S.Hari krishnan, Virudhunagar V. ITO, Virudhunagar

CO 14/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0513 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR NISCHAL
• Keywords: Reasonable cause
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO . 3075/MDS/2014 & C.O. NO.14/MDS/2015 (IN ITA NO.3075/MDS/2014) ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, WARD-I, VIRUDHUNAGAR. VS MR. S.HARIKRISHNAN, 1/2812, MUTHAL NAGAR, VIRUDHUNAGAR-626 001. PAN:ACIPH0037P ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : DR.NISCHAL, JCIT /RESPONDENT BY : NONE /DATE OF HEARING : 17 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 17 TH APRIL, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, MAD URAI DATED 27.08.2014 FOR THE ASSESSMENT YEAR 2009-10. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) OF THE ACT IN RESPECT OF VAN AND LORRY CH ARGES PAID BY THE ASSESSEE. 2 ITA NO.3075 /MDS/2014 & C.O.NO.14/MDS/2015 2. THE CROSS OBJECTION IS FILED BY THE ASSESSEE WIT H THE DELAY OF ONE DAY. THE ASSESSEE FILED PETITION FOR C ONDONATION OF DELAY STATING REASONS FOR DELAY IN FILING OF CRO SS OBJECTION. HAVING GONE THROUGH THE PETITION FOR CODONATION, WE FIND THAT ASSESSEE WAS PREVENTED WITH REASONABLE CAUSE IN NOT FILING THE CROSS OBJECTION IN TIME AND IN THESE CIRCUMSTA NCES, IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF ONE D AY AND ADMIT THE CROSS OBJECTION FOR HEARING. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. SINCE THE ISSUE IN APPEAL OF THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO -ORDINATE BENCH OF THIS TRIBUNAL, WE PROCEED TO DISPOSE OFF T HE APPEAL AND CROSS OBJECTION, AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 4. BRIEF FACTS ARE THAT ASSESSING OFFICER WHILE COM PLETING THE ASSESSMENT DISALLOWED VAN AND LORRY CHARGES PAI D BY THE ASSESSEE UNDER SECTION 40(A)(IA) ON THE GROUND THAT NO TDS UNDER SECTION 194C OF THE ACT WAS MADE. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE 3 ITA NO.3075 /MDS/2014 & C.O.NO.14/MDS/2015 DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES OF ITO VS. THEEKATHIR PRESS AND THE DECISION OF THE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF TEJ A CONSTRUCTIONS VS. ACIT (39 SOT 13) DELETED THE DISALLOWANCE HOLDING THAT 40(A)(IA) DISALLOWANCE C ANNOT BE MADE ON THE AMOUNTS ALREADY PAID BEFORE THE END OF ACCOUNTING YEAR AND THE PROVISIONS OF SECTION 40(A) (IA) APPLY ONLY TO THE AMOUNTS PAYABLE AND OUTSTANDING AT THE END OF THE ACCOUNTING YEAR. 5. DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON T HE ORDER OF THE ASSESSING OFFICER. 6. HEARD DEPARTMENTAL REPRESENTATIVE AND PERUSED ORDERS OF LOWER AUTHORITIES. WE FIND THAT THE ISSU E IN APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL AS THIS TRIBUNAL IS CONSISTENTLY HOLD ING THAT PROVISIONS OF SECTION 40(A)(IA) HAVE NO APPLICATIO N ON THE AMOUNTS ALREADY PAID BEFORE THE END OF THE ACCOUNTI NG YEAR. THE ASSESSING OFFICER DISALLOWED VAN AND LORRY CHAR GES PAID BY THE ASSESSEE FOR NOT DEDUCTING TDS ON SUCH PAYM ENTS 4 ITA NO.3075 /MDS/2014 & C.O.NO.14/MDS/2015 INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISIONS OF CO-ORDINATE BENCH OF THIS TRIBUNAL DE LETED THE DISALLOWANCE OBSERVING AS UNDER:- 7.0 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE APPELLANT AND THE MATERIALS AVAILABLE ON RECORD . THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S 194C OF THE INCOME TAX ACT AND DUE TO THE FAILURE THE ENTIRE AMOUNT OF RS. 49,25,134/- SPENT ON VAN AND LORRY CHARGES HAS BEEN DISALLOWED U/S 40 (A) (LA). HOWEVER, A PERUSAL OF THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE ASSESSEE CLEARLY INDICATES THAT THE ASSESSEE HA D HIRED VEHICLES FROM VARIOUS PERSONS VIDE PARA 4 OF THE ASSESSMENT ORDER. THE RESPONSIBILITY OF CARRYING OU T THE TRANSPORTATION WAS WITH THE ASSESSEE ONLY. THE RISK AND RESPONSIBILITY WAS NOT SHARED WITH THE TRANSPORTER. THERE IS NO ESTABLISHED CONTRACT BETWE EN THE ASSESSEE AND THE LORRY OWNERS. FURTHER THIS VIE W, OF THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION I N THE CASE OF COMMISSIONER OF INCOME TAX VS. PRASHANT H. SHAH (GUJARAT HIGH COURT - 216 ITR 287) THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'TO REITERATE, FOR APPLICATION OF SECTION 194C(2) OF THE ACT WHAT WAS NECESSARY WAS A RELATIONSHIP BETWEEN THE CONTRACTOR AND SUB- CONTRACTOR AND NOT MERELY BE HIRING OF AN AGENCY BY THE CONTRACTOR DURING THE COURSE OF EXECUTION OF THE WORK. IN THE PRESENT CASE, SUCH VITAL REQUIREMENT OF RELATIONSHIP OF A CONTRACTOR AND SUB-CONTRACTOR BETWEEN THE ASSESSEE AND THE TRANSPORTERS WAS MISSING. THE TRIBUNAL, IN OUR VIEW, WAS PERFECTLY JUSTIFIED IN HOLDING THAT IIABILITY.TO DEDUCT TAX AT SOURCE IN T HE PRESENT CASE DO NOT ARISE. RELEVANT PORTION OF EXPLANATION-III OF SECTION 194C ONLY PROVIDES THAT FOR THE PURPOSE OF THIS SECTION, THE EXPRESSION 'WORK' SHALL ALSO INCLUDE CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE 5 ITA NO.3075 /MDS/2014 & C.O.NO.14/MDS/2015 OF TRANSPORT OTHER THAN BY RAILWAYS. THIS EXPLANATION APPLIES BOTH TO SUB-SECTION (1) AS WELL AS SUB-SECTION (2) OF SECTION 194C. ADDITIONALLY, THE EXPLANATION AT ANY RATE CANNOT BE PRESSED IN SERVICE TO BRING THE - CASE OF AN ASSESSEE WITHIN THE SCOPE OF SUB-SECTION (2) OF SECTION 194C, IF THE SAME IS OTHERWISE NOT INCLUDABLE SINCE THE REQUIREMENT OF SUCH SUB- SECTION ARE NOT FULFILLED.' 7.1 FURTHER AS REGARDS THE APPLICABILITY OF SECTIO N 40(A)(IA) IT HAS BEEN HELD BY VARIOUS TRIBUNALS INCLUDING THE JURISDICTIONAL TRIBUNAL THAT SAID SEC TION IS APPLICABLE ONLY TO AMOUNTS WHICH REMAINED PAYABLE ON THE BALANCE SHEET DATE IN RESPECT OF WHICH TAX H AS NOT BEEN DEDUCTED. THIS VIEW HAD BEEN SUPPORTED BY THE ITAT HYDERABAD BENCH IN THE CASE OF TEJA CONSTRUCTIONS VS. ACIT 39 SOT 13 AND ALSO THE ITAT CHENNAI BENCH IN THE CASE OF ITO VS. THEEKATHIR PRESS. AS ON THE BALANCE SHEET NOTHING REMAINED PAYABLE AND HENCE THE PROVISIONS ARE NOT ATTRACTED. 7. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER, AS THIS TRIBUNAL IS CONSISTENTLY HOLDING THAT DISALLOWANCE UNDER SECTIO N 40(A)(IA) CANNOT BE MADE ON THE AMOUNTS ALREADY PAID BEFORE T HE END OF THE ACCOUNTING YEAR. HENCE, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 8. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONL Y IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX 6 ITA NO.3075 /MDS/2014 & C.O.NO.14/MDS/2015 (APPEALS). AS WE HAVE SUSTAINED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE CROSS OBJ ECTION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2015 AT CHENNAI. SD/- SD/- ( ' ) ( % '' ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) ) / ACCOUNTANT MEMBER ' ) / JUDICIAL MEMBER ' /CHENNAI, + /DATED 17 TH APRIL, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .