SHOUBHIK ROY, MUMBAI V. ACIT 11(1), MUMBAI

ITA 7279/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2101 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 07-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2012
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR
• Assessee Lawyers: SHRIKANT V MARATHE
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ./ ITA NO. 7279 / MUM/20 1 2 ( / ASSESSMENT YEAR : 20 07 - 2008 ) MR. S HOUBHIK ROY, F - 701, SATELLITE GARDEN, PHASE - I, GENERAL A.K.VAIDYA MARG, GOREGAON(EAST), MUMBAI - 400063 VS. ACIT - 11(1), MUMBAI - 400063 ./ ./ PAN/GIR NO. : A CBPG 2270 R ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI SHRIKANT V. MARATHE /REVENUE BY : SHRI G.NANTHAKUMAR / DATE OF HEARING : 07 /0 9 /2016 / DATE OF PRONOUNCEMENT 04/11/ 2016 / O R D E R PER R.C.SHARMA (A.M) : T HIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), MUMBAI, DATED 12 - 9 - 2011 , FOR THE ASSESSMENT YEAR 20 07 - 2008 , WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 1) THE HON. CIT (APPEAL) - 3 HAS NOT CONSIDERED THE VIEW OF THE ASSE SSEE THAT THE EXPENDITURE AMOUNTING TO RS 12,18, 847/ - WAS INCURRED IN RESPECT OF THE HIRING OF EQUIPMENTS, LOCATIONS, SETS AND OTHERS APPROPRIATELY. THE HON. CIT (APPEAL) - 3 HAS HELD THAT THESE EXPENSES WERE THE RESULT OF CONTRACTS AND HENCE WERE COVERED BY SECTION 194C IGNORING THE FACT THAT THE SAID EXPENSES WERE THE RESULT OF ARRANGEMENTS FOR HIRING OF EQUIPMENTS, LOCATIONS, SETS AND OTHERS & NOT OF THE CONTRACTS. 2) THE HON. CIT (APPEAL) - 3 HAS ERRED IN CONSIDERING THE FACTUAL STATUS AS THAT OF EQUIP MENT HIRE CHARGES, HIRE CHARGES, LOCATION HIRE CHARGES, SET EXPENSES & OTHER HIRE CHARGES AS THAT OF 'CONTRACTS' & THEREBY CONTRAVENING THE PROVISIONS CONTAINED IN THE CBDT CIRCULAR ITA NO. 7279/12 2 NO. 681 DATED 08/03/1994 GENERALLY & THE STIPULATIONS CONTAINED IN PARA 7( III) OF CIRCULAR NO. 681 SPECIFICALLY. 3) ALTHOUGH THE EXPENDITURE ON EQUIPMENT HIRE CHARGES, HIRE CHARGES, LOCATION HIRE CHARGES, SET EXPENSES & OTHER HIRE CHARGES PAID BY THE ASSESSEE DURING A. Y. 2006 - 07 IS IN THE NATURE OF 'RENT', THE SAME HAVE NOT B EEN ACCORDINGLY CONSIDERED FOR THE PURPOSES OF APPLICATION OF PROVISIONS OF SECTION 1941. THE TERM' RENT' AS PER THE EXPLANATION (I) TO SECOND PROVISO TO SECTION 1941 WHICH READS AS FOLLOWS: - ' RENT' MEANS ANY PAYMENT, BY WHATEVER NAME CALLED, UNDER AN Y LEASE, SUB-LEASE, TENANCY, OR ANY OTHER AGREEMENT OR ARRANGEMENT FOR THE USE OF (EITHER SEPARATELY OR TOGETHER) ANY, - . I) LAND; OR II) BUILDING (INCLUDING FACTORY BUILDING); OR III)LAND APPURTENANT TO A BUILDING (INCLUDING FACTORY BUILDING); OR IV ) MACHINERY V) PLANT; OR VI) EQUIPMENT; OR VII) FURNITURE; OR VIII) FITTINGS, WHETHER OR NOT ANY OR ALL OF THE ABOVE ARE OWNED BY THE PAYEE; THE HON. CIT (APPEAL) - 3 HAS ERRED IN NOT REFERRING TO THE ABOVE STATED DEFINITION, DUE TO WHICH THE ERRONEO US IMPLICATIONS HAVE ARISEN RESULTING IN THE DISALLOWANCE U/S 40 (A) (IA). THE HON. CIT (APPEAL) - 3 HAS ERRED IN HOLDING THE PAYMENTS AMOUNTING TO RS 12,18, 847/ - TO BE IN THE NATURE OF 'CONTRACT' OR 'WORK'. THE DEFINITIONS OF THE TERMS 'CONTRACT' & 'WORK' ARE AS FOLLOWS : - I) 'CONTRACT': - 'CONTRACT' SHALL INCLUDE SUB - CONTRACT' II) 'WORK' : - 'WORK' SHALL INCLUDE - A) ADVERTISING B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; C) CARRIAGE OF GOOD S OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; D) CATERING; E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER; ITA NO. 7279/12 3 BUT DOES NOT INCLUDE MANUF ACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH A CUSTOMER. IT IS IMPLIED FROM THE ORDER OF THE HON. CIT (APPEAL) - 3 THAT THE TRANSACTIONS IN QUESTION A RE ERRONEOUSLY HELD TO BE COVERED BY ABOVE DEFINITIONS, WHEREAS THE SAME WERE AS THAT OF HIRING COVERED U/S 1941. 5) DUE TO INACCURATE APPLICATIONS OF THE RELEVANT DEFINITIONS & PROVISIONS OF THE INCOME TAX ACT, 1961 INJUSTICE IS CAUSED TO THE ASSESSEE I N TERMS OF: - I) THE DISALLOWANCE OF RS 12, 18,847/ - U/S 40 (A) (IA) & II) IMPOSITION OF THE TAX ON THE SAME AMOUNT OF INCOME TWICE BY THE REVENUE. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN B RIEF ARE THAT THE ASSESSEE IS A PROPR IETOR OF M/S MAGIK LANTERN FILMS AND ENGAGED IN THE BUSINESS OF AD FILM MAKING AND OTHER FILM PRODUCTION. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO NOTED THAT FOLLOWING EXPENSES SO INCURRED BY ASSESSEE WERE CONTRACTUAL LIABILITY OF THE ASSESSEE , HOWE VER, NO TAX WAS DEDUCTED AT SOURCE U/S.194C BY THE ASSESSEE. SL. NO. HEAD OF EXPENSES NAME OF THE PARTY PAYMENT (I) (II) (III) (IV) 1 EQUIPMENT HIRE CHARGES JENNI LIGHTS 71,218 SHOOTING STARS 1,17,498 VIKAS SIVARAMAN 1,07,050 AYYAPPA SWAMI LIGHT S 67,831 2 HIRE CHARGES WHISPERING HAIR STYLES 80,000 3 LOCATION HIRE CHARGES VISAGE STUDIOS 85,000 MAH. FILMS STAGE & CULTURE DEV 55,645 ST. MARY HIGH SCHOOL 1,00,000 AMALGAMATED BEAN COFFEE TRDG. CO. LTD., 90,000 SANKRAMAN STUDIOS 97,536 4 SELF EXPENSES PARIMALDAS PODDAR 1,96,500 5 OTHER HIRE CHARGES PARIMALDAS PODDAR 66,000 ITA NO. 7279/12 4 THEREFORE, THE AO DISALLOWED THE ABOVE SUM OF RS.12,18,847/ - U/S. 40(A)(IA) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS U/S.194C AND ADDED THE SAME TO THE TOTAL INCOME. 3. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT AMOUNTS SO PAID WAS LIABLE TO DEDUCTION OF TAX U/S.194C AND THEREFORE, AO WAS JUSTIFIED IN DISALLOWING THE SAME U/S. 40(A)(IA) FOR NON - DEDUCTION OF TAX AT SOURCE U/S.1 94C. AGAINST THE ORDER OF CIT(A) , ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT EXPENDITURE OF EQUIPMENT HIRE CHARGES, LOCATION HIRE CHARGES ARE IN THE NATURE OF RE NT. ACCORDINGLY SAME IS LIABLE FOR DEDU CTION OF TAX U/S.194I. U/S. 194I ONLY PAYMENT IN EXCESS OF RS.1,20,000 / - IS SUBJECT TO DEDUCTION OF TAX AT SOURCE . OUT OF THE TOTAL PAYMENT OF RS.12,18,847/ - MENTIONED BY THE AO ONLY ONE ENTRY OF PAYMENT TO M/S. PARIMALDAS PODDAR AMOUNTING TO RS.1,96,500/ - WAS SUBJECT TO DEDUCTION OF TAX U/S.194I SINCE IT WAS MORE THAT RS.1,20,000/ - . ALL OTHER PAYMENTS WERE BELOW RS.1,20,000/ - . THEREFORE, ASSESSEE WAS NOT REQ UIRED TO DEDUCT TAX AT SOURCE ON THESE PAYMENTS U/S.194I. ACCORDINGLY, WE CONFIRM THE ACTION OF THE AO FOR DISALLOWANCE ONLY WITH RESPECT TO PAYMENT OF RS.1,96,500/ - ONLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 04 / 11 / 201 6 . S D/ - ( AMARJIT SINGH ) S D/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NO. 7279/12 5 MUMBAI ; DATED 04/11 /201 6 P KM PS / KARUNA SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER , / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESP ONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//