M/S. J.D. CHUNDER & CO.,KOLKATA vs. ITO, WARD-31(2), KOLKATA, KOLKATA

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ITA 1075/KOL/2012Status: DisposedITAT Kolkata14 September 2015AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order and restored the issue to the AO. The AO is directed to verify if the recipients of the payments have included these amounts in their income and paid taxes on them.

What were the facts?

The assessee claimed job charges including printing, binding, lamination, processing, and design & drawing expenses. The AO disallowed these expenses for non-deduction of TDS under Section 194C, invoking Section 40(a)(ia). The CIT(A) confirmed the AO's action.

What were the issues?

Whether disallowance under Section 40(a)(ia) is warranted for non-deduction of TDS on job charges when recipients have accounted for the income and paid taxes.

Which sections of the Income-tax Act were involved?

Section 194C,Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH: KOLKATA

Before: Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]

Hearing: 25.08.2015Pronounced: 14.09.2015

ORDER

Per Shri Mahavir Singh, JM:

1.

This appeal by assessee is arising out of order of CIT(A)-XIX, Kolkata in appeal No. 183/CIT(A)-XIX/ITO,Wd-31(2)/Kol/11-12 dated 15.05.2012. Assessment was framed by ITO, Ward-31(2), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2009-10 vide its order dated 21.12.2011.

2.

The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in making disallowance of job charges amounting to Rs.27,76,823/- for non-deduction of TDS u/s. 194C of the Act thereby invoking the provisions of section 40(a)(ia) of the Act.

3.

Briefly stated facts are that the assessee claimed following expenses amounting to Rs.21,76,823/-: i) Printing charges Rs.13,37,030/- ii) Binding charges Rs. 5,46,544/- iii) Lamination charges Rs. 1,20,247/- iv) Processing charges Rs. 95,316/- v) Design & Drawing charges Rs. 77,686/- Rs. 21,76,823/- The AO required the assessee as to why these expenses be not disallowed as the assessee failed to deduct TDS u/s. 194C of the Act and according to AO, the provisions

M/s. J. D. Chunder & Co. AY 2009-10 of section 40(a)(ia) of the Act are applicable in this case. As the assessee failed to deduct TDS the AO made disallowance. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO. Aggrieved, now assessee is in second appeal before us.

4.

We have heard rival submissions and gone through facts and circumstances of the case. Before us Ld. Counsel for the assessee first of all tried to argue that the assessee is not liable to deduct TDS u/s. 194C of the Act for the reason that these printing charges, binding charges, lamination charges, processing charges and design and drawing charges are nothing but it includes supply of material and sec. 194C of the Act has been amended and where supply contract is there, the provisions of section 194C of the Act will not apply. But when Ld. Counsel for the assessee was confronted to produce the evidence that these job work charges are included in the supply of material, he fairly conceded the position but he only made a plea that let the issue be remitted back to the file of AO. In view of the argument of assessee’s counsel that the payment has been taken into account by recipients while computing income of respective recipients and verification of payment of tax in respect of such income can be verified by the AO. We find that this issue is now covered by the decision of Coordinate Bench of this Tribunal in the case of Santosh Kumar Kedia Vs. ITO, AY 2007-08 dated 04.03.2015, wherein vide para 10 of its order it has been held as under:

“10. Secondly, I am of the view that the insertion of second proviso to sec. 40(a)(ia) of the Act is curative and it has retrospective effect w.e.f. 1st April, 2005, being a date from which Sec. 40(a)(ia) of the Act was inserted by the Finance (No. 2) Act, 2004. In view of this, I am of the view that matter needs fresh adjudication in the light of the fact that the AO will carry out necessary verification in regard to related payments having been taken into account by the recipient in computation of its income and verification of payment of taxes in respect of such income and also filing of income tax return by the recipient. In term of the above, the second aspect argued by Ld. counsel is restored back to the file of the AO and assessee will provide all the details in terms of second proviso to sec. 40(a)(ia) of the Act.”

In terms of the above, we set aside the order of CIT(A) and restore the issue back to the file of AO in view of the argument of assessee’s counsel for verification of payment of tax in respect of such income whether the same is included by the recipients in their respective returns of income and paid taxes. If payment of tax is made by respective

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