Indian Dairy Machinery Co.Ltd.,, Anand v. The Income tax Officer-TDS,, Anand

ITA 1037/AHD/2007 | 2000-2001
Pronouncement Date: 23-04-2010 | Result: Allowed

Appeal Details

RSA Number 103720514 RSA 2007
Assessee PAN AAACI4631E
Bench Ahmedabad
Appeal Number ITA 1037/AHD/2007
Duration Of Justice 3 year(s) 1 month(s) 15 day(s)
Appellant Indian Dairy Machinery Co.Ltd.,, Anand
Respondent The Income tax Officer-TDS,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 23-04-2010
Date Of Final Hearing 01-04-2010
Next Hearing Date 01-04-2010
Assessment Year 2000-2001
Appeal Filed On 09-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL VICE-PRESIDENT(A Z) & HONBLE SHRI T.K. SHARMA J.M.) I.T.A. NOS. 1037 & 1038/AHD./2007 ASSESSMENT YEAR : 2000-2001 & 2001-2002 INDIAN DAIRY MACHINERY CO. LIMITED -VS.- INCOME TAX OFFICER (TDS) ANAND ANAND (PAN : AAACI 4631 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY R. SHA H RESPONDENT BY : SHRI C.K. MISHRA SR . D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINS T THE COMMON ORDER DATED 21.12.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV BARODA FOR THE FINANCIAL YEARS 1999-2000 AND 2000-01 RELEVANT TO THE ASSESSMENT YEARS 2000-0 1 AND 2001-02 RESPECTIVELY. 2. BOTH THESE APPEALS WERE HEARD ON THE SAME DATE ARGUED BY LD. COMMON REPRESENTATIVES THEREFORE THESE ARE DECIDED BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 3. VARIOUS COMMON GROUNDS RAISED BY THE ASSESSEE IN ITS APPEALS FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 ARE AS UNDER :- (1) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) -IV BARODA (HEREINAFTER REFERRED TO AS CIT(A.) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF PASSING THE ORDER U/S. 201 OF THE ACT BEYOND THE REASONABLE TIME AND NOT ACCEPTING APPELLANTS C ONTENTION OF THE ORDER BEING TIME BARRED AND HENCE BAD IN LAW. (2) THE LD. CIT(A.) HAS ERRED IN NOT ACCEPTING APPE LLANTS CONTENTION THAT THE LD. A.O. OUGHT TO HAVE PASSED THE ORDER U/ S. 201 R.W.S. 192 OF THE ACT AS THERE WAS NO DEFAULT U/S. 192 OF THE ACT AND PROVISIONS OF SECTION 201 OF THE ACT COULD NOT BE APPLIED. (3) THE LD. CIT(A.) HAS ERRED IN NOT ACCEPTING APPE LLANTS CONTENTION THAT THE LD. A.O. HAS ERRED IN APPLYING THE PROVISI ONS OF ERSTWHILE RULE 3(E) OF THE INCOME TAX RULES 1962 (THE RULES) IN T HE INSTANT CASE SINCE IT WAS NOT A CASE OF FREE EDUCATION. 2 ITA NO. 1037 & 1038/AHD /2007 (4) THE LD. CIT(A.) HAS ERRED IN NOT ACCEPTING APPE LLANTS CONTENTION THAT THE LD. A.O. HAS FAILED TO APPRECIATE THAT THE APPELLANT HAD DEDUCTED TAX U/S. 192 OF THE ACT ON BONAFIDE ESTIMATE OF THE SALARY OF THE EMPLOYEES AND THEREFORE IF AT ALL THERE WAS ANY S HORTFALL ON ACCOUNT OF DIFFERENT INTERPRETATION THEN TAX SHOULD NOT BE RE COVERED FROM THE APPELLANT. (5) THE LD. CIT(A.) HAS ERRED IN NOT GIVING ANY FIN DING WITH REGARD TO THE LEVY OF INTEREST U/S. 201(1A) OF THE ACT. 4. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY ENGAGED IN THE BUSINESS OF FABRICATION AND MANUFACTURING OF EQUIPMENTS USED IN DIARY PHARMACEUTICALS BEVERAGES AND OTHER INDUSTRIES AND ALSO EXECUTES TURNKEY PROJECTS. DURI NG BOTH THE YEAR UNDER APPEAL THE COMPANY HAD GIVEN CONTRIBUTION TO ANANDALAYA EDUCATION SOCI ETY (HEREINAFTER REFERRED TO AS ANANDALAYA) TOWARDS THE DEFICIT INCURRED BY THE S CHOOLS. THE CONTRIBUTION GIVEN BY THE COMPANY WAS COMPUTED ON THE BASIS OF NUMBER OF STUD ENTS OF THE EMPLOYEES OF THE COMPANY. ANANDALAYA SCHOOL IS RUN BY ANANDALAYA EDUCATION SO CIETY WHICH IS REGISTERED AS CHARITABLE INSTITUTION AND APPROVED UNDER SECTION 12A OF THE I NCOME TAX ACT 1961. THE SCHOOL IS SITUATED IN ANAND AND IS PROVIDING EDUCATION AND IS CONSIDER ED TO BE A RENOWNED EDUCATIONAL INSTITUTION IN ANAND IDMC LTD. ALONGWITH OTHER COOPERATIVE INS TITUTIONS SITUATED AT ANAND CONTRIBUTES TO ANANDALAYA. IDMC MAKES CONTRIBUTION TO ANANDALAYA T OWARDS THE SPONSORSHIP OF EDUCATION OF CHILDREN OF ITS EMPLOYEES. THE EMPLOYEES OF IDMC WH OSE CHILDREN ARE STUDYING IN ANANDALAYA SCHOOL ARE PAYING THE FEES AT SUBSIDIZED RATES AS O FFERED BY ANANDALAYA TO ITS SPONSORING INSTITUTIONS. THE RECURRING DEFICIT OF ANANDALAYA I S CONTRIBUTED BY THE SPONSORING INSTITUTIONS BASED ON THE NUMBER OF STUDENTS SENT TO ANANDALAYA FROM THESE INSTITUTIONS. DURING THE YEARS UNDER REFERENCE COMPANY HAD MADE A CONTRIBUTION TO ANANDALAYA SCHOOL FOR MEETING THE EDUCATIONAL EXPENSES OF THE CHILDREN OF THE EMPLOYE ES OF THE ASSESSEE AS UNDER :- F.YEAR OF DEFICIT NO. OF STUDENT TOTAL DEFICIT CONT RIBUTED CONTRIBUTION PER STUDENT PER MONTH 1999-2000 13 139698 896 2000-2001 19 197087 864 3 ITA NO. 1037 & 1038/AHD /2007 5. AT THE TIME OF HEARING BEFORE US SHRI SANJAY R. SHAH APPEARED ON BEHALF OF ASSESSEE AND CONTENDED THAT INCOME TAX OFFICER (TDS) ANAND PASS ED THE ORDER FOR THE ASSESSMENT YEAR 2000-01 UNDER SECTION 201(1) AND 201(1A) READ WITH SECTION 192 OF THE INCOME TAX ACT 1961 ON 29.12.2005 HOLDING THAT THE CONTRIBUTION OF RS. 1 39 698/- MADE BY THE ASSESSEE (IDMC) TO ANANDALAYA SCHOOL IS PERQUISITE IN THE HANDS OF THE EMPLOYEES. THE A.O. ACCORDINGLY HELD THAT IDMC TO BE AN ASSESSEE IN DEFAULT AND WORKED OUT TH E TAX OF RS.37 611/- AND INTEREST THEREON UNDER SECTION 201(1A) AMOUNTING TO RS.31 005/- AS P AYABLE FOR CONTRAVENTION OF PROVISIONS OF SECTION 192 READ WITH SECTION 201(1) AND 201(1A) OF THE INCOME TAX ACT 1961. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER W AS PASSED BY THE A.O. (TDS) ANAND ON 29.12.2005 IN RESPECT OF SALARY PAID DURING THE FIN ANCIAL YEAR 1999-2000 I.E. ALMOST AFTER ABOUT FIVE YEARS AND NINE MONTHS FROM THE END OF THE ASSE SSMENT YEARS. THEREFORE NOT ONLY IT WOULD BE DIFFICULT TO RECOVER THE TAX SOUGHT TO BE COLLECTED FROM ALL THE CONCERNED EMPLOYEES BUT IN SOME CASES IT MAY EVEN BE IMPOSSIBLE TO COLLECT THE TAX FROM THE CONCERNED EMPLOYEES OF IDMC I.E. IF THE EMPLOYEE HAS DIED OR HAS LEFT THE SERVICES FOR GOOD AND THE ASSESSEE DOES NOT HAVE ANY INFORMATION ABOUT SUCH EMPLOYEES. THE ORDER PASSED BY A.O. UNDER SECTION 201(1) AND 201(1A) READ WITH SECTION 192 OF THE INCOME TAX ACT 1961 O N 29.12.2005 IS BARRED BY LIMITATION AS HELD BY THE DECISION OF ITAT SPECIAL BENCH MUMBAI IN T HE CASE OF MAHINDRA & MAHINDRA LTD. VS.- DCIT (2009) 313 ITR (AT) 363 (MUM.). THEREFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE QUASHED THE ORDER OF ITO (TDS) UNDER SECTION 201(1) AND 201(1A) READ WITH SECTION 192 OF THE INCOME TAX ACT 1961 O N 29.12.2005 FOR THE ASSESSMENT YEARS UNDER APPEALS. 6. SHRI C.K. MISHRA SR. D.R. APPEARING ON BEHALF O F REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS OF THE LD. COUNSEL OF THE ASS ESSEE. 7. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. AD MITTEDLY ITO (TDS) ANAND ON 29.12.2005 IN RESPECT OF SALARY PAID DURING THE FINANCIAL YEAR 1999-2000 AND 2000-01 I.E. ALMOST AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS . ITAT SPECIAL BENCH MUMBAI IN THE CASE OF MAHINDRA & MAHINDRA LTD. (SUPRA) HELD THAT NO L AWFUL ORDER CAN BE PASSED AGAINST THE ORDER EITHER UNDER SECTION 201(1) OR 201(1A) OF THE INCOM E TAX ACT AFTER FOUR YEARS 4 ITA NO. 1037 & 1038/AHD /2007 FROM THE END OF RELEVANT FINANCIAL YEAR. FOLLOWING THE SAID DECISION OF THE ITAT SPECIAL BENCH MUMBAI IN THE CASE OF MAHINDRA & MAHINDRA LTD. (SUP RA) WE QUASH THE ORDER PASSED BY THE ASSESSING OFFICER ON 29.12.2005 UNDER SECTION 201(1 ) AND 201(1A) READ WITH SECTION 192 OF THE INCOME TAX ACT 1961 FOR THE FINANCIAL YEAR 1999-20 00(A.Y. 2000-01). RESULTANTLY THE APPEAL OF ASSESSEE FOR A.Y. 2000-01 IS ALLOWED. 8. NOW LET US TAKE UP THE APPEAL OF THE ASSESSEE FO R A.Y. 2001-02. THE COUNSEL OF THE ASSESSEE CONTENDED BY VIRTUE OF PROVISO TO RULE 3(5 ) OF I.T. RULES 1962 THERE IS NO PERQUISITE VALUE BECAUSE COST OF EDUCATION OR VALUE OF BENEFIT PER CHILD WORKS OUT TO RS.864/- (AS MENTIONED) IN PARAGRAPH 4 (SUPRA). SINCE THIS AMOUN T IS LESS THAN RS.1 000/- FOLLOWING THE DECISION DT.13-10-2006 IN THE CASE OF I.T.O. TDS A NAND VS. INSTITUTE OF RURAL MANAGEMENT ANAND OF ITAT D BENCH AHMEDABAD THE DEMAND RAISED BY THE A.O. BE CANCELLED. 9. SHRI C.K. MISHRA D.R. APPEARED FOR THE REVENUE OBJECTED THE SAME ON THE GROUND THAT RULES ON WHICH LEARNED COUNSEL OF THE ASSESSEE PLAC ED RELIANCE IS SUBSTITUTED BY IT(TWENTY- SECOND AMENDMENT) RULES 2001 W.E.F. 1-4-2001. THER EFORE IT IS APPLICABLE FOR THE F.Y. 2001- 02 RELEVANT TO THE ASSESSMENT YEAR 2002-03. THE ASS ESSMENT YEAR OF THE ASSESSEE IS A.Y. 2001- 02 AND THEREFORE THE BENEFIT OF PROVISO IS NOT AVAI LABLE TO THE ASSESSEE. 10. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ITAT D-BENCH AHMEDABAD IN THE CASE OF I TO ANAND VS. INSTITUTE OF RURAL MANAGEMENT DELIVERED THE JUDGEMENT ON 13-10-2006. T HE LD. C.I.T.(A) PASSED THE IMPUGNED ORDER ON21-12-2006. HOWEVER SAID DECISION WAS NOT PRODUCED BEFORE THE LD. C.I.T.(A). WE THEREFORE SET ASIDE THE ORDER OF LD. CIT (A) FOR T HE ASSESSMENT YEAR 2001-02 WITH THE DIRECTION THAT HE WILL EXAMINE THE RELEVANT RULES THE JUDGEM ENT OF ITAT D-BENCH IN THE CASE OF ITO ANAND VS. INSTITUTE OF RURAL MANAGEMENT (SUPRA) AND RE-WORK OUT THE AMOUNT OF SHORT DEDUCTION U/S. 201 R.W.S. 201(1A) OF THE ACT AFRESH AFTER GIV ING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT THE APPEAL FOR THE ASSESSMENT YE AR 2000-01 IS ALLOWED AND FOR THE ASSESSMENT YEAR 2001-02 IT IS TREATED AS ALLOWED FO R THE STATISTICAL PURPOSE. 5 ITA NO. 1037 & 1038/AHD /2007 THE ORDER WAS PRONOUNCED IN THE COURT ON 23.04.2010 . SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 23/ 04 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.