M/s P. B. Enterprise, Kolkata V. DCIT, CIR-38, Kolkata, Kolkata

CO 90/KOL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8558 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-05-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2012
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: M K MUNDRA; S N BURMAN
• Section: 143(3); 194C

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . . . . . . . , !' /AND #! $'# , ) [BEFORE SHRI K. K. GUPTA, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NO.1236/KOL/2012 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR: 200 8- 0 9 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. P. B. ENTERPRISE CIRCLE-38, KOLKATA. (PAN: AAKFP1758N) (+, /APPELLANT ) (-.+,/ RESPONDENT ) & C.O. NO. 90/KOL/2012 IN '% '% '% '% / I.T.A NO.1236/KOL/2012 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR: 200 8- 0 9 M/S. P. B. ENTERPRISE VS. DEPUTY COMMISSIONER O F INCOME-TAX, CIRCLE-38, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 13.05.2013 DATE OF PRONOUNCEMENT: 13.05.2013 FOR THE REVENUE : SHRI K. N. JANA, SR. DR FOR THE ASSESSEE : S/SHRI S. N. BURMAN & M. K. MUNDRA, FCA / / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSES SEE ARE ARISING OUT OF ORDER OF CIT(A)-XXIV, KOLKATA IN APPEAL NO. 824/CIT(A)-XXIV/ C-38/10-11 DATED 29.06.2012. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-38, KOLKATA U /S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEAR 2008-09 VIDE HIS ORDER DATED 15.12.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE AND CR OSS OBJECTION OF ASSESSEE IS AS REGARDS TO DISALLOWANCE OF LORRY HIRE CHARGES FOR NON-DEDUC TION OF TDS U/S. 194C OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUND: 2 ITA NO.1236/K/2012 P. B. ENTERPRISE AY : 2008-09 THE LD. CIT(A)-XXIV, KOLKATA HAS ERRED IN LAW AS W ELL AS ON FACT IN DELETING THE ADDITION MADE U/S. 40(A)(IA) OF THE I. T. ACT TO THE TUNE OF RS.41,90,994/-. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A REG ISTERED FIRM NAMELY, P. B. ENTERPRISES HAVING GARBAGE CLEARING BUSINESS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2008 DECLARING TOTAL INCOME AT RS.8897/-. ASSESSEES CASE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS CLAIMED LORRY HIRE CHARGES AT RS.41,90,994/- AND NO TDS WAS DEDUC TED U/S. 194C OF THE ACT. ACCORDINGLY, AO REQUIRED THE ASSESSEE AS TO WHY THE LORRY HIRE C HARGES BE NOT DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. RELEVA NT ASSESSMENT YEAR INVOLVED IS AY 2008-09. AS THE ASSESSEE HAS NOT DEDUCTED TDS U/S. 194C OF T HE ACT ON LORRY HIRE CHARGES IT VIOLATED SECTION 40(A)(IA) OF THE ACT AND ASSESSEE COULD NOT PRODUCE ANY TDS CERTIFICATES BECAUSE THERE WAS NO TAN IN THE NAME OF ASSESSEE. THE ASSESSEE A LSO COULD NOT PRODUCE ANY FORM NO. 15J OR FORM NO. 15-I FOR NON-DEDUCTING OF TDS. IN THE ABSENCE OF ANYTHING OR ANY EXPLANATION AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT MAK ING DISALLOWANCE OF LORRY HIRE CHARGES AT RS.41,90,994/- BY INVOKING THE PROVISIONS OF SECTIO N 40(A)(IA) OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWED THE CLA IM OF ASSESSEE FOLLOWING THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TR ANSPORTS VS. ADDL. CIT (VISAKHAPATNAM)(SB) REPORTED IN (2012) 136 ITD 23 ( SB) BY OBSERVING AS UNDER: I HAVE CONSIDERED THE VARIOUS SUBMISSIONS OF LD. A /R AND ALSO GONE THROUGH THE ASSESSMENT ORDER AND SUBSEQUENT REMAND REPORT. THE LD. A/ R HAS CLARIFIED THAT THE APPELLANT HAD ACTUALLY PAID THE ENTIRE LORRY HIRING CHARGES OF RS.41,98,227/- DURING THE YEAR 2007-08. THE LD. A/R HAS ALSO RELIED ON THE DE CISION OF THE SPECIAL BENCH OF THE HONBLE ITAT, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING TRANSPORT VS ADDL. CIT IN ITA NO. 477/VIZAG/2008 (A.Y. 2005-06) REPORTED IN ( 2012) 20 TAXMAN.COM 244 (VISAKHAPATNAM). IN THE AFORESAID CASE, THE SPECIAL BENCH OF THE HONBLE ITAT, VISAKHAPATNAM HAS HELD THAT THE PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 3LST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DIS ALLOW WHICH HAD BEEN ACTUALLY PAIC DURING THE PREVIOUS YEAR, WITHOUT DEDUCTION OF TDS. IT IS FOUND THAT THE ABOVE DECISION OF THE HONBLE ITAT IS SQUARELY APPLICABLE TO THE F ACTS OF THE PRESENT CASE. IN VIEW OF IT, THE AO IS DIRECTED TO DELETE THE ABOVE ADDITION OF RS.41,90,994/- U/S 40(A)(IA) ON ACCOUNT OF LORRY HIRE CHARGES. THE APPELLANT GETS A RELIEF OF RS.41,90,994/ -. THIS GROUND OF APPEAL IS ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, IT IS TO BE MENTIONED THAT HONBL E CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M. D. JAKIR HOSSAIN MONDAL, ITA NO.31 OF 2013 D ATED 04.04.2013 HELD THAT THE DECISION IN 3 ITA NO.1236/K/2012 P. B. ENTERPRISE AY : 2008-09 THE CASE OF MERILYN SHIPPING & TRANSPORTS OF SPECIA L BENCH OF THIS TRIBUNAL VISHAKAPATNAM BENCH IS NOT A GOOD LAW AND, WHEREIN IT HAS BEEN HE LD AS UNDER: WE ALREADY HAVE DELIVERED A JUDGMENT ON 3RD APRIL, 2013 IN ITAT NO. 20 OF 2013, G.A. NO. 190 OF 2013 ( CIT, KOLKATA-XI VS. CRESCENT EXPORT SYNDICATES ) HOLDING THAT THE VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTS WERE NOT ACCEPTABLE . THAT IS ONE REASON WHY THE MATTER SHOULD BE REMAN DED TO THE TRIBUNAL. ANOTHER REASON FOR REMANDING THE MATTER TO THE TRIB UNAL IS THAT THE FINDING OF FACTS RECORDED BY THE CIT (APPEAL) WAS NOT TESTED BY THE TRIBUNAL. FOR THE AFORESAID REASONS, THE ORDER UNDER CHALLENGE IS SET ASIDE AND THE MATTER IS REMANDED TO THE TRIBUNAL FOR A DECISION DE NOVO. 5. FURTHER, HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARKHAN N. TUNVAR IN TAX APPEAL NO. 905 OF 2012 & ORS VIDE JUDGMENT DATE D 09.05.2012 HELD THAT THE MERILYN SHIPPING & TRANSPORTS DECISION IS NO LONGER A GOOD LAW AND IS REVERSED. HONBLE GUJARAT HIGH COURT HELD THAT THE ASSESSEE, ENGAGED IN THE BUSINE SS OF TRANSPORT CONTRACTOR AND COMMISSION AGENT, INCURRED EXPENDITURE OF RS. 8.74 CRORES ON P AYMENT TO CONTRACTORS WHERE NO TDS WAS DEDUCTED. THE AO & CIT(A) HELD THAT THE EXPENDITURE HAD TO BE DISALLOWED U/S 40(A)(IA). ON APPEAL, THE TRIBUNAL, RELYING ON MERILYN SHIPPING & TRANSPORTS 146 TTJ 1 (VIZ) (SB) HELD THAT AS THE SAID AMOUNT HAD ALREADY BEEN PAID AND W AS NOT PAYABLE AS OF 31ST MARCH, THE DISALLOWANCE U/S 40(A)(IA) COULD NOT BE MADE. ON AP PEAL BY THE DEPARTMENT TO THE HIGH COURT, HELD REVERSING THE TRIBUNAL: IN MERILYN SHIPPING 146 TTJ 1 (VIZ) (SB) THE MAJORITY HELD THAT AS THE FINANCE BILL PROPOSED THE WORDS AMOUNT CREDITED OR PAID AND AS THE FINANCE ACT USED THE WORDS AMOUNTS PAYABLE , S. 40(A)(IA) COULD ONLY APPLY TO AMOUNTS THAT AR E OUTSTANDING AS OF 31ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING T HE YEAR. THIS VIEW IS NOT CORRECT FOR TWO REASONS. FIRSTLY, A STRICT READING OF S. 40(A)( IA) SHOWS THAT ALL THAT IT REQUIRES IS THAT THERE SHOULD BE AN AMOUNT PAYABLE OF THE NATURE DES CRIBED, WHICH IS SUCH ON WHICH TAX IS DEDUCTIBLE AT SOURCE BUT SUCH TAX HAS NOT BEEN DEDU CTED OR IF DEDUCTED NOT PAID BEFORE THE DUE DATE. THE PROVISION NOWHERE REQUIRES THAT THE A MOUNT WHICH IS PAYABLE MUST REMAIN SO PAYABLE THROUGHOUT DURING THE YEAR. IF THE ASSES SEES INTERPRETATION IS ACCEPTED, IT WOULD LEAD TO A SITUATION WHERE THE ASSESSEE WHO TH OUGH WAS REQUIRED TO DEDUCT THE TAX AT SOURCE BUT NO SUCH DEDUCTION WAS MADE OR MORE FL AGRANTLY DEDUCTION THOUGH MADE IS NOT PAID TO THE GOVERNMENT, WOULD ESCAPE THE CONSEQ UENCE ONLY BECAUSE THE AMOUNT WAS ALREADY PAID OVER BEFORE THE END OF THE YEAR IN CON TRAST TO ANOTHER ASSESSEE WHO WOULD OTHERWISE BE IN SIMILAR SITUATION BUT IN WHOSE CASE THE AMOUNT REMAINED PAYABLE TILL THE END OF THE YEAR. THERE IS NO LOGIC WHY THE LEGISLAT URE WOULD HAVE DESIRED TO BRING ABOUT SUCH IRRECONCILABLE AND DIVERSE CONSEQUENCES. SECON DLY, THE PRINCIPLE OF DELIBERATE OR CONSCIOUS OMISSION IS APPLIED MAINLY WHEN AN EXISTI NG PROVISION IS AMENDED AND A CHANGE IS BROUGHT ABOUT. THE SPECIAL BENCH WAS WRON G IN COMPARING THE LANGUAGE USED IN THE DRAFT BILL TO THAT USED IN THE FINAL ENACTME NT TO ASSIGN A PARTICULAR MEANING TO S. 40(A)(IA). ACCORDINGLY, MERILYN SHIPPING DOES NOT LAY DOWN CORRECT LAW. THE CORRECT LAW IS THAT S. 40(A)(IA) COVERS NOT ONLY TO THE AMOUNTS WHICH ARE PAYABLE AS ON 31TH MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYABLE AT ANY TIME DURING THE YEAR. 4 ITA NO.1236/K/2012 P. B. ENTERPRISE AY : 2008-09 IN SUCH CIRCUMSTANCES, THE ISSUE OF REVENUES APPEA L IS COVERED IN FAVOUR OF REVENUE AND AGAINST ASSESSEE. THIS ISSUE OF REVENUES APPEAL IS ALLOWE D. CROSS OBJECTION OF THE ASSESSEE. 6. THE ISSUE REGARDING FORM 15I HAS NOT BEEN DELIBE RATED UPON BY THE CIT(A) AND ISSUE RAISED IN CROSS OBJECTION READS AS UNDER: 1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHI LE REPRODUCING LETTER DATED 15-02- 2012 OF AUTHORISED REPRESENTATIVE (A/R) IN PAGES-3 AND 4 OF THE IMPUGNED ORDER, LD. CIT(A) ERRED N IGNORING AND NOT REPRODUCING LAST P ARAGRAPH OF THE SAID LETTER, WHICH IS GIVEN BELOW : - COPY OF THE JUDGEMENT, COPIES OF FORM NO. 151 (IN TWO SETS), COPY OF CHALLAN UNDER TAN AND COPY OF 15J ARE SUBMITTED HER EWITH FOR YOUR KIND PERUSAL. 2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN NOT DECIDING THAT THE ASSESSEE-HEREIN WAS NOT LIABLE TO DEDUCT TDS (TAX D EDUCTED AT SOURCE) ON LORRY HIRE CHARGES PAID OF RS.41,90,994/-, AS PAYEES SUBMITTED FORMS NO.15I TO THE ASSESSEE- HEREIN (COPIES OF FORMS NO.15I IN DUPLICATE SUBMITT ED TO LD. CIT(A) AND ONE SET OF FORN1 NO.15I FORWARDED BY LD. CIT(A) TO LD. ASSESSI NG OFFICER FOR REMAND REPORT) AND THEREFORE, DISALLOWANCE U/S.40(A)(IA) MADE FOR SAID PAYMENT OF RS.41,90,994/- IS WRONG DUE TO THIS REASON ALSO. SINCE THIS ISSUE HAS NOT DELIBERATED UPON BY CIT(A) , IT REQUIRES RECONSIDERATION AT THE LEVEL OF CIT(A) AND CIT(A) HAS TO GIVE A SPEAKING ORDER ON T HE SAME. CROSS OBJECTION OF ASSESSEE IS SET ASIDE TO THE FILE OF AO IN TERMS OF ABOVE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED AND CROSS OBJECTION OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . . . . . . . , #! #! #! #! $'# $'# $'# $'# , (K. K. GUPTA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 13TH MAY, 2013 !12 $&34 $5! JD.(SR.P.S.) 5 ITA NO.1236/K/2012 P. B. ENTERPRISE AY : 2008-09 / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT DCIT, CIRCLE-38, KOLKATA. 2 -.+, / RESPONDENT M/S. P. B. ENTERPRISE, 42, MAHENDRA GOSWAMI LANE, KOLKATA-700 006. 3 . $/& ( )/ THE CIT(A), KOLKATA 4. 5. $/& / CIT KOLKATA 7!>$ -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&?/ BY ORDER, # '4 /ASSTT. REGISTRAR .