BIKASH SWAIN,BHUBANESWAR vs. ITO,WARD-2(1), BHUBANESWAR, BHUBANESWAR

This is an appeal filed by the assessee against the order of

the Commissioner of Income Tax(Appeals)-2, Bhubaneswar dated

30.11.2018 for the assessment year 2009-2010.

dismissed as not pressed.

requires no separate adjudication by me.

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“For that both the assessing authority as well as first appellate authority had failed to apply their judicial mind and to apply an inapplicable law to create the demand to this individual tax payer. They had not considered lawful claim of deduction on account of payment made to locally engage printing personnel, expenses incurred towards advertisement and commission expenses on the ground of non-deduction of taxes on such transactions.” 5. I have heard the rival submissions and perused the relevant

materials placed on record of the Tribunal. From the first para

page 3, it is discernible that the Assessing Officer has made

disallowance by observing that no TDS has been deducted at

source while making the payment to the parties as required under

the provisions of section 194C of the Act, and since the assessee

has failed to deduct tax at source on payment of Rs.1,44,000/-,

then same is disallowed u/s.40(a)(ia) of the Act. First of all, I

may point out from the relevant part of the assessment order at

pages 3 & 4, I observe that in the first limb of observation, the

Assessing Officer observed that the assessee has debited a sum of

Rs.3,02,022/- under the head “publicity expenses” whereas in the

second limb of observation at page 4, the Assessing Officer further

observed that since the assessee has failed to deduct tax on

payment of commission of Rs.1,44,000/-. Therefore, the same is

disallowed u/s.40(a)(ia) of the Act. These contradictory

P a g e 2 | 5 observations of the Assessing Officer in the assessment order

shows that the Assessing Officer proceeded to make the impugned

disallowance without application of mind.

observe that there is no adjudication and findings by the CIT(A)

on this issue, especially while dismissing the appeal of the

assessee.

that it is an explanation of the assessee that the impugned

payment of Rs.1,44,000/- has been made to The Samaj News

Paper and Eastern Media Services for publicity expenses and the

same was not a work contract but the entire liability of procuring

material and printing thereon was given to the recipients. As I

have noted that the authorities below have not brought any

material on record to establish that the provisions of section 194C

of the Act are applicable to the present case on the impugned

payments made by the assessee to the said two parties. I may

point out that as per Explanation to clause (iv) sub-clause(e) of

section 194C of the Act, the work shall include manufacturing or

supplying a product according to the requirement or specification

of a customer by using material purchased from such customer

P a g e 3 | 5 but does not include manufacturing or supplying a product

according to the requirement or specification of a customer by

using materials purchased from a person, other than such

customer. In the present case, the Assessing Officer as well as

the CIT(A) has not brought on record any positive material to

show that the publicity expenses claimed by the assessee to the

said two parties does not include the cost of material and same

was supplied by the assessee. Even from the observations made

by the Assessing Officer in the relevant part of the assessment

order at page 3, the Assessing Officer himself observed that the

assessee has debited the impugned amount under the head

“publicity expenses” and he is not claiming under job work

expenses. Therefore, I am satisfied that the second limb of sub-

clause(e) of clause (iv) of Explanation to Section 194C of the Act

absolves the assessee from the liability of deduction of Tax at

source u/s.194C of the Act. Therefore, the disallowance made by

the Assessing Officer u/s.40(a)(ia) cannot be held as sustainable

and thus, I delete the same.

Kolkata Benches in the case of DCIT vs Shalimar Chemicals

Works Ltd., in ITA No.892/Kol/2011 for A.Y. 2008-09 order dated

P a g e 4 | 5 28.9.2015 and CBDT circular No.05/2016 dated 29.2.2016.

Accordingly, the sole ground of the assessee is allowed.

Order pronounced on 16/05/2019.

Sd/- (Chandra Mohan Garg) JUDICIALMEMBER Cuttack; Dated 16/05/209 B.K.Parida, SPS

Copy of the Order forwarded to : 1. The Appellant : Bikash Swain, HIG Duplex, 36, Sailashree Vihar, Chandrasekharpur, Bhubaneswar.

By order

Sr. Pvt. Secretary, ITAT, Cuttack

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