2010 (8) TMI 1107 - AT - Income Tax

Summary

Issues involved: Appeal by revenue against CIT(A)'s order deleting disallowance of payments for packing material u/s 194C of the I.T. Act.

The Appellate Tribunal ITAT Visakhapatnam heard the appeal by the revenue against the CIT(A)'s order. The main issue was the disallowance of payments made for packing material under section 194C of the Income Tax Act. The Tribunal noted that the CIT(A) had erred in deleting the disallowance, but after considering the arguments presented, it found that the issue was covered by a previous order in a similar case. The Tribunal referred to the main purpose of buying packing material for packing goods and held that incidental printing did not change the nature of the transaction. Relying on the judgment of the Delhi High Court in a related case, the Tribunal concluded that section 194C was not applicable in this scenario. Therefore, the Tribunal upheld the CIT(A)'s decision in line with the previous order and the Delhi High Court's judgment.

In the course of the hearing, the assessee's counsel referred to a previous Tribunal order and argued that the issue at hand was similar to the one addressed in that order. The Tribunal agreed with the counsel's interpretation that the main purpose of purchasing packing material was for packing goods, and any incidental printing did not alter the nature of the transaction. This stance was supported by a judgment of the Delhi High Court in a relevant case. On the other hand, the revenue's representative relied on the CIT(A)'s order. After examining all the arguments and previous orders, the Tribunal found that the issue was indeed covered by the previous Tribunal order and the Delhi High Court's judgment. Consequently, the Tribunal upheld the CIT(A)'s decision as it was in line with the established legal principles.

The Tribunal's decision was based on the interpretation of the main purpose behind purchasing packing material and the applicability of section 194C of the Income Tax Act. By referencing a previous Tribunal order and a judgment of the Delhi High Court, the Tribunal concluded that the disallowance of payments for packing material was not justified. The Tribunal found no reason to deviate from the established legal position and upheld the CIT(A)'s decision. As a result, the revenue's appeals were dismissed, and the decision was pronounced in open court on 18.8.2010.