DCIT, CHENNAI V. R.K.Powergen Pvt. Ltd., CHENNAI

ITA 1087/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5953 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V RA VICHANDRAN
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1087 & 1088/MDS/2017 ( )( / ASSESSMENT YEARS : 2007-08 & 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(2), CHENNAI - 600 034. V. M/S R.K. POWERGEN PVT. LTD., NO.14/45, DR. GIRIAPPA ROAD, T. NAGAR, CHENNAI - 600 017. PAN : AABCR 8680 H (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : MS. S. VIJAYAPRABHA, JCIT -.+, / 0 / RESPONDENT BY : SHRI V. RAVICHANDRAN, CA 1 / 2% / DATE OF HEARING : 18.09.2017 3') / 2% / DATE OF PRONOUNCEMENT : 13.10.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) -3, CHENNAI, DATED 31.01.2017 AND PERTAIN TO ASSESSMENT YEARS 2007-08 AND 2012-13. SINCE COMMON ISSUE ARIS ES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THESE A PPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1087 & 1088/MDS/17 2. MS. S. VIJAYAPRABHA, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDING, IT WAS FOUND THAT THE ASSESSEE PAID AMOUNT EXCEEDING ` 20,000/- PER DAY IN CASH, IN VIOLATION OF SECTION 40A(3) OF THE INCO ME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. D.R., T HE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE CASH PAYMENT WAS MADE TO REGISTERED DEALERS FOR PURCHASE OF AGRICULTURAL WAS TE AND BIO-MASS WASTE AS RAW MATERIALS FOR GENERATION OF POWER. TH EREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THA T THE PAYMENT MADE BY IT EXCEEDING ` 20,000/- IN CASH WAS EXCLUDED UNDER SECTION 40A(3) OF THE ACT IN VIEW OF CLAUSE (F) OF RULE 6DD OF THE INCOME-TAX RULES, 1962. 3. REFERRING TO THE ORDER OF THIS TRIBUNAL IN THE A SSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2008-09 TO 2011-12, THE L D. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ON IDENT ICAL CIRCUMSTANCES, THIS TRIBUNAL FOUND THAT THE PAYMENT S WERE MADE TO TRANSPORTERS, THEREFORE, THERE CANNOT BE ANY DISALL OWANCE UNDER SECTION 40A(3) OF THE ACT. THE LD. D.R. FURTHER SU BMITTED THAT FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12, THIS TRIBU NAL FOUND THAT THE PAYMENTS WERE MADE TO LORRY DRIVERS. HOWEVER, FOR THE 3 I.T.A. NOS.1087 & 1088/MDS/17 ASSESSMENT YEARS UNDER CONSIDERATION, THE PAYMENTS WERE MADE TO THE DEALERS. THE BOOKS MAINTAINED BY THE ASSESSEE ALSO DISCLOSED THE PAYMENT MADE TO THE DEALERS WHO SUPPLIED GOODS TO THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. D.R., TH E ORDER OF THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2008-09 TO 2011-1 2 IS NOT APPLICABLE TO THE FACTS OF THE CASE FOR THE ASSESSM ENT YEARS UNDER CONSIDERATION, HENCE, THE CIT(APPEALS) IS NOT JUSTI FIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI V. RAVICHANDRAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE PAYMENTS WERE, IN FACT, MADE TO THE TRANSPORTERS. ACCORDING TO TH E LD. REPRESENTATIVE, THE ASSESSEE PURCHASED AGRICULTURAL WASTE AND BIO- MASS WASTE FROM AGRICULTURISTS AS RAW MATERIALS FOR GENERATION OF POWER. ON A QUERY FROM THE BENCH, THE LD. REPRESEN TATIVE SUBMITTED THAT THE AGRICULTURAL WASTE AND BIO-MASS WASTE IS NOTHING BUT KARUVELAMUDAI. THE ASSESSEE HAS TO PURCHASE KA RUVELAMUDAI FROM THE REGISTERED DEALERS AND OCCASIONALLY FROM T HE AGRICULTURISTS DIRECTLY. REFERRING TO RULE 6DD OF THE INCOME-TAX RULES, 1962, THE LD. REPRESENTATIVE SUBMITTED THAT THE PAYMENTS MADE TO AGRICULTURISTS FOR PURCHASE OF AGRICULTURAL PRODUCE ARE EXEMPTED 4 I.T.A. NOS.1087 & 1088/MDS/17 UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. MOREOVER, THE PAYMENTS WERE MADE ONLY TO THE TRANSPORTERS FOR DEL IVERY OF GOODS. FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12, ON IDE NTICAL CIRCUMSTANCES, ACCORDING TO THE LD. REPRESENTATIVE, THIS TRIBUNAL FOUND THAT SINCE THE PAYMENTS WERE MADE TO LORRY DR IVERS, THE PROVISIONS OF SECTION 40A(3) OF THE ACT IS NOT APPL ICABLE. 5. ON A QUERY FROM THE BENCH, FOR ASSESSMENT YEARS UNDER CONSIDERATION, THE CONTENTION OF THE REVENUE AND FI NDING OF THE ASSESSING OFFICER ARE THAT THE PAYMENTS WERE MADE T O REGISTERED DEALERS, HOWEVER, FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12, THE FACT WAS THAT THE PAYMENTS WERE MADE TO LORRY D RIVERS, THEREFORE, HOW THE DECISION OF THIS TRIBUNAL FOR TH E ASSESSMENT YEARS 2008-09 TO 2011-12 IS APPLICABLE FOR THE ASSE SSMENT YEARS UNDER CONSIDERATION? THE LD. REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT IN SUCH A CASE, THE MATTER MAY BE RE MITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION TO FIND OUT TO WHOM THE PAYMENTS WERE ACTUALLY MADE. THE LD. REPRESENT ATIVE REITERATED THAT THE PAYMENTS WERE MADE ONLY TO THE LORRY DRIVERS. HOWEVER, HE MAY NOT HAVE ANY OBJECTION TO VERIFY TH E FACTUAL SITUATION BY THE ASSESSING OFFICER. 5 I.T.A. NOS.1087 & 1088/MDS/17 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT THE PAYMENTS WERE MADE TO LORRY DRIVERS , THEREFORE, THE PROVISIONS OF SECTION 40A(3) OF THE ACT IS NOT APPL ICABLE. ACCORDING TO THE LD. REPRESENTATIVE FOR THE ASSESSEE, ON IDEN TICAL CIRCUMSTANCES, THIS TRIBUNAL FOUND THAT THE PROVISI ONS OF SECTION 40A(3) OF THE ACT IS NOT APPLICABLE FOR ASSESSMENT YEARS 2008-09 TO 2011-12. THE LD. REPRESENTATIVE HAS VERY FAIRLY SU BMITTED THAT HE HAS NO OBJECTION IN REMANDING BACK THE MATTER TO TH E FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE PAYMENTS WE RE MADE TO LORRY DRIVER OR TO THE DEALERS WHO SUPPLIED GOODS T O THE ASSESSEE. 7. KARUVELAMUDAI TREE IS NOT CULTIVATED BY ANY AGRI CULTURIST. IT IS A KIND OF TREE WHICH GROWS ITSELF SPONTANEOUSLY IN VACANT LAND. THEREFORE, WHETHER KARUVELAM TREE IS AN AGRICULTURA L PRODUCE OR NOT ALSO NEEDS TO BE EXAMINED. THIS FACT WAS NOT EXAMI NED BY THIS TRIBUNAL WHILE ADJUDICATING THE ISSUE FOR ASSESSMEN T YEARS 2008-09 TO 2011-12. SINCE THERE WAS FACTUAL DISPUTE REGAR DING TO WHOM THE PAYMENTS WERE MADE, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT AS SUBMITTED BY THE LD. REPRESENTATIVE FOR THE ASSE SSEE, THE MATTER NEEDS TO BE RE-EXAMINED. ACCORDINGLY, THE ORDERS O F BOTH THE 6 I.T.A. NOS.1087 & 1088/MDS/17 AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND BRING ON RE CORD WHETHER THE PAYMENTS WERE MADE TO LORRY DRIVERS OR REGISTERED D EALERS. THE ASSESSING OFFICER SHALL ALSO BRING ON RECORD WHETHE R KARUVELAMUDAI TREE PURCHASED BY THE ASSESSEE IS AN AGRICULTURAL P RODUCE OR NOT AND THEREAFTER THE ASSESSING OFFICER SHALL DECIDE T HE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH OCTOBER, 2017 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 13 TH OCTOBER, 2017. KRI. 7 I.T.A. NOS.1087 & 1088/MDS/17 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-3, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.