Principal Commissioner Of Income-Tax-27 v. Vijay S. Poojari

Ladda IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No.789 of 2016 Principal Commissioner of Income-tax-27..Appellant.VsVijay S. Poojari..Respondent. Mr. N.C. Mohanty, Advocate for the Appellant. Mr. S. Sriram a/with Mr. Mayank Thosar I/by B.V.Jhaveri for the Respondent. CORAM : AKIL KURESHI & B. P. COLABAWALLA, JJ. DATED :- 8TH JANUARY, 2019. P.C.: 1Leave to amend. Re-verification dispensed with.Amendment to be carried out forthwith. 2 This appeal is filed by the Revenue against the judgment of the Income Tax Appellate Tribunal (“theTribunal”for short) dated 24[th] July, 2015 raising following question forour consideration:- “Whether on the facts and in the circumstances of the case and in lawthe ITAT was justified in not upholding the disallowance ofRs.4,60,21,743/- under Section 40 (a) (ia) of the Income Tax Act, 1961 by holding that the assessee was not liable to deduct tax underSection 194C from the said expenses, as the assessee's turnover in theproceding year was less than the monetary limit prescribed underSection 44AB of the Act, without appreciating the finding of theAssessing Officer in the assessment order passed by him undersection 143 (3) read with section 147 for such preceding year i.e.A.Y. 2006-07 wherein he has established that the assessee's turnoverexceeds the prescribed limit under section 44AB of the Income TaxAct, 1961?” The respondent is an individual. For Return ofIncome filed by the assessee for the Assessment Year 2007-08,the Assessing Officer objected to the assessee not havingdeducted tax at source on certain payments made during theperiod relevant to the said Assessment Year. The assesseeraised two-fold contentions. Firstly, according to the assessee,the payments were in the nature of reimbursement ofexpenditure and, therefore, did not invite the requirement ofdeducting tax at source. Second contention of the assessee wasthat in any case the assessee's turn over did not exceed thethreshold limit so as to subject the assessee to compulsorystatutory audit under Section 44AB of the Income Tax Act,1961 (“the Act”for short). 4The Assessing Officer disregarded both the objections and disallowed the expenditure by invoking Section 40 (a) (ia) ofthe Act. 5The issue eventually raised by the Tribunal, thereforethe Assessee had once again pressed both the grounds. The Tribunalhowever focused only on one of them namely that no requirement ofstatutory audit in case of the assessee. The Tribunal noted that thestatutory provisions contained sub-Section 1 and 2 of Section 194(c) of the Act prevailing at the relevant time excluded theindividuals and Hindu Undivided Families from the requirement ofdeducting tax at source as long as their turnover did not exceed thelimit for statutory audit. On facts, it has been held that assesseewould have been qualified for exclusion clause and therefore therequirement of deducting tax at source could not be applied. 6Having heard the learned Counsel for the parties andhaving perused the documents on record, we do not find any error inthe view of the Tribunal. The finding of the Tribunal that theAssessee's turn over for the previous year did not exceed thestatutory threshold is a finding of fact, not shown to be erroneous.The statutory provisions contained in Section 194 (c) of the Actapplicable at the relevant time specifically excluded the requirementof deducting tax at source by the individual or HUF payees if during the previous year their turnover did not exceed the limit requiringthem to be subjected to compulsory audit. No question of law arises.The appeal is dismissed. (B.P. COLABAWALLA, J.) (AKIL KURESHI, J)