ITO (TDS) - I, Ludhiana V. M/s Vardhman Textiles Ltd., Ludhiana

ITA 979/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64063 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S NAGAR

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. 979/CHD/2012 (ASSESSMENT YEAR : 2010-11) THE INCOME TAX OFFICER(TDS)-I, VS. M/S VARDHMAN T EXTILES LTD., BANSAL BUILDING, CHANDIGARH ROAD, DANDI SWAMI, LUDHIANA LUDHIANA. PAN: AABCM4692E (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI J.S.NAGAR, DR DATE OF HEARING : 05.12.2012 DATE OF PRONOUNCEMENT : 07.12.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, LUDHIANA DA TED 04.07.2012 RELATING TO ASSESSMENT YEAR 2010-11 AGAINST THE ORD ER PASSED U/S 200A/201 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER: 1. THAT THE LD. CIT(APPEALS-II) HAS ERRED IN LAW & FACTS IN DELETING THE INTEREST CHARGED FOR LATE DEPOSIT OF T AX ON AMOUNT OF COMMISSION PAID TO CHAIRMAN & MANAGING DIRECTOR OF THE COMPANY FOR RS.4,62,767/-. 3. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF INTEREST CHARGED ON LATE DEPOSIT OF TAX AT SOURCE O UT OF COMMISSION PAYMENTS MADE BY THE ASSESSEE COMPANY. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD VIDE BOARD MEETING HELD ON 7.5.2010 QUANTIFIED THE AMOUNT OF C OMMISSION PAYABLE 2 TO THE CHAIRMAN AND MANAGING DIRECTOR, SHRI S.P.OSW AL. THE COMMISSION OF RS.5,88,88,375/- WAS DEBITED BY THE A SSESSEE COMPANY ON 31.3.2010, AS IT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE TDS OF RS.1,81,22,173/- DUE ON THE SAID PAYMENT OF COMMISSION WAS PAID ON 12.5.2010. THE ASSESSING OFFICER WAS OF TH E VIEW THAT THE ASSESSEE COMPANY SHOULD HAVE DEPOSITED TDS BY 7.4.2 010 AND CONSEQUENTLY LEVIED PENALTY UNDER SECTION 201(1A) O F THE ACT FOR THE PERIOD OF DELAY IN DEPOSITING THE TAX AT SOURCE AMO UNTING TO RS.4,84,958/-. THE SAID AMOUNT OF INTEREST WAS RED UCED TO RS.4,62,767/- BECAUSE OF CORRECTION STATEMENT FILED BY THE ASSESS EE. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE AND DEL ETED THE INTEREST CHARGED UNDER SECTION 201(1A) OF THE ACT. 5. THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMEN T WHICH WAS REFUSED IN VIEW OF THE ISSUE INVOLVED IN THE PRESEN T APPEAL. 6. THE LEARNED D.R. FOR THE REVENUE PUT FORWARD HIS CONTENTION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE CHARGEABILITY OF INTEREST UNDER SECTION 201(1A) OF THE ACT ON LATE D EPOSIT OF TDS ON THE COMMISSION PAID TO THE CHAIRMAN AND MANAGING DIRECT OR OF THE ASSESSEE COMPANY. THE AMOUNT OF COMMISSION PAYABLE TO THE S AID CHAIRMAN WAS APPROVED BY THE BOARD OF DIRECTORS VIDE ITS MEETING HELD ON 7.5.2010 AND THEREAFTER THE TDS WAS DEPOSITED ON 12.5.2010. THE ASSESSEE COMPANY HAVING FOLLOWED THE MERCANTILE SYSTEM OF AC COUNTING, THE ENTRY OF COMMISSION PAYABLE TO THE SAID CHAIRMAN AND MANA GING DIRECTOR WAS POSTED ON 31.3.2010. THE CIT (APPEALS) VIDE PARA 4 OBSERVED AS UNDER: 4. I HAVE CONSIDERED THE BASIS OF ADDITION MADE BY THE AO AND THE ARGUMENTS OF THE AUDIT REPORT ON THE ISSUE. IT IS SEEN THAT THE AMOUNT OF COMMISSION TO BE PAID HAS O NLY 3 BEEN CREDITED ON 31/3/2010 BUT THE SAME HAS BEEN AR RIVED AT/DETERMINED ON 07/5/2010 I.E. ON THE DATE OF RESO LUTION PASSED BY THE BOARD OF DIRECTORS APPROVING THE FINA NCIALS OF THE ASSESSEE COMPANY. FURTHER THE AMOUNT IN QUE STION HAS BEEN PAID AFTER 07/5/2010 ONLY AND THEREFORE TH E LIABILITY TO DEDUCT TAX ON SUCH ARISES ACCORDINGLY. THE MERE FACT THAT THE ENTRY OF COMMISSION PAYABLE HAS BEEN ON 31/3/2010 WOULD NOT MEAN THAT THE LIABILITY TO DEDU CT TAX AND DEPOSIT THE SAME ARISES ON THE SAME DATE ESPECI ALLY WHEN THE FACTS OF THE CASE MAKE IT AMPLY CLEAR THAT COMMISSION HAD BEEN DETERMINED ON THE BASIS OF PROF ITS FINALIZED IN BOARD MEETING DATED 07/5/2010. THE TA X HAD BEEN DEDUCTED AT SOURCE BY THE ASSESSEE COMPANY AND DEPOSITED THE SAME ON 31/5/2010. IN THE CIRCUMSTAN CES I DONT SEE ANY REASON FOR IMPOSITION OF INTEREST U/S 201(1)/201(1A). THE SAME IS DIRECTED TO BE DELETED . 8. IN VIEW OF THE PRESENT FACTS AND CIRCUMSTANCES O F THE CASE WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APPEALS) A ND UPHOLDING THE SAME, WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF DECEMBER, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 TH DECEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH