Swapna Nursing Home, Hyderabad V. DCIT, Hyderabad

ITA 797/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59099 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: SIVA KUMAR V
• Keywords: Assessment record; Right to appeal
• Section: 142(1); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO.797/HYD/2010 ASSESSMENT YEAR 2006-07 M/S SWAPNA NURSING HOME, HYDERABAD. (AAACF9098Q) VS THE DCIT, CENTRAL CIRCLE 1, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI SIVA KUMAR V. RESPONDENT BY : SHRI B.V. PRASAD REDDY DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 6.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) IV, HYDERABAD DATED 15.2.2010 AND IT PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07, FILED ITS RETURN OF INCOME ON 31.10.2006 D ECLARING TOTAL INCOME AT RS. 2,05,49,190/- . THE CASE WAS SELECTED FOR SCRU TINY AND STATUTORY NOTICES WERE ISSUED U/S 143(2) AND 142(1) OF THE IT ACT. T HE ASSESSING OFFICER HELD AS FOLLOWS: THE ASSESSEE HAS DEBITED A SUM OF RS.56,429/- TOWA RDS THE EXPENDITURE ON MACHINERY MAINTENANCE. THE DETAILS REGARDING THIS EXPENDITURE WERE CALLED FOR AND VERIFIED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. ON PERUSAL OF THE SAME, IT IS NOTICED THAT THIS PAYMENT REPRESENTS ANNUAL MAINTENANCE CONTRACT OF M ACHINERY WHICH ITA NO.797/H/2010 SWAPNA NURSING HOME, HYDERABAD 2 FALLS WITHIN THE MISCHIEF OF SECTION 194C OF THE IT ACT. HENCE, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE SAID AMOUNT AS IT EXCEEDED THE THRESHOLD LIMIT PRESCRIBED UNDER THE A CT. AS THE ASSESSEE FAIL TO COMPLETE THE SAID LEGAL OBLIGATION, THE ENT IRE SUM OF RS.56,429/- IS LIABLE TO BE DISALLOWED UNDER THE PROVISIONS OF SECTION 40A(IA) OF THE IT ACT. ON BRINGING HIS LEGAL POSITION TO THE NOTI CE OF THE AR, HE CONSENTED FOR SUCH DISALLOWANCE. ACCORDINGLY, THIS AMOUNT OF RS.56,429/- IS DISALLOWED AND ADDED TO THE INCOME R ETURNED. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BE FORE THE CIT(A) ON THIS ISSUE. 4. BEFORE THE CIT(A), THE AR OF THE ASSESSEE SUBM ITTED AS FOLLOWS: DURING THE COURSE OF ASSESSEE PROCEEDINGS, THE AR OF THE ASSESSEE SUBMITTED THAT THE PAYMENTS TO BE LIABLE FOR DEDUCT ING TAX AT SOURCE U/S 194 SHOULD BE MORE THAN RS.20,000/- AND IN THE CASE OF THE ASSESSEE NONE OF THE PAYMENTS EXCEEDED RS.20,000/- IN RESPEC T OF MACHINERY MAINTENANCE. IN RESPECT OF COMPUTER MAINTENANCE, I T WAS AVERRED THAT THE ASSESSEE ITSELF HAD ADDED BACK THE SAME IN ITS COMPUTATION AND AS SUCH THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT CORRECT. 5. THE CIT(A) HELD AS FOLLOWS: EVEN THOUGH THE ASSESSEES LEARNED AUTHORIZED REPR ESENTATIVE HAS RAISED A FRESH CONTENTION DURING THE APPELLATE PROC EEDINGS THAT THE AMOUNTS DID NOT EXCEED RS.20,000/- NO EVIDENCE HAS BEEN FILED TO CONTROVERT THE ASSERTION OF THE ASSESSING OFFICER T HAT THE ASSESSEES AR HAD CONSENTED FOR THE DISALLOWANCE OF THE SAID EXPE NSES DURING THE ASSESSMENT PROCEEDINGS. ITA NO.797/H/2010 SWAPNA NURSING HOME, HYDERABAD 3 6. THE CIT(A) FOLLOWING DECISION OF THE HONBLE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF PAVAN CONSTRUCTION (78 ITD 176) WHEREIN IT WAS HELD THAT ONCE THE ASSESSEE GAVE HIS CONSENT TO A PARTIC ULAR ASSESSMENT, IT LOOSES THE RIGHT TO APPEAL AND THEREBY DECIDING THE ISSUE AGAINST THE ASSESSEE. 7. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE U S. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SHRI V. SIVA KUMAR SUBMITTED THAT THIS AMOUNT OF RS.56,429 /- IS PART OF RS.2,74,430/- WHICH IS DEBITED TO P&L ACCOUNTS UNDE R THE HEAD REPAIRS & MAINTENANCE. THE ASSESSEE ENCLOSED A LEDGER COPY O F THE ACCOUNT OF REPAIRS AND MAINTENANCE WHICH INCLUDES RS.56,429/- ON ACCOU NT OF ANNUAL MAINTENANCE AND A STATEMENT SHOWING DETAILS OF RS.5 6,429/-. AS COULD BE SEEN FROM THE SAID STATEMENT, IT COULD BE OBSERVED THAT PAYMENTS WERE MADE TO DIFFERENT PARTIES AND EACH ITEM OF EXPENDITURE I S LESS THAN RS.20,000/- AND THEREFORE PROVISIONS OF SECTION 194C ARE NOT AP PLICABLE FOR SUCH EXPENSES. HENCE THE ASSESSEE SUBMITTED THAT THE AS SESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING RS.56,429/- U/S 40(A)(IA) STATING THAT TDS WAS NOT MADE FROM THE SAID EXPENSES WHEN PROVISIONS OF SECT ION 194C ARE NOT APPLICABLE TO SUCH EXPENSES. 9. THE LEARNED COUNSEL VEHEMENTLY OPPOSED THE OBS ERVATIONS OF THE CIT(A) THAT THE AR HAS CONSENTED FOR DISALLOWAN CE WHEN NO SUCH CONSENT WAS GIVEN BY THE AR AND REQUESTED THAT THIS FACT SHOULD BE VERIFIED FROM THE ASSESSMENT RECORD/ORDER SHEET. 10. WE HEARD BOTH THE PARTIES. FROM THE FORM 3CD OF THE PAGE 4, WE FIND THAT FROM THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD REPAIRS AND MAINTENANCE, THE AMOUNT OF RS.56,429/- IS PART OF R S.2,74,430/-. WE FIND THAT FROM THE STATEMENT, THE PAYMENTS WERE MADE TO DIFFERENT PARTIES AND EACH ITEM OF EXPENDITURE ID LESS THAN RS.20,000/-. WE ARE OF THE OPINION THAT AS PER THE PROVISIONS OF SECTION 3(1) OF SECTI ON 194C OF THE IT ACT, TDS ITA NO.797/H/2010 SWAPNA NURSING HOME, HYDERABAD 4 IS NOT LIABLE IS TO BE DEDUCTED IF THE AMOUNT IS EX CEEDING RS.20,000/- AND SINCE IN NONE OF THE CASES, THE PAYMENTS MADE EXCEE DED RS.20,000/-, THE CIT(A) IS NOT CORRECT IN CONFIRMING THE DISALLOWANC E MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 11. THE NEXT GROUND OF APPEAL RAISED BY THE ASSES SEE IS WITH REGARD TO DISALLOWANCE OF RS. 25,000/- U/S 40(A)(IA) STAT ING THAT THE TDS WAS NOT MADE FROM THIS EXPENDITURE. THE CIT(A) CONFIRMED T HE ORDER OF THE ASSESSING OFFICER IN THIS REGARD. IT WAS SUBMITTED BEFORE US BY THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THIS AMOUNT REPRESENTS EXPENSES ON MAINTENANCE OF COMPUTERS. THE COUNSEL TOOK US THROUGH THE FROM 3CD AND POINTED OUT THAT THIS AMOUNT OF RS.25, 000/- AS WELL AS ANOTHER AMOUNT OF RS.26,630/- INCURRED FOR SURGICAL INSTRUMENT REPAIR WERE REPORTED IN FORM 3CD IN ITEM 16F WAS DISALLOWED BY THE ASSESSEE HIMSELF IN ITS STATEMENT OF COMPUTATION OF INCOME. 12. WE HAVE HEARD BOTH PARTIES. WE PERUSED FORM 3CD AND WE FIND THAT THE CIT(A) HAS COMPLETELY IGNORED THE SUBMISSI ONS AND EVIDENCE FILED BY THE ASSESSEE WHERE THE SAID AMOUNT WAS ALREADY A DDED BACK BY THE ASSESSEE IN ITS COMPUTATION OF INCOME. ONCE THE AS SESSEE FIRM ITSELF ADDED BACK THE SAID AMOUNT OF RS.25,000/- IN ITS COMPUTA TION OF INCOME, THE QUESTION OF DISALLOWING THE SAME ONCE AGAIN U/S 40 (A)(IA) DOES NOT ARISE. HENCE THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT 6. 1.20 12 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 6 TH JANUARY, 2012 ITA NO.797/H/2010 SWAPNA NURSING HOME, HYDERABAD 5 COPY FORWARDED TO: 1. M/S SWAPNA NURSING HOME, 6-3-1111/19, BEGUMPET, HYD ERABAD 2. THE DCIT, CENTRAL CIRCLE 1, HYDERABAD 3. THE CIT(A)- IV, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/