M/s Kurukshetra Darpan (P) Ltd., Kurukshetra V. Addl. CIT, Kurukshetra

ITA 877/CHANDI/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60999 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 17-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: AJAY JAIN
• Keywords: Question of law
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.877/CHD/2008 (ASSESSMENT YEAR:2005-06) M/S KURUKSHETRA DARPAN (P) LTD., VS. THE ADDL.C.I .T., 77, SECTOR 13, KURUKSHETRA. RANGE KURUKSHETRA. PAN: AABCK9292J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 17.07.2012 DATE OF PRONOUNCEMENT : 30.07.2012 O R D E R PER SUSHMA CHOWLA, J.M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS), KARNAL DATED 19.08.2008 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORD ER PASSED U/S 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL AN D GROUND NO.5 AND 6 RAISED BY THE ASSESSEE WERE NOT PRESSED. HENCE GROUND NOS. 1,5 AND 6 ARE DISMISSED. 3. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY ASSESS EE ARE AS UNDER: 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THAT THE PROVISION S OF S. 40(A)(IA) OF THE ACT ARE APPLICABLE ON AMOUNT OF RS. 5819981/- ACTUALLY PAID BY THE APPELLANT TO LICENSORS OF VARIOUS TV CHANNELS WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS OF S. 40(A)(IA) OF THE ACT ARE ONLY APPLICABLE IN CASE O F EXPENSE PAYABLE AT THE END OF YEAR AND DOES NOT APP LY WHERE AMOUNT HAS ACTUALLY BEEN PAID BY THE ASSESSEE . 3. THAT THE LEARNED C.I.T. (A) HAS WRONGLY HELD THAT THE PAYMENTS MADE TO LICENSORS OF VARIOUS TV CHANNELS AMOUNTING TO RS. 5819981/- ARE LIABLE FOR TAX DEDUCTION AT SOURCE UNDER S. 194C OF THE ACT BY 2 VIRTUE OF EXPLANATION-ILLBELOWS.194C(2)OF THE ACT. 4. THAT THE LEARNED CIT (A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF RS.5819981/- UNDER S. 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURC E UNDER S. 194C OF THE ACT ON PAYMENTS MADE TO LICENSORS OF VARIOUS TV CHANNELS. 4. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS IN RESPECT OF DISALLOWANCE MADE BY INVOKING PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT ON THE PAYMENTS MADE BY THE ASSESSEE TO LIC ENSORS OF VARIOUS TV CHANNELS. THE ASSESSING OFFICER MADE DI SALLOWANCE OF RS.58,19,981/- ON ACCOUNT OF NON DEDUCTION OF TAX A T SOURCE, CONSEQUENTLY APPLICATION OF PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASS ESSING OFFICER. 5. THE CONTENTION OF THE LEARNED A.R. FOR THE ASSES SEE BEFORE US WAS THAT THE SAID ISSUE NOW STANDS COVERED BY THE S PECIAL BENCH OF VISHAKHAPATNAM REPORTED IN ACIT VS. MERILYN SHIPPIN G & TRANSPORTS[140 TTJ 1(SB)(VISHAKHAPATNAM)]. 6. ON PERUSAL OF THE RECORD WE FIND THAT THE ISSUE RAISED VIDE GROUND NO.2 WAS IN RELATION TO THE DISALLOWANCE MADE OUT O F PAYMENTS OF LICENSORS TO VARIOUS TV CHANNELS, FOR NON DEDUCTION OF TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE ACT. T HE SAID DISALLOWANCE WAS MADE BY INVOKING THE PROVISIONS OF SECTION 40(A )(IA) OF THE ACT. THE SPECIAL BENCH OF VISHAKHAPATNAM REPORTED IN ACI T VS. MERILYN SHIPPING & TRANSPORTS (SUPRA) HAD LAID DOWN THE PRI NCIPLE THAT WHERE THE AMOUNTS HAVE BEEN PAID DURING THE YEAR UNDER CONSID ERATION ITSELF AND NOTHING IS PAYABLE AT THE CLOSE OF THE YEAR, NO DIS ALLOWANCE WAS WARRANTED UNDER SECTION 40(A)(IA) OF THE ACT FOR NO N DEDUCTION OF TAX AT SOURCE OUT OF SUCH PAID AMOUNT. FOLLOWING THE ABOV E SAID PARITY OF REASONING WE DIRECT THE ASSESSING OFFICER TO VERIFY THE STAND OF THE ASSESSEE AND IN CASE THE SAID AMOUNTS HAVE BEEN PAI D BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, NO DISALLOWANC E IS WARRANTED OUT OF 3 SAID PAYMENTS. REASONABLE OPPORTUNITY OF HEARING S HALL BE AFFORDED TO THE ASSESSEE BY THE ASSESSING OFFICER FOR ADJUDICAT ING THE ISSUE. GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES. 7. THE ASSESSEE VIDE GROUND NO.3 HAS RAISED THE ISS UE VIS--VIS IN RELATION TO THE LIABILITY FOR TAX DEDUCTION AT S OURCE UNDER SECTION 194C OF THE ACT OUT OF THE PAYMENTS MADE TO THE LIC ENSORS TO VARIOUS TV CHANNELS. THE LEARNED A.R. FOR THE ASSE SSEE FAIRLY CONCEDED THAT THE ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE PUNJAB & HARYANA HIGH COURT REPORTED I N [217 CTR 326 (P&H)]. HOWEVER, IT WAS POINTED OUT BY THE LEA RNED A.R. FOR THE ASSESSEE THAT THE ASSESSEE HAD FILED AN APPLICA TION UNDER SECTION 158A(I) OF THE ACT IN FORM NO.8, WHICH IS FILED ON 16.2.2009 UNDER WHICH IT HAS BEEN PLEADED THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 SHOULD BE APPLIED TO THE QUESTION OF LAW RAISED VID E GROUND NO.2. 8. WE FIND THAT THE PRESENT ISSUE RAISED BY THE ASS ESSEE VIDE GROUND NO.3 IS FULLY COVERED AGAINST THE ASSESSEE B Y THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT (SU PRA) IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 200 5-06. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS DISMISSED. HOWEVER, IN VIEW OF THE ASSESSEE HAVING FILED APPLI CATION UNDER SECTION 158A(I) OF THE ACT IN FORM NO.8, WE DIRECT THE ASSESSING OFFICER TO APPLY THE JUDGMENT OF THE HON'BLE SUPREM E COURT OF INDIA IN THE APPEAL RELATING TO ASSESSMENT YEAR 200 5-06 TO THE ISSUE RAISED VIDE GROUND NO.3, AS AND WHEN THE SAME IS DE CIDED. 9. THE ISSUE IN GROUND NO.4 IS LINKED TO THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO.2. THE DISALLOWANCE OF RS.58 ,19,981/- WAS MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C OF THE ACT ON PAYM ENT MADE TO LICENSORS OF VARIOUS TV CHANNELS. THE TRIBUNAL IN ASSESSEES OWN 4 CASE IN THE PRECEDING YEAR HAD HELD THAT THE ASSESS EE WAS LIABLE TO DEDUCT TAX AT SOURCE UNDER SECTION 194C OF THE ACT OUT OF SUCH PAYMENTS. THE HON'BLE JURISDICTIONAL PUNJAB & HARY ANA HIGH COURT HAS CONFIRMED THE ORDER OF THE TRIBUNAL AGAIN ST WHICH THE SLP FILED BY THE ASSESSEE BEFORE THE HON'BLE SUPREM E COURT IS PENDING. THOUGH THE ISSUE IS DECIDED AGAINST THE A SSESSEE I.E. THE LIABILITY OF THE ASSESSEE FOR DEDUCTION OF TAX UNDE R SECTION 194C OF THE ACT, THE PRESENT ISSUE BECOMES ACADEMIC IN NATU RE, IN VIEW OF THE RATIO LAID DOWN BY THE SPECIAL BENCH OF VISHAKH APATNAM IN ACIT VS. MERILYN SHIPPING & TRANSPORTS (SUPRA) WHEREIN I T HAS BEEN HELD THAT WHERE THE AMOUNT HAS BEEN PAID DURING THE YEAR UNDE R CONSIDERATION ITSELF, THERE IS NO MERIT IN DISALLOWING ANY PART O F THE EXPENDITURE UNDER SECTION 40(A)(IA) OF THE ACT. THE LEARNED A.R. FOR THE ASSESSEE FURTHER POINTED OUT THAT THE LICENSORS TO WHOM PAYMENTS WER E MADE HAVE ALSO PAID THE TAXES AND WHERE SUCH TAXES ARE PAID BY VAR IOUS LINCESORS, THE OBJECTIVE OF STATUTE IS FULFILLED AND THERE IS NO L IABILITY TO PAY THE TAXES BY THE PAYER. IN VIEW OF THE ABOVE SAID STAND, THI S GROUND OF APPEAL RAISED BY THE ASSESSEE BEING ACADEMIC IN NATURE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30 TH JULY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5