Diamond Pocket Books Pvt. Ltd.,, New ... vs Department Of Income Tax

Income Tax Officer, Vs. M/s Diamond Pocket Books Ward- Ward-10(3), Pvt.Ltd., New Delhi. X-30, Okhla Industrial Area, Phase- Phase-II, New Delhi - 110 020. PAN : AAACD2474L. (Appellant) (Respondent)

Appellant by : Smt. Parwinder Kaur, Sr.DR. Respondent by : Shri Sanjay Nath, CA.

Date of hearing : 18.02.2015 Date of pronouncement : 04.03.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

This appeal by the Revenue for the AY 2009-10 is directed against the order of learned CIT(A)-XIII, New Delhi dated 21st August, 2012.

2. Ground No.1 of the Revenue's appeal is as under:-

"On the facts and in the circumstances of the case and law, the ld.CIT(A) has erred in deleting the addition of Rs.48,57,508/- made u/s 40(a)(ia) of the Act on account of non deduction of TDS on payments made against printing and processing work."

3. Learned DR submitted that the CIT(A) has not called for any remand report in this case and therefore, the order of the CIT(A) is not 2 ITA-5258/Del/2012

sustainable. She submitted that information was gathered that M/s Print-O-Pack Ltd. has raised bills and copy thereof shows that they were raised for printing and processing work undertaken by the said party. The assessee has failed to make any TDS out of the amount paid to the said party and therefore, the provisions of Section 40(a)(ia) of the Income-tax Act, 1961 were rightly applicable to the facts of the case of the assessee. She submitted that the work done by the said party was in the nature of job work and not in the nature of purchases. She referred to paragraph 3 of the assessment order in support of the case of the Revenue. She relied on the order of the Assessing Officer.

4. Learned counsel for the assessee submitted that it was a clear case of transaction of purchase of books and not job work and therefore, the provisions of Section 40(a)(ia) do not apply to the facts of the case of the assessee. He submitted that no remand report was necessary in this case as suggested by the learned DR. He relied on the order of the CIT(A).

5. We have considered the rival submissions and have perused the order of the Assessing Officer and the CIT(A). We find that in the facts of the case, no remand report was necessary to adjudicate the issue before the CIT(A). We find that the assessee has filed copies of bills pertaining to M/s Print-O-Pack Ltd. The same were on account of purchases of magazines and promotional forms. The CIT(A) has recorded that these bills show that the assessee has purchased magazines and promotional forms and the cost of magazine etc. includes cost of paper, printing and binding. He has further recorded that the assessee has also filed confirmation from M/s Print-O-Pack Ltd. vide letter dated 28th November, 2011 wherein it is mentioned that the bills were raised for magazines and brochures which include the cost of paper, printing and binding. The CIT(A) has given a finding that the 3 ITA-5258/Del/2012

confirmation from M/s Print-O-Pack Ltd. proves that the payments were made not for the job work or printing charges and in the case of the assessee, it was purchase of magazines and promotional forms and therefore, there was no question of deducting TDS. There being no mistake in the order of the learned CIT(A) on this issue, the same is confirmed and ground No.1 of the Revenue's appeal is dismissed.

6. Ground No.2 of the Revenue's appeal is as under:-

"On the facts and in the circumstances of the case and law, the ld.CIT(A) has erred in deleting the addition of Rs.7,34,316/- made u/s 40(a)(ia) of the Act on account of non deduction of TDS on payments made against packing and forwarding charges while accepting additional evidences."

7. Learned DR submitted that the CIT(A) has accepted the additional evidence in contravention of the relevant rules. She submitted that the assessee has not furnished any copy of bill from the parties to substantiate its claim of deduction and also no address or permanent account number was given of these parties so as to enable the Assessing Officer to make independent enquiries. She submitted that the onus was on the assessee to prove which the assessee has failed to discharge. She submitted that the expenditure being packing and forwarding charges falls under the category of job work and contract and therefore, the provisions of Section 194C were applicable to the case of the assessee.

8. Learned counsel for the assessee has opposed the submissions of the learned DR. He submitted that the Assessing Officer never required to produce the bills before him and therefore, the same could not be produced before the Assessing Officer. However, it was a clear transaction of purchases and therefore, the provision of Section 4 ITA-5258/Del/2012

40(a)(ia) of the Act is not applicable to the case of the assessee. He referred to the relevant portion of the appellate order passed by the CIT(A) in support of the case of the assessee.

9. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A). We find that it is not a fit case to restore the matter again before the Assessing Officer. The assessee has filed copies of bills and confirmations of parties before the CIT(A). The CIT(A) has given a finding that on going through these bills, it was seen that the assessee has purchased poly shrink and polythene bags from M/s Allied Plast, board from Chandra Shekhar (Puraney Dabbey Waley) and Bale Hessien Cloth from Ghanshyam Jute Trading Co. He has recorded a finding that these items are purchases of packing and forwarding material and not the payment for packing and forwarding as observed by the Assessing Officer and therefore, are not covered under the provisions of Section 194C of the Act. In these facts of the case, we are of the view that since the payments were made for purchase of packing and forwarding material, the provision of Section 194C was inapplicable and therefore, no disallowance under Section 40(a)(ia) of the Act could be made. Accordingly, the order of CIT(A) on this issue is confirmed and ground No.2 of the Revenue's appeal is dismissed.

10. Ground No.3 of the Revenue's appeal is as under:-

"On the facts and in the circumstances of the case and law, the ld.CIT(A) has erred in deleting the addition of Rs.11,55,465/- made on account of unverified bad debts while accepting additional evidences and not calling for a report from the AO thereon."

5 ITA-5258/Del/2012

11. Learned DR submitted that the onus was on the assessee to prove the unverified bad debt amounts and the additional evidence was accepted by the CIT(A).

12. Learned counsel for the assessee submitted that there was no correspondence with the debtor parties and no record of address of debtor parties was available with the assessee. However, as per the details of the bad debts, the amounts due from various parties were very small and therefore, it was not advisable to initiate legal proceedings against the said parties. He relied on the order of the CIT(A).

13. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A) and also the details of the bad debts claimed by the assessee as filed in the compilation before us. We find that the assessee could not file even the postal address of the debtor parties. A perusal of the details written off as filed in the compilation before us shows that it consists of various debtor parties whose amount due was ranging from `513/- to `5,80,601/-. Allowing the small amounts due from various parties and written off by the assessee, the balance amounts exceeding `20,000/- are addable due to no evidence whatsoever produced by the assessee to show that these were genuine items of bad debts written off by the assessee, the details whereof are as under:-

Sl.No. Name of Party Amount 1. Vijayalaxmi Publishers (Chennai) 24,358.00 2. The Corner Book Store (Delhi) 47,838.00 3. Security Deposits 27,749.00 4. Popular Book Distributors (Trivendrum) 71,694.00 5. Pen Books Pvt.Ltd. (Aluva) 26,166.00 6 ITA-5258/Del/2012

6. Osho Time Centre (Rajkot) 24,548.00 7. English Edition Publishers & Distt. 5,80,601.00 (Mumbai)(4/n) 8. Circle News Agency (Ghaziabad) 94 24,067.00 9. Children Book Centre Pvt.Ltd. (Patna)(1/a) 67,055.00 10. Balaji Book Distributor (Chennai) 42,522.00 Total 9,36,598.00

14. Accordingly, the amount of `9,36,598/- is disallowed on account of failure of the assessee to provide any copy of correspondence with these parties and also failure to communicate the address of these debtor parties and addition is sustained to that extent and the balance addition is deleted. Accordingly, ground No.3 of the Revenue's appeal is partly allowed.

15. Ground No.4 of the Revenue's appeal is as under:-

"On the facts and in the circumstances of the case and law, the ld.CIT(A) has erred in deleting the addition of Rs.5,40,637/- made u/s 2(22)(e) of the Act on account of deemed dividend."

16. Learned DR submitted that the CIT(A) has admitted additional evidence in contravention of Rule 46A of the Income-tax Rules, 1962. She relied on the order of the Assessing Officer.

17. Learned counsel for the assessee submitted that the relevant details have been filed at page 187 and 188 of the compilation filed before the Tribunal. He submitted that the provision of Section 2(22)(e) does not apply to the facts of the assessee's case since deemed dividend addition could be made only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder.

7 ITA-5258/Del/2012

18. We have considered the submissions of both the sides and also the details filed by the assessee in the compilation before us. We find that the provision of Section 2(22)(e) was not applicable in the case of the assessee as it is well settled that deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. The issue is covered in favour of the assessee by the decision of Mumbai Bench of the Tribunal in the case of ACIT Vs. Bhaumik Colors Pvt.Ltd. - 27 SOT 270 (Bom). The CIT(A) has decided the issue correctly in favour of the assessee and accordingly, the order of the CIT(A) on this issue is confirmed and ground No.4 of the Revenue's appeal is dismissed.

19. In the result, the appeal of the Revenue is partly allowed.

Decision pronounced in the open Court on 4th March, 2015.

Sd/- Sd/- (T.S. KAPOOR) KAPOOR) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Income Tax Officer, Ward- Ward-10(3), New Delhi.

2. Respondent : M/s Diamond Pocket Books Pvt.Ltd., X-30, Okhla Industrial Area, Phase-

Phase-II, New Delhi - 110 020.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar