Kal Publications Pvt. Ltd, CHENNAI V. ACIT, CHENNAI

CO 177/CHNY/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2625 (ITAT-CHENNAI)
• Duration Of Justice: 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2016
• Court: TRIBUNAL
• Department Lawyers: N DEVANATHAN; K RAMAKRISHNAN
• Assessee Lawyers: SHIVA SRINIVAS
• Section: 143(3); 142(1); 115JB; 194C

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , J UDICIAL MEMBER ./ I.T.A.NO. 28 21/MDS/2016 / ASSESSMENT YEAR : 20 12 - 13 & C.O. NO. 177 /MDS/201 6 [IN I.T.A. NO. 28 21 /MDS/201 6 ] THE ASSISTANT COMMISSIONER OF INCOME TAX, CO RPORATE CIRCLE 4(2 ), CHENNAI 600 034. VS. M/S. KAL PUBLICAT IONS PVT. LTD., NO. 73, MURASOLI MARAN TOWERS, 3 RD FLOOR, MRC NAGAR, CHENNAI 600 028. [PAN: A A C C K 6694D ] ( APPELLANT ) ( RESPONDENT /CROSS OBJECTOR ) / APPELLANT BY : SHRI SHIVA SRINIVAS , JCIT / RESPONDENT BY : SHRI N. DEVANATHAN , ADVOCATE & SHRI K. RAMAKRISHNAN, C.A. / DATE OF HEARING : 27 . 12 .201 6 / DATE OF P RONOUNCEMENT : 29 . 12 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THE APPEAL PREFERRED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8 , CHENNAI DATED 26 .0 7 .201 6 FOR THE ASSESSMENT YEAR 20 12 - 13 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REV ENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE UNDER SECTION I.T.A. NO . 28 21 /M/ 1 6 & C.O. NO. 177 /M/1 6 2 40(A)( IA ) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] TO THE EXTENT OF . 43,22,073 LAKHS , WHEREAS, IN THE CROSS OBJECTION, ASSESSEE HAS SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN PRINTING AND PUBLISHING OF NEWSPAPERS, WEEKLY AND MONTHLY MAGAZINES. IT HAS FILE D THE RETURN OF INCOME ON 28.09.2012 DECLARING TOTAL LOSS OF .2,51,77,144/ - AND MAT UNDER SECTION 115JB IS NOT APPLICABLE. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 06.08.2013 AND DULY SERV ED ON THE ASSESSEE. NOTICE UNDER SECTION 142(1) OF THE ACT WAS ALSO ISSUED ON 09.01.2015. IN RESPONSE THERETO, THE ASSESSEE FILED ALL DETAILS AS CALLED FOR. AFTER VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED BY MAKING DISALLOWANCE UNDER SECTION 40A(IA) OF THE ACT AT .43,22,073/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING THE PROVISIONS OF SECTION 194C(6) AND 194C(7) OF THE ACT, THE LD. CIT(A) HAS ALLOWED THE APPEAL FIL ED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. BY RELYING ON THE DECISION IN THE CASE OF CIT V. MARUTI SUBRAY PATIL (2015) 63 TAXMANN.COM 28, THE LD. DR HAS SUBMITTED THAT THE TRANSACTIONS WITH LORRY I.T.A. NO . 28 21 /M/ 1 6 & C.O. NO. 177 /M/1 6 3 OWNERS/TRAN SPORTERS COMES WITHIN THE PURVIEW OF PROVISIONS OF SECTION 194C AS IT AMOUNTS TO CARRIAGE OF GOODS OTHER THAN RAILWAYS, AND PLEADED THAT THE TDS SHOULD HAVE BEEN DEDUCTED ON THE PAYMENTS MADE BY THE ASSESSEE TOWARDS VAN HIRE CHARGES. THUS, HE PRAYED THAT T HE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) BY MEANS OF FILING CROSS OBJECTION. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ON VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE TOWARDS PARCEL EXPENSES, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS CLAIMED .43,22,073/ - PAID TOWARDS VAN HIRE CHARGES WITHOUT DEDUCTING TDS ON THE SAME. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN, THE AR OF THE ASSESSEE HAS SUBMITTED THAT AS PER SECTION 194C(6), NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO B E CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PAN TO THE PERSON PAYING OR CREDITING SUCH SUM. IT WAS ALSO SUBMITTED BEFORE THE ASS ESSING OFFICER THAT TDS IS NOT APPLICABLE ON THE SAID EXPENSES IN VIEW OF THE FACT THAT THESE ARE EXPENSES PAID TO GOODS CARRIAGE TRANSPORTERS TOWARDS DISTRIBUTION OF NEWSPAPERS AND THAT THESE PERSONS HAD PAN. THE AR OF THE ASSESSEE HAS FURTHER SUBMITTED T HAT THE I.T.A. NO . 28 21 /M/ 1 6 & C.O. NO. 177 /M/1 6 4 TERMS OF THE PROVISIONS OF SECTION 194C(6) OF THE ACT OVER - RIDE SECTION 194(C)(1) OF THE ACT AND PAYMENTS TO SUCH PERSONS NEED NOT SUFFER TAX DEDUCTION AT SOURCE SO LONG AS THEY PRODUCE THEIR PAN. MOREOVER, THE PERSONS TO WHOM THESE PAYMENTS ARE MA DE ARE NOT SMALL INDIVIDUAL VEHICLE OWNERS INVOLVED IN TRANSPORTATION. SINCE THE PAYMENTS ARE CLEARLY IN THE NATURE OF CONTRACTUAL PAYMENTS AS THEY ARE REGULAR PARTIES UNDERTAKING THESE TRANSPORT JOBS FOR THE ASSESSEE ON A CONTINUOUS BASIS, NO TDS IS LIABL E TO BE DEDUCTED ON THE SAME. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DISALLOWED THE PARCEL EXPENSES OF .43,22,073/ - UNDER SECTION 40(A)(IA) OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, BY ALLO WING THE APPEAL OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AND HELD AS UNDER: 4.1 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. IT IS THE VIEW OF THE ASSESSING OFFICER THAT THE PAYMENTS HAVE NOT B EEN MADE TO SMALL INDIVIDUAL VEHICLE OWNERS INVOLVED IN TRANSPORTATION OF GOODS, BUT THEY ARE IN THE NATURE OF CONTRACTUAL PAYMENTS AS THESE ARE PARTIES UNDERTAKING TRANSPORTATION JOBS ON CONTINUOUS BASIS FOR THE APPELLANT. ON THE OTHER HAND, THE APPELLANT CONTENDS THAT THEIR CASE IS COVERED BY SECTION 194C (6) AND THAT NO TAX NEED TO BE DEDUCTED ON THE PAYMENTS MADE TO GOODS CARRIER TRANSPORTERS. SECTIONS 194C(6) & 194C(7) READ AS FOLLOWS: (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, WHERE SUCH CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR AND FURNISHES A DECLARATION TO THAT EFFECT ALONG WITH HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB - SECTION (6) SHALL FU RNISH, TO THE PRESCRIBED INCOME - TAX I.T.A. NO . 28 21 /M/ 1 6 & C.O. NO. 177 /M/1 6 5 AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS , IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. AS RIGHTLY POINTED OUT BY THE APPELLANT, THE PROVISIONS OF SECTIONS 194C(6) AND 194C(7) DO NOT PROVIDE THAT TDS IS APPLICABLE IF THE PAYMENTS ARE MADE TO TRANSPORT CONTRACTORS ON REGULAR BASIS. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT ANY SUCH CONTRACTOR OWNS MORE THAN TEN GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE DISALLOWANCE OF RS.43,22,073/ - MADE BY THE ASSESSING OFFICER IS DELETED. THE APPELLANT SUCCEEDS ON THIS GROUND. IN THE PRESENT CASE, THERE WAS NO ORAL ASSERTION OR THERE WAS A CASE OF PAYMENT OF FREIGHT C HARGES. THE PAYMENT OF VAN HIRE CHARGES WERE NOT DISPUTED BY THE DEPARTMENT. THEREFORE, THE CASE LAW RELIED ON BY THE LD. DR IN THE CASE OF CIT V. MARUTI SUBRAY PATIL (SUPRA) HAS NO APPLICATION TO THE FACTS OF THE CASE. 7. ON CAREFULLY GOING THROUGH THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING OF FACT AS TO WHETHER THE PAYMENT MADE TO THE CONTRACTOR OWNS TEN OR LESS GOODS CARRIAGE AT ANY TIME DURING THE YEAR UNDER CONSIDERATION OR VERIFIED THE PARTICULARS GIVEN IN TH E DECLARATIONS FILED BY THE CONTRACTORS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE ABOVE FACT AND DECIDE THE ISSUE AFRESH AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. SINCE WE HAVE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A ) WHILE DECIDING THE APPEAL FILED BY THE REVENUE , THE CROSS OBJECTION FILED BY THE I.T.A. NO . 28 21 /M/ 1 6 & C.O. NO. 177 /M/1 6 6 ASSESSEE BECOME INFRUCTUOUS AND ACCORDINGLY, THE CO FILED BY THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPO SES AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 29 TH DECEMBER, 20 16 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 29 . 12 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.