M/s Sampre Nutritions Ltd., Hyderabad V. ACIT, Hyderabad

ITA 924/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59332 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MYTHILI RANI
• Assessee Lawyers: K J D SRINIVAS
• Keywords: Depreciation; Additional evidence; Non-deduction of tax
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBE R. ITA NO.924/HYD/2010 (ASSESSMENT YEAR 2005- 06) M/S.SAMPRE NUTRITIONS LIMITED, SECUNDERABAD. (PAN - AADTS 0206 P ) V/S THE ASSTT. COMMISSIONER OF INCOME- TAX CIRCLE 3(1) HYDERABAD (APPELLANT) (RESPONDENT) AND ITA NO.950/HYD/2010 (ASSESSMENT YEAR 2005- 06) THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 3(1) HYDERABAD V/S M/S.SAMPRE NUTRITIONS LIMITED, SECUNDERABAD. (PAN - AADTS 0206 P ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.J.D.SRINIVAS REVENUE BY : SMT. MYTHILI RANI DATE OF HEARING 25.1.2012 DATE OF PRONOUNCEMENT 9.3.2012 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THESE ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2 005-06. THEY ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) T IRUPATI, DATED 24.3.2010. ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 2 ASSESSEES APPEAL: ITA NO.924/HYD/2010 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPE AL ARE AS UNDER- 1. ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE, THE COMMISSIONER OF INCOME-TAX(APPEALS) TIRUPATHI ERRED IN ALLOWING THE APPEAL ONLY IN PART. THE COMMISSIONER(APPEALS) OUGHT TO HAVE ALLOWED THE APPEAL IN ENTIRETY. 2. THE COMMISSIONER(APPEALS) ERRED IN SUSTAINING TH E DISALLOWANCE OF RS.40,71,650 AND IN CONFIRMING THE LEVY OF INTEREST UNDER SECTION 201(1A) OF THE ACT IN RES PECT OF ALLEGED NON-DEDUCTION OF TAX IN RESPECT OF PAYM ENTS MADE TO DIRECTORS REMUNERATION. 3. THE COMMISSIONER (APPEALS) ERRED IN NOT CONSIDER ING THE GROUNDS WITH RESPECT TO DISALLOWANCE OF EXPENDITURE RELATING TO ESI AND PF. . 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FO R THE ASSESSEE HAS NOT PRESSED THE ISSUES RELATING TO DIS ALLOWANCE OF DEPRECIATION, ALLEGEDLY COVERED BY GROUND NO.1, AND DISALLOWANCE OF ESI AND PF PAYMENTS UNDER S.40(B) OF THE ACT, COVER ED BY GROUND NO.3 ABOVE. THESE GROUNDS ARE ACCORDINGLY REJECTED AS NOT PRESSED. 4. THE ONLY OTHER GROUND SURVIVING FOR CONSIDERATI ON IN THIS APPEAL IS GROUND NO.2, WHICH RELATES TO ADDITION ON ACCOUNT OF INTEREST UNDER S.201(1A) OF THE INCOME-TAX ACT, 1961. 5. THE ABOVE GROUND BEFORE US IS NOT REQUIRED TO B E ADJUDICATED, AS THE ASSESSEE HAS NOT CONTESTED THIS ISSUE BEFORE THE CIT(A), AS OBSERVED BY CIT(A) AT PARA (2) OF HIS OR DER. THE ASSESSEE HAS NOT BROUGHT ANYTHING CONTRARY TO THE FINDING OF THE CIT(A) IN THIS BEHALF. HENCE, THIS GROUND IS DISMISSED. ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 3 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. REVENUES APPEAL: ITA NO.950/HYD/2010 7. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPE AL ARE AS UNDER- (1) THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON F ACTS AND LAW. (2) THE CIT(A) OUGHT TO HAVE UPHELD THE ACTION MADE ON ACTION OF VARIATION IN THE GROSS AMOUNT AS PER TDS CERTIFICAT ES AND THE INCOM E DECLARED. 8. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E COMPANY IS MANUFACTURING SUGAR CANDY AND CONFECTIONARIES FOR I TS OWN BUSINESS AS WELL AS ON JOB WORK BASIS FOR CERTAIN OTHER COMPANI ES. THE COMPANY RECEIVES PROCESSING CHARGES FOR THE CONTRACT MANUFA CTURE FROM OTHER COMPANIES, WHO DEDUCT TDS WHILE PAYING PROCESSING C HARGES TO THE ASSESSEE. THE ASSESSING OFFICER NOTICED THAT THE G ROSS RECEIPTS AS DISCERN FROM THE TDS CERTIFICATES FILED IS RS.2,78, 20,290 WHILE ONLY RS.1,46,74,513 WAS OFFERED AS INCOME AND HENCE THE ASSESSING OFFICER SOUGHT TO TAX THE DIFFERENCE OF RS.1,31,45,577. 9. DURING THE COURSE OF THE APPEAL PROCEEDINGS BEF ORE THE CIT(A), THE ASSESSEE MOVED A PETITION UNDER RULE 46 A FOR ALLOWING ADDITIONAL EVIDENCE ON THE ISSUE OF ADDITION ON ACC OUNT OF THE PROCESSING CHARGES. SUCH EVIDENCE FILED BY THE ASS ESSEE BEFORE THE CIT(A) INCLUDES- (A) TDS CERTIFICATES ISSUED BY THE DABUR INDIA LTD. FOR THE SALES MADE TO THEM. (B) LETTER ADDRESSED TO CTO MALKAJGIRI CIRCLE, HYDERABA D FOR SUBMISSIONS OF C FORMS ISSUED BY DABUR INDIA LTD. ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 4 (C) LEDGER ACCOUNT OF TDS RECEIVABLE AND CST SALES MADE TO VARIOUS BRANCHES OF DABUR INDIA LTD. (D) INVOICES IN RESPECT OF THE SALES MADE TO DABUR INDI A LTD. SINCE THE ASSESSEE COMPANY COULD NOT SUBMIT THE AB OVE INFORMATION DURING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSES SING OFFICER, THE LEARNED CIT(A) GAVE AN OPPORTUNITY TO THE ASSESSIN G OFFICER, AND CALLED FOR A REMAND REPORT. THE CIT(A), THEREAFTER, ADMITT ED THE ADDITIONAL EVIDENCE AND OBSERVED THAT THE BUYER HAD REFLECTED THE TRANSACTION AS SALES YET TREATED THE TDS AS RECEIVABLE WITHOUT EVE N MAKING WHIMPER WITH THE CLIENT, M/S. DABUR INDIA LTD, A REPUTED PU BLIC COMPANY. HE ALSO NOTED THAT THE AUDIT REPORT HAD NOT EVEN PAID A CURSORY LOOK TO THIS STARING ANOMALY WHILE AUDITING THE ACCOUNTS OF THE ASSESSEE. THE CIT(A) HOLDING THAT THE RECEIPTS WERE ACTUALLY SALE S, THOUGH WRONGLY REFLECTED AS PROCESSING CHARGES SIMPLY BY DEDUCTING TDS, DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION ON THIS AC COUNT. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRON GLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SU BMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION MADE BY THE ASSESSEE. 11. THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTE D THAT THOUGH THE CLIENT, DABUR INDIA LTD, EFFECTED TDS IN RESPECT OF THE RECEIPTS OF THE ASSESSEE IN QUESTION, AS IF THEY AR E PROCESSING CHARGES, THEY ARE IN FACT, EVEN AS DESCRIBED BY THE BUYER, D ABUR INDIA LTD., IN ITS RECORDS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED PETITION DATED 16.1.2012, SEEKING TO FILE FURTHER ADDITIONAL EVIDENCE, WHICH IS AS FOLLOWS- ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 5 (1) LETTER OF CONFIRMATION FORM M/S. DABUR INDIA LTD. (2) APGST ASSESSMENT ORDER FOR THE FINANCIAL YEAR 2004 -05 (3) CST ASSESSMENT ORDER FOR THE FINANCIAL YEAR 2004-0 5 IT IS STATED IN THE COVERING LETTER SEEKING ADMISSI ON OF THE ABOVE ADDITIONAL EVIDENCE AS FOLLOWS- 1. THE APPELLANT COMPANY HAS MADE A TURNOVER OF RS.13,49,12,513/- COMPRISING RS.11,92,11,687/- TOWARDS SALES, RS.1,46,74,513/- TOWARDS PROCESSING CHARGES AND RS.10,26,313/- TOWARDS MISC. INCOME AND THE SAME HAS BEEN REFLECTED IN THE PROFIT AND LOSS A/C. 2. OUT OF THE SALES TURNOVER OF RS.11,92,11,687/- T HE RESPONDENT COMPANY M/S. SAMPRE NUTRITIONS LIMITED HAS SOLD GOODS WORTH RS.1,41,26,780/- TO DABUR INDI A LIMITED. 3. IT IS SUBMITTED THAT THE ADDITION M ADE RS.1,31,45,577 BY THE ASSESSING OFFICER REPRESENTS THE SALES, IN RESP ECT OF WHICH NO TDS NEED TO BE MADE BY M/S. DABUR INDIA LIMITED. AS TDS HAS BEEN MADE INADVERTENTLY BY M/S . DABUR INDIA LTD ON THE SALES TURNOVER, THE ASSESSI NG OFFICER MISUNDERSTOOD THE TRANSACTION OF SALE TO BE THAT OF PROCESSING TRANSACTION. IN THE ABSENCE OF EVIDEN CE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ABOVE SAID AMOUNT IS PROCESSING CHARGES. 4. IT IS RESPECTFULLY SUBMITTED HAT THE ADDITIONAL EVIDENCE NOW FILED WILL CLEARLY EVIDENCE THE FACT THAT THE S AID AMOUNT OF RS.1,31,45,577/0 IS SALES AND NOT PROCESS ING CHARGES. IT WAS SUBMITTED THAT BEFORE THE LOWER AUTHORITIES , ASSESSEE HAD NOT PRODUCED THE SAID EVIDENCE, THOUGH HE HAD EXPLAINED THE ISSUE IN DETAIL. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THE ADDITION OF RS.1,31,45,577 WAS MADE, AS THE TDS HAD BEEN MAD E BY THE BUYER, DABUR INDIA LTD., INADVERTENTLY, AND CONSEQUENTLY, THE ASSESSING OFFICER MISUNDERSTOOD THE TRANSACTION OF SALE TO BE THAT OF PROCESSING TRANSACTION. IN THE CIRCUMSTANCES, IT IS SUBMITTED THAT THE ADDITION ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 6 MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND THE SAME HAS CORRECTLY BEEN DELETED BY THE CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IT IS IN THE ABSEN CE OF ANY EVIDENCE DIRECT EVIDENCE TO REFLECT THE CORRECT NATURE OF TH E TRANSACTION, THAT THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A BOVE SAID AMOUNT OF RS.1,31,45,577 IS PROCESSING CHARGES. THE CIT(A) H AS DELETED THE SAID ADDITION, CONSIDERING THE EVIDENCE FILED IN SUPPORT OF THE CONTENTION OF THE ASSESSEE THAT WHAT HAS BEEN RECEIVED IS NOTHING BUT ON ACCOUNT OF SALES, BUT NOT BY WAY OF PROCESSING CHARGES. AS THE SAME CONSTITUTED ADDITIONAL EVIDENCE NOT BEFORE THE ASSESSING OFFICE R DURING THE ASSESSMENT PROCEEDINGS, HAVING BEEN FILED FOR THE FIRST TIME BEFORE HIM, THE CIT(A) GAVE OPPORTUNITY TO THE ASSESSING O FFICER TO EXAMINE THE SAME AND SUBMIT HIS COMMENTS THEREON, AND IT IS ON CONSIDERATION OF THE REMAND REPORT OF THE ASSESSING OFFICER IN TH AT BEHALF, THAT THE CIT(A) ADMITTED THE ADDITIONAL EVIDENCE, AND ULTIMA TELY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. EVEN THE ADDITIONAL EVIDENCE, NOW SOUGHT TO BE FIELD BY THE ASSESSEE BEFORE US DU RING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THIS TRIBUNAL CLEARLY ESTABLISHES THE STAND OF THE ASSESSEE THAT THE AMOUNT OF ADDITION OF RS.1 ,31,45,577 MADE BY THE ASSESSING OFFICER REPRESENTS THE SALE PROCEE DS RECEIVED BY THE ASSESSEE FROM M/S. DABUR INDIA LTD., AND NOT PROCES SING CHARGES, THOUGH TDS HAS BEEN EFFECTED BY THAT COMPANY INADVE RTENTLY. IN THE CONFIRMATION LETTER DATED 21.3.2009 OF M/S. DABUR I NDIA LTD., WHICH IS ONE OF THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED B EFORE US, THE SAID COMPANY CONFIRMS THAT ALL THE PAYMENTS MADE ARE FO R SALE OF THE PRODUCT. IN THE LETTER DATED 10 TH JANUARY, 2012, THE SAID COMPANY FURNISHING DETAILS, GAVE CONFIRMATION OF THE PURCHA SES MADE BY IT FROM M/S. SAMPRE NUTRITIONS LIMITED DURING THE FINANCIAL YEAR 2004-05. THE ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 7 APGSST ASSESSMENT ORDER FOR THE FINANCIAL YEAR 2004 -05 AND CST ASSESSMENT ORDER FOR THE FINANCIAL YEAR 2004-05, W HICH ARE ALSO FILED BEFORE US BY WAY OF ADDITIONAL EVIDENCE, CORROBORAT E WITH THE OTHER EVIDENCE CONSIDERED BY THE CIT(A) AND CLEARLY ESTAB LISH THE STAND OF THE ASSESSEE THAT WHAT WAS RECEIVED BY THE ASSESSEE FROM M/S. DABUR INDIA LTD., WAS ON ACCOUNT OF SALES, AND NOT BY WAY OF PROCESSING CHARGES. IN THIS VIEW OF THE MATTER, SINCE THE ADD ITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE US FOR THE FIRST TIME, HAS A BEARING ON THE DETERMINATION OF THE POINT AT ISSUE, WE ARE INCLINE D TO ADMIT THE SAME. HOWEVER, AS THE ASSESSING OFFICER HAD NO OPPORTUNIT Y OF EXAMINING THE SAID EVIDENCE BEFORE ARRIVING AT A CONCLUSION ON TH E POINT AT ISSUE DURING THE ASSESSMENT PROCEEDINGS, WE DEEM IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSU E, AND SEND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WI TH A DIRECTION TO RE- DETERMINE THE ISSUE IN THE LIGHT OF THE TOTALITY OF THE EVIDENCES WITH REFERENCE TO DEDUCTION OF TAX AT SOURCE. IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS SEPARATELY ACCOUNTED FOR SALES AND PROCESSING CHARGES SEPARATELY IN THE PROFIT AND LOS S ACCOUNT, AND TAX HAS BEEN DEDUCTED AT SOURCE BY DABUR INDIA LTD. INA DVERTENTLY WITH REFERENCE TO PROCESSING CHARGES ALSO. HENCE, WE DI RECT THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF TOTALITY OF THE EVIDENCE AND DECIDE THE SAME IN ACCORDANCE WITH LAW , AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 13. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 14. TO SUM UP, ASSESSEES APPEAL, BEING ITA NO.924 /HYD/2010 IS DISMISSED; AND REVENUES APPEAL, BEING ITA NO950 /HYD2010 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.924 & 950/HYD/2010 M/S. SAMPRE NUJTRITIONS LTD., SECBAD. 8 ORDER PRONOUNCED IN THE COURT ON 9.3.2012 SD/- SD/- (CHANDRA POOJARI) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 9TH MARCH, 2012 COPY FORWARDED TO: 1. M/S.SAMPRE NUTRITIONS LIMITED, (SECUNDERABAD) C/O. SHRI A.V. RAGHU RAM, ADVOCATE, 610, 6TH FLOOR, BABUKHAN ESTAT E, BASHEERBAGH, HYDERABAD-1. 2. ASST COMMISSIONER OF INCOME - TAX , CIRCLE 3(1) HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) TIRUAPTI 4. COMMISSIONER OF INCOME-TAX, 3, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE , ITAT, HYDERABAD B.V.S.