Income-tax Officer, V. Shri Kudal Prashant Vishnudas, Osmanabad

ITA 57/PUN/2014

• Counselvise Citation: 5724514 RSA 2014
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.57/PN/2014 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, WARD 3(4), LATUR. . APPELLANT VS. SHRI KUDAL PRASHANT VISHNUDAS, PROP. AMBIKA THYERS, SOLAPUR ROAD, NEAR DESHPANDE STAND, OSMANABAD, PAN : AGLPK8465C . RESPONDENT DEPARTMENT BY : SHRI RAJESH DAMOR ASSESSEE BY : SHRI M. K. KULKARNI DATE OF HEARING : 17-12-2014 DATE OF PRONOUNCEMENT : 21-01-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), AURANGABA D DATED 25.10.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.1 2.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE ONLY ISSUE RELATES TO THE AC TION OF THE CIT(A) IN DELETING A DISALLOWANCE OF RS.11,50,820/- MADE BY T HE ASSESSING OFFICER BY INVOKING SECTION 40A(3) OF THE ACT. 3. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE RES PONDENT-ASSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN THE DEALING IN MOBILE SIM CARDS AND OTHER ALLIED ACTIVITIES. THE ASSESSING OFFICER NOTED THAT ASSES SEE HAD MADE CASH PAYMENTS TO BSNL AMOUNTING TO RS.11,50,820/- WHICH WERE HIT BY THE PROVISIONS OF SECTION 40A(3) OF THE ACT. AS PER TH E ASSESSING OFFICER, THE AFORESAID PAYMENTS WERE TOWARDS PURCHASE OF SIM CAR DS AND THEREFORE IT ITA NO.57/PN/2014 CONSTITUTED AN EXPENDITURE FALLING WITH THE PURVIEW OF SECTION 40A(3) OF THE ACT. SECTION 40A(3) OF THE ACT PROHIBITS INCURRENCE OF A NY EXPENDITURE IN RESPECT OF WHICH PAYMENTS EXCEEDING RS.20,000/- ARE MADE OTHER WISE THAN BY AN ACCOUNT PAYEE CHEQUE. THE AFORESAID ACTION OF THE ASSESSING OFFICER HAS SINCE BEEN NEGATED BY THE CIT(A) ON THE GROUND THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT ARE NOT ATTRACTED TO THE IMPUGNED TRANSACTION ON THE GROUND THAT ASSESSEE RECEIVED FIXED COMMISSION FROM BSNL O N PURCHASE OF SIM CARDS WHICH ARE SOLD TO THE CUSTOMERS AT FIXED RATE AND HENCE ASSESSEE WAS ONLY ACTING AS AN AGENT OF THE BSNL. THE CIT(A) HA S FURTHER NOTED THAT THE AFORESAID FACTUAL MATRIX OF THE TRANSACTION IS SUPP ORTED BY THE AGREEMENT OF THE ASSESSEE WITH BSNL. ON THE POINT OF LAW, THE C IT(A) HAS RELIED UPON THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF S. RAHUMATHULLA VS. ACIT, 135 TTJ 720, WHEREIN A RELATIONSHIP BETWE EN BSNL AND DISTRIBUTOR OF ITS SERVICE PRODUCTS HAS BEEN HELD TO BE ONE OF PRINCIPAL AND AGENT AND AS PER THE TRIBUNAL THERE WAS NO QUESTION OF ANY PURCH ASE BY THE AGENT. ACCORDINGLY, THE TRIBUNAL HELD THAT NO DISALLOWANCE COULD BE MADE BY APPLYING THE PROVISIONS OF SECTION 40A(3) OF THE ACT IN SUCH A SITUATION. AGAINST SUCH A DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE HAS NOT CONTROVERTED THE CONCLUSION OF THE CIT(A) THAT THE DECISION OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF S. RAHUMATHULL A (SUPRA) COVERS THE CONTROVERSY IN FAVOUR OF THE ASSESSEE. NO DECISION TO THE CONTRARY HAS BEEN BROUGHT OUT BY THE LD. DEPARTMENTAL REPRESENTATIVE AND THEREFORE FOLLOWING THE DECISION OF OUR CO-ORDINATE BENCH IN THE CASE O F S. RAHUMATHULLA (SUPRA), WE HOLD THAT THE TRANSACTION BETWEEN THE ASSESSEE A ND BSNL ENTAILING ACQUISITION OF SIM CARD WHICH ARE IN TURN SOLD TO T HE CUSTOMERS IS NOT TO BE UNDERSTOOD AS A PURCHASE SO AS TO FALL WITHIN THE P URVIEW OF SECTION 40A(3) OF THE ACT. AS A CONSEQUENCE, WE HEREBY AFFIRM THE OR DER OF THE CIT(A) AND REVENUE FAILS IN ITS APPEAL. ITA NO.57/PN/2014 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2015. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 21 ST JANUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE