Income Tax Appellate Tribunal - Ahmedabad
Trumac Engg.Co.Pvt.Ltd., Ahmedabad vs Department Of Income Tax on 16 September, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH AHMEDABAD
Before Shri G.C.Gupta, Vice President and
Shri T.R. Meena, Accountant Member
ITA No. 3316/Ahd/2010
Assessm ent Year :2007-08
ACIT, V/s. Trum ac Engg. Co. Pvt. Ltd.
TDS Circle, Ahm adabad GIDC Estate, Nr. Lam bha
Amrut Jayanti Bhawan, Village, Ahmadabad.
Navjivan Trust Complex,
Ashram Road, Ahm edabad
P AN No. AHM TO0150D
(Appellant) .. (Respondent)
अपीलाथȸ कȧ ओर से Shri Y. P. Verma, Sr. D.R.
By Appellant
ू×यथȸ कȧ ओर से/By Respondent Shri Nimish B. Shah, A.R.
सुनवाई कȧ तारȣख/Date of Hearing
19.04.2013
घोषणा कȧ तारȣख/Date of Pronouncement 08.05.2013
ORDER
PER : T.R.Meena, Accountant Member
This is an appeal at the behest of the Revenue which has emanated from the order of CIT(A)-XXI, Ahmedabad, dated 16.09.2010 for assessment year 2007-08. The Revenue's appeal is against deleting the default levied u/s.201(1) of Rs.2,02,908/- and interest charged u/s.201(1A) of the IT Act of Rs.77,105/-.
2. The factual matrix of the case is that the appellant had made provisions of Rs.36,16,913/- on account of sale commission in the books of account.
I T A No . 3 31 6 /A h d/ 2 01 0 A . Y. 0 7- 08 Page 2 However, the appellant company had not deducted TDS u/s. 194 of the IT Act and the A.O. held that it had committed default u/s.201(1) of the IT Act. At the end of next finance year i.e. 31.03.2008, this entry was reversed to the extent of Rs.26,16,913/- and an amount of Rs.10,00,000/- considered payable as commission on which TDS had been deducted one year later. The provisions made in financial year 2006-07 is also not on adopt basis, but based on general entry reflects sale of various items. The reversal of entry made in next financial year is also in part. Moreover, as per provision of chapter XVII of I.T. Act, the TDS was required to be made where any income was credited to any account whether called suspense account or by any other name in the books of account of the person liable to pay such income considering such crediting would be named to be credit of such income to the amount of payee and provision of Section 194 should apply accordingly. The A.O. had held default u/s.201(1) at Rs.2,02,908/- u/s. 201(1A) at Rs.77,105/-
3. The assessee carried the matter before the CIT(A) who has allowed the appeal in favour of the assessee. The operative portion of the order is as under:
"7. I have given careful consideration to the arguments advanced by the A.R. of the appellant company and have also gone through the written submissions reproduced hereinabove. I have also gone through the order u/s.201(1) and 201(1A) passed by the AO, which is the subject matter of the appeal. Upon careful consideration of the written submission of the appellant company, I find considerable force in the argument of the A.R. of the appellant that there was no legal obligation to deduct tax at source in respect of the provision I T A No . 3 31 6 /A h d/ 2 01 0 A . Y. 0 7- 08 Page 3 made in the books of accounts on account of commission, having regard to the provisions of Section 194H, section 204 as well as section 4(2) of the Income Tax Act. In as much as the provision made in the books of account of the appellant company on account of commission did not result into receipt or accrual of income in the hands of the any party, there was no legal obligation to deduct tax at source. In the facts and circumstances of the case, the order u/s.201(1) and 201(1A) treating the appellant company as an assessee in default for an amount of Rs.2,02,908/- and charging interest thereon u/s.201(1A) of Rs.77,105/- is not sustainable in the eyes of law. Accordingly, the impugned order is hereby cancelled."
4. Now the revenue is before us. The ld. Sr. D.R. vehemently relied upon the order of the A.O. and requested that Instruction No.3/2011, dated 09.02.2011 is not applicable in case of the assessee. Therefore, this case may be decided on merit. However, from the side of the appellant, ld. A.R. contended that this Instruction No.3/2011, dated 09.02.2011 is applicable as tax effect is less than Rs.3,00,000/-. He further relied upon in case of CIT vs. Sureshchandra Durgaprasad Khatod [HUF] in Tax Appeal No. 1404 of 2010, wherein Hon'ble Gujarat High Court held that Instruction No.3/2011, dated 09.02.2011 would also apply to pending appeals. Tax Appeals below the tax effect of Rs.10,00,000/- is not maintainable. Therefore, he argued that this case cannot be heard on merit by keeping in view of the above Instruction.
5. We have heard the rival contentions and perused the material on record. This Instruction is applicable on pending case as held by the Hon'ble I T A No . 3 31 6 /A h d/ 2 01 0 A . Y. 0 7- 08 Page 4 Gujarat High Court in case of CIT vs. Sureshchandra Durgaprasad Khatod [HUF] (supra). Accordingly, we dismiss the appeal of the Revenue.
8. In the result, the Revenue's appeal is dismissed. This Order pronounced in open Court on 08.05.2013 Sd/- Sd/-
(G.C.Gupta) (T.R. Meena)
Vice President Accountant Member
True Copy
S.K.Sinha
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।