ACIT, Jaipur V. M/S RUPAYAN, Jaipur

ITA 89/JPR/2010

• Counselvise Citation: 8923114 RSA 2010
• Duration Of Justice: 4 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

ITA NO. 89/JP/2010 ACIT, CIRCLE- 4 VS. M/S. RUPAYAN, JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 89/JP/2010 ASSESSMENT YEAR: 2006-07 PAN : AADFR 2145 N THE ACIT VS. M/S. RUPAYAN CIRCLE- 4 68, VIJAYWADI, PATH NO.7 JAIPUR SIKAR ROAD,JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE (A.D. ON RECORD) DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 02-09-2014 DATE OF PRONOUNCEMENT: 31-10-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT- II, JAIPUR, DATED 18-11-2009 WHEREIN THE REVENUE H AS RAISED FOLLOWING GROUNDS IN ITS APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE ADDITION OF RS. 2,52,475/- MADE BY THE AO U/S 36(1)(III) ON ACCOUNT OF DISALLOWANCE O F INTERESTED RELATED TO INTEREST FREE ADVANCES GIVEN TO SISTER C ONCERN M/S. RUPAYAN CRAFTS OUT OF INTEREST BEARING FUNDS. ITA NO. 89/JP/2010 ACIT, CIRCLE- 4 VS. M/S. RUPAYAN, JAIPUR 2 (II) DELETING THE ADDITION OF RS. 12,81,823/- MADE BY THE AO U/S 40(A)(IA) ON ACCOUNT OF DISALLOWANCE OF NON- DEDUCTION OF TDS ON FREIGHT PAID TO RAJSICO. (III) IN HOLDING THAT THERE WAS NO DEFAULT U/S 40(A )(IA) SINCE THE FREIGHT HAS ALREADY BEEN PAID AND NO AMOU NT WAS PAYABLE AND THEREFORE, SECTION 40(A)(IA) WAS NOT AP PLICABLE. 2.1 NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPIT E OF SEVERAL EARLIER NOTICES AND THE SERVICE OF NOTICE OF THIS HEARING. CONSEQUENTLY WE ARE LEFT WITH NO ALTERNATIVE BUT TO DECIDE THE APPEAL ON MER ITS, EX PARTE QUA THE ASSESSE, AFTER HEARING LD. DR AND AFTER PERUSAL OF THE MATERIALS AVAILABLE ON RECORD. 3.1 BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS EN GAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF READYMADE GARMENTS, MAD E UPS, HANDICRAFTS ETC. THE AO FOLLOWING HIS EARLIER ORDER FOR THE ASS ESSMENT YEAR 2005-06 DISALLOWED THE AMOUNT OF RS. 2,52,475/- AS INTEREST PAID TO RELATED CONCERNS IN VIOLATION OF SECTION 40A(2)(B) OF THE ACT. 3.2 APROPOS DISALLOWANCE U/S 40A(IA), THE AO DISALL OWED THE SAME BY FOLLOWING OBSERVATIONS. THE ASSESSEE PAID FREIGHT OF RS. 12,81,823/- TO R SICO BUT DID NOT MAKE ANY TDS. AS PER SECTION 194C OF THE I.T. A CT, 1961, THE ASSESSEE WAS TO MAKE TDS, WHICH WAS NOT DONE THE AS SESSEE HAS NOT OBTAINED NO./LOWER DEDUCTION CERTIFICATE FROM RSICO ON THE BELIEF THAT IT IS A EXEMPTED ORGANIZATION. SINCE IT IS NOT AN EXEMPTED, PAYMENT MADE TO THIS ORGANIZATION WITHOUT DEDUCTION OF TDS IS LIABLE ITA NO. 89/JP/2010 ACIT, CIRCLE- 4 VS. M/S. RUPAYAN, JAIPUR 3 TO BE DISALLOWED U/S 40(A)(IA). HENCE, THE SAME IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3.3 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHERE THE ADDITION IN RESPECT OF INTEREST TO RELATE D CONCERNS WAS DELETED BY FOLLOWING OBSERVATIONS. I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SHRI MEHTA AND SHRI MITTAL QUITE CAREFULLY. THE ISSUE IS FULLY COVERED IN THE APPELLATE ORDER PASSED IN THIS CASE FOR ASSESSMENT YEAR 2004-05 DATED 7-01-2008 AND THE SAM E WAS ALSO FOLLOWED IN ASSESSMENT YEAR 2005-06 VIDE APPEL LATE ORDER DATED 2-06-2008. IT IS SEEN THAT IN THE PRESENT YEA R THERE ARE NO FRESH ADVANCE AND CONSIDERING RECENT SUPREME COURT JUDGEMENT IN THE CASE OF MUJAL SALES CORPN. VS. CIT , 298 ITR 298 AND IN THE CASE OF S.A. BUILDERS VS. CIT, 288 I TR 1, IN MY CONSIDERED VIEW THE ASSESSING OFFICER WAS NOT JUSTI FIED IN DISALLOWING THE INTEREST CLAIM TO THE EXTENT OF RS. 2,52,475/- WHICH IS HEREBY DELETED BY ALLOWING RELEVANT GROUND OF APPEAL. 3.4 APROPOS SECOND ISSUE I.E. SECTION 40A(A) OF THE ACT WHEREIN THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT THE FREIG HT AMOUNT WAS ALREADY PAID AND NOTHING WAS OUTSTANDING, THEREFORE, NOTHIN G WAS LIABLE TO BE DISALLOWED U/S 40(A)(IA). BY FOLLOWING OBSERVATION S. I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SHRI MITTAL QUITE CAREFULLY. I HAVE ALSO GONE THROU GH THE COPY OF INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH ORDER IN THE CASE OF JAIPUR VIDHYUT VITARAN NIGAM LTD. VS. DCIT IN ITA N O. 132/JP/2009 FOR ASSESSMENT YEAR 2006-07 AND COPY OF ACCOUNT WIT H RAJASTHAN SMALL INDUSTRIES CORPN. LTD. FROM WHICH IT IS CLEAR THAT ENTIRE AMOUNT OF FREIGHT WAS PAID IN THE FINANCIAL YEAR ITSELF RA THER BY WAY OF ADVANCE PAYMENT AND SINCE, ISSUE IS SQUARELY COVERE D IN FAVOUR OF ITA NO. 89/JP/2010 ACIT, CIRCLE- 4 VS. M/S. RUPAYAN, JAIPUR 4 APPELLANT THROUGH AFORESAID ITAT JAIPUR BENCH DECIS ION THEREFORE, FOLLOWING THE SAME THE AO IS HEREBY DIRECTED TO DEL ETE THE SAID DISALLOWANCE OF RS. 12,81,823/-. 3.5 AGGRIEVED REVENUE IS IN APPEAL BEFORE US. 3.6 APROPOS FIRST ISSUE, THE LD. DR CONTENDS THAT T HE DISALLOWANCE OF INTEREST TO THE SISTER CONCERNS IN CONTRAVENTION OF SECTION 40A(2)(B) OF THE ACT HAS BEEN CHALLENGED BEFORE ITAT IN EARLIER YEAR S. IN THE ABSENCE OF THE ASSESSEE, THERE IS NO INFORMATION ABOUT THE OUTCOME THEREOF. 3.7 APROPOS SECOND ISSUE, THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS RELIED ON THE ITAT JUDEMENT IN THE CASE OF JAIPUR VIDHYUT VITARAN NIGAM LTD. VS. DCIT (SUPRA). CONSEQUENTLY, THE PROPOSITIO N THAT TDS ON THE OUTSTANDING FREIGHT PAYMENT CAN BE ONLY BE DISALLOW ED STANDS REVERSED BY THE HON'BLE CALCUTTA HIGH COURT. THE LD. CIT(A) HA S DELETED THIS ADDITION ON THIS TECHNICAL POINT AND NOT ON MERITS. THEREFOR E, THE ORDER NEEDS TO BE SET ASIDE. 3.8 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LD. D R. APROPOS FIRST ISSUE, THE OUTCOME OF THE ISSUE IN EARLIER ASSESSMENT YEARS 20 04-05 AND 2005-06 IS NOT PLACED ON RECORD AND THE ASSESSEE IS NOT PRESENT, I N THESE CIRCUMSTANCES AND FACTS OF THE CASE, WE SET ASIDE THE ISSUE BACK TO T HE FILE OF THE AO TO THE DECIDE THE SAME AFRESH AFTER VERIFYING THE ITAT JUD GMENT IN EARLIER YEARS. ITA NO. 89/JP/2010 ACIT, CIRCLE- 4 VS. M/S. RUPAYAN, JAIPUR 5 SIMILARLY, SECOND ISSUE DECIDED BY ITAT JAIPUR BENC H IN THE CASE OF JAIPUR VIDHYUT VITARAN NIGAM LTD. VS. DCIT (SUPRA) AND SPE CIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT, (2012) 20 TAXMAN 474 (VISAKHAPATNAM BENCH) HAS BEEN REVERSED. THUS I N VIEW THEREOF, WE ARE INCLINED TO SET ASIDE BOTH THE ISSUES BACK TO THE F ILE OF THE AO TO DECIDE THE SAME AFRESH BY PROVIDING REASONABLY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 3 1-10-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 31 ST OCT. 2014 *MISHRA COPY FORWARDED TO:- 1.THE ACIT, CIRCLE- 4, JAIPUR 2. M/S. RUPAYAN, JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 89/JP/2010) AR ITAT, JAIPUR