The DCITAnand Circle,, Anand v. Laxmi Protein Products Pvt. Ltd.,, Anand

ITA 3244/AHD/2009 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 324420514 RSA 2009
Assessee PAN AAACL3972F
Bench Ahmedabad
Appeal Number ITA 3244/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 25 day(s)
Appellant The DCITAnand Circle,, Anand
Respondent Laxmi Protein Products Pvt. Ltd.,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-07-2011
Date Of Final Hearing 25-07-2011
Next Hearing Date 25-07-2011
Assessment Year 2006-2007
Appeal Filed On 04-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ITA NO.3244/AHD/2009 (ASSESSMENT YEAR:-2006-07) DEPUTY COMMISSIONER OF INCOME-TAX ANAND CIRCLE ANAND V/S LAXMI PROTEIN PRODUCTS PVT. LTD. APPROACH ROAD VASAD DIST. ANAND PAN: AAACL 3972 F [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI S K MEENA DR ASSESSEE BY:- SHRI A L THAKKAR AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 18- 09-2009 OF THE LD. CIT(APPEALS)-IV BARODA FOR TH E ASSESSMENT YEAR 2006-07 RAISES THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIONS OF RS. 33 77 874/- OVERLOOKING THE FACT THAT THE PAYMENT MADE TO CONTRACTOR IS FALLING WITHIN THE AMBIT OF SEC. 194C AND IT CAN NOT BE CONSID ERED FOR REDISTRIBUTION AMONGST THE LABOURERS. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIONS OF RS. 4 00 000/- OVERLOOKING THE FACT THAT THE EVIDENCE REGARDING THE SURR ENDER VALUE OF KEYMAN INSURANCE POLICY ENDORSED / ASSIGNED IN FAVOUR OF SHRI MITESH R PATEL WAS NOT SUBSTANTIATED. RELIEF CLAIM IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE AF ORESAID GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL FA CTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING INC OME OF RS.10 53 259/-(BEFORE SET OFF OF UNABSORBED DEPRECI ATION) FILED ON 20-12-2006 BY THE ASSESSEE MANUFACTURING TOOR DAL & TRADING IN CEREALS & PULSES AND SUBSEQUENTLY REVISED ON 27.3.2 007 WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE 2 ITA NO.3244/AHD/2009 INCOME-TAX ACT 1961 [HEREINAFTER REFERRED TO AS TH E ACT] ACT ON 15- 10-2007.DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER [AO IN SHORT] NOTICED THAT THE ITO TDS VIDE HIS ORDER DATED 15-05-2007 RAISED DEMAND U/S 201(1) OF THE ACT AND ALSO LEVIED INTEREST U/S 201(1A) OF THE ACT THE AS SESSEE HAVING NOT DEDUCTED TAX AT SOURCE FROM THE CONTRACTUAL PAYMENT S MADE FOR SORTING CLEANING LOADING AND UNLOADING CHARGES D EBITED UNDER THE HEAD TRANSPORTATION CHARGES & LABOUR CHARGES. THE RELEVANT DETAILS OF PAYMENTS EXTRACTED IN THE ASSESSMENT ORD ER ARE AS UNDER:- SORTING & LOADING EXPENSES / UNLOADING & LOADING CHARGES FOR ASST. YEAR 2005-06 SR. NO. NAME OF THE CONTRACTOR AGGREGATE AMOUNT PAID TO CONTRACTOR LIABLE (RS.) 1 ARVIND T VASAVA 6 95 693 2 MAHENDRABHAI 50 773 3 MAHESHBHAI PUNAMBHAI 1 97 764 4 MAHESH VASAVA 61 897 5 NAIMESHBHAI 81 651 6 NATUBHAI 6 52 304 7 PRAVIN VASAVA 1 30 259 8 PRAVIN D VASAVA 1 17 848 9 PUNJABHAI VASAVA 2 08 918 10 RAMESHBHAI VASAVA 5 80 950 11 RANJITBHAI 84 946 12 SANJAYBHAI 5 14 871 TOTAL 33 77 874 2.1 TO A QUERY BY THE AO PROPOSING TO DISALLOW T HE AFORESAID AMOUNT U/S 40(A)(IA) OF THE ACT THE ASSESSEE REPL IED VIDE THEIR LETTER DATED 08-12-2008 THAT THERE WAS NO CONTRACTO R INVOLVED IN THE PAYMENTS TO LABOURERS SO AS TO ATTRACT THE PROVISI ONS OF SECTION 194C OF THE ACT. THE PAYMENT WAS MADE DIRECTLY TO T HE WORKERS COMING FROM NEARBY VILLAGES AND DID NOT EXCEED RS. 20 000/- EACH. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF T HE ASSESSEE IN VIEW OF THE AFORESAID ORDER DATED 15-05-2007 OF THE ITO TDS AND 3 ITA NO.3244/AHD/2009 ACCORDINGLY DISALLOWED THE AMOUNT OF RS.33 77 874/ - U/S 40(A)(IA) OF THE ACT. 3. ON APPEAL THE LEARNED CIT(A) DELETED THE DISALL OWANCE WHILE RELYING UPON THE ORDER DATED 22-05-2008 IN APPEAL N O.CAB/IV- A-88 89 & 90/07-08 FOR AYS 2005-06 2006-07 AND 2 007-08 OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE AS ALSO ON T HE ORDER DATED 27-08-2008 FOR AY 2005-06 IN APPEAL NO. CAB/IV-A-20 5/07-08 IN THE FOLLOWING TERMS:- 2.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND APPELLANT'S SUBMISSIONS. MY LEARNED PREDECESSOR CIT(A)-IV DELETED DEMA NDS RAISED U/S. 201(1) & 201(1A) FOR A.YRS. 2005-06 2007-08 THR OUGH ORDER DATED 22.5.2008 IN APPEAL NO. CAB/IV-A-88 89 & 90/07-08. FURTHER THE FACTS IN THIS YEAR ARE IDENTICAL TO A.Y.2005-06 WHERE IN APPEA L NO. CAB/IV-A- 205/07-08 THROUGH ORDER DATED 27.8.2008 MY LEARNED PREDECESSOR CIT(APPEALS)-IV BARODA HAS DELETED THE DISALLOWANCE OF RS.29 52 813/- U/S.40(A)(IA) IN RESPECT OF SORTING CLEANING LOADING/U NLOADING CHARGES. FOLLOWING ORDER OF MY LEARNED PREDECESSOR DISALLOWANCE OF RS.33 77 874/- ON IDENTICAL FACTS IN A.Y.2006-07 IS CANCEL LED . 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE AO.ON THE OTHER HAND THE LD. AR ON BEHALF O F THE ASSESSEE WHILE RELYING UPON THE ORDER DATED 11-02-2010 OF TH E ITAT AHMEDABAD BENCH-A IN THE ASSESSEES OWN CASE IN ITA NOS.3792 & 2582 TO 2584/AHD/2008 FOR THE AYS 2005-06 2006-07 & 2007-08 CONTENDED THAT THE TRIBUNAL HAVING UPHELD THE FINDI NGS OF THE LEARNED CIT(A) IN HIS ORDER DATED 22.5.2008 THERE WAS NO MERIT IN THE DISALLOWANCE MADE BY THE AO. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT . WE FIND THAT THE ITAT IN THE AFORESAID ORDER DATED 11-02-2010 C ONCLUDED THAT THE PAYMENTS HAVING BEEN MADE TO REPRESENTATIVES OF THE LABOURERS THROUGH THEIR MUKADAM WHO WERE EMPLOYEES OF THE AS SESSEE AND 4 ITA NO.3244/AHD/2009 DID NOT EXCEED THE PRESCRIBED LIMITS THESE PAYMENT S DID NOT FALL WITHIN THE AMBIT OF SECTION 194C OF THE ACT. THE IT AT ACCORDINGLY HELD AS UNDER: 8 WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. AS WE HAVE NOTED ABOVE THAT THE A SSESSEE HAS FILED COMPLETE DETAILS VIDE LETTER DATED 08-05-2007 AN D IT IS NOTED THAT THE ASSESSEE INSTEAD MADE PAYMENTS TO LABOURERS RATHER THE ASSESSE E HAS MADE PAYMENT TO THE REPRESENTATIVE OF THE LABOURERS THR OUGH THEIR MUKADAM WHO ARE EMPLOYEES OF THE ASSESSEE. THE INDIVIDUA L PAYMENT IS NOT EXCEEDING THE PRESCRIBED LIMIT AND ONCE THIS IS NOT TH E CASE THE ASSESSEE IS NOT SUPPOSED TO DEDUCT TAX U/S 194C OF THE ACT. A CCORDINGLY THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 5.1 IN THE LIGHT OF THE AFORESAID FINDINGS OF THE TRIBUNAL AND NO MATERIAL HAVING BEEN PLACED BEFORE US BY THE REVENU E SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A ). THEREFORE GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. GROUND NO.2 IN THE APPEAL RELATES TO AN ADDITION OF RS.4 00 000/-. ON PERUSAL OF P&L ACCOUNT THE AO NO TICED THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.4 00 000/- ON ACCOUNT OF KEYMAN INSURANCE PREMIUM PAID ON THE LIFE OF DIRECTORS. TO A QUERY BY THE AO THE ASSESSEE EXPLAINED THAT AMOUNT WAS RENEWAL OF INSURANCE PREMIUM PAID TO ICICI PRUDENTIAL LIFE INSURANCE CO. ON ACCOUNT OF POLICIES TAKEN ON THE LIFE VARIOUS DIRECTORS OF THE COMPANY. ON PERUSAL OF RELEVANT INSURANCE POLICY TAKEN IN THE N AME OF DEVENDRA R PATEL THE AO NOTICED AN ENDORSEMENT REFLECTED TH AT THE INSURANCE POLICY OF DEVENDRA R PATEL HAD BEEN ASSIGNED TO MIT ESH R PATEL. SINCE THE BENEFITS OF THE POLICY WERE TO BE ENJOYED BY THE ASSIGNEE AND NOT BY THE ASSESSEE-COMPANY ACCORDINGLY THE A O DISALLOWED THE CLAIM FOR RS.4 00 000/-. 7. ON APPEAL THE LEARNED CIT(A) AFTER HAVING A REM AND REPORT FROM THE AO DELETED THE DISALLOWANCE IN THE FOLLOW ING TERMS:- 5 ITA NO.3244/AHD/2009 4. LAST GROUND OF APPEAL IS REGARDING DISALLOWANCE OF K EYMAN POLICY INSURANCE OF RS. 4 00 000/-. THE ASSESSING OFFICER ON THE BASIS OF ENDORSEMENT IN THE POLICY OF SHRI DEVENDRA R. PATEL W AS OF THE VIEW THAT APPELLANT COMPANY HAD ASSIGNED THE POLICY TO SHRI MITESH R . PATEL. AS PER ASSESSING OFFICER SINCE NOTHING CONTRARY WAS ON RECORD IT WA S CLEAR THAT BENEFITS WOULD BE ENJOYED BY THE ASSIGNEE AND NOT THE A PPELLANT. ASSESSING OFFICER HELD THAT THE POLICY OBTAINED BY THE APPE LLANT THEREFORE DID NOT FALL WITHIN THE CATEGORY OF KEYMAN INSURANCE AND DISALLOWED INSURANCE PREMIUM OF RS.4 00 000/-. 4.1 BEFORE ME APPELLANT FILED COPY OF POLICY ON LIFE O F DEVENDRA R. PATEL AND SUBMITTED THAT THE PREMIUM PAID WAS FOR KEYM AN INSURANCE AND THE POLICY WAS ASSIGNED IN FAVOUR OF APPELLANT COMPANY AND NOT MITESH R. PATEL. APPELLANT SUBMITTED THAT IT WAS NOT UNDERSTOOD AS TO HOW THE ASSESSING OFFICER HAD STATED THAT POLICY WAS ASSIGNED IN FAVOUR OF SOME OTHER DIRECTOR AND MADE THE DISALLOWANCE WITHOUT AFFOR DING OPPORTUNITY TO THE APPELLANT TO CLARIFY THE MATTER. APPELLANT FURTHE R FILED COPY OF LETTER DATED 26.8.2009 FROM ICICI PRUDENTIAL CERTIFYING THA T LAXMI PROTEINS PRODUCTS PVT. LTD. HAD TAKEN KEYMAN INSURANCE FOR ITS DIRE CTOR DEVENDRA R. PATEL ON 24.8.2004 VIDE POLICY NO. 01060482 AND THE SAID POLICY WAS IN THE NAME OF LAXMI PROTEIN PRODUCTS PVT. LTD. AND NOT A SSIGNED IN FAVOUR OF MR. M R PATEL. APPELLANT REFERRED TO CBDT'S CIRCULAR NO. 762 DATEDT8.2.1998 THAT THE PREMIUM ON KEYMAN INSURANCE PO LICY WAS AN ALLOWABLE BUSINESS EXPENDITURE. 4.1.1. REFERENCE WAS MADE TO THE ASSESSING OFFICER REGA RDING APPELLANT'S SUBMISSIONS. COPY OF CLARIFICATION FROM ICICI PRUDENTIAL D ATED 26.8.2008 WAS ALSO FORWARDED TO THE ASSESSING OFFICER FOR COMMENTS. T HE ASSESSING OFFICER IN HER REPORT DATED 8.9.2009 HAS NOT MADE ANY COMMENTS ON MERITS OF THE MATTER. ASSESSING OFFICER'S ONLY SUBMISSION IS THAT CLA RIFICATION IN RESPECT OF POLICY HAD BEEN CALLED FOR FROM THE INSURANCE C OMPANY WHICH DID NOT FORWARD THE INFORMATION AS CALLED FOR AT THAT TIME AND IT WAS ONLY ON 26.8.2009 THAT THE SAID CLARIFICATION HAS BEEN ISSUED BY T HE INSURANCE COMPANY AT REQUEST OF ASSESSEE. 4.2. I HAVE CONSIDERED THE MATTER. AS PER CBDTS CIRCULAR NO.762 PREMIUM ON KEYMAN INSURANCE PREMIUM IS AN ALLOWABLE BUSI NESS EXPENDITURE. IN VIEW OF CLEAR CUT CLARIFICATION BY ICICI P RUDENTIAL LIFE INSURANCE CO. LTD. THAT THE POLICY CONCERNED WAS A KEYMAN INSURANCE POLICY TAKEN BY THE APPELLANT ON LIFE OF ITS DIRECTOR AND POLICY WAS IN THE NAME OF THE APPELLANT AND NOT ASSIGNED IN FAVOUR OF M. R. PATEL THE INSURANCE PREMIUM OF RS.4 00 000/- IS DIRECTED TO BE ALL OWED. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE FINDINGS OF THE AO WHILE THE LEARNED AR ON BEHALF O F THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). 6 ITA NO.3244/AHD/2009 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM FINDINGS OF THE LD. C IT(A) KEYMAN INSURANCE POLICY WAS TAKEN BY THE ASSESSEE ON THE L IFE OF ITS DIRECTOR AND WAS NOT FOUND TO HAVE BEEN ASSIGNED IN FAVOUR O F SHRI M R PATEL AS CLARIFIED IN LETTER DATED 26.8.2009 OF THE ICICI PRUDENTIAL CERTIFYING THAT LAXMI PROTEINS PRODUCTS PVT. LTD. H AD TAKEN KEYMAN INSURANCE FOR ITS DIRECTOR DEVENDRA R. PATEL ON 24 .8.2004 VIDE POLICY NO. 01060482 AND THE SAID POLICY WAS IN THE NAME OF LAXMI PROTEIN PRODUCTS PVT. LTD. AND NOT ASSIGNED IN FAVO UR OF MR. M R PATEL. THOUGH THE LD. CIT(A) FORWARDED THIS CLARI FICATION TO THE AO FOR A REMAND REPORT THE AO DID NOT CONTROVERT THE FACTS POINTED OUT IN THE SAID DATED 26.8.2009 OF THE ICICI PRUDENTIAL . SINCE THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CON TROVERTING THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LEARNED CIT(A) THERE IS NO BASIS TO INTERFERE. ACCORDINGLY WE HAVE NO ALTE RNATIVE BUT TO UPHOLD HIS FINDINGS. THEREFORE GROUND NO.2 IN THE APPEAL IS DISMISSED. 10. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 29 -07-2011 SD/- SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 29-07-2011 COPY OF THE ORDER FORWARDED TO: 1. LAXMI PROTEIN PRODUCTS PVT. LTD. APPROACH ROAD VASAD DIST. ANAND 2. DEPUTY COMMISSIONER OF INCOME-TAX ANAND CIRCLE ANAND 3. CIT CONCERNED 4. CIT(A)-IV BARODA 5. DR ITAT AHMEDABAD BENCH-A AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGI STRAR/ASSISTANT REGISTRAR ITAT AHMEDABAD