The Income-tax Officer, Hoshiarpur V. M/s. Indian Roadlines, Hoshiarpur

ITA 123/ASR/2013

• Counselvise Citation: 12320914 RSA 2013
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Section: 143(3); 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.123(ASR)/2013 ASSESSMENT YEAR:2005-06 PAN :AAAFI2720D INCOME TAX OFFICER, VS. M/S. INDIAN ROADLINES, HOSHIARPUR-2, AFGHAN ROAD, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY:SH.SURINDER MAHAJAN, CA DATE OF HEARING: 11/12/2013 DATE OF PRONOUNCEMENT:19/12/2013 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JALANDHAR, DATED 20.12.2012 FOR THE ASSESSMENT YEAR 2005-06. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ENTIRE DI SALLOWANCE AMOUNTING TO RS.54,85,657/- MADE U/S 40(A)(IA) FO R NON- COMPLIANCE OF PROVISIONS OF SECTION 194C BY THE A O. ITA NO.123(ASR)/2013 2 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF THE A.O. RESTORED. 3. THAT THE APPELLANT CRAVES REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HE ARD AND DISPOSED OFF. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-FIRM IS A TRANSPORTER. THE ASSESSEE EXECUTED THE CONTRACTS FOR CARRIAGE OF GOODS OF TWO COMPANIES. THE ASSESSEE EXECUTED CONTRACTS THROUGH OWN TRUCKS AS WELL AS THE HIRED TRUCKS. THE ASSESSEE IS EXCLUSIVELY RESPONSIBLE FOR THE EXECUTION OF THE CONTRACT OF CARRIAGE OF GOODS TO THE DESTINATIONS. AS THE ASSESSEE IS NOT HAVING SUFFICIENT NUMBER OF TRUCKS, THEREFORE, THE ASSESSEE HIRED TRUCKS OWNED BY OTHERS AND THE AO OBSERVED THAT THIS IS A SUB-CONTRACT. IT IS RELEVANT TO MENTION THAT THE ASSESSEE IS OWNING SIX TRUCKS MENTIONED AT PAGE 1 OF AOS ORDER AND AS PER FORM NO.16A ISSUED BY CO MPANIES FOR WHICH THE ASSESSEE EXECUTED THE CONTRACTS ARE M/S. JCT LTD. C HOHAL AND M/S. HAWKINS COOKERS LTD; HOSHNIARPUR. THE TOTAL FREIGHT RECEIVE D DURING THE IMPUGNED YEAR IS RS.14,679,698/- ON WHICH TAX AT SOURCE HAS BEEN DEDUCTED BY THE COMPANY AND FREIGHT HAS BEEN PAID TO THE ASSESSEE F IRM AS PER DETAILS AT PAGE 2 OF AOS ORDER. THEREAFTER, THE AO MADE QUERI ES FROM TIME TO TIME WHICH WERE REPLIED BY THE ASSESSEE AND ACCORDINGLY AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO OBSERVED THAT THE ASS ESSEE WAS TO DEDUCT THE INCOME TAX AT SOURCE @ 1% FROM THE TRANSPORT CARR IERS TO WHOM PAYMENTS ITA NO.123(ASR)/2013 3 WERE MADE EXCEEDING RS.50,000/-, WHICH HAVE BEEN WO RKED OUT AT RS.54,85,657/- I.E. THE ASSESSEE HAS NOT DEDUCTED T DS ON THE PAYMENTS AMOUNTING OF RS.54,85,657/- AND ACCORDINGLY WERE DI SALLOWED U/S 40(A)(IA) OF THE ACT. IT IS RELEVANT TO REPRODUCE AOS ORDER AT PAGES 3 TO 16 FOR THE SAKE OF CONVENIENCE AS UNDER: AS PER CERTIFICATE GROSS CONTRACT RECEIPTS/COMMI SSION RECEIVED COMES TO RS.1,46,79,698/- WHEREAS COMMISSI ON DECLARED IS RS.4,15,484/-. EXPLAIN WHETHER YOU PAID COMMISSION TO OTHERS FOR HIRING OF TRUCKS OR GIVE ANY SUB-CONTRACT? IF SO, D ETAILS BE FURNISHED TO WHOM SUCH PAYMENTS MADE AND TDS DEDUCTED. IF NO TD S WAS DEDUCTED EXPLAIN WHY SEC. 40(1)(A) BE NOT APPLIED. THE ASSESSEE VIDE ITS REPLY DT.03/10/2007 STATED AS UNDER: WE DO NOT ENGAGE SUB-CONTRACTORS TO CARRY THE TRAN SPORTATION WORK. WE ARE ARRANGING DIFFERENT TRUCKS FOR CARRYING THE GOODS OF DIFFERENT COMPANIES IN CONSIDERATION OF THIS WE CHARGE COMMIS SION RANGING RS.200/- TO RS.300/- FROM THE OWNER OF TRUCK. WE AS SURE THE COMPANY THAT THE TRUCK OWNER WILL SAFELY DELIVER THE GOODS AT PLACES AS STATED BY THE COMPANY. THESE TRUCK OWNERS ARE PAID FREIGHT CHARGES AS DETERMINED TO COMPANY THROUGH US. OUR FIRM ALSO PROVIDE OUR OWN TRUCKS FOR TRANSPORTA TION OF GOODS. DURING THE YEAR HUNDREDS OF TRUCKS WERE ENGAGED ON BEHALF THE COMPANY TO CARRY THE GOODS. NONE OF TRUCKS RECEIVED PAYMENT EXCEEDING RS.50,000/- DURING THE YEAR. OUR BUSINESS IS TO ARRANGE TRUCKS FOR TRANSPORTATIO N OF GOODS OF M/S. JCT LTD, M/S. HAWKINS LTD. ETC. IN LIEU OF HIS SERV ICE WE GET COMMISSION OF RS.300/- TO RS.400/- PER TRUCK. THE F REIGHT IS PAID TO US BY COMPANY AND SAME AMOUNT IS PAID TO TRUCK OWNERS. SECONDLY, WE EMPLOY OUR OWN TRUCKS (SIX) TO PROVIDE TRANSPORT FA CILITIES. INCOME FROM TRANSPORTATION BUSINESS IS RS.3,56,706/- AVERA GE RECEIPT PER TRUCK IS RS.57,451/- ITA NO.123(ASR)/2013 4 INFORMATION WAS CALLED FOR FROM THE AFORESAID COMPA NIES AND THEY WERE REQUIRED TO INTIMATE THE AMOUNT OF PAYMENTS MA DE VEHICLE/TRUCKS WISE DURING THE YEAR UNDER CONSIDERATION. AS PER IN FORMATION RECEIVED IN RESPECT OF THE FOLLOWING VEHICLES/TRUCKS PAYMENT S EXCEEDING RS.50,000/- IN AGGREGATE DURING THE YEAR UNDER CONS IDERATION WERE MADE AND THESE TRUCKS ARE THOSE WHICH WERE HIRED BY THE ASSESSEE:- FREIGHT PAID TRUCK-WISE TO M/S. INDIAN ROADLINES D URING THE PERIOD 1.4.2004 TO 31.03.2005 BY M/S. JCT MILLS CH OHAL, DISTT. HOSHIARPUR, EXCEEDING RS.50,000/- IN AGGREGATE DURI NG THE F.Y. 2004- 05 (EXCLUDING TRUCKS OWNED BY THE ASSESSEE): AMOUNT GROSS TRUCK NUMBER 139419 CGO72C-0151 72767 CGO72C-1342 51211 CGO72C-0151 59770 GJ17X-3145 131371 GJ6U-4385 59866 GJIVV-9449 73781 HR-46-8523 90183 MH31AP-1241 51117 PAT-5469 61249 PB-07B-8997 215120 PB-07C-5445 136325 PB-07C-9845 109283 PB-07D-5495 123298 PB-07E-1615 201236 PB-07E-5445 220562 PB-07F-4196 172282 PB-07H-3455 112268 PB-07H-9445 63117 PB-07J-8796 114476 PB-07H-L-5987 63021 PB-07M-7209 136220 PB-07M-7645 206435 PB-07M-9445 110765 PB-07N-2445 182224 PB-07N-2645 ITA NO.123(ASR)/2013 5 146868 PB-07N-2745 135427 PB-07N-3645 151278 PB-08AA-1505 59863 PB-08K-6271 59865 PB-08L-9824 245761 PB-08J-3283 123733 PB-08J-3283 136881 PB-10W-9661 71598 PB-32A-5844 141373 PUH-7997 193166 RJ316-4420 TOTAL :4423189 JCT STEEL DIVISION FREIGHT PAID TRUCK WISE EXCEEDIN G RS.50,000/- VEHICLE NO. AMOUNT (GROSS) HP24-3549 9124 HP24-3549 9534 HP24-3549 5826 HP24-3549 4685 HP24-3549 4480 HP24-3549 7342 HP24-3549 4485 HP24-3549 5360 HP24-3549 5206 HP24-3549 2005 HP24-3549 4180 HP24-3549 5305 HP24-3549 6703 HP24-3549 5292 HP24-3549 5490 HP24-3549 6029 HP24-3549 6944 HP24-3549 4537 HP24-3549 5465 HP24-3549 6275 HP24-3549 6087 ITA NO.123(ASR)/2013 6 HP24-3549 5762 HP24-3549 6888 HP24-3549 5080 HP24-3549 8164 HP24-3549 9786 HP24-3549 6718 HP24-3549 HP24-3549 6206 4780 HP24-3549 6471 HP24-3549 6908 HP24-3549 HP24-3549 5650 6611 TOTAL 198,395 HR36C7787 12950 HR36C7787 9055 HR36C7787 9549 HR36C7787 12893 HR36C7787 8581 HR36C7787 7408 HR36C7787 18612 TOTAL 79048 HR38E4823 6129 HR38E4823 4644 HR38E4823 4385 HR38E4823 4385 HR38E4823 6458 HR38E4823 6687 HR38E4823 6284 HR38E4823 5193 HR38E4823 5819 HR38E4823 4380 HR38E4823 4652 HR38E4823 5951 HR38E4823 4528 HR38E4823 4380 HR38E4823 7717 HR38E4823 6873 HR38E4823 5046 ITA NO.123(ASR)/2013 7 HR38E4823 6747 HR38E4823 7837 HR38E4823 7285 HR38E4823 7446 HR38E4823 7832 HR38E4823 6547 HR38E4823 7725 HR38E4823 7963 HR38E4823 7761 HR38E4823 5709 HR38E4823 9789 HR38E4823 8108 HR38E4823 11265 HR38E4823 7291 HR38E4823 7214 HR38E4823 10082 HR38E4823 7081 HR38E4823 6958 HR38E4823 7846 HR38E4823 6201 HR38E4823 6417 HR38E4823 7483 HR38E4823 6768 HR38E4823 7043 HR38E4823 6581 HR38E4823 7046 HR38E4823 8204 HR38E4823 9273 HR38E4823 10358 HR38E4823 7471 HR38E4823 7540 HR38E4823 5961 HR38E4823 8105 HR38E4823 6313 HR38E4823 6355 TOTAL 359,116 PB07C7329 1655 PB07C7329 2654 PB07C7329 5105 ITA NO.123(ASR)/2013 8 PB07C7329 6594 PB07C7329 7172 PB07C7329 5680 PB07C7329 8585 PB07C7329 7679 PB07C7329 2019 PB07C7329 8368 PB07C7329 5310 PB07C7329 1655 PB07C7329 7544 PB07C7329 7904 PB07C7329 1755 PB07C7329 2732 PB07C7329 8551 PB07C7329 6262 PB07C7329 6570 PB07C7329 6355 TOTAL 130,130 PB07E0951 5505 PB07E0951 4805 PB07E0951 5005 PB07E0951 4805 PB07E0951 4805 PB07E0951 5205 PB07E0951 5505 PB07E0951 6005 PB07E0951 5705 PB07E0951 6105 PB07E0951 5705 PB07E0951 6805 TOTAL 71,695 PB08G1797 5565 PB08G1797 4380 PB08G1797 4380 PB08G1797 2298 PB08G1797 2159 PB08G1797 2056 PB08G1797 2056 PB08G1797 4380 ITA NO.123(ASR)/2013 9 PB08G1797 5568 PB08G1797 5908 PB08G1797 4380 PB08G1797 5607 PB08G1797 4680 PB08G1797 4380 PB08G1797 4380 PB08G1797 4380 PB08G1797 4380 PB08G1790 4380 PB08G1797 6817 PB08G1797 4685 PB08G1797 6088 PB08G1797 5540 PB08G1797 5764 PB08G1797 7402 PB08G1797 5485 PB08G1797 5080 PB08G1797 5618 PB08G1797 7740 PB08G1797 7750 PB08G1797 4380 PB08G1797 4585 PB08G1797 9290 PB08G1797 6436 PB08G1797 5722 PB08G1797 5850 PB08G1797 5602 PB08G1797 2688 PB08G1797 2560 PB08G1797 3599 PB08G1797 3242 PB08G1797 9068 PB08G1797 6357 PB08G1797 6519 PB08G1797 6685 TOTAL 223,814 GRAND TOTAL 1,062,468 ITA NO.123(ASR)/2013 10 THE ABOVE INFORMATION WAS CONFRONTED TO THE ASSESS EE VIDE LETTERS DT.10/10/2007 AND 16/10/2007. IN REPLY DT.0 2/11/2007 THE ASSESSEE SUBMITTED AS UNDER: THAT THE ASSESSEE HAS UNDERTAKEN THE WORK TO SUPPL Y TRUCKS FOR CARRIAGE OF GOODS FROM JCT LTD. TO DIFFERENT PLACES IN INDIA. ASSESSEE ARRANGES THE TRUCKS FOR TRANSPORTATION OF GOODS, IN LIEU OF THIS SERVICE COMMISSION IS RECEIVED FROM THE TRU CK OWNER. THE SAME IS CREDITED TO THE BOOKS OF ACCOUNT UNDER HEAD COMM ISSION INCOME. THAT ENTIRE FREIGHT CHARGES RECEIVED FROM JCT CO. LTD. IS PAID TO THE TRUCK OWNERS WHO CARRY THE GOODS FROM JCT. R ECEIPT IS CREDITED IN FREIGHT A/C ON CREDIT SIDE, WHEN THE GOODS REACH AT THE DESTINATION. THE FREIGHT CHARGES RECEIVED FROM JCT ARE PASSED T O THE TRUCK OWNERS. THE ASSESSEE IS CONCERNED ONLY ABOUT COMMIS SION WHICH HE RECEIVES FROM TRUCK OWNERS. THAT THE FREIGHT CHARGES HAVE NEVER BEEN CLAIMED A S EXPENSES IN THE PROFIT AND LOSS A/C. IT IS APPARENT FROM BAL ANCE SHEET. SECTION 40(A)(IA) IS NOT APPLICABLE ON THE FACTS OF THE CAS E. AS PER ACCEPTED HISTORY AND PROCEDURE OF CONSISTENCY THERE WAS NO L IABILITY TO DEDUCT TAX AT SOURCE BY THE ASSESSEE. THE ASSESSEE SIMPLY ARRANGES THE TRUCK FROM TRANSP ORTATION OF GOODS AND UNDERTAKES ITS SAFE DELIVERY. WHATEVER FR EIGHT IS RECEIVED, THE SAME IS PAID TO THE TRUCK OWNERS. ASSESSEE GETS COMMISSION FROM THE TRUCK OWNER ONLY. THAT THE FREIGHT IS NOT CLAIMED IN THE P & L ACCOU NT. DISALLOWANCE OF EXPENSES CAN BE MADE IF EXPENSES AR E CLAIMED AS DEDUCTION IN PROFIT AND LOSS ACCOUNT. THE PAYMENTS TO DIFFERENT TRUCK OWNERS WERE MADE WHO WERE HAVING NOT MORE THAN TWO TRUCKS. SECTION 194C(3) PROVISO 2 STATE THAT NO DEDUCTION OF TAX IS TO BE MADE WHEN THE OWNER DO NOT OWN MORE THAN TWO TRUCKS. THERE WAS NO PRESCRIBED FORM IN FORCE FOR THE RELE VANT ASSESSMENT YEAR. THESE FORMS 15-I & 15-J WERE INTRO DUCED W.E.F. 17.06.2005 ITA NO.123(ASR)/2013 11 IN VIEW OF THE SAID FACTS AND POSITION OF LAW THE PROVISION OF SECTION 40(A)(IA) ARE NOT APPLICABLE. HERE IT IS ESSENTIAL TO KNOW AS TO HOW CONTRACT REC EIPTS ARE TREATED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. THE CONTRACT RECEIPTS RECEIVED FROM THE ABOVE SAID COMPANIES ARE CREDITED TO THE F REIGHT ACCOUNT OPENED IN THE LEDGER. THE FREIGHT PAID TO THE OTHER TRUCK/VEHICLE OWNERS AND THE COMMISSION RECEIVED FROM THEM ARE DE BITED TO FREIGHT ACCOUNT ON CONSOLIDATED DAY TO DAY FIGURES. THE FIN AL PICTURE EMERGES AS UNDER: FREIGHT ACCOUNT TOTAL FREIGHT RECEIPT RS.1,54,34,513 LESS: OPENING BALANCE RS. 7.54.815 RS.1,46,79,698 TOTAL FREIGHT PAID RS.1,48,95,251 LESS:COMMISSION EARNED RS. 4,15,684 RS.1,44,79,567 THE BALANCE IS ON ACCOUNT OF DIFFERENCE BETWEEN THE FREIGHT RECEIVABLE AT THE CLOSE OF THE YEAR AND OPENING BALANCE THE RECEIPT AND PAYMENT IS DULY ENTERED IN THE BOOK S OF ACCOUNT THOUGH UNDER DIFFERENT HEADS. IT WAS THE DUTY OF TH E ASSESSEE TO HAVE BROUGHT THESE FIGURES IN THE ACCOUNT STATEMENTS FIL ED ALONG WITH THE RETURN OF INCOME. BY GIVING CONTRACT RECEIPTS DIFF ERENT NAMES THE ASSESSEE MISAPPROPRIATED THE CONTRACT RECEIPT/PAYME NT UNDER DIFFERENT HEADS LIKE FREIGHT AND COMMISSION. BY DOING THIS, T HE ASSESSEE NOT CHANGE THE CHARACTER OF COMMISSION WHICH IS CONTRAC T RECEIPT. THE ASSESSEE IS CLAIMING BENEFIT OF TDS WITHOUT SHOWING THE GROSS CONTRACT RECEIPT IN THE PROFIT & LOSS ACCOUNT. THE SO CALLED FREIGHT RECEIVED AND PAID, AS ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IS PART AND PARCEL OF THE PROFIT & LOSS ACC OUNT AND IS BEING SEPARATELY UNDER THE HEAD FREIGHT AND COMMISSION SO AS TO ESCAPE THE TAX LIABILITY ON PAYMENTS MADE TO SUB CO NTRACTORS. IN SO FAR AS CLAIM OF THE ASSESSEE THAT FORM NO.15 -I, WHICH A SUB-CONTRACTOR IS TO PROVIDE TO THE ASSESSEE AND FO RM NO.15-J IN WHICH INFORMATION IS TO BE SUPPLIED TO THE PRESCRIB ED AUTHORITY WERE ITA NO.123(ASR)/2013 12 BROUGHT INTO USE W.E.F. 17.06.2005 AS THESE WERE IN SERTED BY THE IT (FOURTEENTH AMDT.) RULES, 2005 IS CONCERNED, IT MAY BE POINTED OUT THAT THOUGH THESE FORMS WERE INTRODUCED LATER ON BU T THE CONDITION FOR DEDUCTION OF INCOME TAX AT SOURCE WAS VERY MUCH IN EXISTENCE IN STATUTE BOOK. IT MAY ALSO BE POINTED OUT THAT THE A SSESSEE HAS NEVER PUT ANY SUCH CLAIM THAT THE PAYMENTS WERE MADE TO S UB-CONTRACTOR WHO DOES NOT OWN MORE THAN TWO GOODS CARRIERS AND THEREFORE, THERE IS NO QUESTION OF GETTING ANY BENEFIT AS LAID DOWN IN PROVISO 2 TO SUB- SECTION (3) OF SEC. 194C OF THE I.T ACT, 1961. THE ONUS SECURELY LIES ON THE ASSESSEE TO PROVE THAT THE PAYMENTS WERE MADE T O SINGLE OR TWO TRUCK OWNERS. WHEN ANY PROVISION IS MADE IN THE ST ATUTE, IT BECOMES OBLIGATORY ON THE PART OF THE ASSESSEE TO MAKE COMP LIANCE OF THE SAME. ON 22.1.2007 THE ASSESSEE FILED FURTHER WRITTEN SU BMISSIONS IN THE MATTER AS UNDER: IN CONTINUATION OF EARLIER REPLY ON THE SUBJECT, IT IS SUBMITTED SEC. 50 INCOME TAX ACT, STATES- NOTWITHSTANDING ANYTHING TO CONTRARY IN SECTION 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTIN G THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAIN OF BUSINESS OR PROFESSION. SECTION 40(IA) AMOUNT PAYABLE TO A CONTRACTOR OR SUB CONTRACTOR, BEING RESIDENT FOR CARRYING OUT ANY WORK ( INCLUDIN G SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) ON WHICH TAX IS DEDUCTIB LE AT SOURCE UNDER CHAPTER XVIIB AND SUCH TAX HAS NOT BEEN DEDUCTED. E XPLANATION TO SEC. (IA) WORK SHALL HAVE THE SAME MEANING AS IN EXPLANATION III TO SECTION 194C. CHAPTER XVII-SEC.194C(2) ANY PERSON BEING A CONTRACTOR AND NOT BEING INDIVID UAL OR HINDI UNDIVIDED FAMILY RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (THEREAFTER THIS SECTION REFERRED TO AS THE SUB CON TRACTOR). IN PURSUANCE OF A CONTRACT WITH SUB CONTRACTOR . SHAL L AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF CHEQUE AND DRAFT. FACTS OF OUR CASE: ITA NO.123(ASR)/2013 13 1. FREIGHT CHARGES PAID TO THE DIFFERENT TRUCK OWNERS HAVE NOT BEEN CLAIMED AS EXPENSES IN P & L ACCOUNT. SO THIS EXPENSE IS NOT CLAIMED AS DEDUCTION FROM THE INCOME CHARGEABLE . 2. THAT WE EARN INCOME AS COMMISSION FROM TRUCK OWNERS WHO ARE BEING ARRANGED FOR SUPPLY OF GOODS UNDER EACH SEPAR ATE GRS 3. THAT THE PROVISION OF SECTION 194C(2) ARE NOT APPLI CABLE BECAUSE WE HAVE NOT ENGAGED ANY SUB CONTRACTOR FOR CARRIAGE OF GOODS. ONLY THE PAYMENT IN PURSUANCE OF A CONTRA CTOR IS LIABLE FOR DEDUCTION OF TAX AT SOURCE. 4. THAT EACH TRUCK OWNER WHO CARRIES THE GOODS AT THE BEST CAN BE SAID TO HAVE ENTERED IN EACH SEPARATE CONTRACTOR. I N THIS WAY ONE EACH CONTRACT IS TAKEN SEPARATELY THERE WAS NO LIAB ILITY TO DEDUCT TAX AT SOURCE. CENTRAL BOAR OF DIRECTOR TAXES IN CIRCULAR NO.715 DT. 08/08/1995, REPLYING QUESTION NO.9 HAS SAID: NORMALLY EACH GR CAN BE SAID TO BE SEPARATE CONTRA CT, IF THE GOODS ARE TRANSPORTED AT ONE TIME. IN OUR BUSINESS, THE DEDUCTEE HAS MADE ARRANGEMENT WITH DIFFERENT CONTRACTOR IN HOSHIARPUR AND AT OTHER PLA CES. THEY ASK US TO ARRANGE TRANSPORT OF CARRIAGE OF GOODS WHEN EVER TH E NECESSITY ARISES. THEY PLACE THE SIMILAR ORDERS TO OTHER AGENCIES ALS O. ON THE SIMILAR LINE, WE NEVER MAKE ARRANGEMENT OR ENTER INTO ANY CONTRACT WITH ANY SUB AGENCY OR TRANSPORTER FOR CARRYING THE GOODS. THE DEMAND WE MOVE IN THE MARKET, TRUCK OWNERS GOI NG TO THE ROUND , WE ARE TO TAKE GOODS ARE FOUND, RATES ARE S ETTLED FOR FREIGHT, N THE TIME THERE CAN BE DIFFERENT RATES OF FREIGHT D EPENDING ON MARKET CONDITIONS, WE GET THE COMMISSION FROM TRUCK OWNERS , WHO CARRIES THE GOODS. IF A PERSON WHO GOES TO JALANDHAR OR DELHI IN A TA XI ON 06/12/2007 AND, THEREFORE, WHEN HE ARRANGES THE SAM E TAXI ON 16/12/2007, IT CANNOT BE SAID THE TAXI OWNER IS SUB CONTRACTOR OR CONTRACTOR OF A PERSON. SIMILAR IS THE SITUATION N OUR CASE. THE TRUCK OWNERS WHO CARRIES THE GOODS ARE NOT OUR SUB CONTRA CTOR. ITA NO.123(ASR)/2013 14 EACH TIME A SEPARATE ARRANGEMENT IS MADE AT A PAR TICULAR RATE OF FREIGHT. MOST OF THE TRUCK OWNERS ARE HAVING ON E TRUCKS, WHO CARRIES THE GOODS, EVEN ON THAT SCORE THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCES. IT IS FIRST OF ALL, IMPERATIVE TO KNOW WHAT IS A CONTRACT. THE DEFINITION OF CONTRACT IS NOT GIVEN IN THE INCO ME-TAX ACT. IT IS DEFINED IN INDIAN CONTRACT ACT, 1872. A CONTRACT IS AN ARRANGEMENT MADE BETWEEN TWO OR MORE PARTIES WHICH THE LAW WILL ENFORCE. SECTION 2(H) DEFINES A CONTACT AS AN AGREEMENT ENFORCEABLE BY LAW. THE DEFINITION IS BASED ON POLLOCKS DEFINITION WHICH IS AS FOLLOWS: EVERY AGREEMENT AND PROMISE ENFORECEABLE AT LAW IS A CONT RACT. SIR WILLIAM ANSON DEFINES A CONTRACT A LEGALLY BINDIN G AGREEMENT BETWEEN TWO OR MORE PERSONS BY WHICH RIGHTS ARE ACQ UIRED BY ONE OR MORE TO ACTS OR FORBEARANCE ON THE PART OF THE OTHE RS. ACCORDING TO SALMOND, A CONTRACT IS AN AGREEMENT CREATING AND DEFINING OBLIGATION BETWEEN THE PARTIES. IT IS ALSO ESSENTIAL TO KNOW WHAT IS AGREEMENT, AN AGREEMENT IS DEFINED AS EVERY PROMISE AND EVERY SET OF PROMISES , FORMING CONSIDERATION FOR EACH OTHER SECTION 2(E). A PROMI SE IS DEFINED THUS, WHEN THE PERSON TO WHOM THE PROPOSAL IS MADE SIGNI FIES HIS ASSET THERETO, THE PROPOSAL IS SAID TO BE ACCEPTED. A PRO POSAL WHEN ACCEPTED, BECOMES A PROMISE. SEC. 2(B), THUS, IN OTHER WORDS, MEANS THAT AN AGREEMENT IS AN ACCEPTED PROPOSAL. IN ORDE R, THEREFORE, TO FORM AN AGREEMENT THERE MUST BE A PROPOSAL OR OFFE R BY ONE PARTY AND ITS ACCEPTANCE BY THE OTHER. THE PROVISIONS ARE WIDE ENOUGH TO COVER NOT ONLY WRITTEN CONTRACTS BUT ALSO ORAL CONT RACTS. IN THE BACKGROUND OF THIS IT CAN BE SEEN THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH THE COMPANIES I.E. M /S. JCT MILLS (FILAMENT UNIT), M/S. JCT MILLS (STEEL UNIT) AND M /S. HAWKINS COOKERS LTD. FOR TRANSPORTATION OF GOODS. THE COMPA NIES MADE PROPOSAL, THE ASSESSEE ACCEPTED THE PROPOSAL AND EN TERED INTO AN AGREEMENT. AN AGREEMENT CREATING AND DEFINING OBLI GATION BETWEEN THE PARTIES IS A CONTRACT. THE COMPANIES DEDUCTED I NCOME TAX ON THE PAYMENTS MADE ON THE PRESCRIBED RATES TO TAX TO CON TRACTORS AND ISSUED F.NO.16A TO THE CONTRACT, I.E. ASSESSEE, SIN CE THE ASSESSEE WAS NOT HAVING SUFFICIENT NUMBER OF VEHICLES OF ITS OWN TO CARRY OUT THE CONTRACT, IT ENTERED INTO FURTHER CONTRACT TO HIRE THE VEHICLES OWNED BY ITA NO.123(ASR)/2013 15 OTHER AFTER SETTING THE TERMS OF CONTRACT. THIS IS, THEREFORE, A SUB- CONTRACT ENTERED INTO BY THE ASSESSEE FIRM WITH THE OTHER TRANSPORTER/VEHICLE OWNER(S) AND RESPONSIBILITY IS CAST ON THE ASSESSEE TO HAVE DEDUCTED INCOME-TAX @ 1% PLUS SURCHARGE ETC . AT THE PRESCRIBED RATE ON THE PAYMENTS MADE BY IT TO THE S UB-CONTRACTORS. THE ASSESSEE ON ITS PART IS INTERPRETING SUB-CONTRA CT IN THE NARROW SENSE OF THE TERMS AS IN A WRITTEN SUB-CONTRACT. AN OFFER BY THE ASSESSEE AND ACCEPTANCE BY THE TRUCK OWNER FOR PERF ORMING THE WORK OF TRANSPORTATION OF GOODS AS SPECIFIED WOULD AMOUN T TO THE EXISTENCE OF A CONTRACTUAL LIABILITY AS THE PAYMENT IS RELEAS ED TO THE TRUCK OWNERS BY THE ASSESSEE ONLY AFTER THE GOODS HAVE BE EN DELIVERED AT THEIR DESTINATIONS. THUS, ONLY AFTER COMPLETION OF ONE PART OF THE CONTRACT I.E. DELIVERY OF THE GOODS IS THE OTHER PA RT (I.E. PAYMENT COMPLETED). THIS IS CLEARLY INDICATIVE OF THE EXIST ENCE OF A CONTRACT OF SUB-CONTRACT AND THE ASSESSEE CANNOT CHOOSE TO IGNO RE IT. THE ASSESSEE CANNOT ESCAPE FROM THIS RESPONSIBILITY BY BIFURCATI NG THE CONTRACT RECEIPT INTO FREIGHT RECEIPT AND COMMISSION. THE NA TURE OF PAYMENT IS CONTRACT RECEIPT AND CONTRACT PAYMENTS IRRESPEC TIVE OF THE FACT THAT THE ASSESSEE MAY TERM IT AS FREIGHT RECEIVED A ND FREIGHT PAID OR COMMISSION RECEIVED AND FREIGHT PAID. TO ATTRACT TH E PROVISIONS OF SECTION 194C, THE FOLLOWING CONDITIONS HAVE TO BE S ATISFIED; NAMELY, (1) THERE MUST BE A CONTRACT BETWEEN THE PERSON RES PONSIBLE FOR MAKING PAYMENT AND THE CONTRACTOR, (II) THE CONTRAC T MUST BE FOR CARRYING OUT ANY WORK, (III) THE WORK IS BEING CA RRIED OUT THROUGH THE CONTRACTOR; (IV) CONSIDERATION FOR THE CONTRACT SHOULD EXCEED LIMIT RS.20,000/- PROVIDED THAT WHERE THE AGGREGATE OF TH E AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR P AID DURING THE FINANCIAL YEAR EXCEEDS RS.50,000/- I.E. THE AMOUNT FIXED BY SECTION 194C(3)(1) AND (V) THE PAYMENT IS MADE TO THE CONTR ACTOR FOR THE WORK CARRIED OUT BY HIM. THESE ELEMENTS ARE THERE IN TH E CONTRACT ENTERED INTO BY THE ASSESSEE FIRM WITH THE AFORESAID COMPAN IES AS LAID DOWN IN SEC. 194C OF THE I.T.ACT, 1961. FURTHER, THE ASSESS EE FIRM BEING A CONTRACTOR WAS RESPONSIBLE FOR PAYING ANY SUM TO RE SIDENT IN PURSUANCE OF A CONTRACT WITH RESIDENT (BEING A SUB- CONTRACTOR) FOR CARRYING OUT, OR FOR THE SUPPLY OF BOTH FOR CARRYIN G OUT, THE WHOLE OR ANY PART OF THE WORK UNDERTAKING BY THE CONTRACTOR OR FOR THE SUPPLYING WHETHER WHOLLY OR PARTLY ANY LABOUR CONTR ACTOR WITH THE CONTRACTOR HAS UNDERTAKEN TO SUPPLY SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY ITA NO.123(ASR)/2013 16 OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PERCENT TO SUCH SUM AS INCOME-TAX ON INCOME COMPRIS ED THEREIN. THIS IS PROVIDED IN SUB-SECTION (2) OF SECTION 194C OF T HE I.T.ACT, 1961. IN SO FAR AS WORK OR SERVICE IS CONCERNED IT M AY BE POINTED OUT THAT WITH THE INSERTION OF EXPLANATION III TO SEC. 194C W.E.F. 01.07.1995, THE EXPRESSION WORK SHALL ALSO INCLUDE CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS. THEREFORE, THE CARRIAGE OF GOODS IS ALSO A WORK. SECTION 194C CLEARLY LAYS DOWN THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK IN PU RSUANCE OF CONTRACT SHALL, AT THE TIME OF CREDIT OF SUCH SUM T O THE ACCOUNT OF CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER DEDUCT INCOME-TAX AT SOURCE AT THE PRESCRIBED RATES. THUS , THE CARRYING OF THE GOODS I AN ACT OR A BUSINESS OF TRANSPORT INVOLVING AN EFFORT OF EXERTION DIRECTED TO DEFINITE ENDS EXPRESSLY AS A M EANS OF GAINING ONES LIVELIHOOD. THE CONTRACT OF TRANSPORTATION OF GOODS FROM THE FACTORY TO VARIOUS DESTINATIONS, THUS, FALLS WITHIN THE EXPRESSION CARRYING OUT ANY WORK THE CONSIDERATION FOR THE C ONTRACT EXCEEDED THE AMOUNT FIXED IN SEC. 194C(3)(1) AND, THEREFORE, THE ASSESSEE BEING RESPONSIBLE FOR MAKING PAYMENT WAS OBLIGED TO MAKE DEDUCTION OF TAX AT SOURCE. ALL THE NECESSARY REQUIREMENTS FOR THE A PPLICABILITY OF SEC. 194C WERE, THUS, SATISFIED AND, THEREFORE, IT WAS O BLIGATORY UPON THE ASSESSEE TO DEDUCT TAX AT SOURCE. THE CONTENTION OF THE ASSESSEE THAT EACH GR IS A S EPARATE CONTRACT ALSO DOES NOT CARRY ANY WEIGHT BECAUSE NOR MALLY EACH GR CAN BE SAID TO BE A SEPARATE CONTRACT, IF THE GOODS ARE TRANSPORTED AT ONE TIME. BUT IF THE GOODS ARE TRANSPORTED CONTINU OUSLY IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD OR QUANTITY E ACH GR WILL NOT BE A SEPARATE CONTRACT AND ALL GRS RELATING TO THAT PER IOD OR QUANTITY WILL BE AGGREGATED FOR THE PURPOSE OF THE TDS. THIS HAS BEEN CLARIFIED BY THE CBDT WHILE ANSWERING QN. 9 IN CIRCULAR NO.715 D ATED 08.08.1995. EVEN WHEN THE GOODS ARE RECEIVED ON F REIGHT TO PAY BASIS, THE PROVISIONS OF TAX DEDUCTION AT SOURCE AR E APPLICABLE IRRESPECTIVE OF THE ACTUAL PAYMENT. THE GOODS WERE TRANSPORTED IN SAME VEHICLE/TRUCK FOR NUMBER OF TIMES IN PURSUANCE OF A CONTRACT FOR THE YEAR UNDER CONSIDERATION. THEREFORE, WHEN THE A MOUNT OF PAYMENT MADE TO EACH VEHICLE OWNER EXCEEDED RS.50,000/- IN AGGREGATE IN THE ITA NO.123(ASR)/2013 17 YEAR, THE ASSESSEE WAS TO DEDUCT THE INCOME TAX AT SOURCE @ 1% OF SUCH PAYMENTS ALREADY MADE OR LIKELY TO BE MADE SUB SEQUENTLY. UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, IT IS IMPERATIVE TO RECAST THE PROFIT & LOSS ACCOUNT AS U NDER: PROFIT & LOSS A/C TO FREIGHT 14895251 BY CONT. RECEIPT: 15434513 LESS:FREIGHT 754815 14679698 LESS:COMMISSION 415684 DIFF OF OPENING & BY TRUCK INCOME 356706 CLOSING(754815-539262) BY INTT. ON REFUND 7744 215553 631237 (BEING ITEMS OF BALANCE SHEET) 14264014 OTHER ITEMS OF P&L A/C 780134 15044148 15044148 IN VIEW OF THE FOREGOING DISCUSSION, THE ASSESSEE MADE PAYMENTS OF RS.1,42,64,014/- TO SUB-CONTRACTORS OUT OF THE SAME, THE TRANSPORT CARRIERS TO WHOM PAYMENTS WERE MADE EXCE EDING RS.50,000/- IN AGGREGATE IN THE YEAR UNDER CONSIDER ATION, AS POINTED OUT ABOVE, WORKS OUT TO RS.54,85,657/- ( I.E. RS.44 ,23,189/-) IN RESPECT OF CONTRACT OF JCT LTD. (STEEL UNIT) ON WHICH NO IN COME TAX WAS DEDUCTED AT SOURCE AT THE TIME OF PAYMENT OR CREDIT ED TO THE VEHICLE OWNERS A/C. THEREFORE, UNDER THE PROVISIONS OF SEC. 40(IA) OF THE I.T. ACT, 1961, THIS AMOUNT OF RS.54,85,657/- IS DISALLO WED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT (A), JALANDHAR, WHICH WAS DISPOSED OFF BY THE LD. CIT(A) VIDE ORDER DATED 20.12.2012 BY DELETING THE ADDITION OF RS.54,85,657/- BY HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT, 1961 ARE ATTRACTED ONLY ON THE AMOUNTS PAYABLE AT THE END OF THE YEAR AND THE CASE OF THE ASSESSEE FA LLS UNDER SECOND PROVISO TO ITA NO.123(ASR)/2013 18 SECTION 194C(3) OF THE ACT AND THERE WAS NO OBLIGAT ION ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. THERE WAS A SUB-C ONTRACT WITH TRUCK OWNERS TO WHOM PAYMENTS HAVE BEEN MADE. THE DEPARTMENT FIL ED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) BEFORE THE ITAT, AMRITS AR BENCH AND THE ASSESSEE FILED THE CROSS OBJECTIONS. THE ITAT, AMRI TSAR BENCH, VIDE ORDER DATED 31.12.2008 DECIDED THE APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE AND HELD THAT THE LD. CIT(A) HAS ERRED IN HASTENING TO DECIDE THE MATTER ON THE ISSUE AS ABOVE RATHER THAN FIRST AP PLYING HIMSELF TO THE APPLICABILITY OF THE SECTION PER SE TO THE FACTS OF THE CASE, IN AS MUCH AS THE APPLICABILITY OF SECTION 194C OF THE ACT HAS NOT BE EN TAKEN INTO CONSIDERATION AT ALL. FURTHER, IT WAS HELD IN THE L IGHT OF THE ABOVE, IN THE PRESENT CASE, IN OUR OPINION, IT WOULD BE APPROPRIA TE TO REMIT THE MATTER TO THE FILE OF THE LD. CIT(A) TO BE DECIDED AFRESH, IN ACCORDANCE WITH LAW , ON AFFORDING ADEQUATE OPPORTUNITY TO BOTH THE PARTIES, KEEPING IN VIEW OUR AFORESAID ORDER IN THE CASE OF M/S. SATISH AGGARWAL & CO., MUKERIAN. THIS IS HOW THE LD. CIT(A) HAS DECIDED THE APPEAL VIDE O RDER DATED 20.12.2012, WHICH IS IN DISPUTE BEFORE US. THE LD. CIT(A) IN TH E SAID ORDER DATED 20.12.2012 IN VIEW OF THE DIRECTION OF THE ITAT, AM RITSAR BENCH, DATED 31.12.2008 HAS ALLOWED THE APPEAL OF THE ASSESSEE B Y OBSERVING IN PARA 7 TO 11, WHICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCE D AS UNDER: ITA NO.123(ASR)/2013 19 7. I HAVE CAREFULLY CONSIDERED THE DIRECTIONS OF HONBLE ITAT, THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS, THE ORDERS O F MY LD. PREDECESSOR IN A.Y.06-07 AND THE DECISION OF ITAT I N AY 2006-07. I HAVE ALSO GONE THROUGH THE ORDER OF HONBLE ITAT I N CASE OF M/S. SATISH KUMAR AGGARWAL, CONTRACTOR. 8. IT IS FOUND AS ON TODAY THE ISSUE IS COVERED BY THE DECISION OF MY LD. PREDECESSOR IN AY 2006-07 WHICH IS UPHELD BY TH E HONBLE ITAT AMRITSAR ALSO IT IS ALSO COVERED BY THE DECISION OF HONBLE ITAT-SB- VISHAKHAPATANAM IN CASE OF M/S. MERILYN SHIPPING TR ANSPORTER 32 CCH 213. TO THE EXTENT OF AN AMOUNT OF RS.54,85,657 . IN THE DECISION OF HONBLE SPECIAL BENCH, VISHAKHAPATNAM IT IS HELD THAT THE DISALLOWANCE U/S 40(A)(IA) OF IT ACT CAN BE MADE ON LY IN RESPECT OF AMOUNTS PAYABLE AT THE YEAR END AND THE AMOUNTS A LREADY PAID DURING THE YEAR ARE NOT HIT BY SECTION 40(A)(IA0 OF IT ACT. IN VIEW OF THIS DISALLOWANCE OF RS.54,85,657/- IS VACATED ON T HIS COUNT ALONE. 9. IN THE AY 2006-07, IN THE CASE OF ASSESSEE ITSEL F THE ISSUE OF APPLICABILITY OF SECTION 194C OR OTHERWISE WAS DISC USSED AT LENGTH IN THE ORDER OF MY LD. PREDECESSOR ( A COPY OF WHICH I S FILED AND IS ON RECORDS) WHEREIN RELYING ON THE DECISION OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF M/S. UNITED RICE LA ND LTD. 217 CTR 332 AND ON CBDT CIRCULAR NO.715 DATED 08.08.1995 HA S HELD THAT THE PROVISIONS OF SECTION 194C OF IT ACT WERE NOT APPLI CABLE TO THE CASE OF ASSESSEE. THIS STAND WAS UPHELD BY HONBLE ITAT, AM RITSAR IN THE ORDER IN ITA NO.80(ASR)/2010 DATED 07.05.2010 IN CA SE OF ASSESSEE PARA NO. 4.1 AND 8-8.1 WHICH ARE AS UNDER: HAVING REGARD TO THE ABOVE LEGAL AND FACTUAL DISCU SSIONS IN RESPECT OF THIS GROUND, WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER PASSED BY THE CIT(A). IT IS FURTHER MAINTAINED THAT WE HAVE TO NO NEW GROUND WHICH REBUTS THE FINDINGS OF THE LD. CIT(A). THUS, THE DETAILED AND WELL REASONED ORDER PASSED B Y THE CIT(A) CANNOT BE ASSAILED. HENCE, THE FINDINGS OF T HE CIT(A), IN THE MATTER ARE CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA NO.123(ASR)/2013 20 AS REGARDS NOS. 1 AND 2 RAISED IN THE C.O. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THERE WAS NO CONTRACT W ITH ANY TRUCK OWNER FOR SPECIFIED QUANTITY, PERIOD OR PRICE SO AS TO ATTRACT PROVISIONS OF SECTION 194C OF THE ACT. FURT HER, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE AS THE CASE OF THE ASSESSEE FALLS UNDER 2 ND PROVISO TO SECTION 194C(3) OF THE INCOME TAX ACT, AS EACH OWNER DID NOT OWN MORE THAN TWO TRUCKS. THIS ISSUE HAS SINCE BEEN ADJUDICATED BY US ABOVE, WHEREBY THE GROUNDS OF APPEAL RAISED BY THE REVENUE HAVE BEEN D ISMISSED. AS THESE GROUNDS RAISED BY THE ASSESSEE ARE SUPPORT IVE OF THE ORDER OF THE CIT(A), THE FINDINGS OF WHICH WE HAVE ALREADY UPHELD. ACCORDINGLY, THESE GROUNDS OF THE CROSS OBJ ECTION ARE DISMISSED AS INFRUCTUOUS. 10. THE AO IN HIS REPORT HAS THOUGH CONTENDED THAT EACH ASSESSMENT IS A SEPARATE ASSESSMENT YEAR BUT FAILED TO POINT OUT AS TO HOW THE FACTS IN THE CASE OF ASSESSEE ARE ANY DIFFE RENT IN AY 2005-06 AS COMPARED TO AY 2006-07. I DONT FIND THAT FACTS ARE DIFFERENCE IN ANY WAY. SINCE THE DECISION OF THE JURISDICTIONAL H ONBLE ITAT, AMRITSAR IS AVAILABLE IN THE CASE OF ASSESSEE ITS ELF IN AY 2006-07 WHEREIN IT IS HELD THAT THERE WAS NO CONTRACT BETW EEN ASSESSEE AND THE PAYEES AND THE PROVISION OF SECTION 194C OF IT ACT WERE NOT APPLICABLE TO THE CASE OF ASSESSEE, RESPECTFULLY FO LLOWING THE SAME, THE ENTIRE DISALLOWANCE IS VACATED. THE DIRECTIONS OF H ONBLE ITAT, AMRITSAR STAND COMPLIED. 11. IN THE RESULT, THE APPEAL IS ALLOWED. 4. THE LD. COUNSEL FOR THE ASSESSEE, SH.SURINDER MA HAJAN, CA, AT THE OUTSET, ARGUED THAT THE PRESENT CASE IS COVERED BY THE DECISION OF ITAT, AMRITSAR BENCH, IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2006-07 IN ITA NO.80(ASR)/2010 AND C.O. NO.6(ASR)/2010, DATED 7 TH MAY, 2010. A COPY OF THE SAID ORDER IS PLACED AT PB 97 TO 106, W HERE THE APPEAL OF THE ITA NO.123(ASR)/2013 21 REVENUE HAS BEEN DISMISSED. THEREAFTER, THE LD. COU NSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND THE SUB MISSIONS MADE THEREIN. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE AS SESSEE ARRANGES FOR TRANSPORTATION OF GOODS IN LIEU OF THE SERVICE COMM ISSION WHICH IS RECEIVED FROM THE TRUCK OWNERS AND THE SAME IS CREDITED TO T HE BOOKS OF ACCOUNT UNDER THE HEAD COMMISSION INCOME. THE JCT LIMITED PAYS FREIGHT CHARGES TO THE ASSESSEE AND DEDUCT TAX AT THE PRESCRIBED RATE, WHI CH ARE RECEIVED BY THE ASSESSEE AND THE ENTIRE FREIGHT CHARGES RECEIVED FR OM THE SAID COMPANY ARE PAID TO THE TRUCK OWNERS TO CARRY GOODS TO JCT REC EIPT IS CREDITED IN FREIGHT ACCOUNT ON CREDIT SIDE, WHEN THE GOODS REACH AT THE DESTINATION. THE FREIGHT CHARGES RECEIVED FROM JCT ARE PASSED TO THE TRUCK O WNERS AND THE ASSESSEE IS CONCERNED ONLY ABOUT COMMISSION WHICH IS RECEIVED F ROM TRUCK OWNERS. IT WAS ALSO CLAIMED THAT FREIGHT CHARGES HAS NEVER BEE N CLAIMED AS EXPENSES IN THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, THE PROVISI ONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE IN THE PRESENT CASE AND THERE I S NO LIABILITY TO DEDUCT TAX AT SOURCE. IT WAS ARGUED THAT THE PAYMENTS TO DIFFEREN T TRUCK OWNERS WERE MADE, WHICH WERE NOT HAVING MORE THAN TWO TRUCKS. THE LD. COUNSEL FOR THE ASSESSEE MAINLY RELIED UPON CIRCULAR NO.715 DATED 08/08/1995 OF C.B.D.T. AND ARGUED THAT EACH TIME A SEPARATE ARRANGEMENT IS MADE AT A PARTICULAR RATE OF FREIGHT AND MOST OF THE TRUCK OWNERS ARE HAVING ONE TRUCK, WHO CARRIES THE ITA NO.123(ASR)/2013 22 GOODS, EVEN ON THAT SCORE THE ASSESSEE WAS NOT REQU IRED TO DEDUCT TAX AT SOURCE. 5. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON TH E DECISIONS OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BHAGWATI STEELS (2010) 326 ITR 108 & CIT VS. UNITED RICE LAND LIMITED (201 0) 322 ITR 594 (P&H) IN THIS REGARD. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER AND ARGUED THAT THE DECISION OF THE ITAT, A MRITSAR BENCH, FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.80(ASR)/2010 AN D C.O.NO.6(ASR)/2010 DATED 7 TH MAY, 2010 IN ASSESSEES OWN CASE, IS ON DIFFERENT FACTS AND CIRCUMSTANCES AND ALSO THE CASES RELIED UPON BY THE LD. COUNSEL ARE ON DIFFERENT FACTS AND CANNOT BE MADE APPLICABLE IN TH E PRESENT CIRCUMSTANCES AND FACTS OF THE CASE. FURTHER, THE ASSESSEE HAS NO T PRODUCED ANY EVIDENCE FOR THE CLAIM MADE THAT EACH GR IS A SEPARATE CONTRACT AND THE AMOUNT HAS BEEN MADE IN ITS ENTIRETY GR-WISE. 7. THE LD. DR FURTHER RELIED UPON THE DECISION OF THE ITAT, AMRITSAR BENCH, IN THE CASE OF ITO WARD 2(1), BHATINDA VS. MAHABIR COTTON TRADERS, BUCHO MANDI, IN ITA NO. 326(ASR)/2010 FOR THE ASSE SSMENT YEAR 2005-06, DATED 30.05.2013, WITH REGARD TO THE DISALLOWANCE U /S 40(A)(IA) OF THE ACT. ITA NO.123(ASR)/2013 23 THEREFORE, THE AMOUNT PAID OR PAYABLE IN PURSUANCE OF CONTRACT ON WHICH TAX AT SOURCE HAS NOT BEEN DEDUCTED, HAS ESSENTIALLY TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT., IN VIEW OF THE DECISION OF T HE ITAT, AMRITSAR BENCH, IN THE CASE OF ITO WARD 2(1), BHATINDA VS. MAHABIR CO TTON TRADERS, BUCHO MANDI (SUPRA). THE LD. DR FURTHER ARGUED THAT THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BHAGWATI STEELS (2010) 326 ITR 108 & CIT VS. UNITED RICE LAND LIMITED (201 0) 322 ITR 594 (P&H) ARE ON DIFFERENT FACTS AND ALSO THE DECISION OF ITAT, AMRITSAR BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 -07 IS ON DIFFERENT FACTS AND CANNOT BE MADE APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, HE PRAYED TO ALLOW THE APPEAL OF T HE REVENUE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE IN THE PRESENT CASE OWN SIX TRUCKS , A S DETAILS IS AVAILABLE AT PAGE 1 OF AOS ORDER. THE ASSESSEE RECEIVED CONTRAC T PAYMENTS AS PER F.NO.16A FROM JCT LTD. CHOHAL, JCT (STEEL DIVISION) , HOSHIARPUR AND M/S. HAWKINS COOKERS LTD. HOSHIARPUR, AS PER DETAIL AVAI LABLE AT PAGE 2 OF AOS ORDER, AMOUNTING TO RS.14,679,698/- ON WHICH TDS H AS BEEN DEDUCTED BY THE SAID COMPANIES. THE CLAIM OF THE ASSESSEE IS TH AT THE ASSESSEE HAS TO FULFIL CONTRACT OF THE SAID COMPANIES, WHO HAD USED ITS OWN TRUCKS AS WELL AS ITA NO.123(ASR)/2013 24 HIRED TRUCKS FROM OUTSIDE. THE CLAIM OF THE ASSESSE E IS THAT THE TRUCKS ARE HIRED ON NEED BASIS, AS AND WHEN TRUCKS WERE REQUIR ED AND THERE WAS NO CONTRACT ORAL OR WRITTEN WITH THE SAID TRUCK OWNER. 8.1. THE MAIN CLAIM OF THE ASSESSEE VIDE LETTER DAT ED 03.10.2007 AND THEREAFTER IN THE PROCEEDINGS AND ALL OTHER LEVELS WAS THAT THE BUSINESS OF THE ASSESSEE IS TO ARRANGE TRUCKS FOR TRANSPORTATION OF GOODS OF JCT LTD. M/S. HAWKINS LTD. AND IN LIEU OF THIS SERVICE, THE ASSES SEE GETS COMMISSION OF RS.300/- TO RS.400/- PER TRUCK AND THE FREIGHT PAID BY THE COMPANY TO THE ASSESSEE IS PAID TO THE TRUCK OWNERS AS IT IS. THE CLAIM OF THE ASSESSEE AND THE ARGUMENT MADE BY THE LD. COUNSEL FOR THE ASSESS EE IS THAT WHATSOEVER FREIGHT IS RECEIVED FROM JCT LTD. AND M/S. HAWKINS LTD. IS PASSED ON TO THE TRUCK OWNERS AND NO PART OF THE MONEY RECEIVED FROM SUCH COMPANIES I.E. M/S. JCT LTD AND M/S. HAWKINS LTD. IS RETAINED BY T HE ASSESSEE. IN THIS REGARD, THE ASSESSEE HAS NOT PLACED, THE COPY OF TH E CONTRACT BETWEEN THE ASSESSEE AND JCT LTD. AND HAWKINS LTD. AND GETTING TRANSPORT CHARGES AND PASSING ON THE SAME TO THE TRANSPORTERS. WHETHER TH ERE WAS SUCH CONDITION IN THE AGREEMENT THAT SUCH COMPANIES ARE BOUND TO MAKE PAYMENTS ON BEHALF OF TRANSPORTERS TO THE ASSESSEE HAVE NOT BEEN PLACE D ON RECORD BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US? THEREFOR E, THE CLAIM OF THE ASSESSEE AND THE ARGUMENT MADE BY THE LD. COUNSEL F OR THE ASSESSEE THAT ITA NO.123(ASR)/2013 25 WHATEVER AMOUNT IS RECEIVED FROM THE SAID COMPANIES I.E. M/S. JCT LTD. & M/S. HAWKINS LTD. IS PASSED ON TO THE TRUCK OPERATO RS AS IT IS CANNOT BE ACCEPTED AND IS DEVOID OF ANY MERIT OR ANY EVIDENCE OR ANY SATISFACTORY EXPLANATION. NO OTHER EVIDENCE IS PLACED ON RECORD TILL DATE TO VERIFY THE GENUINENESS OF THE CLAIM. ACCORDINGLY, THE CLAIM OF THE ASSESSEE IS REJECTED. 8.2. THE AO HAS CALLED FOR INFORMATION FROM M/S. JC T LTD. FOR PAYMENTS EXCEEDING RS.50,000/- PAID TRUCK-WISE TO M/S. INDI AN ROADLINES I.E. THE ASSESSEE WHICH ARE AVAILABLE AT PAGES 4 TO 8 OF AO S ORDER REPRODUCED HEREINABOVE. THE ASSESSEES CLAIM IN THIS REGARD IS THAT RELIANCE OF CBDT CIRCULAR NO.715 DATED 08.08.1995 WHERE IT HAS BEEN MENTIONED THAT EACH GR CAN BE SAID TO BE SEPARATE CONTRACT, IF THE GOODS A RE TRANSPORTED AT ONE TIME. BUT IF THE GOODS ARE TRANSPORTED CONTINUOUSLY IN P URSUANCE OF A CONTRACT FOR A SPECIFIED PERIOD OR QUANTITY, EACH GR WILL NOT BE A SEPARATE CONTRACT AND ALL GRS RELATING TO THAT PERIOD OR QUANTITY WILL B E AGGREGATED FOR THE PURPOSE OF THE TDS. IT IS PERTINENT TO MENTION THAT THE ASS ESSEE HAS MADE ITS CLAIM BEFORE THE AO BY RELYING UPON CBDT CIRCULAR NO.715 DATED 08.08.1995, WHICH IS THE CLAIM AROUND WHICH THE PRESENT ISSUE R EVOLVES. IT IS A SETTLED LAW THAT THE PERSON WHO CLAIMS HAS TO PROVE IT. THE ASS ESSEE HAS CLAIMED THAT EACH GR IS A SEPARATE CONTRACT AND NOT A CONTINUING CONTRACT, NOTHING IN THIS REGARD HAS BEEN PLACED ON RECORD BEFORE ANY OF THE AUTHORITIES BELOW OR ITA NO.123(ASR)/2013 26 BEFORE US TO ASCERTAIN, EXAMINE OR PERUSE THAT EACH GR HAS BEEN PAID SEPARATELY. THE AO HAS ALSO NOT PROCEEDED TO EXAMIN E THIS FACT, ON THE OTHER HAND FROM THE TRUCK OWNERS. 8.3. THE AO RECEIVED THE INFORMATION FROM M/S. JCT LTD. WHO HAD PAID TRUCK-WISE MORE THAN RS.50,000/- TO INDIAN ROADLINE S DURING THE IMPUGNED YEAR, WHICH IS AVAILABLE AT PAGE 4 AND THEREAFTER, THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE THAT SUCH PAYMENT S TO THE ASSESSEE ARE NOT CONTINUING CONTRACT. UNLESS THIS ISSUE IS EXAMI NED BY THE AO WHETHER IT IS A CONTINUING CONTRACT OR NOT, THE ISSUE CANNOT B E DECIDED BY THE AO AND IT WAS PRE-MATURE FOR THE AO TO DECIDE SUCH ISSUE. 8.4. AS REGARDS THE ARGUMENT MADE BY THE LD. COUNSE L FOR THE ASSESSEE THAT THE ISSUE IS IDENTICAL IN ASSESSEES OWN CASE FOR T HE ASSESSMENT YEAR 2006-07 AND DECIDED BY THE ITAT, AMRITSAR BENCH (SUPRA) CAN NOT BE ACCEPTED FOR THE REASON THAT IN THAT YEAR, THE ASSESSEE SUBMITTED T HAT HE CANNOT PRODUCE TRANSPORTERS AND ACCORDINGLY THE AO ISSUED SUMMONS TO VARIOUS TRANSPORTERS OUT OF WHICH ONE JORAWAR SINGH APPEARED, WHO STATED THAT HIS TRUCK WAS PERMANENTLY EMPLOYED WITH THE ASSESSEE-FIRM WHO HAS GIVING FREIGHT TO HIM AND ACCORDINGLY THE AO HELD THAT THE CONTRACTS ARE CONTINUING CONTRACTS. THE LD. CIT(A) RELYING UPON THE DECISION OF THE H ONBLE SUPREME COURT IN ITA NO.123(ASR)/2013 27 THE CASE OF KISHAN CHAND CHELLARAM VS. CIT (1980) 125 ITR 713 HELD THAT MATERIAL GATHERED BY THE AO BEHIND ASSESSEES BACK CANNOT BE USED..WHEREAS THE AO IN THE PRESENT CASE HAS NOT EX AMINED THIS ISSUE BY ISSUING SUMMONS TO ANY OF THE TRANSPORTER IN THE PR ESENT CASE. DURING THE ASSESSMENT YEAR 2006-07 WITH REGARD TO THE PAYMENT MADE TO THE TRUCK OWNERS, WHO DID NOT OWN MORE THAN TO TRUCKS, THE AS SESSEE SUBMITTED FORM- 15-J WHICH FORMS ARE NOT AVAILABLE IN THE PRESENT APPEAL BEFORE US. ALSO DURING THE ASSESSMENT YEAR 2006-07 IN ASSESSEES OW N CASE, CERTAIN TRUCK NUMBERS WERE NOT PERTAINING TO TRUCK, IT WAS OBSER VED BY THE LD. CIT(A) THAT THEY WERE NOT CONFRONTED TO THE ASSESSEE. IT WAS OBSERVED THAT THE INFORMATION FROM D.T.O. HOSHIARPUR WAS PASSED ON TH E SAME DAY BY THE AO WITHOUT CONFRONTING THE ASSESSEE WITH THE INFORMAT ION COLLECTED BEHIND ASSESSEES BACK.. WHEREAS, IN THE PRESENT CASE, THE AO HAS NOT EXAMINED THIS ISSUE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS IN A.Y. 2006-07. THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 CANNOT BE MADE APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES O F THE CASE. ACCORDINGLY, IN VIEW OF OUR FINDINGS HEREINABOVE, THE DECISIONS OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASES OF CIT VS. BHAGWAT I STEELS (SUPRA) & CIT VS. UNITED RICE LAND LIMITED (SUPRA) ARE NOT APPLI CABLE TO THE PRESENT CASE. ITA NO.123(ASR)/2013 28 8.5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF OUR FINDING HEREINABOVE, THE MATTER IS SET ASIDE TO THE FILE OF THE AO TO DECIDE THE ISSUE DENOVO AND TO FIND OUT WHETHER HIRING OF THE TRUCK S FROM DIFFERENT TRUCK OPERATORS IS A SUB-CONTRACT BY EXAMINING THE GRS OF EACH TRUCK, THE PAYMENT MADE TO EACH TRUCK IS A PAYMENT MADE PER GR OR LUM PSUM PAYMENT AGAINST MANY GRS. IF THE PAYMENTS ARE MADE IN LUMPSUM I.E. NOT PER GR THEN IT IS CONTINUING PAYMENT WHICH MEANS A CONTINUING CONTRAC T. THE AO IS, THEREFORE, DIRECTED TO DECIDE THE ISSUE TO EXAMINE EACH AND EVERY PAYMENT AS DIRECTED HEREINABOVE IN VIEW OF CIRCULAR NO.715 DATED 8.8.1995 AND SECTION 194-C OF THE ACT, AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 8.6. AS REGARDS THE CLAIM OF THE ASSESSEE THAT SECT ION 40(A)(IA) IS NOT APPLICABLE WHEN THE AMOUNTS ARE NOT PAYABLE AT THE END OF THE YEAR SINCE ALL THE AMOUNTS HAVE ALREADY BEEN PAID DURING THE YEAR. THESE ARE THE FINDINGS IN PARA 8 OF LD. CIT(A)S ORDER WHO HAD VACATED TH E AOS ORDER ON THIS ACCOUNT ALONE. 8.7. IN THIS REGARD, THIS ISSUE IS COVERED AGAINST THE ASSESSEE IN VIEW OF OUR DECISION DATED 30.05.2013 IN THE CASE OF INCOME TA X OFFICER, BHATINDA VS. MAHAVIR COTTON TRADERS, BUCHO MANDI (SUPRA) FOR THE ASSESSMENT YEAR 2005- ITA NO.123(ASR)/2013 29 06 AND THE RELEVANT PORTION OF OUR DECISION IN THE CASE OF MAHABIR COTTON TRADERS (SUPRA) IS REPRODUCED HEREINBELOW: 4. THE BRIEF FACTS IN REVENUES APPEAL AND C.O. O F THE ASSESSEE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND DOING T HE BUSINESS OF COTTON SEED GINNING AND HAVING TAKEN ON RENT THE FACTORY OF M/S . SHRI BALAJI OIL MILLS, BHUCHO IN ACCORDANCE WITH THE COMPOSITE AGREEMENT DATED 01 .09.2004 CONTAINING THEREIN FIXED RENT @ RS.45/- PER QTL. OF THE COTTON SEED TO BE CRUSHED WHEREBY M/S. SHRI BALAJI OIL MILLS CANNOT WORK FOR ANY OTHER FIRM EX CEPT THAT OF THE ASSESSEE. THUS, COMPLETE POSSESSION AND ENJOYMENT OF THE FACTORY WA S AT THE DISPOSAL OF THE ASSESSEE. 5. THE RETURN OF INCOME WAS FILED ON 26.09.2005 AT AN INCOME OF RS.47,770/- WHEREIN THE CLAIM OF EXPENSES OF RS.14,61,285/- WAS MADE HAVING BEEN PAID TO M/S. SHRI BALAJI OIL MILLS, BHUCHO TOWARDS CRUSHING OF BINOLA AFTER HAVING CHARGED THE SAME AGAINST THE INCOME WHEREUPON TAX W AS NOT DEDUCTED ON THE SAID PAYMENTS. 6. THE RETURNED INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 22.05.2006 WHICH WAS SUBSEQUENTLY TAKEN UP FOR SCRU TINY THROUGH ISSUANCE AND SERVICE OF NOTICE U/S 143(2) OF THE ACT, DATED 25.0 7.2006 AND CONSEQUENTLY SCRUTINY ASSESSMENT WAS COMPLETED ON THE ADDITION OF RS.50,200/-, THUS DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 97,980/- THROUGH ORDER OF THE A.O. DATED 28.02.2005. SINCE THE PROCEEDINGS WERE I NITIATED THROUGH ISSUANCE OF NOTICE UNDER SECTION 263(1) OF THE I.T.ACT, 1961, D ATED 12.03.2009 & 19.03.2009 AND IN RESPONSE TO WHICH THE SUBMISSIONS WERE ADVAN CED ON 30.03.2009 WHEREBY THE COMMENTS OF THE AO TOO WERE CALLED FOR ON 30.03 .2009 THROUGH LETTER NO. 200 NOT BEING CONVINCED, THE ASSESSMENT ORDER WAS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR WHIC H THE FINDINGS ARE EXTRACTED BELOW: IN VIEW OF THE ABOVE MENTIONED AND LEGAL POSITION, IT IS HELD THAT IT IS A FIT CASE FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE I .T. ACT, 1961, AS THE ASSESSMENT FRAMED BY THE A.O. ON 28.02.2007 U/S 143(3) IS ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDI NGLY, THE ASSESSMENT FRAMED BY THE I.T.O., WARD-II(1), BATHINDA ON 28.02.2007 U/S 143(3) OF THE I.T. ACT, 1961 IS CANCELLED U/S 263 OF THE ACT AND THE A.O. IS DIREC TED TO FRAME FRESH ASSESSMENT, IN THE LIGHT OF THE OBSERVATIONS MADE B Y THE UNDERSIGNED IN THE FOREGOING PARAGRAPH 7. THE REVISION ORDER DATED 31.03.2009 HAS ATTAINED FINALITY UNDISPUTEDLY ON LEGALITY WHEREAS CONSEQUENTIAL THE FRESH NOTICE UN DER SECTION 143(2) DATED 22.05.2009 WAS ISSUED AND SERVED WHEREBY THE PROCEE DINGS WERE CONTINUED AND CONCLUDED UNDER SECTION 143(3) OF THE ACT VIDE ORDE R DATED 02.10.2009 AT AN ASSESSED INCOME OF RS.15,59,270/- WITH THE UNDER-ST ATED FINDINGS: ITA NO.123(ASR)/2013 30 AS STATED EARLIER IN THE FOREGOING PARAGRAPHS, TH E ASSESSEE FAILED TO DEDUCT TDS OUT OF THE CRUSHING CHARGES PAID TO M/S SHREE BALAJI OIL MILLS, BHUCHOO AS PER PROVISIONS OF SECTION 194C, THE TOTAL PAYMENTS FOR WHICH WERE DEBITED TO ASSESSEES PROFIT & LOSS ACCOUNT AT RS. 14,61,285/-. AS SUCH THE EXPENSES DEBITED TO PROFI T & LOSS ACCOUNT AT RS. 14,61,285/- ON ACCOUNT OF CRUSHING CHARGED PAI D TO THE SAID CONCERN ARE NOT ALLOWABLE AS PER PROVISIONS OF SEC TION 40A(IA) OF THE INCOME TAX ACT. ACCORDINGLY, THESE EXPENSES ARE DI SALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE ALREADY A SSESSED AS PER ORIGINAL ASSESSMENT. TOTAL INCOME OF THE ASSESSEE IS RE-COMPUTED AS UNDE R:- INCOME AS PER ASSESSMENT ORDER U/S 143(3) DATED 28.02.2007 RS. 97,980/- ADD: DISALLOWANCE OF CRUSHING CHARGES AS DISCUSSED ABOVE RS. 14,61,285/- TOTAL INCOME ASSESSED RS. 15,59,265/- OR SAY RS. 15,59,270/- 8. HOWEVER, THE GRIEVANCE OF THE ASSESSEE CONTINUED , HENCE ORDER DATED 02.10.2009 PASSED BY THE A.O. WAS CHALLENGED IN APPEAL BEFORE THE LD. CIT(A) THROUGH VARIOUS GROUNDS OF APPEAL DA TED 09.11.2009 REPRODUCED HEREIN BELOW PRIMARILY CONFINING TO THE ARGUMENTS TO THE EXTENT ALLOWANCE IS CORRECTLY CLAIMED ACCORDING TO THE PROVISIONS OF SECTION 28 OF THE ACT AND WHICH PROVISIONS ONLY ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES AND NATURE OF THE CASE. 3. THAT THE LEARNED A.O. ERRED IN MAKING AN ADDITI ON OF RS. 1461285/- KEEPING IN VIEW THE FACTS AND CIRCUMSTA NCES OF THE CASE. 4. THAT RS. 1461285/- WAS PAID FOR OUT SOURCING JOB WORK OF CRUSHING OF BINOLA SO IT IS AN ITEM FALLING UNDER MANUFACTURING/TRADING ACCOUNT. ACCORDING, THE SAME CAN NOT FALL UNDER ANY SECTIONS IN 30 TO 38. ACCORDINGLY, THE ADDITION OF RS. 1461285/- IS LIABLE TO BE DELETED. 5. THAT ITEMS OF EXPENDITURE WHICH DO NOT FALL UNDE R SECTIONS 30 TO 38, CANNOT FALL WITH THE PURVIEW OF SECTIONS 40(A) (IA) OF THE ACT. ACCORDINGLY, THE ADDITION IS LIABLE TO DELETED. ITA NO.123(ASR)/2013 31 6. THAT THE OMISSION OF NON DEDUCTION OF TDS IS MAD E GOOD BY M/S SHREE BALAJI OIL MILLS, BHUCHO MANDI, AS THAT ASSESSEE HAS SHOWN THE CRUSHING CHARGES IN THEIR RETURN OF INCO ME, SO IN VIEW OF EXPLANATION TO S-191 OF THE ACT, THE ADDIT ION OF RS. 1461285/- IS LIABLE TO BE DELETED. 7. THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THIS O UT SOURCING JOB WORK OF CRUSHING OF BINOLA ON THE ADVICE OF IT S STATUTORY AUDITOR SO THIS ADDITION IS LIABLE TO BE DELETED. 9. BEFORE THE LD. CIT(A), THE CONTENTIONS WERE RAI SED RELYING UPON THE DICTIONARY MEANING TO THE WORD CONTRACTO R, THE DECISION OF JAIPUR VIDYUT VITRAN NIGAM VS. DCIT, J.C. BANSAL , CHIEF ENGINEERS VS. TRO-2 UJJAIN. SECTION 194C, SECTION 40A(IA) AND THE WORDS UTILIZED IN THE FINANCE BILL 2004 CERTAIN OPI NION OF THE AUTHORS AND IN CONSEQUENCE THERETO THE REMAND REPORT OF THE A.O. VIDE LETTER NO.2677 DATED 31.03.2010 WAS CALLED FOR, FOR WHICH WAS PRAYED FOR UPHOLDING AOS ORDER DATED 02.10.2009. HAVING NOTIC ED THE AFORESAID POINTS RAISED BY THE ASSESSEE AND IN THE REMAND RE PORT, THE LD. CIT(A) ALLOWED THE GROUNDS TREATING THE APPEAL PARTLY ALLO WED THROUGH ORDER DATED 06.05.2010 AT PAGES 10 & 11 OF HIS ORDER BY G IVING THE FOLLOWING FINDINGS: I HAVE CONSIDERED THE ARGUMENTS OF LEARNED COUNSE L FOR THE APPELLANT AND THE REMAND REPORT OF THE A.O. ON THIS ISSUE AS WELL AS THE AFORESAID JUDGMENT OF THE HON'BLE SUPREME COURT AND HOLD THA T THE A.O. SHOULD HAVE SEEN THE TRUE NATURE AND QUALITY OF THE RECEI PT AND NOT THE HEAD UNDER WHICH IT IS ENTERED IN THE ACCOUNTS BOOKS OF THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND SHOULD HA VE RECASTED THE PROFIT AND LOSS ACCOUNT AND TRADING ACCOUNT, IN VI EW OF HIS OWN ADMISSION THAT THE CRUSHING CHARGES ARE THE PART O F TRADING/MANUFACTURING ACCOUNT. ACCORDINGLY, THESE CRUSHING CHARGES WOULD FALL UNDER THE PROVISIONS OF SECTION 28 WHIC H DO NOT FIND PLACE IN THE PROVISIONS OF SECTION 40(A)(IA). ACCORDINGL Y, THERE APPEARS TO BE MERIT IN THE ARGUMENTS OF THE APPELLANT THAT THIS AMOUNT OF CRUSHING CHARGES CANNOT BE DISALLOWED ON THE BASIS OF PROVI SIONS OF SECTION 40(A)(IA). ITA NO.123(ASR)/2013 32 THE NEXT GROUND OF APPEAL IS REGARDING THE WORD PA YABLE WHICH IS USED BEFORE THE RESIDENT CONTRACTOR OR SUB -CONTRACTOR. THE LEARNED COUNSEL POINTED OUT THAT THE WORDS USED WER E CREDITED OR PAID IN CLAUSE 11 OF FINANCE BILL, 2004 AT THE TIME OF I TS INTRODUCING IN THE LOK SABHA, BUT WERE SUBSTITUTED BY THE WORD PAYABLE WHILE PASSING THE FINANCE BILL IN TO ACT. HE RELIED UPON THE MEAN ING OF WORD PAYABLE FROM THE BLACKS LAW DICTIONARY (5 TH EDITION) AS WELL AS THE OPINION OF THE LEARNED AUTHORS GIVEN AT PAGE 386/87 OF TAXMANS DIRECT TAX LAW AND PRACTICE (AUG, 2009 EDITION). HE ALSO RELIED UPON THE PARA 9.12 OF THE CASE DECIDED BY JAIPUR BENCH O F I.T.A.T. IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LIMITED VS. DCIT (2009) 26 DTR TRIBUNAL ORDERS AND FILED ITS PHOTOCOPY AS WELL AS UPON MY DECISION IN THE CASE OF M/S KISHAN MAL OIL COTTON & GINNING FACTORY, RAMPURAPHUL (APPEAL NO. 187-IT-CIT(A)/BTI/09-10 DAT ED 15.04.2010) DECIDED ON THE BASIS OF TEJA CONSTRUCTI ONS VS. ACIT, HYDERABADN A BENCH (I.T.A. NO. 308/HYD/2009 DATED 23.10.2009 FOR THE ASSTT. YEAR 2005-06) REPORTED AT 36 DTR(HYD ) (TRIBUNAL) 220 AND RELIED UPON THE FOLLOWING FINDING GIVEN BY ME I N THAT CASE WHICH ARE BEING REPRODUCED BELOW:- I HAVE GIVEN DUE CONSIDERATION TO THE FACTS OF THE CASE AND THE PROVISIONS OF LAW IN THIS RESPECT. IT IS IMPORTANT TO NOTE THAT FROM THE WORDING OF S. 40(A)(IA), IT IS VERY CLEAR THAT THE SECTION IS APPLICATION ON EXPE NDITURE PAYABLE. IT IS NOT APPLICABLE TO THE EXPENDITURE P AID. THE WORD PAID HAS BEEN DEFINED IN SECTION 43(2) OF THE IN COME-TAX ACT, 1961 WHICH MEANS PAID OR PAYABLE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY FOLLOWED OR EMPLOYED BY THE A SSESSEE. HOWEVER, THE WORD PAYABLE HAS NO WHERE BEEN DEFI NED IN THE I.T. ACT, 1961. THUS, BY IMPLICATION, THE WORD PA YABLE DOES NOT INCLUDE PAID SIMPLY BECAUSE THERE IS NO SUCH DEFINITION OR DEEMING PROVISION FOR THE WORD PAYABLE. THEREFOR E, IN MY VIEW, THE DISALLOWANCE UNDER SECTION 40(A)(IA) CAN ONLY BE MADE IN RESPECT OF EXPENDITURE WHICH IS PAYABLE AN D IF THE EXPENDITURE HAS ALREADY BEEN PAID, NO SUCH DISALLO WANCE CAN BE MADE. THUS, SECTION 40(A)(IA) IS NOT APPLICABLE WH ERE THE EXPENDITURE IS PAID. IT IS APPLICABLE ONLY IN A CA SES WHERE THE PAYMENTS ARE DUE AND OUTSTANDING. ITA NO.123(ASR)/2013 33 THEREFORE, AFTER GOING THROUGH THE FACTS AND PROVIS IONS OF LAW AND RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON 'BLE BENCH (DISCUSSED (SUPRA)), I AGREE WITH THE APPELLANT AN D THEREFORE, HOLD THAT PROVISIONS ARE APPLICABLE ONLY IN RESPEC T OF THE EXPENDITURE WHICH REMAINED PAYABLE AT THE END OF T HE YEAR. AFTER PERUSING THE RECORDS, I FIND THAT AS PER THE BALANCE SHEET AT THE END OF THE YEAR, ONLY A SUM OF RS. 1649262/ - REMAINED PAYABLE OUT OF RS. 86238103/-. THEREFORE, THE MAXI MUM DISALLOWANCE WHICH COULD BE MADE U/S 40(A)(IA) SHO ULD BE RS. 1649262/-. THE APPELLANT HAS CLAIMED THAT OUT OF T HIS MOST OF THE AMOUNTS PAYABLES ARE ON ACCOUNT OF GOODS SUPPL IED BY THE PAYEE, AMOUNTING TO RS. 1631597/-, BUT THE APPELLA NT HAS FAILED TO ESTABLISH THAT THIS PAYABLE AMOUNT IS AGAINST T HE PURCHASE OF GOODS. HENCE, THIS PLEA OF THE APPELLANT IS NOT AC CEPTED. ON THESE FACTS AND IN VIEW OF THE LEGAL POSITION, I S USTAIN THE DISALLOWANCE OF RS. 1649262/- AS AN EXPENDITURE DI SALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. THE APP ELLANT GETS A RELIEF OF RS. 6974551/-. ON THE OTHER HAND THE A.O. CONTENDED THAT THE WORD PAYABLE INCLUDES THE WORD PAID ALSO AND THAT IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE PAYMENT IS MADE DURING THE PARTICULAR YEAR OR IN THE SUBSEQUENT YEAR. I HAVE CONSIDERED THE ARGUMENTS OF THE LEARNED COU NSEL OF THE APPELLANT AND THE FACTS OF THE CASE AND PROVISIONS OF LAW AND THE REMAND REPORT OF THE A.O ON THIS ISSUE AS WELL AS THE AFORESAID JUDGMENT OF THE JAIPUR BENCH OF I.T.A.T. IN THE CA SE OF M/S JAIPUR VIDYUT VITRAN NIGAM LIMITED VS. DICT AND MY OWN DE CISION IN THE CASE OF M/S KISHAN MAL OIL COTTON & GINNING FACTOR Y, RAMPURAPHUL (APPEAL NO. 187-IT-CIT(A)/BTI/09-10 DATED 15.04.20 10). I AGREE WITH THE APPELLANT THAT THEREFORE, HOLD THAT PROVI SIONS ARE APPLICABLE ONLY IN RESPECT OF THE EXPENDITURE I.E. CRUSHING C HARGES WHICH REMAINED PAYABLE AT THE END OF THE YEAR. AFTER PER USING RECORDS, I FIND THAT AS PER THE BALANCE-SHEET OF THE APPELLANT AT THE END OF THE YEAR, ONLY A SOME OF RS. 26245/- REMAINED PAYABLE OUT OF RS. 1461285/-. THEREFORE, THE MAXIMUM DISALLOWANCE WHICH COULD BE MADE U/S 40(A)(IA) SHOULD BE RS. 16245/-. ON THESE FACTS AN D LEGAL POSITION I SUSTAIN THE DISALLOWANCE OF RS. 26245/- AS AN EXPE NDITURE DISALLOWABLE ITA NO.123(ASR)/2013 34 U/S 40(A)(IA) OF THE I.T. ACT, 1961. THE APPELLAN T GETS A RELIEF OF RS. 1435040/-. 10. THE REVENUE BEING AGGRIEVED WITH THE FINDINGS OF THE LD. CIT(A), CHALLENGED THE SAME THROUGH THE STATEMENT OF FACTS AND GROUNDS OF APPEAL DATED 14.07.2010 WHICH IS REPROD UCED FOR THE SAKE OF CLARITY AS UNDER: THE WORD PAYABLE INCLUDES THE WORD PAID ALSO. WHEN THE CRUSHING WORK OF THE ASSESSEES BINOLA WAS UNDERTA KEN, THE PAYMENT OF CERTAIN MONEY BECAME PAYABLE WHICH WAS SUBSEQUE NTLY PAID BY THE ASSESSEE LEAVING A PETTY BALANCE PAYABLE AS ON THE LAST DAY OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UND ER REPORT. THE LEGISLATURE HAS USED THE WORD PAYABLE IN THE SEN SE THAT WHENEVER A PAYMENT BECOMES DUE TO THE PERSON WHO RENDERS THE SERVICE/WORK A CERTAIN AMOUNT OF PAYMENT BECOMES PAYABLE TO THAT PERSON AND IT DOES NOT MAKE ANY DIFFERENCE WHETHER THAT PAYMENT IS PA ID DURING A PARTICULAR YEAR OR IN THE SUBSEQUENT YEAR. THE LEA RNED CIT(A) HAS NOT INTERPRETED THE PROVISIONS OF SECTION 40(A)(IA) IN BROAD SENSE, AS THE INTENTION OF LEGISLATURE IN ENACTING THESE PROVISI ONS WAS TO LEVY TAX ON THE AMOUNTS COMING DUE FROM ANY SERVICE RENDERED O N WHICH TDS WAS NOT DEDUCTED. KEEPING IN VIEW ABOVE FACTS LEARNED CIT(A) HAS ERRE D IN DELETING THE ADDITION OF RS. 14,35,040/- MADE BY TH E A.O. WITHOUT CONSIDERING THE FACTS DISCUSSED IN THE ASSESSMENT O RDER AS WELL AS REMAND REPORT DATED 26.04.2010 SUBMITTED BEFORE HIM . 11. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD PAPER BOOK CONTAINING 20 PAGES DATED 23.05.2013 FOR SUBST ANTIATING THE CONTENTIONS PRIMARILY DEVOTED TO THE GROUNDS OF CR OSS OBJECTIONS DATED 01.08.2010 ADDRESSING TO THE GRANTING OF ALL OWANCE AND UPHOLDING THE FINDINGS OF THE LD. CIT(A) AND ADDIT IONALLY A VALIANT ATTEMPT MADE TO BUTTRESS THE ARGUMENTS BY RELYING U PON THE DECISION OF COORDINATE BENCH IN THE CASE OF TEJA CONSTRUCTI ONS VS. ACIT (2010) 36 DTR 220 (HYD. TRIB) AND N. RAMACHANDRA RE DDY, ITA NO.1372 OF 2007 COORDINATE BENCH ORDER DATED 6 TH MARCH, 2009 NOTICED IN PARAGRAPH 13 OF TEJA CONSTRUCTIONS CASE WHEREBY NO FACET OF CONTROVERSY OF THE ASSESSEE HAS BEEN RAISED TAK ING THROUGH VARIOUS ITA NO.123(ASR)/2013 35 DOCUMENTS AND MATERIAL FACTS SHIFTING THE BURDEN O F PROOF IS ON THE REVENUE QUA NON BRINGING OF EVIDENCE ON RECORD THAT SHRI BALAJI OIL MILLS IS A CONTRACTOR IN RELATION TO RESPONDENT-ASS ESSEE, HENCE NONE LIABILITY FOR DEDUCTION UNDER SECTION 194C OF THE ACT. 12. PERTINENT TO REFER THAT LABYRINTH SUBMISSIONS HAVING BEEN MADE CONTENDING THEREIN THAT ALLOWANCE IS TO BE GRANTED ACCORDING TO THE SOLITARY PROVISION OF SECTION 28 WHILE READING TH E SAME AS STAND ALONE OF SECTION DE-HORSE OTHER PROVISIONS OF THE ACT AND THUS PRAYING FOR ALLOWING THE CROSS OBJECTION AND DISMISSING THE APPEAL OF THE REVENUE. 13. IN CONTRADICTION TO THE SUBMISSIONS RAISED BY T HE LD. COUNSEL FOR THE ASSESSEE (SUPRA), THE LD. DR MR. TARSEM LAL RAI SED POINT-WISE REBUTTAL ON VARIOUS FACTS OF THE CONTROVERSY WHICH CHRONOLOGICALLY RUN AS NAMELY THE CONSTITUTIONAL VALIDITY OF SECTION 40 (A)(IA) UPHELD WHILE PAYMENTS MADE WITHOUT DEDUCTING TAX AT SOURCE IN TH E DECISION IN W.T. 186 OF 2008 IN DEYS MEDICAL (U.P.) PVT. LTD. VS. UNION OF INDIA AND OTHERS (2009) 316 ITR 445 (ALL) DATED 15.02.200 8 , TUBE INVESTMENTS OF INDIA LTD. AND ANOTHER VS. ACIT IN CWP NO.33766 OF 2007 AND OTHERS REPORTED IN (2010) 325 ITR 610 ( MADRAS) DATED 29,09,2009, CIT-IV VS. SIKANDAR KHAN N. TUNVAR DAT ED 02.05.2013 IN TAX APPEAL NO.905 OF 2012 , CIT VS. (GUJ) , CIT VS. MERILYN SHIPPING & TRANSPORTS ( ITA NO.477/VIZ/2008 DATED 29 TH MARCH, 2012 (SB) AND AGAINST THE SPECIAL BENCH DECISION O F THE TRIBUNAL FINALLY THE DECISION OF HONBLE CALCUTTA HIGH COUR T IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE IN ITA NO. 20 OF 2013 GA 190 OF 2013 WHICH NOTICES THE DECISION OF DEYS MEDICAL (U .P.) PVT. LTD. (SUPRA). 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS FAILED TO ADDRESS ANY REBUTTAL OF WHATSOEVER KIND TO THE JUDGMENTS OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF DEYS MEDICAL (U. P.) PVT. LTD. , HONBLE MADRAS HIGH COURT IN THE CASE OF TUBE INVE STMENTS OF INDIA LTD. AND ANOTHER VS. ACIT (SUPRA), HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT-IV VS. SIKANDARKHAN N. TUNVAR (SUPRA) AND HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (SUPRA), WHICH ARE THE DECISIONS ON THE IMPUGNED IS SUES AS RAISED. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISI ON OF SPECIAL BENCH IN THE CASE OF CIT VS. MERILYN SHIPPING & TRANSPORT S (SUPRA) ONLY IN THIS REGARD BUT HAS NOT REBUTTED THE SAID DECISIONS OF THE HONBLE HIGH COURTS MENTIONED HEREINABOVE. ITA NO.123(ASR)/2013 36 15. SECONDLY, REGARDING RELIANCE PLACED ON THE DE CISION OF COORDINATE BENCH OF HYDERABAD IN THE CASE OF TEJA C ONSTRUCTIONS VS. ACIT (SUPRA), WE ARE OF THE VIEW THAT THE ARGUMENTS HAVE NOT BEEN CONCLUDED TO THE LOGICAL END WHILE THE SAID ORDER W ITH GREATEST RESPECT OF THE ITAT IS DATED 23.10.2009 BEFORE THE CONSTI TUTIONAL VIRUS WERE UNDER CHALLENGE AS REVEALED THROUGH THE JUDGMENTS BEING BY THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF DEY S MEDICAL (U.P.) P LTD. (SUPRA) WHICH IS DATED 15.02.2008 AND JUDGM ENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF TUBE INVESTMENTS O F INDIA VS. ACIT (SUPRA) WHICH IS DATED 29.09.2009 AND DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRA NSPORTS DATED 29.03.2012 WHEREBY AT THE TIME OF CASE DISPOSAL BEF ORE US, WE HAVE THE BENEFIT OF ADDITIONAL JUDGMENT OF HONBLE GUJRA T HIGH COURT IN THE CASE OF CIT-IV VS. SIKANDARKHAN N TUNVAR AND HONBL E CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (SUPRA). THUS, WE ARE BOUND TO FOLLOW THE LAW PREVALENT AT T HE RELEVANT DATE AND TIME. EVEN OTHERWISE, CONTROVERSY RAISED STANDS ANSWERED AGAINST THE ASSESSEE AND THEREFORE THE DEPARTMENTAL APPEAL IS ALLOWED TO THAT EXTENT WHEREBY THE SAID ASPECT OF THE FINDINGS BY THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. CRESCENT E XPORT SYNDICATE ARE REPRODUCED HEREIN BELOW WHICH ARE PERTINENT FIN DING OF THE HONBLE HIGH COURT IN THE PRESENT CASE.: IN THE BACKDROP OF THESE SUBMISSIONS, HONBLE MAD RAS HIGH COURT UPHELD THE CONSTITUTIONAL VALIDITY OF THE PROVISIO NS OF SECTION 40(A)(IA) AND MADE VARIOUS OBSERVATIONS:- (I) HONBLE MADRAS HIGH COURT, INTER ALIA, NOTED THE OB SERVATIONS OF HONBLE SUPREME COURT IN THE CASE OF A.S.KRISHNA V. STATE OF MADRAS AIR 1957 SC 297 WHICH ARE AS UNDER:- IT WOULD BE QUITE AN ERRONEOUS APPROACH TO THE QUE STION TO VIEW SUCH A STATUTE NOT AS AN ORGANIC WHOLE, BUT AS A MERE COLLECTION OF SECTIONS THEN DISINTEGRATE IT INTO PA RTS, EXAMINE UNDER WHAT HEADS OF LEGISLATION THOSE PARTS WOULD S EVERALLY FALL, AND BY THAT PROCESS DETERMINE WHAT PORTIONS THEREOF ARE INTER VIRES AND WHAT ARE NOT. THUS, SECTION 40(A)(IA) COU LD NOT BE VIEWED INDEPENDENTLY AND HAD TO BE CONSIDERED ALONG WITH OTHER PROVISIONS. ITA NO.123(ASR)/2013 37 (II) THE PROVISIONS OF SECTION 40(A)(IA) WERE COMPARED W ITH THE PROVISIONS OF SECTION 201 OF THE INCOME TAX ACT AND , IT WAS, INTER ALIA, OBSERVED THAT AS FAR AS SECTION 201 IS CONCERNED THAT WOULD RELATE TO THE AMOUNT OF TAX THAT COULD BE DED UCTED BY WAY OF TDS. HOWEVER, AS FAR AS SECTION 40(A)(IA) IS CONCERNED, WHICH WOULD RESULT IN THE DISALLOWANCE OF WHOLE OF THE EXPENDITURE AND THEREBY THE ENTIRE SUM EXPENDED WOU LD ATTRACT THE LEVY OF TAX AT A PRESCRIBED RATE WITH ALL OTHER CONDITIONS SUCH AS SURCHARGE, ETC. THUS, HONBLE MADRAS HIGH COURT HAS ALSO HELD IN PA RA 61 OF ITS JUDGMENT THAT WHOLE OF THE EXPENDITURE CLAIMED WITHOUT MAKING TDS IS TO BE DISALLOWED AND NOT ONLY PART OF THE EXPENDITURE. (III) (III) THE FINANCE BILL NO.2 OF 2004 STATES THAT THE INSER TION OF CLAUSE (IA) IN CLAUSE (A) TO SECTION 40 OF THE ACT WAS WIT H A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISIONS. (IV) WHEN THE PROVISIONS AND PROCEDURES RELATING TO TDS ARE SCRUPULOUSLY APPLIED, FIRST AND FOREMOST IT ENSURES THE IDENTIFICATION OF THE PAYEES AND THEREBY NETWORK OF ASSESSEES GETS CONFIRMED. WHEN ONCE SUCH IDENTITY OF ASSESSEE S, WHO ARE IN RECEIPT OF THE INCOME CAN BE ASCERTAINED, IT WIL L ENABLE TAX COLLECTION MACHINERY TO BRING WITHIN ITS FOLD ALL S UCH PERSONS WHO ARE LIABLE TO COME WITHIN THE NETWORK OF TAXPAY ERS. THUS, IF IT IS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE IN RESPECT OF THOSE PAYMENTS WHICH HAVE BEEN PAID WITHOUT MAKING TDS AND AT THE END OF THE YEAR NO AM OUNT IS OUTSTANDING THEN THE VERY OBJECT OF IDENTIFICATION OF PAYEES WILL GET FRUSTRATED. (V) THE LEGISLATIVE INTENT OF THE INTRODUCTION OF SECTI ON 40(A)(IA) IS IN THE LARGER PERSPECTIVE OF AUGMENTING THE VERY TD S PROVISIONS THEMSELVES. IT IS NOT MERELY RELATED TO THE COLLECTION OF TDS ONLY. (VI) THE INTENTION OF THE LEGISLATURE IS NOT TO TAX THE PAYER FOR ITS FAILURE TO DEDUCT THE TAX AT SOURCE. THE OBJECT OF INTRODUCTION OF SECTION 40(A)(I) AS WELL AS SECTION 40(A)(IA) IS TO ENSURE THAT ONE OF THE MODES OF RECOVERY AS PROVIDED IN CHAPTER XVI I-B IS SCRUPULOUSLY IMPLEMENTED WITHOUT ANY DEFAULT, IN OR DER TO AUGMENT THE SAID MODE OF RECOVERY. ITA NO.123(ASR)/2013 38 HONBLE MADRAS HIGH COURT, INTER ALIA, OBSERVED AT PARA 69 OF ITS JUDGMENT AS UNDER:- WITH THE PROVISO TO SECTION 40(A)(IA) THE DEDUCTIO N IN THE SUBSEQUENT YEAR BY RECTIFYING THE DEFAULT COMMITTE D IN THE MATTER OF TDS IN THE PREVIOUS YEAR, A DEFAULTING A SSESSEE CANNOT BE HEARD TO SAY THAT IRRESPECTIVE OF THE DELIBERAT E DEFAULT COMMITTED BY IT IN IMPLEMENTING THE PROVISION RELA TING TO TDS, IT SHOULD BE HELD THAT A HIGHER TAX LIABILITY IS M ULCTED ON IT. HONBLE MADRAS HIGH COURT, INTER ALIA, OBSERVED IN PARA 83 OF ITS JUDGMENT AS UNDER:- AFTER ALL THE PROVISO HAS BEEN INSERTED IN ORDER T O ENSURE THAT EVEN A DEFAULTER IS NOT PUT TO SERIOUS PREJUDICE, IN AS MUCH AS, BY OPERATION OF THE SUBSTANTIVE PROVISION, THE EXP ENDITURE WHICH IS OTHERWISE ALLOWABLE AS A DEDUCTION IS DEN IED ON THE GROUND THAT THE OBLIGATION OF TDS PROVISIONS IS VI OLATED. THE LAW MAKES WHILE IMPOSING SUCH A STRINGENT RESTRICT ION WANTED TO SIMULTANEOUSLY PROVIDE SCOPE FOR THE DEFAULTER TO GAIN THE DEDUCTION BY COMPLYING WITH THE TDS PROVISION AT A LATER PINT OF TIME. THUS, IMPLIEDLY HONBLE MADRAS HIGH COURT, HAS, INTER ALIA, HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) WILL BE APPLICABLE WITH RESPECT TO ENTIRE EXPENDITURE. IT IS TRUE THA T SPECIFIC ISSUE REGARDING PAID, CREDITED AND PAYABLE HAS NOT BEEN CONSIDERED BUT FROM THE JUDGMENT IT IS EVIDENT THA T IF ASSESSEES CONTENTION IS ACCEPTED THEN THE VERY OBJECT OF INC ORPORATION OF SECTION 40(A)(IA) WOULD BE FRUSTRATED. 21. IN VIEW OF ABOVE DISCUSSION, WE ANSWER THE QUESTION AS UNDER:- THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, ARE APPLICABLE NOT ONLY TO THE AMOUNT WHICH IS SHOWN A S PAYABLE ON THE DATE OF BALANCE-SHEET, BUT IT IS APPLICABLE TO SUC H EXPENDITURE, WHICH BECOME PAYABLE AT ANY TIME DURING THE RELEVANT PRE VIOUS YEAR AND WAS ACTUALLY PAID WITHIN THE PREVIOUS YEAR. IN THE RES ULT THE QUESTION IS DECIDED IN FAVOUR OF REVENUE AND AGAINST THE ASSES SEE. ITA NO.123(ASR)/2013 39 BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF ME RILYN SHIPPING. WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORIT Y AND THE MINORITY VIEWS EXPRESSED IN THE AFORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE FACT THAT THE LEGISL ATURE HAS REPLACED THE EXPRESSION AMOUNTS CREDITED OR PAID WITH THE EXPRESSION PAYABLE IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE-AMENDMENT AND POST AMEND MENT LAW IS PERMISSIBLE FOR THE PURPOSE OF ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE BY THE APEX COURT I N THE CASE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME OMPARISON BETWEEN THE DRAFT AND THE ENACTED LAW IS NOT PERMIS SIBLE. NOR CAN THE DRAFT OR THE BILL BE USED FOR THE PURPOSE OF REGULA TING THE MEANING AND PURPORT OF THE ENACTED LAW. IT IS THE FINALLY ENACT ED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REAL IZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD THAT WHERE LANGUAGE IS C LEAR THE INTENTION OF THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE USED. HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRE T THE SECTION ON THE BASIS OF ANY COMPARISON BETWEEN THE DRAFT AND THE S ECTION ACTUALLY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFE CT OF THE SO-CALLED REPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. THE LEARNED TRIBUNAL HELD THAT SECTION 40(A)(IA) O F THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHICH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER TH E HEAD INCOME FROM BUSINESS AND PROFESSION IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED. HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEEK TO JUSTIFY THAT THIS FICTION CANNOT BE EXTENDED ANY FURTHER AND, T HEREFORE, CANNOT BE INVOKED BY ASSESSING OFFICER TO DISALLOW THE GENUIN E AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY P AID? DOES THIS ITA NO.123(ASR)/2013 40 NOT AMOUNT TO DELIBERATELY READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIND THAT THE LEA RNED TRIBUNAL REALIZED THE MEANING AND PURPORT OF SECTIO N 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CASE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSIBLE EXPENSES ARE TO BE DISALLOWE D. BUT THEY SOUGHT TO REMOVE THE RIGOUR OF THE LAW BY HOLDING T HAT THE DISALLOWANCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASUS OMISSUS WHICH WAS NOT PERMISSIBLE AND COULD ONLY HAVE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CASE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGMENT IN THE CASE OF BHUWALKA STE EL INDUSTRIES VS. BOMBAY IRON & STEEL LABOUR BOARD REPORTED IN 2010 ( 2) SCC 273. UNPROTECTED WORKER WAS FINALLY DEFINED IN SECTIO N 2 (II) OF THE MATHADI ACT AS FOLLOWS:- UNPROTECTED WORKER MEANS A MANUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE CONTENTION RAISED WITH REFERENCE TO WHAT WAS TH ERE IN THE BILL WAS REJECTED BY THE SUPREME COURT BY HOLDING A S FOLLOWS:- IT MUST, AT THIS JUNCTURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDED THE WORDS BUT FOR THE PROVISIONS OF THIS ACT IS NOT ADEQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS O F THE LABOUR FORCE IN THE STATE, THESE PRECISE WORDS WERE REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS MADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECEIVED THE ASSENT OF THE VICE- PRESIDENT ON 05-06-1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZETTE EXTRAORDINARY, PART IV ON 13-06-1969, THE AFOREMENTIONED WORDS WERE OMITTED. THEREFORE, THIS WOULD BE A CLEAR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLATURE BEING CONSC IOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FACTUAL DATA, DELIBERATELY AVOIDED THOSE W ORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITIO N, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERATELY OMITTED FRO M THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE ITA NO.123(ASR)/2013 41 DO NOT THINK THAT IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SUPPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREM ELY CLEAR AND SETTLED THAT THOUGH THIS COURT MAY SUPPLY THE CASUS OMISSUS, IT WOULD BE IN THE RAREST OF THE RARE CASE AND THUS SUPPLYIN G OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INA DVERTENT OMISSION ON THE PART OF THE LEGISLATURE. BUT, THAT IS CERTAI NLY NOT THE CASE HERE. WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERP RETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDING TO US, ARE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI I B. IF THE QUESTION IS WHICH EXPENSES ARE SOUGHT TO BE DISALLOWED? TH E ANSWER IS BOUND TO BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SO URCE 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. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSC EPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOOKING AT THE DRAFT IT C OULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CR EDITED IN FAVOUR OF A CONTRACTOR OR SUB-CONTRACTOR DIFFERENTLY THAN THE P AYMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESS IONAL SERVICES OR FEES FOR TECHNICAL SERVICES BECAUSE THE WORDS AMOUNTS CREDITED OR PAID WERE USED ONLY IN RELATION TO A CONTRACTOR OR SUB- CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B PAYABLE ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES OR TO A CONTRACTOR OR SUB CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NOT DEDUCED, OR AFTER DEDUCTION HAS NOT PAID WITHIN THE SPECIFIED TIME. THE LANGUAGE USED BY THE LEGISLATURE IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREAS THE LANGUAGE USED IN THE BILL WAS AMBIGUOUS. A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBM ISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THERE CAN BE NO DENIAL THAT THE ITA NO.123(ASR)/2013 42 PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR ANSWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MS. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECOME EFFECTIVE FROM 1ST APRIL, 2013 SHOULD BE HELD TO HAVE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DATE CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDICATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECURE COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS OF TAX AT SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPIN ION THAT THE MAJORITY VIEWS EXPRESSED IN THE CASE OF MERILYN SHI PPING & TRANSPORTS ARE NOT ACCEPTABLE. THE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALREADY BEEN DEALT WITH AND REJECTED. THE APPEAL IS, THUS, ALLOWED IN FAVOUR OF THE REVE NUE. 16. IT WOULD BE RELEVANT TO DEAL WITH THE ARGUMEN TS OF THE LD. COUNSEL OF THE ASSESSEE WHICH WERE PRESSED REPEATED LY THAT THE PROVISIONS OF SECTION 28 STAND ALONE, GRANT THE ALLOWANCE TO THE ASSESSEE AND THIS CLAIM HAS BEEN MADE VALIDLY THU S ELIGIBLE FOR ALLOWANCE NEVERTHELESS NO DEDUCTION OF TAX MADE. I N THIS CONTEXT, WE REFER THAT THE SAID ARGUMENTS BY LD. AR ARE BEREF ET OF MERITS AND SUBSTANCE SINCE THE ACT HAS TO BE READ AS AN INTEG RATED CODE AND NOT TO THE CHOICE OF THE ASSESSEE BEING PICK AND CHOOSE TO THE PROVISIONS OF LAW SUITING THE REQUIREMENTS OF A LITIGANT ANDS THE SIMILAR ARGUMENT HAS BEEN DEALT IN THE AFORESAID JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDIC ATE (SUPRA) AND WHICH FINDINGS ARE WHILE NOTICING THE JUDGMENT OF H ONBLE SUPREME COURT IN A.S. KRISHNA VS. STATE OF MADRAS REPORT ED IN AIR 1957 SCC 297 (SUPRA). 17. THAT THE SAID ARGUMENT IS HEREBY REJECTED AND E VEN THE HONBLE SUPREME COURT IN THE CASE OF V.N. SHRIKHANDE (DR.) VS. ANITA SENA FERNANDES (2011) 1 SCC 53 AT PARA 22 WHILE NOTICING THE JUDGMENT IN THE CASE OF RBI V. PEERLESS GENERAL FINANCE & INVES TMENT CO. LTD; (1987) 1SCC 450 AT PARA 33 WHERE IT HAS BEEN HELD A S UNDER: ITA NO.123(ASR)/2013 43 IN RBI VS. PEERLESS GENERAL FINANCE & INVESTMENT C O. LTD. CHENNAPA REDYY, J. REFERRED TO THE RULE OF CONTEXTU AL INTERPRETATION AND OBSERVED : (SCC P.450 PARA 33): 33. INTERPRETATION MUST DEPEND ON TH TEXT AND THE CONTEXT. THEY ARE THE BASES OF INTERPRETATION. ONE MAY WELL SAY IF TH E TEXT IS THE TEXTURE, CONTEXT IS WHAT GIVES THE COLOUR. NEITHER CAN BE IG NORED. BOTH ARE IMPORTANT. THAT INTERPRETATION IS BEST WHICH MAKES THE TEXTUAL INTERPRETATION MATCH THE CONTEXTUAL. A STATUTE IS B EST INTERPRETED WHEN WE KNOW WHY IT WAS ENACTED. WITH THIS KNOWLEDGE, TH E STATUTE MUST BE READ FIRST AS A WHOLE AND THEN SECTION BY SECTIO N, CLAUSE BY CLAUSE, PHRASE BY PHRASE AND WORD BY WORD. IF A STATUTE IS LOOKED AT, IN THE CONTEXT OF ITS ENACTMENT, WITH THE GLASSES OF THE S TATUTE MAKER, PROVIDED BY SUCH CONTEXT, ITS SCHEME, THE SECTIONS, CLAUSES, PHRASES AND WORDS MAY TAKE COLOUR AND APPEAR DIFFERENT THA N WHEN THE STATUTE IS LOOKED AT WITHOUT THE GLASSES PROVIDED BY THE CO NTEXT. WITH THESE GLASSES, WE MUST LOOK AT THE ACT AS A WHOLE AND DIS COVER WHAT EACH SECTION, EACH CLAUSE, EACH PHRASE AND EACH WORD IS MEANT AND DESIGNED TO SAY AS TO FIT INTO THE SCHEME OF THE EN TIRE ACT. NO PART OF A STATUTE AND NO WORD OF A STATUTE CAN BE CONSTRUED I N ISOLATION. 18. FURTHER, WE SHALL ADD THAT PROVISIONS OF SECTIO N 28 ARE CONFINED TO CHARGING OF INCOMES UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND IT IS MOST PERTINENT TO REFER TH AT THE PROVISIONS OF SECTION 29 REFERS TO THE METHODOLOGY OF COMPUTING T HE SAID CHARGE FOR COVERING THE PROVISION CONTAINED IN SECTION 30 TO 4 3D, WHEREIN THE SAID PROVISION U/S 40(A)(IA) IS INCLUSIVE THEREIN. AND IT IS EVEN OTHERWISE RELEVANT TO MENTION THAT THE PROVISIONS O F SECTION 40 OPEN WITH WORD NOTWITHSTANDING ANYTHING TO THE CONTRAR Y IN SECTION 30 TO 38 WHEREIN THE AMOUNTS NOT DEDUCTIBLE ARE REFERRED TO U/S 40(A)(IA). THE SAID PROVISION COMMENCE WITH NON-OBSTANTE CLAUS E AND REFER THE PROVISION U/S 30 TO 38 WITH WHERE INTO UNDER THE GE NERAL CLAIM OF THE EXPENSES, THE SAID ALLOWANCE NOT TO BE GRANTED, SPE CIFICALLY WHERE A SPECIAL PROVISION FOR DISALLOWANCE HAS BEEN EXTRACT ED UNDER THE STATUTE. 19. THEREFORE, IN VIEW OF OUR FINDINGS HEREINABOVE , GROUNDS RAISED BY THE ASSESSEE IN ITS C.O. HAVE NO MERIT AND THERE FORE, THE SAME ARE DISMISSED AND THE APPEAL OF THE REVENUE IS ALLOWED. ITA NO.123(ASR)/2013 44 20. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO.326(ASR)/2010 IS ALLOWED AND C.O. NO.19(ASR)/20 10 OF THE ASSESSEE IS DISMISSED. 9. IN VIEW OF THE ABOVE DISCUSSIONS, THE LEGAL ISSU E RAISED BY THE REVENUE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.123(ASR)/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH DECEMBER., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19TH DECEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. INDIAN ROADLNES, AFGHAN ROAD, HOS HIARPUR. 2. THE ITO, HOSHIARPUR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.