INCOME TAX OFFICER 1(3), BILASPUR(CG) V. SHRI NEERAJ KUMAR DUBEY, RAIPUR (CG)

ITA 112/BIL/2011

• Counselvise Citation: 11224714 RSA 2011
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: R B DOSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI MUKUL K. SHRAWAT , JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER IT A NO. 1 1 2 / BLPR./2011 ( ASSESSMENT YEAR : 20 06 0 7 ) INCOME TAX OFFICER 1(3) CENTRAL REVENUE BUILDING CIVIL L INES, RAIPUR (C.G) APPELLANT V/S SHRI NEERAJ KUMAR DUBEY PROP. JAI AMBEY FREIGHT CARRIER BILASPUR ROAD, BHANPURI, RAIPUR PAN ACTPD1456A .... RESPONDENT REVENUE BY : SHRI D.K. JAIN ASSESSEE BY : SHRI R.B. DOSHI DATE OF HEARING 1 0.06.2015 DATE OF ORDER 12 .06.2015 O R D E R PER SHAMIM YAHYA, A.M. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28 TH FEBRUARY 2011 , PASSED BY THE LEARNED CIT(A), RAIPUR , FOR THE ASSESSMENT YEAR 20 06 07. THE GROUND RAISED BY THE REVENUE IS AS UND ER: SHRI NEERAJ KUMAR DUBEY 2 WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` 15,78,491, MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OUT OF FREIGHT. 2. IN THIS CASE, THE ASSESSING OFFICER HAS MADE DISALLOW ANCE OF ` 15,78,491, OUT OF FREIGHT EXPENSES BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) SINCE THE ASSESSEE HAS FAILED TO MAKE TDS IN RESPECT OF TRANSPORTATION CHARGES. 3. AT THE OUTSET, THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE ENTIRE AMOUNT OF TRANSPORTATION EXPENDITURE WAS PAID DURING THE YEAR AND NO AMOUNT WAS PAYABLE, HENCE, HE SUBMITTED THAT UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT. FOR THIS PROPOSITION, HE PLACED RELIANCE UPON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S VECTOR SHIPPING SERVICES PVT. LTD., [2013] 357 ITR 642 (ALL.) . THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THOUGH THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE, HAS TAKEN A CONTRARY VIEW BUT SINCE THERE IS NO JURISDICTIONAL HIGH COURT DECISION THE DECISION WHICH IS IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. THE LEAR NED COUNSEL SUBMITTED THAT SPECIAL LEAVE PETITION AGAINST THE ORDER OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD. (SUPRA) HA S ALSO SHRI NEERAJ KUMAR DUBEY 3 BE E N DISMISSED BY THE HON'BLE SUPREME COURT. THE LEARNED COUNSEL FOR THE ASSESSEE FUR THER SUBMITTED THAT AFTER CONSIDERING ALL THE DECISIONS IN THIS REGARD, THE BANGALORE BENCH OF ITAT IN DCIT V/S ANANDA MARAKALA, (2014) 150 ITD 323 (BANG.), HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE O THER HAND, SUBMITTED THAT IT IS NOT CORRECT TO HOLD THAT PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS ONLY ATTRACTED WHEN THE EXPENDITURES ARE PAYABLE. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE, HAS DULY HELD SO, HENCE, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. UPON CAREFUL CONSIDERATION, WE NOTE THAT IT IS UNDISPUTED THAT NONE OF THE TRANSPORTATION EXPENSES WERE PAYABLE AT THE END OF THE YEAR. ALL THE EXPENDITURES WERE DULY PAID DURING THE YEAR. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD. (SUPRA) HAD HELD AS UNDER: SECTION 40(A)(IA) WAS INTRODUCED IN THE ACT BY THE FINANCE ACT, 2004 WITH EFFECT FROM 1.4.2005 WITH A VIEW TO AUGMENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISALLOW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE SHRI NEERAJ KUMAR DUBEY 4 HEAD 'INCOME FROM BUSINESS AND PROFESSION' IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. IN THE PRESENT CASE TAX WAS DEDUCTED AS TDS FROM THE SALARIES OF THE EMPLOYEES PAID BY M/S MERCATOR LINES LTD., AND THE CIRCUMSTANCES IN WHICH SUCH SALARIES WERE PAID BY M/S, MERCATOR LINES LTD., FOR M/S VECTOR SHIPPING SERVICES, THE ASSESSEE WERE SUFFICIENTLY EXPLAINED . IT IS TO BE NOTED THAT FOR DISALLOWING EXPEN SES FROM BUSINESS AND PROFESSION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR . ACCORDING TO THE ABOVE HIGH COURT DECISION, THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE A CT CAN BE MADE ONLY WHEN THE EXPENSES CLAIMED ARE PAYABLE. NO DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT ON THIS ISSUE HAS BEEN BROUGHT TO OUR NOTICE. ALTHOUGH, IT IS TRUE THAT THERE ARE ANOTHER HIGH COURT DECISIONS WHICH HAVE TAKEN A CONTRARY VIEW. HOWEVER, THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S VEGETABLE PRODUCTS LTD., [1973] 88 ITR 192 (SC) HAS EXPOUNDED THAT WHEN THE TWO VIEWS ARE POSSIBLE, THEN THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED, HENCE, IN THE ABSENCE OF ANY JURIDICT IONAL HIGH COURT DECISION, WE HOLD THAT SINCE THE ENTIRE TRANSPORTATION EXPENSES WERE PAID DURING THE YEAR AND NO EXPENSES WERE PAYABLE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS AND CONSEQUENT SHRI NEERAJ KUMAR DUBEY 5 DISALLOWANCE OF THE EXPENDITURE CLAIMED. ACCORDINGLY, THIS GROUND OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, RE VENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 12 TH JUNE 2015 SD/ - MUKUL K. SHRAWAT JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER RAI PUR , DATED : 12 TH JUNE 2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE ; (2) THE REVENUE; (3) THE CIT(A ) ; (4) THE CIT, BILASPUR CITY CONCERNED ; (5) THE DR, ITAT, RAIPUR (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY SR. PRIVATE SECRETARY / ASSISTANT REGISTRAR ITAT, RAIPUR