TMI Blog2013 (1) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the assessing officer by resorting to disallowance in terms of S.40(a)(ia). Expenditure incurred on purchase of various items - whether partake the character of payments under the works contract and tax was deductible u/s 194C which was not deducted - Held that:- Relying on decision in the case of CIT Vs. Glenmark Pharmaceuticals Ltd. (2010 (3) TMI 289 - BOMBAY HIGH COURT) wherein the Bombay High Court took note of the amendment to sec. 194C (w.e.f. 01/10/2009 and held that work does not include manufacture and supply of products according to specification of customers by using materials purchased from third parties. Expenditure towards advertisement charges - demand raised by the AO u/s 201(1) - the CIT(A) deleted the same, however sustained the interest u/s 201(1A) - Held that:- CIT(A) relying on the decision of Hindustan Coca Cola Beverage (P) Ld. Vs. CIT (2007 (8) TMI 12 - SUPREME COURT OF INDIA)referring to the CBDT Circular No. 275/201/95-IT(B), dated 29/01/1997 wherein held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,632 21,25,40,778 56,67,75,410 3. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the CIT(A). 4. Before the CIT(A), the learned AR of the assessee filed written submission and stated that the issue is covered in favour of the assessee by the ITAT orders in other chit fund companies. It was contended that in the scheme of chit funds, the assessee acts as a foreman for the chit subscribers, the foreman s job is to collect chit instalment from subscribers, conducts auction of chits among subscribers, distributes the discount remaining after foreman s commission among the chit subscribers equally which is called as dividend in the chit fund business. It was further submitted that in this activity, the foreman neither lends his money to the subscribers nor borrows money from the subscribers and thus there is no creditor and debtor relationship between the foreman and the chit subscribers and, therefore, issue of payment of interest does not arise at all. It was also submitted that the dividend paid by the foreman to the subscriber cannot be treated as interest since it does not fit into the definition of interest as provided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 vide order in ITA No. 0064/CIT(A)-II/Hyd/2011-12, dted 18/04/2012, the CIT(A) deleted the demand raised u/s 201(1) 201(1A) by the AO. 6. As regards the ground concerning TDS default u/s 194-C on various payments made towards purchase of articles/things, the learned AR of the assessee submitted that it had purchased printing stationery, diaries, calendars, etc. for Rs. 2,26,65,453/-, the details of which were extracted by the CIT(A) in a tabular form in his order at page 5. It was submitted that it had purchased all the items upto item No. Xiv) in the table with appellants log/name on it and submitted that no work within the meaning of section 194C of the Act was carried out by the parties so as to attract the provisions of section 194-C of the Act and also that it had paid sales tax on purchase of all these items, therefore, the provisions of section 194- C are not attracted to Rs. 2,26,65,453/-. The assessee had relied on various judicial pronouncements in support of its claim. It was also submitted that in respect of the order u/s 143(3) for AY 2007-08, CIT(A)-V, in his order in ITA No. 176/Addl.CIT-16/CIT(A)-V/2009- 10, dated 17/09/2010 has deleted the addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand u/s 201(1) was deleted, but he retained the interest u/s 201(1A), which is mandatory. 10. Aggrieved by the order of the CIT(A), the revenue is in appeal before us and has raised the following grounds of appeal:- 1. The order of the CIT(A) is contrary to law. The CIT(A) ought to have sustained the order u/s 201 201(1A) of the Act. 2. The CIT(A) ought to have held that the dividend allowed to non prized subscribers, by due drawal of the chits, partakes the character of interest and hence the assessee is under legal obligation to cause deduction of tax at source u/s 194A of the Income-tax Act. 3. The CIT(A) failed to appreciate that the expression interest as defined in section 2(28A) of the Income Tax Act is wide enough to cover dividend in question being paid to the subscribers by a chit fund company. 4. The concept of interest as developed in the commercial world means the amount paid by way of compensation for the deferred payment of the sum due. The non prized subscriber by reason of postponing his entitlement to draw chit, gets paid what is called a dividend, which is nothing but an euphemistic expression for interest. Therefore, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and against the Revenue. We may refer to a few of them herein for ready reference. 4. Examining the nature of the 'dividend' distributed by a chit fund company among its chit subscribers and consequent liability of the assessee to deduct tax in relation thereto, in the context of proceedings initiated by the assessing officer, under S.201 and 201(1A) of the Act, dealing with the cross-appeals in the case of Vipanchi Chit Funds Ltd., (ITA No.804-805/Hyd/2011), the Tribunal vide its order dated 11th August, 2011, following the earlier decisions of the Bangalore Bench of the Tribunal in the case of Marga Soochi Chit Pvt. Ltd. in ITA No.965/Bang/2008);besides of the Hon'ble Delhi High Court in the case of Sahib Chits(Delhi)(P)ltd. in I.T.A. No.44 of 2008 dated 24.7.2009; and of the Hon'ble Madras High Court in the case of CIT V/s. Bilahari Investment Pvt. Ltd.(288 ITR 39), which has been affirmed by the Apex Court in 299 ITR 1, held that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS under S.194A of the Act, and not liable to interest u/s. 201(1) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he necessity of uniform conclusion on same matter, and scope of adjudication by a Tribunal, it has been held by the Hon'ble High Court as follows- "No Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another Bench of the same Tribunal on same facts. It may be that the members who constituted the Tribunal and decided on the earlier occasion were different from the members who decided on the present occasion. But what is relevant is not the personality of the officers presiding over the Tribunal or participating in the hearing but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal, on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (P H) 3. CIT Vs. Dabur India Ltd., 283 ITR 197 (Del.) 4. CIT Vs. Reebok India Co., 306 ITR 124 (Del.) 5. CIT Vs. Girnar Food and Beverages Pvt. Ltd., 306 ITR 23 (Guj) 6. CIT Vs. Hindustan Lever Ltd. 306 ITR 25 (Guj.) 7. ITO Vs. Milan Dairy Foods (P) Ltd., 7 SOT 901 Del 8. ITO Vs. Dr. Wilmar Scwaabe India (P) Ltd., 95 TTJ 53 Del. 9. Wadilal Dairy International Ltd. Vs. ACIT 81 ITD 238 (Pune) 10. Jindal Photo Films Ltd. Vs. ITO, 5 SOT 272 Del. 16. We have heard the arguments of both the parties and perusing the record as well as decisions cited. Respectfully following the ratio laid down in the judicial pronouncements cited at para 15, we hold that the expenditure to the extent of Rs. 2,26,65,453/- does not attract the provisions of section 194C of the Act. 17. The last issue is with respect to the expenditure of Rs. 3,17,104/- towards advertisement charges paid to M/s Ushodaya Enterprises Ltd., for which demand was raised by the AO u/s 201(1), the CIT(A) deleted the same, however, the CIT(A) has sustained the interest u/s 201(1A) relating thereto. 18. With respect to this issue, we uphold the order of the CIT(A) relying on the ..... 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