Income Tax Appellate Tribunal - Kolkata
Smriti Kumar Mukherjee, Kolkata vs Department Of Income Tax on 28 December, 2011
आयकर अपीलीय अधीकरण, Ûयायपीठ - " िस" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम¢)Before ौी एस. भी. मेहरोऽा, लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
[Before Shri S. V. Mehrotra, AM & Sri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A No. 1084/Kol/2011
िनधॉरण वषॅ/Assessment Year: 2007-08
Assistant Commissioner of Income-tax, Vs. Shri Smriti Kumar Mukherjee
Circle-49, Kolkata. (PAN: AELPM 1307 F)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing: 28.12.2011
Date of pronouncement: 28.12.2011
For the Appellant: Shri N. Dutta Gupta
For the Respondent: N o n e
आदे श/ORDER
Per Mahavir Singh, JM ( महावीर िसंह, Ûयायीक सदःय)
सदःय This appeal by revenue is arising out of order of CIT(A)-XXXII, Kolkata in Appeal No.57/CIT(A)-XXXII/10-11/Cir-49/Kol dated 30.03.2011. Assessment was framed by DCIT, Circle-49, Kolkata u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2007-08 vide his order dated 30.12.2009.
2. The only issue in this appeal of revenue is against the order of CIT(A) in holding the activity of assessee as business and not profession. For this, revenue has raised following ground no.1:
"Whether in the facts and circumstances of the case the Ld. CIT(A) was correct in holding that the activity of the assessee in the line of advertising would constitute business and not profession, thereby exonerating him from the liability of TDS as his case would fall outside the purview of the Section 44AB?"
3. We have heard Ld. Sr. DR Shri N. Dutta Gupta and gone through facts and circumstances of the case. We find that the Assessing Officer made disallowance of payment made to sub contractors by invoking the provisions of section 40(a)(ia) of the Act for non- deduction of TDS u/s. 194C of the Act. Before the Assessing Officer, the assessee contended that it is carrying on the business of advertising agency and for this it has received consultancy service charges and also paid consultancy charges to sub-contractors. The assessee's turnover is below Rs. 40 lacs and case does not fall under the provisions of section 44AB of the Act, it is not required to deduct TDS u/s. 194C of the Act. However, Assessing Officer held that the 2 ITA 1084/K/2011 Smriti Kumar Mukherjee A.Y.07-08 assessee is a professional and the gross receipts of the assessee exceed Rs.10 lacs as prescribed u/s. 44AB of the Act, the assessee is obliged to deduct TDS u/s. 194C of the Act, thereby he disallowed the payments made to sub-contractors. However, whether this amount is Rs.24,35,272/- or Rs.15,88,959/- is to be verified, it is not clear from the assessment order or the order of CIT(A). However, this is not the dispute before us. The assessee's turnover i.e. the gross receipts are to the tune of Rs.35,75,587/-. The CIT(A) deleted the addition by giving following finding:
"From the above discussion it is gathered that a profession is a job which will depend primarily upon personal qualifications and skills of a person. In the instant case the assessee supplies advertising material and services to its customers. The assessee either produces the goods or causes to produce goods which are sold for consideration. The fact that the assessee had incurred expenditure by way of payment to other persons for goods/services to produce goods or/and provide services to his customers shows that activities carried out by him are primarily in the nature of "business" to which provisions of Clause (a) of section 44AB apply to this case and not a "profession" to which the provisions of clause (b) of that section would apply. Therefore, he was not required to get his accounts audited as per the provisions of section 44AB since the turnover of his business did not exceed the threshold limit of Rs.40,00,000/- even during the preceding financial year. As the accounts of the assessee were not liable audit u/s. 44AB, he was not under obligation to deduct tax at source u/s. 194C from the payments made by him to the four persons mentioned by the A.O. in the assessment order in light of the proviso below sub-section (2) of that section. That being so, the disallowance of Rs.24,35,272/- made by the A.O. is found to be erroneous and not sustainable, therefore, the same is deleted. As a result, grounds no. 2 & 3 of the appeal are allowed."
4. We find that the assessee is in the business of production of advertising material which were used in hoarding, kiosks, glow signs, printing of brochures and leaflets. The assessee produced advertising materials, which were sold to different clients at an agreed consideration and the gross receipts earned from such activity are disclosed in the P&L Account of the assessee. From the details filed the AO as well as CIT(A) observed that the job done by assessee relates to painting of hoardings, wall signs, printing of labels, banners, posters, pamphlets, making of advertisement film, art work design etc. etc., which are not in the nature of any consultancy but in the nature of supply/job work. For carrying out the work the assessee hired the services of other firms and individuals engaged in similar business to get the work done. These were also in the nature of purchase/job work and not in the nature of consultancy services. The assessee filed complete details including names and addresses of the parties through whom the work was done. The assessee was carrying on the business of advertising materials/job work which falls within the ambit of clause (a) of section 44AB of the Act which states that tax audit is required to be done if the total sales, turnover or gross receipts exceeds Rs.40 lacs in any previous year. It is an admitted fact that the assessee's gross receipt during the previous year relevant to assessment year under consideration, inclusive of advances received from clients disclosed in the P&L Account are at Rs.36.84 lacs. Hence, assessee is not 3 ITA 1084/K/2011 Smriti Kumar Mukherjee A.Y.07-08 obliged to get his accounts audited u/s. 44AB of the Act. As per the provisions of section 194C of the Act, any person responsible for paying any sum to any resident for carrying out any work, including supply of labour for carrying out any work, in pursuance to a contract is required to deduct tax at source. However, as per explanation (1)(B) of section 194C of the Act, any person being an individual or a HUF or an Association of Person is required to deduct tax at source from the amounts paid/credited to the contractor, if they are liable to get their accounts audited under clause (a) or clause (b) of section 44AB of the Act. Since the assessee is not required to get his accounts audited u/'s. 44AB of the Act, he was not liable to deduct tax at source for the amount paid/credited by him u/s. 194C of the Act. Hence, we are of the view that there is no need to interfere in the order of CIT(A) and the same is confirmed.
5. In the result, appeal of revenue is dismissed.
6. Order pronounced in open court.
Sd/- Sd/-
एस. भी. मेहरोऽा लेखा सदःय वीर िसंह, Ûयायीक सदःय
महावी
महा वीर
(S. V. Mehrotra) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated : 28 December, 2011
(तारȣख th
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - ACIT, Circle-49, Kolkata.
2 ू×यथȸ/ Respondent, Shri Smriti Kumar Mukherjee, K-8, 69/1, S. K. Deb
Road, Kolkata-700 048.
3. आयकर किमशनर (अपील)/ The CIT(A), Kolkata
4. आयकर किमशनर/CIT, Kolkata
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata
स×याǒपत ूित/True Copy, आदे शानुसार/ By order,
सहायक पंजीकार/Asstt. Registrar.