Patnitop Development Authority, Distt. Udhampur (J&K) V. The Assistant Commissioner of Income Tax, Jammu

ITA 634/ASR/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5350 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIRENDER K MAINI
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 634 (ASR)/2013 ASSESSMENT YEAR: 2006-07 PAN: AAALP0454D PATNITOP DEVELOPMENT AUTHORITY VS. ACIT, CRICLE-2 , JAMMU KUD BAZAR, DISTRICT UDHAMPUR, AAYAKAR BHAW AN, PANAMA J&K-182101 CHOWK, JAMMU-180012 (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VIRENDER K. MAINI, CA RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 24.03.2014 DATE OF PRONOUNCEMENT: 28.03.2014 ORDER PER BENCH 1) THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 30.09.2013 PASSED BY LEARNED CIT(A), JA MMU, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: I. THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION OF RS. 5,88,200/- ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUND THAT THE ASSESSEE D ERIVES ITS INCOME UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LEARNED C IT(A) HAS OVERLOOKED THE FACTS THAT, THE ASSESSEE HAS OFFERED ITS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE SAME HAS B EEN ASSESSED SO BY THE LEARNED ASSESSING AUTHORITY. II. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND AND ADD TO SUBSTITUTE ANY GROUNDS OF APPEALS BEFORE OR AT THE TIME OF HEARING . 2 I.T.A. NO. 634 (ASR)/2013 ASSESSMENT YEAR: 2006-07 2) THE ASSESSING OFFICER HAS DISALLOWED RS. 5,88,20 0/- UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN S HORT THE ACT) BY GIVING HIS FINDINGS IN PARA NOS. 4 & 4.2 , PAGE 5, WHICH ARE REPRODUCED AS UNDER: 4. DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT, 1961: IT HAS BEEN POINTED OUT BY THE AUDITORS IN THEIR RE PORT SUBMITTED ALONGWITH THE RETURN OF INCOME, THAT THE AUTHORITY HAS NOT DEDUCTED INCOME TAX AT SOURCE FROM THE FOLLOWING PAYMENTS MA DE DURING THE YEAR UNDER REPORT:- S. NO. REFERENCE NO. AMOUNT (RS.) NATURE OF PAYMENT 1. 02/06.05.2005 83,440 ADVERTISEMENT CHARGES 2. 30/29.08.2005 66,000 ADVERTISEMENT CHARGES 3. 04/08.12.2005 50,000 CONSULTANCY CHARGES FOR ROPEWAY PROJECT. 4. 24/11.02.2006 2,00,000 -DO- 5. 02/31.03.2006 67,760 PROVISION FOR ADVERTISEMENT 6. 02/31.03.2006 1,21,000 PROVISION FOR YOUTH FESTIVAL EXPENSES TOTAL 5,88,200 4.2 THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT S OURCE WHILE MAKING THESE PAYMENTS AS PROVIDED UNDER THE PROVISI ONS OF SECTION 194C AND 194J OF THE INCOME-TAX ACT, 1961 BUT HAVIN G FAILED TO DO SO, THE ASSESSEE IS NOT ALLOWED ANY DEDUCTION AS IT HAS BEEN PROVIDED UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE IN COME-TAX ACT, 1961 THAT WHERE ANY INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSION SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RE SIDENT, FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYIN G OUT ANY WORK ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI IB AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BE EN PAID DURING THE 3 I.T.A. NO. 634 (ASR)/2013 ASSESSMENT YEAR: 2006-07 PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200, SU CH AMOUNT SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDE R THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. ACCORD INGLY, DISALLOWANCE OF RS. 5,88,200/- IS MADE UNDER THIS HEAD. 3) AGGRIEVED WITH THE ASSESSMENT ORDER DATED 6 TH FEBRUARY, 2008, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIR ST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 30.09.2013, DISMISSED THE APPEAL OF THE ASSESSEE BY GIVING HIS FINDING IN PARA NO. 4.2, PAG E NO. 7, WHICH IS REPRODUCED AS UNDER: 4.2 GROUND OF APPEAL NO. 2 RELATES TO ADDITION OF RS. 5,88,200/- ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 40(A)(IA) OF TH E ACT. THE APPELLANT HAS ARGUED THAT IT HAS SHOWN ITS INCOME UNDER THE H EAD INCOME FROM OTHER SOURCES AND ACCORDINGLY THE PROVISIONS OF THE SECTI ON 40(A)(IA) OF THE ACT ARE NOT APPLICABLE TO THE APPELLANT. IT IS OBSERVED THAT THE MAIN ACTIVITY OF THE APPELLANT IS DEVELOPMENT OF LAND AND BUILDINGS IN ITS AREA AND EARN INCOME FROM SALE/RENT OF LAND/BUILDINGS, BUILDING PERMISSION FEE, FEE FROM VEHICLES ENTERING THE AREA ETC. IT IS THE MAIN ACTIVITY OF THE APPELLANT THAT PROVIDE THESE SERVICES AFTER CHARGING PROFIT M ARGIN AND ACCORDINGLY THE SAME CANNOT BE REGARDED AS THE INCOME FROM OTHE R SOURCES. THE INCOME OF THE APPELLANT IS INCOME FROM BUSINESS AND THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE TO THE APPELLANT. FURTHER, THE APPELLANT HAS ARGUED VERBALLY THAT SEC TION 40(A)(IA) IS APPLICABLE WHERE THE AMOUNTS ARE PAYABLE AND NOT W HERE THE EXPENDITURE HAS ALREADY BEEN PAID. INTENTION OF SECTION 40(A)(I A) IS TO MAKE COMPLIANCE OF TDS PROVISIONS WHILE MAKING PAYMENTS FOR EXPENDITURE. IF THE AMOUNT PAID IS TAKEN OUT OF THE PURVIEW OF T HIS SECTION THE BASIC INTENTION OF THIS SECTION IS DEFEATED. THE CONCERN ING CASE LAWS CITED BY THE APPELLANT OF JAIPUR VIDYUT NIGAM LTD 26 DTR 79, IT HAS BEEN HELD THAT ONLY PAYABLE AMOUNT AS ON 31 ST MARCH WILL FALL UNDER THE MISCHIEF OF SECTION 40(A)(IA). THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT KOLKATA IV VS. CRESCENT EXPORT SYNDICATE, IN ITA NO . 20 OF 2013 GA 190 2013 DECIDED ON 3 RD APRIL, 2013, HON'BLE KARNATKA HIGH COURT IN 4 I.T.A. NO. 634 (ASR)/2013 ASSESSMENT YEAR: 2006-07 THE CASE OF SMT. J. RAMA VS. CIT & ANOTHER REPORTED IN 194 TAXMAN 37 AS WELL AS HON'BLE GUJARAT HIGH COURT IN THE CASE O F CIT IV VS. SIKANDAR KHAN N. TUNVAR IN TAX APPEAL NO. 905 OF 2012 DATED 02.05.2013 HAVE DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. THE ON LY ONE HIGH COURT IN THE COUNTRY IS IN FAVOUR OF THE ASSESSEE. IN VIEW O F THE MAJORITY VIEWS EXPRESSED IN FAVOUR OF REVENUE, I AM OF THE CONSIDE RED OPINION THAT ADDITION OF RS. 5,88,200/- HAS BEEN RIGHTLY MADE AN D IS THUS CONFIRMED. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 4) WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE SMALL PAPER BOOK CONTAINING PAGES FROM 1 TO 14, IN WHICH HE HAS ATTACHED SYNOPSIS; COPIES OF CIT APPEAL ORDER DATED 04.01.2010 IN APPEAL NO. 208/08-09 FOR A.Y. 2 006-07.(SECTION 271B); AND CIT APPEAL ORDER DATED 30.09.2013 IN APP EAL NO. 22/08-09 FOR A.Y. 2006-07 [SECTION 40(A)(IA)]. WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY UPHELD THE AS SESSMENT ORDER ON THE ISSUE IN DISPUTE BY REJECTING THE CLAIM OF THE ASSE SSEE UNDER SECTION 40(A)(IA) OF THE ACT AFTER DISCUSSING THE ORDER OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT KOLKATA IV VS. CRESCENT EX PORT SYNDICATE, IN ITA NO. 20 OF 2013 GA 190 2013 DECIDED ON 3 RD APRIL, 2013, HON'BLE KARNATKA HIGH COURT IN THE CASE OF SMT. J. RAMA VS. CIT & ANOTHER REPORTED IN 194 TAXMAN 37 AS WELL AS HON'BLE GUJARA T HIGH COURT IN THE CASE OF CIT IV VS. SIKANDAR KHAN N. TUNVAR IN TAX A PPEAL NO. 905 OF 2012. IN OUR CONSIDERED VIEW, THE GROUNDS RAISED BY THE ASSESSEE BEFORE THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY B EEN REJECTED BY HIM. 5 I.T.A. NO. 634 (ASR)/2013 ASSESSMENT YEAR: 2006-07 THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE WEL L REASONED ORDER PASSED BY LEARNED FIRST APPELLATE AUTHORITY. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE ASSESSEE AND UPHOLD THE ORDER DATED 30 .09.2013 PASSED BY LEARNED CIT(A), JAMMU. 5) IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH MARCH, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: PATNITOP DEVELOPMENT AUTHORITY KUD BA ZAR, DISTRICT UDHAMPUR, J&K-182101 2. ACIT, CRICLE-2, JAMMU, AAYAKAR BHAWAN, PANAMA CHOWK , JAMMU- 180012 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.