The DCITBharuch Circle,, Bharuch v. Shri Hasmukh J.Patel, Bharuch

ITA 2081/AHD/2009 | 2006-2007
Pronouncement Date: 10-03-2011 | Result: Dismissed

Appeal Details

RSA Number 208120514 RSA 2009
Assessee PAN AERPP7459P
Bench Ahmedabad
Appeal Number ITA 2081/AHD/2009
Duration Of Justice 1 year(s) 8 month(s) 10 day(s)
Appellant The DCITBharuch Circle,, Bharuch
Respondent Shri Hasmukh J.Patel, Bharuch
Appeal Type Income Tax Appeal
Pronouncement Date 10-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 10-03-2011
Date Of Final Hearing 07-03-2011
Next Hearing Date 07-03-2011
Assessment Year 2006-2007
Appeal Filed On 30-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA AM) ITA NO.2081/AHD/2009 A. Y.: 2006-07 THE D. C. I. T. BHARUCH CIRCLE BHARUCH VS SHRI HASMUKH J. PATEL PROP. JAYSHREE INDUSTRIES PLOT NO.4705/1/3 GIDC ANKLESHWAR DIST. BHARUCH PA NO. AERPP 7459 P (APPELLANT) (RESPONDENT) C. O. NO. 174/AHD/2009 (IN ITA NO.2081/AHD/2009: AY: 2006-07) SHRI HASMUKH J. PATEL PROP. JAYSHREE INDUSTRIES PLOT NO.4705/1/3 GIDC ANKLESHWAR DIST. BHARUCH VS THE D. C. I. T. BHARUCH CIRCLE BHARUCH PA NO. AERPP 7459 P (APPLICANT) (RESPONDENT) DEPARTMENT BY SHRI C. K.MISHRA SR. DR ASSESSEE BY SHRI BHARVIN MARFATIA AR O R D E R PER BHAVNESH SAINI: THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF THE LEARNED CIT(A)-VI BARODA DATED 22 ND APRIL 2009 FOR ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS PREFERRED THE APPEAL ON THE FOLL OWING GROUNDS: ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) HAS ERRED IN LAW IN DIRECTING TO ALLOW DEDUCTION OF RS.8 72 188/- AFTER VERIFICATION OF PROOFS WHICH AMOUNT WAS DISALLOWABLE U/S. 40(A (IA) OF THE I. T. ACT 1961. 2. THE CIT(A) HAS ALSO ERRED IN NOT GIVING A CLEAR CUT FINDING AS REQUIRED UNDER SECTION 251 (1) (A) OF TH E IT ACT. 3. THE ASSESSEE HAS FILED THE CROSS OBJECTIONS ON T HE FOLLOWING GROUNDS: 1. THE LEARNED AO AS WELL AS THE CIT(A) ERRED IN F ACT AND IN LAW HOLDING THAT DISALLOWANCE IS REQUIRED TO BE MADE U/S. 40(A) (IA) OF THE ACT FROM THE PAYMENTS MADE TO FOREIGN SHIPPING COMPANIES OR THEIR AGENTS DESPITE THE FACT THAT CIRCULAR NO.723 DATED 19-9-1995 CLEARLY PROVIDED THAT PROVISIONS OF SECTION 194C AS WELL AS PROVISIONS OF SECTION 195 ARE NOT APPLICABLE TO PAYMENTS MADE TO SHIPPING AGENTS OF NON-RESIDENTS AND THEREFORE NO DISALLOWANCE INVOKING PROVISIONS OF SECTION 40(A) (IA) CAN BE MADE IN THE CASE OF THE RESPONDENT. 2 THE LEARNED CIT(A) ALSO ERRED IN FACT AND IN LAW IN DIRECTING THE RESPONDENT TO PRODUCE THE PROOF OF PAYMENT OF TAXES BY THE SHIPPING COMPANY DESPITE THE FACT THAT SECTION 172 (6) CLEARLY STATES THAT I T IS THE DUTY OF THE COLLECTOR OF CUSTOMS OR OTHER OFFIC ER DULY AUTHORIZED TO VERIFY WHETHER THE TAXES DUE HAS BEEN PAID BY THE SHIPPING COMPANY. THE DIRECTION GIVEN BY THE CIT(A) TO THE RESPONDEN T TO PRODUCE THE PROOF OF PAYMENT OF TAXES BY THE SHIPPING COMPANY BEING NOT AS PER LAW AND AGAINST THE PROVISIONS OF SECTION 172 THE SAME IS REQUIRED TO BE DELETED AND THE RESPONDENT BE NOT INSISTED TO ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 3 PROVIDE THE PROOF OF PAYMENT OF TAXES BY THE SHIPPING COMPANY. 4. BRIEFLY THE FACTS OF THE CASE ON THE ABOVE ISSU E ARE THAT THE ASSESSEE CLAIMED CLEARING AND FORWARDING EXPENSES O F RS.3 14 475/- AND CARRIAGE EXPENSES OF RS. 11 18 871/-. THE ASSES SEE WAS ASKED TO FURNISH THE DETAILS OF TDS WHICH WAS FURNISHED BY THE ASSESSEE. ON VERIFICATION OF THE SAME IT WAS SEEN THAT THE AS SESSEE HAS MADE PAYMENT TO GLOBAL LINX SHIPPING & LOGISTICS MUMBAI OF RS. 8 72 188/- ON WHICH TDS WAS NOT DEDUCTED. THE A O DISALLOWED RS.8 72 188/- OF EXPENSES INVOKING THE PROVISIONS O F SECTION 40 (A) (IA) OF THE IT ACT. IT WAS CONTENDED BEFORE THE LEA RNED CIT(A) THAT THE ASSESSEE IS MANUFACTURING CHEMICALS AND IT IS ALSO EXPORTING MATERIAL THROUGH SHIPPING AGENTS WHO ACT ON BEHALF OF NON-R ESIDENT SHIPPING COMPANIES. IT WAS SUBMITTED THAT IN TERMS OF CIRCUL AR NO.723 DATED 19-9-1995 SECTION 194 C OF THE IT ACT IS NOT APPLI CABLE IN THE CASE OF SHIPPING AGENTS WHO ACT ON BEHALF OF NON-RESIDENT S HIPPING COMPANIES AND THAT THE ASSESSEE WAS NOT LIABLE TO D EDUCT TDS ON THE FREIGHT REIMBURSED TO THE SHIPPING AGENT M/S. G LOBAL LINK SHIPPING & LOGISTICS MUMBAI. THE LEARNED CIT(A) CO NSIDERING THE EXPLANATION OF THE ASSESSEE NOTED THAT THE ASSESSEE HAS OFFERED TO FURNISH CONFIRMATION FROM THE SHIPPING COMPANY THAT TAXES HAVE BEEN PAID IN THE RETURN OF INCOME FILED U/S 172 OF THE I T ACT. THE LEARNED CIT(A) ALSO NOTED THAT CIRCULAR NO.723 CLEARLY STAT ES THAT PROVISIONS OF SECTION 172 OF THE IT ACT OVER-RIDE THE PROVISIO NS OF SECTION 194C OF THE IT ACT. IT WAS FURTHER NOTED THAT IF ANY TAX ES ARE NOT PAID BY THE SHIPPING COMPANY THE SAME ARE TO BE BORNE BY THE S HIPPING AGENT WHO STEPS INTO THE SHOES OF NON-RESIDENT SHIPPING C OMPANIES. THE ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 4 LEARNED CIT(A) ACCORDINGLY DIRECTED TO PROVIDE PROO F OF THE TAXES PAID BY THE SHIPPING COMPANY AND THE AO WAS ASKED TO VER IFY THE SAME. THE APPEAL OF THE ASSESSEE WAS ALLOWED SUBJECT TO V ERIFICATION. 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND REFERRED TO THE REPLY FILED BEFORE THE LEARNED CIT( A) (PB -5) AND ALSO RELIED UPON THE CBDT CIRCULAR NO. 723 DATED 19-9-19 95 (PB 7 AND 8). 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE AR E OF THE VIEW THAT THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE FACTS AND THE PROVISIONS OF LAW WHILE DECIDING THE ABOVE ISSUE AN D THEIR ORDERS ARE NOT SUSTAINABLE UNDER THE LAW. THE ASSESSEE SPECIFI CALLY EXPLAINED THAT HE IS PROPRIETOR OF CHEMICAL MANUFACTURING CON CERN AND ALSO EXPORTS THE MATERIAL FOR SALE. IN THE COURSE OF THE EXPORT THE ASSESSEE HAS TO PAY SHIPPING FREIGHT CHARGES TO THE SHIPPING AGENT WHO ACTS ON BEHALF OF THE NON-RESIDENT SHIPPING COM PANIES. WHAT THE ASSESSEE HAD PAID WAS NOTHING BUT REIMBURSEMEN T OF FREIGHT CHARGES FOR WHICH NECESSARY MEMOS WERE ISSUED BY TH E SHIPPING AGENT M/S. GLOBAL LINX SHIPPING & LOGISTIC MUMBAI. THE COPIES OF REIMBURSEMENT CLAIM MEMOS WERE SUBMITTED TO THE AO FOR HIS PERUSAL. IT WAS ALSO EXPLAINED THAT THESE PAYMENTS ARE ACTUALLY REIMBURSEMENT TO SHIPPING AGENTS AND THEREFORE SE CTION 194C OF THE IT ACT IS NOT APPLICABLE IN THIS CASE. THE ASSESSEE ALSO RELIED UPON CBDT CIRCULAR NO.723 (SUPRA). THE ABOVE FACTS WERE SPECIFICALLY ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 5 PLEADED BEFORE THE AUTHORITIES BELOW BUT THE SAME H AVE NOT BEEN PROPERLY UNDERSTOOD. THE CIRCULAR NO.723 DATED 19-9 -1995 (SUPRA) COPY OF WHICH IS FILED BY THE ASSESSEE IN THE PAPER BOOK IS REPRODUCED AS UNDER: 913. TAX DEDUCTION AT SOURCE FROM PAYMENT MADE TO FOREIGN SHIPPING COMPANIES 1. REPRESENTATIONS HAVE BEEN RECEIVED REGARDING THE SCOPE OF SECTIONS 172 194C AND 195 OF THE INCOME-TAX ACT 1961 IN CONNECTION WITH TAX DEDUCTION AT SOURCE FROM PAYMENTS MADE TO THE FOREIGN SHIPPING COMPANIES OR THEIR AGENTS. 2. SECTION 172 DEALS WITH SHIPPING BUSINESS OF NON- RESIDENTS. SECTION 172(1) PROVIDES THE MODE OF THE LEVY AND RECOVERY OF TAX IN THE CASE OF ANY SHIP BELONGING TO OR CHARTERED BY A NON-RESIDENT WHICH CARRIES PASSENGERS LIVESTOCK MAIL OR GOODS SHIPPED AT A PORT IN INDIA. AN ANALYSIS OF THE PROVISIONS OF SECTION 172 WOULD SHOW THAT THESE PROVISIONS HAVE TO BE APPLIED TO EVERY JOURNEY A SHIP BELONGING TO OR CHARTERED BY A NON-RESIDENT UNDERTAKES FROM ANY PORT IN INDIA. SECTION 172 IS A SELF-CONTAINED CODE FOR THE LEVY AND RECOVERY OF TH E TAX SHIP-WISE AND JOURNEY WISE AND REQUIRES THE FILING OF THE RETURN WITHIN A MAXIMUM TIME OF THIRT Y DAYS FROM THE DATE OF DEPARTURE OF THE SHIP. 3. THE PROVISIONS OF SECTION 172 ARE TO APPLY NOTWITHSTANDING ANYTHING CONTAINED IN OTHER PROVISIONS OF THE ACT. THEREFORE IN SUCH CASES TH E PROVISIONS OF SECTIONS 194C AND 195 RELATING TO TAX DEDUCTION AT SOURCE ARE NOT APPLICABLE. THE RECOVERY OF TAX IS TO BE REGULATED FOR A VOYAGE UNDERTAKEN FROM ANY PORT IN INDIA BY A SHIP UNDER THE PROVISIONS OF SECTION 172. ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 6 4. SECTION 194C DEALS WITH WORK CONTRACTS INCLUDING CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN RAILWAYS. THIS SECTION APPLIED TO PAYMENTS MADE BY A PERSON REFERRED TO IN CLAUSE (A) TO (J) OF SUB-SECTION (1) TO ANY RESIDENT (TERM ED AS CONTRACTOR). IT IS CLEAR FROM THE SECTION THAT T HE AREA OF OPERATION OF TDS IS CONFINED TO PAYMENTS MADE TO ANY RESIDENT. ON THE OTHER HAND SECTION 172 OPERATES IN THE AREA OF COMPUTATION OF PROFITS FROM SHIPPING BUSINESS OF NON-RESIDENTS. THUS THERE IS NO OVERLAPPING IN THE AREAS OF OPERATION O F THESE SECTIONS. 5. THERE WOULD HOWEVER BE CASES WHERE PAYMENTS ARE MADE TO SHIPPING AGENTS OF NON-RESIDENT SHIP- OWNERS OR CHARTERERS FOR CARRIAGE OF PASSENGERS ETC. SHIPPED AT A PORT IN INDIA. SINCE THE AGENT ACTS ON BEHALF OF THE NON-RESIDENT SHIP-OWNER OR CHARTERER HE STEPS INTO THE SHOES OF THE PRINCIPAL . ACCORDINGLY PROVISIONS OF SECTION 172SHALL APPLY AND THOSE OF SECTIONS 194C AND 195 WILL NOT APPLY. CIRCULAR NO.723 DATED 19-9-1995. 8. THE PROVISIONS OF SECTION 172 OF THE IT ACT IS A LSO REPRODUCED AS UNDER: 172. (1) THE PROVISIONS OF THIS SECTION SHALL NOTWITHSTANDING ANYTHING CONTAINED IN THE OTHER PRO VISIONS OF THIS ACT APPLY FOR THE PURPOSE OF THE LEVY AND RECOVERY OF TAX IN THE CASE OF ANY SHIP BELONGING TO OR CHA RTERED BY A NON-RESIDENT WHICH CARRIES PASSENGERS LIVESTOCK MAIL OR GOODS SHIPPED AT A PORT IN INDIA [***]. (2) WHERE SUCH A SHIP CARRIES PASSENGERS LIVESTOCK MAIL OR GOODS SHIPPED AT A PORT IN INDIA [SEVEN AND A H ALF] PER CENT OF THE AMOUNT PAID OR PAYABLE ON ACCOUNT OF SU CH CARRIAGE TO THE OWNER OR THE CHARTERER OR TO ANY PE RSON ON ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 7 HIS BEHALF WHETHER THAT AMOUNT IS PAID OR PAYABLE IN OR OUT OF INDIA SHALL BE DEEMED TO BE INCOME ACCRUING IN INDIA TO THE OWNER OR CHARTERER ON ACCOUNT OF SUCH CARRIAGE. (3) BEFORE THE DEPARTURE FROM ANY PORT IN INDIA OF ANY SUCH SHIP THE MASTER OF THE SHIP SHALL PREPARE AND FURNISH TO THE [ASSESSING] OFFICER A RETURN OF THE FULL AMO UNT PAID OR PAYABLE TO THE OWNER OR CHARTERER OR ANY PERSON ON HIS BEHALF ON ACCOUNT OF THE CARRIAGE OF ALL PASSENGER S LIVESTOCK MAIL OR GOODS SHIPPED AT THAT PORT SINCE THE LAST ARRIVAL OF THE SHIP THEREAT: PROVIDED THAT WHERE THE [ASSESSING] OFFICER IS SATISFIED THAT IT IS NOT POSSIBLE FOR THE MASTER OF THE SHIP TO FURNISH THE RETURN REQUIRED BY THIS SUB-SECTION BEFORE THE DEPARTURE OF THE SHIP FROM THE PORT AND PROVIDED TH E MASTER OF THE SHIP HAS MADE SATISFACTORY ARRANGEMEN TS FOR THE FILING OF THE RETURN AND PAYMENT OF THE TAX BY ANY OTHER PERSON ON HIS BEHALF THE [ASSESSING] OFFICER MAY IF THE RETURN IS FILED WITHIN THIRTY DAYS OF THE DEPAR TURE OF THE SHIP DEEM THE FILING OF THE RETURN BY THE PERSON SO AUTHORISED BY THE MASTER AS SUFFICIENT COMPLIANCE W ITH THIS SUB-SECTION. (4) ON RECEIPT OF THE RETURN THE [ASSESSING] OFFIC ER SHALL ASSESS THE INCOME REFERRED TO IN SUB-SECTION (2) AN D DETERMINE THE SUM PAYABLE AS TAX THEREON AT THE RAT E OR RATES [IN FORCE] APPLICABLE TO THE TOTAL INCOME OF A COMPANY WHICH HAS NOT MADE THE ARRANGEMENTS REFERRE D TO IN SECTION 194 AND SUCH SUM SHALL BE PAYABLE BY THE MASTER OF THE SHIP. [(4A) NO ORDER ASSESSING THE INCOME AND DETERMINING THE SUM OF TAX PAYABLE THEREON SHALL BE MADE UNDER SUB- SECTION (4) AFTER THE EXPIRY OF NINE MONTHS FROM TH E END OF THE FINANCIAL YEAR IN WHICH THE RETURN UNDER SUB-SE CTION (3) IS FURNISHED: ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 8 PROVIDED THAT WHERE THE RETURN UNDER SUB-SECTION (3) HAS BEEN FURNISHED BEFORE THE 1ST DAY OF APRIL 2007 S UCH ORDER SHALL BE MADE ON OR BEFORE THE 31ST DAY OF DECEMBER 2008.] (5) FOR THE PURPOSE OF DETERMINING THE TAX PAYABLE UNDER SUB-SECTION (4) THE [ASSESSING] OFFICER MAY CALL F OR SUCH ACCOUNTS OR DOCUMENTS AS HE MAY REQUIRE. (6) A PORT CLEARANCE SHALL NOT BE GRANTED TO THE SH IP UNTIL THE COLLECTOR OF CUSTOMS OR OTHER OFFICER DULY AUT HORISED TO GRANT THE SAME IS SATISFIED THAT THE TAX ASSESS ABLE UNDER THIS SECTION HAS BEEN DULY PAID OR THAT SATIS FACTORY ARRANGEMENTS HAVE BEEN MADE FOR THE PAYMENT THEREOF . (7) NOTHING IN THIS SECTION SHALL BE DEEMED TO PREV ENT THE OWNER OR CHARTERER OF A SHIP FROM CLAIMING BEFORE T HE EXPIRY OF THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE DATE OF DEPARTURE OF THE SHIP FRO M THE INDIAN PORT FALLS THAT AN ASSESSMENT BE MADE OF HI S TOTAL INCOME OF THE PREVIOUS YEAR AND THE TAX PAYABLE ON THE BASIS THEREOF BE DETERMINED IN ACCORDANCE WITH THE OTHER PROVISIONS OF THIS ACT AND IF HE SO CLAIMS ANY PA YMENT MADE UNDER THIS SECTION IN RESPECT OF THE PASSENGER S LIVESTOCK MAIL OR GOODS SHIPPED AT INDIAN PORTS DU RING THAT PREVIOUS YEAR SHALL BE TREATED AS A PAYMENT IN ADVANCE OF THE TAX LEVIABLE FOR THAT ASSESSMENT YEA R AND THE DIFFERENCE BETWEEN THE SUM SO PAID AND THE AMOU NT OF TAX FOUND PAYABLE BY HIM ON SUCH ASSESSMENT SHAL L BE PAID BY HIM OR REFUNDED TO HIM AS THE CASE MAY BE. [(8) FOR THE PURPOSES OF THIS SECTION THE AMOUNT R EFERRED TO IN SUB-SECTION (2) SHALL INCLUDE THE AMOUNT PAID OR PAYABLE BY WAY OF DEMURRAGE CHARGE OR HANDLING CHAR GE OR ANY OTHER AMOUNT OF SIMILAR NATURE.] ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 9 9. THE AO INVOKED THE PROVISIONS OF SECTION 40(A) ( IA) OF THE IT ACT FOR NON-DEDUCTION OF TDS AS REQUIRED U/S 194C OF TH E IT ACT. HOWEVER THE ABOVE PROVISION IS APPLICATION FOR THE AMOUNTS PAYABLE TO THE RESIDENTS OR THE AMOUNTS PAYABLE TO CONTRACT ORS OR SUB- CONTRACTORS BEING RESIDENT. SIMILARLY THE PROVISIO NS OF SECTION 194C OF THE IT ACT APPLY TO THE AREA OF OPERATION OF TDS WHICH IS CONFINED TO PAYMENTS MADE TO ANY RESIDENTS. THE ASSESSEE IN HIS REPLY SPECIFICALLY PLEADED THAT THE AMOUNT IN QUESTION IS NOTHING BUT REIMBURSEMENT OF FREIGHT CHARGES WHICH WAS PAID TO THE SHIPPING AGEN TS FOR CARRYING MATERIALS FOR SALE. THUS THE ASSESSEE MADE THE PAY MENT TO THE SHIPPING BUSINESS OF NON-RESIDENTS THROUGH SHIPPING AGENT. A SPECIAL PROCEDURE IS PROVIDED U/S 172 OF THE IT ACT FOR PAY MENT OF TAXES IN CASE OF ANY SHIP BELONGING TO OR CHARTERED BY A NON -RESIDENT WHICH CARRIES PASSENGER LIVESTOCK MATERIAL OR GOODS SHI PPED AT A PORT IN INDIA. IT HAS NOTHING TO DO WITH THE ACTIVITY CARRI ED OUT BY THE ASSESSEE. THE BOARD CIRCULAR NO.723 (SUPRA) CLARIF IES BOTH THE PROVISIONS OF SECTION 172 OF THE IT ACT AND SECTION 194C OF THE IT ACT AND IT IS PROVIDED THAT IN SUCH CASE THE PROVISIONS OF SECTION 172 OF THE IT ACT WOULD APPLY AND NO DEDUCTION OF TAX IS R EQUIRED AS PER SECTION 194C OF THE IT ACT. IT IS ALSO CLARIFIED TH AT THAT SINCE THE AGENT ACTS ON BEHALF OF THE NON-RESIDENT SHIP OWNERS OR C HARTERER HE STEPS INTO THE SHOES OF THE PRINCIPAL AND ACCORDINGLY PR OVISIONS OF SECTION 194C OF THE IT ACT WOULD NOT APPLY IN THE CASE OF T HE ASSESSEE. THE AO HAS ALSO NOT MADE OUT ANY CASE THAT THE ASSESSEE HAS PAID ANY AMOUNT TO THE RESIDENTS. THEREFORE PROVISIONS OF S ECTION 194C OF THE IT ACT HAVE BEEN WRONGLY APPLIED IN THE CASE OF THE ASSESSEE. THE LEARNED CIT(A) WAS THEREFORE NOT JUSTIFIED IN REM ANDING THE MATTER TO ITA NO.2081/AHD/2009 AND CO NO.174/AHD/2009 SHRI HASHMUKH J. PATEL PROP. OF JAYSHREE INDUSTRIE S 10 THE FILE OF THE AO FOR VERIFICATION OF THE DETAILS OF EXPENSES AND DEPOSIT OF THE TAX. THE DIRECTION GIVEN BY THE LEAR NED CIT(A) IS CONTRARY TO THE ABOVE PROVISIONS OF LAW. IN VIEW OF THE ABOVE DISCUSSIONS WE DO NOT APPROVE THE FINDINGS OF THE AUTHORITIES BELOW. THE ORDERS OF THE AUTHORITIES BELOW ARE ACCORDINGLY SET ASIDE AND QUASHED. RESULTANTLY THE ADDITION IS DELETED. 10. IN THE RESULT THE DEPARTMENTAL APPEAL FAILS AN D IS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-03-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 10-03-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD