The ACIT, Circle-1, Rajahmundry, Rajahmundry V. Sri Potru Muralikrishna, Visakhapatnam

CO 23/VIZ/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8067 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: TH L PETER
• Keywords: Non-deduction of tax
• Section: 194C; 28

Judgement Text

ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D MANMOHAN, VICE PRESIDENT AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.254/VIZAG/2012 ASSESSMENT YEAR: 2007-08 ACIT CIRCLE-1 RAJAHMUNDRY POTRU MURALI KRISHNA KOVVUR (APPELLANT) VS. (RESPONDENT) PAN NO: AEMPP 5584N CO NO.23/VIZAG/2012 (ARISING OUT OF ITA NO.254/VIZ/2012) ASSESSMENT YEAR: 2007-08 ACIT CIRCLE-1 RAJAHMUNDRY SRI POTRU MURALI KRISHNA KOVVURU (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI TH.L. PETER, CIT(DR) RESPONDENT BY: SHRI C. SUBRAHMANYAM, C.A. DATE OF HEARING: 05.11.2012 DATE OF PRONOUNCEMENT: 07.11.2012 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 26.3. 2012 PASSED BY LEARNED. CIT(A) VISAKHAPATNAM AND THEY RELATE TO TH E ASSESSMENT YEAR 2007-08. 2. THE REVENUE IS ASSAILING THE DECISION OF LEARNED . CIT(A) IN DELETING THE ADDITION MADE UNDER SECTION 40(A)(IA) OF THE IN COME-TAX ACT FOR THE FAILURE TO DEDUCT TAX AT SOURCE UNDER SECTION 194C OF THE ACT FROM LORRY TRANSPORT CHARGES CLAIMED BY THE ASSESSEE. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS A TRANSPORT CONTRACTOR UNDERTAKING CONTRACT OF TRANSP ORT FROM M/S. ANDHRA SUGARS AND OTHERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 2 OF 6 NOTICED THAT THE ASSESSEE HAS PAID A SUM OF RS.2.85 CRORES AS LORRY TRANSPORT CHARGES, WITHOUT DEDUCTING TAX AT SOURCE UNDER SECTION 194C OF THE ACT. THE ASSESSEE SUBMITTED THAT HE DID NOT DE DUCT TAX AT SOURCE AS THE RECIPIENT OF LORRY CHARGES HAVE FURNISHED FORM NO.15I AND IN TURN HE HAS FILED THE COPIES OF THE SAME ALONG WITH FORM NO.15J BEFORE LEARNED. CIT, RAJAHMUNDRY. HOWEVER, THE ASSESSING OFFICER DISALL OWED THE ENTIRE AMOUNT OF LORRY TRANSPORT CHARGES CLAIMED BY THE ASSESSEE UNDER SECTION 40(A)(IA) OF THE ACT WITH THE REASONING THAT THE ASSESSEE HAS FAILED TO FURNISH PROOF OF DEDUCTION OF TDS FROM SUCH PAYMENTS. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED. CIT(A) AND ALLOWED THE CLAIM OF THE ASSESSEE WITH THE FOLL OWING OBSERVATION: COMING TO THE NEXT ARGUMENT THAT THE ASSESSEES CAS E IS COVERED BY 194C(6), ON THE BASIS OF EVIDENCE FILED BEFORE ME, I FIND STRENGTH IN THE ARGUMENTS OF THE ASSESSEE. I WOULD LIKE TO MEN TION THAT ASSESSING OFFICER NOWHERE IN THE ASSESSMENT ORDER D ISPUTED THIS FACT AND DID NOT BRING ON RECORD ANY EVIDENCE TO SHOW TH AT THE ASSESSEE DID NOT OBTAIN THE NECESSARY DECLARATION OR DID NOT SUBMIT THE SAME TO THE CIT, RAJAHMUNDRY. ONCE A CLAIM IS MADE BEFO RE THE ASSESSING OFFICER AND NECESSARY PROOF IN RELATION T O THE SAME IS SUBMITTED, ASSESSING OFFICER DUTY BOUND TO EXAMINE AND DISPROVE THE SAME IF HE DID NOT BELIEVE THE CONTENTION OF THE AS SESSEE TO BE TRUE. HOWEVER, AO WITHOUT DISCUSSING THE ISSUE, WENT ON T O DISALLOW THE PAYMENT MADE WHICH IN MY OPINION IS NOT CORRECT. T HUS, IN VIEW OF THE EVIDENCE SUBMITTED BY THE ASSESSEE, I HOLD THAT ASSESSEE IS NOT REQUIRED TO DEDUCT TAX AS HIS CASE IS SQUARELY COVE RED UNDER SECTION 194C(6) R.W.RULE 29D. ALTERNATIVELY THE ASSESSEES CASE IS ALSO COVERED BY THE DECISION OF JURISDICTIONAL TRIBUNAL IN THE CASE OF MYTHRI TRANSPORT CORPORATION ((SUPRA) AS THERE IS N O SUBCONTRACT ENTERED INTO BY THE ASSESSEE WITH INDIVIDUAL LORRY OPERATORS. IN VIEW OF THE ABOVE, I HOLD THAT THE ASSESSEE IS NOT REQUI RED TO DEDUCT TAX AT SOURCE AND HENCE, I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION. AS I HAVE HELD THAT THE ADDITION MADE IS NOT SUSTAINABLE ON MERITS, I DO NOT DEEM IT FIT TO GO INTO OTHER ALTER NATIVE CONTENTIONS OF THE ASSESSEE. IT IS SEEN THAT THE LEARNED CIT(A) HAS ALLOWED THE APPEAL ON THE LEGAL GROUND THAT THE LORRY TRANSPORT CHARGES DOES NOT FA LL IN THE CATEGORY OF SUB- CONTRACT PAYMENTS REQUIRING DEDUCTION OF TAX AT SOU RCE U/S 194C(2) OF THE ACT AND ALSO ON THE GROUND THAT THE ASSESSEE HAS CO MPLIED WITH THE PROVISIONS OF SEC. 194C R.W. RULE 29D. ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 3 OF 6 5. AGGRIEVED BY THE ORDER OF LEARNED. CIT(A), THE R EVENUE HAS FILED THIS APPEAL BEFORE US. THE ASSESSEE HAS FILED THE CROSS OBJECTION WITH THE PLEA THAT THE ASSESSEE HAS PAID THE ENTIRE AMOUNT OF LOR RY TRANSPORT CHARGES AND HENCE THE PROVISIONS OF SECTION 40(A)(IA) OF THE AC T IS NOT ATTRACTED IN VIEW OF THE DECISION OF SPECIAL BENCH OF HON'BLE ITAT VI SAKHAPATNAM IN THE CASE OF M/S. MERLYN SHIPPING & TRANSPORT VS. ACIT (136 I TD 23)(SB)(VIZAG). 6. LEARNED D.R. SUBMITTED THAT THE LORRY TRANSPORT CHARGES PAID BY THE ASSESSEE WOULD FALL IN THE CATEGORY OF CONTRACT AND HENCE SUCH PAYMENTS ARE LIABLE FOR DEDUCTION OF TAX AT SOURCE. FOR THIS PROPOSITION HE PLACED RELIANCE ON THE FOLLOWING CASE LAWS: A. SRI CHOUDHRY TRANSPORT CO. 225 CTR 125 (RAJ) B. SMT. J. RAMA VS. CIT [2012] 344 ITR 608 (KARN) THE LEARNED DR DREW OUR ATTENTION TO THE FOLLOWING GROUNDS RAISED BY THE REVENUE: THE CIT(A) ERRED IN HOLDING THAT ASSESSEES CASE IS COVERED UNDER SECTION 194C(6) READ WITH RULE 29D WITHOUT APPRECIA TING THE FACT THAT FORMS NO.15I WERE INCOMPLETE NOT HAVING PANS A ND ALSO NOT FILED IN RESPECT OF ALL 48 INDIVIDUAL LORRY OWNERS (AS PER BOOKS). THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FAIL ED TO FURNISH THE PRESCRIBED FORM NO.15I FOR ALL THE RECIPIENTS OF LO RRY TRANSPORT CHARGES AND HENCE THE EXEMPTION PROVIDED UNDER SECTION 194C OF THE ACT SHALL NOT APPLY TO THE ASSESSEE. 7. THE LEARNED. AUTHORISED REPRESENTATIVE, ON THE C ONTRARY, SUBMITTED THAT THE ASSESSEE HAS RECEIVED FORM NO.15I FROM ALL THE PAYEES AND FURNISHED COPIES OF THE SAME TO THE LEARNED CIT RAJ AHMUNDRY. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FILED FORM NO.15J PRESCRIBED UNDER RULE 29D OF THE ACT AS PER PROVISO TO SECTION 194C(3)(I) OF THE ACT, WHICH CONTAINED THE DETAILS SUCH AS THE NAME & ADDRESS OF THE PAYEES, AMOUNT PAID, VEHICLE NUMBE R AND DATE OF REGISTRATION FOR ALL THE 43 RECIPIENTS. HE ALSO DR EW OUR ATTENTION TO THE COPIES OF FORM NO.15I FILED BY THE ASSESSEE, WHICH ARE PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. ACCORDINGLY HE SUBMITT ED THAT THE ASSESSEE HAS ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 4 OF 6 COMPLIED WITH THE PROVISIONS OF SECTION 194C OF THE ACT FOR NOT DEDUCTING TAX AT SOURCE FROM SUCH PAYMENTS. HE FURTHER SUBMI TTED THAT THE IMPUGNED LORRY TRANSPORT CHARGES CANNOT BE CONSIDERED AS SUB CONTRACT PAYMENTS AS PER THE DECISION OF HON'BLE ITAT VISAKHAPATNAM IN T HE CASE OF MYTHRI TRANSPORT CORPORATION (124 ITD 40). HE FURTHER SUB MITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT SHALL NO T APPLY TO THE IMPUGNED PAYMENTS AS THE ASSESSEE HAS PAID THE ENTIRE AMOUNT DURING THE COURSE OF THE YEAR AND NOTHING REMAINS PAYABLE AS AT THE YEAR END. FOR THIS PROPOSITION, THE LEARNED AUTHORISED REPRESENTATIVE RELIANCE ON THE SPECIAL BENCH DECISION IN THE CASE OF MERLYN SHIPPING & TRA NSPORT REFERRED (SUPRA). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT THE LEARNED. CIT HAS FOLLOW ED THE DECISION RENDERED BY THIS BENCH IN THE CASE OF M/S. MYTHRI TRANSPORT CORPORATION REFERRED (SUPRA) IN GRANTING RELIEF TO THE ASSESSEE. 9. THE PROCEDURE FOR FILING THE FORMS PRESCRIBE D UNDER RULE 29D OF THE INCOME TAX RULES READ WITH THE SECOND PROVISO TO SE C. 194C(3)(I) SHALL APPLY ONLY IF THE PAYMENTS ARE FALLING IN THE CATEG ORY OF SUB-CONTRACT PAYMENTS. IN THE INSTANT CASE, THE LEARNED CIT(A) HAS HELD THAT THE IMPUGNED PAYMENTS SHALL NOT FALL IN THE CATEGORY OF SUB-CONTRACT PAYMENTS, BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CA SE OF MYTHRI TRANSPORT CORPORATION, (SUPRA). HENCE, STRICTLY SPEAKING, TH ERE IS NO NECESSITY TO LOOK INTO THE COMPLIANCE WITH THE SECOND PROVISO TO SEC. 194C(3)(I). IT APPEARS THAT THE ASSESSEE, AS A SAFER COURSE, HAS COMPLIED WITH THE SAID PROVISION AND WE HAVE ALREADY NOTICED THAT THE ASSESSEE HAS O BTAINED FORM NO.15I FROM ALL THE PAYEES AND FILED THEM WITH THE LEARNED CIT. WE NOTICE THAT THE REQUIREMENT OF FURNISHING PAN NO. IS MADE COMPU LSORY ONLY FROM 1.10.2009. 10. FURTHER IT IS NOTICED THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF M/S. MERLYN SHIPPING & TRANSPORT ALSO APPLI ES TO THE FACTS OF THE INSTANT CASE, I.E., THE PROVISIONS OF SEC.40(A)(IA) SHALL APPLY ONLY TO THE ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 5 OF 6 PAYMENTS WHICH REMAIN PAYABLE AS AT THE YEAR END AN D IT SHALL NOT APPLY TO THE PAYMENTS ALREADY MADE DURING THE COURSE OF THE YEAR. 11. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION REACHED BY THE LEARNED CIT(A). 12. DURING THE COURSE OF HEARING, THE LEARNED A .R PLACED RELIANCE ON THE DECISION DATED 28-02-2011 OF THE DELHI BENCH OF TRI BUNAL IN THE CASE OF ITO VS. AHAAR CONSUMER PRODUCTS PVT LTD IN ITA NO.2910/ DEL/2010 AND ITA NO.1939/DEL/2010 TO CONTEND THAT THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT SHALL NOT APPLY TO THE IMPUGNED PAYMENT AS THE SAM E IS CLAIMED UNDER SECTION 28 OF THE ACT. SINCE WE HAVE ALREADY CONFI RMED THE DECISION OF LEARNED CIT(A), WE FIND IT NOT NECESSARY TO CONSIDE R THIS CONTENTION OF THE ASSESSEE. 13. SINCE WE HAVE DISMISSED THE APPEAL FILED BY THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE DOES NOT SURVIVE. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 07.11.2012 SD/- SD/- (D MANMOHAN) (B R BASKARAN) VICE PRESIDENT ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATE: 07 TH NOVEMBER, 2012 ITA NO.254/VIZ/2012 & CO 23/VIZ/12 SRI POTRU MURALI KRISHNA, KOVVURU PAGE 6 OF 6 COPY TO 1 ACIT CIRCLE-1, RAJAHMUNDRY, E.G. DIST. 2 SRI POTRU MURALI KRISHNA, 4-2-20, NANDAMURI ROAD, KOVVUR, WEST GODAVARI DISTRICT 3 4. THE CIT, RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM