, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NOS.698 & 547/KOL/2012 #$ %&/ ASSESSMENT YEARS: 2007-08 TO 2008-09 M/S. DUTTA AUTOMOBILES VS. DEPUTY COMMISSIONER OF INCOME-TAX, (PAN: AACFD3851C) CIRCLE-1, DURGAPUR (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 28.04.2014 DATE OF PRONOUNCEMENT: 30.04.2014 FOR THE ASSESSEE: SHRI V. N. PUROHIT, C.A FOR THE REVENUE : SHRI KALYAN NATH, JCIT, SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : BOTH THESE APPEALS BY ASSESSEE ARE ARISING OUT OF S EPARATE ORDERS OF CIT(A), DURGAPUR IN APPEAL NOS. 139 & 116/CIT(A)/DGP/2010-11 DATED 01.0 3.2012 AND 03.02.2012 RESPECTIVELY. ASSESSMENTS WERE FRAMED BY DCIT, CIRCLE-1, DURGAPUR U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASS ESSMENT YEARS 2007-08 TO 2008-09 VIDE HIS SEPARATE ORDERS DATED 23.12.2009 AND 30.11.2010 RES PECTIVELY. 2. FIRST WE TAKE UP ITA NO. 547/K/2012. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOW ANCE MADE BY AO ON ACCOUNT OF RENT AND ELECTRICITY CHARGES AT RS.1,24,764/- FOR NON-DEDUCT ION OF TDS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, ASSESSEE H AS RAISED FOLLOWING GROUND NO.1: 1. THAT THE CIT(A) HAS ERRED IN CONFIRMING ADDITI ON OF RS.1,24,764/- PAID AS RENT U/S. 40(A)(IA) IGNORING THE FACT THAT IT INCLUDED ELECTR ICITY CHARGE AS WELL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCS OF THE CASE. WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS MADE DISALLOANCE OF RENT OF RS.1,20,000/- AND ELECTRICITY CHARGES OF RS.4,364/- FOR NON-DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE CI T(A) ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 2 ITA NOS. 698 & 547/K/2012 M/S. DUTTA AUTOMOBILES AY 2007-08 TO 2008-09 4. WE FIND THAT THE ASSESSEE HAS PAID RENT TO THE E XTENT OF RS.1,20,000/- @ RS.10,000/- PER MONTH. THE ASSESSEE HAS NOT DEDUCTED TDS FROM THE S AME. LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT HE HAS FILED COPY OF LEDGER ACCOUNT WHICH WAS AVAILABLE BEFORE THE LOWER AUTHORITIES AND IN VIEW OF THIS, THE ASSESSEE IS NO T LIABLE TO DEDUCT TDS U/S. 194-I OF THE ACT AS THE PAYMENT IS TO THE EXTENT OF RS.1,20,000/- ONLY. WE HAVE SEEN FACTUALLY THAT THE RENT IS TO THE EXTENT OF RS.1,20,000/- AND IT DOES NOT EXCEED THE LIMIT AS PRESCRIBED U/S. 194-I OF THE ACT. ONCE THIS IS THE POSITION, THE ASSESSEE IS NOT LIAB LE TO DEDUCT TDS AND ONCE THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT CAN BE MADE. 5. THE NEXT DISALLOWANCE IS ELECTRICITY CHARGES WHI CH IS RS.4,364/-. AS THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON THIS ELECTRICITY CHARGES, N O DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CAN BE MADE. HENCE, WE DELETE BOTH THE DISALLOWANCES. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY AO ON COMMISSION PAYMENT OF RS .2,98,958/- FOR NON-DEDUCTION OF TDS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMING ADDITION U/S. 40(A)(IA) TOTALLING TO RS.2,98,958/- PAID AS COMMISSION WITHOUT LOOKING IN TO REALIZATION THEREOF FROM MANUFACTURERS ON ACCOUNT OF FREE AND OTHER SERVICES NEGATING THE CLAIM ON DEBIT SIDE (EXPENSES) OF PROFIT & LOSS ACCOUNT, THOUGH WRONGLY GROUPED UNDER COMMISSION HEAD. 7. BRIEFLY STATED FACTS ARE THAT THE AO MADE DISALL OWANCE ON COMMISSION PAYMENT OF RS.2,98,958 FOR NON-DEDUCTION OF TDS BY INVOKING TH E PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN APPEAL, LD. CIT(A) DIRECTED THE AO TO GIVE CREDIT FOR TAX DEDUCTED AT SOURCE AND SELF ASSESSMENT TAX PAID AFTER VERIFYING THE ASSESSEES CONTENTION AND ALLOW IT CREDIT AS PER LAW. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO MADE DISALLOWANCE OF TOTALLING RS.2,98,958/- U/S. 40(A)(IA) OF THE ACT VIZ., RAJA TRADING RS.47,704/-, MANABENDRA AUTOMOBILES RS .1,17,582/-, RAHUL AUTOMOBILES RS.1,07,675/- AND K. M. SONS RS. 25,997/- FOR NON-D EDUCTION OF TDS. LD. COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED THAT THE THESE EXPENSE S WERE WRONGLY LEDGERIZED UNDER COMMISSION ACCOUNT RATHER THESE EXPENSES ARE FOR FR EE SERVICES PAYMENT. JUST BECAUSE THERE WERE WRONGLY GROUPED AS COMMISSION, NO DISALLOWANCE CAN BE MADE. HE ALSO SUBMITTED THAT 3 ITA NOS. 698 & 547/K/2012 M/S. DUTTA AUTOMOBILES AY 2007-08 TO 2008-09 THIS MATTER MAY BE SET ASIDE TO THE FILE OF AO FOR VERIFICATION AFRESH TO FIND OUT WHETHER THESE ARE EXPENSES INCURRED FOR FREE SERVICE PAYMENT OR N OT. LD. SR. DR ALSO CONCEDED THIS POSITION. HENCE, IN THE INTEREST OF NATURAL JUSTICE, WE SET A SIDE THE MATTER TO THE FILE OF AO FOR VERIFICATION AFRESH WHETHER THE EXPENSES OF RS.2,98,958/- HAS BE EN INCURRED FOR FREE SERVICE PAYMENT OR NOT. IF THESE EXPENSES ARE INCURRED FOR FREE SERVICES, N EEDLESS TO SAY THAT NO DISALLOWANCE CAN BE MADE. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. NOW, WE ARE COMING TO ITA NO.698/K/2012. THE FIR ST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOW ANCE MADE BY AO ON GODOWN RENT PAID TO FOLLOWING FOUR PARTIES: I) L. N. KONAR RS.1,11,703.50 II) S. K. DAGA RS. 32,400.00 III) JAGADISH PRASAD RS. 20,572.00 IV) KALYANI KONAR RS. 20,030.00 RS.1,84,705.00 10. AT THE OUTSET, IT IS SEEN THAT THE RENT PAID TO ABOVE FOUR PARTIES IS NOT EXCEEDING RS.1,20,000/- IN EACH OF THE CASE AND THIS FACT HAS NOT BEEN VERIFIED BY EITHER THE AO OR THE CIT(A). IN SUCH CIRCUMSTANCES, LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT THIS ISSUE CAN BE REMITTED BACK TO THE FILE OF AO FOR VERIFICATION. ON THIS, LD. SR. DR HAS NOT CONTESTED AND HE FAIRLY AGREED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF AO. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE ISSUE TO THE FILE O F AO FOR VERIFICLATION AFRESH. IN CASE THE AMOUNT IS NOT EXCEEDING RS.1,20,000/- IN EACH OF TH E CASE, THE AO WILL NOT MAKE ANY DISALLOWANCE. THIS ISSUE OF ASSESSEES APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. 11. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE DISALLOWANCE MADE BY AO AND CONFIRMED BY CIT(A) ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY EXPENSES PAID TO SHRESTI LIFESTYLE ENTERTAINMENT LTD. AT RS.40,000/-. FOR T HIS, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ADVERTISEMENT AND PUBLICITY EXPENSES PAID TO SH RESTI LIFESTYLE ENTERTAINMENT LTD. AT RS.40,000/- IS NOT EXCEEDING RS.50,000/- IN WHOLE O F THE YEAR AND ONCE THIS IS THE POSITION, NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT CAN BE MADE. ON THIS LD. SR. DR FAIRLY CONCEDED THAT IF THE PAYMENT IS BELOW RS.50,000/- IN WHOLE OF THE YE AR THE SAME CAN BE DECIDED BY THE TRIBUNAL. 12. WE AFTER HARING THE ARGUMENTS AND FACTS OF THE CASE STATE THAT THE AMOUNT OF ADVERTISEMENT AND PUBLICITY EXPENSES PAID TO SHREST I LIFESTYLE ENTERTAINMENT LTD. IS BELOW RS.50,000/- IN WHOLE OF THE YEAR AND ONCE THIS IS T HE POSITION NO DISALLOWANCE CAN BE MADE AS THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS. THE DISA LLOWANCE MADE BY AO BY INVOKING THE 4 ITA NOS. 698 & 547/K/2012 M/S. DUTTA AUTOMOBILES AY 2007-08 TO 2008-09 PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND CONF IRMED BY CIT(A) IS DELETED. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 13. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF BELATED PAYMENTS OF EMPLOYEES CONTRIBUTION TO PF AND ESI THOUGH PAID WITHIN THE TIME OF FILING OF RETURN . FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT LIKE-WISE CIT(A)-DGP HAS FURTHER ERRED IN CONFIRMING THE ADDITION RS.6570/- AND RS.3345/- (TOTAL RS.9915/-) OF DELAYED PAYMENT OF PF AND ESI CONTRIBUTION OF EMPLOYER THOUGH PAID WITHIN THE TIME OF FILING OF R ETURN. 14. BRIEFLY STATED FACTS ARE THAT ACCORDING TO AO, THE AMOUNTS DEPOSITED REPRESENTING EMPLOYEES CONTRIBUTION TO PF & ESI BEYOND THE STAT UTORY DUE DATES. THE SAID SUM WAS DEDUCTED FROM THE SALARIES/WAGES OF THE EMPLOYEES B UT WERE NOT CREDITED TO THE RESPECTIVE FUNDS WITHIN THE STATUTORY DUE DATED AND ACCORDINGLY INCL UDIBLE TO THE ASSESSEES INCOME IN TERMS OF SECTION 2(24)(X) READ WITH SECTION 36(1)((VA) OF TH E ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF AO. AGG RIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 15. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH F ACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AMOUNTS OF EMPLOYEES CONTRIBUTION TO PF AND ESI WERE NOT MADE WITHIN THE DUE DATE OF RESPECTIVE ACTS BUT WERE PAID WITHIN TH E DUE DATE OF FILING OF RETURN OF INCOME U/S. 139(1) OF THE ACT, WHICH HAS BEEN REPRODUCED BY AO IN THE ASSESSMENT ORDER PAGE 2. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. VIJAY SHREE LIMITED VIDE ITAT NO. 245 OF 2011 IN GA NO.2607 OF 2011 DATED 7 TH SEPTEMBER, 2011, WHEREIN IT HAS BEEN HELD AS UNDER : AFTER HEARING MR. SINHA, LEARNED ADVOCATE, APPEARI NG ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALOM EXTRUSION LTD., WE FIND THAT THE SUPREME COURT IN THE AFORESAID CASE HAS HELD THAT THE AMENDMENT TO THE SECOND PROVISO TO THE SEC. 43(B) O F THE INCOME TAX ACT, AS INTRODUCED BY FINANCE ACT, 2003, WAS CURATIVE IN NATURE AND IS RE QUIRED TO BE APPLIED RETROSPECTIVELY WITH EFFECT FROM 1 ST APRIL, 1988. SUCH BEING THE POSITION, THE DELETION OF THE AMOUNT PAID BY THE EMPLOYEES CONTRIBUTION BEYOND DUE DATE WAS DEDUCTIBLE BY INVOKING THE AFOR ESAID AMENDED PROVISIONS OF SECTION 43(B) OF THE ACT. WE, THEREFORE, FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL AND CONSEQUENTLY, WE DISMISS THIS APPEAL. 5 ITA NOS. 698 & 547/K/2012 M/S. DUTTA AUTOMOBILES AY 2007-08 TO 2008-09 16. ONCE THE ISSUE IS DECIDED BY HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF VIJAYSHREE LTD. SUPRA, WHERE IN IT IS HELD THAT THE PF & ESI ARE PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT, DEDUCTI ON IN RESPECT TO THE AMOUNT ON WHICH PF &ESI IS SO PAID, IS ALLOWABLE. IN THE PRESENT CASE THE ASSESSEE HAS PAID THE PF & ESI BEFORE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT BY THE A SSESSEE, HENCE, WE ALLOW THIS GROUND OF APPEAL OF ASSESSEE. 17. IN THE RESULT, APPEALS OF ASSESSEE ARE PARTLY A LLOWED FOR STATISTICAL PURPOSES. 18. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.04. 2014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH APRIL, 2014 ./ #01 2 JD.(SR.P.S.) 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT M/S. DUTTA AUTOMOBILES, C/O, V. N. PURO HIT & CO. CHARTERED ACCOUNTANTS, DIAMOND CHAMBER, SUIT NO.4G, 4 TH FLOOR, 4, CHOWRINGHEE LANE, KOLKATA-70 016. 2 *+() / RESPONDENT DCIT, CIRCLE-1, DURGAPUR. 3 . # ( )/ THE CIT(A), DURGAPUR 4. 5. # / CIT DURGAPUR 4:; *# / DR, KOLKATA BENCHES, KOLKATA +4 */ TRUE COPY, # BY ORDER, 1 /ASSTT. REGISTRAR .