IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER
AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA No.443/Bang/2011
Assessment year : 2004-05
Namdhari Seeds, Vs. The Assistant Commissioner of No.119, 9th Main Road, Income Tax, Ideal Homes Town Ship, Circle 2(1), Rajarajeshwarinagar, Bangalore. Bangalore - 560 098.
PAN : AABFN 0971G
APPELLANT RESPONDENT Appellant by : Shri H.N. Khincha, C.A. Respondent by : Shri S.K. Ambastha, CIT-I(DR) Date of hearing : 31.05.2012
Date of Pronouncement : 31.05.2012
Per N.K. Saini, Accountant Member
This appeal by the assessee is directed against the order dated 31.01.2011 of the CIT(Appeals)-I, Bangalore.
2. Following grounds have been raised in this appeal:- ITA No.443/Bang/2011
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"1. The learned assessing officer had erred in passing the order in the manner passed by him. The order passed is bad in law and is liable to be quashed.
2. The assessing officer had erred in treating the entire agricultural income of Rs.66,11,897/-, which was claimed as exempt U/s. 10(1) of the 1.T. Act, 1961, as income from their business. The learned Commissioner of Income-tax (Appeals) has following the earlier appellate order, held that only 10% of agricultural income is taxable. The appellant prays that the entire income be held as agricultural income and even the addition of 10% as sustained by Commissioner of Income-tax (Appeals) be deleted.
3.1 The learned assessing officer had erred in applying the provision of Sec. 40(a)(ia) of IT. Act, 1961 and in disallowing a sum of Rs. 1,88,984/-. The appellant was not required to deduct TDS on such professional charges paid out of India and hence the provisions of Sec. 40(a)(ia) would not be applicable to the facts of the case. The disallowance having been made on erroneous application of law and incorrect appreciation of facts require to be deleted.
3.2 The learned Commissioner of Income-tax (Appeals) has also erred in concluding that this ground was not pressed.
4. The appellant also denies the liability to pay Interest U/s. 234B and Interest U/s. 234C of the Income-tax Act, 1961. The interest having been levied wrongly are to be deleted.
5. In view of the above and on other grounds to be adduced at the time of hearing, it is requested that the order passed be quashed or full exemption for agricultural income as claimed be allowed and disallowance U/s. 40(a)(ia) be deleted and interest levied also be deleted."
3. Ground No.1 is general in nature, so do not require any adjudication on our part, while ground No.5 is correlated with specific issues raised in ground Nos. 2, 3.1 and 3.2.
4. Vide ground No.2, the grievance of the assessee relates to the confirmation of the action of the AO by considering the agricultural income ITA No.443/Bang/2011
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claimed by the assessee as business income, except 10% of agricultural income.
5. The facts of the case in brief are that the assessee filed the return of income on 30.07.2004 declaring an income of Q 40,28,061, which was processed u/s. 143(1) of the Income-tax Act, 1961 [hereinafter referred to as "the Act" in short"]. Later on the case was selected for scrutiny, the assessment u/s. 143(3) of the Act was framed on 12.12.2006. Thereafter the case was reopened u/s. 147 of the Act by issuing the notice dated 30.03.2009 and the same came to be concluded vide order dated 26.11.2009 u/s. 143(3) r.w.sec. 147 of the Act.
6. The assessee preferred an appeal to the ld. CIT(A) against the assessment order dated 12.12.2006, the ld. CIT(A) decided the appeal in favour of the assessee by giving a finding that 90% of total agricultural income claimed by the assessee should be considered to be income from contract farming. Against the said order, the department preferred an appeal to the ITAT, wherein vide order dated 01.08.2008, the appeal of the revenue was dismissed and the view of the ld. CIT(A) was upheld. Following the aforesaid order of the ITAT, the AO allowed the consequential relief. However, the AO reopened the assessment u/s. 147 of the Act and while framing the assessment u/s. 143(3) r.w. sec. 147 of the Act, the AO in addition to rejecting the assessee's claim of exemption u/s. 10(1) of the Act, also made disallowance of advertisement expenses.
7. The present issue raised by the assessee in ground No.2 is not arising out of the impugned order passed by the ld. CIT(A), since this issue has already been adjudicated by the ITAT. Even before the ld. CIT(A), the ITA No.443/Bang/2011
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assessee pleaded that the starting point of computation of total income should have been Q 69,17,090 and the ld. CIT(A) directed the AO to adopt the figure of Q 69,17,090 while computing the income of the assessee. We therefore do not see any merit in this ground of the assessee. More over, the ld. counsel for the assessee during the course of hearing was fair enough to concede that this issue has been decided by the Hon'ble jurisdictional High Court against the assessee vide judgment dated 24.10.2011 in ITA No.75 of 2007 in assessee's own case. In view of the above, we do not see any merit in this ground of the assessee's appeal.
8. In ground No.3.1 & 3.2, the grievance of the assessee relates to disallowance of Q 1,88,984.
9. The facts of the case related to this issue in brief are that the AO while framing the assessment u/s. 143(3) r.w.sec. 147 of the Act, made the addition of Q 1,93,695 by observing that after verifying the various documents furnished by the assessee, it was seen that the amount of Q 1,88,984 was paid towards professional charges outside India for which TDS was not made and approval to the said disallowance was given by the Authorised Representative vide letter dated 26.10.2009. He also added Q 4,711 which was debited to the P&L account towards donation.
10. The assessee challenged the said addition. The ld. CIT(A) confirmed the addition by stating that the said addition was confirmed due to lack of persuasion. Now the assessee is in appeal.
11. The ld. counsel for the assessee submitted that the assessee persuaded the addition made by the AO and did not agree for the addition ITA No.443/Bang/2011
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amounting to Q 1,88,984 which was paid outside India to the foreign nation on account of advertisement expenditure. The said payment was made for the services rendered outside India and there was no taxable income in the hands of the recipient which accrued or arose in India. Therefore the provisions of section 195 of the Act were not applicable, as such disallowance made for want of TDS deduction was uncalled for.
12. The ld. CIT(DR) in his rival submissions supported the order of the authorities below.
13. After considering the submissions of both the parties and going through the material on record, it is noticed that the AO in the assessment order dated 26.11.2009 mentioned that the amount in question was paid towards professional charges outside India for which the TDS was not made. On the other hand, the contention of the ld. counsel for the assessee was that the said amount was on account of advertisement, therefore a contradictory stand towards the nature of expenses has been taken by the revenue department and the assessee and the facts are not clear. We therefore deem it appropriate to set aside this issue back to the file of the Assessing Officer to be adjudicated afresh in accordance with law, after providing due and reasonable opportunity of being heard to the assessee.
14. As regards ground No.4 relating to liability to pay interest u/s. 234B & 234C of the act is concerned, both the parties agreed that it is consequential in nature, we order accordingly.
15. In the result, the appeal is partly allowed for statistical purposes. ITA No.443/Bang/2011
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Pronounced in the open court on this 31st day of May, 2012. Sd/- Sd/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) Judicial Member Accountant Member Bangalore,
Dated, the 31st May, 2012.
5. DR, ITAT, Bangalore.
6. Guard file
Senior Private Secretary