Smt R. Kamala, Mysore V. ITO, Mysore

ITA 686/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0693 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: KRISHNAMOORTHY
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

PAGE 1 OF 6 ITA NO.686 /B/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M ITA NO.686/BANG/09 (ASST. YE AR 2006-07) SMT. R KAMALA, M/S YES BEE ENTERPRISES, NO.748, LIG-II, I STAGE, HEBBAL, HUDCO, MYSORE. - APPELLANT VS THE INCOME TAX OFFICER, WARD-1(2), MYSORE. - RESPONDENT APPELLANT BY : SH RI KRISHNA MOORTHY RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER GEORGE GEORGE K : THIS APPEAL, FILED BY ASSESSEE, IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A), MYSORE DATED 27TH MAY, 2009. THE ASST. YEAR CONCERNED IS 2006-07. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL, IS WHE THER THE CIT(A) IS JUSTIFIED IN DISALLOWING THE REMUNERATION PAID TO SMT. JAYALATHA AND SHRI SUNDERRAJAN ON THE GROUND THAT TD S SHOULD HAVE PAGE 2 OF 6 ITA NO.686 /B/2009 2 BEEN MADE ON PAYMENTS TO THEM AND HENCE SECTION 40(A )(IA) IS ATTRACTED. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS A LABOUR CONTRA CTOR. THE RETURN OF INCOME WAS FILED ON 31.10.2006 DECLARING A TOTAL IN COME OF RS.3,72,466/-. THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.48,000/- AS ACCOUNTING CHARGES AND RS.55,000/- AS PROFESSION AL CHARGES. THE LEARNED ASSESSING OFFICER HELD THAT THESE PAYMENTS B Y WAY OF REMUNERATION TO TWO PERSONS WERE COVERED BY SECTION 194J, REQUIRING TAX DEDUCTED AT SOURCE AND SINCE NO DEDUCTION WAS E FFECTED AT SOURCE, PROVISIONS OF SECTION 40A(IA) WAS APPLICABL E AND DISALLOWED THESE PAYMENTS WHILE COMPUTING THE INCOME OF THE ASS ESSEE. ACCORDINGLY, ASSESSMENT U/S 143(3) WAS COMPLETED DET ERMINING A TOTAL INCOME OF RS.4,75,470/-. 4. ON APPEAL, IT WAS SUBMITTED BEFORE THE CIT(A), THAT THE SAID PAYMENTS WERE MADE TO SMT. JAYALATHA AND SHRI SU NDERRAJAN, WHO ARE PART TIME EMPLOYEES OF THE ASSESSEE, AND THE Y WERE IN RECEIPT OF MONTHLY REMUNERATION FOR ASSISTING THE A SSESSEE IN CLERICAL WORK AND ACCOUNTING WORK RELATING TO THE B USINESS OF THE ASSESSEE. BOTH OF THEM ARE B.COM GRADUATES AND AR E NOT IN POSSESSION OF ADDITIONAL PROFESSIONAL OR TECHNICAL QUALIFICATION. SMT. JAYALATHA WAS PAID A TOTAL REMUNERATION OF RS.55,000 /- DURING THE PAGE 3 OF 6 ITA NO.686 /B/2009 3 YEAR AND SHRI SUNDERRAJAN WAS PAID A REMUNERATION O F RS.48,000/- DURING THE YEAR. 5. THE CIT(A) DISMISSED THE APPEAL BY NOTING THAT S MT. JAYALATHA WAS ASSISTING THE ASSESSEE IN CONNECTION W ITH PF AND ESI MATTERS AND SHRI SUNDERRAJAN WAS WRITING ACCOUNTS A ND HELD THAT THESE PAYMENTS WERE IN THE NATURE OF PAYMENT FOR PROF ESSIONAL SERVICES AS DEFINED IN SECTION 194J. HE ALSO HELD THAT IN THE CASE OF SMT. JAYALATHA, THE INCOME IN QUESTION IS A PROFESSI ONAL INCOME OR ALTERNATIVELY IT CAN BE CONSIDERED AS INCOME IN HER HANDS TO BE FEES FOR TECHNICAL SERVICE. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 7. IT WAS SUBMITTED BY THE LEARNED AR THAT THE TERM PROFESSIONAL SERVICES HAS BEEN DEFINED IN THE EXPLA NATION TO SECTION 194J, WHEREIN IT IS DEFINED AS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEERING, O R ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOUNTANCY OR TECHN ICAL CONSULTANCY ETC. THE DEFINITION MAKES IT VERY CLEAR THAT THE SE RVICE RENDERED SHOULD BE IN THE COURSE OF CARRYING ON THE PROFESSIO N OF ACCOUNTANCY. IN THIS CASE IT WAS SUBMITTED THAT SMT. JAYALATHA HA S BEEN PROVIDING CLERICAL ASSISTANCE RELATING TO PPF AND ESI MATTERS AND SAME CAN HARDLY BE DESCRIBED AS CARRYING ON THE PROFESSION OF ACCOUNTANCY OR PROVIDING TECHNICAL CONSULTANCY. IT WAS CONTENDED T HAT THE HON'BLE PAGE 4 OF 6 ITA NO.686 /B/2009 4 CIT(A) HIMSELF IS AWARE THAT HIS VIEW IN THIS BEHAL F IS NOT FREE FROM DOUBT AND SO HAS TAKEN THE ALTERNATE VIEW THAT IT W ILL CERTAINLY BE FOR RENDERING MANAGERIAL TECHNICAL OR CONSULTANCY SERVIC ES AS DEFINED IN SECTION 9. HE THEREFORE HELD THAT SECTION 194J STO OD ATTRACTED. IT WAS ALSO SUBMITTED THAT SMT. JAYALATHA HAS BEEN PROV IDING CLERICAL ASSISTANCE IN ESI AND PPF MATTERS AND IT CANNOT BE HELD TO BE RENDERING EITHER PROFESSIONAL SERVICE OR TECHNICAL SERVICE. FURTHER, EXPLANATION 2 TO SUB-SECTION (VI) TO SECTION 9 CLEA RLY STATES THAT THE TERM DOES NOT INCLUDE CONSIDERATION, WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES'. H E SUBMITTED THAT IT IS AN ADMITTED POSITION THAT BOTH SMT. JAYALATHA AND SHRI SUNDERRAJAN ARE PART TIME EMPLOYEES, ASSISTING THE A SSESSEE IN PROVIDING CLERICAL WORK AND THE NATURE OF THEIR WOR K WILL NOT FIT INTO THE DEFINITION OF THE TERM 'PROFESSIONAL OR TECHNIC AL SERVICE'. FINALLY IT WAS SUBMITTED THAT THE CIT(A) HAD COMPLETELY OVER LOOKED THE FACT THAT NEITHER SMT. JAYALATHA NOR SHRI SUNDERRAJAN WER E NOT LIABLE TO INCOME TAX AND SO THE VERY QUESTION OF DEDUCTION OF TAX AT SOURCE DOES NOT ARISE FOR CONSIDERATION. THE AFFIDAVITS OF SMT. JAYALATHA AND SHRI SUNDERRAJAN TO THAT EFFECT WAS PRODUCED BE FORE US. IT WAS SUBMITTED THAT THESE AFFIDAVITS WERE NOT FURNISHED BEFORE THE LOWER AUTHORITIES. THESE TWO PERSONS WERE PART TIM E EMPLOYEES OF THE ASSESSEE AND HAD LEFT ASSESSEE'S SERVICES WHEN THE ASSESSMENT PROCEEDINGS WERE TAKEN UP AND THEIR WHEREABOUTS WER E NOT KNOWN. IT WAS PRAYED THAT THE AFFIDAVITS OF SMT. JAYALATHA A ND SHRI SUNDERRAJAN MAY BE ADMITTED AS ADDITIONAL EVIDENCE A ND MATTER MAY PAGE 5 OF 6 ITA NO.686 /B/2009 5 BE REMITTED TO THE ASSESSING OFFICER FOR FRESH CONS IDERATION OF THE MATTER. 8. PER CONTRA, THE LEARNED DR DID NOT RAISE ANY SPE CIFIC OBJECTION WITH REFERENCE TO ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM AFFIDAVITS FURNISHED BY SMT. JAYALATHA AND SHRI SUNDERRAJAN NOR REMITTING BACK THE ISSUE TO THE FILE OF THE AUT HORITIES BELOW FOR FRESH CONSIDERATION. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE PERUSED THE AFFIDAVITS OF SMT. JAYALATHA AND SHRI SUNDERRAJAN, WHEREIN IT IS STATED ; THEY ARE PART TIME EMPLOYEES OF THE ASSESSEE, FOR THE ASST. YEAR CO NCERNED. IT IS CLEARLY MENTIONED IN THE AFFIDAVITS OF THESE TWO PER SONS THAT FOR THE YEAR ENDING 31ST MARCH, 2006, THE TOTAL INCOME I NCLUDING THE REMUNERATION RECEIVED FROM THE ASSESSEE IS ONLY RS.9 8,000/- IN THE CASE OF SHRI SUNDERRAJAN AND RS.91,000/- IN THE CAS E OF SMT. JAYALATHA, WHICH IS FAR BELOW THE TAXABLE LIMIT. W E ARE SATISFIED ABOUT THE REASONS STATED FOR NON-PRODUCTION OF AFFI DAVITS OF THE ABOVE TWO PERSONS BEFORE THE AUTHORITIES BELOW. IN THE INTEREST OF JUSTICE AND FOR PROPER ADJUDICATION OF THE MATTER, WE ADMIT THE ADDITIONAL EVIDENCE ON RECORD AND RESTORE THIS MATT ER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION IN AC CORDANCE WITH LAW. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPOR TUNITY OF HEARING BEFORE ORDER OF ASSESSMENT IS DRAWN UP AGAIN. PAGE 6 OF 6 ITA NO.686 /B/2009 6 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER, 2009. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE, DATED :27/11/2009 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. MSP/20.11. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.