Warner Multimedia Ltd., , Kolkata V. DCIT, Circle - 8, Kolkata , Kolkata

ITA 564/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3140 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

1 ITA NO. 564/KOL/2018 WARNER MULTIMEDIA LTD., AY 2006-07 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 564/KOL/2018 ASSESSMENT YEAR: 2006-07 WARNER MULTIMEDIA LTD. (PAN: AABCC0225H) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-8, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 21.01.2019 DATE OF PRONOUNCEMENT 28.02.2019 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI SHANKAR HALDER, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-3, KOLKATA DATED 14.03.2018 FOR AY 2006-07. 2. AT THE OUTSET ITSELF, THE LD. AR DREW OUR ATTENT ION TO GROUND NO.1 OF THE APPEAL PREFERRED BY THE ASSESSEE AND CONTENDED THAT THE AO HAS DISALLOWED RS.2,85,500/- FOR NON- DEDUCTION OF TDS TO THREE PARTIES U/S. 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). ACCORDING TO LD. AR, BA SED ON MISCONCEPTION OF FACTS, THE AO HAS TAKEN NOTE THAT THE ASSESSEE HAS PAID THREE PER SONS THIS AMOUNT WITHOUT DEDUCTION OF TDS. IT WAS BROUGHT TO OUR NOTICE THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAS CONTENDED WITH CORROBORATING EVIDENCE THAT THE AFORESAID AMOU NT WAS PAID TO DIFFERENT LAWYERS, CLERKS IN VARIOUS COURTS IN PUNE, MUMBAI, JODHPUR ETC. AN D THE DETAILS OF THE PARTIES 18 IN NUMBERS WERE FURNISHED BEFORE THE LD. CIT(A), WHO BRUSHED A SIDE THE CONTENTIONS AND EVIDENCE ON THE SPECIOUS PLEA THAT IT IS AN AFTER THOUGHT BY TH E ASSESSEE. WE DO NOT COUNTENANCE TO SUCH AN ACTION FROM THE PART OF THE LD. CIT(A). AS PER THE SCHEME OF THE ACT, TAX HAS TO BE 2 ITA NO. 564/KOL/2018 WARNER MULTIMEDIA LTD., AY 2006-07 LEVIED ON RIGHT PERSON, RIGHT INCOME AND IN THE RIG HT YEAR AND ALSO IT HAS TO BE KEPT IN MIND THAT THERE IS NO ESTOPPEL AGAINST LAW. IF THE ASSE SSEE FOR JUST CAUSE NOT ABLE TO PRESENT ITS FACTS PROPERLY BEFORE THE AO THEN HE CAN BE ALLOWED TO EXPLAIN WITH THE SUPPORT OF MATERIAL/EVIDENCE TO PUT THE CORRECT FACTS BEFORE T HE FIRST APPELLATE AUTHORITY WHO ENJOYS CO-TERMINUS POWERS AS THAT OF AO AND THE LD. CIT(A) HAS THE DISCRETION TO EVEN ADMIT FRESH EVIDENCE AS PER RULE 46A. HOWEVER, SINCE THE ASSESSEE IS PROVIDING THE NEW EVIDENCES FOR THE FIRST TIME BEFORE LD CIT(A), WE W OULD LIKE THE AO TO EXAMINE AND VERIFY THE DOCUMENTS IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE. SO, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE ARE INCLINED TO SET ASIDE THE ORDER O F THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE AO FOR DE NOVO ADJUDICATION OF THIS ISS UE. THE ASSESSEE IS AT LIBERTY TO ADDUCE EVIDENCE TO SUBSTANTIATE ITS CLAIM AND THE AO TO DE CIDE THE ISSUE DE NOVO BY PASSING A SPEAKING ORDER. THEREFORE, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3. GROUND NO. 2 IS AGAINST THE ACTION OF THE LD. CI T(A) IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF TRAVELLING EXPENSES AT 40% FROM THAT OF 80% AS ESTIMATED BY THE AO. 4. BRIEF FACTS ARE THAT THE ASSESSEE, A PRIVATE LIM ITED COMPANY HAD CLAIMED EXPENSES INCURRED OF RS.3,30,266/- ON ACCOUNT OF TRAVELLING AND CONVEYANCE WHICH THE AO DISALLOWED AT 80% AND MADE AN ADDITION OF RS.2,64,213/-. AGAI NST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO RESTRICTED IT TO 40%, SO THE DISALLOWANCE WAS RESTRICTED TO RS.1,32,106/- I.E. 40% OF RS.3,30,266/-. AGGRIEVED , THE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. AR ASSAILING THE DECISION OF THE LD. CIT(A) CONTENDED THAT THE ASSESSEE BEING A PRIVATE LIMITED COMPANY HAD INCURRED EXPENS ES FOR ITS DIRECTORS TRAVEL, WHICH HAS TO BE ALLOWED IN FULL AND AT BEST THE AO COULD HAVE ADDED IT AS PERQUISITE OF THE DIRECTORS U/S. 17 OF THE ACT AND NOT BY ESTIMATION AND THAT TOO WI THOUT REJECTING THE BOOKS OF ACCOUNT, WHICH ACTION ITSELF IS ARBITRARY. WE NOTE THAT THE ASSESSEE BEING A PRIVATE LIMITED COMPANY HAS INCURRED EXPENSES FOR THE TRAVEL OF ITS EMPLOYE ES/DIRECTORS AND THE DISALLOWANCE OF EXPENSES CLAIMED BY THE COMPANY CANNOT BE BASED ON THE REASON OF PERSONAL USE OF ASSESSEE 3 ITA NO. 564/KOL/2018 WARNER MULTIMEDIA LTD., AY 2006-07 COMPANY. AT BEST THE ADDITION COULD HAVE MADE AS D IRECTORS PERQUISITE U/S. 17 OF THE ACT. IN ANY WAY, AS PER THE ACT, THE AO VENTURING TO EST IMATE THE DISALLOWANCE WITHOUT REJECTING THE BOOKS OF ACCOUNT HAS NO SANCTION OF LAW AND AD HOC DISALLOWANCE IS AN ARBITRARY ACTION. THEREFORE, THE AD-HOC DISALLOWANCE OF 40% RESTRICTE D BY THE LD. CIT(A) IS ALSO LEGALLY UNTENABLE AND, THEREFORE, WE DIRECT DELETION OF THE ENTIRE ADDITION ON THIS GROUND. 6. GROUND NOS. 3 AND 4 ARE GENERAL IN NATURE, THERE FORE, THE SAME ARE DISMISSED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2019. SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28TH FEBRUARY, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT WARNER MULTIMEDIA LTD., 75C, PARK STREE T, KOLKATA-700 016. 2 RESPONDENT DCIT, CIRCLE-8, KOLKATA 3 4 5 CIT(A) -3, KOLKATA (SENT THROUGH E-MAIL) CIT , KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR