DCIT, Circle-17(1), Hyd, Hyderabad v. Devgen Seeds & Crop Technology Pvt.Ltd., Sec'bad, Hyderabad

ITA 885/HYD/2016 | 2009-2010
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 88522514 RSA 2016
Assessee PAN AACCD5732D
Bench Hyderabad
Appeal Number ITA 885/HYD/2016
Duration Of Justice 4 month(s) 7 day(s)
Appellant DCIT, Circle-17(1), Hyd, Hyderabad
Respondent Devgen Seeds & Crop Technology Pvt.Ltd., Sec'bad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 21-10-2016
Assessment Year 2009-2010
Appeal Filed On 13-06-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SMT P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER ITA NO. 885/HYD/2016 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME- TAX CIRCLE 17(1) HYDERABAD. VS. M/S DEVGEN SEEDS & CROP TECHNOLOGY P. LTD. SECUNDERABAD. PAN AACCD5732D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI NITESH JOSHI DATE OF HEARING 13-10-2016 DATE OF PRONOUNCEMENT 21-10-2016 O R D E R PER S. RIFAUR RAHMAN A.M.: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 5 HYDE RABAD DATED 28/03/2016 FOR AY 2009-10. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF CULTIVATION OF LAND SOW ING IRRIGATION AND PRODUCTION AND SALE OF SEEDS FILED ITS RETURN OF I NCOME FOR AY 2009- 10 ON 30/09/2009 DECLARING A LOSS OF RS. 1 00 74 05 5/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY THE ASSESSEE FILED A REVISED RETURN ON 15/10/2010 DECLARING TOTA L LOSS OF RS. 6 94 56 542/-. THE CASE WAS SELECTED FOR SCRUTINY A ND NOTICES U/S 143(2) AND 142(1) WERE ISSUED. 2 ITA NO. 885/H/16 M/S DEVGEN SEEDS & CROP TECHNOLOGY PVT. LTD. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT DURING THE FY RELEVANT TO AY UNDER CONSIDERATI ON THE ASSESSEE HAS MADE THE FOLLOWING PAYMENTS: 1. COORDINATOR PAYMENTS UNDER THE HEAD SEED GROWER PAYMENTS & OTHER PRODUCTION COSTS 20.96 586/- 2. HYPACK INDUSTRIES TOWARDS PROMOTIONAL EXPENSES. 58 67 907/- 3. PROMOTIONAL EXPENSES OTHERS TO VARIOUS PARTIES VIZ. LEELA LEATHER MODI PRINTER AND OTHERS (PRINT MEDIAL CORP. ABHAY INDUSTRIES SUVIDHA GRAPHICS & PRINTERS AKSHARENT) 9 51 894 TOTAL 89 16 387/-. 2.2 THE AO OBSERVED THAT NO TDS WAS MADE BY THE ASS ESSEE ON THE SAID PAYMENTS. HE THEREFORE DISALLOWED THE SA ID AMOUNT U/S 40(A)(IA) OF THE ACT. 3. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 4. BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT T HE PAYMENT MADE BY IT TOWARDS PROMOTIONAL EXPENSES I.E. EITHER TOWARDS PURCHASE OF PROMOTIONAL ITEMS OR REIMBURSEMENT OF EXPENSES I NCURRED BY THE COMPANYS EMPLOYEE TOWARDS PROMOTIONAL ACTIVITIES ARE NOT LIABLE TO TDS. IT WAS FURTHER CONTENDED THAT SECTION 40(A)(IA ) IS NOT APPLICABLE IN THE CASE OF PURCHASE OF SEEDS. IT WAS ALSO CONTE NDED THAT EVEN OTHERWISE SECTION 40(A)(IA) COULD NOT BE INVOKED IN ITS CASE SINCE THE SAID SECTION IS APPLICABLE TO THE AMOUNT REMAINING PAYABLE AS ON 31 ST MARCH OF THE YEAR AND NOT THE AMOUNT PAID DURING TH E YEAR AND ASSESSEE HAS MADE THE PAYMENTS DURING THE FINANCIAL YEAR ITSELF. 4.1 THE ASSESSEE MADE AN ALTERNATE PLEA BEFORE THE CIT(A) RELYING ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD. [2013] 262 CITR 545 (ALL.) THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO RS. 15 22 373/- WHICH IS 3 ITA NO. 885/H/16 M/S DEVGEN SEEDS & CROP TECHNOLOGY PVT. LTD. OUTSTANDING AT THE END OF THE YEAR I.E. OUTSTANDING AS ON 31 MARCH 2015. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING THE VARIOUS CASE LAWS INCLUD ING THE SPECIAL BENCH DECISION OF THE ITAT IN THE CASE OF MERLYN SH IPPING & TRANSPORTS VS. ADDL. CIT [2012 136 ITD 0023 (SB) HELD THAT THE LIABILITY TO DEDUCT TDS OUT OF PROMOTIONAL CHARGES/ PAYMENTS DOES NOT ARSE AND THEREFORE OUT OF ADDITION OF RS. 89 16 387 /- THE OUTSTANDING AMOUNT OF RS. 15 22 373/- IS SUSTAINED AND THE REMA INING AMOUNT IS DIRECTED TO BE DELETED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 7. THOUGH THE APPROVAL OBTAINED FROM PR.CIT TO APP EAL BEFORE THE ITAT AGAINST THE ORDER OF THE CIT(A) U/S 253(2) OF THE ACT THE REVENUE HAS NOT RAISED/FILED ANY GROUNDS OF APPEAL. EVEN THOUGH THE SAID DEFECT HAS BEEN POINTED OUT BY THE REGISTRY T HE REVENUE HAS NOT FILED ANY GROUNDS OF APPEAL. ON THIS ASPECT ITSELF THE APPEAL OF THE REVENUE DESERVED TO BE DISMISSED. HOWEVER WE WILL DEAL WITH THE MERITS OF THE CASE IN THE BELOW PARAGRAPHS. 8. LD. DR RELYING ON THE ORDER OF THE ASSESSING OF FICER SUBMITTED THAT THE CIT(A) IS NOT PROPER IN SUSTAINING THE OUT STANDING AMOUNT OF RS. 15 22 373/- OUT OF THE ADDITION OF RS. 89 16 38 7/-. 9. LD. AR ON THE OTHER HAND BESIDES RELYING ON THE ORDER OF THE CIT(A) RELIED ON THE FOLLOWING DECISIONS: 1. CIT VS. JANAPRIYA ENGINEERS SYNDICATE 371 ITR 439 (AP) 2. ACIT VS. WARANGAL URBAN COOPERATIVE BANK LTD. [2016] 73 TAXMANN.COM 229 (HYD.) 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD AS WELL AS THE DECISIONS CITED. WE DO NOT FIND ANY INFIRMITY 4 ITA NO. 885/H/16 M/S DEVGEN SEEDS & CROP TECHNOLOGY PVT. LTD. IN THE ORDER OF THE CIT(A) IN SUSTAINING ONLY THE A MOUNT OF RS. 15 22 373/- WHICH IS PAYABLE AT THE END OF THE YEA R I.E. OUTSTANDING AS ON 31ST MARCH 2015 AS AGAINST THE ADDITION OF RS.89 16 387/- MADE BY THE ASSESSING OFFICER FOLLOWING THE SPECIA L BENCH DECISION OF THE ITAT IN THE CASE OF MERLYN SHIPPING AND TRAN SPORT (SUPRA). ACCORDINGLY WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 11. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD DATED: 21 ST OCTOBER 2016 KV COPY TO:- 1) DCIT CIRCLE 17(1) SIGNATURE TOWERS KONDAPU R HYDERABAD 2) M/S DEVGEN SEEDS AND CROP TECHNOLOGY PVT. LTD. 7C SURYA TOWERS 105 SP ROAD SECUNDERABAD. 3) CIT(A) - 5 HYDERABAD 4 CIT - 5 HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. HYDE RABAD. 6) GUARD FILE 5 ITA NO. 885/H/16 M/S DEVGEN SEEDS & CROP TECHNOLOGY PVT. LTD. S.NO. DESCRIPTION DATE INTLS DS1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/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.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER