DCIT, Bangalore v. M/s Rajesh Exports Ltd.,, Bangalore

ITA 857/BANG/2010 | 2004-2005
Pronouncement Date: 21-09-2011 | Result: Allowed

Appeal Details

RSA Number 85721114 RSA 2010
Assessee PAN AAEFN2494B
Bench Bangalore
Appeal Number ITA 857/BANG/2010
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant DCIT, Bangalore
Respondent M/s Rajesh Exports Ltd.,, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 21-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year 2004-2005
Appeal Filed On 30-06-2010
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH B BANGALORE BEFORE SHRI N.K.SAINI ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI JUDICIAL MEMBER I.T.A. NO.1054(BANG.)/2010 (ASSESSMENT YEAR : 2006-07) THE DEPUTY COMMISSIONER OF INCOME-TAX CIR CLE-2(1) BANGALORE APPELLANT VS M/S NATIONAL PANEL PRODUCT 304 MYSORE ROAD BANGALORE-560 026. PAN NO.AAEFN2494B RESPONDEN T REVENUE BY : SMT. SUSAN THOM AS JOSE JCIT ASSESSEE BY : SHRI A.R.VIVEK ADVOCATE DATE OF HEARING : 26-09-2011 DATE OF PRONOUNCEMENT : O R D E R PER SMT P. MADHAVI DEVI JM ; THIS APPEAL BY THE REVENUE RELATES TO ASSESSMENT YE AR 2006-07. THE REVENUE HAS RAISED THE FOLLOWING GROUN DS IN ITS APPEAL; 1.THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE U/S 40(A)(IA) OF IT ACT ON ACCOUNT OF DISALLOWANCE OF JOB WORK CHARGES OF RS.57 95 239/- FOR NOT DEDUCTING TDS AS REQUIRED UNDER THE PROVISIONS OF SEC194C OF THE IT ACT 1961 ON THE MODVAT CREDIT INCLUDED IN THE JOB WORK CHARGES OF RS.1 43 13 517/- 2.THE CIT(A) WITHOUT APPRECIATING THE PROVISIONS OF SEC. 194C IN PROPER PERSPECTIVE HAS ITA.NO.1054(B)/10 2 ERRED IN NOT TAKING INTO CONSIDERATION THE FACT THAT THE ACCOUNT OF NIPL HAS BEEN CREDITED TO THE EXTENT OF RS.1 43 13 517/- (INCLUDING RS.57 95 239/- BEING EXCISE DUTY CREDIT) ON ACCOUNT OF JOB WORK CHARGES AND TDS IS REQUIRED TO BE DEDUCTED AT SOURCE ON THE ENTIRE SUM AT THE TIME OF CREDITING OF SUCH SUM TO THE ACCOUNT OF NPIL OR AT THE TIME OF PAYMENT THEREOF. 3. THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT AS PER THE EXPLANATION-II TO SEC.194C OF THE IT ACT 1961 THE PROVISIONS OF SEC194C OF THE IT ACT ARE APPLICABLE TO ANY SUM REFERRED TO IN SUBSECTION(1) IS CREDITED TO ANY ACCOUNT CALLED SUSPENSE ACCOUNT; OR BY ANY OTHER NAME IN THE BOOKS OF ACCOUNTS OF THE PERSON LIABLE TO PAY SUCH SUM AND SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF SEC.194C WILL APPLY ACCORDINGLY. 2. IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE U/S 40( A)(IA) OF THE IT ACT OF AN AMOUNT OF RS.57 95 239/- FOR NOT DEDUC TING THE TAX AT SOURCE AS REQUIRED UNDER THE PROVISIONS OF SEC.194C OF THE IT ACT ON THE MODVAT CREDIT AND THE JOB WORK CHARGES OF RS.1 43 13 517/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF SALE LAMINATE SHEETS. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT TH E AO PERUSED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND OB SERVED ITA.NO.1054(B)/10 3 THAT THE ASSESSEE IS SHOWING RS.1 43 13 517/- UNDER THE HEAD JOB WORK CHARGES PAID TO M/S NATIONAL PLYWOO D INDUSTRIES LTD. ( NPIL ) M/S MATCHWELL AND M/S MULTISHAPPER (I) PVT.LTD. AND THAT THE ASSESSEE HAS ACTUALLY DE DUCTED TAX AT SOURCE ONLY TO THE EXTENT OF RS.85 18 218/- OUT OF JOB WORK CHARGES BUT HAS DEDUCTED TAX AT SOURCE ON THE BALAN CE AMOUNT. THE ASSESSEES EXPLANATION WITH REGARD TO SHORT DEDUCTION OF TAX AT SOURCE WAS CALLED FOR. THE ASS ESSEE REPLIED THAT OUT OF TOTAL PAYMENTS OF RS.1.43 CRORE S AROUND RS.57.95 LAKHS IS THE MODVAT ELEMENT WHICH IS UTILI SED BY THE JOB WORK CONCERN NAMELY M/S NPIL AND ON COMPLETION OF THE FINISHED GOODS M/S NPIL HAS BILLED BOTH THE LABOUR CHARGES AS WELL AS EXCISE DUTY AS IT IS EXCISABLE PRODUCT. IT WAS SUBMITTED THAT THE ASSESSEE HAS PAID ONLY JOB WORK LABOUR CHARGES AND NOT EXCISE DUTY AND THEREFORE THE TDS IS NOT DEDUCTED ON THE SAME. THE AO HOWEVER WAS NOT SATIS FIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE TDS OUGHT TO HAVE BEEN DEDUCTED FROM THE SAID PAYMENT O F MODVAT CREDIT ALSO SINCE THE SAME IS CREDITED TO TH E LEDGER OF JOB WORK CHARGES. HE ACCORDINGLY MADE THE ADDITION TO THE RETURNED INCOME. 3.1 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A) REITERATING THE SUBMISSIONS MADE BEFORE THE AO AND ON CONSIDERATION OF THE SAME THE CIT(A) DELETE D THE ADDITION. ITA.NO.1054(B)/10 4 3.2 AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE O RDER OF THE CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE T HE AUTHORITIES BELOW. 4. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS WE FIND THAT THE ASSESSEE HA S SUPPLIED THE RAW MATERIALS TO M/S NPIL FOR MANUFACTURE OF PL YWOOD AND AS PER THE TERMS OF THE CONTRACT THE ASSESSEE WAS REQUIRED TO PAY THE ENTIRE PURCHASE CONSIDERATION I NCLUDING THE EXCISE AMOUNT ON THE SAID RAW MATERIAL. THE MO DVAT CREDIT THAT WAS AVAILABLE ON THE SAID PURCHASE OF R AW MATERIAL WAS AVAILED BY NPIL BY VIRTUE OF EXCISE NO TIFICATION NO.23/2004-CENTRAL EXCISE(N.T) DATED 10-09-2004. I N VIEW OF THE SAME WE FIND THAT THE CIT(A) HAS RIGHTLY AP PRECIATED THE FACT THAT THE JOB WORK CHARGES + EXCISE DUTY WA S PAID SIMULTANEOUSLY TO M/S NIPL BY THE ASSESSEE WHILE TD S IS MADE ONLY FROM THE JOB WORK AS NIPL DEPOSITS THE E XCISE DUTY WITH THE GOVERNMENT WHICH IS RECEIVED FROM THE ASSESSEE ON THE MANUFACTURE OF PANELS. ON ENQUIRY FROM THE BENCH LEARNED DR ADMITTED THAT THE NIPL WAS GIVEN THE CREDIT FOR THE MODVAT CREDIT. THIS FACT HAS ALSO BEEN RECORDED BY THE CIT(A). ONCE THE DEPARTMENT HAS GR ANTED CREDIT FOR THE MODVAT CREDIT IT CANNOT BE AGAIN SA ID THAT TDS HAS TO BE DEDUCTED FROM THE SAME. IN VIEW OF THE S AME WE ITA.NO.1054(B)/10 5 DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A) AND THE REVENUES APPEAL IS ACCORDINGLY DISM ISSED. 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE ( N.K.SAINI) (SMT. P . MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: BANGALORE DATED: AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR ITAT BANGALORE