M/s. Nataraja Cotton (P) Ltd, Anantapur V. CIT,(A), Trupathi, Tirupathi

ITA 1007/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66130 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K A SAI PRASAD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 1007/HYD/2009 ASSESSMENT YEAR: 2006-07 M/S NATARAJA COTTON (P) LTD., APPELLANT TADIPATRI, ANANTAPUR DT. (PAN/GIR NO. AAGCS7461Q) VS. ADDL. COMMISSIONER OF INCOME-TAX, RESPONDENT ANANTAPUR RANGE, ANANTAPUR (PAN/GIR NO. N-1/AAGCS7461Q)) APPELLANT BY : SHRI K.A. SAI PRASAD RESPONDENT BY : SMT. NIVEDITA BISWAS DATE OF HEARING : 06/06/2012 DATE OF PRONOUNCEMENT : 03/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), TIRUPATHI, DATED 14/08/2009 FOR TH E ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG IN COTTON BALES SUPPLYING THEM TO SPINNING MILLS IN AND AROUN D ANDHRA PRADESH. DURING THE COURSE OF ASSESSMENT IT WAS NO TICED BY THE AO THAT RS.7,60,430/- WAS PAID TO M/S.SRINIVASA PRE SSING COMPANY PRIVATE LIMITED, KURNUTALA, TOWARDS COTTON PRESSING CHARGES ON A CONTINUOUS ENGAGEMENT BASIS. ITA NO. 1007/HYD2009 M/S NATARAJA COTTON (P) LTD. 2 3. THE AO DISALLOWED THE ENTIRE EXPENDITURE ON THE GROUND THAT SUCH A CONTINUOUS ENGAGEMENT OF THE LATTER FOR PRES SING COTTON AMOUNTS TO CONTRACT AS PER PROVISIONS OF SECTION 19 4 AND THUS LIABLE TO DEDUCT TAX AT SOURCE. SINCE THIS STATUTO RY OBLIGATION HAS BEEN VIOLATED, THE AO HAS APPLIED THE PROVISOS OF S EC.40(A)(IA). 4. AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFO RE THE CIT(A). THE ASSESSEE SUBMITTED BEFORE THE CIT(A) T HAT THERE WAS NO CONTRACT BETWEEN THE APPELLANT AND THE PRESSING COMPANY AS THE PAYMENTS WERE MADEONA PIECE RATE BASIS I.E AT T HE RATE OF RS.110/- PER EACH BALE PRESSED. IN SUPPORT OF THIS AVERMENT, THE APPELLANT COMPANY HAS FURNISHED A STATEMENT FROM TH E PRESSING COMPANY STATING THERE THAT THERE ARE MORE THAN 10 PRESSING MILLS IN AND AROUND KURNUTALA THAT THERE IS NO CONTRACT E ITHER WRITTEN OR ORAL WITH ANY CUSTOMER TO PRESS LOOSE COTTON INTO F .P BALES THAT THEY HAVE NOT INVITED ANY DEALER IN COTTON TO GET T HEIR COTTON PRESSED IN A PRESSING MILL. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UNDER:- THE ARGUMENTS OF THE APPELLANT AND STATEMENT OF TH E PRESSING COMPANY IS CAREFULLY CONSIDERED. IT WAS SETTLED LAW NOW THAT CONTRACT NEED NOT BE IN WRITIN G ALWAYS EVEN THE ORAL CONTRACTS ARE LIABLE TO BE TRE AED AS CONTRACTS PER SE. SINCE THIS IS AN ARRANGEMENT O N A PIECE RATE BASIS (COST PER BALE), AND ON A CONTINUO US BASIS BETWEEN THE APPELLANT AND PRESSING COMPANY, THIS AMOUNTS TO AN ORAL CONTRACT. THE HONBLE MADRAS HIGH COURT IN THE CASE OF POOMPUHAR SHIPPING CORPORATION LTD REPORTED IN 282 ITR 3 HAS DISTINGUISHED BETWEEN HIRE OF TRANSPORT F ROM TRANSPORT CONTRACT FOR CARRIAGE OF GOODS. THUS A CONTRACT INVOLVING A CONTINUOUS WORK BY LABOUR OR SERVICES HAS TO BE LIABLE FOR TDS AND THUS THE APPE LLANT HAS FAILED TO DISCHARGE THIS OBLIGATION. ITA NO. 1007/HYD2009 M/S NATARAJA COTTON (P) LTD. 3 HENCE THE ASSESSING OFFICER HAS RIGHTLY APPLIED THE PROVISIONS U/S.40(A)(IA), THEREBY THE APPEAL IS DISMISSED 5. AGGRIEVED THE ASSESSEE HAS FILED AN APPEAL BEFOR E US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDIOT N OF RS.7.60,430/-ON ACCOUNT OF DISALLOWANCE U/S.40(A)(I A). 2. FOR THE ABOVE AND ANY OTHER GROUNDS THAT MAY BE URGED DURING THE COURSE OF HEARING, THE APPELLATE PRAYS T HAT THE HONBLE INCOME-TAX APPELLATE TRIBUNAL BE PLEASED TO DIRECT THE AO TO DELETE THE ADDITION OF RS.7,60,430/- 6. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K.A. S AI PRASAD GAVE THE ACCOUNT OF COPY OF M/S SAI SRINIVASA PRESS INGS PVT. LTD. CONTAINING DETAILS OF CHEQUE NOS. AND PRESSING BILL NOS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE ARE OF THE OPINION THAT THE MATTER IS TO BE REMITTED BA CK TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL EXAMINE THE WORKIN G GIVEN BY THE ASSESSEE AND FOLLOWING THE DECISION OF SPECIAL BENC H OF VIZAG ITAT IN THE CASE OF M/S MERLYN SHIPPING TRANSPORT & OTHERS, 136 ITD 23(SB)(VIZAG) DECIDE THE ISSUE AFTER PROVIDING REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL IS ALLOWED FOR STATISTI CAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2012. SD/- SD/- (D. KARUNAKARA RAO) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 3 RD AUGUST, 2012. ITA NO. 1007/HYD2009 M/S NATARAJA COTTON (P) LTD. 4 KV COPY TO:- 1) M/S NATARAJA COTTON (P) LTD., C/O CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD 500 020. 2) THE ADDL. CIT, ANANTHAPUR RANGE, ANANTHAPUR. 3) THE CIT (A), TIRUPATHI 4) THE CIT, TIRUPATHI. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.