Shri Narottam Goyal, Kolkata V. ITO, WD-51(1), KOLKATA, Kolkata

ITA 1210/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4181 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 06-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2016
• Court: TRIBUNAL
• Assessee Lawyers: ANIKESH BANERJEE
• Section: 194C

Judgement Text

I.T.A. NO. 1210/KOL./2016 ASSESSMENT YEAR: 2010-2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. NO. 1210/KOL/ 2016 ASSESSMENT YEAR: 2010-2011 SRI NAROTTAM GOYAL,................................ .........................APPELLANT SANTI BAZAR, SUPER MARKET COMPLEX, BARRACKPORE, KOLKATA-700 120 [PAN: AGPPG 7667 L] -VS.- INCOME TAX OFFICER,................................ ........................RESPONDENT WARD-51(1), KOLKATA, 54/1, RAFI AHMED KIDWAI ROAD, 2 ND FLOOR, KOLKATA-700 016 APPEARANCES BY: SHRI ANIKESH BANERJEE, A.R. & SMT. SASWATI MITRA DU TTA, A.R., FOR THE ASSESSEE SHRI PINAKI MUKHERJEE, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DECEMBER 08, 2016 DATE OF PRONOUNCING THE ORDER : DECEMBER 15, 2016 O R D E R PER SHRI A.T. VARKEY, J.M .: THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLKATA DA TED 17.02.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. AT THE OUTSET ITSELF, THE LD. A.R. TOOK OUR ATTE NTION TO THE GROUNDS OF APPEAL AND SUBMITTED THAT HE IS NOT PRESSING GROUND S NO. 2, 3 & 4. SO GROUNDS NO. 2, 3 & 4 STAND DISMISSED AS NOT PRESSED . 3. COMING TO THE SOLE GROUND OF APPEAL PREFERRED BY THE ASSESSEE IS AGAINST THE ADDITION OF RS.5,15,184/- PAID TO THE T RANSPORTERS AS DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. BRIE F FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME SHOWIN G TOTAL INCOME OF RS.2,17,560/-. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS A RE-SELLER O F MUSTARD SEEDS, I.T.A. NO. 1210/KOL./2016 ASSESSMENT YEAR: 2010-2011 PAGE 2 OF 5 MUSTARD OIL, ETC. UNDER THE TRADE NAME OF HIS PROPR IETORSHIP BUSINESS CONCERN M/S. SHIV SANKAR TRADERS. THE ASSESSING OFF ICER OBSERVED THAT WHILE HE WAS PERUSING THE RECORD, HE FOUND THAT THE ASSESSEE HAS DEBITED IN HIS TRADING AND PROFIT & LOSS ACCOUNT TOWARDS TR ANSPORT CHARGES AMOUNTING TO RS.5,88,259/-. THE ASSESSING OFFICER A SKED THE ASSESSEE TO FURNISH THE DETAILS OF TRANSPORT CHARGES PAID ALONG WITH EVIDENCE FOR MAKING TDS ON IT SINCE ACCORDING TO THE ASSESSING O FFICER, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON SUCH EXPENDIT URE TOWARDS TRANSPORT CHARGES, WHICH ATTRACTS THE PROVISION UNDER SECTION 194C OF THE ACT. THE ASSESSEE FILED ALL THE TRANSPORT DETAILS AND AFTER PERUSING THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T DEDUCTED ANY TDS AND HAS PAID TOWARDS TRANSPORT CHARGES TO DIFFERENT TRANSPORTERS IN CASH. THE ASSESSING OFFICER FOUND THAT THE AMOUNT OF RS.5 ,15,184/- (RS.3,50,617/- + RS.1,64,567/- WAS PAID BY THE ASSE ESSEE AS TRANSPORT CHARGES WITHOUT DEDUCTING THE TDS AND ASKED THE ASS ESSEE WHY THIS AMOUNT SHOULD NOT BE DISALLOWED UNDER SECTION 40(A) (IA). WITHOUT FINDING ANY ANSWER FROM THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT UNDER SECTION 40(A)(IA) OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD. CIT(APPEALS), WHO WAS PLEASED TO DISMISS THE SA ME. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FIRST WE TAK E NOTE THAT THE ASSESSEE IS RUNNING A PROPRIETORSHIP CONCERN KNOWN AS M/S. S HIV SANKAR TRADERS, WHICH IS ENGAGED IN THE BUSINESS OF RE-SELLING OF M USTARD SEEDS, MUSTARD OIL, ETC. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBITED IN HIS PROFIT & LOSS ACCOUNT TRANSPORT CHARGES TO THE TUNE OF RS.5,88,259/-, SO HE ASKED THE ASSESSEE TO GIVE DETAILS OF THE TRANSPORT CHARGES PAID BY TH E ASSESSEE AND TO SHOW TO HIM THE TDS DEDUCTED FOR SUCH PAYMENT, WHICH CRO SSED THE THRESHOLD LIMIT AS SPECIFIED UNDER SECTION 194C, FOR WHICH TH E ASSESSEE GAVE ALL THE DETAILS. AFTER PERUSING THE DETAILS, THE ASSESSING OFFICER FOUND THAT THE I.T.A. NO. 1210/KOL./2016 ASSESSMENT YEAR: 2010-2011 PAGE 3 OF 5 AMOUNT OF RS.5,15,184/- HAS BEEN PAID WITHOUT DEDUC TING TDS SO HE DISALLOWED THE AMOUNT UNDER SECTION 40(A)(IA) AND A DDED IT TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(APPE ALS) HAS SIMPLY STATED THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURC E ON THE PAYMENT OF TRANSPORT CHARGES UNDER SECTION 194C AND, THEREFORE , THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVISION OF SECTIO N 40(A)(IA) AND HE CONFIRMED THE DISALLOWANCE. BEFORE US, THE LD A.R. TOOK OUR ATTENTION TO A SIMILAR DISALLOWANCE MADE BY THE DEPARTMENT, WHICH WAS DELETED BY THE TRIBUNAL IN ITA NO. 617/KOL/2014 FOR A.Y. 2007-08 I N THE CASE OF M/S. DHIRENDRA NATH MONDAL PVT. LIMITED VS.- ITO DECIDE D ON 23.02.2015, WHEREIN ALSO THE ISSUE WAS RELATING TO THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TDS IN RESPECT O F PAYMENT MADE TO THE TRANSPORTERS. IN THAT CASE, THE ASSESSEE WAS A DEAL ER OF IRON-SHEETS AND THE ASSESSEE HAD MADE PURCHASES FROM CHATTRISHGARH AND PAYMENTS HAD BEEN MADE TO M/S. DEEPAK TRANSPORT AGENCY AT BHANPU RI, RAIPUR, CHATTRISHGARH TOWARDS TRANSPORTATION OF THE GOODS. THE ASSESSING OFFICER DISALLOWED THE TRANSPORTING CHARGES ON THE GROUND T HAT TDS WAS NOT DEDUCTED INVOKING THE PROVISIONS OF SECTION 40(A)(I A) OF THE ACT, WHICH WAS LATER CONFIRMED BY THE LD. CIT(APPEALS). THE TR IBUNAL NEGATED THE ACTION OF THE REVENUE AND HELD IN ITS ORDER AS UNDE R:- 5. I HAVE CONSIDERED THE SUBMISSIONS AS ALSO THE ASSESSMENT ORDER AND THE ORDER OF THE LD. CIT(APPEA LS). A PERUSAL OF THE ORDER OF LD. CIT(APPEALS) MORE SPECI FICALLY THE GROUNDS RAISED BEFORE THE LD. CIT(APPEALS) SHOWS TH AT THE ASSESSEE HAS SPECIFICALLY MENTIONED THAT THE TRANSP ORTER IS NOT A CONTRACTOR APPOINTED BY THE ASSESSEE BUT A CO NTRACTOR APPOINTED BY THE SUPPLIER COMPANY FOR CARRYING GOOD S AT THE OWNERS (SUPPLIERS) RISK AND INSURANCE TERMS TO THE DESTINATION AT KOLKATA. THE SUPPLIER IS A CONSIGNOR WHO IS SENDING HIS GOODS THROUGH HIS LORRY CONTRACTOR TO T HE ASSESSEE-COMPANY, THE CONSIGNEE. THE ASSESSEE-COMPA NY IS NO WAY CONNECTED TO THIS WHOLE OPERATION AND THE AS SESSEE CAME TO THE PICTURE WHEN THE GOODS WERE DELIVERED T O HIM AND THEREAFTER HE BECAME THE OWNER OF THE GOODS. ON CE THIS SUBMISSION OF THE ASSESSEE IS CONSIDERED, THEN IT B ECOMES QUITE EVIDENT THAT THE PAYMENT OF THE TRANSPORT COS T BECOMES PART OF THE COST OF PURCHASES OF THE ASSESS EE. THIS IS IN VIEW OF THE DECISION OF THE HONBLE SUPREME C OURT IN I.T.A. NO. 1210/KOL./2016 ASSESSMENT YEAR: 2010-2011 PAGE 4 OF 5 THE CASE OF INDIA METERS LIMITED VS.- STATE OF TAM ILNADU IN CIVIL APPEAL NO. 1032-33 OF 2003 DATED 07.09.2010 W HEREIN THE HONBLE SUPREME COURT HAS HELD THAT IF THE OWN ERSHIP IN THE GOODS GETS TRANSFERRED AT THE PREMISES OF TH E BUYER AND THE SUPPLIER HAS THE OBLIGATION OF TRANSPORTING THE GOODS TO THE PREMISES OF THE BUYER, THEN NOTWITHSTA NDING THE FACT THAT THE FREIGHT CHARGES WERE RECOVERED SE PARATELY FROM THE BUYER, THE TRANSPORTATION CHARGES SHALL FO RM PART OF TURNOVER OF THE SUPPLIER, I.E. COST OF PURCHASES FOR THE BUYER. ONCE THIS IS SO, THEN ADMITTEDLY THE PROVIS IONS OF TDS IN RESPECT OF THE SAME WOULD NOT APPLY. IN THES E CIRCUMSTANCES, RESPECTFULLY APPLYING THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF IN DIA METERS LIMITED, THE DISALLOWANCE AS MADE BY THE ASS ESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT STAN DS DELETED. WE FIND THAT THE ISSUE BEFORE US IS IDENTICAL TO TH E FACTS OF THAT CASE AND RELYING ON THE AFORESAID PRECEDENT OF THE COORDINAT E BENCH ORDER WHICH IS IN VIEW OF THE RATIO OF THE HONBLE SUPREME COURT I N THE CASE OF INDIA METERS LIMITED VS.- STATE OF TAMILNADU IN CIVIL AP PEAL NO. 1032-33 OF 2003 DATED 07.09.2010, WE ARE OF THE OPINION THAT T HE PROVISIONS OF TDS WOULD NOT APPLY IN THE SIMILAR TRANSACTION AND, THE REFORE, THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE AC T COULD NOT HAVE BEEN INVOKED BY THE ASSESSING OFFICER AND, THEREFORE, WE DIRECT TO DELETE THE ADDITION MADE BY THE AUTHORITIES BELOW. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 15, 2016. SD/- SD/- (WASEEM AHMED) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMB ER KOLKATA, THE 15 TH DAY OF DECEMBER, 2016 COPIES TO : (1) SRI NAROTTAM GOYAL, SANTI BAZAR, SUPER MARKET COMPLEX, BARRACKPORE, KOLKATA-700 120 (2) INCOME TAX OFFICER, WARD-51(1), KOLKATA, 54/1, RAFI AHMED KIDWAI ROAD, 2 ND FLOOR, KOLKATA-700 016 I.T.A. NO. 1210/KOL./2016 ASSESSMENT YEAR: 2010-2011 PAGE 5 OF 5 (3) COMMISSIONER OF INCOME TAX(APPEALS)-15, KOLKATA , (4) COMMISSIONER OF INCOME TAX- ,KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.