Bachittar Singh, Chandigarh V. DCIT, Chandigarh

ITA 118/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60843 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 118/CHD/2012 ASSESSMENT YEAR: 2007-08 SHRI BACHITTAR SINGH, V DCIT, CIRCLE 1(1), SCO 20, SECTOR 7A, CHANDIGARH. CHANDIGARH. PAN: AKBPS-7765H (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT : SMT.JAISHREE SHARMA DATE OF HEARING : 07.05.2012 DATE OF PRONOUNCEMENT : 17.05.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 18.11.2011 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THE LD. AO ERRED IN MAKING AN ADDITION OF RS. 64,00 0/- BY TREATING THE EXPENDITURE OF PAYMENT MADE TO SMT. SA ROJ KAUL FOR NOT DEDUCTING THE TDS UNDER SECTOR 194 C OF THE INCOME TAX ACT, 1961 WHEREAS THE PAYMENT IS NOT COVERED UNDER C ONTRACTUAL PAYMENTS. 2. THE LD. AO ERRED IN DISALLOWING THE BUILDING MATERIALS OF RS. 52,498/- PURCHASED FROM AMAR PROMOTERS PRIVATE LIMIT ED EVEN WHEN IT WAS CONFIRMED FOR THE DELIVERY OF MATERIALS AND THE CONFIRMATION FOR THE RECEIPT OF DUES BY THE SUPPLIER. 2 3. THE LD AO ERRED IN DISALLOWING RS. 18,750/- BEING THE MATERIALS PURCHASED WHEN THE BILLS HAVE BEEN PRODUCED BEFORE THE OFFICER. 4. NONE ATTENDED ON BEHALF OF THE ASSESSEE, CONSEQUENT LY, THE APPEAL IS ADJUDICATED ON MERIT, HAVING REGARD T O THE AVAILABLE RECORDS. 5. IN THE FIRST GROUND OF APPEAL, ASSESSEE CONTENDED T HAT CIT(A) ERRED IN MAKING AN ADDITION OF RS. 64,000/- BY TREATING THE EXPENDITURE OF PAYMENT MADE TO SMT. SA ROJ KAUL FOR NOT DEDUCTING THE TDS UNDER SECTOR 194 C OF THE INCOME TAX ACT, 1961 WHEREAS THE PAYMENT IS NOT COV ERED UNDER CONTRACTUAL PAYMENTS. 6. LD. CIT(A), UPHELD THE FINDINGS OF THE AO. THE BRI EF FACTS OF THE CASE ARE THAT THE ASSESSEE MADE PAYMEN T OF RS.64,000/- TO SMT.SAROJ KAUL AND RS.40,000/- TO SH RI SANJAY THAKUR, THROUGH HIS SISTER CONCERN M/S PRAYA S CONSTRUCTION CONSULTANTS PVT. LTD. THE AMOUNT TO SMT.SAROJ KAUL WAS PAID FOR RENDERING DESIGNING SER VICES AND DESIGNING NON-RESIDENTIAL BUILDING, WHEREAS PAY MENT TO SHRI SANJAY THAKUR WAS FOR PREPARATION OF 3D VIE W OF THE CONFERENCE ROOM AT C.M. OFFICE. THE AO DISALLO WED THE ENTIRE AMOUNT PAID TO THESE TWO PERSONS AMOUNTI NG TORS.1,04,000/- U/S 40(A)(IA) OF THE ACT. AS, THE S AID ASSESSEE HAD MADE PAYMENT, THE APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, IS COVE RED BY THE DECISION OF THE SPECIAL BENCH OF VISHAKHAPATNAM TRI BUNAL, IN THE CASE OF ACIT V MERILYN SHIPPING & TRANSPORTS ITA NO. 477/VIG./2008 (SB) DATED 14.3.2012. THE RELEVAN T PART 3 OF THE DECISION DATED 14.3.2012 IS REPRODUCED HEREU NDER: 12. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS O F HON'BLE SUPREME COURT AND HON'BLE HIGH COURTS, MATERIALS PL ACED BEFORE US, ARGUMENTS MADE BY BOTH THE SIDES AND IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ON COMPARISON BETW EEN THE PROPOSED AND ENACTED PROVISION, THE ONLY CONCLUSION WHICH I CAN REACH IS THAT THE LEGISLATURE CONSCIOUSLY REPLA CED THE WORDS 'AMOUNTS CREDITED OR PAID' WITH THE WORD 'PAYABLE' IN THE FINAL ENACTMENT. BY CHANGING THE WORDS FROM 'CREDITED' OR 'PAID' TO 'PAYABLE', THE LEGISLATIVE INTENT HAS BEEN MADE CLE AR THAT ONLY OUTSTANDING AMOUNTS OR THE PROVISIONS FOR EXPENSES LIABLE FOR TDS UNDER CHAPTER XVII-B OF THE ACT IS SOUGHT TO BE DIS ALLOWED IN THE EVENT THERE IS A DEFAULT IN FOLLOWING THE OBLIGATIO NS CASTED UPON THE ASSESSEE UNDER CHAPTER XVII-B OF THE ACT. I AGREE W ITH THE ARGUMENTS MADE BY ID. COUNSEL FOR THE ASSESSEE AND OTHER COUNSELS FOR THE INTERVENES THAT WHILE INTERPRETING THE WORD 'PAYABLE' IN THIS PROVISION, THE WORD OF A STATUTE MUST BE UNDERSTOOD IN ITS NATURAL, ORDINARY OR POPULAR SENSE AND CONSTRUED ACCORDING T O ITS GRAMMATICAL MEANING. ACCORDING TO ME, SUCH CONSTRUC TION WOULD NOT LEAD TO ABSURDITY BECAUSE THERE IS NOTHING IN T HIS CONTEXT OR IN THE OBJECT OF THIS STATUTE TO SUGGEST TO THE CONTRA RY. IT IS A CARDINAL PRINCIPLE OF INTERPRETATION THAT THE WORDS OF A STA TUTE MUST BE PRIMA FACIE GIVEN THEIR ORDINARY MEANING, WHEN THE WORDS OF THE STATUTE ARE CLEAR, PLAIN AND UNAMBIGUOUS THEN THE COURTS ARE BO UND TO GIVE EFFECT TO THAT MEANING. THE LITERAL RULE OF INTERPRETATION REALLY MEANS THAT THERE SHOULD BE NO INTERPRETATION OF THE STATUTE, R ATHER IN OTHER WORDS, WE SHOULD READ THE STATUTE AS IT IS WITHOUT DOING ANY VIOLENCE TO THE LANGUAGE. IN THE PRESENT DISPUTE BEFORE US, THE WORD 'PAYABLE' USED IN SECTION 40(A)(IA) OF THE ACT IS T O BE ASSIGNED STRICT INTERPRETATION, IN VIEW OF THE OBJECT OF LEG ISLATION, WHICH IS INTENDED FROM THE REPLACEMENT OF THE WORDS IN THE P ROPOSED AND ENACTED PROVISION FROM THE WORDS 'AMOUNT CREDITED O R PAID' TO 'PAYABLE'. HENCE, IN MY VIEW, MY ANSWER TO THE QUES TION REFERRED BY HON'BLE PRESIDENT TO THE SPECIAL BENCH IS AS UNDER: THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON THE DATE 31 ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DIS ALLOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR, WITHOU T DEDUCTION OF TDS. 7. IN GROUND NO.2, ASSESSEE CONTENDED THAT CIT(A) ERRE D IN DISALLOWING THE BUILDING MATERIALS OF RS. 52,498/- PURCHASED FROM AMAR PROMOTERS PRIVATE LIMITED EVEN WHEN IT WAS CONFIRMED FOR THE DELIVERY OF MATERIALS AND THE CONFIRMATION FOR THE RECEIPT OF DUES BY THE SUP PLIER. LD. CIT(A) UPHELD THE FINDING OF THE AO. HOWEVER, PERUSAL 4 OF THE SUBMISSIONS MADE BY THE ASSESSEE, BEFORE THE CIT(A) MAKES THE FACTS CLEAR. THE RELEVANT SUBMISSION IS REPRODUCED HEREUNDER : 8. DURING THE YEAR THE ASSESSEE PURCHASED THE MAT ERIAL OF RS. 52,498/ -FROM AMAR PROMOTERS PRIVATE LIMITED FO R THE PURCHASE OF THE GALVENISED STEEL CHAIN TO BE USED AT THE SITE OF THE CLIENT COLGATE. THE SUPPLIER OF THE MATERIAL S INFORMED THE ASSESSEE THAT THE SAME MATERIALS IS LYING AT DO ON VALLY PUBLIC SCHOOL WHICH HAVE BEEN SUPPLIED BY THEM AND AT PRESENT THE SAID MATERIAL IS NOT REQUIRED BY DOON V ALLY SCHOOL. THE ASSESSEE APPROACHED DOON VALLY SCHOOL AND REDIR ECTED THE MATERIALS FROM THEM FOR RS. 52,498/- WHO HAD HA NDED OVER THE ORIGINAL BILL ISSUED BY AMAR PROMOTERS PVT. LTD . TO THE ASSESSEE AND PAID OFF THE DUE AMOUNT OF RS. 52,498/ - TO AMAR PROMOTERS PRIVATE LIMITED DIRECTLY. IT IS BEYOND AN Y DOUBT THAT THE MATERIAL HAVE BEEN PURCHASED AND UTILIZED AT OU R COLGATE SITE AS EVIDENT FROM THE RECEIPT STAMP OF COLGATE O N THE BACK OF THE BILL THESE FACTS WERE PRODUCED BEFORE THE LD . A.O. DURING THE ASSESSMENT PROCEEDINGS BUT THE LD. A.O. ONLY STRESSES ON THE FACT THAT THE BILL WAS NOT IN THE N AME OF THE ASSESSEE. TO FURTHER SUBSTANTIATE THIS FACT WE SUBMIT AS UNDE R: BILL NO. 25 DATED 21.09.2006 FOR RS. 52,498/- FROM AMAR PROMOTERS PRIVATE LTD. IN WHICH ON THE REVERSE OF T HE BILL STAMP OF COLGATE COMPANY IS AFFIXED WHICH SHOWS THA T MATERIALS WERE DELIVERED AT THE SITE OF COLGATE, TH E WORK SITE ON THAT TIME UNDERTAKEN BY ASSESSEE AS PER ANNEXURE -3 CERTIFICATE FROM COLGATE WHICH CERTIFY THAT THE MAT ERIALS WERE LIFTED FROM THE DOON VALLY PUBLIC SCHOOL WHICH WAS SUPPLIED TO THEM BY THE AMAR PROMOTERS PRIVATE LIMITED AS PE R ANNEXURE-4 8. IN VIEW OF THE SUBMISSIONS AND DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE, BEFORE THE CIT(A), THE IMPUG NED ADDITION IS DELETED. ASSESSEE SUCCEEDS IN THIS GRO UND OF APPEAL. 9. IN GROUND NO.3, ASSESSEE CONTENDED THAT CIT(A), ERRED IN DISALLOWING RS. 18,750/-, BEING THE MATERIALS PURCH ASED WHEN THE BILLS HAVE BEEN PRODUCED BEFORE THE OFFICE R. THE AO NOTICED THAT THERE IS NO BILL AGAINST THE INTERN AL VOUCHERS OF RS.18,750/-. CONSEQUENTLY, AO WAS NOT 5 SATISFIED WITH THE SUBMISSION OF THE APPELLANT AND MADE ADDITION. 10. IN THE COURSE OF APPELLATE PROCEEDINGS BEF ORE CIT(A), IT WAS SUBMITTED THAT THE AMOUNT PERTAIN TO PURCHASE OF BRICKS. ACCORDING TO THE COUNSEL, PART Y WAS ISSUED SMALL SLIPS AND THE APPELLANT WAS MAKING PAY MENT TO THE PARTY BASED ON SUCH SMALL SLIPS. HOWEVER, CONTENTION OF THE ASSESSEE FAILED BEFORE CIT(A). H AVING REGARD TO THE FACTS OF THE CASE AS ALSO THE MEAGERN ESS OF THE AMOUNT INVOLVED IN THIS GROUND OF APPEAL AND TH E SLIPS PRODUCED BY THE ASSESSEE APPELLANT, WE DEEM IT FAIR TO ADJUDICATE THIS GROUND IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH MAY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH