N.Palanivelu, CHENNAI V. ITO, Salem

ITA 618/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90321 (ITAT-CHENNAI)
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: A S SRIRAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A. NO.618/MDS/2015 ( / ASSESSMENT YEAR : 2009-2010) SHRI. N. PALANIVELU, PROP. M/S. NAGAMALAI TEXTILES, NO.4/78-A, MAMPALAYAM, DEVANANKURICHI POST, TIRUCHENGODE TALUK NAMAKKAL 637 209 [PAN:AIGPP 9199K] ( %& /APPELLANT) VS THE INCOME TAX OFFICER, WARD II(1), SALEM. ( '(%& /RESPONDENT) / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE / RESPONDENT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. /DATE OF HEARING : 29.04.2015 /DATE OF PRONOUNCEMENT : 29.04.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY ASSESSEE ARE DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DATED 29.01.2015 FOR THE ASSESSMENT YEAR 2009-10. I.T.A.NO.618/MDS/2015. :- 2 -: 2. THE FIRST GROUND FOR CONSIDERATION IS WITH REGARD T O ADDITION MADE U/S.40 (A)(IA) OF THE ACT. 2.1 THE BRIEF FACTS OF THE CASE THE ASSESSEE IS A P ROPRIETOR OF M/S. NAGAMALAI TEXTILES, WHICH CONCERN IS INDULGED IN MA NUFACTURING OF FABRICS AND HAD MADE A TOTAL TURNOVER OF E9,30,49,4 75/- DURING THE FINANCIAL YEAR 2008-09. DURING THE COURSE OF PRODUC TION THE UNIT HAS INCURRED A SUM OF E23,18,855/- TOWARDS SIZING WHICH PROCESS IS NEEDED FOR STRENGTHENING THE WRAP BY ADDING STARCH TO REDU CE BREAKAGE OF THE YARNS. IN ORDER TO COMPLETE THE ABOVE PROCESS THE A SSESSEE HAS ENGAGED TO VARIOUS SIZING MILS WHO MILLS WHO EXECUT E THE SAID PROCESS FOR THE ASSESSEE. THE POINT TO BE NOTED IN THIS CAS E IS THAT THE WHOLE CONTROL OF THE WORK WAS IN THE HANDS OF THE ASSESSE E AND ALLEGED SUB CONTRACT WORK WAS EXECUTED I.E. SIZING WORK UNDER T HE FULL CONTROL OF THE ASSESSEE ITSELF. THERE ARE NO SUCH DISCRETION WITH ALLEGED SUB- CONTRACTORS FOR EXECUTING THE ABOVE WORKS. THEY WE RE EXECUTING THE WORK AS PER REQUIREMENT OF TENDER UNDER FULL CONTRO L AND SUPERVISION OF ASSESSEE. THE ASSESSING OFFICER HAS DISALLOWED AN A MOUNT OF E23,18,855/- ON THE GROUND THAT NO TDS WAS MADE BY THE ASSESSEE AS REQUIRED U/S.194C OF THE ACT. ON APPEAL, THE COMMI SSIONER OF INCOME I.T.A.NO.618/MDS/2015. :- 3 -: TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ACIT (2012) 136 ITD 23 (VISAKHAPATNAM) AND JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES (P) LTD IN IT A NO.122 OF 2013 DATED 09.7.2013 HELD THAT SEC 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF T HE YEAR RELEVANT TO THE ASSESSMENT YEA IN RESPECT OF THESE PAYMENT. HO WEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WH ETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE C LOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHE R IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE I NTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND T HE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. I.T.A.NO.618/MDS/2015. :- 4 -: 4. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED AMOU NT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSME NT YEAR IN RESPECT OF THE EXPENSES EITHER AS OUTSTANDING EXPENSES OR AS SUNDR Y CREDITORS, THIS AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS R EMITTED BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 5. THE NEXT GROUND IS WITH REGARD TO PARTIALLY SUSTAI NING THE DISALLOWANCE @ 20% ON WEAVING CHARGES. WHILE COMPL ETING THE ASSESSMENT, THE ASSESSING OFFICER DISALLOWED 20% OF THE WEAVING/COOLY PAID TO THE LABOUR ON THE GROUND THAT VOUCHERS ARE ALL SELF-MADE. AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). ON APPEAL, TH E COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE DISALLOWANCE TO 15%. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD. IN OUR OPINION, ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER @20% ON THE GROUND THAT SUPPORTING VOUCHE RS ARE SELF-MADE VOUCHERS IS ON HIGHER SIDE. IN OUR OPINION, IT IS APPROPRIATE TO DISALLOW ONLY 10% OF WEAVING CHARGES SUPPORTED BY SELF MADE VOUCHERS. THIS GROUND IS PARTLY ALLOWED. I.T.A.NO.618/MDS/2015. :- 5 -: 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.618/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIM E OF HEARING ON WEDNESDAY, THE 29 TH OF APRIL, 2015 AT CHENNAI. SD/- SD/- ( . ! ) V. DURGA RAO ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:29.04.2015. KV $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.