M/s. Sri Venkateswara Exports, Kakinada V. The ACIT, Kakinada

CO 4/VIZ/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3021 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 19-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MURTHY NAIK
• Assessee Lawyers: T S V ADITYA SARMAFCA
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 136/VIZ/2016 (ASST. YEAR : 2012-13) ACIT, CIRCLE-1, KAKINADA. V. M/S. SRI VENKATESWARA EXPORTS, D.NO.50-4-6, MARKET STREET, KAKINADA, E.G. DIST. PAN NO. ABPFS 2349 E (APPELLANT) (RESPONDENT) C.O.NO.04/VIZ/2017 ITA NO. 136/VIZ/2016 (ASST. YEAR : 2012-13) M/S. SRI VENKATESWARA EXPORTS, D.NO.50-4-6, MARKET STREET, KAKINADA, E.G. DIST. V. ACIT, CIRCLE-1, KAKINADA. PAN NO. ABPFS 2349 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.S.V. ADITYA SARMAFCA. DEPARTMENT BY : SHRI MURTHY NAIK - SR.DR DATE OF HEARING : 17/04/2017. DATE OF PRONOUNCEMENT : 17/04/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, GUNTUR CAMP AT VISAKHAPATNAM, DATED 07/01/2016 FOR THE ASSESSMENT YEAR 2012-13. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND EXPORT OF RICE AND IRON ORE ETC., FILED ITS RETURN 2 ITA NO.136/VIZ/2016 C.O.NO. 04/VIZ/2017 (M/S. SRI VENKATESWARA EXPORTS) OF INCOME BY DECLARING TOTAL INCOME OF 21,28,620/-. THE RETURN FIELD BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND AFTER DUE PROCESS, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS PAID FREIGHT CHARGES TO SRI VARI MINERALS, HOSPET OF 32,54,500/- AND VENKATESWARA MINERALS & LOGISTICS, BALLERY OF 22,55,000/-. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH PANS OF THE ABOVE PARTIES. IN FAILURE, ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE-FIRM DID NOT OBTAIN THE PANS OF TWO TRANSPORT OPERATORS NOR MADE TDS. ACCORDINGLY, HE DISALLOWED THE FREIGHT CHARGES PAID TO THE TWO TRANSPORTERS OF 55,09,500/- UNDER SECTION 40(A)(IA) OF THE ACT. 3 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) BY FOLLOWING THE DECISION OF SPECIAL BENCH, ITAT VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT (136 ITD 23) ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DEPARTMENTAL REPRESENTATIVE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 6 . ON THE OTHER HAND, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT LD.CIT(A) BY FOLLOWING THE DECISION OF SPECIAL BENCH, ITAT VISAKHAPATNAM, ALLOWED THE APPEAL OF THE ASSESSEE. 3 ITA NO.136/VIZ/2016 C.O.NO. 04/VIZ/2017 (M/S. SRI VENKATESWARA EXPORTS) 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 8 . THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS PAID FREIGHT CHARGES TO TWO TRANSPORTERS, NAMELY SRI VARI MINERALS & VENKATESWARA MINERALS & LOGISTICS, BALLERY, BUT HE HAS NOT FURNISHED NEITHER THEIR PANS NOR DEDUCTED TDS. THEREFORE, THE ASSESSING OFFICER BY INVOKING SECTION 40(A)(IA) OF THE ACT, DISALLOWED THE ENTIRE FREIGHT CHARGES PAID TO THE TWO TRANSPORTERS. ON APPEAL, LD. CIT(A) BY FOLLOWING THE DECISION OF SPECIAL BENCH, ITAT VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) ALLOWED THE APPEAL OF THE ASSESSEE. WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE SPECIAL BENCH, ITAT VISAKHAPATNAM IN MERILYN SHIPPING & TRANSPORTS (SUPRA). THE RELEVANT PORTION OF THE ORDER IS EXTRACTED HEREUNDER:- WHEN S. 40(A)(IA) WAS PROPOSED TO BE INSERTED BY THE FINANCE BILL 2004, IT APPLIED TO ANY AMOUNT CREDITED OR PAID. HOWEVER, WHEN ENACTED BY THE FINANCE ACT 2004, IT APPLIED ONLY TO AMOUNT PAYABLE. THE WORDS CREDITED/ PAID AND PAYABLE HAVE DIFFERENT CONNOTATIONS AND THE LATTER REFERS TO AN AMOUNT WHICH IS UNPAID. THE CHANGE IN LANGUAGE BETWEEN THE BILL AND THE ACT IS CONSCIOUS AND WITH A PURPOSE . THE LEGISLATIVE INTENT IS CLEAR THAT ONLY THE OUTSTANDING AMOUNT OR THE PROVISION FOR EXPENSE (AND NOT THE AMOUNT ALREADY PAID) IS LIABLE FOR DISALLOWANCE IF TDS IS NOT DEDUCTED. ALSO, S. 40(A)(IA) CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN GENUINE AND ADMISSIBLE EXPENSES CAN BE DISALLOWED FOR WANT OF TDS. A LEGAL FICTION HAS TO BE LIMITED TO THE AREA FOR WHICH IT IS CREATED. CONSEQUENTLY, S. 40(A)(IA) CAN APPLY ONLY TO EXPENDITURE WHICH IS PAYABLE AS OF 31ST MARCH AND DOES NOT APPLY TO EXPENDITURE WHICH HAS BEEN ALREADY PAID DURING THE YEAR. 4 ITA NO.136/VIZ/2016 C.O.NO. 04/VIZ/2017 (M/S. SRI VENKATESWARA EXPORTS) 9. IN VIEW OF THE AFORESAID DECISION OF THE SPECIAL BENCH, ITAT VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 10 . SO FAR AS CROSS OBJECTION IS CONCERNED, IN VIEW OF THE DISMISSAL OF APPEAL FILED BY THE REVENUE, NO SEPARATE ORDER IS REQUIRED. 11 . IN THE RESULT, APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF APRIL, 2017. SD/- SD/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17 TH APRIL, 2017. VR/- COPY TO: 1. THE ASSESSEE - M/S. SRI VENKATESWARA EXPORTS, D.NO.50-4-6, MARKET STREET, KAKINADA, E.G. DIST. 2. THE REVENUE - ACIT, CIRCLE-1, KAKINADA. 3. THE PCIT-2, VISAKHAPATNAM. 4. THE CIT(A)-2, VISAKHAPATNAM. 5. THE D.R. 6. GUARD FILE. BY ORDER