Transport Development Corporation, Kolkata V. I.T.O Wd - 56(1),kolkata, Kolkata

CO 55/KOL/2013

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3254 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2013
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD
• Assessee Lawyers: S JHAJHARIA
• Section: 43B; 154

Judgement Text

1 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.580/KOL/2013 ASSESSMENT YEAR : 2009-10 I.T.O., WARD-56(1) , -VERSUS- M/S. TRANSPORT DEVE LOPMENT KOLKATA CORPORATION, KOLKATA (PAN:AABFT3278J) (APPELLANT) (RESPONDENT) C.O.NO.55/KOL/2013 A/O ITA NO.580/KOL/2013 ASSESSMENT YEAR : 2009-10 M/S. TRANSPORT DEVELOPMENT I.T.O., WARD-56(1) , CORPORATION, KOLKATA KOLKATA (PAN:AABFT3278J) (CROSS OBJECTOR (RESPONDENT) FOR THE DEPARTMENT: SHRI RAJENDRA PRASAD, JCIT, SR.DR FOR THE ASSESSEE : SHRI S.JHAJHARIA, FCA DATE OF HEARING : 05.04.2016. DATE OF PRONOUNCEMENT :.11.05.2016. ORDER PER N.V.VASUDEVAN, JM ITA NO.580/KOL/2013 IS AN APPEAL BY THE REVENUE DIR ECTED AGAINST THE ORDER DATED 04.01.2013 OF CIT(A)-XXXVI, KOLKATA, RELATING TO AY 2009-10. THE ASSESSEE HAS FILED CROSS-OBJECTION BEING CO NO.55/KOL/2013 A GAINST THE VERY SAME ORDER OF THE CIT(A). ITA NO.580/KOL/2013 (REVENUES APPEAL) 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. THAT THE LD.C.I.T.(A)-XXXVI,KOLKATA ERRED IN AL LOWING TRUCK RUNNING EXPENSES OF RS. 10,18,291/- AS THE PRINCIPAL EXPENDITURE OF THE ASSESSEE HAS BEEN DEBITED UNDER THE ALREADY DEBITED TRUCK RUNNING EXPENSES WHICH THE MA TERIAL FACTS ON RECORD. 2. THAT THE LD.C.I.T.(A)-XXXVI,KOLKATA ERRED IN ALL OWING GO-DOWN EXPENSES OF RS. 7,42,641/- AS THIS EXPENDITURE OF THE ASSESSEE NOT RELATABLE TO BUSINESS SINCE THE ASSESSEE HAS NO CLOSING STOCK OR BUSINESSES OF ANY TRADE MATERIALS WHICH IS FACTS ON 2 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 RECORD. 3. THAT THE LD.C.I.T.(A)-XXXVI,KOLKATA ERRED IN ALL OWING RETAINERSHIP FEES OF RS. 6,49,275/- AS THIS EXPENDITURE OF THE ASSESSEE NOT RELATABLE TO THE BUSINESS OF THE ASSESSEE SINCE ASSESSEE HAVING TRANSPORT BUSINESS W ITH ITS OWN VEHICLES NOT REQUIRE TO PAY ANY AMOUNT TOWARDS RETAINERSHIP. 4. THAT THE LD.C.I.T.(A)-XXXVI,KOLKATA ERRED IN ALL OWING TRANSPORTATION CHARGES OF RS. 14,49,755/- AS THIS HEAD OF EXPENDITURE ARE MAD E IN THE NAME OF SAME PARTY ON THE SAME DAY AND ALSO TRANSPORT CHARGES AND TRUCK RUNNI NG EXPENSES OF LEDGER ENTRIES ARE SIMILAR IN NATURE. 5. THAT THE LD.C.I.T.(A)-XXXVI,KOLKATA ERRED IN ALL OWING LOAN AMOUNT CHARGES OF RS. 8,54,000/- AS THIS LOAN DOCUMENTS HAVE NOT BEEN SUB STANTIATED BY ASSESSEE IN ADDITION TO EXISTING LOAN. 3. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF TRANSPORTATION. FOR A.Y.2009-10 THE ASSESSEE FILED RETURN OF INCOME SHO WING TOTAL INCOME OF RS.3,05,174/-. ASSESSMENT WAS COMPLETED BY AO BY DI SALLOWING CERTAIN EXPENSES AND DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,45,58,900/-. MOST OF THE ADDITIONS MADE BY AO WERE DELETED BY CIT(A) GIVING RISE TO TH IS APPEAL BY THE REVENUE BEFORE THE TRIBUNAL. 4. AS FAR AS GROUND NO.1 RAISED BY THE REVENUE IS C ONCERNED THE FACTS ARE THAT THE ASSESSEE CLAIMED A SUM OF RS.1,01,82,908/- AS TRUCK RUNNING EXPENSES. THE SAME WAS CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM TR ANSPORTATION BUSINESS. IN THE BODY OF THE ORDER OF ASSESSMENT, THE AO WANTED TO D ISALLOW 10% OF THE TRUCK RUNNING EXPENSES ON THE GROUND THAT NO DOCUMENTS WERE FILE IN SUPPORT OF THE EXPENSES AND THAT FUEL CHARGES WAS NOT INCLUDED IN THE TRUCK RUN NING EXPENSES. HOWEVER WHILE COMPUTING THE TOTAL INCOME AO ADDED THE ENTIRE SUM OF RS.1,01,82,908/- TO THE TOTAL INCOME OF THE ASSESSEE. HOWEVER IN AN ORDER U/S 154 OF THE ACT DATED 16.01.2012 THIS MISTAKE WAS RECTIFIED AND THE DISALLOWANCE WAS REST RICTED TO RS.10,18,291/-. 5. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT THE TRUCK RUNNING EXPENSES WAS INCURRED IN RESPECT OF VEHICLES OWNED BY THE ASSESS EE WHICH WERE 28 IN NUMBER. THE 3 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 ASSESSEE POINTED OUT THAT NO EXPENSES IN RESPECT OF HIRING VEHICLES WERE INCLUDED IN THE TRUCK RUNNING EXPENSES. THE ASSESSEE POINTED OUT TH AT OUT OF TOTAL EXPENSES BOOKED UNDER THE HEAD TRUCK RUNNING EXPENSES, EXPENSES ON FUEL CONSTITUTED ABOUT 85% TO 90% AND THE REMAINING SUM WAS WAGES PAID TO THE DRI VERS AND KALASIS AND TRUCK REPAIRING EXPENSES AND OTHER MISCELLANEOUS INCIDENT AL EXPENSES. IT WAS SUBMITTED THAT THESE ARE USUAL AND NORMAL EXPENSES. IT WAS ARGUED THAT NO PART OF THE EXPENSES OUGHT TO HAVE BEEN DISALLOWED BY THE AO. CIT(A) ACCEPTING THE CONTENTIONS ON BEHALF OF THE ASSESSEE DELETED THE ADDITION MADE BY AO. 6. THE LEARNED DR RELIED ON THE ORDER OF AO. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE PLACED A CHART SHOWING THAT THE TRUCK RUNNING EXPENSES FROM AY 2007-08 TO A.Y.2011-12 AND THE TURNOVER OF THE ASSESSEE IN THE BUSINESS OF TRANSAPORTATION. THE COMPARATIVE CHART OF THE EXPENSES GIVEN BY THE ASSESSEE IS GIVEN AS ANNEXURE TO THIS ORDER. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON A CONSIDERATION OF THE COMPARATIVE CHART, WE FIND THAT THE TRUCK RUNNING E XPENSES CLAIMED IN THIS AY IS COMMENSURATE WITH THE TURN-OVER OF THE ASSESSEE COM PARED TO A.Y.2010-11 AND 2011- 12. THE TRUCK RUNNING EXPENSES FROM A.Y.2007-08 TO 2011-12 SHOWS THE INCREASING TREND. THIS INCREASE IN THE PERCENTAGE OF THE EXPEN SES TO THE TURN-OVER IS UNDERSTANDABLE AND COMMENSURATE WITH THE RATE OF IN FLATION. NO ADVERSE INFERENCE OUGHT TO HAVE BEEN THEREFORE DRAWN AGAINST THE ASSE SSEE. WE THEREFORE ARE OF THE VIEW THAT CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY AO. 8. AS FAR AS GROUND NO.2 RAISED BY THE REVENUE IS C ONCERNED, THE FACTS ARE THAT M/S. PHILIPS INDIA LTD HAD TAKEN ON RENT THE PREMISES BE ING A GODOWN AT VILLAGE BALONGI ON KHARAR ROAD IN THE DISTRICT ROPAR WITHIN THE STATE OF PUNJAB. THEY APPOINTED THE ASSESSEE AS CLEARING AND FORWARDING AGENT UNDER AN AGREEMENT DATED 01.12.2004. AS PER THE TERMS OF THE AGREEMENT, THE ASSESSEE WAS TO EMPLOY WORKMEN AND STAFF FOR MAINTAINING THE SAFETY AND SECURITY OF THE GODOWN, STORING, KEEPING AND HANDING OF THE 4 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 GOODS IN SAFE CONDITION IN THE GODOWN AND KEEPING P ROPER ACCOUNTS LOADING AND UNLOADING OF THE GOODS TO AND FROM THE GODOWN TO DI FFERENT DEALERS. FOR PERFORMING THE AFORESAID JOB THE ASSESSEE INCURRED EXPENSES TO THE TUNE OF RS.7,42,641/-. THESE EXPENSES WERE BOOKED UNDER THE HEAD GODOWN EXPENSE S. THE AO WAS OF THE VIEW THAT SINCE THE ASSESSEE BY THE VERY NATURE OF HIS B USINESS WAS REQUIRED TO HAVE ANY STOCK OF GOODS THERE WAS NO NECESSITY FOR HAVING A GODOWN. ACCORDINGLY HE DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF THE AFORESAID EXPENSES. 9. ON APPEAL BY THE ASSESSEE, THE CIT(A) AFTER GOI NG THROUGH THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. PHILIPS INDIA LTD FOUND THAT THE CONTENTIONS OF THE ASSESSEE THAT THESE EXPENSES THOUGH BOOKED UNDER THE HEAD GODOWN EXPENSES WERE BY ITS NATURE ALLOWABLE EXPENSES AND RELATED TO THE BUSINESS OF T HE ASSESSEE. THE CIT(A) THEREFORE FOUND THE EXPLANATION OF THE ASSESSEE TO BE ACCEPTA BLE AND ACCORDINGLY DELETED THE ADDITION MADE BY AO. 10. CONSIDERING THE MATERIAL AVAILABLE ON RECORD A ND AGREEMENT BETWEEN THE ASSESSEE AND M/S.PHILIPS INDIA LTD., WE ARE OF THE VIEW THA T THE EXPENDITURE IN QUESTION WAS FOR THE BUSINESS OF THE ASSESSEE AND THE ORDER OF C IT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 11. AS FAR AS GROUND NO.3 RAISED BY THE REVENUE IS CONCERNED THE FACTS ARE THAT THE AO DISALLOWED A SUM OF RS.6,49,275/- WHICH WERE PAI D AS RETAINER FEE BY THE ASSESSEE. ACCORDING TO THE AO THE ASSESSEE WAS IN THE BUSINES S OF TRANSPORTATION AND THERE WAS NO NECESSITY OF PAYMENT OF A RETAINER FEE AS ASSESS EE USED ITS OWN VEHICLE FOR TRANSPORTATION. 12. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT THE PAYMENT OF RETAINER FEE WAS PAYMENT MADE TO CASUAL LABOURERS ENGAGED IN THE PRO CESS OF LOADING AND UNLOADING OF GOODS AT VARIOUS PLACES. THESE WERE IN THE NATURE O F WAGES AND ARE NOT PAID TO PERSONS WHO ARE IN THE REGULAR PAY ROLL OF THE ASSESSEE. TH IS WAS THE REASON WHY THE 5 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 NOMENCLATURE RETAINERSHIP FEES WAS USED WHILE ACC OUNTING FOR THE AFORESAID PAYMENT. THE REAL NATURE OF THE PAYMENT WAS IN THE NATURE OF WAGES AND HAD TO BE ALLOWED AS DEDUCTION. THE CIT(A) ACCEPTED THE CONT ENTION OF THE ASSESSEE AND ALLOWED THE CLAIM OF THE ASSESSEE. 13. THE CONTENTION OF THE REVENUE BEFORE US WAS THA T SINCE THE ASSESSEE WAS HAVING ITS OWN VEHICLE THERE WAS NO NEED FOR ANY RETAINER FEE. IN OUR VIEW THIS CONTENTION OF THE REVENUE IS NOT ACCEPTABLE BECAUSE THE NATURE OF THIS FEE IS WAGES AND NOT ANY RETAINER FEE PAID IN THE PROCESS OF TRANSPORTATION. WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). CONSEQUENTLY GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 14. AS FAR AS GROUND NO.4 RAISED BY THE REVENUE IS CONCERNED, THE AO FOUND THAT TRANSPORTATION CHARGES OF RS.14,49,755/- HAD BEEN M ADE TO THE SAME PARTY ON THE SAME DAY. HE WAS OF THE VIEW THAT THESE EXPENSES WERE PE RTAINING TO TRUCK RUNNING EXPENSES AND OUGHT TO HAVE BEEN INCLUDED THEREIN. THE AO ACC ORDINGLY ADDED THE AFORESAID SUM TO THE TOTAL INCOME OF THE ASSESSEE. 15. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT AP ART FROM ITS OWN TRUCK THE ASSESSEE HAD ALSO ENGAGED OTHER PARTIES FOR HIRING TRUCKS FO R ITS BUSINESS. THE ASSESSEE POINTED OUT THAT THE TRUCK RUNNING EXPENSES INCURRED BY THE ASSESSEE WAS DIFFERENT FROM TRANSPORTATION CHARGES PAID TO OTHER TRUCK OPERATOR S WHOSE SERVICES WERE AVAILED BY THE ASSESSEE ON HIRE. THE ASSESSEE POINTED OUT THAT THE NATURE OF THE TWO EXPENSES ARE DIFFERENT AND THEY WERE NOT PROPERLY APPRECIATED BY THE AO. CIT(A) FOUND FORCE IN THE SUBMISSIONS MADE BY THE ASSESSEE AND ACCORDINGLY DE LETED THE ADDITION MADE BY AO. 16. BEFORE US THE CONTENTION OF THE REVENUE IS THAT THE TRUCK RUNNING EXPENSES AND TRANSPORTATION CHARGES ARE ONE AND THE SAME. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE EVIDENCE BROUGHT BEFORE CIT(A), THE CONTENTION OF T HE REVENUE CANNOT BE ACCEPTED. ACCORDINGLY GROUND NO.4 RAISED BY THE REVENUE IS DI SMISSED. 6 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 17. AS FAR AS GROUND NO.5 RAISED BY THE REVENUE IS CONCERNED, THE AO NOTICED THAT THERE WAS AN INCREASE IN THE LOAN AMOUNT IN THE BA LANCE SHEET OF THE ASSESSEE BY A SUM OF RS.8,54,000/-. SINCE THE ASSESSEE HAD NOT FILED ANY EVIDENCE TO SHOW THE RECEIPT OF LOAN AO TREATED THE AFORESAID SUM AS UNEXPLAINED AN D ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 18. CIT(A) HOWEVER DELETED THE ADDITION BY OBSERVIN G AS FOLLOWS: THE FACTS ARE THAT AS PER THE BALANCE SHEET (LIABI LITY SIDE) THE AMOUNT OF 'LOANS AND ADVANCES' TAKEN AS ON 31.3.2008 WAS RS. 20,44,340/- WHICH INCREASED TO RS. 28,98,340/- AS ON 31.3.2009. THE INCREMENTAL AMOUNT WAS RS. 8,5 4,000/-. THE LOANS & ADVANCES PERTAINED TO 3 (THREE) PARTIES. IN RESPECT OF 2 (TW O) PARTIES THE BALANCE AS ON 31.3.2008 AND 31.3.2009 WERE EXACTLY SAME WITHOUT ANY CHANGE. THE ONLY LOAN ALC. WAS WITH THE SISTER CONCERN M/S TDC WAREHOUSING CORPORATION AND IT WAS INTEREST FREE. THE LOAN TRANSACTIONS WITH THE SISTER CONCERN WERE ALL BY CH EQUE AND THE SAME WERE DULY ACCOUNTED FOR IN THE ASSESSEE'S BOOKS. HENCE, ADDIT ION MADE OF RS.8,54,000/- U/S. 69 IS THEREFORE DELETED. 19. THE CONTENTION OF THE REVENUE BEFORE US IS THAT THE ASSESSEE DID NOT PRODUCE THE LOAN DOCUMENTS TO SUBSTANTIATE RECEIPT OF LOAN. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE EVIDENCE TO SHOW THAT THE LOAN AMOUNT WAS AVAIL ED FROM THE SISTER CONCERN, THE ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY GROUND NO.5 RAISED BY THE REVENUE IS DISMISSED. 20. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. C.O.NO.55/KOL2013(ASSESSEES APPEAL) 21. THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ARE AS FOLLOWS :- 1. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) HAD ERRED IN CONFIRMING THE ARBITRARY DISALLOWANCE OF RS.2,88 ,549/- MADE BY THE AO IN THE ASSESSMENT FRAMED U/S 143(3)/144 OF THE ACT, DATED 28.12.2011, OUT OF RATES AND TAXES. 7 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 22. AS FAR AS THE GROUNDS RAISED BY THE ASSESSEE IS CONCERNED, THE FACTS ARE THAT THE AO FOUND THAT THE ASSESSEE HAD CLAIMED AS DEDUCTION A SUM OF RS.2,88,549/- UNDER THE HEAD RATES AND TAXES WHICH SUM WAS DEBITED IN THE P ROFIT AND LOSS ACCOUNT. THIS ADDITION WAS MADE ON THE PREMISE THAT THERE WAS NO ACTUAL PAYMENT OF RATES AND TAXES AND THEREFORE THE AMOUNT IN QUESTION WAS DISALLOWED BY THE AO INVOKING THE PROVISION OF SECTION 43B OF THE ACT. THE CIT(A) CO NFIRMED THE ORDER OF AO ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDE NCE TO SHOW THE ACTUAL PAYMENT OF RATES AND TAXES. 23. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE SUBMISSIONS FILED BEFORE CIT(A) WHEREIN IN ANNEXURE -D A COMPLETE PROOF OF PAYMENT OF RATES AND TAXES WERE FURNISHED BEFORE CIT(A). TH ESE DOCUMENTS ARE PLACED AT PAGE NOS. 181 TO 227 OF THE ASSESSEES PAPER BOOK. THE B REAK UP OF THE EXPENDITURE IS AS FOLLOWS :- SUMMARY: 1 2 3 4 TAX RENEWAL CHARGES CERTIFICATE OF FITNESS PERMIT RENEWAL FEES OTHER TAXES AMOUNT 137,098.00 4,040.00 144,261.00 3,150.00 TOTAL 288,549.00 24. THE EVIDENCE RECORDING ACTUAL PAYMENT HAVE ALSO BEEN FURNISHED BEFORE US. IN THE LIGHT OF THE EVIDENCE WHICH WAS FILED BEFORE CI T(A) WE ARE OF THE VIEW THAT THE ISSUE REQUIRES EXAMINATION BY THE AO TO VERIFY ACTU AL PAYMENT WITHIN THE PERIOD CONTEMPLATED U/S 43B OF THE ACT. WE THEREFORE SET A SIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE EVIDENCE FILED BEFORE CIT(A). THE AO SHALL AFFORD O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE CROSS OBBJECITON IS TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NO.580/KOL/2013&C.O.55/KOL/2013-M/S.TRANSPORT D EVELOPMENT CORPN. A.Y.2009-10 25. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE COURT ON 11.05.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11.05.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. TRANSPORT DEVELOPMENT CORPORATION, 132, LENI N SARANI, KOLKATA-1. 2.I.T.O., WARD-56(1), KOLKATA 3. CIT(A)-XXXVI, KOLKATA 4. CIT-XXI, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY B Y ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES KOLKATA BENCHES