The ACIT, 2(1), Bhopal V. M/s Lilasons Brewereis Ltd., Bhopal

ITA 607/IND/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54028 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: H P VERMA
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.607/IND/2010 A.Y. 2007-08 ACIT-2(1), BHOPAL ... APPELLANT VS M/S. LILASONS BREWERIES LTD., BHOPAL PAN AAACL 5312 R ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN, SR. DR RESPONDENT BY : S/SHRI H.P.VERMA & ASHISH GOYAL DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 24.11.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 18.8.2010. 2 2. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESS EE CONTENDED THAT THE IMPUGNED ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL DATED 25 TH JUNE, 2010 FOR THE ASSESSMENT YEAR 2006-07 (ITA NOS. 268 AND 288/IND/2009). THIS FACT UAL MATRIX WAS NOT CONTROVERTED BY THE LEARNED SR. DR. HOWEVER , MR. DEWAN INVITED OUR ATTENTION TO SECTION 194C OF THE ACT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. THE FACTS OF THE A BOVE CASE ARE IDENTICAL WITH THE FACTS OF THE PRESENT CASE WHICH HAVE ALREADY BEEN CONSIDERED BY THE BENCH IN THE AFORESAID ORDER FOR THE ASSESSMENT YEAR 2006-07 AND THE ISSUE INVOLVED IS A LSO IDENTICAL. THE RELEVANT PORTION OF THE ORDER IS REP RODUCED HEREUNDER :- BOTH THESE APPEALS ARE FILED BY THE REVENUE AND INVOLVE ISSUES OF APPLICABILITY OF SECTION 40(A)(IA) OF TH E ACT IN RESPECT OF DEDUCTION OF PURCHASES MADE BY THE ASSES SEE OF LABELS AND CROWN CORKS, WHEREIN THE TAX AT SOURCE H AD NOT BEEN DEDUCTED. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAG ED IN MANUFACTURING OF BEER AND PURCHASED PRINTED LABELS AND CROWN CORKS FOR ITS MANUFACTURING ACTIVITIES. THE A O HELD THAT SUCH PURCHASES WERE OF NATURE OF WORK CONTRACT, THE REFORE, 3 THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S 194C AND SINCE THE ASSESSEE HAD NOT DONE SO, HE DISALLOW ED THE ENTIRE AMOUNT SPENT BY THE ASSESSEE ON THE PURCHASE S OF THESE ITEMS BY INVOKING PROVISIONS OF SECTION 40(A) (IA). AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THAT PURCH ASE OF THESE ITEMS WERE NOT COVERED WITHIN THE DEFINITION OF WORKS CONTRACT U/S 194C OF THE ACT. THE ASSESSEE ALSO SUB MITTED THAT THE SUPPLIER HAD CHARGED SALES TAX AND EXCISE DUTY, WHICH FACT ALSO SUPPORTED THE CLAIM OF THE ASSESSEE. THE ASSESSEE ALSO RELIED ON VARIOUS JUDICIAL DECISIONS AS WELL A S RELEVANT CIRCULARS ISSUED BY THE CBDT FROM TIME TO TIME, WH EREIN IT WAS MENTIONED THAT IN RESPECT OF AGREEMENT OF PURCH ASE, PROVISIONS OF SECTION 194C WERE NOT APPLICABLE AND EVEN THE CUSTOMIZES PURCHASES DID NOT CEASE TO BE PURCHASES. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. SENIOR D.R. PLACED STRONG RELIANCE ON THE O RDER OF THE AO, WHEREAS THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BDA LIMITE D VS. ITO, AS REPORTED IN 281 ITR 99 AND THIS DECISION WA S ALSO APPROVED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ADIDAS INDIA MARKETING, AS REPORTED IN 322 ITR (ST) 9, WHEREIN THE SLP FILED BY THE DEPARTMENT HAD BEEN DISMISSED . 5. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. \ 6. AS FAR AS NATURE OF TRANSACTION IS CONCERNED, IT IS NOT IN DISPUTE THAT IT IS A CASE OF PURCHASES FROM SUPP LIERS AS PER THE REQUIREMENT OF THE ASSESSEE. HENCE, AS PER THE RELEVANT PROVISIONS APPLICABLE AT THAT TIME, THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. THIS VIEW DULY FINDS SUPPO RT FROM THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF BDA LIMITED (SUPRA) RELIED ON BY THE ASSESSEE THE RATIO OF WHICH HAS BEEN APPROVED BY THE HON'BLE SUPREME COURT ALS O. IN THESE CIRCUMSTANCES, WE FIND NO MERIT IN BOTH THE G ROUNDS OF THE REVENUE IN BOTH THE YEARS. THEREFORE, THE SAME ARE DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 4 THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2010. 4. SECTION 194C(7)(IV)(E) OF THE ACT SPEAKS ABOUT W ORK WHICH INCLUDES MANUFACTURING OR SUPPLYING A PRODUCT ACCOR DING TO THE REQUIREMENT OR SPECIFICATION OF THE CUSTOMER BY USI NG MATERIAL PURCHASED FROM SUCH CUSTOMERS AND AS PER SUB-CLAUSE (III) CONTRACT INCLUDES SUB-CONTRACT. SUBSTITUTION WAS MA DE BY FINANCE (NO.2) ACT, 2009 WITH EFFECT FROM 1.10.2009 AND PRIOR TO ITS SUBSTITUTION SECTION 194C AS AMENDED BY FINA NCE ACT, 1972 AND VARIOUS OTHER ACTS, THE SECTION READS AS U NDER :- 194C. PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDE NT (HEREINAFTER IN THIS SECTION REFERRED TO AS THE CO NTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE TO A CONTRACT BETWEEN THE C ONTRACTOR AND....... THE TRIBUNAL IN THE AFORESAID ORDER HAS ALREADY CON SIDERED THE DECISION FROM HON'BLE BOMBAY HIGH COURT IN THE CASE OF BDA LIMITED (281 ITR 99) AND ALSO THE DECISION FROM HON 'BLE APEX COURT IN CIT V. ADIDAS INDIA MARKETING; 322 ITR (ST .) 9 WHEREIN THE SLP OF THE DEPARTMENT WAS DISMISSED. IN THE PR ESENT APPEAL ALSO THE NATURE OF TRANSACTION IS NOT IN DIS PUTE AND THE 5 PURCHASES FROM SUPPLIERS WERE AS PER THE REQUIREMEN T OF THE ASSESSEE. SINCE THE FACTS AND THE ISSUE ARE IDENTIC AL AND THE LD. CIT(A) HAS ALSO FOLLOWED THE ORDER OF THE TRIBU NAL FOR ASSESSMENT YEAR 2006-07, THEREFORE, RESPECTFULLY FO LLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND NO INFIRMI TY IN THE IMPUGNED ORDER. IT IS AFFIRMED. ORDER WAS PRONOUNCED IN THE OPEN IN THE PRE SENCE OF LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.11.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE