM COMMUNICATIONS P. LTD, MUMBAI

ITA 5553/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84567 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: PRIYANKA GADA
• Section: 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI . . , , . . , BEFORE SHRI H.L.KARWA , PRESIDENT & SHRI B.R.BASKARAN , A M ITA NO. 5553 /MUM/201 3: ASST.YEAR 2008 - 200 9 THE DY.COMMISSIONER OF INCOME - TAX TDS 2(2), MUMBAI. / VS. M/S.PLATINUM COMMUNICATIONS P.LTD 302, 3 RD FLOOR, 349 BUSINESS POINT WESTERN EXPRESS HIGHWAY ANDHERI (E), MUMBAI 400 069. PAN :AAECP2215R. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI NEIL PHILIP /RESPONDENT BY : MS.PRIYANKA GADA / DATE OF HEARING : 31 .12.2014 / DATE OF PRONOUNCEMENT : 31 .12.2014. / O R D E R PER H.L.KARWA ( PRESIDENT ) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 1 4 , MUMBAI, DATED 14 TH JUNE, 2013, DELETING THE DEMAND RAISED BY THE ASSESSING OFFICER U/S 201(1) / 201(1A) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ), FOR NON - DEDUCTION OF TDS ON REIMBURSEMENT, RELATING TO ASSESSMENT YEAR 2008 - 2009 . 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS PRINCIPALLY ENGAGED IN OUT OF HOME MEDIA SERVICES INCLUDING MEDIA PLANNING, BUYING AND DESIGNING CONSULTANCY, OUT - DOOR MEDIA MONITORING SERVICES, VISUAL MERCHANDISING SERVICES, SIGNAGE AND OTHER RELATED SERVICES . DURING THE COURSE OF PROCEEDINGS U/S 201 OF THE ACT, THE A.O. REQUIRED THE ASSESSEE TO PRODUCE CERTAIN DETAILS OF TDS INCLUDING THOSE ITA NO. 5553 /MUM/201 3 . M/S. PLATINUM COMMUNICATIONS PRIVATE LIMITED. 2 PERTAINING TO THE REIMBURSEMENT OF EXPENSES. ON THE BASIS OF SUCH DETAILS, THE A.O. ASKED THE ASSESSEE AS TO WHY IT SHOULD NOT BE TREATED TO BE AN ASSESSEE IN DEFAULT FOR NON - DEDUCTION OF TAXES ON THE PAYME NT (IN THE NATURE OF REIMBURSEMENT) OF EXPENSES TO MADISON COMMUNICATIONS PRIVATE LIMITED (IN SHORT MCPL ) AND MOMS OUTDOOR MEDIA SOLUTIONS PRIVATE LIMITED (FOR SHORT MOMS ) AMOUNTING TO RS.1,27,59,125 AND RS.96,045, RESPECTIVELY. AFTER AFFORDING AN OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE AND CONSIDERING THE REPLY SUBMITTED ON BEHALF OF THE ASSESSEE, THE A.O. PASSED ORDER U/S 201(1) / 201(1A) OF THE ACT, DATED 28 TH MARCH, 2011, TREATING THE ASSESSEE IN DEFAULT FOR NON - DEDUCTION OF TAX ON REIMBURSEMENT OF EXPENSES AMOUNTING TO RS.1,28,55,170. CONSEQUENTLY, THE A.O. LEVIED TAX AND INTEREST AMOUNTING TO RS.14,56,490 AND RS.5,24,336 U/S 201(1) AND 201(1A) OF THE ACT, RESPECTIVELY. 3. ON APPEAL, THE CIT(A) DELETED THE DEMAND RAISED BY THE ASSESSING OFFICER U/S 201(1) AND 201(1A) OF THE ACT, BY OBSERVING AS UNDER: - 4.5 I HAVE CONSIDERED THE FACTS OF THE CASE, THE WRITTEN SUBMISSIONS OF THE APPELLANT AS WELL AS THE ORDER OF THE LD.AO ON THIS ISSUE. IT IS SEEN THAT DUE TO NON - AVAILABILITY OF FUNDS, THE APPELLANT HAD REQUESTED MCPL TO PAY ITS EXPENSES ON ITS BEHALF. THEREAF TER THE APPELLANT HAD REIMBURSED SUCH EXPENSES TO MCPL WITHOUT ANY INCOME ELEMENT EMBEDDED IN IT. IT IS ALSO SEEN THAT WHILE MAKING SUCH PAYMENTS ON BEHALF OF THE APPELLANT, THE MCPL HAD DEDUCTED TAX AT SOURCE APPROPRIATELY, WHEREVER APPLICABLE. FROM THE A BOVE FACTS, IT IS EVIDENT THAT THE TDS PROVISIONS WOULD NOT BE APPLICABLE ON ANY OF THE CATEGORIES OF REIMBURSEMENT OF EXPENSES TO MCPL AS MENTIONED ABOVE. HENCE, THE AO S ACTION IN THIS REGARD IS UNJUSTIFIED. I THEREFORE HOLD THAT THE APPELLANT HAS NOT CO MMITTED DEFAULT UNDER SECTION 201 OF THE ACT. THE DEMAND RAISED BY THE AO IS HEREBY DELETED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT DUE TO NON - AVAILABILITY OF FUNDS, THE ASSESSEE MADE REQUEST TO MCPL TO PAY ITS EXPENSES ON ITS BEHALF. IT IS ALSO A FACT THAT THE ASSESSEE HAD REIMBURSED SUCH EXPENSES TO MCPL WITHOUT ANY ELEMENT OF INCOME INVOLVED IN THE TRANSACTIONS. WE ALSO OBSERVE THAT THE CIT(A) HAS CATEGORICALLY STAT ED ITA NO. 5553 /MUM/201 3 . M/S. PLATINUM COMMUNICATIONS PRIVATE LIMITED. 3 THAT WHENEVER THE PAYMENTS ON BEHALF OF THE ASSESSEE WAS MADE, MCPL HAD DEDUCTED TAX AT SOURCE. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE FULLY AGREE WITH THE OBSERVATION OF THE CIT(A) THAT THE ASSESSEE CANNOT BE HELD LIABLE FOR DEFAULT U/S 201 OF THE ACT. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE, WHICH IS DEVOID OF ANY MERIT. 5 . IN THE RESULT, REVENUE S APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF DECEMBER, 2014 . 31 .12.2014 SD/ - SD/ - ( B.R.BASKARAN ) ( H.L.KARWA ) / ACCOUNTANT MEMBER / PRESIDENT MUMBAI; DATED : 31 .12. 2014 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 1 4 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI