ACIT, Circle-1, Nellore V. Sri D. Krishna Reddy, Prop. M/s. Ajay Constructions, Nellore Dist.

ITA 1099/HYD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91550 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Section: 143(3)

Judgement Text

ITA NO.1099 OF 2012 D. KRISHNA REDDY NELLORE PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1099/HYD/2012 (ASSESSMENT YEAR: 2009-10) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1 NELLORE VS. SRI D. KRISHNA REDDY, PROP.M/S AJAY CONSTRUCTIONS, SINGAPET VILLAGE, ALLURU MANDAL, NELLORE DISTT. PAN: AEGPD 3324 Q (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAJAT MITRA, DR FOR REVENUE : NONE DATE OF HEARING : 12/03/2015 DATE OF PRONOUNCEMENT : 08 /04/2015 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS IS AN APPEAL PREFERRED BY THE REVENUE DIRECTE D AGAINST THE ORDER OF THE CIT (A) GUNTUR, DATED 24.04.2012, PASSED FOR A.Y 2009-10 U/S 143(3) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD CIT (A) IS ERRONEOUS BOTH O N FACTS AND IN LAW. 2. THE LD CIT (A) ERRED IN DELETING THE DISALLOWANC E OF FREIGHT CHARGES OF RS.12,43,190 MADE U/S 40(A)(IA) ON ACCOUNT OF ASSESSEES FAILURE TO MAKE TDS U/S 194C. 3. THE ORDER OF THE LD CIT (A) IS EX FACIE PERVERSE ON FACTS AS HIS FINDING OF FACT THAT THE PAYMENT OF FR EIGHT ITA NO.1099 OF 2012 D. KRISHNA REDDY NELLORE PAGE 2 OF 4 CHARGES TO NONE OF THE ELEVEN PAYEES DURING THE PREVIOUS YEAR HAS EXCEEDED THE THRESHOLD LIMIT ATTRACTING THE PROVISIONS OF TDS IS CONTRARY TO THE MATERIAL AVAILABLE ON RECORD WHICH SHOWS THAT IN AL L THE ELEVEN CASES THE PAYMENT EXCEEDED THE THRESHOLD LIM IT OF RS.50,000 AS LAID DOWN IN THE FIRST PROVISO TO S ECTION 194C(3)(I). 4. THE LD CIT (A) ERRED IN DELETING THE DISALLOWNCE OF HIRE PURCHASES INTERST OF RS.72,000 MADE U/S 40(A)(IA) O N ACCOUNT OF ASSESSEES FAILURE TO MAKE TDS U/S 194A. 5. THE LD CIT (A) OUGHT TO HAVE PLACED RELIANCE ON BOARDS CIRCULE NO.760 TO CONCLUDE THAT THE FINANCE CHARGES PAID TO HIRE PURCHASE COMPANY ARE EITHER IN THE NATURE OF INTEREST IF THE TRANSACTION IS A FINANCIN G TRANSACTION IN SUBSTANCE OR IN THE NATURE OF HIRE C HARGES IF THE TRANSACTION IS HIRE PURCHASE TRANSACTION IN SUBSTANCE AND ACCORDINGLY THERE IS LIABILITY TO MAK E TDS EITHER U/S 194A OR 194I THE FAILURE IN RESPECT OF W HICH ATTRACTS DISALLOWANCE U/S 40(A)(IA) 3. IN THE REVENUES APPEAL THE FIRST GROUND IS DISA LLOWANCE OF RS.12,43,190. THE AO DISALLOWED FREIGHT CHARGES OF RS.12,43,190 U/S 40(A)(IA) ON THE GROUND OF NON DEDUCTION OF TAX . THE ASSESSEE SUBMITTED THAT THE AMOUNTS WERE PAID TO 11 PEOPLE, WHOSE INCOME WAS LESS THAN THE TAXABLE LIMIT AND HENCE NO TAX WAS DEDUCTIBLE. 4. IN RESPECT OF ONE OF THE PARTIES, SANDEEP JAGADH AMA & ASSOCIATES, PUNE, PAID A SUB CONTRACT OF RS.1,50,00 0 AND MAIN CONTRACTOR DEDUCTING TAX OF RS.1,37,061. ON APPEAL THE CIT (A) FOUND THAT THE PAYMENT TO 11 PERSONS DID NOT EXCEED THE THRESHOLD LIMIT OF ATTRACTING THE PROVISION OF TDS. AS REGARDS SANDEEP JAGADHAMA & ASSOCIATES, IT WOULD APPEAR THA T SUB ITA NO.1099 OF 2012 D. KRISHNA REDDY NELLORE PAGE 3 OF 4 CONTRACTOR RETAINED THE COMMISSION AMOUNT AFTER DED UCTING TDS OF RS.12,939. THEREFORE, THE CIT (A) FOUND THAT THE TAX HAS BEEN DEDUCTED AT GROSS AMOUNT AND HENCE THERE IS NO DEFA ULT OF TDS. FURTHER, ALL THE AMOUNTS HAVE BEEN PAID DURING THE YEAR AND HENCE APPLYING THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & SERVICES VS. ADD. CIT (16 CTR 1 VIZAG SB), THE CIT (A) DELETED THE DISALLOWANCE. 5. ON APPEAL BEFORE US IT WAS SUBMITTED BY THE LD D R THAT THE CLAIM OF THE ASSESSEE WAS MADE FOR THE FIRST TIME B EFORE THE CIT(A), THAT THE AMOUNT PAID TO 11 PERSONS DID NOT EXCEED THE THRESHOLD LIMIT AND THAT THEIR INCOME WAS BELOW TAX ABLE LIMIT WHICH WAS ACCEPTED BY THE CIT (A) WITHOUT GIVING AN OPPORTUNITY TO THE AO TO VERIFY THE SAME. HENCE, IN THESE CIRCU MSTANCES, WE SET ASIDE THE ISSUE TO THE AO TO VERIFY WHETHER THE AMOUNTS WERE PAID TO 11 PERSONS WHOSE INCOME WAS LESS THAN TAXAB LE LIMIT AND HENCE NO TAX WAS DEDUCTIBLE AND IF SO TO ALLOW THE GROUND RAISED BY THE ASSESSEE. 6. THE NEXT GROUND IS AGAINST THE DISALLOWANCE OF R S.72,000 PAYABLE TO M/S LAKSHMI GENERAL FINANCE TOWARDS HIRE CHARGES. THE HIRE CHARGES NOT BEING IN THE NATURE OF INTERES T AND LOANS, PROVISION OF SECTION 194A IS NOT APPLICABLE. THE CB DT IN THEIR CIRCULAR NO.760 DATED 13.1.1998 HAS ALSO CONFIRMED THAT PAYMENT OF HIRE CHARGES AND HIRE PURCHASE AGREEMENT IS NOT IN THE NATURE OF INTEREST, PROVISION OF SECTION 194A W OULD NOT APPLY. WE AGREE WITH THE DECISION OF THE CIT (A) ON THE GR OUND AND ITA NO.1099 OF 2012 D. KRISHNA REDDY NELLORE PAGE 4 OF 4 CONFIRM THE ORDER DELETING THE DISALLOWANCE AND REJ ECTING THE GROUNDS OF REVENUE ON THIS HEAD. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH APRIL, 2015. S D/ - S D/ - (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 08 TH APRIL, 2015. VNODAN/SPS COPY TO: 1. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1 24-2-43 8 GNT ROAD, DARGAMITTA NELLORE 2. SRI D. KRISHNA REDDY, PROP.M/S AJAY CONSTRUCTIONS, SINGAPET VILLAGE, ALLURU MANDAL, NELLORE DISTT. 3. THE CIT(A) GUNTUR 4. THE CIT GUNTUR 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER