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Income Tax Appellate Tribunal, “A” Bench, Mumbai
O R D E R Per B.R. Baskaran (AM) :-
The appeal filed by the Revenue is directed against the order dated 9.3.2011 passed by the learned CIT(A)-3, Mumbai and it relates to A.Y. 2006- 07. The Revenue is aggrieved by the decision of the learned CIT(A) in granting relief by deleting the additions made u/s. 40(a)(ia) of the Act to the extent of ` 5,66,000/-(u/s. 194I) and ` 71,37,220/- (u/s. 194J).
We have heard the parties and perused the record. The assessee is engaged in the business of preparing scratch ad film, banners and hoardings for the customers. The assessee is carrying on his work through five proprietary concerns. The Assessing Officer noticed that the assessee has claimed a sum of ` 1,25,75,680/- as expenditure in aggregate in all the concerns. Since the assessee did not furnish details, the Assessing Officer took the view that the assessee would be liable to deduct tax from the above said payment and accordingly disallowed the above said amount u/s. 40(a)(ia) of the Act.
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In the appellate proceedings, the assessee furnished detailed submissions giving breakup details of various expenses. It was submitted that the provisions of TDS would not be applicable to the payment made to the extent of ` 21,49,200/-. It was further submitted that provisions of section 194C of the Act shall not be applicable to the assessee for the year under consideration. The learned CIT(A) forwarded all the details to the Assessing Officer calling for the remand report. The Assessing Officer accepted the claim of the assessee that provisions of section 194C of the Act shall not be applicable to the assessee during the year under consideration. Accordingly, the Assessing Officer discussed about the applicability of section 40(a)(ia) of the Act on the following payments :-
(a) Section 194I - ` 5,66,000/- (b) Section 194J - ` 71,37,220/-
The Assessing Officer noticed that the assessee had filed certain details initially and revised those details subsequently. The Assessing Officer took the view that the revised details should not be considered by the learned CIT(A). However, the Assessing Officer accepted that the provisions of section 194I are also not applicable to the assessee for the year under consideration. In respect of the provisions of section 194J, the Assessing Officer placed reliance on the details initially furnished by the assessee.
The learned CIT(A) noticed that the assessee furnished head-wise details initially and thereafter revised the same payee-wise. The learned CIT(A) noticed that the payment made to each of the payees does not exceed threshold limit prescribed in the respective sections. Accordingly, he deleted both the additions referred above with the following observations:-
“2.2.2 In so far as section 1941 is concerned, AO has identified 2 heads of expenses for disallowance u/s.1941. These are both under Khushi Ad Production, proprietary concern and pertain to flat hire for shoot to Felix L. Pinto ` 3,10,000/- and outdoor loction charges to SK Kumar Gardens 2,56,000/-. The submissions of appellant are seen. It is 3 Shri Amit Bhupendra Popat evident that this disallowance has been worked out by AO on the basis of initial details considered by AO in the assessment order and not on the basis of revised details filed on 29-12-08 which were remanded during appellate proceedings. The ledger accounts of appellant do not indicate payments to only Felix L Pinto or to SK Kumar Garden. The details indicate that the payments were made to numerous parties on different dates and that none of the payments was above the minimum prescribed limit u/s. 194I. In the facts and circumstances of the case, the disallowance proposed by AO in the report of 25-1-11 is unsubstantiated. It is held that there was no applicability on the facts of the payments to different parties in the impugned AY u/s. 194I.
2.2.3 In so far as disallowance u/s. 194J is concerned, the entire disallowability worked out by AO is based on details considered by AO during assessment. AO has again ignored the revised details and ledger accounts of appellant. It is seen that appellant had submitted before AO that disallowability would be ` 821,000/- which details have been furnished by Assessing Officer in his report supra. Assessing Officer did not accept and held that the details considered by his predecessor in assessment order were applicable and the entire amount of payment of ` 71,37,220/- was to be disallowed. It is also seen that AO's report is based on the headwise expenditure and not on the basis of individual payments and amounts o such individual payments to different parties. Details filed by appellant before AO and during appellate proceedings indicate that individual payments are less than the minimum specified limit u/s. 194J. In spite of adequate opportunities given to AO, the facts of the case from the ledger accounts of appellant have not been verified by AO while proposing sustaining of disallowance, though he had accepted that revised details and ledger accounts do not match only in 3 instances. In the circumstances, except the disallowability worked out by appellant at ` 8,21,000/-, it cannot be held that on the basis of headwise accounts, provisions of section 40(a)(ia) should be invoked when payments to any party over the prescribed minimum limit had not been identified by AO. Moreso, when the ledger accounts indicate the payments made to different parties are less than the prescribed sum above which tax needed to be deducted.”
We have gone through the order passed by the learned CIT(A) and noticed that he has given a finding of fact to the effect that the payment made to each of the parties does not exceed threshold limit in the prescribed sections. During the course of hearing the Revenue could not place any material to contradict the findings given by the learned CIT(A). Hence, we do not find any reason to interfere in the order passed by him on this issue.
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In the result, appeal filed by the Revenue is dismissed. Order has been pronounced in the Court on 16.5.2017.