ACIT, Patiala V. M/s Smt. Birinder Kaur, Patiala

ITA 643/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6195 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AAKARSHAN SINGH
• Keywords: Assessment record
• Section: 40A(3); 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 643/CHD/2013 (ASSESSMENT YEAR : 2008-09) THE A.C.I.T., VS SMT. BIRINDER KAUR, CIRCLE, PROP. M/S BUDGET HOMES TRADING DIVI SION, PATIALA. 18-A, BUDHA DAL COMPLEX, PATIALA. PAN : AHVPK8212A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AAKARSHAN SINGH RESPONDENT BY : SHRI AMAN PARTI DATE OF HEARING : 17.06.2014 DATE OF PRONOUNCEMENT : 11.07.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) PATIALA DATED 22.03.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF T HE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.5,00,000/- ON A/C OF LO W HOUSE HOLD WITHDRAWALS AS THE ESTIMATION OF HOUSE-HOLD EXPENSE S MADE BY THE AO IS QUITE REASONABLE KEEPING IN VIEW THE STATUS & SI ZE OF FAMILY. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,28,213/- MADE BY THE AO ON A/C OF CASH PAYMENTS MADE BY THE ASSESSEE WHICH EXCEEDS RS.20,0 00/- IN SINGLE DAY ON DIFFERENT DATES THEREBY VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE IT ACT, 1961. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.41,11,394/- MADE BY THE AO UNDER SECTION 2 40(A)(IA) OF THE ACT ON A/C OF NON-DEDUCTION OF IDS TOWARDS PAYMENTS MADE TO THE PURCHASING PARTIES . 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.41,11,394/- MADE BY THE AO WITHOUT CONSIDERING THE FACTS THAT THE SUMMONS WERE ISSUED TO SEVEN PARTIES BUT THE SUMMONS OF THREE PARTIES RECEIVED BACK UNDELIVE RED & FROM ONE PARTY NO INFORMATION HAD BEEN RECEIVED. ALSO FROM T WO PARTY PURCHASE BILLS FILED BUT NO ONE ATTENDED PERSONALLY. SH. JAS BIR SINGH (AR ) OF M/S HI-TECH ENTERPRISES, LUDHIANA RECORDED AND ADMITTED TO HAVE SUPPLIED THE MATERIAL AS PER SPECIFICATIONS GIVEN BY THE ASS ESSEE BUT NO IDS WAS DEDUCTED BY THE ASSESSEE. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED DELETING THE ADDITION OF RS.1,79,640/- MADE BY THE AO UNDER SECTION 4X)(A)(IA) OF THE ACT ON A/C OF NON-DEDUCTION OF TD S TOWARDS PAYMENTS MADE TO THE PARTY M/S SAAB & CO. ON CLEARING & FORW ARDING SERVICES PROVIDED TO THE ASSESSEE. 3. THE ISSUE RAISED BY THE REVENUE VIDE GROUND OF A PPEAL NO. 1 IS AGAINST THE DELETION OF ADDITION OF RS. 5,00,000/- MADE ON ACCOUNT OF ESTIMATION OF HOUSEHOLD EXPENSES. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE IS ENGAGED IN TRADING OF ELECTRICALS, POLO MOUNTS, CAB LE TRAYS ETC . THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF FAMILY MEMBERS AND THE HOUSEHOLD EXPENDITURE AND THE SOURCES FOR THE SAME. IN REPLY, IT WAS SUBMITTED THAT THE FAMILY OF THE ASSESSEE CONSISTS OF SELF AND HER HUSBAND AND THE HOUSEHOLD EXPENSES WERE SHARED WITH HER HUSBAND. HOWEVER, NO EVIDENCE WAS FILED IN RESPECT OF THE SO URCE OF HOUSEHOLD EXPENSES INCURRED BY HER HUSBAND. THE ASSESSEE HAD INCURRED THE EXPENDITURE ON RESIDENCE TELEPHONE AT RS. 9799/- AN D ELECTRICITY AT RS. 21,520/-. IN ADDITION, THE ASSESSEE HAD WITHDRAWN RS. 50,000/- FOR PERSONAL EXPENSES ON 02.12.2006 AND ANOTHER RS. 50 ,000/- ON 12.02.2007. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE ASSESSEE HAD WITHDRAWN RS. 50,000/- PER MONTH, HER HOUSEHOLD EXPENSES WOULD BE ABOUT RS. 6,00,000/- AND AS THE S OURCE OF ONLY RS. 3 1,00,000/- HAD BEEN EXPLAINED, THE BALANCE WAS TREA TED AS INCOME OF THE ASSESSEE. 5. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE STATED THAT HER HUSBAND WAS MAKING REGULAR MONTHLY WITHDRAWALS FROM HIS CAPITAL ACCOUNT AND TOTAL WITHDRAWALS WERE RS. 2,18,000/- AS AGAINST WHICH THE ASSESSEE HAD WITHDRAWN RS. 1,00,0 00/- AND HAD ALSO ATTRIBUTED RS. 59,626/- TOWARDS ELECTRICITY AND TEL EPHONE BILLS. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION AS THE ADDITION WAS MADE ON PURE ESTIMATE AND ON THE BASIS OF WITHDRAWALS MADE IN TWO MONTHS. LOOKING INTO THE SIZE OF THE F AMILY, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE WITHDRAWALS MADE FOR HOUSEHOLD EXPENDITURE WAS ADEQUATE AND THE ADDITION OF RS.5,00,000/- WAS DELETED. 6. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTROV ERT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHERE I T HAD FOUND THAT THE HUSBAND OF THE ASSESSEE HAD CONTRIBUTED RS. 2,1 8,000/- FOR HOUSEHOLD EXPENSES. FURTHER, THE ASSESSEE HAD MADE CONTRIBUTION OF RS.1,00,000/- AND ALSO INCURRED EXPENSES ON THE ELE CTRICITY AND TELEPHONE. THE TOTAL WITHDRAWALS MADE BY THE ASSES SEE AND HER HUSBAND FOR HOUSEHOLD EXPENSES WERE RS. 377,626/-. IN THE ENTIRETY OF THE ABOVESAID FACTS AND CIRCUMSTANCES, WE FIND NO M ERIT IN GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 7. THE ISSUE IN GROUND OF APPEAL NO. 2 IS AGAINST D ELETION OF ADDITION OF RS. 328,213/- MADE UNDER SECTION 40A(3) OF THE ACT. 8. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD WITHDRAWN CASH EXCEEDING RS. 20,000/- ON DIFFERENT DATES AND THE SAME WAS THUS, DISALLOWABLE UNDER 4 SECTION 40A(3) OF THE ACT. IN REPLY THE ASSESSEE C LAIMED THAT SHRI GURNAM SINGH WAS HER EMPLOYEE AND WAS ACTING AS FIE LD INCHARGE PETTY CASH WAS KEPT WITH HIM IN ORDER TO MEET DAY-T ODAY EXPENSES. THE SAID PETTY CASH WAS RECORDED IN THE ACCOUNTS BO OKS IN HIS INDIVIDUAL NAME. IT WAS FURTHER STATED THAT NO CAS H PAYMENTS EXCEEDING RS. 20,000/- WAS MADE DURING THE PERIOD U NDER CONSIDERATION. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AS CASH PAYMENTS TO SHRI GURNAM SINGH EXCE EDING RS. 20,000/- ON DIFFERENT DATES WERE MADE AND FURTH ER THE ASSESSEE HAD FAILED TO FURNISH THE DETAILS OF PAYMENT MADE BY SH RI GURNAM SINGH ON ACCOUNT OF DAY-TO-DAY EXPENSES. THE DETAILS OF THE EXPENDITURE IS TABULATED AT PAGES 10 & 11 OF THE ASSESSMENT ORDER AND DISALLOWANCE OF RS. 328,213/- WAS MADE ON ACCOUNT THEREOF. 9. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE PA RA 6.3 AT PAGE 13 OF THE APPELLATE ORDER RECORDS A FINDING TH AT THE ASSESSMENT RECORDS WERE VERIFIED IN THE PRESENCE OF THE ASSESS ING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED AS UN DER : 6.3 I HAVE CONSIDERED THE SUBMISSIONS MADE. THE ASSESSMENT RECORDS WERE VERIFIED IN THE PRESENCE OF THE A.O. IT WAS SEEN THAT THE MONEY WAS BEING PAID ROUTINELY TO SH. GURNAM SINGH AND AT THE END OF EACH MONTH, THE EXPE NSES INCURRED BY THE SH. GURNAM SINGH WAS BEEN ADJUSTED FROM THE BALANCE LYING WITH HIM. THE APPELLANT HAS GIVEN A C OPY OF THE LEDGER ACCOUNTS TO THE A.O. AS ALSO DETAILS OF DAIL Y EXPENSES INCURRED BY SH. GURNAM SINGH DURING ASSESSMENT PROC EEDINGS. THE SAME ARE AVAILABLE AS PART OF THE IMPOUNDED MAT ERIAL ALSO. ON PERUSAL OF THE SAME, IT IS SEEN THAT THE B ALANCE AVAILABLE WITH HIM AS ON 3O TH APRIL, 2007 WAS RS. 1,66,500/- AND, THEREAFTER, SH. GURNAM SINGH AT THE END OF THE MONTH HAS GIVEN DETAILS OF EXPENSES ON PETROL & DIESEL TO THE TUNE OF RS.16,4OO/-WHICH HAS BEEN ADJUSTED AND OUT OF THE B ALANCE AND RS.5O,3OO/- HAS BEEN CARRIED FORWARD TO THE NEX T MONTH. THE SAME PATTERN IS CONTINUING IN THE SUBSEQUENT MO NTHS ALSO. GOING BY THE NATURE OF TRANSACTIONS, THEREFORE, IN MY OPINION, THIS IS IN THE NATURE OF IMPREST EXPENSES GIVEN TO THE EMPLOYEE SH. GURNAM SINGH WHO HAS BEEN SPENDING THE AMOUNT U NDER DIFFERENT HEADS AND GIVING DETAILS OF THE EXPENSES INCURRED BY HIM AT THE MONTH END. LOOKING INTO THE FACT OF THE 5 TRANSACTIONS, THEREFORE, IN MY OPINION, THIS DOESN' T FALL U/S 4OA (3) OF INCOME TAX ACT, 61 AND, THEREFORE, ADDIT ION MADE BY THE A.O. IS HEREBY DELETED. 10. FURTHER, IN RESPECT OF ANOTHER PAYMENT OF RS. 3 9,050/- THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE PARA 6.4 HELD AS UNDER : 6.4 AS REGARDS, THE CASH PAYMENT OF RS.39050/-- MADE TO M/S RAWEL ELECTRIC WORKS, THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDING HAS SUBMITTED THAT THE PAYMEN T WAS MADE ON SATURDAY AFTER WORKING HOUSES. THE A.O., HOWEVE R, DISALLOWED THE SAME CONTENDING THAT NO EVIDENCE IS FURNISHED. DURING THE APPELLATE PROCEEDING ALSO, THE SAME SUBM ISSION WAS MADE CONTENDING THAT WORKING HOURS IN THE BANK IS S HORTER ON SATURDAY. HOWEVER, FURTHER EVIDENCE AS TO WHEN TH E PAYMENT WAS ACTUALLY MADE IS NOT SUBMITTED. THEREFORE, LAM OF THE OPINION THAT THE A.O. HAS RIGHTLY MADE THE ADDITION. 11. THE REVENUE IS IN APPEAL AGAINST THE PART RELIE F GIVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ADDITION BEING UPHELD IN THE HANDS OF THE ASSESSEE. 12. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE EXEMPTION FROM THE PROVISIONS OF SECTION 40A(3) OF THE ACT ARE PRO VIDED ONLY UNDER RULE 6DD OF IT RULES AND THE CONDITIONS MENTIONED B Y THE ASSESSEE ARE NOT COVERED BY THE SAID RULE. 13. THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON A CCOUNT OF THE AMOUNTS PAID TO SHRI GURNAM SINGH WHO ADMITTEDLY IS AN EMPLOYEE OF THE ASSESSEE AND HAS BEEN ALLOCATED CERTAIN AMOUNTS UNDER THE IMPREST ACCOUNT FOR MEETING DAY-TO-DAY EXPENDITURE. THE CO MMISSIONER OF INCOME TAX (APPEALS) ON THE VERIFICATION OF THE REC ORD HAVE GIVEN A 6 FINDING VIDE PARA 6.3 WHICH IS REPRODUCED HEREIN AB OVE THAT SHRI GURNAM SINGH WAS MEETING THE DAY-TODAY EXPENDITURE AND DEBITING THE SAME AT THE END OF THE MONTH. IN VIEW OF THE IMPRES T ACCOUNT BEING AVAILABLE TO THE EMPLOYEE OF THE ASSESSEE AND THE E XPENDITURE BEING INCURRED UNDER VARIOUS HEADS AND IN THE ABSENCE OF ANY CONCRETE FINDING OF THE ASSESSING OFFICER OF THE ASSESSEE HA VING INCURRED EXPENDITURE IN CASH OVER AND ABOVE RS. 20,000/-, WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 15. THE ISSUE RAISED IN GROUND NOS. 3 TO 5 IS AGAIN ST THE DELETION OF ADDITION OF RS. 41,11,394/-. 16. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE UNDER THE HEAD CARTAGE AND FREIGHT HAD MADE PAYMENTS TO M/S SAAP & CO. AS THE ASSESSEE HAD NOT DEDUCTED ANY TAX AT SOURCE FOR THOSE PAYMENTS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY THE SAME SHOULD NOT BE DISALLOWED, IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN REPLY THE ASSESSEE EXPLAI NED THAT M/S SAAP &CO. WERE CLEARING AND FORWARDING AGENTS FOR EXPORT OF GOODS OUTSIDE INDIA AND COMPOSITE PAYMENTS WERE MADE TOWARDS ALL SORTS OF SERVICES, OUT OF WHICH NO TAX WAS DEDUCTIBLE AT SOURCE. THE ASSESSING OFFICER REJECTING THE CLAIM OF THE ASSESSEE DISALLOWED THE SUM OF RS. 179,640/- DEBITED UNDER THE HEAD CARTAGE & FREIGHTS. FURTHER THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE PURCHASES FROM VARIOUS PARTIES AS TABULATED AT PAGES 12 & 13 OF THE ASSESS MENT ORDER, TOTALING RS. 41,11,394/-. THE ASSESSING OFFICER ISSUED SUMM ONS TO THE SAID PARTIES FOR VERIFICATION OF THE TRANSACTION. HOWEV ER, SOME LETTERS WERE RETURNED BACK UN-SERVED AND FURTHER NO INFORMATION WAS FURNISHED BY SOME OF THE PARTIES. TWO OF THE PARTIES I.E. M/S J AGDEV ERECTORS & ENGINEERS AND M/S JAGDEV WELDING WORKS, MOHALI HAD SENT COPIES OF 7 THE PURCHASE BILLS BUT DID NOT PERSONALLY RESPOND T O THE SUMMONS. THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO PRO DUCE SAID PARTIES FOR VERIFICATION. IN REPLY IT WAS EXPLAINED BY THE ASSESSEE THAT IT HAD MADE PURCHASES FROM THE SAID PARTIES IN NORMAL COUR SE OF BUSINESS AND ALL THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS . IT WAS EXPLAINED THAT THOUGH CONFIRMATIONS ARE BEING SENT BY THE SAID PARTIES BUT THEY HAVE SHOWN THEIR INABILITY TO ATTEND THE O FFICE DUE TO SHORT TIME. IN THE CASE OF ONE OF THE PARTIES I.E. M/S H I TECH ENTERPRISES, STATEMENT OF SHRI JASBIR SINGH WAS RECORDED ON 20.1 2.2010 IN WHICH HE STATED THAT HE HAD SUPPLIED NUT-BOLTS TO THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION AS PER THE SPECIFICATION GIVEN BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT TAX HAD TO BE DEDUCTED FROM THE PAYMENTS MADE TO M/S HI TECH ENTERPRISES A S IT WAS NOT A CONTRACT OF SALE BUT CONTRACT OF JOB AND IN VIEW OF THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSING OFFICER, THE ASSE SSEE WAS HELD TO BE IN DEFAULT. FURTHER, THE CONTENTION OF THE ASSESSE E THAT IT HAD PAID SALES TAX/VAT ON SUCH PURCHASES WAS ALSO NOT ACCEPT ED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, IN VIEW THEREOF HELD THAT THE SUM OF RS. 41,11,394/- PAID FOR JOB WORK TO VAR IOUS CONCERNS FOR MANUFACTURE OF SEMI-FINISHED GOODS WAS TO BE DISALL OWED FOR NON- DEDUCTION OF TAX AT SOURCE IN VIEW OF THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT. 17. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS IN SUPPORT OF HIS CON TENTION THAT PURCHASES WERE MADE FROM DIFFERENT CONCERNS AND IT WAS NOT A CONTRACT OF JOB WORK. THE WRITTEN SUBMISSIONS ARE REPRODUCE D UNDER PARA 4.1 AT PAGES 3.7 OF THE APPELLATE ORDER. THE BILLS WERE I MPOUNDED BY THE ASSESSING OFFICER AND DURING THE COURSE OF APPELLAT E PROCEEDINGS THE 8 COMMISSIONER OF INCOME TAX (APPEALS) SUMMONED THE A SSESSMENT RECORDS AND PERUSED THE SAME. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT THE ITEMS PURCHA SED BY THE ASSESSEE HAD BEEN RESOLD TO OTHER PARTIES AS SUCH AND THEREF ORE, THE CONTENTION OF THE ASSESSING OFFICER THAT THESE GOODS WERE NOT TRADABLE IN THE MARKET WAS NOT CORRECT. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER HELD THAT THE SELLERS HAD ALSO CHARGED SALE S TAX AND THE INTENSION OF THE ASSESSEE WAS TO BUY MATERIALS AND THUS, IT WAS A CASE OF SALE AND NOT A CASE OF CONTRACT FOR CARRYING OUT ANY WORK. THUS, THE ADDITION OF RS. 41,11,394/- MADE BY THE ASSESSING O FFICER WAS DELETED. 18. THE SECOND PART OF THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WAS RS. 179,640/ -. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE PARA 4.5 HELD THAT THE CLEARING AGENT WAS BEING PAID AGAINST COST OF SERVI CES RENDERED BY IT FOR EXPORT OF GOODS AND THERE WAS NO LIABILITY TO D EDUCT TAX AT SOURCE OUT OF SUCH PAYMENTS AND THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER WAS DELETED. 19. THE REVENUE IS IN APPEAL AGAINST THE ADDITIONS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CL AIMED TO HAVE MADE PURCHASE OF GOODS FROM THE FOLLOWING PARTIES : S. N NAME OF THE PARTY AMOUNT I. G.S. BHAMRA & SONS, 16/43H TANK ROAD, KAROL BAGH, NEW DELHI. 12,68,750/- 2. INDUSTRIAL EQUIPMENT COMPANY, 34, INDUSTRIAL AREA, PH-II,CHANDIGARH. 5,07,000/- 9 3. M/S KUMAR ENGINEERING COMPANY, 34 INDUSTRIAL AREA, PHASE-II, NEW DELHI. 8,35,074/- 4. M/S VIKING ENGINEERS PVT. PLOT NO. 71, SEC 24, FARIDABAD, HARYANA 6,51,007/- 5. JAGDEV ERECTORS AND ENGINEERS, VILL. MADANPUR, 6,71,679/- 21. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE GOODS SUPPLIED BY THE SAID PARTIES WERE AS PER SPECIFICATIONS OF T HE ASSESSEE AND CONSEQUENTLY CONTRACT FOR JOB WORK AND NOT A CONTRA CT OF SALE, THOUGH SALES TAX/VAT WAS CHARGED BY THE CONCERNS. THE BIL LS RELATING TO THE PURCHASES WERE IMPOUNDED BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) DURING THE COU RSE OF HEARING HAD CALLED FOR THE ASSESSMENT RECORDS AND PERUSED T HE BILLS. IN RESPECT OF VARIOUS PARTIES, THE ASSESSEE HAD GIVEN WRITTEN SUBMISSIONS WHICH ARE INCORPORATED AT PAGES 3 & 4 OF THE APPELLATE OR DER. THE COMMISSIONER OF INCOME TAX (APPEALS) THEREAFTER VID E PARA 4.2 HAD GIVEN A FINDING IN RESPECT OF EACH OF THE PURCHASES WHICH IS AS UNDER : 4.2 THEREAFTER THE ASSESSMENT RECORDS WERE VERI FIED IN THE PRESENCE OF THEA.O. IT WAS NOTED THAT THE BILLS OF THE ALLEGED PURCHASES HAVE BEEN IMPOUNDED BY THE A.O. THE BILLS WERE PERUSED. FIRST LY IT WAS NOTED THAT THE ITEMS PURCHASES MADE BY THE APPELLANT HAVE BEEN RESOLD TO OTHER PARTIES AS SUCH AND, THEREFORE, THE CONTENTION OF T HE A.O. THAT THESE GOODS ARE NOT TRADABLE IN THE MARKET IS NOT CORRECT. T HE GOODS PURCHASED FROM G.S. BHAMRA AND SONS HAVE DULY BEEN EXPORTED T O USA. THE D.G. SETS PURCHASED FROM INDUSTRIAL EQUIPMENT CO. H AVE ALSO BEEN RESOLD TO OTHER PARTIES. SIMILARLY, THE SHELTERS PURCHASED FROM VIKING ENGINEERING PVT. LTD. HAVE BEEN RESOLD WHILE THE M OUNTS, TRAY, ETC. PURCHASED FROM JAGDEV WELDING WORKS AND JAGDEV ELEC TRIES AND ENGINEERING HAVE BEEN SOLD TO OTHER PARTIES AS SUCH . THE CONTENTION OF THE A.O. THAT THESE PRODUCTS ARE SEMI-FINISHED IN N ATURE AND, THEREFORE, CANNOT BE TRADED IN THE OPEN MARKET IS, THEREFORE, NOT CORRECT. DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO, THE APPEL LANT HAS SUBMITTED THAT THE SELLERS HAVE CHARGED SALES TAX WHILE ISSUI NG THE BILLS WHICH IS APPARENT FROM THE COPIES OF THE BILLS. THE MAIN P URPOSE OF THE APPELLANT WAS TO BUY THE GOODS FROM THE SELLERS TO BE SUBSEQUENTLY RESOLD TO OTHER PARTIES. 10 22. THE LD. DR FOR THE REVENUE HAS FAILED TO CONTRO VERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE GROUND OF APPEAL RAIS ED BY THE REVENUE. 23. NOW COMING TO GROUND NO. 5 RAISED BY THE REVENU E, THE ISSUE IS AGAINST THE PAYMENT MADE TO THE CLEARING & FORWARDI NG SERVICES PROVIDED BY M/S SAAP & CO. THE ASSESSEE HAD MADE A PAYMENT OF RS. 179,640/- AGAINST THE CONSOLIDATED BILL RAISED BY THE SAID PARTY FOR VARIOUS SERVICES GIVEN TO THE ASSESSEE AGAINST THE EXPORT OF GOODS. THE ASSESSING OFFICER HAD DISALLOWED THE SAID PAYME NT IN THE ABSENCE OF TAX DEDUCTION AT SOURCE. THE COMMISSIONER OF IN COME TAX (APPEALS), ON THE OTHER HAND, HAD ALLOWED THE SAID EXPENDITURE BECAUSE THE SAID PAYMENT WAS A COMPOSITE PAYMENT. WE FIND NO MERIT IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IN THIS REGARD. THE PROVISIONS OF THE ACT ARE CLEAR AND HA VE ALSO BEEN CLARIFIED BY CBDT IN THIS REGARD THAT WHERE COMPOSI TE PAYMENTS ARE BEING MADE TO CLEARING AND FORWARDING AGENT, TAX HA D TO BE DEDUCTED OUT OF SUCH COMPOSITE PAYMENTS. ACCORDINGLY, WE RE VERSE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING RE LIEF OF RS. 179,640/-. THE GROUND OF APPEAL NO. 5 RAISED BY TH E REVENUE IS THUS, ALLOWED. 24. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH JULY, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.