M/S. ORION MAD PICTURES, MUMBAI V. ACIT 11(1), MUMBAI

ITA 684/MUM/2011

• Counselvise Citation: 68419914 RSA 2011
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAD J

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.684/MUM/2011 ( / ASSESSMENT YEAR :2007-08) M/S ORION MAD PICTURES, 201, KEWAL INDUSTRIAL ESTATE, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI-400013 / VS. INCOME TAX OFFICER 11(1)(1), CIRCLE 11(1), AAYAKAR BHAVAN, MUMBAI-400020. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AABFO3367M % / APPELLANT BY : SHRI K GOPAL ! & % / RESPONDENT BY SHRI PREMANAD J ' ( & ) * / DATE OF HEARING : 1.1.2015 +, & ) * /DATE OF PRONOUNCEMENT : 16.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 1.11.2010 PASSED BY LD CIT(A)-3, MUMBAI AND IT RELA TES TO THE ASSESSMENT YEAR 2007-08. THE ASSESSEE IS CONTESTING FOLLOWING ADDITIONS THROUGH THE ORIGINAL GROUNDS OF APPEAL, ADDITIONAL GROUNDS AND REVISED GROUNDS OF APPEAL. (A) ADDITION MADE U/S 40(A)(IA) OF THE ACT RS.19,00, 316/- (B) DISALLOWANCE OF INTEREST EXPENDITURE 2. WE HAVE HEARD THE PARTIES AND PERUSED THE REC ORD. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PRODUCT ION AND DISTRIBUTION OF ITA NO.684 /MUM/2011 2 MOTION PICTURES. THE FIRST ISSUE RELATES TO THE DI SALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER HAS NO TICED THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE U/S 194I OF THE ACT IN RESPECT OF HIRING OF PLANT, MACHINERY, EQUIPMENT, FURNITURE AND FITTINGS , EVEN THOUGH THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AT A LOWER RATE U/S 194J OF THE ACT. SINCE THERE WAS SHORT DEDUCTION OF TAX AT SOURCE, T HE AO DISALLOWED A SUM OF RS.28,12,412/- U/S 40(A)(IA) OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) CONFIRMED THE ACTION OF THE AO IN PRI NCIPLE. HOWEVER, HE NOTICED THAT CERTAIN PAYMENTS HAVE BEEN MADE TO IND IVIDUALS AND THE TDS RATE APPLICABLE ON SUCH PAYMENTS U/S 194I WAS LOWER THAN THAT APPLICABLE TO NON-INDIVIDUALS. ACCORDINGLY HE DIRECTED THE AO TO WORK THE DISALLOWANCE AFRESH. 3. BEFORE US, THE LD A.R SUBMITTED THAT THE SHORT DEDUCTION OF TAX DUE TO APPLICATION OF WRONG PROVISIONS OF TDS WILL NOT ATTRACT DISALLOWANCE U/S 40(A)(IA) OF THE ACT. IN THIS REGARD, HE PLACED RE LIANCE ON THE DECISION OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS. S.K. TEKRIWAL (361 ITR 432), WHEREIN IT WAS HELD THAT THE SHORT D EDUCTION OF TAX AT SOURCE WILL NOT ATTRACT DISALLOWANCE U/S 40(A)(IA) OF THE ACT. RESPECTFULLY FOLLOWING THE ABOVE SAID DECISION, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE DISALLOW ANCE. 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OUT OF INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. THE LD A.R SUB MITTED THAT THE ASSESSING OFFICER HAS DISALLOWED PART OF INTEREST E XPENDITURE ON THE REASONING THAT THE PARTNERS HAVE WITHDRAWN INTEREST BEARING FUNDS FOR PERSONAL PURPOSES. HE SUBMITTED THAT THE LD CIT(A) ALSO CONFIRMED THE SAME. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS R ECEIVED INTEREST FREE ADVANCES FROM THE DISTRIBUTORS AND THE SAID FUNDS W ERE ONLY WITHDRAWN BY THE PARTNERS. IN THIS REGARD, HE INVITED OUR ATTEN TION TO PAGES 60 & 61 OF ITA NO.684 /MUM/2011 3 THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS MADE ONE TO ONE LINK. HE SUBMITTED THAT THE LD CIT(A) HAS NOT CONSIDERED THOSE STATEMENTS. 5. WE ALSO HEARD LD D.R ON THIS ISSUE. ACCORDING TO THE ASSESSEE, THE PARTNERS HAVE WITHDRAWN ONLY INTEREST FREE FUNDS AN D ACCORDING TO THE ASSESSEE, THE SAID FACT HAS BEEN ESTABLISHED BY PRE PARING A STATEMENT, WHICH IS PLACED AT PAGES 60-61 OF THE PAPER BOOK FI LED BY THE ASSESSEE. ADMITTEDLY, THE TAX AUTHORITIES HAVE NOT CONSIDERED THE SAID CONTENTIONS OF THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFIC ER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO R ECONSIDER THIS MATTER AFRESH BY DULY CONSIDERING THE CONTENTIONS OF THE A SSESSEE AND ALSO THE INFORMATION AND EXPLANATIONS THAT MAY BE FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LA W. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16TH JAN,2015. +, ' - ./ 0 116TH JAN 2015 , & 6( 7 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI:16TH JAN, 2015. . . ./ SRL , SR. PS ITA NO.684 /MUM/2011 4 ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' ;) ( ) / THE CIT(A)- CONCERNED 4. ' ;) / CIT CONCERNED 5. 6. <= 6 )> , * > , . ' ( / DR, ITAT, MUMBAI CONCERNED 6 ? @ ( / GUARD FILE. A ' / BY ORDER, B # (ASSTT. REGISTRAR) * > , . ' ( /ITAT, MUMBAI