ITO, Ward-6(4), Hyderabad, Hyderabad V. 25 Frames Media House, Hyd, Hyderabad

ITA 855/HYD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5154 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 30-09-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: TDS
• Section: 143(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD (THROUGH VIDEO CONFERENC E ) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 855/HYD./2016 A.Y. 2009 - 10 ITO, WARD 6 (4) VS. M/S 25 FRAMES MEDIA HOUSE HYDERABAD HYDERABAD PAN: AAAF23893N ITA NO. 983/HYD./2016 A.Y. 2009 - 10 M/S 25 FRAMES MEDIA HOUSE VS. ITO, WARD 6(4) HYDERABAAD HYDERABAD (APPELLANT) (RESPONDENT) FOR REVENUE : SH. SOLGY JOSE T K O TTARAM, D.R. FOR ASSESSEE : SH. S. RAMA RAO, ADV. DATE OF HEARING : 30/09/2020 DATE OF PRONOUNCEMENT 06 / 10 /2020 O R D E R PER SMT. P. MADHAVI DEVI, J.M. B OTH THESE APPEALS ARE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS REVENUE AGAINST THE ORDER OF LD.CIT(A) - 4 , HYDERABAD DATED 24.03.2016 FOR THE A.Y. 200 9 - 10 . THESE CROSS APPEALS WERE TAKEN UP FOR HEARING ON 30.09.20 20 THROUGH VIDEO CONFEREN C ING AND BOTH THE PARTIES WERE HEARD. ITA NO.855/HYD/2016 AND ITA 983/HYD/2016 AY 2009 - 10 25 FRAMES MEDIA HOUSE 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, HAS FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 19.04.2010 DECLARING AN INCOME OF RS.15,76,900/ - . CONSEQUENT TO SELECTION OF THE RETURN UNDER CASS FOR SCRUTINY, THE ASSESSMENT PROCEEDINGS U/S 143(3) WERE COMPLETED AND THE ASSESSEE WAS DIRECTED TO FURNISH VARIOUS INFORMATION. THE ASSESSEE FILED THE RELEVANT INFORMATION. THEREAFTER , THE AO DISALLOWED MEDIA EXPENSES U/S 40 (A) (IA) FOR N ON - DEDUCTION OF TDS AND 50% OF THE EXPENDITURE CLAIMED BY ASSESSEE , IN THE ABSENCE OF BOOKS OF ACCOUNTS AND MADE ADDITION TOWARDS SUNDRY CREDITORS FOR AN AMOUNT OF RS.56,90,000/ - FOR WANT OF CONFIRMATION FROM THE PARTIES. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. AS REGARDS DISALLOWANCE U/S 40 (A) (IA) OF THE I.T.ACT, 1961 THE CIT(A) FOLLOWED THE DECISION OF THE VISAKHAPATNAM SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MER I LYN SHIPPING & TRANSPO RTS VISAKHAPATNAM VS. ACIT, RANGE 1, VISAKHAPATNAM REPORTED IN 136 ITD 23. 2.1. WITH REGARD TO DISALLOWANCE OF 50% OF THE EXPENDITURE , THE CIT(A) OBSERVED THAT ASSESSEE HAS FILED DETAILS BEFORE HER WHICH ARE FORWARDED TO THE AO AND A REMAND REPORT WERE CALLED FOR. A FTER CONSIDERING THE REMAND REPORT , SHE HELD THAT THE ACTION OF THE AO IN DISALLOWING 50% OF THE MISC. EXPENSES AND SALARIES WAS NOT JUSTIFIABLE, AND THAT IF ANY EXPENSES WERE TO BE DISALLOWED, AT THE MOST IT SHOULD BE OF ADMINISTRATIVE EXPENSES. AS REGARDS SUNDRY CREDITORS , SHE DIRECTED THAT THE ADDITION MAY BE DELETED BY OBSERVING THAT THESE CREDITORS WERE REGULAR CREDITORS CONTINUING FOR YEARS AND PAYMENTS WERE ALSO MADE FOR SUBSEQUENT YEARS. SHE FURT HER DIRECTED THE AO TO ASSESS THE INCOME AT 8% OF THE GROSS RECEIPTS AND DELETED ADDITIONS MADE BY AO TOWARDS UNDISCLOSED INCOME. 3. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US, WHILE THE ASSESSEE IS IN APPEAL BEFORE US ON ESTIMATION OF INCOME @ 8% OF GROSS RECEIPTS. ITA NO.855/HYD/2016 AND ITA 983/HYD/2016 AY 2009 - 10 25 FRAMES MEDIA HOUSE 3 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ESTIMATION OF INCOME @ 8% OF THE GROSS RECEIPTS IS TOO HIGH AS AGAINST THE PROFIT OFFERED BY ASSESSEE @ 2%. HE SUBMITTED THAT THERE IS NO BASIS FOR ESTIM ATION OF INCOME @ 8% AS DONE BY THE CIT(A). WITH REGARD TO DISALLOWANCE U/S 40(A)(IA), HE FAIRLY ACCEPTED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PAL A M GAS SERVICE (2017) (SC) REPORTED IN 394 ITR 300, AND SINCE THE CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS HE PRAYED THAT THE ISSUE MAY BE REMITTED TO THE CIT(A). 5. LD.DR , ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AO AND SUBMITTED THAT BOTH THE ISSUES MAY BE REMITTED TO THE FILE OF AO. 6. HAVING REGARD TO RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, WE FIND THAT THE CIT(A) HAS FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL AT VISAKHAPATNAM IN THE CASE OF MERYLIN SHIPPING & TRANSPORTS VISAKHAPATNAM (SUPRA) WH ICH HELD TH AT SINCE PAYMENTS HAVE ALREADY BEEN MADE, THE DISALLOWANCE U/S 40(A)(IA) IS NOT WARRANTED. HOWEVER, THE HONBLE SUPREME COURT IN THE CASE OF PAL A M GAS SERVICE VS. CIT (2017) REPORTED IN 394 ITR 300 HAS HELD THAT THE PROVISION S OF SEC.40(A)(IA) OF THE ACT ARE APPLICABLE TO ALL THE CASES OF FAILURE TO MAKE TDS WHETHER PAID OR PAYABLE. THEREFORE, THE DECISION OF THE SPECIAL BENCH IS NO LONGER IN FORCE. S INCE THE CIT(A) HAS NOT DECIDED THE ISSUE ON MERITS, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF CIT(A) . SIMILARLY , THE ISSUE OF SUNDRY CREDIT OR S AND ESTIMATION OF INCOME IS ALSO REMITTED TO THE FILE OF CIT(A) FOR RE - ADJUDICATION. THE ASSESSEE IS DIRECTED TO FILE THE CONFIRMATIONS OF THE SUNDRY CREDITORS BEFORE THE CIT(A ), WHO SHALL CONSIDER SUCH EVIDENCE IN ACCORDANCE WITH LAW. AS REGARDS ESTIMATION OF INCOME, CIT(A) IS DIRECTED TO ESTIMATE THE INCOME AFTER TAKING INTO CONSIDERATION THE GROSS PROFIT EARNED BY SIMILAR ASSESSEES. ACCORDINGLY, BOTH THE APPEAL S OF REVENUE AS WELL AS ASSESSEE ARE REMITTED TO THE FILE OF CIT(A). ITA NO.855/HYD/2016 AND ITA 983/HYD/2016 AY 2009 - 10 25 FRAMES MEDIA HOUSE 4 7. IN THE RESULT, BOTH THE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 06 TH OCTOBER, 2020. SD/ - SD/ - (A. MOHAN ALANKAMONY) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06 TH OCTOBER, 2020 . *GMV COPY FORWARDED TO: 1. M/S 25 FRAMES MEDIA HOUSE, C/O SRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 2. ITO, WARD 6(4), HYDERABAD / ITO WARD 8(1), HYDERABAD 3. CIT(A) - 4 , HYDERABAD / ACIT, RANGE 8, HYDERABAD 4. PR. CI T - 2 , HYDERABAD . 5. DR, ITAT, HYD ERABAD. 6 . GUARD FILE.