ACIT, Kanpur v. M/s. Tandon & Mahendra, Kanpur

ITA 66/LKW/2011 | 2007-2008
Pronouncement Date: 24-10-2013 | Result: Dismissed

Appeal Details

RSA Number 6623714 RSA 2011
Assessee PAN AABFT7594B
Bench Lucknow
Appeal Number ITA 66/LKW/2011
Duration Of Justice 2 year(s) 8 month(s) 22 day(s)
Appellant ACIT, Kanpur
Respondent M/s. Tandon & Mahendra, Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 24-10-2013
Date Of Final Hearing 21-10-2013
Next Hearing Date 21-10-2013
Assessment Year 2007-2008
Appeal Filed On 02-02-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW BEFORE SHRI SUNIL KUMAR YA DAV JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO.66/LKW/2011 A.Y.: 2007-08 A .C.I.T.-5 KANPUR. VS. M/S TANDON & MAHENDRA 14/75 GOPAL VIHAR CIVIL LINES KANPUR. PAN:AABFT7594B (APPELLANT) (RESPONDENT) A PPELLANT BY SHRI ALOK MITRA D.R. RESPONDENT BY SHRI S. K. GARG ADVOCATE SHRI P. K. KAPOOR C.A. DATE OF HEARING 21/10/2013 DATE OF PRONOUNCEMENT 24/10/2013 O R D E R PER A. K. GARODIA A.M. THIS IS A REVENUES APPEAL DIRE CTED AGAINST THE ORDER OF LEARNED CIT(A)-II KANPUR DATED 13/10/2010 FOR THE ASSESSMENT YEAR 2007-2008. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ALLOWANCE MADE U/S 40(A)(IA) OF THE IT. ACT 1961. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE IT. ACT 1961 ARE NOT APPLICABLE ON PAYMENT OF COMMISSION U/ S 194H ON THE FACTS OF THE CASE. [2] 3. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN AB OVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 3. THE LEARNED D.R. SUPPORTED THE ASSESSMENT ORDER. HE ALSO SUBMITTED THAT THE WRITTEN SUBMISSIONS FILED BY EARLIER D.R. SHRI PRAVEEN KUMAR DATED 20 TH JULY 2011 SHOULD ALSO BE CONSIDERED WHILE DECIDING THE PRESENT APPEAL WHICH IS REPRODUCED AS UNDER: MAY IT PLEASE YOUR HONOURS 1. IN PARA 4.4.1 AND PARA 4.4.2 PAGE 26 CIT(A) HAS MENTIONED AS UNDER:- 4.4.1 THE APPELLANT DERIVED GR OSS PROFESSIONAL RECEIPTS AMOUNTING TO RS.82 00 382/- WHICH INCLUDED COMMISSION/BROKERAGE FROM FUND HOUSES AMOUNTING TO RS.73 28 869/-. THE APPELLANT FI RM HAD PAID AN AMOUNT OF RS.51 27 815/- TO M/S TAPASYA PR OJECTS LTD. (TPL) ON ACCOUNT OF BROKERAGE FOR MOBILIZING INVESTMENTS PURSUANT TO AN AGREEMENT DATED 01.04.2006. 4.4.2 ACCORDING TO THE APPELLANT IT HAD NOT DEDUCTED TAX AT SOURCE ON THE BROKERAGE PAID ON ACCOUNT OF SERVICES RENDERED BY M/S TAPASYA PROJECTS LTD. IN VIEW OF EXPLANATION (I) AND (III) TO SECTION 194H OF THE ACT. 2. EXPLANATION (1) OF SECTION 194 H STATES AS UNDER:- EXPLANATION - FOR THE PURPOSES OF THIS SECTION- (I) 'COMMISSION OR BROKERAGE' INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDIRECTLY BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BE ING PROFESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET VALUABLE ARTICLE OR THING NOT BEING SECURITIES' [3] 3. WHILE DECIDING THE ISSUE IN PARA 4.9 PAGES 29 30 CIT(A) HELD THAT THE FACTUAL MATRIX OF THE AFORESAID TRANSACTION IS VERY CLEAR IF SERVICES HAVE BEEN RENDERED BY M/S TAPASYA PROJECT LTD. IT IS ONLY IN RELATIO N TO THE SECURITIES AS NO OTHER SERVICES HAVE BEEN RENDERED BY M/S TAPASYA PROJECT. 4. THE CIT(A) HAS TREATED THE SERVICE RENDERED AS TRANSACTION RELATING TO SECURITI ES ON HYPOTHETICAL BASIS. 5. EXPLANATION (III) TO SEC TION 194 H STATES AS UNDER:- THE EXPRESSION 'SECURITIES ' SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (H) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATION) ACT 1956 (42 OF 1956). 6. SECTION 2 (H) OF SECURITIES CONTRACT (REGULATION) ACT 1956 (42 OF 1956) STATES AS UNDER:- (H) ' SECURITIES' INCLUDE- (I) SHARES SCRIPS STOCKS BONDS DEBENTURES DEBENTURE STOCK OR OTHER MARKETABLE SECU RITIES OF A LIKE NATURE IN OR OF ANY INCORPORATED COMPANY OR OTHER BODY CORPORATE; [(IA) DERIVATIVE; (IB) UNITS OR ANY OTHER INSTRUMENT ISSUED BY ANY COLLECTIVE INVESTMENT SCHEME TO THE INVESTORS IN SUCH SCHEMES;] (IC) SECURITY RECEIPT AS DEFINE D IN CLAUSE (ZG) OR SECTION 2 OF THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002;] (ID) UNITS OR ANY OTHER SUCH INSTRUMENT ISSUED TO THE INVESTORS UNDER ANY MUTUAL FUND SCHEME;] (II) GOVERNMENT SECURITIES; (IIA) SUCH OTHER INSTRUMENTS AS MAY BE DECLARED BY THE CENTRAL GOVERNMENT TO BE SECURITIES; AND (III) RIGHTS OR INTERE ST IN SECURITIES; A COPY OF SECTION 2 IS ENCLOSED. 7. IT CAN BE SEEN THAT THE TRANSACTION OF THE ASSESSEE WITH M/S TAPASYA PROJECT IS NOT COVERED UNDER THE SECURITIES. [4] 8. ASSESSEE HIMSELF HAS ADMITTE D PAYING OF COMMISSION OF RS.51 27 815/- TO M/S TAPASYA PROJECT LTD. FOR MOTIVATING VARIOUS INVESTORS TO INVEST THROUGH THE ASSESSEE FIRM. 9. IN VIEW OF THE ABOVE THE HON'BLE BENCH MAY BE PLEASED TO CONFIRM THE ACTION OF THE ASSESSING OFFICER. 4. AS AGAINST THIS THE LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBM ITTED THAT THIS ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THREE DECISIONS OF THE TRIBUNAL WHICH ARE AVAILABLE FROM PAGE 119 TO 123 124 TO 127 AND 128 TO 134 OF THE ASSESSEES PAPER BOOK DETAILS OF WHICH ARE AS UNDER: 1. I.T.A.T. MUMBAI BENCH ORDE R DATED 23/02/2011 IN CASE OF ACIT-2(3) MUMBAI VS. M/S S. J. INVESTMENT AGENCIES P. LTD. 2. I.T.A.T. DELHI BENCH ORDER DATED 07/12/2012 IN THE CASE OF INCOME TAX OFFICER WARD-36(2) NEW DELHI VS. MITTAL INVESTMENT & CO. 3. I.T.A.T. DELHI BENCH ORDER DATED 30/04/2013 IN THE CASE OF INCOME TAX OFFICER VS. KJH FINANCIAL SERVICES (P) LTD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS CITED BY LEARNED A.R. FOR THE ASSESSEE. AS PER THE FACTS NOTE D BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IT IS SEEN THAT TH E ASSESSEE HAS RECEIVED AN AMOUNT OF RS.73 28 868/- BEING COMMISSION RECE IVED FROM VARIOUS MUTUAL FUND REGISTRARS ON ACCOUNT OF BROKERAGE OR COMMISSION FOR SUBSCRIBING TO VARIOUS MUTUAL FUNDS BY A NUMBER OF INVESTORS. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE HAS ACTED AS A MUTUAL FUND BROKER UNDER BROKER CODE ARN-8814 FOR SUCH INVE STORS AND HAD EARNED COMMISSION TO THIS EXTENT. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE HAD DEBITED BROKERAGE AMOUNT OF RS.51 27 815/- TO ONE COMPANY NAMELY M/S TAPASYA PROJECTS LTD. THEREAFTER TH E ASSESSING OFFICER HAS NOTED THAT THE [5] ASSESSEE DID NOT MAKE ANY DEDUCTION OF TDS WHILE DEBITING THE ABOVE BROKERAGE AMOUNT IN FAVOUR OF M/S TA PASYA PROJECTS LTD. THE ASSESSING OFFICER DISPUTED THE ALLOWABILITY OF THIS AMOUNT ON TWO COUNTS AS TO WHETHER M/S TAPASYA PROJECTS LTD. HAD RENDERED ANY ACTUAL SERVICES TO THE ASSESSEE OR NOT AND WHETHER THE AMOUNT IS TO BE DISALLOWED UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE AC T. ON THE FIRST ASPECT I.E. REGARDING RENDERING OF SERVICE THE ASSESSING OFFICER HAS HELD AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BUT REGARDING ALLOWABILITY OF AMOUNT U/S 40(A)(IA) OF THE ACT IT WAS HELD BY HIM THAT SINCE THE ASSESSEE HAS NOT DEDUCTED THE TDS THIS AMOUNT IS NOT ALLOWABLE U/ S 40(A)(IA) OF THE ACT AND ON THIS BASIS HE DISALLOWED TH IS AMOUNT. THE LEARNED CIT(A) HAS DELETED THIS DISALLOWANCE ON THE BASIS THAT SINCE THE COMMISSION INCOME EARNED BY THE ASSESSEE AND COMMISSION EXPENDITURE INCURRED BY THE ASSESSEE WERE IN RELATION TO SECURITIES AS PER THE PROVISION OF SECTION 194H NO TDS WAS REQUIRED TO BE DEDUCTED ON SUCH EXPENDITURE AND CONSEQUENTLY NO DISALLOWANCE IS TO BE MADE U/S 40( A)(IA) OF THE ACT FOR THIS AMOUNT. 5.1 IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AS NOTED ABOVE WE NOW EXAMINE THE APPLICABILITY OF VARIOUS DECISIONS OF THE TRIBUNAL CITED BY LEARNED A.R. OF THE ASSESSEE. THE FIRST TRIBUNAL DECISION IS DATED 23/02/2011 PASSED BY BOMBAY TRIBUNAL IN THE CASE OF ACIT-2(3) MUMBAI VS. M/S S.J. INVESTMENT AGENCIES P. LT D. (SUPRA). AS PER THE FACTS NOTED BY THE TRIBUNAL IN THAT CASE ALSO TH E DISPUTE WAS SIMILAR. IN THAT CASE ALSO THE ASSESSEE WAS ENGAGED AS DISTRI BUTOR OF MUTUAL FUND UNITS AND HE HAD APPOINTED A SUB AGENT FOR THE SA ME AND COMMISSION WAS PAID TO THE SUB AGENT. UNDER THESE FACTS IT WA S HELD BY THE TRIBUNAL THAT AS PER EXPLANATION (I) TO SECTION 194H NO TDS WAS REQUIRED TO BE DEDUCTED FROM SUCH PAYMENT OF COMMISSION BECAUSE IT IS IN RELATION TO SECURITIES. IN THE [6] PRESENT CASE ALSO THE FACTS ARE SIMILA R AND THEREFORE THIS TRIBUNALS DECISION IS SQUARELY APPLICABLE IN THE FACTS OF THE PRESENT CASE. 5.2 IN OTHER TWO DECISIONS ALSO UNDER SIMILAR FACTS SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. LEARNED D.R. OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENC E IN THE FACTS OF THE PRESENT CASE AND IN THESE THREE CASES CITED BY LEARNED A.R. FOR THE ASSESSEE. WE THEREFORE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE. RESPECTFULLY FOLLOWING THE TRIBUNAL DECISIONS WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN THE PRESENT CASE ALSO. REGARDING THE WRITTEN SUBMISSIONS OF LEARNED D.R. OF REVENUE WE WOULD LIKE TO OBSERVE THAT PAYMENT OF COMMISSION IN RELATION TO SECURITIES IS COVE RED BY EXPLANATION (I) TO SECTION 194H AND HENCE TDS IS NOT DEDUCTIBLE. HENCE THE WRITTEN SUBMISSIONS ARE NOT HELPING THE REVENUE. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:24/10/2013 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT 2. T HE RESPONDENT. 3. CONCERNED CIT 4. T HE CIT( A ) 5. DR ITAT LUCKNOW A SSTT. REGISTRA R [7]