ITO 10(2)(2), MUMBAI v. GODREJ EFACEE AUTOMATION & ROBOTICS LTD, MUMBAI

ITA 4931/MUM/2010 | 2006-2007
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 493119914 RSA 2010
Assessee PAN AAACG7978A
Bench Mumbai
Appeal Number ITA 4931/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant ITO 10(2)(2), MUMBAI
Respondent GODREJ EFACEE AUTOMATION & ROBOTICS LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 30-09-2011
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year 2006-2007
Appeal Filed On 14-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.4931/MUM/2010 (ASSESSMENT YEAR: 2006-07) ITO -10(2)(2) ROOM NO.458 4TH FLOOR AAYAKAR BHAVAN M.K. MARG MUMBAI -400 020 ....... APPELLANT VS M/S. GODREJ EFACEE AUTOMATION & ROBOTICS LTD. PLANT NO.4 PIROJSHANAGAR VIKROLI MUMBAI -400 079 ..... RESPONDENT PAN : AAACG 7978 A APPELLANT BY : SHRI A.K. NAYAK RESPONDENT BY : SHRI AKRAM KHAN DATE OF HEARING : 21. 09.2011 DATE OF PRONOUNCEMENT: 30.09.201 1 O R D E R PER R.S. PADVEKAR JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-21 MUMBAI DATED 26.03.2010 FOR THE A.Y. 2006-07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN D:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE DISALLOWA NCE OF ` 74 74 986/- U/S.40(A)(IA) WITHOUT APPRECIATING THE FACT THAT THE CERTIFICATE OF NON DEDUCTION OF TDS DOES NOT M ENTION THE NAME OF PERSON WHO MAKES PAYMENT TO THE COMPANY ITA 4139/M/2010 M/S. GODREJ EFACEE AUTOMATION & ROBOTICS LTD. 2 AND ADMISSION OF NEW EVIDENCE DURING APPELLATE PROCEEDINGS IN VIOLATION OF RULE 46A. 2. THE ASSESSEE IS A JOINT VENTURE COMPANY ENGAGED IN THE MANUFACTURING & SERVICING OF AUTOMATED STORAGE AND RETRIEVAL SYSTEM AND FORMED BY M/S. GODREJ & BOYCE MFG. CO. GROUP AN D EFACEE AUTOMATION & ROBOTICS LTD. GROUP. THE ASSESSEE HAS NO EMPLOYEE ON ITS PAY-ROLE. AS AND WHEN THE ASSESSEE RECEIVES TH E WORKS /SERVICES ORDER FROM ITS CLIENTS IT USES EMPLOYEES WHO WERE ON THE PAY-ROLE OF GODREJ & BOYCE MFG. CO. AND MAKE THE PAYMENT TO THE SAID COMPANY. IT WAS NOTICED BY THE A.O. THAT FOR THE SERVICE REN DERED BY GODREJ & BOYCEE MFG. CO. THE ASSESSEE HAD TO PAY ` 78 27 055/- INCLUDING RENT OF ` 4 41 000/-. THE A.O. WAS OF THE VIEW THAT THE SER VICES RENDERED BY M/S. GODREJ & BOYCEE MFG. CO. ARE IN THE NATURE OF A CONTRACTOR AND HENCE THE ASSESSEE IS REQUIRED TO DEDUCT THE T AX AT SOURCE AS PER THE PROVISIONS OF SEC. 194C OF THE ACT AND SINCE TH E ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE (TDS) FROM THE AMOUNT PA ID/PAYABLE TO M/S. GODREJ & BOYCEE MFG. CO. AND HENCE AS PER THE PROVISIONS OF SEC. 40(A)(IA) OF THE I.T. ACT SUM OF ` 74 74 986/- HAS TO BE DISALLOWED. THE A.O. ACCORDINGLY MADE THE DISALLOWANCE OF ` 74 74 986/- (EXCLUDING RENT) AND MADE ADDITION TO THE TOTAL INC OME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) AND LD. CIT (A) DELETED THE ADDITION OPERATIVE PART OF THE ORDER OF THE LD. CIT (A) READS AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT MADE PAYMENT OF ` 74 74 986/- TO M/S. GODREJ & BOYCE MFG. CO. ON ACCOUNT OF PROVIDING ALL NECESSARY SERV ICES TO IT BY M/S. GODREJ & BOYCEE MFG. CO. THE APPELLANT DID NOT DEDUCT TDS ON SUCH PAYMENT. THE APPELLANTS ARGUME NTS WERE THAT FIRSTLY NO TDS WAS REQUIRED TO BE MADE SI NCE THE SAME WAS REIMBURSEMENT OF EXPENSES AND IN ANY CASE THE DEDUCTEE M/S. GODREJ & BOYCEE MFG. CO. OBTAINED NON DEDUCTION CERTIFICATE FROM THE DEPARTMENT. I HAVE CAREFULLY ITA 4139/M/2010 M/S. GODREJ EFACEE AUTOMATION & ROBOTICS LTD. 3 CONSIDERED THE APPELLANTS ARGUMENT. THE APPELLANT S FIRST ARGUMENT THAT NO TDS WAS DEDUCTIBLE FROM SUCH PAYME NT BEING PAYMENT IN THE NATURE OF REIMBURSEMENT IS NOT ENTIRELY ACCEPTABLE. HOWEVER IN VIEW OF THE FACT THAT M/S. GODREJ & BOYCEE MFG. CO. I.E. TO WHOM THE PAYMENT W AS MADE THE APPELLANT OBTAINED A NON DEDUCTION CERTIFI CATE FROM THE I.T. DEPARTMENT THEREFORE THE APPELLANT WAS NOT REQUIRED TO DEDUCT ANY TAX ON PAYMENT MADE TO M/S. GODREJ & BOYCE MFG. CO.. IN VIEW OF THIS CERTIFICA TE THERE WAS NO LIABILITY ON APPELLANT TO DEDUCT TDS AND THE REFORE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE . IT IS A FACT ON RECORD THAT AT THE TIME OF ASSESSMENT PROCE EDINGS THE APPELLANT WAS NOT AWARE OF THIS CERTIFICATE AND THEREFORE NO SUCH ARGUMENT WAS TAKEN BY THE APPELLA NT DURING THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY T HE A.O. WAS ALSO JUSTIFIED IN MAKING DISALLOWANCE U/S.40(A)(IA) OF THE ACT. HOWEVER BECAUSE THIS CE RTIFICATE OF NON DEDUCTION OF TDS HAS NOW BEEN PRODUCED BY THE APPELLANT DURING APPELLATE PROCEEDINGS THEREFORE T HE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE AND DISALLOWANCE MADE BY THE A.O. DESERVES TO BE DELETE D. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. THE ASSESSEE HAS FILED THE PAPER BOOK IN WHICH COPIES O F THE CERTIFICATE ISSUED BY THE A.O. TO M/S. GODREJ & BOYCE MFG. CO. DATED 13.04.2005 IS PLACED. SAID COMPANY WAS AUTHORIZED TO RECEIVE T HE PAYMENTS IN RESPECT OF CONTACTS UNDERTAKEN WITHOUT DEDUCTION OF TAX-AT-SOURCE (TDS) U/S.194C OF THE ACT (PAGE NO.4 OF THE PAPER B OOK). ONLY ARGUMENT OF THE LD. D.R. IS THAT SAID CERTIFICATE I SSUED ONLY IN THE GENERAL TERMS AND THERE IS NO NAME OF THE ASSESSEE. IN OUR OPINION AS THE LD. D.R. IS NOT DISPUTING THE GENUINENESS OF THE CERTIFICATE AND ITA 4139/M/2010 M/S. GODREJ EFACEE AUTOMATION & ROBOTICS LTD. 4 HENCE HOW THE CERTIFICATE IS TO BE WORDED IS IN DOM AIN OF THE CONCERNED A.O. BUT ADMITTEDLY AS PER COPY OF CERTI FICATE ON RECORD M/S. GODREJ & BOYCE MFG. CO. WAS ENTITLED TO RECEIV E THE PAYMENT WITHOUT DEDUCTION OF TAX-AT-SOURCE (TDS). IN OUR O PINION THE LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION AS THERE WAS N O STATUTORY LIABILITY ON THE ASSESSEE TO DEDUCT THE TAX FROM THE PAYMENTS MADE TO M/S. GODREJ BOYCE MFG. CO. THOUGH THE REVENUE HAS TAKEN PLEA OF VIOLATION OF RULE 46A BUT SAME IS WITHOUT MERIT AS CERTIFICA TE PRODUCED BY THE ASSESSEE BEFORE LD. CIT (A) IS ISSUED BY A.O. ONLY. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 5. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH SEPTEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATED : 30TH SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -21 MUMBAI. 4) THE CIT- MC -10 MUMBAI. 5) THE D.R. G BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 4139/M/2010 M/S. GODREJ EFACEE AUTOMATION & ROBOTICS LTD. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 26.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER