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Shri Avtar Singh, Prop. Chandigarh Computer Center Versus The JCIT, Patiala

2016 (7) TMI 1009 - ITAT CHANDIGARH

TDS u/s 194C - disallowance on account of advertisement expenditure on the basis that the TDS was not deducted - Held that:- The matter requires re-consideration at the level of the ld. CIT(Appeals). The assessee filed copy of certificate from Association at page 13 of the Paper Book in which it was certified that the association gives advertisement of all the learning centres of Punjab Technical University, Distance Education Program in Punjab to the print media. The shares of cost of advertise .....

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,51,117/-. The net profit in the year under consideration comes to ₹ 6,90,288/-, thus, total capital of assessee comes to ₹ 21,41,405/-. Further, assessee has interest free unsecured loan of ₹ 5 lacs from Shri Joginder Singh. These amounts/funds are sufficient to cover up the interest free advances given to the family members in a sum of ₹ 14,25,000/-. Hon'ble Punjab & Haryana High Court in the case of Kapson Associates [2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT ] .....

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asset came into existence and there was no advantage of enduring benefit to the business of the assessee. Since there is no existence of any asset and no enduring benefit have been taken by the assessee, therefore, authorities below were wholly unjustified in considering it to be capital expenditure in nature. The expenses are clearly revenue in nature - Decided in favour of assessee - ITA No. 392/CHD/2016 - Dated:- 19-7-2016 - Shri Bhavnesh Saini, Judicial Member For the Appellant : Shri Ashok .....

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cted. The Assessing Officer noted that assessee in the Profit & Loss Account has debited a sum of ₹ 16,72,425/- under the head 'All India PTU Expenses'. On verification of this account, it was noticed that a sum of ₹ 10,56,169/- included in this account is the advertisement expenditure but no tax has been deducted at source by the assessee while making the payment. The assessee, in response to the query raised by Assessing Officer submitted that the aforesaid sum amount i .....

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ereof, shall deduct the tax at the source @ 1% under section 194C of the Income Tax Act. The Assessing Officer did not accept contention of the assessee that TDS has been deducted by All India PTU Association and accordingly, disallowed the amount of ₹ 10,56,169/- for non-deduction of TDS. 4. The assessee reiterated the submissions before ld. CIT(Appeals). It was submitted that there are seven parties in Punjab doing similar type of business. The said parties formed an Association in the n .....

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nt of ₹ 10,56,169/- was made by assessee to the Association as reimbursement of its share of common advertisement expenses incurred by that association. It was made clear that association was not an advertisement agency and relationship between payee and payer was that of an Association and its member and not that of contractor and contractee as contemplated under section 194C of the Act therefore, no TDS is liable to be deducted. The contract was entered into between Association and the A .....

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Section 194C(1) of the Act in his findings, dismissed this ground of appeal of the assessee without giving any reasons for decision on the same. 6. After considering rival submissions, I am of the view the matter requires re-consideration at the level of the ld. CIT(Appeals). The assessee filed copy of certificate from Association at page 13 of the Paper Book in which it was certified that the association gives advertisement of all the learning centres of Punjab Technical University, Distance Ed .....

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ITA 649/2011 and 723/2011 in which the identical issue was raised in the appeal of the assessee on ground No. 1 (PB-89). The submissions of the assessee were identical as have been raised in the present appeal. The Tribunal in the absence of material on record, restored the matter back to the file of ld. CIT(Appeals) for deciding the issue afresh. 6(i) The ld. counsel for the assessee referred to PB-56 which is order of ld. CIT(Appeals), Patiala dated 18.09.2015 for assessment year 2008-09 of M/ .....

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vertisement incurred by the association, therefore, assessee is not liable to deduct TDS and appeal of the assessee was accordingly allowed. It, therefore, appears that the ld. CIT(Appeals) has not considered these details filed on record and the order of the ITAT and ld. CIT(Appeals), Patiala in the case of M/s Vaishno Maa Computers (supra) which have decided identical point in issue. The ld. CIT(Appeals) did not pass the reasoned order in this matter, therefore, order is violation of Section 2 .....

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result, ground No. 1 of appeal of the assessee is allowed for statistical purposes. 7. On ground No. 2 assessee challenged the disallowance of ₹ 1,07,600/- on account of interest. The Assessing Officer found that there are advances made by assessee to four persons in a sum of ₹ 14.25 lacs to Mrs. Goldy Kamboj (wife), Mrs. Harpreet Kaur (sister), Shri Sukhbir Singh (nephew) and Smt. Surinder Kaur, mother-in-law of the assessee. The Assessing Officer asked the assessee to explain the p .....

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have not been utilized for business purposes to the extent of interest free advances made to the persons as above, the interest chargeable on these advances was, therefore, held not to be allowable. The Assessing Officer, accordingly, disallowed ₹ 1,07,600/-. 8. The assessee challenged addition before ld. CIT(Appeals) and it was submitted that assessee has capital of ₹ 14,51,117/-. Further, there was interest free loan of ₹ 5 lacs. Out of the said amounts, he has advanced few .....

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al, has capital of ₹ 14,51,117/-. The net profit in the year under consideration comes to ₹ 6,90,288/-, thus, total capital of assessee comes to ₹ 21,41,405/-. Further, assessee has interest free unsecured loan of ₹ 5 lacs from Shri Joginder Singh. These amounts/funds are sufficient to cover up the interest free advances given to the family members in a sum of ₹ 14,25,000/-. Hon'ble Punjab & Haryana High Court in the case of Kapson Associates 38 ITR 204 held .....

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. The Assessing Officer noted that the assessee in the Profit & Loss Account has debited a sum of ₹ 6,50,000/- on account of franchise fees paid to Indian Institute of Hardware Technology Ltd., Bangalore. The Assessing Officer asked the assessee as to why the same be not treated as capital expenditure as the same has brought advantage of enduring nature. The assessee submitted that amount has been paid for affiliation to IIHT Ltd. for Patiala and Chandigarh centre. It is only licence f .....

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e franchise agreement which does not include the affiliation fees payable to the major IT companies for obtaining education licence or affiliation from them. It was, therefore, considered to be capital expenditure and addition was made accordingly. 11. The assessee submitted before ld. CIT(Appeals) that he is running various centres in Punjab to import information technology which includes computer course. To give computer course to the students, it got franchise from IIHT Ltd. which is engaged .....

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hno Maa Computers (supra). The ld. CIT(Appeals), however, did not accept contention of the assessee and found that amount paid is towards capital expenditure and dismissed this ground of appeal of the assessee. 12. After considering rival submissions, I am of the view addition is wholly unjustified. Hon'ble Full Bench of Hon'ble Punjab & Haryana High Court in the case of CIT V Groz Beckert Asia Ltd. 351 ITR 196 held as under : "If an item of expenditure is to be considered capit .....

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erred on the assessee and that too for a limited period. Such expenses are for running the business with a view to produce the benefits to assessee. Consequently, it cannot be treated as capital asset. Held accordingly, dismissing the appeal, that the corporate membership to the golf club was for a limited period of five years. It was obtained for running the business with a view to produce profit. Thus, the corporate membership fee paid to the golf club was of revenue expenditure." 13. PB- .....

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