M/s Vas Electronics, Kolkata V. A.C.I.T Cir - 36,kolkata, Kolkata

ITA 662/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100124 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Assessee Lawyers: S M SURANA
• Section: 143(3); 133(6); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO. 662/KOL/2013 ASSESSMENT YEAR: 2009-10 M/S. VAS ELECTRONICS VS. ASSISTANT COMMISSIONER OF INCOME-TAX, (PAN: AAEFV1120C) CIRCLE-36, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 19.11.2015 DATE OF PRONOUNCEMENT: 24.11.2015 FOR THE APPELLANT: SHRI S. M. SURANA, ADVOCATE FOR THE RESPONDENT: SHRI RAJENDRA PRASAD, JCIT ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 357/CIT(A)-XX/CIRCLE-36/2011-12/KOL DATED 11.12 .2012. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-36, KOLKATA U/S. 143(3) OF THE INCO ME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2009-10 VIDE ITS O RDER DATED 23.12.2011. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING THE LABOUR CHARGES AMOUNTING TO RS.55,440/-, CARRIAGE INWARD CHARGES AMOUNTING TO RS.62,07,498/- AND HIRE CHARGES AMOUNTING TO RS.29,12,123/- FOR NON-DEDUCTION OF TDS U/S. 194C O F THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR TH IS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2, 3 AND 4: 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING T HE ADDITION OF RS.55,440/- WHEN NO TAX WAS DEDUCTIBLE ON THE PAYMENTS MADE FOR LABO UR CHARGES AND IN ANY CASE NO AMOUNT REMAINED PAYABLE AND THEREBY THE DISALLOWANC E U/S. 40(A)(IA) WAS NOT CALLED FOR. 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.62,07,498/- UNDER SEC. 40(A)(IA) WHEN NO TAX WAS DEDUCTIBLE ON THE PA YMENTS MADE FOR CARRIAGE INWARD WHICH WAS NOTHING BUT REIMBURSEMENT AND IN A NY CASE NO AMOUNT REMAIN PAYABLE AS AT THE END OF THE YEAR, HENCE THE ADDITI ON WAS NOT CALLED FOR. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.29,12,123/- BEING THE PAYMENT MADE UNDER THE HEAD HIRE CHARGES IGNORI NG THE TERMS OF THE AGREEMENT WITH PHILIPS. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE HAS CLAIM ED LABOUR CHARGES AT RS.55,440/-, CARRIAGE INWARD CHARGES AMOUNTING TO RS.62,07,498/- AND HIRE CHARGES AMOUNTING TO RS.29,12,123/- IN THE P&L ACCOUNT, BUT NO TDS WAS D EDUCTED U/S. 194C OF THE ACT. LD. 2 ITA NO. 662/KOL/2013 VAS ELECTRONICS AY 2009-10 COUNSEL FOR THE ASSESSEE BEFORE US NOW CLEARLY ADMI TTED THAT THE ASSESSEE HAS NOT DEDUCTED TDS U/S. 194C BUT HE IS OBLIGED TO DEDUCT TDS U/S. 194C OF THE ACT. THE AO APPLIED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON THE ABOVE THREE PAYMENTS AND MADE DISALLOWANCE. AGGRIEVED, ASSESSEE PREFERRED A PPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSE E IS IN SECOND APPEAL BEFORE US. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FAIR LY CONCEDED THE GROUNDS BUT REQUESTED ONLY ON THE ISSUE OF APPLICABILITY OF SEC OND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH IS HELD TO BE RETROSPECTIVE BY HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP P. LTD. (2015) 377 ITR 635 (DEL), WHEREIN THE AO IS DIRECTED TO VERIFY WHETHER THE RECIPIENTS HAVE INCL UDED THE RECEIPTS PAID BY THE ASSESSEE IN THEIR RESPECTIVE RETURNS OF INCOME AND ALSO PAID TAXES ON THE SAME. WHEN THIS PLEA OF THE LD. COUNSEL FOR THE ASSESSEE WAS CONFRONTED TO LD. SR. DR, HE FAIRLY CONCEDED THE POSITION AND URGED THE BENCH TO SET ASIDE THE MATTE R TO THE FILE OF THE AO. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE INCLINED TO SET ASIDE THE ISSUE TO TH E FILE OF THE AO AND ACCORDINGLY, WE DIRECT THE AO TO VERIFY WHETHER THE RECIPIENTS HAVE INCLUDED THE INCOME IN THEIR RESPECTIVE RETURNS AND ALSO PAID TAXES ON THE SAME. THE ASSES SEE WILL PROVIDE THE DETAILS OF RECIPIENTS I.E. THEIR ASSESSMENT PARTICULARS ETC. TO THE AO SO THAT THE AO CAN VERIFY. IN CASE THE RECIPIENT PARTIES ARE NOT COOPERATING IN PROVIDING DETAILS, THE AO CAN CALL FOR THE INFORMATION U/S. 133(6) OF THE ACT FOR VERIFICATION OF THE SAME. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF AO TO DECIDE IN TERMS OF THE ABOVE DIRECTIONS. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING INTEREST OF RS.2,69 ,265/- AND RS.7059/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.5: 5. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING TH E ADDITION ON ACCOUNT OF THE INTEREST OF RS.2,69,265/- AND RS.7059/- ESTIMATED FOR THE AMOUN T ADVANCED TO M/S. GLOW SIGNS AND JASBINDER SINGH WHEN UNDER THE LAW NO SUCH ESTIMATE ON ACCOUNT OF NOTIONAL INCOME WAS CALLED AND THE AMOUNT WAS NOT ADVANCED OUT OF THE L OANS AND ADVANCES. 7. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.4 8,30,276/- AS INTEREST IN THE P&L ACCOUNT ON SECURED LOAN PAID TO BANK FOR MAINTAININ G ITS CASH CREDIT ACCOUNT. ACCORDING 3 ITA NO. 662/KOL/2013 VAS ELECTRONICS AY 2009-10 TO AO, THE ASSESSEE HAS ADVANCED TO VARIOUS PARTIES A SUM OF RS.1,38,98,576/- I.E. THE FOLLOWING AMOUNTS: NAME OF THE PARTY CLOSING BALANCE BIOMAT PRODUCTS RS.37,25,200/- GLOW SIGNS RS.93,80,576/- JASBINDER SINGH RS. 7,03,200/- BUT NO INTEREST HAS BEEN CREDITED BY THE ASSESSEE O N THE ABOVEMENTIONED LOANS. THE AO AFTER GOING THROUGH THE PERIOD OF ADVANCING OF LOAN ESTIMATED THE DISALLOWANCE OF LOAN IN RESPECT TO BLOMAT PRODUCTS, GLOW SIGNS AND JASIBND ER SINGH AT RS.2,96,237/- AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO IN RESP ECT TO DISALLOWANCE OF AMOUNTS ADVANCED TO THESE TWO PARTIES I.E. BLOMAT PRODUCTS AND GLOW SIGNS. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE ONLY REQUESTED THAT THE ISSUE BE SET ASIDE TO THE FILE OF AO FOR VERIFICATION OF AVAILAB ILITY OF INTEREST FREE FUNDS FOR THE ASSESSEE IN TERM OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWERS LTD. (2009) 313 ITR 340 (BOM.) AS WELL AS THE DECISION OF KOLKATA ITAT 3 RD MEMBER IN THE CASE OF S. P. JAISWAL ESTATE REPORTE D IN 147 TTJ 649 THERE CANNOT BE ANY DISALLOWANCE. WE FIND THAT THE LOAN GIVEN TO SISTER CONCERN IS LESS THAN THE INTEREST FREE FUND AVAILABLE WITH THE ASSE SSEE AND ACCORDINGLY, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWERS LTD., SUPRA WHE REIN IT IS HELD AS UNDER: IF THERE BE INTEREST-FREE FUNDS AVAILABLE TO AN AS SESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD R AISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTERES T-FREE FUNDS AVAILABLE. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT THE ISSUE CAN BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION OF AVA ILABILITY OF INTEREST FREE FUNDS INVESTED IN INTEREST FREE LOANS. IN VIEW OF THE ABOVE PLEA OF THE ASSESSEE, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO FOLLOW THE DECISION OF RELIANCE UTILITIES & POWERS LTD., SUPRA AND ACCORDINGLY, DECIDE THE ISSU E. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4 ITA NO. 662/KOL/2013 VAS ELECTRONICS AY 2009-10 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER IS PRONOUNCED IN THE OPEN COURT ON 24.11. 2015 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24TH NOVEMBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. VAS ELECTRONICS, 3A, POLLOCK STREE T, KOLKATA-700 001. 2 RESPONDENT ACIT, CIRCLE-36, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .