The ACIT, 2(1), Bhopal v. M/s. Gendalal Hazarilal and Company, Sehore

ITA 16/IND/2013 | 2009-2010
Pronouncement Date: 02-07-2013 | Result: Dismissed

Appeal Details

RSA Number 1622714 RSA 2013
Assessee PAN AADFG3139M
Bench Indore
Appeal Number ITA 16/IND/2013
Duration Of Justice 5 month(s) 29 day(s)
Appellant The ACIT, 2(1), Bhopal
Respondent M/s. Gendalal Hazarilal and Company, Sehore
Appeal Type Income Tax Appeal
Pronouncement Date 02-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 02-07-2013
Assessment Year 2009-2010
Appeal Filed On 04-01-2013
Judgment Text
1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 16/IND/2013 A.Y.2009-10 ASSTT. COMMISSIONER OF INCOME TAX 2(1) BHOPAL :: APPELLANT VS M/S GENDALAL HAZARILAL & COMPANY SEHORE PAN AADFG 3139M :: RESPONDENT CO NO. 63/IND/2013 (ARISING OUT OF ITA NO. 16/IND/2013) M/S GENDALAL HAZARILAL & COMPANY SEHORE :: OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 2(1) BHOPAL :: RESPONDENT 2 DEPARTMENT BY SMT.MRIDULA BAJPAI ASSESSEE BY SHRI H.P. VERMA SHRI N.P. PATWA AND MISS SAKSHI VERMA DATE OF HEARING 02.07.2013 DATE OF PRONOUNCEMENT 02.07.2013 O R D E R PER JOGINDER SINGH JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 30.10.2012 PASSED BY THE LEARNED FIRST APPELLATE AU THORITY BHOPAL ON THE GROUND THAT THE CIT(A) WAS NOT JUSTI FIED IN DELETING THE ADDITION OF RS. 1 63 46 216/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194C OF THE INCOME TAX ACT 1961. 2. BEFORE US MRS. MRIDULA BAJPAI LEARNED CIT DR S TRONGLY DEFENDED THE ASSESSMENT ORDER BY CONTENDING THAT U/ S 194C OF THE ACT IT IS MANDATORY ON THE PART OF THE PERSON MAKING THE PAYMENT TO DEDUCT TDS ON SUCH PAYMENT AND SINCE IN THIS CASE THE ASSESSEE HAS TOTALLY FAILED TO DEDUCT ANY TAX O N THE PAYMENTS MADE BY IT TOWARDS SEALING CHARGES TO VINDHYACHAL D ISTILLERIES PRIVATE LIMITED THE CIT(A) WAS NOT JUSTIFIED IN RE VERSING THE ORDER OF THE LEARNED ASSESSING OFFICER. ON THE OTHER HAN D SHRI H.P. 3 VERMA LEARNED COUNSEL FOR THE ASSESSEE WHILE SUPPO RTING THE IMPUGNED ORDER SUBMITTED THAT AS PER SECTION 194C T HERE SHOULD BE A CONTRACT BETWEEN THE CONTRACTOR AND THE ASSESS EE WHICH IS ABSENT IN THE PRESENT CASE AND AS SUCH THE ASSESSEE IS NOT OBLIGED TO DEDUCTION TDS ON THE PAYMENTS MADE BY IT TO VINDHYACHAL DISTILLERIES PVT. LTD. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE IN BRIEF ARE THE ASSESSING OFFICER FOUND THAT IN THE P&L ACCOUNT THE ASSESSEE DEBITED AN AMOUNT OF RS. 1 63 46 216/- ON ACCOUNT O F SEALING CHARGES. THE ASSESSING OFFICER THEREFORE CALLED UPON THE ASSESSEE TO FURNISH PARTYWISE DETAILS OF THE SAID E XPENSES ALONGWITH DETAILS OF TDS. IN RESPONSE THE ASSESSE E FURNISHED EXTRACT OF THE SAID ACCOUNT. THE ASSESSING OFFICER NOTED THAT ALL THE PAYMENTS WERE MADE TO ONE PARTY - M/S VINDHYACH AL DISTILLERIES PRIVATE LIMITED AND NO TDS WAS MADE TH EREAGAINST. THE ASSESSING OFFICER THEREFORE DISALLOWED THE PA YMENT OF RS. 1 63 46 216/- U/S 40(A)(IA) OF THE ACT ON ACCOUNT O F NON- DEDUCTION OF TDS AND ADDED THE SAME TO THE TOTAL IN COME OF THE ASSESSEE. 4 4. FELT AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFICER THE ASSESSEE APPROACHED THE LEARNED CIT(A) BY WAY OF FI LING AN APPEAL. THE LEARNED CIT(A) AFTER CONSIDERING THE F ACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS MADE BY THE ASSESSE E OBSERVED THAT THE ASSESSEE HAVING LICENCE FOR RETAIL SALE OF COUNTRY LIQUOR PURCHASES BOTTLES OF COUNTRY LIQUOR FROM THE DISTIL LERIES WHICH ARE ENGAGED IN THE MANUFACTURE AND SUPPLY OF COUNTRY LI QUOR IN SEALED BOTTLES IN PURSUANCE WITH THE LICENCE ISSUED BY THE STATE GOVT. HE ALSO NOTED THAT THE EXCISE DEPTT. OF THE S TATE GOVERNMENT ISSUES LICENCE TO THE DISTILLER BY ISSUI NG TENDER NOTICE FOR MANUFACTURE AND SUPPLY OF COUNTRY LIQUOR IN SEA LED BOTTLES. THE DISTILLER FILLED THE COUNTRY LIQUOR IN BOTTLES OR SOME OTHER PACKING MODE AS SPECIFIED BY THE EXCISE DEPTT. AND SEALING OF THE BOTTLES IS ALSO CARRIED OUT AS PER SPECIFICATIONS A ND LABELS ARE AFFIXED ON EACH BOTTLE AND THEREAFTER ON DEMAND OF RETAIL CONTRACTORS UPON PROOF OF PAYMENT INTO TREASURY OF THE ISSUE PRICE RECOVERABLE FROM IT IT ISSUES THE BOTTLES OF THE COUNTRY LIQUOR TO THE RETAIL CONTRACTOR. THE RETAIL CONTRA CTOR MAKES THE PAYMENTS TO THE GOVERNMENT FOR LIQUOR AND SEALING C HARGES TO THE DISTILLER AS PER DIRECTIONS OF THE EXCISE DEPARTMEN T FOR BOTTLING AND SELLING OF COUNTRY LIQUOR. IN THIS WAY FOR RET AIL CONTRACTOR THE 5 TOTAL PAYMENT MADE TO THE STATE GOVERNMENT EXCISE DEPARTMENT AS WELL AS TO THE DISTILLER CONSTITUTES THE PURCHASE PRICE OF THE PRODUCT I.E. COUNTRY LIQUOR AND THERE IS NO WORK CONTRACT INVOLVED IN THIS TRANSACTION. WE FIND THAT THE HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF MAA SHA RDA WINE TRADERS (2009) 15 STR 3 (MP) HAS CLEARLY HELD THAT THE ENTIRE PROCESS OF BOTTLING IS A PART OF THE PROCESS OF MAN UFACTURING BY THE DISTILLER WHICH IS PERFORMED UNDER THE SUPERVIS ION AND CONTROL OF EXCISE AUTHORITY AND THEREFORE BY NO STRETCH OF IMAGINATION SERVICE TAX CAN BE LEVIED ON THE ACTIVI TIES OF BOTTLING OF LIQUOR. THE LEARNED CIT(A) ALSO OBSERVED FROM FO RM NO. 26AS THAT THE DISTILLER VINDHYACHAL DISTILLERIES PVT. LT D. HAS ALSO STARTED COLLECTING TAX AT SOURCE U/S 206C ON THE SE ALING CHARGES RECEIVED FROM THE ASSESSEE. HE ALSO FOUND THAT M/S VINDHYACHAL DISTILLERIES PRIVATE LIMITED HAS ALSO SHOWN THE PRO CEEDS RECEIVED AS SEALING CHARGES AS PART OF SALES OF COUNTRY LIQU OR. THE LEARNED CIT(A) THEREFORE HELD THAT IN THE CASE OF DISTILL ER PACKING AND BOTTLING OF LIQUOR ARE THE PART OF THE MANUFACTURIN G PROCESS AND THE TOTAL PAYMENT RECEIVED IS FOR THE SALE OF COUNT RY LIQUOR PRODUCED AND THEREFORE IT CANNOT BE SAID TO BE A WORK CONTRACT WHICH IS LIABLE FOR DEDUCTION OF TDS U/S 194C OF TH E ACT. IN THE 6 PRESENT CASE SEALING CHARGES HAVE ALREADY BEEN PAI D BEFORE THE END OF THE PREVIOUS YEAR AND NO AMOUNT WAS PAYABLE AS ON 31.3.2009. AS SUCH THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON THE SEALING CHARGES OF RS. 1 63 46 216/- PAID BY THE ASSESSEE TO M/S VINDHYACHAL DISTILLERIES PRIVATE LIMITED. W E THEREFORE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND CO NFIRM THE SAME. 5. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION. HOW EVER DURING THE COURSE OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THE SAME. THE CROSS OBJECTION IS THEREFO RE DISMISSED AS SUCH. IN VIEW OF OUR ABOVE DISCUSSION THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESS EE STAND DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 2.7.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 5.7.2013 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE DN/-N 7