LARA DUTTA, MUMBAI V. ACIT 11(1), MUMBAI

ITA 5602/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0112 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5 602 / MUM/ 201 2 ( / ASSESSMENT YEAR: 20 08 - 09 ) LARA DUTTA 301, ANSTEL APARTMENTS, ST PAULS ROAD, BANDRA (W) MUMBAI PIN:400050 / VS. ACIT 11(1) AAYAKAR BHAVAN, MUMBAI PIN: 400020 ./ ./ PAN/GIR NO. : ADPPD 7458 K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 29 .0 5 .2017 / DATE OF PRONOUNCEMENT : 28 .0 8 .2017 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRE SENT APPEAL AGAINST THE ORDER DATED 28 .06.201 1 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 03 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 08 - 09 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE APPEAL IS PREF ERRED BY MS . LARA DUTTA (HEREAFTER REFERRED TO AS THE 'APPELLANT') AGAINST: THE ASSESSMENT ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX - 11(I.), MUMBAI, (HER EINAFTER REFERRED TO AS THE LD. ACI). 2. THE ASSESSEE IS AN ARTIST, RESIDENT INDIVIDUAL HAVI NG INCOME FROM THE PROFESSIONAL ACTIVITIES . THE APPELLANT LODGED THE ORIGINAL REVENUE BY : SHRI A JAI PRATAP ASSESSEE BY: SHRI HEMANT BAHEDIA MS. LARA DUTTA 2 RETURN OF INCOME, FOR THE A.Y. 2008 - 09 ON 311 SEPTEMBER, 2008, DECLARING INCOME OF T 30842130/ - . ALL TAXES DUE WER E PAID AT DIE TIME OF FILING OF RETURN OF INCOME. 3. THE DISALLO WANCES MADE BY 'LEARNED ACIT' ARE AS UNDER: PARTICULAR OF EXPENSES FOR NON - DEDUCTION 27,121641/ - DISALLOWANCE OF PERSONAL EXPENDITURE 456,429/ - TOTAL 31,69,070! - IN THE RST PLACE, THE ASSISTANT COMMISSIONER OF INCOME TAX - 11(1) ERRED IN DISALLOWING THE CERTAIN EXPENSES ON ACCOUNT OF NON - DEDUCTION OF MS OF Z 2742641/ - AND CERTAIN EXPENSES AS PERSONAL EXPENDITURE OF T 456429/ - . ON FURTHER APPEALS TO COMMISSIONER OF INCOME TAX (APPEALS), (HEREINAFTER REFERRED TO AS LEARNED M(A), HAS ERRED IN DISALLOWING THE APPEAL BASED ON THE MISPERCEPTION OF THE FACTS OF THE CASE. GROUND OF APPEAL A. DISALLOWANCE OF EXPENSES ON NON - DEDUCTION OF TDS OF RS.27,12,641/ - 1. COSTUME EXPENSES 12,95,676/ - 2. PERSONALITY DEVELOPMENT EXPENSES 10,91,965/ - 3. DIETICIAN FEES/FOOD 3,25,000/ - TOTAL 27,12,641/ - THE LD. ACIT HAS ERRED IN DISALL OWING THE ABOVE EXPENDITURE ON ACCOUNT OF NON - DEDUCTION OF TDS AND THE DISALLOWANCE WAS MADE WITHOUT ANY EVIDENCE TO THE CONTRARY AND THE ADDITIONS ARE BASED PURELY ON ASSUMPTIONS AND SURMISES. THE LD. CIT(A) HAS ERRED IN APPRECIATING THE FACT THAT ABOVE M ENTIONED PAYMENTS DO NOT ATTRACT TDS PROVISIONS U/S 40 (A)(IA). B. DISALLOWANCE OF PERSONAL EXPENSES OF RS.4,56, 429/ - BUSINESS PROMOTION EXPENSES 10,03,789/ - CAR REPAIRS 12843/ - SALARIES 2,02,797/ TAPE & CASSETTES 1,37,000/ - TOTAL 4,56,429/ - THE LD. ACIT HAS ERRED IN DISALLOWIN G THE ABOVE EXPENDITURE TO THE TU N E OF 20% OF THE TOTAL EXPENDITURE AND THE DISALLOWANCE WAS MADE WITHOUT ANY EVIDENCE TO THE CONTRARY AND THE ADDITIONS ARE BASED PURELY ON ASSUMPTIONS AND SURMISES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED HER RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCO ME TO THE TUNE OF RS.3,08,42,130 / - THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX MS. LARA DUTTA 3 ACT, 1961 ( IN SH ORT THE ACT). THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S.14 3(2) OF THE I.T. ACT, 1961 DATED 14.08.2009 AND NOTICE 142(1) OF THE ACT DATED 07.07.2010 WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. THE ASSESSEE IS A N ACTRESS BY PROFESSION . T HE ASSESSEE CLAIMED THE COSTUME EXPENSES TO THE TUNE OF RS.12,95,676/ - , PERS ONALITY DEVELOPMENT CHARGES TO THE TUNE OF RS.10,91,965/ - & DI ETICIAN FEES TO THE TUNE OF RS. 3, 25,000 / - IN HIS P&L ACCOUNT . T HE SAID EXPENSES WERE D ISALLOWED ON THE GROUND OF THAT THE TDS WAS NOT DEDUCTED A ND THE SAID EXPENSES WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS ALSO RAISED THE CLAIM OF THE BUSINESS PROMOTION EXPENSES TO THE TUNE OF RS. 1,03,789 / - AND EXPEN SES IN CONNECTION WITH THE CAR R EPAIRS TO THE TUNE OF RS. 12,843/ - AND SALARIES TO THE TUNE OF RS.2,02,797/ - AND TH E EXPENSES ON ACCOUNT OF TAPE & CASSETTES TO THE TUNE OF RS.1,37,000/ - TOTAL IN COME TO THE TUNE OF RS.4,56,429 / - BUT FINDING NOT JUSTIFIABLE THE A O HAS DISALLOWED THE EXPENSES TO THE EXTENT OF 20%. THE ASSESSEE FILED AN APPE AL BEFORE THE CIT(A) WHO DISMI SSED THE CLAIM OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 : - 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF EXPENSES ON ACCOUNT OF NON - DEDUCTION OF TDS OF RS.27,12,641/ - ON ACCOUNT OF CO STUME EXPENSES, PERSONALITY DEVELOPMENT EXPENSES AND DIETICIAN FEES. THE LD. REPRESENTATIVE OF THE ASSESSEE HA S ARGUED THAT THE ASSESSEE MADE THE PAYMENT OF COSTUME PURCHASE INCLUDING PAYMENT TO DESIGNER LIKE MS. ANNA SINGH, TARUN TAHILIANI ETC AND THE SAI D PAYMENT W AS IN THE NATURE OF PURCHASE , T HEREFORE , THE PROVISION OF TDS U/S 40 (IA) WAS NOT APPLICABLE BUT MS. LARA DUTTA 4 THE CIT(A) HAS WRONGLY DECIDED THE MATTER OF CONTROVERSY THEREFORE, THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SE T ASIDE. IT IS ALSO ARGUED THAT THE NATURE OF TRANSACTION DOES NOT COME WITHIN THE AMBIT OF SECTION 194 C OF THE ACT . THEREFORE, THE PROVISIO N OF THE TDS DEDUCTION U/S 40 (IA) IS NOT APPLICABLE HENCE, THE SAID EXPENSES ARE LIABLE TO BE ALLOWED. HOWEVER, ON THE OTHER HAND THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE ASSESSING OFFICER DISALLOWED THE EXPENSES ON ACCOUNT OF THE VIEW THAT THE TDS WAS LIABLE TO BE DEDUCTED U/S 40 (IA) WHICH WAS NOT DEDUCTED THEREFORE THE SAME WAS D ISALLOWED. THE EXPENSES WERE CLAIMED ON ACCOUNT OF COSTUME EXPENSES, PERSONALITY DEVELOPMENT EXPENSES, DIETICIAN FOOD EXPENSES . T O UNDER STANDS THE NATURE OF THE TRANSACTION , I T IS NECESSA R Y TO ADVERT THE PROVISION O F SECTION 194(C)(1) OF THE ACT. ANY P ERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK(INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE3 OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIE D PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO AS PER EXPLANATION GIVEN IN THIS SECTION. WORK SHALL INCLUDE A. ADVERTISING: B. BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING: C. CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; D. CATERING MS. LARA DUTTA 5 E. MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER. BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER . 5. IN VIEW OF THE SAID PROVI SION IT IS QUITE CLEAR THAT THE TRANSACTION OF THE ASSESSEE NOWHERE FALL WITHIN THE AMBIT OF THE PROVISION OF SECTION 194(C)1. IT DOES NOT INCLUDE TRANSACTION OF SUPPLYING THE PRODUCT ACCORDING TO THE REQUIREMENT OF SPECIFIC DIRECTION OF THE CUSTOMER BY USING MATERIAL, PURCHASE D FROM A PERSON OTHER THAN SUCH A CUSTOMER. ACCORDINGLY, IT IS A PURCHASE WHICH DOES NOT FALL WITHIN THE PURVIEW OF SECTION 40(IA) THEREFORE, APPARENTLY, THE PROVISION OF 40(IA) IS NOT APPLICABLE TO THE SAID EXPENSES HENCE, THE FINDING OF THE CIT(A) IN THIS REGARD IS HEREBY SET ASIDE AND WE ALLOWED THE CLAIM OF THE ASSESSEE ON THIS ISSUE. I SSUE NO.2 : - 6. UNDER T HIS ISSUE THE AS SESSING OFFICER HAS DISALLOWED THE EXPENSES TO THE T UNE OF RS.4,56,429/ - RAISED AGAINST THE BUSINESS PROMOTION EXPENSES, CAR REPAIR, SALARY EXPENSES AND TAPE & CASSETTES . THE SAID EXPENSES WERE DIS ALLOWED ON THE BASIS OF ESTIMATION BECAUSE THE ASSESSING O FFICER WAS OF THE VIEW THAT THERE WAS A PERSONAL ELEMENT THER E IN. D ISALLOWANCE ON THE BASIS OF ESTIMATION IS NOT JUSTI FIABLE. NO BOOKS OF ACCOUNTS HAVE BEEN REJECTED. WE ALSO NOTICE THAT THE ASSESSEE FAILED TO PROVE THE EXPENSES WI TH VOUCHERS AND SALARY S LIP ETC, THEREFORE, WE RESTRICT THE ADDITION TO THE EXTENT OF 10% OF THE SAID EXPENSES . ACCORDINGLY, WE ALLOWED THE CLAIM OF THE ASSESSEE. MS. LARA DUTTA 6 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 08 ,2017 . SD/ - SD/ - ( G.S.PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMB ER / JUDICIAL MEMBER MUMBAI; DATED : 28 . 08. 2017 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI