The ACIT, Central Circle-3, Surat V. Ramzan Abbas Nabi Shaikh, SILVASSA

ITA 1018/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80568 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: M K PATEL
• Keywords: Cost of acquisition
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA NO. 1018/AHD/2010 (ASSESSMENT YEAR: 2005-06) THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3, ROOM NO. 507, AAYAKAR BHAVAN, MAJURA GATE, SURAT APPELLANT VS. RAMZAN ABBAS NABI SHAIKH SURVEY NO.126/P, PLOT NO.49, AMLI INDUSTRIAL ESTATE, SILVASSA RESPOND ENT PAN: AHHPS1912M / BY REVENUE :SHRI ROOP CHAND, SR. D.R. / BY ASSESSEE : SHRI M. K. PATEL, A.R. /DATE OF HEARING :18.12.2014 !' /DATE OF PRONOUNCEMENT : 22.12.2014 I.T.A. NO. 1018/AHD/2010 FOR A.Y. 05-06 (ACIT VS. RAMZAN ABBAS NABI SHAIKH) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD, DATED 18.11.2009 FOR A.Y. 2005-06 ON THE FOLLOWING GROUND : (1) THE LD.CIT (A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.8,84,565/- MADE ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT IGNORING THE FACT THAT TDS WAS DEDUCTIBLE ON THE TRANSPORT EXPENSES PAID TO M/S POOJA TRANSPORT. (2) THE LD.CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.24,03,480/- OUT OF TOTAL ADDITIO N OF RS.26,62,322/- MADE ON ACCOUNT OF SUPPRESSION OF RECEIPTS, IGNORING THE FACT THAT THE ASSESSEE FOLLO WS MERCANTILE SYSTEM OF ACCOUNTING AND THE TOTAL AMOUN T OF RS. 1,69,19,728/- WAS ACCRUED TO THE ASSESSEE IN THE CURRENT YEAR AS EVIDENT FROM THE REPLY OF THE PAYEE. 2. THE FIRST ISSUE IS WITH REGARDS TO ADDITION OF R S.8,84,565/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 40(A)(IA). AS SESSEE HAS SHOWN PURCHASES OF RS.9,76,365/- FROM POOJA TRANSPO RT SERVICES. ASSESSING OFFICER OBSERVED THAT OUT OF T OTAL AMOUNT BILLS AMOUNTING TO RS.8,84,565/- PERTAINED TO TRANS PORT CHARGES ON WHICH ASSESSEE WAS REQUIRED TO DEDUCT TA X AT SOURCE. ACCORDING TO ASSESSING OFFICER, ASSESSEE H AS NOT DEDUCTED TAX AT SOURCE AS PER PROVISIONS OF 194C OF THE ACT. THUS, ASSESSING OFFICER DISALLOWED EXPENDITURE TO T HE TUNE OF RS.8,84,565/- BY INVOKING SECTION 40(A)(IA) OF THE ACT. I.T.A. NO. 1018/AHD/2010 FOR A.Y. 05-06 (ACIT VS. RAMZAN ABBAS NABI SHAIKH) PAGE 3 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) HAS GRANTED R ELIEF TO THE ASSESSEE. 2.2 SAME HAS BEEN OPPOSED BEFORE US, INTER ALIA, SU BMITTED ON BEHALF OF REVENUE THAT CIT(A) ERRED IN LAW AND F ACT IN DELETING ADDITION OF RS.8,84,565/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 40(A)(IA) ACCEPTING THAT PAYMENT SHOWN TO HAVE BEEN MADE TO M/S. POOJA TRANSPORTS SERVICES IS INCLUSIVE OF PURCHASE COST OF MATERIAL FOR WHICH NO TDS WAS L IABLE; IGNORING THAT ASSESSING OFFICER MADE ADDITION AFTER VERIFYING THE BILLS, WHICH WERE IN THE NATURE OF ADMINISTRATI VE BILL AND ALSO AFTER FINDING OUT THAT M/S. POOJA TRANSPORT SE RVICES IS NOT DOING BUSINESS OF TRADING OF MORUM AND METAL. SO, THE ORDER OF CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF ASS ESSING OFFICER BE RESTORED. ON OTHER HAND, LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT IT HAD PURCHASED MORUM AND METAL FRO M M/S. POOJA TRANSPORT FOR CONSTRUCTION PURPOSE AND THE MA TERIAL PURCHASED ARE INCLUSIVE OF TRANSPORTATION CHARGES. ASSESSING OFFICER HAS ERRONEOUSLY CONSIDERED ENTIRE AMOUNT AS TRANSPORT CHARGES AND INVOKED PROVISIONS OF SECTION 40(A)(IA) . ACCORDING TO ASSESSEE, SAME IS A PURCHASE OF MATERIAL ONLY AN D OBSERVATION OF ASSESSING OFFICER THAT EXPENDITURE C ONSTITUTES TRANSPORTATION CHARGES WERE BASED ON ERRONEOUS UNDERSTANDING OF FACTS. IN VIEW OF THIS, LD. AUTHO RIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A) ON ISS UE. I.T.A. NO. 1018/AHD/2010 FOR A.Y. 05-06 (ACIT VS. RAMZAN ABBAS NABI SHAIKH) PAGE 4 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ON PERUSAL OF COPIES ON WHOLE ISSUE BY M/S. POOJA TRANSPORT, IT WAS FOUND THAT ASSESSEE HA S PURCHASED MORUM AND METAL, WHICH ARE INCLUSIVE OF TRANSPORTATION CHARGES. THIS FACT HAS NOT BEEN DIS PUTED BY REVENUE. IN THIS SITUATION, CIT(A) WAS JUSTIFIED I N HOLDING THAT TDS U/S. 194C IS NOT DEDUCTABLE FOR PURCHASE OF MOR UM AND METAL. ACCORDINGLY, CIT(A) HAS RIGHTLY DIRECTED TH E ASSESSING OFFICER TO DELETE THE ADDITION IN QUESTION. THIS F ACTUAL AND LEGAL FINDING NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4. NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS.24, 03,480/-. ASSESSEE HAS SHOWN TOTAL CONTRACT RECEIPTS OF RS.1, 39,99,728/- AS RECEIVED FROM M/S. JBF INDUSTRIES IN HIS RETURN OF INCOME. ASSESSING OFFICER VERIFIED THE SAME WITH INFORMATIO N RECEIVED FROM JBF INDUSTRIES AND OBSERVED THAT JBF INDUSTIRE S HAS ACCOUNTED THE CONTRACT CHARGES OF RS.1,66,62,050/- IN THE NAME OF M/S. R. A. CONSTRUCTION, PROPRIETARY CONCER N OF TRHE ASSESSEE. THE STAND OF ASSESSEE HAS BEEN THAT AS P ER ACCOUNTING POLICY THEY ACCOUNTED R.A. BILL WHEN WOR K OF PARTICULAR AREA IS COMPLETED AND THEY HAVE REFLECTE D THE SAME AS WORK IN PROGRESS AND IT DOES NOT EFFECT THE REVE NUE I.E. NO LOSS TO THE REVENUE. ASSESSING OFFICER REJECTING T HE CONTENTION OF ASSESSEE HELD THAT ASSESSEE HAS SUPPRESSED THE C ONTRACT I.T.A. NO. 1018/AHD/2010 FOR A.Y. 05-06 (ACIT VS. RAMZAN ABBAS NABI SHAIKH) PAGE 5 RECEIPTS BY RS.26,62,322/-, WHICH WAS ADDED TO ASSE SSEES INCOME. 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE FOR RECONCILIATION OF THE ASSESSEE. IT WAS SUBMITT ED ON BEHALF OF ASSESSEE BEFORE CIT(A) THAT VIDE ORDER SHEET ENTRY DATED 15.07.2009, AUTHORIZED REPRESENTATIVE OF ASSESSEE W AS SPECIFICALLY ASKED TO PRODUCE RECONCILIATION AND EX PLANATION WITH R.A. BILLS. ASSESSEE VIDE ITS LETTER DATED 10 .08.2009 SUBMITTED THAT WITHIN TIME ALLOWED THEY WERE UNABLE TO RECONCILE THEIR CONTRACT ACCOUNT AS PER THEIR BOOKS OF ACCOUNT AND JBF INDUSTRIESS BOOK TO THE EXTENT OF RS.2,58, 842/-. IN THIS BACKGROUND, CIT(A) PERUSED THE LEDGER ACCOUNT OF JBF INDUSTRIES IN BOOKS OF ACCOUNT OF ASSESSEE OBSERVED THAT ASSESSEE HAS ACCOUNTED RS.13,16,241/- AND RS.10,87, 239/- TOTALLING TO RS.24,03,480/- ON 10.04.2005 IN SUBSEQ UENT YEAR I.E. A.Y. 2006-07. IT WAS ALSO FOUND THAT ASSESSEE HAS ACCOUNTED FULL CONTRACT AMOUNT AS PER BILLING AT RS.24,03,480/- AND JBF AT RS.26,62,322/- RESULTING IN DIFFERENCE OF RS.2,58,842/-. THUS, DIFFERENCE AMOU NT AS PER BOOKS OF ACCOUNTS OF ASSESSEE AND THAT OF JBF WAS F OUND AT RS.2,58,842/-. KEEPING IN VIEW THE ADDITION TO THE SAME EXTENT MADE BY ASSESSING OFFICER WAS RESTRICTED TO THE SAM E EXTENT I.E. RS.2,58,842/- AND ASSESSEE WAS GRANTED RELIEF OF RS.24,03,480/- OUT OF TOTAL ADDITION OF RS.26,62,32 2/-. THIS I.T.A. NO. 1018/AHD/2010 FOR A.Y. 05-06 (ACIT VS. RAMZAN ABBAS NABI SHAIKH) PAGE 6 REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFE RENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF DECEMBER, 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;