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2016 (7) TMI 611 - ITAT KOLKATA

2016 (7) TMI 611 - ITAT KOLKATA - TMI - Reopening of assessment - whether there was an obligation on the part of the assessee to deduct tax at source in terms of seciton 194C? - Held that:- As already seen while concluding the original assessment proceedings the issue of TDS on dyeing and printing charges was raised by the assessee and in the order passed u/s 143(3) of the Act dated 28.12.2007 no addition whatsoever was made u/s 40(a)(ia) of the Act for non deduction of tax at source. Thus it is .....

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ely a change of opinion, reassessment proceedings have been initiated by the AO. Such a course is not permissible as held by the Hon’ble Supreme Court in the case of CIT vs M/s. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). - We are of the view that the provision of section 194C (2) of the Act apply to a contractor and not to a person such as the assessee who was a trader in art silk fabricss. When the provision of section 194C(2) of the Act are not attracted the que .....

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favour of assessee - I.T.A No. 2713/Kol/2013 - Dated:- 8-7-2016 - Sri N.V.Vasudevan, JM & Shri M.Balaganesh, AM For The Appellant : Shri P.B.Pramanik, JCIT, Sr.DR For The Respondent : Shri Subash Agarwal, Advocate ORDER Per N.V.Vasudevan, JM This is an appeal by the Revenue against the order dated 04.09.2013 of CIT(A)-XXXII, Kolkata relating to AY 2005-06. 2. Grounds of appeal raised by the revenue read as follows :- i) That on the facts and circumstances of the case, Ld. CIT(A) erred in dec .....

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e A.O. has applied the provision of section 194C(2) of the Act while making the disallowance u/s.40(a)(ia) of the Act. iv) That on the facts and circumstances of the case, Ld. CIT(A) has erred to apply the provision of section 194C(1) of the Act, where the assessee, being Contractor, made payment to sub-contractor and violated the provision of Section 194C(2) of the Act. v) The appellant craves leave to add, modify any question of Law in course of hearing of this appeal. 3. The Assessee is an in .....

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and packaging expenses. After getting a reply from the assessee on the above query the AO completed the order of assessment u/s 143(3) of the Act on 28.12.2007 in which he did not make any disallowance of dying and printing charges for non deduction of tax at source on the aforesaid sum by invoking the provision of section 40(a)(ia) of the Act. 4. On 10.10.2011 AO issued a notice u/s 148 of the Act for making an assessment u/.s 147 of the Act i..e. income escaping assessment. The reasons record .....

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ected to show cause as to why ₹ 63,11,804/- claimed as Dyeing & Printing charges should not disallowed U/s.40(a)(ia) of the IT. Act, 1961 and added back to the total income for the relevant A. Y under consideration. It is further confirmed that you are still assessed under this jurisdiction and no file has been transferred to Surat 1. T. office . 5. In response to the notice issued u/s 148 of the Act the assessee sent a letter on 21.10.2005 requesting the AO to treat the return origina .....

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1)(k) of the Act which came into effect only from 01.06.2007. The stand of the revenue was that the provision of section 194C(2) proviso imposed on obligation even on individuals prior to 01.06.2007. The AO accordingly disallowed a sum of ₹ 63,11,804/- which was dyeing and printing charges paid by the assessee to various process houses. 6. Aggrieved by the order of AO the assessee preferred appeal before CIT(A). Before CIT(A) the assessee submitted that initiation of reassessment proceedin .....

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e Dyeing Printing charges. On being satisfied by the reply of the Assessee, the Ld A.O. had accepted the contention in original assessment. The ld.A.O. had also verified books of a/c along with voucher of Dyeing & Printing charges which were produced by the Assessee before him and is deemd to have accepted the plea of the Assessee as he did not make any addition u/s.40(a)(ia) of the Act. 7. It was further submitted that as per Provisions of Section 194C of the Act as applicable for the Asst. .....

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ent proceedings cannot be initiated on a mere change of opinion. Sarthuk Securities Co. Pvt. Ltd. Vs ITO (2010) 329ITR 110 (Delhi). Indivest PTE Ltd. Vs Additional Director of IT & Ors (2012) 250 CTR (Bombay) 15. C.I.T Vs M/s. Kelvinator of India Ltd. (2010) 320 ITR 561 (S.C). As per decision of Delhi High Court in the case of CIT vs Usha International Ltd. 253 CTR (Delhi) 113 (FB.) no assessment can be re-opened where an issue or query is raised and answered by the assessee in original asse .....

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The assessee s appeal is allowed for the following reason :- (l) The fact that the A.O. had categorically examined the issue of TDS applicability on Dyeing and Printing Charges during the original assessment proceedings leads to the only conclusion that the reassessment proceedings is based on a mere change of opinion only. Reliance is placed on the following case laws :- (a) CIT v. Kelvinator of India Ltd(2010) 320 ITR 561 (S.C.) (b) CIT v. Usha International Ltd (2012) 251 CTR 113 (FB) (Delhi) .....

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/s.40(a)(ia) of the Act is misplaced. Reliance is placed on the following among others :- (a) CBDT Circular No.3 of 2008 dated 12.03.2008 (b) CIT v. Prashant H. Shah (2013) 29 taxmann.com 296(Guj) (c) CIT v. Vishnudutt Sharma (2013) 33 taxmann.com 284 (Guj) (d) ACIT v. Smt. Keya Seth ITA No.842 & 843/Koll2010 dated 11.03.2011 (ITAT Kolkata) (e) Raj Kishori Lal Patodia v. ACIT, ITA No.89671Mum/2010 dated 23.0S.2013(ITAT Mumbai) In view of the above, the assessee s ground of appeal No. 2&3 .....

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while concluding the original assessment proceedings the issue of TDS on dyeing and printing charges was raised by the assessee and in the order passed u/s 143(3) of the Act dated 28.12.2007 no addition whatsoever was made u/s 40(a)(ia) of the Act for non deduction of tax at source. Thus it is clear that the question as to whether dyeing and printing charges paid by the assessee had to suffer TDS in the hands of the assessee, who is an individual is deemed to have been considered by the AO and .....

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