Income Tax Appellate Tribunal - Hyderabad
Seed Innovations Pvt.Ltd., Hyd, ... vs Dcit, Circle-15(1), Hyd, Hyderabad on 10 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No. 17/Hyd/2016
Assessment Year: 2012-13
Seed Innovations Pvt. Ltd., Vs. Dy. Commissioner of Income-
Hyderabad. tax, Circle - 15(1),
Hyderabad.
PAN - AAIC S0120J
(Appellant) (Respondent)
Assessee by : Shri P. Murali Mohan Rao
Revenue by : Shri A. Sitarama Rao
Date of hearing : 02-02-2017
Date of pronouncement : 10-02-2017
O RDE R
PER S. RIFAUR RAHMAN, A.M.:
This is an appeal of the assessee directed against the order of the learned Commissioner of Income-tax(A) - 8, Hyderabad, dated 26 th October, 2015 for AY 2012-13.
2. Briefly the facts of the case are that assessee is a company engaged in the business of research, production and marketing of seeds & vegetable crops. In this case, a survey u/s 133A of the Act was conducted on 10/10/2012. Order u/s 201(1) and 201(1A) of the Act was passed on 31/03/2014 raising a demand of Rs. 2,16,03,647/- towards non deduction of tax on advertisement expenses, car hire charges and legal & professional charges, audit fee, courier charges etc. 2 ITA No. 17/H/16 M/s Seed Innovations Pvt. Ltd.
3. When the assessee preferred an appeal before the CIT(A), the CIT(A) dismissed the appeal of the assessee for non-compliance before him despite providing sufficient opportunities.
4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal:
"1. The order of the Ld. CIT (A)-8, Hyderabad is erroneous both on facts and in law while passing the appellate order under consideration.
2. The Ld. CIT (A), erred in non-adjudication the grounds filed by the assessee which are based on merits of the case.
3. The learned CIT (A), ought to have appreciated the fact that no disallowance u/s 40(a)(ia) has been made by assessing officer while passing the order u/s 143(3) of the act.
4. The learned CIT (A), ought to have appreciated the fact that the assessee has complied with all the provision of TDS and payment in respect of expenditure to which TDS provisions are attracted have already suffered TDS.
5. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS as deductible at Rs. 1,49,600 on the whole of the Advertising expenses ofRs.74,79,929, but the assessee has already deducted and paid TDS on amount ofRs.16,02,752 and balance Rs.58,77,177 is not liable for deduction of TDS.
6. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS deductible at Rs.25,834 on Car Hire Charges ofRs.l2,91,724, was paid to various different parties comes below the taxable limit of TDS.
7. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS of Rs.68,481 on Legal & Professional Consultancy Charges ofRs.6,84,907, where each party payment is less than 20,000, comes below the taxable limit of TDS.
8. The learned CIT (A), erred in sustaining the action of Ao in quantifying the TDS of Rs.20,485 on Audit Fees of Rs.2,04,850, but the asses has already deducted and paid TDS on amount of Rs. 1,68,450 and for balance ofRs.36,400 is not liable for deduction of TDS.3 ITA No. 17/H/16
M/s Seed Innovations Pvt. Ltd.
9. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS of Rs.23,715 on Courier Charges of Rs. 11,85,772, but the assessee has already deducted and paid TDS on amount ofRs.8,21,026 and balance 3,64,746 it is not liable for deduction of TDS.
10. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS of Rs.76,71,666 on Remuneration, Salaries and wages ofRs.5,11,44,444 but the assessee has already deducted and paid TDS on amount ofRs.6,65,61,897 and balance of Rs.3,57,26,991 is not liable for deduction of TDS.
11. The learned CIT (A), erred in sustaining the action of AO in quantifying the TDS of Rs. 47,55,532 on the entire amount of Rs.4,75,55,318 without verifying whether payment to each party has exceeded the limits as prescribed for deduction of TDS.
12. The learned CIT (A), erred in sustaining the action of AO in calculating TDS of Rs.96,000 on Rent Charges of Rs.9,60,000, but the assessee had already deducted and paid the TDS. Hence no TDS liability.
13. The Learned CIT (A), erred in sustaining the action of AO in calculating TDS of Rs.2,49,418 on Farm Maintenance Charges of Rs.1,24,70,890, but TDS is not deductable on Farm Maintenance Charges as it is a cultivation and labour expenses was paid to large number of farm workers, on which TDS in not deductible.
14. The learned CIT(A), erred in sustaining the action of AO determining the TDS deductible at Rs.2502549 on the entire amount of Business Promotion Expenses of Rs.2,50,25,487, but the assessee has already deducted and paid TDS on amount of Rs.38,35,141 and for balance ofRs.2,11,90,326 is not applicable.
15. The learned CIT (A), erred in sustaining the action of AO calculating TDS of Rs.4,92,190 on Sales C & F Commission Charges of Rs.49,21,903, the assessee had already deducted and paid the TDS.
16. The learned CIT (A), erred in sustaining the action of AO calculating TDS of Rs.94,14,770 on Commission & Discount charges of Rs.9,41,47,960, but the amount paid of Rs.37,65,90,761 is only on Discount but not on commission.
17. The learned CIT (A), ought to have considered that where the deductee, recipient of income, has already paid taxes on the amount received from deductor, department once again cannot recover tax from deductor on the Same income by treating the 4 ITA No. 17/H/16 M/s Seed Innovations Pvt. Ltd.
deductor to be assessee-in-default for the shortfall in its amount of tax deducted at Source.
18. Without prejudice to the above, the learned CIT (A) ought to have appreciated the judgement of Honourable Supreme Court in the case of Hindus tan Coca Cola Beverages Pvt Ltd Vs. Commissioner of Income Tax Civil Appeal No: 3765 of2007.
19. The assessee may add, alter or modify or substitute any other point to the Grounds of appeal at any time before or at the time of hearing of the appeal"
5. Before us, the ld. AR of the assessee submitted that the AO has completed the assessment u/s 143(3) on 25/03/2015 in which the AO has not disallowed any thing u/s 40(a)(ia) nor treated the assessee in default. He, therefore, contended that the proceedings u/s 201 cannot be initiated. Further, he submitted that the recipient has declared the income in the return of income and paid relevant taxes on income, therefore, the same cannot be recovered from the assessee. For the above proposition, he relied on the following case laws:
1. M/ Country Club (India) Ltd., ITA No. 1628/Hyd/2014, order dated 30/06/2015.
2. Hindustan Coca Cola Beverages (P) Ltd., 163 Taxman 355(SC).
Further, he submitted a tabulated chart in which he has explained that TDS need not be deducted on the various heads of expenditure which were considered for proceeding u/s 201.
6. Ld. DR, on the other hand, relied on the orders of revenue authorities.
7. Considered the rival submissions and perused the material facts on record. The ld. Counsel for the assessee has submitted a chart , which is a part of the record filed before us in which he has given the details like the amounts on which TDS is required to be deducted, which were accordingly paid by the assessee and the balance amounts on which TDS need not be deducted with various reasons 5 ITA No. 17/H/16 M/s Seed Innovations Pvt. Ltd.
supporting the claim along with supporting papers were filed before us. The provisions of Chapter XVII have undergone various changes over the years. The Legislature has modified the provisions to avoid charging of tax on income twice in the hands of assessee as well as recipient. In that process, it has amended sections 40(a)(ia) and 201 in the recent years. As per the set of new rules, AO has to initiate the proceedings u/s 201 to determine whether the assessee is in default in respect of payment of TDS, without which, no action can be initiated. As part of proceedings u/s 201, when the recipient of the income, declares the same as his income and pays relevant taxes as per the provision, recipient can issue a certificate to the other party and the other party can use the same as proof of compliance. Considering the above provisions and the details submitted by the assessee, we are inclined to remit this issue back to the file of the AO to verify the claims of the assessee and determine the allowability of the claim of the assessee as per the provisions of the Act. Assessee may be given an opportunity of being heard in the matter.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on 10 th February, 2017.
Sd/- Sd/-
(P. MADHAVI DEVI) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 10th February, 2017.
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ITA No. 17/H/16
M/s Seed Innovations Pvt. Ltd.
Copy to:-
1) M/s Seed Innovations Pvt. Ltd., P. Murali & Co., CAs, 6-3-655/2/3, 1 st Floor, Somajiguda, Hyderabad - 82..
2) DCIT, Circle - 15(1), Hyd.
3) CIT(A) - 8, Hyderabad 4 CIT (TDS), Hyderabad
5) The Departmental Representative, I.T.A.T., Hyderabad.
6) Guard File
De scri pti on Date Intls
S.No.
d s1. Draft dictated on Sr.P.S./P.S
2. Draft placed before author Sr.P.S/PS
Draf t propo sed & pl ac ed b ef ore the se con d Mem ber JM/AM
3
4 Draf t di scu ssed/a ppr ov ed by sec on d Mem ber JM/AM
5 Approv ed Draft comes to the Sr.P.S./PS Sr.P.S./P.S
6. Kept for pronouncement on Sr. P.S./P.S.
7. Fi l e sent to the B enc h Cl erk Sr.P.S./P.S
8 Dat e o n whi ch f i l e goe s t o t he H ea d Cl erk
9 Date of Di sp atch of order