M.R.Lakshmanan, CHENNAI V. ITO, CHENNAI

ITA 82/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0759 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T T DURAIRAJ KANDIAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.82/MDS/2012 ASST. YEARS : 2005-06 M.R. LAKSHMANAN, PROP. SPLENDID LEATHER MANUFACTURER, NO.H-4, TALCO INDUSTRIAL ESTATE, MADHAVARAM, CHENNAI-600 060. PAN : AIQPM7143J. (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD-XI(2), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : MR. T.T. DURAIRAJ KAN DIAR, CA RESPONDENT BY : MR. SHAJI P. JACOB, ADDL.CIT DATE OF HEARING : 14 FEB 2013 DATE OF PRONOUNCEMENT : 26 FEB 20 13 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI , DATED 17.11.2011 FOR THE ASST. YEAR 2005-06. THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA 82/MDS/12 2 A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT FAIR ENOUGH TO REJECT THE APPELLANTS PLEA FOR A SHORT ADJOURNMENT ESPECIALLY WHEN THERE WAS CHANGE IN THE APPELLANTS REPRESENTATIVE. B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO CONSIDER THE MERIT OF THE CASE, LEGAL PROVISIONS INVOLVED AND HAS PREJUDICED IN CONFIRMIN G THE DISALLOWANCE OF D.31,37,411/- U/S.40(A)(IA) IGNORING THE FACT AND CIRCUMSTANCES OF THE CASE. 2. AT THE TIME OF HEARING, THE COUNSEL FOR THE AS SESSEE SUBMITS THAT GROUND (A) ABOVE RAISED IN ITS GROUNDS OF APPEAL IS NOT PRESSED AND MAY BE DISMISSED AS NOT PRESSED. THERE FORE, GROUND (A) IS DISMISSED AS NOT PRESSED. 3. THE ASSESSING OFFICER WHILE COMPLETING THE ASSE SSMENT DISALLOWED D.31,37,411/- UNDER SEC.40(A)(IA) OF THE ACT STATING THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE UNDER SEC .194C OF THE ACT ON THE PAYMENTS MADE TO VARIOUS PARTIES ON THE MACH INERY JOB WORK CHARGES. THEREFORE, APPLYING THE PROVISIONS OF SEC .40(A)(IA) READ WITH SEC.194C OF THE ACT, HE DISALLOWED THE SAID PA YMENTS. THE ITA 82/MDS/12 3 ASSESSING OFFICER OBSERVED THAT IN SPITE OF OPPORTU NITIES GIVEN TO THE ASSESSEE, THE ASSESSEE COULD NOT FURNISH ANY REPLY. THEREFORE, DISALLOWANCE WAS MADE. THE ASSESSEE FILED APPEAL B EFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE SA ID DISALLOWANCE. THE COMMISSIONER OF INCOME TAX (APPEALS) UP HELD TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER STATING THAT THE ASSE SSEE ASKED FOR ADJOURNMENT ON FLIMSY GROUNDS AND SINCE THE CHIEF C OMMISSIONER OF INCOME TAX DIRECTED TO DISPOSE OFF ALL HIGH DEMAND APPEALS, THE APPEAL IS DISPOSED OFF REJECTING THE ADJOURNMENT P ETITIONS FILED BY THE ASSESSEE. 4. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT BEFO RE THE ASSESSING OFFICER THE ASSESSEE COULD NOT PRODUCE MA TERIALS AS THERE WAS SOME CHANGE IN THE AUTHORISED REPRESENTATIVE AN D THE SAME THING HAPPENED BEFORE THE COMMISSIONER OF INCOME TA X (APPEALS) AND NO PROPER REPRESENTATION COULD BE MADE BEFORE T HE LOWER AUTHORITIES TO ESTABLISH THAT THE DISALLOWANCE IS N OT PROPER AND JUSTIFIED IN THE FACTS OF THE ASSESSEES CASE. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER APPLIED THE PROVISIONS OF ITA 82/MDS/12 4 SEC.194C OF THE ACT AS AMENDED FROM 01.6.2007 WHERE TDS IS ATTRACTED TO THE PAYMENTS MADE TO INDIVIDUALS AND H UF ALSO. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT PRIOR TO THE AMENDMENT THE PROVISION AS APPLICABLE FOR THE ASST. YEAR 2005-06 IE., ASST. YEAR UNDER APPEAL NO TDS IS REQUIRED TO BE MADE UNDER SE C.194C OF THE ACT ON THE PAYMENTS MADE TO INDIVIDUALS AND HUF. T HEREFORE, THE PAYMENTS MADE BY THE ASSESSEE TO VARIOUS PARTIES TO WARDS MACHINERY JOB WORK CHARGES DO NOT ATTRACT THE PROVI SIONS OF SEC.194C OF THE ACT AND, THEREFORE, THE QUESTION OF DISALLOW ANCE UNDER SEC.40(A)(IA) READ WITH SEC.194C OF THE ACT WILL NO T ARISE. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSEE HAS MADE TDS ON THE PAYMENTS TO VARIOUS PARTIES AND, T HEREFORE, THE PAYMENTS MADE ARE OUTSIDE THE PURVIEW OF SEC.194C O F THE ACT. 5. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. THE ASS ESSEE, IN THE ITA 82/MDS/12 5 ASSESSMENT PROCEEDINGS COULD NOT SUBMIT THE DETAILS OR EXPLANATION FOR NOT DEDUCTING TDS UNDER SEC.194C OF THE ACT. T HE COMMISSIONER OF INCOME TAX (APPEALS) DISPOSED OFF THE APPEAL REJ ECTING THE ADJOURNMENT PETITION. THE COUNSEL FOR THE ASSESSE E SUBMITS THAT THE PROVISIONS OF SEC.194C OF THE ACT HAVE NO APPLI CATION TO THE PAYMENTS MADE TO INDIVIDUALS OR HUF FOR THE ASST. Y EAR 2005-06 AND THEREFORE THE ASSESSING OFFICER IS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SEC.194C OF THE ACT APPLICABLE AFTER AMENDMENT WITH EFFECT FROM 01.6.2007 AND MAKING DISALLOWANCE UNDER SEC.40(A)(IA) READ WITH SEC.194C OF THE ACT. THE PROVISIONS OF S EC.194C AS APPLICABLE FOR THE ASST. YEAR 2005-06 ARE AS UNDER :- 194C. (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR F OR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRA CTOR AND ( A ) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT; O R ( B ) ANY LOCAL AUTHORITY; OR ( C ) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL , STATE OR PROVINCIAL ACT; OR ( D ) ANY COMPANY; [OR] [( E ) ANY CO-OPERATIVE [SOCIETY; OR]] [( F ) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER A NY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYI NG THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE O F ITA 82/MDS/12 6 PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOW NS AND VILLAGES, OR FOR BOTH; OR ( G ) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGIST RATION ACT, 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR ( H ) ANY TRUST; OR ( I ) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER OF THE UNIVERSITY GRANTS COMMISSIO N ACT, 1956 (3 OF 1956); [OR] [( J ) ANY FIRM,] SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, [DEDUCT AN AMOUNT EQUAL TO ( I ) ONE PER CENT IN CASE OF ADVERTISING, ( II ) IN ANY OTHER CASE TWO PER CENT, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN.] 7. ON A READING OF THE ABOVE PROVISIONS OF SEC.1 94C OF THE ACT AS APPLICABLE FOR THE ASST. YEAR 2005-06, WE FI ND FORCE IN THE ARGUMENT OF THE COUNSEL FOR THE ASSESSEE THAT THE PAYMENTS MADE TO INDIVIDUALS AND HUF ARE NOT ATTRACTED THE PROVIS IONS OF SEC.194C. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THA T THE PROVISIONS OF SEC.194C OF THE ACT ARE NOT ATTRACTED TO SOME OF THE PAYMENTS MADE TOWARDS MACHINERY JOB WORK CHARGES AS THE ASSE SSEE HAD DEDUCTED TDS ON SUCH PAYMENTS. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTI CE WE FEEL THAT THIS ITA 82/MDS/12 7 MATTER SHOULD GO BACK TO THE ASSESSING OFFICER FOR FRESH EXAMINATION IN THE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESS EE. THEREFORE, WE SET ASIDE THE ISSUE IN APPEAL TO THE FILE OF THE AS SESSING OFFICER WITH DIRECTION TO EXAMINE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. BEF ORE THE ASSESSING OFFICER, THE ASSESSEE MAY FURNISH DETAILS, SUBMISSI ONS ETC., IN SUPPORT OF HIS CLAIM THAT THE PROVISIONS OF SEC.194C OF THE ACT ARE NOT ATTRACTED TO THE PAYMENTS MADE BY HIM TO VARIOUS PA RTIES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. 9. ORDER PRONOUNCED ON THESDAY, THE 26 TH DAY OF FEBRUARY 2013. SD/- SD/- ( N.S. SAINI ) (CHALLA N AGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : FEBRUARY 2013. JLS. ITA 82/MDS/12 8 COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), (4) C.I.T., (5) D.R. (6) GUARD FILE