ITO,Ward-38(1), Kolkata, Kolkata V. M/s Jagdish Narayan Inder Bahadur Singh, Kolkata

ITA 1097/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99792 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 24-07-2012
• Court: TRIBUNAL
• Department Lawyers: M K BISWAS
• Assessee Lawyers: I CHATRATH
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & SHRI WASEE M AHMED , AM ] ITA NO. 1097/KOL/2012 ASSESSMENT YEAR : 2007 - 08 I.T.O., WARD - 38(1) - VERSUS - M/S. JAGDISH NARAYAN INDER KOLKATA BAHADUR SI NGH, KOLKATA (PAN: AACFJ 1438 K) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI M.K.BISWAS ,JCIT.SR.DR FOR THE RESPONDENT : SHRI I.CHATRATH DATE OF HEARING : 31 /08/2015. DATE OF PRONOUNCEMENT : 16/09/2015. ORDER PER SHRI WASEE M AHMED , AM THIS APPEAL OF THE REVENUE ARISE S OUT OF THE ORDER OF LD. CIT(A) - XX I V , KOLKATA IN APPEAL NO . 721 /CIT(A) - XX I V / 38(1)/09 - 10 DATED 28.05 .2012 FOR A.Y. 2007 - 08. ASSESSMENT WAS FRAMED BY I.T.O., WARD - 38(3) U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS THE ACT ) VIDE ORDER DATED 31.12.2009. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION MADE U/S 40(A)(IA) OF THE AC T TO THE TUNE OF RS.10,57,611/ - FOR NOT DEDUCTI NG TDS U/S 194C OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF TRADING OF SPARE PARTS AND HEAVY EARTH MOVING VEHICLES. DURING THE YEAR THE ASSESSEE HAS CLAIMED EXPENSES OF RS.10,57,611/ - TOWARDS LORRY FREIGHT CHARGES WITHOUT DEDUCTING TDS ON THE SAID EXPEND ITURE. ON QUESTION BY AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION REGARDING THE VIOLATION OF SECTION 194C OF THE ACT . HENCE AO HAS ADDED TO THE INCOME OF THE ASSESSEE. ITA NO. 1097/KOL/2012 M/S. JAGDISH NARAYAN INDER BAHADUR SINGH A..Y.2007 - 08 2 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS ALLOWED THE EXPENSES OF RS.10,57,611/ - IN VIEW OF THE HON BLE ITAT, SPECIAL BENCH VISHAKAPATNAM IN THE CASE OF MERILYN SHIPPING & TRAN S P ORTS [2012] 20 TAXMANN.COM 244, EXPLAINING THAT THE APPELLANT HAD PAID F REIGHT CHARGES DURING THE YEAR AND THERE WAS NO OUTSTANDING AMOUNT OF FREIGHT CHARGES PAYABLE AS ON 31 ST MARCH, 2007. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AND RAISED THE FOL LOWING GROUNDS OF APPEAL : - 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT IN DELETING THE ADDITION MADE U/S 40(A)(IA) TO THE TUNE OF RS.10,57,611/ - . 4. SHRI M.K.BISWAS, JCIT, SR.DR, THE LD. DR APPEARED ON BEHALF OF THE REVENUE AND SHRI.INDU CHAT RATH APPEARED ON BEHALF OF THE ASSESSEE. 5. THE LD. DR RELIED ON THE ORDER OF AO. THE LD. AR ARGUED THAT THE FREIGHT CHARGES WERE PAID ON THE MATERIAL DISPATCHED BY THE SUPPLIER OF THE ASSESSEE AS SUCH THERE WAS NO CONTRACT BETWEEN THE ASSESSEE FIRM AND T RANSPORTERS . THUS THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE. SINCE THERE WAS NO CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTERS, THE OBLIGATIONS TO DEDUCT TAX AT SOURCE DOES NOT ARISE. IN SUPPORT OF HIS CLAIM HE RELIED ON THE DECISI ON OF ITAT KOLKATA VIDE ITA NO.1921/KOL/2009 ORDER DATED 16.12.2010 . THE LD. AR ALSO SUBMITTED THAT THE LORRY CHARGES WAS PART OF THE PURCHASE PRICE WHICH HAS BEEN PAID TO THE TRANSPORT PARTIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD. AR THAT THERE WAS NO WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORT PARTIES, HENCE THE PROVISION OF TDS DOES NOT ATTRACT IN THE PRESENT CASE, IS NOT TENABLE AS THE DEPARTMENT HAS CLARIFIED THAT TH E PROVISION S OF SECTION 194C ARE EQUALLY COVERED EVEN FOR VERBAL CONTRACT IN TERMS OF CBDT CIRCULAR NO.86 DATED 29 TH MAY, 1972. THE CLAIM OF THE LD. AR THAT THE LORRY CHARGES WAS PART OF THE PURCHASE PRICE WAS NOT CORRECT AS EVIDENCED FROM THE FINANCIAL ST ATEMENT OF THE ASSESSEE WHEREIN THE LORRY CHARGE S HAS BEEN DECLARED SEPARATELY BY IT. EVEN OTHERWISE ITA NO. 1097/KOL/2012 M/S. JAGDISH NARAYAN INDER BAHADUR SINGH A..Y.2007 - 08 3 THE VERBAL CONTRACT ARE DULY COVERED AND THE SAME HAS BEEN HELD IN THE CASE OF DCIT VS KAMAL MUKHERJEE & CO. (SHIPPING )(P) LTD ITA NO.199/KOL/2010, WHEREI N IT IS HELD AS UNDER : - (FROM HEAD NOT ES) .UNDOUBTEDLY, THESE DECISIONS DO INDICATE THAT THERE IS A WORKMAN EMPLOYER RELATIONSHIP BETWEEN THE DOCK WORKERS AND THE STEVEDORES LIKE ASSESSEE WHEN THEY EMPLOY THOSE WORKERS, BUT BE THAT AS IT MAY, THE FACT REMAINS THAT THE ASSESSEE HAS MADE PAYMENTS TO THE CDLB FOR SUPPLY OF LABOUR, EVEN WHEN THIS LABOUR MAY BE TREATED AS EMPLOYED BY THE ASSESSEE FOR ALL PRACTICAL PURPOSES, THE PROVISIONS OF SECTION 194C ARE CLEARLY ATTRACTED. IN SUCH A SITUATION, I.E. WHEN LABOUR HIRED BY THE ASSESSEE THROUGH CDLB IS CONSIDERED TO BE IN ASSESSEE S EMPLOYMENT, THE PAYMENTS MADE TO CDLB CANNOT BE TREATED AS PAYMENTS FOR ANY WORK, BUT NEVERTHELESS THESE PAYMENTS COULD STILL BE COVERED BY THE PROVISIONS OF SECTION 194C BECAUSE T HESE ARE PAYMENTS MADE FOR SUPPLY OF LABOUR WHICH ARE SPECIFICALLY COVERED BY SECTION 194C(1). CDLB IS AN AGENT OF THE STEVEDORES LIKE THE ASSESSEE IN THE SENSE THAT THE LABOUR IS RECRUITED BY THE ASSESSEE THROUGH CDLB, BUT WHEN THIS FACT DOES NOT AFFECT T HE NATURE OF PAYMENT BY THE ASSESSEE TO THE CDLB WHICH IS ADMITTEDLY IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR. THE REASONING ADOPTED BY THE COMMISSIONER (APPEALS), THOUGH SOMEWHAT IMPRESSIVE AT FIRST GLANCE, IS FALLACIOUS. THERE IS NO CAUSE AND EFFECT RELATIONSHIP BETWEEN WORKERS ASSIGNED BY THE CDLB HAVING EMPLOYER WORKMAN RELATIONSHIP WITH THE ASSESSEE, AND THE PAYMENTS BEING MADE BY THE ASSESSEE TO CDLB BEING NOT IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR . 4. SINCE THE FACTS AND CIRCUMS TANCES ARE EXACTLY IDENTICAL, WHAT WAS BEFORE US IN KAMAL MUKHJERJEE & CO. (SHIPPING) (P.) LTD. (SUPRA) AND ALSO THAT IN THE CASE OF SMT. J. RAMA OF HON BLE KARNATAKA HIGH COURT (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE VIEW THAT EVEN ORAL CO NTRACT IS SUFFICIENT AND ADMITTEDLY THE ASSESSEE HAS TAKEN THE DUMPERS ON HIRE AND HE HAS PAID CHARGES FOR THE SAME. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND REVERSE THE ORDER OF CIT(APPEALS). THE CA SE CITED BY CIT(A) MERILYN SHIPPING & TRANSPORTERS IS NOT APPLICABLE IN THE PRESENT CASE IN THE LIGHT OF THE JUDGMENT BY JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS CRESCENT EXPORT WHEREIN IT HAS BEEN HELD THAT THE KEY WORDS USED IN SECTION 40(A)(I A), ACCORDING TO US, ARE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B . IF THE QUESTION IS WHICH EXPENSES ARE SOUGHT TO BE DISALLOWED? THE ANSWER IS BOUND TO BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B. ONCE THIS IS REALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD PAYABLE AND NOT PAID OR CREDITED . UNLESS ANY AMOUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF AN AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. SO THE VIEWS EXPRESSED IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS ARE NOT ACCEPTED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE DISMISS THE ORDER OF THE LD. ITA NO. 1097/KOL/2012 M/S. JAGDISH NARAYAN INDER BAHADUR SINGH A..Y.2007 - 08 4 CIT(A) AND RESTORE THAT OF THE AO. ACCORDINGL Y WE DECIDE THIS APPEAL IN FAVOUR OF THE REVENUE. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNC ED IN TH E COURT ON 16.09.2015. SD/ - SD/ - [MAHAVIR SINGH] [ WASEEM AHMED ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 16.09.2015. R.G .(.P .S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S. JAGDISH NARAYAN INDER BAHADUR SINGH, 19, GOA BAGAN STREET, KOLKATA - 700006. 2 I.T.O., WARD - 38(1), KOLKATA. 3 . THE CIT - XIII, KOLKATA 4. THE CIT(A) - XX I V , KOLKATA. 5 . DR, KOLKATA BENC HES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES