ITO, New Delhi v. M/s. Paras Lubricants Lrd., New Delhi

ITA 737/DEL/2010 | 2003-2004
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 73720114 RSA 2010
Bench Delhi
Appeal Number ITA 737/DEL/2010
Duration Of Justice 2 month(s) 10 day(s)
Appellant ITO, New Delhi
Respondent M/s. Paras Lubricants Lrd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 30-04-2010
Date Of Final Hearing 20-04-2010
Next Hearing Date 20-04-2010
Assessment Year 2003-2004
Appeal Filed On 18-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 737/DEL/2010 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER WARD 51(1) ROOM NO. 510 5 TH FLOOR AAYAKAR BHAWAN LAXMI NAGAR NEW DELHI. VS. PARAS LUBRICANTS LTD. C-573 2 ND FLOOR SARASWATI VIHAR NEW DELHI. DELP01391F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. H.K. LAL SR. DR RESPONDENT BY: SHRI RAJEEV SAXENA ADV. O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 14 TH DECEMBER 2009 FOR A.Y. 2002-03. GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACETS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE S TORAGE CHARGES PAID BY THE ASSESSEE TO VARIOUS PARTIES IS NOT RENT PAID IN ACCORDANCE WITH THE PROVISIONS OF SEC. 194-I. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE P AYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF STORING/PACKING MAT ERIAL ARE NOT CONTRACTUAL OBLIGATIONS COVERED UNDER WORKS CONTRAC T IN ACCORDANCE WITH THE PROVISIONS OF SEC. 194C OF INCO ME TAX ACT 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE A SSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAULT FOR NON DEDUC TION OF TAX AT 2 ITA NO. 737/DEL/2010 SOURCE U/S 194C OF THE ACT OUT OF PAYMENTS MADE TO VENDORS FOR PURCHASE OF STORING/PACKING MATERIAL. 2. THE ASSESSEE IS A MANUFACTURER AND TRADER OF ALL KINDS OF LUBRICANTS AND GREASES. IN GROUND NO. 1 THE ISSUE RAISED IS WITH RESPECT TO STORAGE CHARGES PAID BY THE ASSESSEE AMOUNTING T O RS. 24 31 063/- WHICH HAS BEEN TREATED BY THE AO AS RENT IN PLACE O F THE CONTENTION OF THE ASSESSEE THAT THESE CHARGES ATTRACT THE PROVISI ONS OF SEC. 194C OF INCOME TAX ACT 1961 (ACT) AS THE SAID AMOUNT IS PA ID UNDER THE COMPOSITE CONTRACT FOR HANDLING AND STORAGE OF BASE OIL. HOWEVER AO IS OF THE VIEW THAT STORAGE CHARGES PAID BY THE ASSESS EE WILL ATTRACT THE PROVISIONS OF SEC. 194I WHICH ATTRACTS HIGHER RATE OF DEDUCTION OF TAX AND HE TREATED THE ASSESSEE IN DEFAULT FOR THE DIFFEREN CE BETWEEN THE TDS DEDUCTED BY THE ASSESSEE U/S 194C AND TREATED BY TH E AO U/S 194I. 3. GROUND NO. 2 & 3 RELATES TO DEDUCTION OF TAX ON THE PACKING MATERIAL WHICH ACCORDING TO ASSESSEE DID NOT INVOLV E ANY LIABILITY FOR DEDUCTION OF TAX AS THE SAID MATERIAL WAS RECEIVED BY THE ASSESSEE AGAINST THE CONTRACT OF SALE AND PURCHASE BUT ACCOR DING TO AO THE PACKING MATERIAL RECEIVED BY THE ASSESSEE WAS ARISI NG OUT OF CONTRACT ON WHICH THE TAX WAS LIABLE TO BE DEDUCTED U/S 194C OF THE ACT. 4. LD. DR RELYING ON THE ORDER OF AO PLEADED THAT O N STORAGE CHARGES THE ASSESSEE WAS LIABLE TO PAY HIGHER RATE OF DEDUCTION OF TAX AS THE SAME WAS ATTRACTED THE PROVISIONS OF SEC. 194I OF THE ACT AND WITH REGARD TO PACKING MATERIAL IT WAS SUBMITTED BY LD. DR THAT THE SAME 3 ITA NO. 737/DEL/2010 REPRESENTED A CONTRACT ON WHICH THE ASSESSEE WAS LI ABLE TO DEDUCT TAX AT SOURCE AND IN ABSENCE OF SUCH DEDUCTION OF TAX THE ASSESSEE WAS AN ASSESSEE IN DEFAULT AND THEREFORE THE AO WAS RIGH T IN TREATING THE ASSESSEE IN DEFAULT FOR THESE TWO ACTIONS. LD. CIT (A) IS WRONG IN DELETING BOTH THE DEMANDS RAISED BY THE AO. 5. ON THE OTHER HAND AT THE OUTSET IT WAS PLEADED BY LD. AR THAT THE ISSUE REGARDING STORAGE CHARGES IS COVERED BY THE E ARLIER ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 22 ND JULY 2005 IN ITA NO. 5196/DEL/04 FOR A.Y. 2001-02 WHEREIN VIDE PARA 7 IT WAS CONCLUDED THAT CIT(A) WAS RIGHT IN HOLDING THAT FOR SUCH STOR AGE CHARGES PROVISIONS OF SEC. 194C WERE APPLICABLE AND PROVISIONS OF SEC. 194I WERE NOT APPLICABLE. 6. ON THE OTHER ISSUE LD. AR SUBMITTED THAT JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT VS. DABAR INDIA LTD. 283 ITR 197 HAS HELD THAT IN THE CASE OF PACKING MATERIAL TRIBUNAL WAS JUSTIFIED IN HOLDING THAT PRE- DOMINANT OBJECT UNDERLYING THE CONTRACT WAS ONE FOR SALE OF GOODS WHICH TOOK THE CONTRACT OUT OF THE PURVIEW OF SEC. 194C. LD. AR SUBMITTED THAT THE SIMILAR VIEW HAS BEEN TAKEN BY DELHI ITAT IN TH E CASE OF WHIRLPOOL OF INDIA LTD. VS. JCIT. THUS IT WAS SUBMITTED BY LD. AR THAT LD. CIT(A) HAS RIGHTLY DECIDED BOTH THE ISSUES AND HIS ORDER SHOUL D BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N IN THE LIGHT OF MATERIAL PLACED BEFORE US. FIRST ISSUE RAISED BY T HE ASSESSEE IS COVERED 4 ITA NO. 737/DEL/2010 BY AFOREMENTIONED DECISION OF TRIBUNAL DATED 22 ND JULY 2005 FOR A.Y. 2001-02 AND THE RELEVANT PARA IS REPRODUCED BELOW: - 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. WE FIND THAT WHILE THE LD. AO HAS ATTACHED CONSIDER ABLE IMPORTANCE TO THE FACT THAT THE ASSESSEE PAID LUMP SUM CHARGES ON MONTHLY BASIS HE IGNORED THAT THE ASSES SEES CONTRACT WAS NOT MERELY FOR CHARGE BUT ALSO FOR TAK ING DELIVERY AND MAKING DELIVERY AND FOR SAFE CUSTODY. WE FIND THAT THE RELIANCE PLACED BY THE LD. AO ON THE JUDGM ENT OF HONBLE MADRAS HIGH COURT REPORTED IN 216 ITR 240 I S NOT JUSTIFIED. IN THAT CASE THE ATTEMPT ON THE PART OF THE REVENUE TO EXTEND THE SCOPE OF SEC. 194C TO THE PROFESSIONA L FEE BEING PAID TO DOCTORS AND LAWYERS WAS REJECTED. HO NBLE MADRAS HIGH COURT HELD THAT THE PROVISIONS 194C COU LD NOT BE RESTRICTED TO WORKS CONTRACT ALONE. AS AGAINST THIS WE FIND THAT IN THE CASE OF GULF OIL INDIA LTD. VS. I TO INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C HAS IN SIM ILAR SITUATION HELD THAT PROVISIONS OF SEC. 194I ARE NOT APPLICABLE. IN THAT CASE OF CIT VS. SALEM TEXTILES LTD. 237 IT R 662 (MAD.) THE DIESEL TANK PROVIDING DIESEL FOR GENERA TORS WAS HELD TO BE PLANT AND NOT BUILDING. WE ARE THEREFO RE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE IMPU GNED ORDER OF THE LD. CIT(A). THE SAME IS UPHELD AND THIS APP EAL IS DISMISSED. 8. ACCORDINGLY AFTER HEARING BOTH THE PARTIES WE D ECLINE TO INTERFERE IN THE ORDER OF CIT(A) WHEREBY HE HAS HELD THAT STO RAGE CHARGES PAID BY THE ASSESSEE ATTRACTED THE PROVISIONS OF SEC. 194C INSTEAD OF 194I. THEREFORE GROUND NO. 1 OF REVENUE IS DISMISSED. 5 ITA NO. 737/DEL/2010 9. SO AS TO IT RELATES TO SECOND ISSUE I.E. APPLICA BILITY OF PROVISIONS OF SEC. 194C ON THE PURCHASE OF STORING/PACKING MATERI ALS AND STICKERS WE FOUND THAT A FINDING HAS BEEN RECORDED BY LD. CIT(A ) IN HIS ORDER THAT THESE MATERIALS WERE PURCHASED BY THE ASSESSEE IN O PEN MARKET AGAINST PROPER SALE INVOICES AFTER PAYING SALES TAX/CST. I N THIS VIEW OF THE SITUATION AS NO CONTRARY MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE AGAINST SUCH FINDING WE DECLINE TO INTERFE RE IN THE ORDER OF CIT(A) AS HE HAS GRANTED SUCH RELIEF TO THE ASSESSE E BASED ON AFOREMENTIONED DECISION OF JURISDICTIONAL HIGH COUR T IN THE CASE OF DABAR INDIA LTD. (SUPRA). THEREFORE GROUND NO. 2 & 3 OF THE REVENUE ARE ALSO DISMISSED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30.04.201 0 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 30.4.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR