Appeal Details
Counselvise Citation
67420514 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 3 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-06-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
D
Next Hearing Date
23-06-2015
Assessment Year
2007-2008
Appeal Filed On
03-03-2011
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. AY APPELLANT RESPONDENT ITA NOS. 674 TO 676/AHD/2011 2007-08 2008-09 2009-10 M/S. FACETS POLISHING WORKS PVT LTD, PLOT NO.1, KG HOUSE, UMIYA MATA TEMPLE, A.K. ROAD, SURAT PAN : AAACF 7016 Q ITO, TDS-1, SURAT ITA NOS. 856 & 857/AHD/2011 2007-08 2009-10 REVENUE ASSESSEE ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SMT SONIA KUMAR, SR. DR. / // / DATE OF HEARING : 23/06/2015 !' / // / DATE OF PRONOUNCEMENT: 25/06/2015 #$ #$ #$ #$/ // / O R D E R ` PER G.D. AGRAWAL, VICE PRESIDENT: ITA NOS. 674 & 856/AHD/2011 ARE THE CROSS APPEALS F ILED BY THE ASSESSEE AND REVENUE RESPECTIVELY AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT DATED 16.11.2010 FOR ASSESSMENT YEARS 2007-08. ITA NOS. 676 & 857/AHD/ 2011 ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIV ELY AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT DATED 16.11.2010 FOR ASSESSMENT YEARS 2009-10. ITA NO. 675/AHD/201 1 IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT 16.11.2010 FOR ASSESSMENT YEARS 2008-09. SINCE THESE APPEALS INVOLVE COMMON ISSUES, THESE WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 2 ITA NOS. 856 & 857/AHD/2011REVENUES APPEAL FOR AY S 2007-08 & 2009-10 2. THE FIRST GROUND RAISED IN THE APPEAL BY THE REV ENUE IN BOTH THE YEARS READ AS UNDER:- AY 2007-08 THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S 201A(1) OF THE I.T. ACT OF RS.10,0 9,800/- & INTEREST CHARGE U/S 201(1A) OF THE IT ACT OF RS.4,27,482 FOR A.Y. 2 007-08 EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED TH AT THE ASSESSEE COMPANY HAD NOT DEDUCTED TAX IN RESPECT OF PAYMENT OF RENT U/S 194I OF THE IT ACT OF RS.60,00,000/- @ RS.5 LAKHS PER MONTH TO M/S. TIRUP ATI ORGANISERS PVT LTD (TOPL) FOR USING PREMISES & INFRASTRUCTURES. AY 2009-10 THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FACTS OF THE CASE IN DELETING THE ORDER PASSED U/S 201A(1) OF THE I.T. ACT OF RS.8,44 ,600/- & INTEREST CHARGE U/S 201(1A) OF THE IT ACT OF RS.84,460 FOR A.Y. 200 9-10 EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD NOT DEDUCTED TAX IN RESPECT OF PAYMENT OF RENT U/S 194I OF THE IT ACT TO M/S. TIRUPATI ORGANISERS PVT LTD (TOPL) FOR USING PREMIS ES & INFRASTRUCTURES. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSING OFFICER HELD THE ASSESSEE TO BE IN DEFAULT IN NON DEDUCTION OF TAX IN RESPECT OF PAYMENT MADE TO TIRU PATI ORGANIZERS PVT LTD. THAT, AS PER ASSESSING OFFICER, THE ABOVE PAYMENT W AS IN THE NATURE OF RENT AND THEREFORE, THE ASSESSEE WAS LIABLE TO DEDUCT TH E TAX U/S 194I. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT IT W AS NOT THE PAYMENT OF RENT BUT IT WAS A JOINT VENTURE BETWEEN THE ASSESSE E AND THE TIRUPATI ORGANISERS PVT LTD. THEREFORE, THERE WAS NO LIABIL ITY OF DEDUCTING THE TAX ON THE PAYMENT MADE TO ASSESSEE WHO DERIVED INCOME FRO M JOINT VENTURE ALONGWITH THE ASSESSEE. 4. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LD. COUNSEL THAT IN THE CASE OF TIRUPATI ORGANISERS PVT LTD, TH E ISSUE AROSE ABOUT THE ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 3 TAXABILITY OF THE HEAD OF INCOME UNDER WHICH THE AM OUNT RECEIVED FROM THE ASSESSEE WAS TO BE ASSESSED. AS PER REVENUE, IT IS TO BE ASSESSED UNDER THE HEAD FROM HOUSE PROPERTY WHILE AS PER ASSESSEE IT WAS ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS, BECAUSE I T WAS THE INCOME FROM THE BUSINESS OF JOINT VENTURE OF PROCESSING OF DIAMONDS . THE DISPUTE REACHED TO THE HIGH COURT AND THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TIRUPATI ORGANISERS PVT LTD VIDE TAX APPEALS NO. 22 6 TO 268 OF 2013, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH TH E FOLLOWING FINDINGS:- IN THE PRESENT CASE, THE FACTS ARE VITALLY DIFFE RENT. THE ASSESSEE HAD NOT RENTED OUT PROPERTY BUT HAD ALLOWED ITS USE THEREOF FOR THE PURPOSE OF JOINT VENTURE BUSINESS. IN ADDITION TO THE SPACE WITH PR OPER INFRASTRUCTURAL FACILITATES, IT ALSO PROVIDES VARIOUS OTHER FACILIT ATES TO BE USED FOR THE PURPOSE OF DIAMOND PROCESSING. 5. THUS, WHEN THE HONBLE JURISDICTIONAL HIGH COURT HAS ACCEPTED IN THE CASE OF TIRUPATI ORGANIZERS PVT LTD THAT THE SAID C OMPANY PROVIDED THE PROPERTY FOR THE PURPOSE OF JOINT VENTURE BUSINESS ALONGWITH ASSESSEE, THE PAYMENT MADE BY THE ASSESSEE TO TIRUPATI ORGANIZERS PVT LTD CANNOT BE SAID TO BE RENT, SO AS TO MAKE THE ASSESSEE LIABLE FOR DEDUCTION U/S 194I. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF H ONBLE JURISDICTIONAL HIGH COURT (SUPRA), UPHOLD THE ORDER OF THE CIT(A) ON TH IS POINT AND REJECT GROUND NO.1 OF THE REVENUES APPEAL FOR ASSESSMENT YEAR 2007-08 AS WELL AS ASSESSMENT YEAR 2009-10. 6. THE ONLY OTHER GROUND RAISED IN THE REVENUES AP PEAL IN ASSESSMENT YEAR 2009-10 READS AS UNDER:- 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FAC TS OF THE CASE IN DELETING THE ORDER PASSED U/S 201A(1) OF THE I.T. ACT OF RS. 2,20,025/- & INTEREST CHARGE U/S 201(1A) OF THE IT ACT OF RS.33,917 FOR A .Y. 2009-10 EVEN THOUGH DURING THE COURSE OF VERIFICATION IT WAS NOTICED TH AT THE ASSESSEE HAD ENTERED ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 4 INTO AGREEMENT WITH VARIOUS CONCERNS & DEDUCTED OF TAX ON PAYMENT FOR TECHNICAL SERVICES U/S 194C OF THE ACT INSTEAD OF 1 94J OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE ASSESSEE MADE THE PAYMENT TO VARIOU S PARTIES IN RESPECT OF ANNUAL MAINTENANCE CHARGES. THE ASSESSING OFFICER W AS OF THE OPINION THAT IT IS A PROFESSIONAL FEE; THEREFORE, TAX WAS REQUIR ED TO BE DEDUCTED U/S 194J. WHILE, THE ASSESSEE WAS OF THE OPINION THAT IT WAS A CONTRACT FOR RENDERING THE SERVICES AND THEREFORE, TAX WAS REQUIRED TO BE DEDUCTED U/S 194C. THE TAX WAS ACTUALLY DEDUCTED U/S 194C. ON APPEAL, THE CIT(A) ACCEPTED ASSESSEES CONTENTION WITH THE FOLLOWING FINDINGS:- 7.5 I HAVE CONSIDERED BOTH I.E. CONTENTIONS OF TH E A.O. IN THE ORDER IN QUESTION AND THE APPELLANTS SUBMISSIONS. ON GOING THROUGH THE FACTS WITH REGARD TO SERVICES RENDERED BY VARIOUS CONCERNS, I FIND NO POINT/CLUE ON THE BASIS OF WHICH THE NATURE OF THESE SERVICES CAN BE CHARACTERIZED AS PROFESSIONAL OF TECHNICAL IN NATURE. THE SERVICES R ENDERED ARE NOTHING BUT FOR MAINTENANCE OF VARIOUS TYPES OF MACHINES ALREADY IN STALLED. ONLY BECAUSE TECHNICAL PERSONS ARE INVOLVED IN RENDERING THE SAI D SERVICES DOES NOT MEAN THAT SERVICES BECOME TECHNICAL OR PROFESSIONAL IN N ATURE. HENCE, THE A.O.S ACTION IN THIS REGARD IS NOT APPROVED. 8. AFTER CONSIDERING THE FACTS OF THE CASE AND ARGU MENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE FI NDINGS OF THE CIT(A). WE, THEREFORE, UPHOLD HIS ORDER IN THIS REGARD AND REJE CT GROUND NO.2 OF THE REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10. ITA NOS. 674 TO 676/AHD/2011 ASSESSEES APPEALS F OR AYS 2007-08, 2008-09 AND 2009-10 9. THE FIRST GROUND OF THE ASSESSEES APPEAL IN ALL THE THREE YEARS READS AS UNDER:- THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS [C IT (A)] ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE FOR NOT ALLOWING EXEMPTION FOR THE OFFICE WEAR ALLOWANCE (OWA) UND ER SECTION 10(14) OF THE INCOME TAX ACT, 1961 (THE ACT) PAID BY THE AP PELLANT TO ITS WORKERS. ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 5 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAS PAID WEAR-ALLOWANCE TO THE EMPLOYEES AND THE SAME WAS CLAIMED EXEMPT U/S 10(14) OF THE INCOME-TA X ACT. THEREFORE, THE ALLOWANCES PAID TO THE EMPLOYEES WERE NOT INCLUDED IN SALARY FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE U/S 192. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE WEAR-ALLOWANCE IS NOT EXEMPT U /S 10(14) AND THEREFORE, OUGHT TO HAVE BEEN INCLUDED IN THE SALAR Y FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE. ON APPEAL, THE CIT(A) S USTAINED THE ORDER OF THE ASSESSING OFFICER WITH THE FOLLOWING FINDINGS:- 6.4 I DO NOT AGREE WITH THE APPELLANTS SUBMISSIO N THAT OFFICE WEAR ALLOWANCE IS EXEMPT U/S 10(14) OF THE ACT BECAUSE T HE PROVISIONS OF SEC. 10(14) TALKS ABOUT THE EXPENSES WHICH IS GRANTED T O MEET WHOLLY, NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORMANCE OF THE DUTIES TO THE EXTENT TO WHICH SUCH EXPENSES ARE ACTUALLY INCURRED FOR TH AT PURPOSE. HERE IN THIS CASE WHAT HAS ACTUALLY BEEN INCURRED BY THE EMPLOYE E IS NOT KNOWN AS THE APPELLANT HAS NOT BEEN ABLE TO SUBMIT ANY DETAILS I N THIS REGARD BEFORE THE A.O. AND ALSO DURING APPELLATE PROCEEDINGS. HENCE, THE A.O.S ACTION IN THIS REGARD IS APPROVED. 11. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE COULD NOT ESTABLISH HOW THE WEAR-ALLOWANCE PAID TO THE EMPLOYEES WAS EXEMPT U/S 10(14). DURING THE COURSE OF ARGUMENT B EFORE US, HE FAIRLY ADMITTED THAT THERE WAS NO DRESS CODE FOR THE EMPLO YEES. THUS, THE EMPLOYEES WERE FREE TO WEAR ANY DRESS. FOR THE PURP OSE OF GETTING EXEMPTION OF ANY ALLOWANCE U/S 10(14), TWO CONDITIO NS MUST BE SATISFIED. 1. THAT THE ALLOWANCE HAS BEEN GIVEN TO MEET EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORM ANCE OF THE DUTIES OF AN OFFICE; ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 6 2. THE EXPENDITURE MUST BE ACTUALLY INCURRED BECAUSE T HE EXEMPTION IS LIMITED TO THE EXTENT OF EXPENSES ACTUALLY INCUR RED. 12. IN THIS CASE, THE ASSESSEE IS UNABLE TO SATISFY ANY OF THE CONDITIONS. WHEN THERE WAS NO DRESS CODE AND THE EMPLOYEES WERE FREE TO WEAR ANY DRESS, HOW THE WEAR-ALLOWANCE CAN BE SAID TO BE GRA NTED TO MEET THE EXPENSES WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES OF AN OFFICE. MOREOVER, THE CIT(A) HAS RECORDED THE F INDING THAT THE ASSESSEE WAS UNABLE TO ESTABLISH THAT THE EXPENDITURE WAS AC TUALLY INCURRED. IN VIEW OF ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTER FERE WITH THE ORDER OF THE CIT(A) IN THIS REGARD AND THE GROUND NO.1 OF THE AS SESSEES APPEAL IN ALL THE THREE ASSESSMENT YEARS IS REJECTED. 13. THE GROUND NO.2 OF THE ASSESSEES APPEAL READS AS UNDER:- 2. THE HONBLE CIT(A) ERRED IN LAW AND ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE FOR NOT DISCUSSING THE FO LLOWING GROUND OF APPEAL RAISED BY THE APPELLANT BEFORE HIM: THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN IM POSING SURCHARGE ON TDS WHICH IS ACTUALLY NOT APPLICABLE 14. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE FAIRLY SUBMITTED THAT IN THIS REGARD THE ASSESSEE HAS ALRE ADY FILED AN APPLICATION U/S 154. THE SAME IS DISPOSED OF BY THE ASSESSING OFFICER AND THE APPEAL AGAINST SUCH ORDER U/S 154 IS PENDING BEFORE THE CI T(A). HE, THEREFORE, SUBMITTED THAT, AT PRESENT, THIS GROUND CAN BE TREA TED AS INFRUCTUOUS AND THE ASSESSEE WILL BE AT LIBERTY TO TAKE PROPER REMEDY I F THE CIT(A) DOES NOT ACCEPT THE ASSESSEES CONTENTION IN THE APPEAL FILE D U/S 154. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION TO THE ABOVE SUGGESTION OF THE LD. COUNSEL . WE, THEREFORE, TREAT THE GROUND NO. 2 AS INFRUCTUOUS AND ITA NOS.674 TO 676, 856 AND 857 AHD 2011 - FACETS POLISHING WORKS PVT LTD AYS: 2007-08, 2008-09 & 2009-10 7 REJECT ACCORDINGLY. HOWEVER, WE MAY CLARIFY THAT TH E DISPOSAL OF GROUND NO.2 AS ABOVE WILL NOT PREJUDICE TO THE ASSESSEES CASE AND THE CIT(A) WILL DECIDE THE ASSESSEES APPEAL FILED AGAINST THE ORDE R U/S 154 ON MERITS. 15. IN THE RESULT, THE APPEALS BY THE REVENUE AS WE LL AS BY THE ASSESSEE, ALL ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 25 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 25/06/2015 BIJU T., PS #$ %& '#&' #$ %& '#&' #$ %& '#&' #$ %& '#&'/ COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. %*() / THE RESPONDENT. 3. ++ , / CONCERNED CIT 4. , ( ) / THE CIT(A) 5. &/0 % , , / DR, ITAT, AHMEDABAD 6. 02 3 / GUARD FILE . #$ #$ #$ #$ / BY ORDER, TRUE COPY 4 44 4/ // / +5 +5 +5 +5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD
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