DCIT, Circle - 12, Kolkata, Kolkata V. M/s. Southern Cooling Towers Pvt. Ltd., Kolkata

ITA 654/KOL/2011

• Counselvise Citation: 65423514 RSA 2011
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: N O N E
• Keywords: Additional evidence
• Section: 194C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA ( ) , . . , , ) [BEFORE SHRI MAHAVIR SINGH, J.M. AND SRI C.D. RAO, A.M. ] ! ! ! ! / I.T.A NO. 654/KOL/2011 ASSESSMENT YEAR : 2006-2007 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- M/S . SOUTHERN COOLING TOWERS PVT. LTD., CIRCLE-12, KOLKATA KOLKATA (PAN : AADCS 59 39 A) ( '# /APPELLANT ) ( $%'# / RESPONDENT ) FOR THE APPELLANT : SHRI D.J. MEHTA, D. R. FOR THE RESPONDENT : N O N E &' ( ) &' ( ) &' ( ) &' ( ) /DATE OF HEARING : 15.11.2011 *+ ) *+ ) *+ ) *+ ) /DATE OF PRONOUNCEMENT : 18.11.2011 , / ORDER PER SHRI C.D. RAO, ACCOUNTANT MEMBER/ . . ) , :- THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA DATED 23.02.2011 FOR THE ASS ESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS :- (1) LD. CIT(A.) ERRED IN DIRECTING TO RESTRICT THE DISALLOWANCE UNDER SECTION 40(A)(IA) AT RS.9,48,280/- ON THE BASIS OF THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM IN VIOLATION OF RULE 46A OF THE I.T. RULE, 1962. (2) UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A.) ERRED IN RESTRICTING THE DISALLOWANCE TO 5% OF THE TOTAL EXPENDITURE ON ACCOUNT OF TRAVELING & CONVEYANCE WITHOUT GIVING AN Y COGENT REASON THEREOF. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING. THEREFORE, WE HAVE DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. D.R. AND THE MATERIAL AVAILABLE ON RECORD. ITA NO. 654/KOL./2011 2 3. BRIEF FACTS RELATING TO GROUND NO.1 OF THIS APPE AL ARE THAT WHILE DOING SCRUTINY ASSESSMENT, THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS.24,97,927/- UNDER SECTION 40(A)(IA) BY OBSERVING IN PARA 12 AT PAGES 8-9 OF H IS ORDER AS UNDER :- THE ASSESSEE IN HIS SUBMISSION FILED DETAILS OF FA BRICATION AND TREATMENT EXPENSES FOR THE YEAR ENDED 31.03.06, WHE REIN IT WAS SEEN THAT TDS WAS NOT DEDUCTED IN MOST OF THE PAYMENTS M ADE AND IN THE CASE OF CERTAIN PARTIES THE AGGREGATE PAYMENT EXCEE DS RS.50,000/-. THE TOTAL AMOUNT (PRINCIPAL) ON WHICH TDS WAS NOT D EDUCTED AMOUNTS TO RS.24,97,927/-, WHICH IS HEREBY DISALLOW ED UNDER SECTION 40(A)(IA). 4. ON APPEAL, LD. CIT(APPEALS) AFTER TAKING INTO CO NSIDERATION OF THE VARIOUS SUBMISSIONS ON THE FACTS AVAILABLE ON RECORD RESTRICTED THE DIS ALLOWANCE UNDER SECTION 40(A)(IA) TO THE EXTENT OF RS.9,48,280/- BY OBSERVING AS UNDER :- 12. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND PERUSED THE ASSESSMENT ORDER. DURING THE YEAR UNDER CONSIDERATI ON THE APPELLANT COMPANY HAS MADE PAYMENT AGGREGATING TO RS.41,35,34 8/- ON ACCOUNT OF FABRICATION AND TREATMENT EXPENSES. THE A.O. HAS MA DE DISALLOWANCE OF RS.24,97,927/- BY INVOKING PROVISIONS OF SEC. 40(A) (IA) OF THE ACT FOR THE REASON THE TAX WAS NOT DEDUCTED BY THE APPELLANT CO MPANY. HOWEVER, IN THE ASSESSMENT ORDER THE A.O. HAS NOT MENTIONED ANYTHIN G AS TO HOW HE ARRIVED ON THE AMOUNT OF RS.24,97,927/- AND NAMES O F THE PARTIES AND AMOUNTS ON WHICH THE TAX WAS NOT DEDUCTED BY THE CO MPANY. ON THE OTHER HAND, DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE APPELLANT COMPANY FURNISHED PARTY-WISE AND BILL-WISE DETAILS OF PAYME NTS AGGREGATING TO RS.41,35,648/- ALONG WITH DETAILS OF TAX DEDUCTED U /S. L94COF THE ACT. ON BEING ASKED, THE APPELLANT COMPANY ALSO FURNISHED C OPIES OF CHALLANS THROUGH WHICH THE TAX DEDUCTED U/S. 194C, WAS PAID BY HIM. ON PERUSAL OF DETAILS OF PAYMENTS, TAX DEDUCTED U/S. 194C AND TAX DEPOSITED TO THE GOVT. TREASURY, IT WAS OBSERVED THAT PAYMENTS AGGREGATING TO RS.3,13,404/- WERE MADE TO VARIOUS PARTIES AND TO EACH PARTY THE PAYME NT MADE DURING THE YEAR WAS LESS THAN RS.20,000/-. HENCE, ON THE PAYME NT AGGREGATING TO RS.3,13,404/-, THE APPELLANT COMPANY WAS NOT HAVING ANY LIABILITY TO DEDUCT TAX U/S. 194C, THEREFORE, OUT OF PURVIEW OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. FURTHER, ON THE PAYMENTS AGGR EGATING TO RS.3,69,972/- MADE TO DIFFERENT PARTIES , THOUGH, THE TAX WAS DED UCTED AND PAID BY THE APPELLANT COMPANY BUT IT WAS IN THE NEXT FINANCIAL YEAR I.E. F.Y. 2006-07. THUS THE AMOUNT OF RS.3,69,972/- FALLS WITHIN THE P URVIEW OF PROVISION OF SEC 40(A)(IA). AGAIN PERUSAL OF DETAILS, IT IS OBSE RVED THAT IN THE CASE OF TWO PARTIES, THE APPELLANT COMPANY HAD MADE PAYMENT AGG REGATING TO RS.5,78,308/- ON WHICH TAX WAS NOT DEDUCTED U/S. 19 4C AND HENCE, CLEARLY DISALLOWABLE U/S. 40(A)(IA). HOWEVER, ON THE BALANC E PAYMENT OF RS.28,73,664/-, THE APPELLANT COMPANY HAS DEDUCTED THE TAX AND PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U /S. 139(1) OF THE ACT. IN VIEW OF ABOVE, THE PROVISION OF SEC. 40(A)(IA) ARE APPLICABLE ON THE PAYMENTS AGGREGATING TO RS.9,48,280/- ON WHICH EITH ER TAX WAS DEDUCTED AND PAID IN THE NEXT FINANCIAL YEAR OR THE TAX WAS NOT DEDUCTED AT ALL AS ITA NO. 654/KOL./2011 3 MENTIONED ABOVE. HENCE, THE A.O. IS DIRECTED TO RES TRICT THE DISALLOWANCE U/S. 40(A)(IA) TO THE EXTENT OF RS.9,48,280/-. THE GROUND NO. 3 IS PARTLY ALLOWED. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. D.R., THOUGH RELIED ON THE ORDER OF ASSESSING OFFICER, COULD NOT CONTRADICT THE OBSERVATIONS MADE BY THE LD. CIT (APPEALS) BY BRINGING ANY MATERIAL CONTRARY TO THE FACTS NARRATED TO THE IMPUGNED ORDER. 6. SECOND GROUND OF THIS APPEAL RELATES TO THE DISA LLOWANCE OF THE TOTAL EXPENDITURE ON ACCOUNT OF TRAVELLING AND CONVEYANCE. THE ASSESSING OFFICER WHILE DOING THE SCRUTINY ASSESSMENT HAS DISALLOWED RS.3,81,166/- ON ACCOUNT OF TRAVELING AND CONVEYANCE BY OBSERVING AS UNDER :- THE ASSESSEE HAS DEBITED RS.19,05,831/- ON ACCOUNT OF TRAVELING AND CONVEYANCE. BUT THE SUBMISSIONS FILED BY THE ASSESS EE DO NOT REFLECT THE REASONS AS TO HOW SUCH EXPENSES WERE RELATED IN THE BUSINESS ACTIVITY OF THE ASSESSEE-COMPANY. SINCE AN ELEMENT OF PERSON AL USE CAN NOT BE RULED OUT 20% OF THE SAME IS HEREBY DISALLOWED AMOU NTING TO RS.3,81,166/-. 7. ON APPEAL, LD. CIT(APPEALS) HAS RESTRICTED THE D ISALLOWANCE TO 5% OF THE TOTAL EXPENDITURE BY OBSERVING AT PARA 15 OF HIS IMPUGNED ORDER AS UNDER :- 15. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. THE AO HAS MADE THE DISALLOWA NCE @ 20% OUT OF THE TRAVELING AND CONVEYANCE EXPENSES FOR THE RE ASON OF INCURRING CERTAIN EXPENSES FOR THE PURPOSES OTHER THAN BUSINE SS PURPOSES. THOUGH, THE AO HAS NOT GIVEN ANY SPECIFIC INSTANCE OF EXPENDITURE, WHICH WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS BUT I AM INCLINED TO AGREE WITH THE AO THAT THE ELEMENT OF PERSONAL E XPENSES CANNOT BE RULED OUT. HOWEVER, I AM OF THE OPINION THAT THE DI SALLOWANCE MADE BY THE AO IS ON HIGHER SIDE AND HE IS DIRECTED TO REST RICT THE DISALLOWANCE @ 5% OF TOTAL EXPENDITURE WHICH COMES TO RS.95,291/ -. THE GROUND NO. 4 IS PARTLY ALLOWED. 8. AT THE TIME OF HEARING, LD. D.R., THOUGH RELIED ON THE ORDER OF ASSESSING OFFICER, COULD NOT CONTRADICT THE OBSERVATIONS MADE BY THE LD. CIT (APPEALS) BY BRINGING ANY MATERIAL CONTRARY TO THE FACTS NARRATED TO THE IMPUGNED ORDER. ITA NO. 654/KOL./2011 4 9. WE HAVE HEARD THE LD. D.R. AND CAREFULLY PERUSED THE SPECIFIC OBSERVATIONS MADE BY THE LD. CIT(APPEALS). WE FIND THAT THE LD. D.R. COULD N OT BRING ANY CONTRARY MATERIAL TO THE FINDINGS OF LD. CIT(APPEALS) ON BOTH THE ISSUES. TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS) AND UPHOLD THE SAME AND R EJECT THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT. 10 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/11/2011. SD/- SD/- [MAHAVIR SINGH/ , ] [C.D. RAO/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 18/ 11/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. SOUTHERN COOLING TOWERS PVT. LTD., 2, CHOWRING HEE TERRACE, KOLKATA- 20. 2 DCIT, CIRCLE-2, P-7, CHOWRINGHEE SQUARE, 7 TH FLOOR, KOLKATA-69 3. COMMISSIONER OF INCOME-TAX (APPEALS)- ,KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.