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TMI Blog2013 (1) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the decision of the Delhi High Court in the case of Sahib Chits and the decision of the ITAT, Visakhapatnam Bench in the case of Daspalla Chits & Investments Ltd. The AO also noticed from the assessment order u/s 143(3) by the DCIT, Circle 16(2), Hyderabad that the assessee had not deducted taxes at source from the payments made of Rs. 2,32,28,557/- on account of printing of stationery, visiting cards, calendars, dairies etc. Not satisfied with the assessee's explanation, the AO passed order dated 15/03/2011 determining the TDS defaults u/s 201(1) and 201(1A) as under: Section TDS not deducted u/s 201(1) Interest u/s 201(1A) Total 194A - payment to individual @ 11.22% 242,17,04,427 27,17,15,236 16,30,29,141 43,47,44,377 194A - payment to corporate @ 22.44% 36,54,14,786 8,19,99,077 4,91,99,446 13,11,98,523 194C on contracts 2.24% 2,32,28,557 5,20,319 3,12,191 8,32,510 Total 35,42,34,632 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Chit Fund(P) Ltd. for the AY 2004-05, vide order in ITA No.00437/CIT(A)-II, Hyd/2005-06 dtd. 09/03/2011, it was held by him that the chit dividend paid to various persons does not partake the character of interest payment and there was no applicability of section 194A of the Act, which was confirmed by the Hon'ble Jurisdictional Tribunal, A-Bench vide its order in ITA No. 820/Hyd/2001, dated 26/12/2011. 3) The ITA, A-Bench, Hyderabad while confirming the decision of CIT(A)-V, Hyderabad vide order in ITA Nos. 526,527,528 & 529/Hyd/2011 dated 29/09/2011 for AYs. 2004-05, 2005-06, 2007-08 & 2007-08, in assessee's own case, had 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 u/s 194A of the Act and not liable for interest u/s 201(1) and 201(1A) of the Act. 4) In assessee's own case for AY 2005-06 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 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk' will not include manufacture and supply of products according to specification of customers by using materials purchased from third parties. In view of the above findings, the CIT(A) held that there is no TDS liability in respect of printed material purchased and therefore the demand raised u/s 201(1) in respect of Rs. 2,26,65,453/- was ordered to be deleted along with interest u/s 201(1A) of the IT Act. 9. As regards the item No. xvi for an amount of Rs. 2,46,000/- towards printer head repairing, the CIT(A) held that this amount does not attract the provisions of TDS. However, item no. xv as admitted by the assessee had been made towards advertisement charges for recruitment to M/s Ushodaya Enterprises Ltd. without deduction of tax at source, the CIT(A) held that since the assessee had admitted that there was liability to deduct tax but no TDS was made on the amount of Rs. 3,17,104/- and the deductee had paid taxes in the return filed by it, the demand 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:- & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) to the effect that the payment of dividend to the subscribers does not partake the character of interest and accordingly, the assessee is not liable to deduct TDS u/s 194A of the IT Act. 12. We find that this issue in question is squarely covered by the decision of the jurisdictional coordinate bench in assessee's own case in ITA No. 973/Hyd/2011 for AY 2008-09 vide order dated 24/02/2012 wherein the coordinate bench held as under:- "3. We have heard both the parties on this issue. As is evident from the above grounds of appeal, the only issue that arises for consideration in this appeal relates to the nature of 'dividend' distributed by the assessee company to the subscribers of its chit fund schemes every month, and assessee's liability to deduct tax at source while distributing such dividend, so as to warrant disallowance in terms of the provisions of S.40(a)(ia) of the Act. We find that various coordinate benches of this Tribunal, including the ones at Hyderabad, have taken a consistent view on the point at issue in favour of the assessee and against the Revenue. We may refer to a few of them herein for ready reference. 4. Examining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, referred to by the CIT(A) in the impugned order and also cited certain decisions in the grounds of this appeal, in the absence of any contrary decision of jurisdictional High Court or Apex Court brought to our notice by the Revenue, we are inclined to follow the consistent view taken by the Tribunal in similar matters, discussed above rendered by the coordinated Benches of this Tribunal, to some of which both of which are parties, involving the determination of nature of 'dividend' distributed by the assessee-company among its chit subscribers month after month, and also following in that process the decision of the Hon'ble Madras High Court in the case of Bilahari Investments (P)Ltd.(288 ITR 39), and hold that the dividend distributed by the assessee herein does not partake the character of 'interest', and consequently, the assessee is not liable to deduct tax at source. 8. We are fortified in following the consistent view taken by the decision in similar matters by the ratio of the decision of the Madras High Court in the case of CIT V/s. L.G.Ramamurthy and Others (110 ITR 453), wherein emphasizing the necessity of uniform conclusion on same matter, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract and tax was deductible u/s 194C, which was not deducted. 15. The learned counsel for the Assessee Shri Sivakumar submitted before us that it can be seen from the details of the items at 1 to 14, the assessee purchased printed stationery etc., for Rs. 2,26,65,453/-. The learned counsel submitted that it purchased all these items with the assessee's logo on the items and that no 'work' within the meaning of section 194C of the IT Act is carried out by the parties so as to attract the provisions of section 194C of the IT Act. It was submitted that it had paid sales tax on purchase of all the said items. The learned counsel invited our attention to the decision of the Bombay High Court in the case of CIT Vs. Glenmark Pharmaceuticals Ltd., 324 ITR 199 (Bom) 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. The learned counsel also relied upon the following cases in support of its case: 1. BDA Ltd. Vs. ITO, 281 ITR 99 (Bom.) 2. CIT Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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