M/s S.K.M Enterprises, Ranchi V. ITO, Ranchi

ITA 104/RAN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0032 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHURY ORAN
• Assessee Lawyers: R R MITTAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI SMC BENCH, RANCHI BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER ITA NO.104/RAN/2015 ASSESSMENT YEAR :2007-08 M/S S.K.M. ENTERPRISES D-102, HARMU HOUSING COLONY, RANCHI V S INCOME TAX OFFICER WARD-3(1), RANCHI PAN/GIR NO. :AAZFS 6816 M (APPELLANT ) .. (RESPONDENT) APPELLANT BY : SHRI R.R. MITTAL, CA RESPONDENT BY : SHRI CHOUDHURY ORAN, DR DATE OF HEARING :06-09-2016 DATE OF PRONOUNCEMENT : 09-09-2016 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 26.3.2015 OF COMMISSIONER OF INCOME TAX (APPEALS)-R ANCHI (JHARKHAND) RELATING TO AY 2007-08. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE MADE BY THE REVENUE AUTHORITIES OF A SUM OF RS.13,36,675/- OUT OF THE VAN HIRING CHARGES FOR TH E REASON THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE ON THE AFORES AID ITEM OF EXPENDITURE WHICH WAS CLAIMED AS DEDUCTION IN COMPU TING ITS INCOME FROM THE BUSINESS OF ACTING AS DISTRIBUTOR OF CONSU MER PRODUCTS OF PROCTOR AND GAMBLE LTD. THE DISALLOWANCE OF THE AF ORESAID SUM WAS MADE BY INVOKING THE PROVISIONS OF SEC.40(A)(IA) OF THE INCOME TAX ACT, 1961 (ACT) WHICH PROVIDES THAT WHEREVER THE AS SESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE AND WHEREVER THE ASSESSEE H AS FAILED TO DEDUCT TAX AT SOURCE, NO DEDUCTION ON ACCOUNT OF THE SUM O N WHICH TAX WAS 2 ITA NO.104/RAN/2015 AY:2007-08 NOT DEDUCTED SHOULD NOT BE ALLOWED AS DEDUCTION WHI LE COMPUTING INCOME FROM BUSINESS OF THE ASSESSEE. 3. THE SUM DISALLOWED WAS PAID BY THE ASSESSEE TO VARIOUS VAN OWNERS WHO DELIVERED THE MATERIAL TO VARIOUS RETAIL ERS. IT IS NOT IN DISPUTE THAT THE APPLICABLE PROVISION UNDER WHICH T HE ASSESSEE WAS BOUND TO DEDUCT TAX AT SOURCE WAS SEC.194C OF THE A CT. THE PROVISIONS OF SEC.194C(3) OF THE ACT AS IT READ DUR ING THE PREVIOUS YEAR RELEVANT TO AY 2007-08, PROVIDES THAT NO TAX NEED BE DEDUCTED UNDER CERTAIN CIRCUMSTANCES. THE SAME IS AS FOLLOWS: (3) NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (1 ) OR SUB-SECTION (2) FROM ( I ) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB-CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES: PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SU MS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID D URING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESP ONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB-SECTION (2) SHALL BE LIABLE TO DEDUCT INCOM E-TAX UNDER THIS SECTION: PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB- SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLY ING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARA TION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRES CRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH T IME AS MAY BE PRESCRIBED, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING TH E PREVIOUS YEAR: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB-CONTRACTOR REFERRED TO IN T HE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED INCOME-TAX AUTHORIT Y OR THE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRI BED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED; OR] ( II ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1972; OR ( III ) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF J UNE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO-OPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB-CONTRACTOR IN RELATION TO ANY WORK (INCLUDI NG SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTAKEN BY THE CONTRA CTOR FOR THE CO- OPERATIVE SOCIETY. 3 ITA NO.104/RAN/2015 AY:2007-08 4. IT WAS THE PLEA OF THE ASSESSEE BEFORE THE AO THAT THE PERSONS TO WHOM PAYMENTS WERE MADE BY THE ASSESSEE WITHOUT DED UCTION OF TAX AT SOURCE HAD FURNISHED A DECLARATION IN TERMS OF S ECOND PROVISO TO SEC.194C(3) OF THE ACT IN THE REQUIRED FORM NO.15-I OF THE INCOME TAX RULES, 1962 (RULES). IN TERMS OF THE THIRD PROVISO TO SEC.194C(3) OF THE ACT, THE ASSESSEE HAS TO GIVE THE DETAILS OF TH E PERSONS WHO HAVE GIVEN DECLARATION IN FORM 15I IN FORM NO.15J OF THE RULES. THE AO REJECTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/ S.194C(3) ON THE GROUND THAT EVIDENCE OF HAVING FILED FORM NO.15J OF THE RULES HAD NOT BEEN FURNISHED BY THE ASSESSEE BEFORE HIM. 5. BEFORE CIT(A) THE REQUIRED FORM NO.15J WAS FURN ISHED AND THIS WAS ALSO ACCEPTED BY THE AO IN THE REMAND REPORT FI LED BEFORE THE CIT(A) IN THE COURSE OF APPELLATE PROCEEDINGS. THE CIT(A) HOWEVER ON AN ERRONEOUS ASSUMPTION OF FACT THAT FORM NO.15J OF THE RULES WAS NOT FURNISHED BY THE ASSESSEE BEFORE THE CONCERNED CIT, UPHELD THE DISALLOWANCE MADE BY THE AO. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER CIT(A) AND REMAND REPORT OF THE AO WHEREIN HE HAS ACCEPTED THE FACTUM OF FORM NO.15J OF THE RULES HAVING BEEN FILED BY THE A SSESSEE BEFORE THE CONCERNED CIT. IN THE LIGHT OF THIS ADMITTED FACTU AL POSITION, THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT CANNOT BE SUS TAINED. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANKAD IN ITA NO.1182 OF 2011 DATED 1.10.2012 HELD THAT ONCE FORM NO.15I IS OBTAINED NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT C AN BE MADE ON THE GROUND THAT FORM NO.15J WAS NOT FILED BEFORE THE CO NCERNED CIT. IN VIEW OF THE ABOVE LEGAL POSITION, I DIRECT THE DISA LLOWANCE U/S.40(A)(IA) OF THE ACT BE DELETED. 7. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE O F A SUM OF RS.1,06,991/- SUSTAINED BY THE CIT(A) ON ACCOUNT OF DIFFERENCE IN VAN HIRE CHARGES. THE AO NOTICED THAT THE VAN HIRING C HARGES DEBITED BY 4 ITA NO.104/RAN/2015 AY:2007-08 THE ASSESSEE IN THE BOOKS OF ACCOUNTS WAS RS.19,46, 150 WHEREAS AS PER THE VOUCHERS THE TOTAL OF VAN HIRE CHARGES WAS ONLY RS18,39,159/-. THE AO THEREFORE ADDED THE DIFFERENCE SUM OF RS.1,0 6,991/- TO THE TOTAL INCOME OF THE ASSESSEE AS EXCESS VAN HIRE CHA RGES CLAIMED. 8. BEFORE CIT(A) THE ASSESSEE RECONCILED THE DIFFE RENCE BY FILING THE REQUIRED EVIDENCE AND THE AO IN THE REMAND REPORT H AS ACCEPTED THAT THE DIFFERENCE HAS BEEN RECONCILED. DESPITE SUCH A REMAND REPORT, THE CIT(A) ON AN ERRONEOUS ASSUMPTION THAT VOUCHERS WE RE NOT PRODUCED FOR THE DIFFERENCE IN VAN HIRE CHARGES CONFIRMED TH E ORDER OF THE AO. 9. IN VIEW OF THE REMAND REPORT OF THE AO CONFIRMI NG THAT THE ASSESSEE HAS RECONCILED THE DIFFERENCE BY PRODUCING REQUIRED VOUCHERS FOR THE DIFFERENCE, I AM OF THE VIEW THAT THE ADDIT ION SUSTAINED BY THE CIT(A) DESERVES TO BE DELETED. THE SAME IS DIRECTE D TO BE DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D . ORDER PRONOUNCED IN THE OPEN COURT ON 09/09 /2016 SD/- (N.V.VASUDEVAN ) JUDICIAL MEMBER RANCHI , DATED 09/09/2016 *DKP ,PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT CONCERNED 2. THE RESPONDENT CONCERNED 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE. BY ORDER, // TRUE COPY // SR.PS, ITAT, RANCHI