Shri Gautam Sarkar, Kolkata v. DCIT, Circle - 33, Kolkata, Kolkata

ITA 1972/KOL/2010 | 2007-2008
Pronouncement Date: 29-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 197223514 RSA 2010
Assessee PAN AUXPS0871L
Bench Kolkata
Appeal Number ITA 1972/KOL/2010
Duration Of Justice 1 year(s) 1 month(s) 2 day(s)
Appellant Shri Gautam Sarkar, Kolkata
Respondent DCIT, Circle - 33, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 29-11-2011
Assessment Year 2007-2008
Appeal Filed On 27-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . ! '# '# '# '# /AND ' $# ! ) [BEFORE SHRI S. V. MEHROTRA AM & SRI MAHAVIR SINGH JM] #% #% #% #% / I.T.A NO. 1972/KOL/2010 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2007-08 SRI GAUTAM SARKAR VS. DEPUTY COMMISSIONER OF I NCOME-TAX (PAN:AUXPS 0871 L) CIRCLE-33 KOLKATA. (+ /APPELLANT ) (-.+ / RESPONDENT ) DATE OF HEARING: 24.11.2011 DATE OF PRONOUNCEMENT: 29.11.2011 FOR THE APPELLANT: S/SHRI S. BANDYOPADHYAY & A. K. BANERJEE FOR THE RESPONDENT: SHRI S. K. ROY / / ORDER PER MAHAVIR SINGH JM ( ' $# ' $# ' $# ' $# ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XX KOLKATA IN APPEAL NO- 320/CIT(A)-XX/CIRCLE-33/2009-10/KOL DATED 30.09.201 0. ASSESSMENT WAS FRAMED BY DCIT CIRCLE-33 KOLKATA U/S.143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DA TED 15.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.2 92 534/- ON ACCOUNT OF BOGUS PURCH ASES. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 1 AND 2: 1. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE ADDITION OF RS.2 92 534/- IN AGGREGATE (RS.2 20 809/- + RS.2 425 + RS.69 300) WITHOUT TAKING INTO CONSIDERATION OF THE EVIDENCE AND ARGUMENTS ADDUCED TO HIM. 2. FOR THAT HAVING REGARD TO THE FACT THAT THE LD. A.O. PASSED THE ASSESSMENT ORDER ON THE BASIS OF REPORT OBTAINED FROM THE SUPPLIER WITH OUT ALLOWING ANY OPPORTUNITY TO CROSS EXAMINE THE SUPPLIER FOR SALE OF GOODS AMOUNT ING TO RS.2 20 809/- AND ALSO SALE OF RS.69 300 APPEARED IN THE BOOKS OF THE SAID SUPP LIER WHICH AMOUNTED TO A CLEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE THE LD. CIT(A) ERRED IN LAW IN CONFIRMING THE ADDITION OF RS.2 92 534 RELYING ON THE BASIS OF THE FINDINGS MADE BY THE LD. A.O. AND WITHOUT PAYING HEED TO THE CITATION RELIED UPON BY THE APPELLANT. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINES S OF CIVIL CONSTRUCTION AND DURING THE RELEVANT YEAR IT HAS DISCLOSED TOTAL PURCHASE OF RS.14 04 2 51/- THROUGH M/S. NEW DEY PAINTS. DURING 2 ITA 1972/K/2010 SRI GAUTAM SARKAR. A.Y.07-08 COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER REQUIRED ASSESSEE TO CONFIRM THESE PURCHASES HENCE HE ISSUED NOTICE U/S. 133(6) OF TH E ACT CALLING FOR INFORMATION FROM THAT PARTY AND THAT PARTY CONFIRMED PURCHASES OF RS.12 50 337/ - ONLY. THE ASSESSEE EXPLAINED THAT IT IS RECORDED PURCHASES OF RS.2 20 809/- ON ACCOUNT OF S ELF MADE VOUCHERS WHICH HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS OF M/S. NEW DEY PAINTS A ND SECONDLY PURCHASES OF RS.2425/- WAS WRONGLY POSTED IN THE LEDGER ACCOUNT OF THAT PARTY. THIRDLY M/S. NEW DEY PAINTS HAS ALSO DISCLOSED SALE OF RS.69 300/- WHICH IS NOT IN THE K NOWLEDGE OF ASSESSEE. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AN D TREATED THIS BOGUS PURCHASES FROM UNDISCLOSED SOURCES AND MADE ADDITION OF RS.2 20 80 9/- AND RS.2425/- ON ACCOUNT OF BOGUS PURCHASE AND RS.69 300/- ON ACCOUNT OF UNDISCLOSED PURCHASES. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER. AGGRIEVED ASSESSEE CAME IN SECOND APPEAL BEFORE US. 4. WE HAVE GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED FACT THAT THE PURCHASES MADE BY ASSESSEE AS PER BOOKS OF ACCOUNT OF M/S. NEW DEY PAINTS AT RS.12 50 337/- BUT DISCLOSED IN HIS BOOKS OF ACCOUNT AT RS.14 04 251/- THEREBY THE DIFFERENCE OF RS.2 53 914/-. OUT OF THESE THE ASSESSEE HAS NOT RECEIVED THE TAX INVOICE NO. 3251 DATED 12.10.2006 BY VIRTUE OF WHICH M/S. NEW DEY PAINTS MADE SALE OF RS.69 30 0/- TO ASSESSEE. IF WE REDUCE THIS AMOUNT OF UNACCOUNTED PURCHASE THEN PURCHASES WILL BE RS.1 84 614/- AND REMAINING AMOUNT WRONGLY ENTERED AS ONE PURCHASE VIDE BILL NO. 5716 DATED 27 .7.2006 WHICH IS RS.2425/- THE UNACCOUNTED PURCHASE WILL BE RS.1 87 039/-. THEREBY THE EFFECT IVE UNACCOUNTED PURCHASE IS RS.1.87 LACS AND FOR THIS THE ASSESSEE COULD NOT SUBSTANTIATE ANYTH ING EVEN BEFORE US. EVEN BEFORE US IT WAS NOT PLEADED THAT ASSESSEE REQUIRES CROSS VERIFICATION F ROM THE PARTY I.E. THE SUPPLIER DESPITE A QUERY FROM THE BENCH. ACCORDINGLY WE ARE OF THE VIEW TH AT UNACCOUNTED PURCHASE IN THE HANDS OF THE ASSESSEE SHOULD HAVE BEEN ASSESSED AT RS.1.87 LACS INSTEAD OF THE ADDITION OF RS.2 92 534/-. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. THIS ISSU E OF ASSESSEES APPEAL IS PARTLY ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF DEDUCTION OF PAYMENT TO CONTRACTORS AT RS.46 51 015/-. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 3 AND 4: 3. FOR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE DISALLOWANCE OF RS.46 51 015/- ON MISCONCEPTION OF FACTS AS WELL AS LAW AND WITHOUT TAKING INTO CONSIDERATION OF EVIDENCE ADDUCED TO HIM AND ARGUME NTS PLACED IN SUPPORT OF THE CONTENTION OF THE APPELLANT. 4. FOR THAT THE LD. CIT(A) SHOULD NOT HAVE ACTED AR BITRARILY AND CAPRICIOUSLY IN HOLDING THAT THE PAYMENTS OF RS.46 51 015/- WERE MADE TO TH E SUB-CONTRACTOR WITHOUT ANY BASIS WHATSOEVER AND THAT SUCH PAYMENTS ATTRACTED THE PRO VISIONS OF SECTION 194C OF INCOME- 3 ITA 1972/K/2010 SRI GAUTAM SARKAR. A.Y.07-08 TAX ACT 1961 IN CONSEQUENCE THEREOF SECTION 40(A)( IA) WAS APPLICABLE IN THE INSTANT CASE. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT THE ASSESSEE IS AN INDIVIDUAL AND PROVI SIONS OF SECTION 194C(1) CLEARLY STATES THAT THESE PROVIS IONS WILL NOT APPLY TO INDIVIDUALS AND THESE WERE M ADE APPLICABLE TO INDIVIDUALS BY THE FINANCE ACT 2007 W.E.F. 01.06.2007. ACCORDING TO LD. COUNSEL THUS ASSESSEE IS NOT LIABLE TO DEDUCT TAX U/S. 194C(1) O F THE ACT IN THE RELEVANT YEAR. ASSESSING OFFICER A S WELL AS CIT(A) WAS OF THE VIEW THAT TAX WAS DEDUCTIBLE A T SOURCE UNDER THE PROVISION OF SECTION 194C(1) OF THE ACT FROM THE PAYMENTS OF CONTRACTOR. BUT NOW WE FIND THAT THIS ISSUE HAS BEEN SETTLED BY THIS BE NCH OF TRIBUNAL KOLKATA IN THE CASE ACIT VS SMT. KEYA SETH IN ITA NO.842 & 843/K/2010 FOR ASSESSMENT YEARS 2006-07 & 2007-08 VIDE ORDER DATED 11.03.2011 WHEREIN EXACTLY THE SAME ISSUE HAS BEEN DECIDED AS UNDER: 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ADMITTED POSITION THAT THE ASSESSEE AN INDIVIDUA L CARRYING ON THE BUSINESS OF AYURVEDIC (COSMETIC DIVISION) AND THE CONSULTANCY ON BEAUTICI AN AND ALSO RELATED THERAPIES . AS CLAIMED BY THE ASSESSEE WHETHER THE PROVISIONS OF SECTION 194 (1) AS EXISTED IN ASSESSMENT YEARS 2006-07 & 2007-08 WILL APPLY TO THE ASSESSEE OR NOT? ADMITTED LY ASSESSEE HAS NOT DEDUCTED ANY TDS ON ADVERTISEMENT PAYMENT AND ACCORDING TO HER PROVISI ONS OF SECTION 194C(1) AS EXISTED IN THE RELEVANT ASSESSMENT YEARS WILL NOT OBLITERATE ANY D UTY ON ASSESSEE TO DEDUCT TDS. NOW WE HAVE TO EXAMINE THIS. THE RELEVANT PROVISIONS OF SECTION 194C(1) & (2) AS EXIST IN ASSESSMENT YEAR 2006-07 & 2007-08 READS AS UNDER :- (1) ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO A NY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE O F A CONTRACT BETWEEN THE CONTRACTOR AND-- (A) THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT ; OR (B) ANY LOCAL AUTHORITY ; OR (C) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTR AL STATE OR PROVINCIAL ACT ; OR (D) ANY COMPANY OR (E) ANY CO-OPERATIVE SOCIETY ; OR (F) ANY AUTHORITY CONSTITUTED IN INDIA BY OR UNDER ANY LAW ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYI NG THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNIN G DEVELOPMENT OR IMPROVEMENT OF CITIES TOWNS AND VILLAGES OR FO R BOTH ; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETIES REGI STRATION ACT 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT AC T IN FORCE IN ANY PART OF INDIA ; OR (H) ANY TRUST ; OR 4 ITA 1972/K/2010 SRI GAUTAM SARKAR. A.Y.07-08 (I) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY O R UNDER A CENTRAL STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARED TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT 1956 (3 OF 1956) OR (J) ANY FIRM SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACC OUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CH EQUE OR DRAFT OR BY ANY OTHER MODE WHICHEVER IS EARLIER DEDUCT AN AMOUNT EQUAL TO-- (I) ONE PER CENT. IN CASE OF ADVERTISING (II) IN ANY OTHER CASE TWO PER CENT. OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN. (2) ANY PERSON (BEING A CONTRACTOR AND NOT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY) RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE SUB-CONTRACTOR) IN PURSUANCE OF A CONTRACT WITH THE SUB-CONTRACTOR FOR CARRYING OUT OR FOR THE SUPPLY OF LABOUR FOR CARRYING OUT THE WHOLE OR ANY PART OF THE WORK UNDERTAKEN BY THE CON TRACTOR OR FOR SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR WHICH THE CONTR ACTOR HAS UNDERTAKEN TO SUPPLY SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISS UE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE WHICHEVER IS EARLIER DEDUCT AN AMO UNT EQUAL TO ONE PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. XXXX XXXX XXXX 6. FROM THE ABOVE PROVISIONS OF SECTION 194C(1) IT IS CLEAR THAT THE PAYMENTS MADE BY INDIVIDUAL OR HINDU UNDIVIDED FAMILY DOES NOT COME WITHIN THE AMBIT OF TDS I.E. THE EXPENDITURE INCURRED FOR ADVERTISEMENT AS INDIVIDUAL AND HUF ARE SPECIFI CALLY EXCLUDED IN THE ABOVE PROVISIONS. THE PROVISION OF SUB-SECTION (2) APPLIES ONLY TO PAYMEN TS MADE TO SUB-CONTRACTORS AND NOT TO CONTRACTORS. ACCORDINGLY ASSESSING OFFICER CAN NOT MADE DISALLOWANCE BY INVOKING PROVISIONS OF SECTION 40A(IA) AS PRESENT ASSESSEE BEING AN INDIV IDUAL IS NOT LIABLE TO DEDUCT TAX IN VIEW OF PROVISIONS OF SECTION 194C(1) AS EXISTED IN THE REL EVANT ASSESSMENT YEARS. NO DOUBT ASSESSEES TURNOVER EXCEEDS THE MONETARY LIMIT AS SPECIFIED UN DER CLAUSE (A) OR CLAUSE (B) OF SECTION 44AB AND THE ASSESSEES ACCOUNTS ARE SUBJECT TO AUDIT AN D THE ASSESSEE HAS AUDITED HER ACCOUNTS AND FILED TAX AUDIT REPORT ALONG WITH RETURN OF INCOME. WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE IN VIEW OF THE AMENDED PROVISIONS OF S ECTION 194C(1) BY THE FINANCE ACT 2007 WITH EFFECT FROM 01.06.2007 WHEREIN IT IS PROPOSED TO A MEND SUB-SECTION (1) IN SECTION 194C SO AS TO INCLUDE PAYMENTS MADE BY ANY INDIVIDUAL OR HINDU UN DIVIDED FAMILY WHOSE TOTAL SALES / GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSIO N CARRIED ON BY HIM EXCEED MONETARY LIMIT SPECIFIED UNDER CLAUSE (A) OR CLAUSE (B) OR SECTION 44AB DURING THE FINANCIAL YEAR OR IMMEDIATELY PRECEDING FINANCIAL YEAR IN WHICH SUCH SUM IS CREDI TED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS AMENDMENT TAKES EFFECT FROM 1 ST DAY OF JUNE 2007 AND IS APPLICABLE FOR AND FROM A SSESSMENT YEAR 2008-09. IN SECTION 194C(1) WITH EFFECT FROM 0 1.06.2007 BY THE FINANCE ACT 2007 CLAUSE AS INSERTED READS AS UNDER :- (K) ANY INDIVIDUAL OR A HINDU UNDIVIDED FAMILY WH OSE TOTAL SALES GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PROFESSIO N CARRIED ON BY HIM EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUS E (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANC IAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN 5 ITA 1972/K/2010 SRI GAUTAM SARKAR. A.Y.07-08 CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTH ER MODE WHICHEVER IS EARLIER DEDUCT AN AMOUNT EQUAL TO - (I) ONE PER CENT IN CASE OF ADVERTISING (II) IN ANY OTHER CASE TWO PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THERE IN : PROVIDED THAT NO INDIVIDUAL OR A HINDU UNDIVIDED FA MILY SHALL BE LIABLE TO DEDUCT INCOME-TAX ON THE SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. 7. WE FIND FROM THE ARGUMENTS OF LD.SR. DR THAT REV ENUE WANT TO INVOKE PROVISIONS OF SUB-SECTION (2) OF SECTION 194C FOR FURTHERANCE OF THIS CASE BU T WE ARE OF THE CONSIDERED VIEW THAT SECTION 194C(2) WILL APPLY TO THE PAYMENTS MADE TO SUB-CONT RACTORS BY THE CONTRACTOR AND NOT BY THE ASSESSEE. IN THE PRESENT CASE IT IS AN ADMITTED PO SITION THAT THE ASSESSEE HAS MADE PAYMENTS ON ADVERTISEMENT TO THE CONTRACTORS AND NOT TO SUB-CON TRACTORS. FURTHER AS REFERRED BY LD. COUNSEL FOR THE ASSESSEE THIS PROVISION WAS EXPLAINED BY C BDT CIRCULAR NO.3 OF 2008 DATED 12.03.2008 WHICH IS REPORTED IN (2008)299 ITR 8 (STATUTE) AND THE RELEVANT CIRCULAR AS REPORTED AT PAGE 71 READS AS UNDER :- 54. EXPANSION OF SCOPE OF THE PROVISIONS OF SECTIO N 194C. 54.1 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C PROVIDED FOR DEDUCTION OF INCOME-TAX AT SOURCE FROM ANY SUM CRED ITED OR PAID TO THE RESIDENT CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUP PLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CO NTRACTOR AND THE GOVERNMENT LOCAL AUTHORITIES STATUTORY CORPORATIO NS COMPANIES CO-OPERATIVE SOCIETIES STATUTORY AUTHORITIES ENGAGED IN PROVIDI NG HOUSING ACCOMMODATION ETC. REGISTERED SOCIETIES TRUSTS UNIVERSITIES AN D FIRMS. THE RATE OF TDS IS 1% IN RESPECT OF ADVERTISING CONTRACTS AND 2% IN OTHER CA SES. 54.2 THE EXISTING PROVISIONS OF SUB-SECTION (1) OF SECTION 194C DID NOT PROVIDE FOR DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY TO A CONTRACTOR. 54.3 CONSIDERING THE RISING NUMBER OF CONTRACTS BEI NG AWARDED BY INDIVIDUALS AND HUFS CARRYING ON BUSINESS OR PROFESSION AND THE INCREASING VOLUME OF SUCH PAYMENTS TO CONTRACTORS IT WAS FELT THAT THERE IS NEED TO REQUIRE SUCH PERSONS TO DEDUCT TAX AT SOURCE FROM PAYMENTS MADE BY THEM TO CONTRACTORS. 54.4 THERE WOULD BE GENUINE DIFFICULTIES IF INDIVID UALS OR HUFS WITH SMALL BUSINESS TURNOVERS OR GROSS RECEIPTS OF PROFESSION ARE REQUIRED TO DEDUCT TAX AT SOURCE. AN EXCEPTION IN SUCH CASES WOULD BE JUSTIFI ED. SIMILARLY THE CONTRACTS AWARDED BY AN INDIVIDUAL OR A MEMBER OF HUF OF HUF EXCLUSIVELY FOR PERSONAL PURPOSES MERIT EXCLUSION. 54.5 ACCORDINGLY THE FINANCE ACT 2007 HAS SUBSTI TUTED THE SAID SUB-SECTION (1) TO INCLUDE IN ITS AMBIT SUCH INDIVIDUAL OR A HI NDU UNDIVIDED WHOSE TOTAL SALES GROSS RECEIPTS OR TURNOVER FROM THE BUSINESS OR PRO FESSION CARRIED ON EXCEED THE MONETARY LIMITS SPECIFIED UNDER CLAUSE (A) OR CLAUS E (B) OF SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING FINANCIAL YEAR IN WHICH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR. THIS AMEN DMENT SHALL NOT APPLY IN RESPECT OF PAYMENTS MADE TO A CONTRACTOR BY ANY IND IVIDUAL OR A MEMBER OF A HINDU UNDIVIDED FAMILY EXCLUSIVELY FOR THEIR PERSON AL PURPOSES. 6 ITA 1972/K/2010 SRI GAUTAM SARKAR. A.Y.07-08 54.6 APPLICABILITY - THIS AMENDMENT WILL TAKE EFFEC T FROM THE 1ST DAY OF JUNE 2007. 8. IN VIEW OF THE ABOVE CLEAR PROVISIONS OF SECTION 194(1) AS EXISTING IN ASSESSMENT YEARS 2006-07 & 2007-08 I.E. RELEVANT ASSESSMENT YEARS IN THE PR ESENT APPEALS IT IS CLEAR THAT THE ASSESSEE IS UNDER NO OBLIGATION TO DEDUCT TDS ON THE EXPENDITUR E OF ADVERTISEMENT AS THE ASSESSEE BEING AN INDIVIDUAL AND THE CLAIM OF THE ASSESSEE IS AS PER PROVISIONS OF LAW. ONCE THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS UNDER THE PROVISION OF SECTION 194C(1 ) THE PROVISIONS OF SECTION 40A(IA) FOR MAKING DISALLOWANCE OF EXPENDITURE FOR NON-DEDUCTION OF TD S WILL NOT APPLY. WE FURTHER FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE EXPENSES ARE BOGUS OR UNREASONABLE OR EXCESSIVE BUT THE DISALLOWANCE IS MADE MERELY FOR NON-DEDUCTION OF TD S. ACCORDINGLY WE ARE OF THE CONSIDERED VIEW THAT CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE AN D WE CONFIRM THE SAME. 7. AS THE LEGAL ISSUE RAISED BY THE ASSESSEE IS EXA CTLY ON SIMILAR FACTS IN THE PRESENT CASE TAKING A CONSISTENT VIEW WE ARE OF THE VIEW THAT T HE AMENDED PROVISIONS OF SECTION 194C(1) OF THE ACT WILL NOT APPLY TO THE PRESENT ASSESSMENT YE AR OF THE ASSESSEE. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 8. IN THE RESULT APPEAL OF ASSESSEE IS PARTLY ALLO WED. 9. ORDER PRONOUNCED IN OPEN COURT ON 29.11.2011 . SD/- SD/- . . ! ' '' ' $# $# $# $# ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 29 TH NOVEMBER 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . + / APPELLANT SHRI GAUTAM SARKAR 13B MANMATHA NATH GANGULY ROAD KOLKATA-700 002. 2 -.+ / RESPONDENT DCIT CIR-33 KOLKATA 3 . $/& ( )/ THE CIT(A) KOLKATA 4. $/& / CIT KOLKATA 5 . '$? -$& / DR KOLKATA BENCHES KOLKATA .7 -$/ TRUE COPY /&@/ BY ORDER #4 /ASSTT. REGISTRAR .