M/S MOTI SEEDS COMPANY, Mehsana V. THE INCOME TAX OFFICER, Mehsana

ITA 788/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5684 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 788/AHD/2014 (ASSESSMENT YEAR: 2009-10) MOTI SEEDS COMPANY AT: KANAKPURA, TAL: VIJAPUR, DIST. MEHSANA V/S THE ITO, PATAN WARD-3, MEHSANA (APPELLANT) (RESPONDENT) PAN: AAGFM2357J APPELLANT BY : SHRI M. K. PATEL, AR RESPONDENT BY : SHRI K. MADHUSUDAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 25 -07-201 7 DATE OF PRONOUNCEMENT : 27 -07-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 17.12.2013 PERTAINING TO A.Y. 2009-10. ITA NO. 788/ AHD/2014 . A.Y. 2009-10 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF SALARY PAYMENT OF RS. 1,20,000/ - U/S. 40(A)(IA) OF THE ACT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCIN G AND TRADING OF CERTIFIED SEEDS. RETURN FOR THE YEAR WAS FILED ON 21.09.2009 WHICH WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTIC ES WERE ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS PAID RESEARCH AND DEVELOPMENT CHARGES OF RS. 1,20,000/- TO SHRI KIRTAN YOGESHBHAI PATEL ON WHICH NO TAX WAS DEDUCTED AT SOURCE. THE A.O. WAS OF THE OPINION THAT THE PAYMENT IS IN THE NATURE OF PROFESSIONAL SERVICE AND THEREFORE THE ASSESSEE IS LIABLE TO DED UCT TAX AT SOURCE U/S. 194J OF THE ACT FAILING WHICH PROVISIONS OF SECTION 40(A)(I A) OF THE ACT ARE ATTRACTED AND APPLYING THE SAME. THE A.O. MADE DISALLOWANCE OF RS . 1,20,000/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT SHRI KIRTAN PATEL WAS AN EMPLOYEE OF THE ASSESSEE AND THEREFORE PROVISIONS O F SECTION 194J OF THE ACT DO NOT APPLY ON THE FACTS OF THE CASE. IT IS THE SA Y OF THE LD. COUNSEL THAT IN EARLIER FINANCIAL YEAR ALSO RS. 72,000/- WAS PAID A S SALARIES TO SHRI KIRTAN PATEL WHICH WAS ACCEPTED BY THE REVENUE. IT IS THE SAY O F THE LD. COUNSEL THAT AS PER THE REQUIREMENT OF GOVERNMENT OF INDIA, MINISTRY OF SCIENCE & TECHNOLOGY, NEW DELHI THE ASSESSEE HAD TO EMPLOY A QUALIFIED SC IENTIST TO CARRY OUT RESEARCH WORK. THE COPY OF CERTIFICATE OF RECOGNITION OF IN- HOUSE R&D UNIT WAS FILED BEFORE THE LOWER AUTHORITIES AND AFTER RECEIVING TH IS CERTIFICATE FROM THE ITA NO. 788/ AHD/2014 . A.Y. 2009-10 3 GOVERNMENT, THE ASSESSEE HAS APPOINTED QUALIFIED SC IENTIST. THE LD. COUNSEL CONCLUDED BY SAYING THAT THE PAYMENT IS IN THE NATU RE OF SALARY AND THEREFORE SHOULD BE ALLOWED AS SUCH. 7. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE A.O. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW. IT IS A FACT THAT IN F.Y. 2007-08, DR. KIRTAN PATEL WAS PAID RS. 72,000/ - AS SALARIES. FOR THE SAME REASONS, DURING THE YEAR UNDER CONSIDERATION, DR. K IRTAN PATEL WAS PAID RS. 1,20,000/-. AS NO DISTINGUISHING FACT HAS BEEN BROU GHT ON RECORD PERTAINING TO THE NATURE OF SERVICES RENDERED BY DR. KIRTAN PATEL IN F.Y. 2007-08 AND THE YEAR UNDER CONSIDERATION. WE DO NOT FIND ANY REASON WHY THE SAME SHOULD NOT BE ACCEPTED AS PAYMENT OF SALARY. WE, ACCORDINGLY, SE T ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION O F RS. 1,20,000/-. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 07- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 27 /07/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.