DCIT, New Delhi V. M/s. M. Sons Gems N Jewellery Pvt. Ltd., New Delhi

ITA 6683/DEL/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4052 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. N. K. SAINI, V ICE P RESIDENT AND SMT. BEENA A. PILLAI , J UDICIAL M EMBER ITA NO. 6683 /DEL/201 4 : ASSTT. YEAR : 2011 - 12 DEPUTY COMMISS IONER OF INCOME TAX, CIRCLE - 16(1) , NEW DELHI VS M/S M. SONS GEMS N. JEWELLERY PVT. LTD., 94 - A, ARJUN NAGAR, SAFDARJUNG ENCLAVE, NEW DELHI - 110029 (APPELLANT) (RESPONDENT) PAN NO. A A DCM9406A ASSESSEE BY : SH. SACHIN JAIN , CA REVENUE BY : MS. ASHIMA NEB , SR. DR DATE OF HEARING : 16.10 .201 8 DATE OF PRONOUNCE MENT : 17 .10 .201 8 ORDER PER N. K. SAINI, VICE PRESIDENT : THIS IS AN APPEAL BY THE DEPARTMENT AGAINS T THE ORDER DATED 23.09.2014 OF LD. CIT(A) - IX, NEW DELHI. 2. FOLLOWING GROUND HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE FACTS & IN LAW, THE LD. CIT(A) HAS ERRED IN D ELETING THE DISALLOWANCE OF RS. 1,1 2, 87,989/ - U/S 40A (IA) IGNORING THE FACTS THAT TRANSACTION OF ASSESSEE ARE IN NATURE OF INTE REST LIABLE TO T DS U/S 194A? 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. ITA NO . 6683 /DE L/201 4 M. SONS GEMS N JEWELLERY PVT. LTD. 2 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EAC H OTHER. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUE UN DER CONSIDERATION IS SQUARELY COVERED IN ASSESSEE S FAVOUR VIDE EARLIER ORDER DATED 17.06.2015 OF THE ITAT DELHI BENCH E , NEW DELHI IN ITA NO. 5419/DEL/2012 FOR THE ASSESSMENT YEAR 2009 - 10 IN ASSESSEE S OWN CASE (COPY OF THE SAID ORDER WAS FURNISHED WHIC H IS PLACED ON RECORD). 4 . IN HIS RIVAL SUBMISSIONS, THE LD. SR. DR ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AN D PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, I T IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE ASSESSEE S APPEAL IN ITA NO. 5419/DEL/2012 FOR THE ASSESSMENT YEAR 2009 - 10 WHEREIN VIDE ORDER DATED 17.06.2015 , THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 9 WHICH READ AS UNDER: 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER, AT PAGE 13 OF THE ASSESSMENT ORDER, HAD LI STED OUT THE DISTINCTION BETWEEN FACTORING AND BI LL/INVOICING DISCOUNT. IT WAS FURTHER HELD BY THE ASSESSING OFFICER THAT AS PER THE ITA NO . 6683 /DE L/201 4 M. SONS GEMS N JEWELLERY PVT. LTD. 3 TERMS OF AGREEMENT ENTERED BETWEEN THE ASSESSEE AND GTF, THE DISCOUNTING CHARGES MENTIONED THEREIN IS ACTUALLY INTEREST COMPONENT ON THE LOAN. HOWEVER, WE NOTICE THAT THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S. MKJ ENTERPRISES LIMITED (GA NO.1927 OF 2014, COPY ENCLOSED) WAS SPECIFICALLY CONSIDERING A CASE WHERE FACTORING CHARGES TANTAMOUNT TO INTEREST AND WHETHER THE TAX IS TO BE DEDUCTED AT SOURCE ON THE SAME. THE HON BLE HIGH COURT HELD THAT FACTORING CHARGES WERE NOT INTEREST AND AS SUCH, PROVISIONS OF TDS ARE NOT APPLICABLE. THE HON BLE HIGH COURT WAS CONSIDERING T HE FOLLOWING QUESTION OF LAW : - WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED TRIBUNAL WAS JUSTIFIED IN LAW TO HOLD INTER ALIA THAT THE FACTORING C HARGES OF RS.56,33,112/ - WAS NOT INTEREST AND AS SUCH PROVISION OF TDS UND ER SECTION 194A OF THE SAID ACT WAS NOT APPLICABLE, HENCE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE SAID ACT WAS NOT WARRANTED, IGNORING THE FACT THAT THE ASSESSES ITSELF SHOWN THIS EXPENDITURE UNDER THE HEAD INTEREST IN ITS BOOKS OF ACCOUNT AND AS SUCH DISALLOWANCE UNDER SECTION 40(A)(IA) WAS RIGHTLY MADE ON ACCOUNT OF NON DEDUCTION OF TAX UNDER SECTION 194A. THE HON BLE CALCUTTA HIGH COURT, ON CONSIDERING THE A BOVE QUESTION OF LAW, HELD CATEGORICALLY THAT FACTO RING CHARGES ON SALE CANNOT BE TERMED AS INTEREST. IN VIEW OF THE HON BLE CALCUTTA HIGH COURT JUDGMENT, WE HOLD THAT THE FACTORING CHARGES WILL NOT COME WITHIN THE PURVIEW OF SECTION 2(28A) OF THE INCOME - TAX ACT, 1961 AND AS SUCH, THE PROVISIONS OF TDS ARE NOT APPLICABLE ON FACTS AND CIRCUMSTANCES OF THE CASE. 6 . SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 17.06.2015 IN ASSESSEE S OWN CASE, THE ISSUE UNDER ITA NO . 6683 /DE L/201 4 M. SONS GEMS N JEWELLERY PVT. LTD. 4 CONSIDERATION IS DECIDED IN ASSESSEE S FAVOUR AND AGAINST THE DEPA RTMENT. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT . 7 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORDER PRON OUNCED IN THE COURT ON 17 /10 /2018) SD/ - SD/ - ( BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER VICE PRESIDENT DATED: 17 /10 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR