ACIT, Circle-40, Kolkata, Kolkata V. Smt. Keya Seth, Kolkata

ITA 842/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9276 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Keywords: Business income
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, C BENCH : KOLKATA [BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI C. D.RAO, AM] ITA NOS. 842 & 843/KOL/2010 : ASSESSMENT YEARS : 2006-07 & 2007-08 ASSTT. COMMISSIONER OF INCOME TAX -VS.- SMT.KEYA SETH CIRCLE-40, KOLKATA. KOLKATA. [PAN : ALIPS 5 218 B] [APPELLANT] [RESPONDENT] APPELLANT BY : SHRI S. K. MALAKAR RESPONDENT BY : SHRI T. P. KA R PER MAHAVIR SINGH, J. M. THESE TWO APPEALS BY REVENUE, ARE EMANATI NG OUT OF ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA, IN APPEAL NOS.86-87/XII /40(2)/09-10 OF SAME DATE 19.01.2010. THE ASSESSMENTS WERE FRAMED BY ITO, WARD-40(2), KOL KATA U/S. 143(3)/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R ASSESSMENT YEARS 2006-07 & 2007-08 VIDE SAME DATE 11.09.2009. 2. THE FIRST COMMON ISSUE, IN THESE APPEALS OF REVE NUE, IS AS REGARD TO ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER OF ADVERTISEMENT EXPENDITURE WITHOUT CONSIDERING THE PROVISIONS OF SUB-SECTION (2) OF SE CTION 194C READ WITH SECTION 40A(IA) OF THE ACT. FOR THIS REVENUE HAS RAISED COMMON GROUNDS, WH ICH ARE IDENTICALLY WORDED EXCEPT QUANTUM, AND THE GROUND AS RAISED IN ITA NO.842/KOL /2010 FOR THE ASSESSMENT YEAR 2006-07 READS AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAD ERRED BY DELETING THE ADDITION MADE ON ACCOUNT OF E XPENDITURE CORRESPONDING TO ADVERTISEMENT AMOUNTING TO RS.27,2 3,788/- WITHOUT CONSIDERING THE EXISTING PROVISION OF SUB-SECTION ( 2) OF SECTION 194C AND U/S. 40A(IA) OF THE I.T. ACT, 1961, SINCE THE A SSESSEE BEING AN INDIVIDUAL WHOSE DISCLOSED TURNOVER EXCEEDS THE MON ETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR UNDER CONSIDERATION. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 30.10.2006. THIS RET URN WAS PROCESSED U/S. 143(3) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER NOTICED THAT THE AS SESSEE HAS NOT DEDUCTED ANY TDS ON THE PAYMENT OF ADVERTISEMENT EXPENSES AND COMMISSION & BROKERAGE AS REQUIRED U/S. 194C & ITA NOS. 842 & 843/KOL/20 10 2 194H OF THE ACT RESPECTIVELY AND ACCORDINGLY, HE IN ITIATED PROCEEDINGS U/S. 147 READ WITH SECTION 148 OF THE ACT. THE ASSESSEE REPLIED TO NOT ICE U/S. 148 VIDE LETTER DATED 18.03.2009 STATING TO CONSIDER THE ORIGINAL RETURN FILED AS IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS REQUIRED THE ASSESSEE AS TO WHY THE EXPENDITURE TOWARDS ADVERTISEMENT BE NOT DISALL OWED AS THE ASSESSEE HAS FAILED TO DEDUCT TDS ON SUCH PAYMENTS AS REQUIRED U/S. 194C READ WIT H SECTION 40A(IA) OF THE ACT. THE ASSESSING OFFICER ALSO NOTICED THAT THE PAYMENTS MA DE EXCEEDS THRESHOLD LIMIT FOR DEDUCTION OF TDS U/S. 194C OF THE ACT. THE ASSESSEE REPLIED THAT NO TDS HAS BEEN DEDUCTED AND THE PAYMENT IS MADE FOR ADVERTISEMENT EXPENSES AS PER P ROVISIONS OF LAW AND THESE PAYMENTS ARE GENUINE PAYMENTS. IT WAS ALSO REPLIED THAT THERE IS NO REQUIREMENT FOR DEDUCTION OF TDS UNDER THE PROVISIONS OF SECTION 194(1) OF THE ACT. THE AS SESSING OFFICER DISALLOWED THE EXPENDITURE TOWARDS ADVERTISEMENT EXPENSES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. THE CIT(A) DELETED THE DISALLOWANCE BY STATING T HAT THE PAYMENT MADE BY INDIVIDUAL/HUF WAS BROUGHT UNDER THE AMBIT OF SECTI ON 194(1) BY THE FINANCE ACT, 2007 WITH EFFECT FROM 01.06.2007 AND THUS THIS PROVISION IS A PPLICABLE FOR AND FROM ASSESSMENT YEAR 2008- 09 AND AS ASSESSEES CASE FALLS IN ASSESSMENT YEARS 2006-07 & 2007-08. ACCORDING TO HIM, THESE PROVISIONS WILL NOT BE APPLIED TO THIS ASSESS EE. THE CIT(A) DELETED THE DISALLOWANCES. AGGRIEVED, NOW THE REVENUE IS IN APPEAL AGAINST THE DELETION. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED POSITION THAT THE ASSESSEE AN IND IVIDUAL CARRYING ON THE BUSINESS OF AYURVEDIC (COSMETIC DIVISION) AND THE CONSULTANCY ON BEAUTICI AN AND ALSO RELATED THERAPIES . AS CLAIMED BY THE ASSESSEE, WHETHER THE PROVISIONS OF SECTION 194(1) AS EXISTED IN ASSESSMENT YEARS 2006- 07 & 2007-08 WILL APPLY TO THE ASSESSEE OR NOT? ADM ITTEDLY, ASSESSEE HAS NOT DEDUCTED ANY TDS ON ADVERTISEMENT PAYMENT AND ACCORDING TO HER, PROVISIONS OF SECTION 194C(1) AS EXISTED IN THE RELEVANT ASSESSMENT YEARS WILL NOT OBLITERAT E ANY DUTY ON ASSESSEE TO DEDUCT TDS. NOW, WE HAVE TO EXAMINE THIS. THE RELEVANT PROVISIONS OF SECTION 194C(1) & (2) AS EXIST IN ASSESSMENT YEAR 2006-07 & 2007-08 READS AS UNDER :- (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 FOR CARRYING OUT ANY WO RK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND-- ITA NOS. 842 & 843/KOL/20 10 3 (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT ; OR (B) ANY LOCAL AUTHORITY ; OR (C) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTR AL, STATE OR PROVINCIAL ACT ; OR (D) ANY COMPANY, OR (E) ANY CO-OPERATIVE SOCIETY ; OR (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER ANY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYI NG THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLA NNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES, OR FOR BOTH ; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGI STRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING T O THAT ACT IN FORCE IN ANY PART OF INDIA ; OR (H) ANY TRUST ; OR (I) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY O R UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY G RANTS COMMISSION 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 CASH 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. (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-C ONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT , OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT, THE WHOLE OR ANY PART OF T HE WORK UNDERTAKEN BY ITA NOS. 842 & 843/KOL/20 10 4 THE CONTRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR P ARTLY ANY LABOUR WHICH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT T HE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. XXXX XXXX XXXX 6. FROM THE ABOVE PROVISIONS OF SECTION 194C(1), IT IS CLEAR THAT THE PAYMENTS MADE BY INDIVIDUAL OR HINDU UNDIVIDED FAMILY DOES NOT COME WITHIN THE AMBIT OF TDS I.E. THE EXPENDITURE INCURRED FOR ADVERTISEMENT AS INDIVIDUA L AND HUF ARE SPECIFICALLY EXCLUDED IN THE ABOVE PROVISIONS. THE PROVISION OF SUB-SECTION (2) APPLIES ONLY TO PAYMENTS MADE TO SUB- CONTRACTORS AND NOT TO CONTRACTORS. ACCORDINGLY, AS SESSING OFFICER CAN NOT MADE DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 40A(IA), AS PRESE NT ASSESSEE BEING AN INDIVIDUAL IS NOT LIABLE TO DEDUCT TAX IN VIEW OF PROVISIONS OF SECTION 194C (1) AS EXISTED IN THE RELEVANT ASSESSMENT YEARS. NO DOUBT, ASSESSEES TURNOVER EXCEEDS THE MO NETARY LIMIT AS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB AND THE ASSESSEES ACCOU NTS ARE SUBJECT TO AUDIT AND THE ASSESSEE HAS AUDITED HER ACCOUNTS AND FILED TAX AUDIT REPORT ALO NG WITH RETURN OF INCOME. WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE IN VIEW OF THE AMENDED PROVISIONS OF SECTION 194C(1) BY THE FINANCE ACT, 2007 WITH EFFECT FROM 0 1.06.2007 WHEREIN IT IS PROPOSED TO AMEND SUB-SECTION (1) IN SECTION 194C SO AS TO INCL UDE PAYMENTS MADE BY ANY INDIVIDUAL OR HINDU UNDIVIDED FAMILY WHOSE TOTAL SALES / GROSS RE CEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSION CARRIED ON BY HIM EXCEED MONETARY LIMIT SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OR SECTION 44AB DURING THE FINANCIAL YEAR OR IMMEDIATE LY PRECEDING FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTR ACTOR. THIS AMENDMENT TAKES EFFECT FROM 1 ST DAY OF JUNE, 2007 AND IS APPLICABLE FOR AND FROM AS SESSMENT YEAR 2008-09. IN SECTION 194C(1) WITH EFFECT FROM 01.06.2007, BY THE FINANCE ACT, 20 07, CLAUSE AS INSERTED, READS AS UNDER :- (K) ANY INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, WH OSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PRO FESSION CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAU SE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAI D TO THE ACCOUNT OF THE CONTRACTOR, SHALL, AT THE TIME OF CREDIT OF SUCH SU M TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF A CHEQUE ITA NOS. 842 & 843/KOL/20 10 5 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 : PROVIDED THAT NO INDIVIDUAL OR A HINDU UNDIVIDED FA MILY SHALL BE LIABLE TO DEDUCT INCOME-TAX ON THE SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID E XCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. 7. WE FIND FROM THE ARGUMENTS OF LD.SR. DR THAT REV ENUE WANT TO INVOKE PROVISIONS OF SUB-SECTION (2) OF SECTION 194C FOR FURTHERANCE OF THIS CASE BUT WE ARE OF THE CONSIDERED VIEW THAT SECTION 194C(2) WILL APPLY TO THE PAYMENTS MAD E TO SUB-CONTRACTORS BY THE CONTRACTOR AND NOT BY THE ASSESSEE. IN THE PRESENT CASE, IT IS AN ADMITTED POSITION THAT THE ASSESSEE HAS MADE PAYMENTS ON ADVERTISEMENT TO THE CONTRACTORS AND NO T TO SUB-CONTRACTORS. FURTHER AS REFERRED BY LD. COUNSEL FOR THE ASSESSEE, THIS PROVISION WAS EXPLAINED BY CBDT CIRCULAR NO.3 OF 2008 DATED 12.03.2008 WHICH IS REPORTED IN (2008)299 ITR 8 (STATUTE) AND THE RELEVANT CIRCULAR AS REPORTED AT PAGE 71, READS AS UNDER :- 54. EXPANSION OF SCOPE OF THE PROVISIONS OF SECTIO N 194C. 54.1 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C PROVIDED FOR DEDUCTION OF INCOME-TAX AT SOURCE FROM ANY SUM CREDITED OR PA ID TO THE RESIDENT CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABO UR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR A ND THE GOVERNMENT, LOCAL AUTHORITIES, STATUTORY CORPORATIONS, COMPANIES, CO- OPERATIVE SOCIETIES, STATUTORY AUTHORITIES ENGAGED IN PROVIDING HOUSING ACCOMMODAT ION, ETC., REGISTERED SOCIETIES, TRUSTS, UNIVERSITIES AND FIRMS. THE RATE OF TDS IS 1% IN RESPECT OF ADVERTISING CONTRACTS AND 2% IN OTHER CASES. 54.2 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C DID NOT PROVIDE FOR DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY TO A CONTRACTOR. 54.3 CONSIDERING THE RISING NUMBER OF CONTRACTS BEI NG AWARDED BY INDIVIDUALS AND HUFS CARRYING ON BUSINESS OR PROFESSION AND THE INCREASING VOLUME OF SUCH PAYMENTS TO CONTRACTORS, IT WAS FELT THAT THERE IS NEED TO REQUIRE SUCH PERSONS TO DEDUCT TAX AT SOURCE FROM PAYMENTS MADE BY THEM TO CONTRACTORS. 54.4 THERE WOULD BE GENUINE DIFFICULTIES IF INDIVID UALS OR HUFS WITH SMALL BUSINESS TURNOVERS OR GROSS RECEIPTS OF PROFESSION ARE REQUIRED TO DEDUCT TAX AT SOURCE. AN EXCEPTION IN SUCH CASES WOULD BE JUSTIFI ED. SIMILARLY THE CONTRACTS ITA NOS. 842 & 843/KOL/20 10 6 AWARDED BY AN INDIVIDUAL OR A MEMBER OF HUF OF HUF EXCLUSIVELY FOR PERSONAL PURPOSES MERIT EXCLUSION. 54.5 ACCORDINGLY, THE FINANCE ACT, 2007, HAS SUBSTI TUTED THE SAID SUB-SECTION (1) TO INCLUDE IN ITS AMBIT SUCH INDIVIDUAL OR A HI NDU UNDIVIDED WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PRO FESSION CARRIED ON EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUS E (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING FINANCIAL YEAR IN WHICH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS AMEN DMENT SHALL NOT APPLY IN RESPECT OF PAYMENTS MADE TO A CONTRACTOR BY ANY IND IVIDUAL OR A MEMBER OF A HINDU UNDIVIDED FAMILY EXCLUSIVELY FOR THEIR PERSON AL PURPOSES. 54.6 APPLICABILITY - THIS AMENDMENT WILL TAKE EFFEC T FROM THE 1ST DAY OF JUNE, 2007. 8. IN VIEW OF THE ABOVE CLEAR PROVISIONS OF SECTION 194(1) AS EXISTING IN ASSESSMENT YEARS 2006-07 & 2007-08, I.E. RELEVANT ASSESSMENT YEARS I N THE PRESENT APPEALS, IT IS CLEAR THAT THE ASSESSEE IS UNDER NO OBLIGATION TO DEDUCT TDS ON TH E EXPENDITURE OF ADVERTISEMENT, AS THE ASSESSEE BEING AN INDIVIDUAL, AND THE CLAIM OF THE ASSESSEE IS AS PER PROVISIONS OF LAW. ONCE THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS UNDER THE PROV ISION OF SECTION 194C(1), THE PROVISIONS OF SECTION 40A(IA) FOR MAKING DISALLOWANCE OF EXPENDIT URE FOR NON-DEDUCTION OF TDS WILL NOT APPLY. WE FURTHER FIND THAT, IT IS NOT THE CASE OF THE REVENUE THAT THE EXPENSES ARE BOGUS OR UNREASONABLE OR EXCESSIVE BUT THE DISALLOWANCE IS M ADE MERELY FOR NON-DEDUCTION OF TDS. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT CIT (A) HAS RIGHTLY DELETED THE DISALLOWANCE AND WE CONFIRM THE SAME. 9. EXACTLY, SIMILAR ARE FACTS IN ITA NO.843/KOL/201 0 FOR ASSESSMENT YEAR 2007-08, HENCE TAKING A CONSISTENT VIEW, WE CONFIRM THE DELETION O F DISALLOWANCE MADE BY CIT(A) IN THAT YEAR ALSO. ACCORDINGLY, THIS COMMON ISSUE OF REVENUES A PPEALS IS DISMISSED. 10. THE NEXT ISSUE IN REVENUES APPEALS IN ITA NO. 842/KOL/2010 FOR ASSESSMENT YEAR 2006- 07, IS AGAINST THE ORDER OF CIT(A) DELETING THE DI SALLOWANCE OF EXPENDITURE OF COMMISSION AND BROKERAGE BY INVOKING PROVISIONS OF SECTION 194H RE AD WITH SECTION 40A(IA) OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND :- 'THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAD ERRED BY DELETING THE ADDITION MADE ON ACCOUNT OF EXPENDITUR E CORRESPONDING TO COMMISSION AND BROKERAGE AMOUNTING TO RS.61,631/- W ITHOUT CONSIDERING THE EXISTING PROVISION OF SECTION 194H AND U/S. 40A(IA) OF THE I.T. ACT, 1961 SINCE THE ITA NOS. 842 & 843/KOL/20 10 7 ASSESSEE BEING AN INDIVIDUAL WHOSE DISCLOSED TURNOV ER EXCEEDS THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB DURING THE FINANCIAL YEAR UNDER CONSIDERATION. 11. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSING OFFICER HAS DISALLOWED THIS EXPENDITURE ON ACCOUNT OF NON-DEDUCTION OF TDS ON PAYMENTS MADE TOWARDS BROKERAGE AND COMMISSION OF RS.61,631/-. THE ASSESSEE EXPLAIN ED THAT SHE HAS FILED CONFIRMATION AND CERTIFICATE OF STATEMENT OF COMMISSION PAID AND ACC ORDING TO HER, COMMISSION PAID IS GENUINE AND NO DISALLOWANCE SHOULD BE MADE. ADMITTEDLY, ASS ESSEE HAS NOT DEDUCTED TDS AND THE THRESHOLD LIMIT FOR DEDUCTION OF TDS U/S. 194H OF T HE ACT EXCEEDS IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE BY INVOKING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BE FORE THE LD. CIT(A). 12. THE CIT(A) DELETED THE DISALLOWANCE WITHOUT GOI NG INTO THE MERITS OF THE CASE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH CONTENTIONS OF BOTH SIDES. WE FIND THAT IT IS AN ADMITTED POSITION THAT THE ASSES SEE IS SUBJECT TO TDS IN VIEW OF PROVISIONS OF SECTION 194H, AND ONCE IT IS AN ADMITTED POSITION T HAT ASSESSEE HAS NOT DEDUCTED TDS ON THE ABOVE BROKERAGE AND COMMISSION PAYMENTS, ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE EXPENDITURE. ACCORDINGLY, WE ARE OF THE VIEW THAT T HE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE AND SET ASIDE THE ORDER OF CIT(A). AC CORDINGLY, THIS ISSUE OF THE REVENUES APPEAL IS ALLOWED. ITA NO. 843/KOL/2010 14. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF OVER STATEMENT OF P URCHASES FILED BEFORE THE VAT AUTHORITY. FOR THIS REVENUE HAS RAISED GROUND NO.2 AS UNDER :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED BY DELETING THE ADDITION MADE ON ACCOUNT OF OVERSTA TEMENT OF PURCHASE WITHOUT CONSIDERING THE PURCHASE AMOUNT OF RS.35,23 ,193/- DISCLOSED BEFORE THE VAT AUTHORITY. 15. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE DISCLOSED TOTAL PURCHASES IN RESPECT OF M/S. KEYA SETH AYRVEDIC SOLUTION (COS METIC DIVISION) AT RS.40,10,635/- WHICH ITA NOS. 842 & 843/KOL/20 10 8 INCLUDES RAW MATERIAL PURCHASES OF RS.37,28,213/- A ND PACKING MATERIALS OF RS.2,82,422/-. THE ASSESSING OFFICER EXAMINED THE VAT RETURNS FOR THE RELEVANT FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 AND NOTED THAT TOTAL PURCHA SES DISCLOSED BEFORE THE VAT AUTHORITY ARE TO THE TUNE OF RS.35,23,193/- AND ALSO INCLUDED VAT INPUT CALCULATED AT RS.1,16,334/-. HE NOTED MATERIAL PURCHASES AT RS.37,28,213/-. ACCORDI NGLY, HE NOTED THAT THERE IS DIFFERENCE IN THE PURCHASE AND OVER STATED PURCHASE ARE AT RS.2,05,02 0/-. ACCORDINGLY, HE MADE ADDITIONS OF OVER STATED PURCHASES. AGGRIEVED, ASSESSEE PREFERRED APP EAL BEFORE THE CIT(A). 16. THE CIT(A) DELETED THE ADDITION AFTER CONSIDERI NG THE REPLY OF THE ASSESSEE VIDE PARA 4.3 OF HIS ORDER, WHICH READS AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND RECONCILIATION STATEMENT AND VAT CERTIFICATE. THE A.O. HAS CONSIDE RED ONLY DIFFERENCE BETWEEN RS.37,28,213/- BEING RAW MATERIAL PURCHASES AND RS. 35,23,192/- BEING RAW MATERIAL AND PACKING MATERIAL PURCHASES. THE A.O. HAS NOT TA KEN INTO CONSIDERATION THE PACKING MATERIAL AND CENTRAL PURCHASES ON WHICH NO INPUT TA X CREDIT IS ALLOWED. THUS THE A.OS ACTION IN ADDING THE DIFFERENCE IS NOT FACTUALLY CO RRECT. FURTHER THE APPELLANT SUBMITTED THAT ALL PURCHASES WERE MADE BY ACCOUNT PAYEE CHEQU ES. THE APPELLANT ALSO FURNISHED A CERTIFICATE FROM THE COMMERCIAL TAX OFFICER, SALT L AKE CITY, KOLKATA WHEREIN THE TOTAL PURCHASES SHOWN AT RS.40,10,635/- ONLY. IN VIEW OF THE FACTS, I DIRECT THE A.O. TO DELETE THE ADDITION MADE ON ACCOUNT OF OVERSTATEMENT OF PU RCHASES. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 17. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE STATEMENT OF PURCHASES AS PER VAT RETURN FOR RELEVANT FOUR QUARTERS AS ENDING AS ON 31.03.2007 AND THE STATEMENT OF PURCHASES AS CERTIFIED BY COMMERCIAL TAX OFFICER, BELGACHIA CHARGE, GOVERNMENT OF WEST BENGAL ANNEXED BEFORE US AS ANNEXURE B & C, WHICH CLEARLY EXPLAINS THAT TOTAL PURCHASES OF RS.4 0,10,634/- CONSISTING OF RAW MATERIAL OF RS.37,28,213/- AND PACKING MATERIAL OF RS.2,82,422/ -, WHICH WERE PURCHASED BOTH FROM WEST BENGAL AND OUTSIDE STATE I.E. CALLED CENTRAL PURCHA SES. IN OUR VIEW, NORMALLY THE LOCAL SALES TAX I.E. VAT TAX AUTHORITIES DOES NOT INCLUDE CENTRAL P URCHASES OR OUTSIDE PURCHASES. IF WE RECONCILE THESE FIGURES, THIS WILL CLEARLY REVEALS THAT PURCHASES IN VAT RETURN CONSIDERED OF RS.37,28,213/- FOR RAW MATERIAL AND RS.2,82,422/- F OR PACKING MATERIAL I.E. THE TOTAL PURCHASES ACCOUNTED BY THE ASSESSEE IN ITS ACCOUNT. WE ARE UN ABLE TO AGREE WITH THE ASSESSING OFFICER OR LD SR DR. THAT THE PURCHASES ARE NOT RECONCILED IN VIEW OF THE ABOVE RECONCILIATION. THE ONLY ITA NOS. 842 & 843/KOL/20 10 9 DIFFERENCE IS THAT OUTSIDE PURCHASES ARE NOT RECORD ED IN THE VAT RETURN SUBMITTED WITH WEST BENGAL VAT AUTHORITY. ACCORDINGLY, WE ARE OF THE CO NSIDERED VIEW THAT THERE IS NO OVER STATEMENT OF PURCHASES AS ALLEGED BY HIM AND CIT(A) HAS RIGHTLY DELETED THE SAME. WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISS ED. 16. IN THE RESULT, APPEALS OF REVENUE, IN ITA NO. 8 42/KOL/2010 IS PARTLY ALLOWED AND ITA NO.843/KOL/2010 IS DISMISSED. ORDER PRONOUNCED IN COURT ON 11. 03. 2011. SD/- SD/- [C. D. RAO] [MAHAVIR SINGH ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11TH MARCH, 2011. COPY FORWARDED TO THE - 1. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-40, 18, R ABINDRA SARANI, PODDAR COURT, 4 TH FLOOR, KOLKATA-700 001. 2. SMT. KEYA SETH, 25/4/A, ANATH NATH DEB LANE, KOLKATA-700 037. 4. CIT(A)- (5) CIT- 6. D.R., I.T.A.T., KOLKATA. [TRUE COPY] BY ORDER DEPUTY/ASSISTANT REGISTRAR (KKC) I .T.A.T., KOLKATA.