Income Tax Appellate Tribunal - Chennai
P.Rajasekaran, Madurai vs Department Of Income Tax on 14 June, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
I.T.A. No. 2068/Mds/2011
Assessment Year : 2008-09
The Assistant Commissioner of Shri P. Rajasekaran,
Income Tax, M/s P.R. Traders,
Circle II, v. 10/1, Deputy Collector Colony,
Madurai. 1st Street, K.K. Nagar, Madurai.
PAN : ABZPR3772L
(Appellant) (Respondent)
Appellant by : Shri Anirudh Rai, CIT-DR
Respondent by : Shri M.P. Senthil Kumar, Advocate
for Shri C.V. Rajan, Advocate
Date of Hearing : 14.06.2012
Date of Pronouncement : 14.06.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by the Revenue, its grievance is that the CIT(Appeals) deleted a disallowance made by the A.O. under Section 40(a)(ia) of Income-tax Act, 1961 (in short 'the Act').
2. Short facts apropos are that assessee had claimed a sum of ` 50,38,918/- as royalty payment. Assessing Officer, during the course of 2 I.T.A. No. 2068/Mds/11 assessment proceedings, put assessee on notice that the said payment attracted Section 194J of the Act since assessee had not deducted tax in accordance with said Section. According to him, rigours of Section 40(a)(ia) of the Act were attracted. Though the assessee contended that the payment was not in the nature of royalty, this was not accepted by the Assessing Officer, who proceeded to make a disallowance.
3. In his appeal before CIT(Appeals), assessee reiterated the contention made before the A.O. that the payment was not royalty . As per the assessee, the type of payment which he had made was for quarrying granites from quarries owned by various parties and this could not be considered as royalty. CIT(Appeals), after considering the argument, was of the opinion that the argument of the assessee had substance. According to him, the payments made for quarrying in land for the purpose of obtaining granites in view of the agreements with concerned parties, could not be considered as royalty and assessee could not be fastened with a liability to deduct tax under Section 194J of the Act. He, therefore, deleted the disallowance made by the Assessing Officer.
4. Now before us, learned D.R., assailing the order of CIT(Appeals), submitted that even if the payments could not be brought within the purview of Section 194J of the Act, it would definitely be covered under 3 I.T.A. No. 2068/Mds/11 Section 194-I of the Act. According to him, the amounts paid fell within the definition of "rent" as given under Section 194-I of the Act.
5. Per contra, learned A.R. supported the order of CIT(Appeals). He also relied on the decision of Special Bench of this Tribunal in the case of Merilyn Shipping and Transport v. ACIT (2012) 16 ITR (Trib.) 1 (SB).
6. We have perused the orders and heard the rival submissions. Leaving alone the issue whether the payment fell under Section 194J or 194-I of the Act, one thing that clearly comes out from the assessment order is that "royalty" or by whatever name the amount was called, stood paid before the end of the relevant previous year. Assessing Officer has himself mentioned that the payments of ` 32,43,820/- to M/s R.R. Granites, Madurai and ` 17,95,098/- to Shri V. Shanmugam were made. Since the amounts stood paid before the end of the relevant previous year, in our opinion, the rigours of Section 40(a)(ia) would not be attracted in view of the decision of Special Bench of this Tribunal in the case of Merilyn Shipping and Transport (supra). It was held by the Special Bench that the rigours of Section 40(a)(ia) of the Act were attracted only when the amounts stood payable as at the end of relevant previous year. We, therefore, find no merit in the appeal filed by the Revenue.
4 I.T.A. No. 2068/Mds/11
7. In the result, appeal filed by the Revenue is dismissed. The order was pronounced in the Court on Thursday, the 14th of June, 2012, at Chennai.
sd/- sd/-
(Challa Nagendra Prasad) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 14th June, 2012.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT(A)-I, Madurai
(4) CIT-I, Madurai
(5) D.R.
(6) Guard file