M/s R.R. Enterprises, Meerut v. ITO, Meerut

ITA 5238/DEL/2010 | 2006-2007
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 523820114 RSA 2010
Bench Delhi
Appeal Number ITA 5238/DEL/2010
Duration Of Justice 3 month(s)
Appellant M/s R.R. Enterprises, Meerut
Respondent ITO, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 25-02-2011
Date Of Final Hearing 02-02-2011
Next Hearing Date 02-02-2011
Assessment Year 2006-2007
Appeal Filed On 25-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : F NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA HONBLE VICE PRES IDENT AND SHRI A.D. JAIN JUDICIAL MEMBER ITA NO.5238/DEL./2010 (ASSESSMENT YEAR : 2006-07) M/S R.R. ENTERPRISES VS. ITO WARD 2(2) 184-A ABULANE MEERUT. MEERUT. (PAN/GIR NO.AABFR6498Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINOD KUMAR GOEL ADV. REVENUE BY : SHRI H.K. LAL SR.DR ORDER PER A.D. JAIN JM THIS IS ASSESSEES APPEAL FOR AY 2006-07 TAKING THE FOLLOW ING GROUNDS: 1. THE CIT(A) WAS NOT JUSTIFIED IN TREATING THE ASSESSEE IS DEFAULTER OF TDS RELATING TO ADVERTISING EXPENSES AS CONTRACT U/S 194C OF THE I.T. ACT 1961. HOWEVER T HERE WERE NO CONTRACT OR RELATIONSHIP OF PRINCIPAL AND CONTRACTOR BETWEEN THE ASSESSEE AND ADVERTISING AGENCY THEREFORE ADDITION MADE BY THE AO U/S 40(A)( IA) CONFIRMED BY CIT(A) IS BAD IN LAW. 2. THAT A.O. WAS NOT JUSTIFIED IN MAKING ADDITIONAL O N ACCOUNT OF GIFT WERE GIVING UNDER THE GIFT BONANZA SCHEME BECAUSE GIFT WAS GIVEN ON THE GROUNDS AND COMMERCIAL EXPEDIENCY. A.O. AS WELL AS CIT(A) IS IN ERROR THAT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE UNDER GIFT BONANZA SCHEME. THEREFORE ADDITION MADE `1 59 700 IS BAD IN LAW. 2. APROPOS GROUND NO.1 THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF `55 176 IN ITS P&L A/C ON ACCOU NT OF ADVERTISEMENT WITHOUT MAKING TDS THEREON. ON QUERY THE ASSESSEE I.T.A. NO.5238/DEL./10 (AY : 2006-07) 2 SUBMITTED BEFORE THE AO THAT THE PAYMENT WAS MADE EVE RY DAY FOR ADVERTISEMENT IN NEWSPAPERS; THAT THE PAYMENT AT ONE T IME WAS LESS THAN `20 000; THAT IN SUM THE AMOUNT WAS LESS THAN `50 000; THAT PAYMENTS HAD BEEN MADE BY THE FIRM ON THE ASKING OF T HE COMPANY; AND THAT THIS DID NOT ATTRACT THE PROVISIONS OF SECTION 194C OF THE I.T. ACT. 3. THE AO DISAGREED WITH THE ASSESSEES STAND OBSERVING THA T THE ASSESSEE HAD MADE PAYMENT OF `55 176 ON DIFFERENT DATES TO M/S SINGHAL ADVERTISING AGENCY WHICH WAS MORE THAN `50 0 00; THAT AS SUCH THE PROVISIONS OF SECTION 194C OF THE ACT WERE AT TRACTED; THAT THE ASSESSEE SHOULD HAVE MADE TDS THEREON WHICH HAD NOT BEE N DONE; AND THAT THEREFORE THE EXPENSES DEBITED UNDER THIS HE AD WERE BEING DISALLOWED U/S 40(A)(IA) OF THE ACT. 4. BY VIRTUE OF THE IMPUGNED ORDER THE CIT(A) CON FIRMED THE ORDER OF THE AO. 5. AGGRIEVED THE ASSESSEE HAS TAKEN GROUND NO.1 BEFORE US. 6. CHALLENGING THE IMPUGNED ORDER THE LD.COUNSEL FO R THE ASSESSEE HAS CONTENDED REITERATING THE ASSESSEES STAND TAKEN BEFOR E THE CIT(A) THAT DURING THE YEAR THE ASSESSEE HAD INCURRED THE EXPENDITURE TOWARDS THE ADVERTISEMENT INCLUDING SERVICE TAX; THAT THE TOTAL PAYMENT MADE TO SINGHAL ADVERTISING AGENCY WAS ONLY `49575/- WHICH IS LESS THAN `50 000; THAT THE CIT(A) HOWEVER WRONGLY IGNORED THE PAYMENTS OF `1615 AND `3 000 MADE TO MODE COMMER CIAL COLLEGE & MEDIA ADVERTISERS RESPECTIVELY; THAT AS SUCH THE TOTA L PAYMENT MADE BY THE ASSESSEE WAS OF ONLY `45 559; THAT AS SUCH TH E ASSESSEE HAVING NOT MADE ANY PAYMENT OF `20 000 AS A SINGLE PA YMENT TO SINGHAL ADVERTISING AGENCY NOR PAYMENT OF OVER `50 000 IN THE AGGREGATE IS NOT LIABLE TO DEDUCT AT SOURCE THE PRO VISIONS OF SECTION 194C OF THE ACT IS APPLICABLE. ATTENTION HAS BEEN D RAWN TO PAGE 8 OF THE ASSESSEES PAPER BOOK WHICH IS A COPY OF ADVERTISEMEN T LEDGER I.T.A. NO.5238/DEL./10 (AY : 2006-07) 3 ACCOUNT. ATTENTION HAS ALSO BEEN DRAWN TO THE CALCUL ATION OF THE PAYMENT MADE TO SINGHAL ADVERTISING AGENCY AS DEPICT ED IN THE TABLE AT PAGE 3 OF THE ASSESSEES WRITTEN SUBMISSIONS. 7. THE LD.DR ON THE OTHER HAND HAS PLACED RELIANCE ON THE IMPUGNED ORDER CONTENDING THAT SINCE THE AMOUNT OF `53 561 HAD BEEN PAID TO A SINGLE PARTY I.E. THE SINGHAL ADVERT ISING AGENCY TDS WAS DEDUCTIBLE IN VIEW OF THE PROVISIONS OF SECTION 194 C OF THE ACT. 8. IN THIS REGARD IT IS SEEN THAT THE CIT(A) OBSERVED ON THE ISSUE MERELY AS FOLLOWS: I HAVE CONSIDERED THE FACTS AND ARS SUBMISSIONS CAREFULL Y. I FIND THAT THE SUM OF `55 176 WAS PAID TOWARDS ADVERTISI NG DURING THE YEAR. OUT OF THIS A SUM OF `53 561 WAS PAID TO A SINGLE PARTY VIZ. SINGHAL ADVERTISING AGENCY. IN MY VIEW TDS WA S DEDUCTIBLE IN TERMS OF EXPRESS PROVISIONS CONTAINED UNDER SECTION 19 4C AS THE AMOUNT EXCEEDED `50 000 DURING THE YEAR. 9. THE CIT(A) AS IS EVIDENT FROM THE ABOVE FINDING HAS NOT PASSED A SPEAKING ORDER BY RECORDING CATEGORICAL FINDINGS ON THE EXPLANATION OFFERED BY THE ASSESSEE AND THE DETAILS SUBMITTED. THE O RDER OF THE CIT(A) IS AS SUCH NON-SPEAKING. ACCORDINGLY THIS ISSUE IS REMITTED TO THE FILE OF THE CIT(A) TO BE DECIDED AFRESH IN ACCOR DANCE WITH LAW BY PASSING A SPEAKING ORDER ON AFFORDING ADEQUATE OPPORTU NITY TO THE ASSESSEE. 10. SO FAR AS REGARDS GROUND NO.2 THE AO MADE ADDITI ON OF `1 59 700 BY OBSERVING THAT THE EXPENDITURE CLAIMED WAS BOGUS. IT WAS OBSERVED THAT THE ASSESSEE HAD SHOWN GIFTS AMOUNTING TO `1 59 700 GIVEN TO DIFFERENT PERSONS UNDER BONANZA SC HEME AND HAD DEBITED THIS AMOUNT IN THE P&L A/C; THAT ON QUERY AB OUT DETAILS OF THE RECIPIENTS THE ASSESSEE HAD SUBMITTED THAT IN LUCKY DRAW WATCHES HAD BEEN GIFTED AND IT WAS THE PRICE OF THE WATCHES W HICH HAD BEEN I.T.A. NO.5238/DEL./10 (AY : 2006-07) 4 DEBITED; AND THAT THIS CLAIM OF THE ASSESSEE HAD NOT BEE N PROVED NOR HAD THE ASSESSEE PROVIDED THE NAMES AND ADDRESS OF THE REC IPIENTS RENDERING THE CLAIM TO BE UNVERIFIABLE. 11. THE CIT(A) CONFIRMED THE ADDITION. 12. THE LD.COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT TH E ASSESSEE-FIRM HAD TAKEN OUT A GIFT BONANZA SCHEME AND H AD DEBITED AN AMOUNT OF `1 59 700 TO THE P&L A/C BEING THE CO ST OF THE WATCHES DISTRIBUTED TO THE LUCKY DRAW WINNERS OF THE SCHEME; THAT THE LIST OF THE WINNERS WERE NOT TRACEABLE SINCE RECORDS HAD BEEN MOVED SEVERAL TIMES AND HAD BEEN BROUGHT FOR VERIFICATION TO THE D EPARTMENT; THAT THE EXPENDITURE THEREON IS NEITHER OF CAPITAL EXPEND ITURE NOR A PERSONAL EXPENDITURE OF THE ASSESSEE AND IT WAS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE ASSESSEES BUSINESS; THAT THE AO NEVER ASKED THE ASSESSEE FOR THE DETAILS OF THE GIFTS BUT ONLY FOR THE DETAILS OF THE RECIPIENTS; THAT THE GIFT WATCHES WERE SENT BY THE SUPPLIERS AND WERE PART OF THE PURCHASE PRICE. ATTENT ION HAS BEEN DRAWN TO PAGES 18-24 OF THE PAPER BOOK CONSTITUTING A LIST OF THE GIFT BONANZA COUPONS DRAW. IT HAS BEEN CONTENDED THAT THI S HAS NOT BEEN CONSIDERED BY THE CIT(A). ATTENTION HAS ALSO BEEN DRA WN TO PAGE NO. 25 (COPY OF PAMPHLET OF GIFT BONANZA OFFERED) PAGE NO.26 (LIST OF EXPENSES FOR AYS 2004-05 TO 06-07) AND PAGE NO.27 (COP Y OF PHOTO DRAW) OF THE PAPER BOOKS. IT HAS BEEN CONTENDED THAT ALL THE EVIDENCE HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE CIT(A). 13. THE LD.DR ON THE OTHER HAND HAS RELIED ON THE IMPUGNED ORDER. 14. HERE ALSO WE FIND THAT THE ORDER OF THE CIT(A) IS A NON-SPEAKING ORDER. THE EVIDENCE FILED BY THE ASSESSEE HAS NOT BEEN CONSIDERED. NO DETAILED FINDINGS HAD BEEN RECORDED. THE CIT(A) HAS DOUBTED THE VERY INCURRENCE OF THE EXPENDITURE WITHOUT TAKING T HE EVIDENCE INTO CONSIDERATION. THE LIST OF PERSONS TO WHOM THE GIFT BO NANZA COUPONS I.T.A. NO.5238/DEL./10 (AY : 2006-07) 5 WERE ISSUED HAS NOT BEEN ADMITTED INTO THE EVIDENCE SI NCE IT WAS ADDITIONAL EVIDENCE. THIS LIST IT IS SEEN HOWEVER CO NTAINS THE DETAILS OF THE ALLEGED RECIPIENTS OF THE GIFTS. THIS LIST IS TH US NECESSARY TO BE TAKEN INTO CONSIDERATION TO DECIDE THE CLAIM OF THE ASSESSEE. THE MATTER IS IN VIEW OF THE ABOVE REMITTED TO THE FIL E OF THE CIT(A) TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE AND PASS A SPEAKING ORDER ON THE ISSUE . 15. IN THE RESULT FOR STATISTICAL PURPOSES THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 16. ORDER PRONOUNCED IN OPEN COURT ON 25.02.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D.JAIN) VICE PRESIDENT JUDICIAL MEMBER DELHI DATED : 25.02.2011 SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) MEERUT. 5.CIT(ITAT) NEW DELHI. AR/ITAT