M/S DAVESMEN INDIA,KOLKATA vs. INCOME TAX OFFICER, WARD - 33(1), KOLKATA, KOLKATA

In this appeal, the assessee has raised the following ground of appeal:-

Brief facts of this case are that the assessee is a firm and involved in the business of trading of tyre and production of chemicals and iron. The assessee filed its return of income M/s. Davesmen India 1 declaring a total income of Rs.6,73,260/-. The case was selected for scrutiny by issuing notice u/s. 143(2) of the Act. In response to which, the assessee filed its books of account, bank statements and other evidences including details of TDS.

During such proceedings, the AO found that the assessee debited an amount of Rs.6,88,569/- as Exhibition Expenses. Out of which the assessee paid an amount of Rs.3,00,000/- to Confederation of Indian Industry (CII). In explanation the assessee also produced a certificate issued u/s. 197(1) of the Act by the ACIT [TDS], Cir-49(1), Delhi authorising the assessee not to deduct tax at source on such payment made to Confederation of Indian Industry [CII]. According to the AO the said certificate was not issued in favour of assessee to claim exemption and was issued in favour of M/s. Davesmen India Pvt. Ltd. The AO was of the view that since the said certificate was issued in favour of M/s. Davesmen India Pvt. Ltd and not in the name of M/s. Davesmen India, the assessee herein, he disallowed the payment of Rs.3,00,000/- made to Confederation of Indian Industry by the assessee and added the same to the total income of the assessee u/s. 40(a)(ia) of the Act.

Before the CIT-A, the assessee contended that it was due to clerical error where name of the assessee was mistakenly mentioned as M/s. Davesmen India Pvt. Ltd on exemption certificate issued u/s. 197(1) of the Act. Before him it was also contended that the invoice was raised in the name of firm and such payment was made through its bank account. It was further argued before him that M/s. Davesmen India Pvt. Ltd did not claim any TDS in its return of income. The CIT-A after considering the submissions of the assessee was of the opinion M/s. Davesmen India 2 that the assessee should have filed rectification petition in this regard. Not satisfied with such contentions of the assessee, he confirmed the impugned order of AO.

Aggrieved by such order of the CIT-A, now the assessee is in second appeal before us by raising the above mentioned ground of appeal.

Before us the Ld.AR filed a paper book containing 11 documents running from pages 1 to 24, wherein he drew our attention to page 20 to show that said M/s. Davesmen India Pvt. Ltd did not claim any TDS and page 21 to show that M/s. Davesmen India Pvt. Ltd was incorporated on 12-02-08 by Registrar of Companies [ROC].

On the other hand, the Ld.DR has relied on the orders of the authorities below.

We have heard the rival submissions and perused the material available on record including the details available in the paper book. We find that the AO disallowed the amount of Rs.3,00,000/- on the ground that the said certificate issued to claim exemption was in the name of other entity and not in the name of assessee herein being M/s. Davesmen India. It is also seen from the record that there is no adverse inference drawn by the AO with regard to raising of invoice and such payment was caused through assessee’s bank account. On perusal of documents filed in the paper book show that M/s. Davesmen India Pvt. Ltd was incorporated in the year 2008 and there was no financial transaction. It is also noticed that on such entity the assessee filed its return of income along with computation M/s. Davesmen India 3 of income and certificate of incorporation to show that M/s. Davesmen India Pvt. Ltd was incorporated during the year i.e under consideration has no financial transaction and has no claim of TDS. Taking into consideration the facts of the case and submissions of the assessee, we are of the view that this is a clerical error where name of the assessee was mistakenly mentioned as M/s. Davesmen India Pvt. Ltd instead of M/s. Davesmen India in the said certificate issued u/s. 197(1) of the Act. We are of the view that the mistake inadvertently crept in and in such circumstances, the addition made thereon is not sustainable. Therefore, the addition made by the AO and confirmed by the CIT-A is hereby deleted. Accordingly, the ground raised by the assessee is allowed.

In the result, the appeal filed by the assessee is allowed.