M/s Shoo & Brothers, Jagatsinghpur V. ITO, Jagatsinghpur

ITA 123/CTK/2012

• Counselvise Citation: 12322114 RSA 2012
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: S K JENA
• Keywords: Depreciation
• Section: 32; 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 123/CTK/2012 / ASSESSMENT YEAR 2006 - 07 M/S.SAHOO & BROTHERS, AT: ATHARBANKI, PARADEEP, DIST. JAGATRSINGHPUR PAN: AANHS 8692 F - - - VERSUS - INCOME - TAX OFFICER, WARD 1, JAG ATSINGHPUR. ( /APPELLANT ) ( / RESPONDENT ) / I.T.A.NO. 092/CTK/2012 / ASSESSMENT YEAR 2006 - 07 INCOME - TAX OFFICER, WARD 1, JAGATSINGHPUR - - - VERSUS - M/S.SAHOO & BROTHERS, AT: ATHARBANKI, PARADEEP, DIST. JAGATRSINGHPUR PAN: AANHS 8692 F ( /APPELLANT ) ( / RESPONDENT ) FOR THE ASSESSEE: SHRI S.K.JENA, AR FOR THE DEPARTMENT: SHRI N.K.NEB, DR / DATE OF HEARING: 11.09.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / O RDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THESE APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE ARE ON DIFFERENT GROUNDS WHICH WE PROPOSE TO TAKE UP TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY FOR THE ASSESSMENT YEAR 2 006 - 07 SIMULTANEOUSLY. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND. A. FOR THAT THE ASSESSMENT ORDER ADDITION MADE BY THE LD. AC IS IN PURSUANCE TO THE ORDER PASSED BY THE LD. CIT U/S.263 OF THE ACT IS ILLEGAL, PARTICULARLY WHEN THERE IS NO ORAL OR WR ITTEN AGREEMENT BETWEEN THE APPELLANT AND TRANSPORTERS FOR CARRIAGE OF GOODS. IT HAS ALSO NOT BEEN PROVED BEYOND REASONABLE DOUBTS I.T.A.NO. 123/CTK/2012 & I.T.A.NO. 092/CTK/2012 (CR OSS APPEALS) 2 BY THE LD. AC THAT THE TRANSPORTATION CHARGES WERE PAID TO THE TRANSPORTERS BY VIRTUE OF A CONTRACT FOR A SPECIFIC PERIOD, QU ANTITY OR PRICE. THEREFORE THE APPLICA TION OF SECTION 40(A) (I A) R. W 194C IN THE APPELLANTS CASE IS PRIMA - FADE INCORRECT IN THE ABSENCE OF ANY EVIDENCE. THE ADDITION MADE BY THE LD. AC IS MERELY BASED ON UNTESTED MATERIALS, SURMISES, ASSUMPTION, MISCONCE IVED, CONTRARY TO SETTLED POSITION OF LAW. THE LD. CIT (A) IS ALSO EQUALLY ERRED IN CONFIRMING THE SAID ADDITION. THUS THE ADDITION OF RS.28, 18,926/ - IS NOT SUSTAINABLE, LIABLE TO BE DELETED ON THIS GROUND. 3. THE REVENUE HAS RAISED THE FOLLOWING ISSUES . 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE DISALLOWANCE OF EXCESS DEPRECIATION OF 12,46,944 MADE BY THE AO, WHERE THE ASSESSING OFFICER HAS CATEGORICALLY ASCERTAINED IN THE ASSESS MENT ORDER PASSED U/S.263/143(3) DATED 29.12.2010 THAT ASSESSEE HAS ENGAGED HIS OWN THREE NUMBERS OF PAY LOADERS AND TWO NUMBERS OF TATA HITACHI IN HIS OWN BUSINESS AT THE CONFINED AREA OF PARADEEP PORT NOT AT OUTSIDE AREAS AND NEVER USED SUCH MACHINERIES IN BUSINESS OF RUNNING THEM ON HIRE. SINCE PLANT AND MACHINERIES ARE USED (OTHER THAN THOSE USED IN BUSINESS OF RUNNING THEM ON HIRE) - DEPRECIATION @15% IS ALLOWABLE AS PROVISIONS OF SECTION 32 AND DEPRECIATION RATE SPECIFIED IN NEW APPENDIX I TO I.T.RU LE 1962 INSTEAD OF 30% ALLOWED BY THE LD.CIT(A). 4. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE WHEN THE ASSESSEE AND REVENUE WERE IN APPEAL WAS RENDERED BY THE ITAT, CUTTACK BENCH IN THE CASE OF SRI NASIB SINGH V. AC IT IN ITA NO.440/CTK/2011 VIDE ORDER DT.13.1.2012, WHICH COPY IS BEING FURNISHED INSOFAR AS THE TRIBUNAL HA D JUSTIFIED THE INTER - LINKING OF THE ISSUES TO THE EXTENT THAT THE FACTS HAVE BEEN INTERPRETED AS THEY WERE RENDERED WHEN THIS ISSUE WAS ACCEPTED BY THE ASSESSING OFFICER BUT WAS SUBJECT TO REASSESSMENT I.T.A.NO. 123/CTK/2012 & I.T.A.NO. 092/CTK/2012 (CR OSS APPEALS) 3 U/S.263 ON THE DIRECTION OF THE LEARNED CIT U/S.263 WAS A VIEW WHICH WAS NOT IMPERMISSIBLE. THE LEARNED CIT(A) THEREFORE, TRIED TO IMPORT A MEANING ON THE FINDINGS OF THE ASSESSING OFFICER WHEN HE HEL D THAT A CONTRACT IS BOUND TO BE THERE WHETHER ORAL, WRITTEN OR IMPLIED ENTITLED THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF DEDUCTION U/S.40(A)(IA) WHEN THE MAGNITUDE OF TH E EXPENDITURE AMOUNTING TO 1.9 CRORES WAS ALLOWED BY HIM CLAIMED IN SIMILAR MANNER . THIS ISSUE CLEARLY INDICATES THE NATURE OF THE BUSINESS OF THE ASSESSEE OF HIRING OUT WHEN THE ASSETS USED WERE HIRED OUT AND THE CLAIM OF DEPRECIATION WAS ON THE HIRE D AS SETS . THE LEARNED CIT(A) HAVING APPRECIATED THE FACT DIRECTED THE ASSESSING OFFICER TO ALLOW 30% DEPRECIATION ON THE ASSETS HIRED OUT BY THE ASSESSEE WAS THEREFORE CLINCHING THE ISSUE IN FAVOUR OF THE ASSESSEE INSOFAR AS THE ASSESSING OFFICER HAD TO COMPL Y WITH THE DIRECTIONS OF THE LEARNED CIT U/S.263. HE PRAYED THAT THE ORDER OF THE ITAT, CUTTACK BENCH ON IDENTICAL ISSUE AND FACTS MAY KINDLY BE CONSIDERED ON THE BASIS AS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE FOR RELIANCE . 5. HEARD BOTH THE PARTIES AND PERUSED THE DETAIL MATERIAL AVAILABLE ON RECORD. THE ASSESSEE FILED RETURN OF INCOME WHICH ORIGINALLY WAS ASSESSED U/S.143(3) AND WAS ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY CHANGES WITH RESPECT TO THE DISALLOWANCE U/S.40(A)(IA) OR DENYING THE CLAIM OF DEPRECIATION AT 30% WHICH O N THE DIRECTION OF THE LEARNED CIT U/S.263 WAS ADHERED TO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER U/S.263 WAS NOT APPEALED BEFORE THE TRIBUNAL, THEREFORE, HAS TO BE CONSIDERED IN TH E MANNER OF THE DECISION OF THE ITAT, CUTTACK BENCH IN THE CASE OF NASIB SINGH V. ACIT (SUPRA). WE HAVE PERUSED THE ORDER OF THE ITAT, CUTTACK BENCH AS WELL AND WE DO FIND AFTER HEARING THE RIVAL SUBMISSIONS THAT THE LEARNED CIT(A) DID NOT GIVE A FINDING T O SUSTAIN THE DISALLOWANCE ASSESSED BY THE ASSESSING OFFICER U/S.40(A)(IA) TO SUGGEST THAT THERE WAS ANY CONTRACT I.T.A.NO. 123/CTK/2012 & I.T.A.NO. 092/CTK/2012 (CR OSS APPEALS) 4 BETWEEN THE ASSESSEE AND THOSE INDIVIDUALS BY WAY OF A COMPOSITE CONTRACT AS WELL AS HIRING OF VEHICLES AND EQUIPMENTS ETC. NO DEDUCTION OF TA X COULD BE MADE BY THE DEDUCTOR UNLESS A CONTRACT IS ENTERED INTO WHEN THE NAMES AND ADDRESSES AND PAN ARE TO BE OBTAINED FOR MAKING AVAILABLE THE CREDIT OF THE TAX DEDUCTED AT SOURCE TO THE PAYERS. THIS FACT FINDING HAS BEEN ELABORATELY DISCUSSED BY THE A SSESSING OFFICER AS WELL AS THE LEARNED CIT(A) THEREFORE CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE INSOFAR AS ON THE SPECIFIC DIRECTION OF THE LEARNED CIT U/S.263 THE ASSESSING OFFICER HELD A VIEW OTHER THAN WHICH HE HAD ALREADY HELD IN THE ORIGINAL ASS ESSMENT ORDER. THIS FACT FINDING THEREFORE COULD NOT HAVE LED TO INVOKING THE PROVISIONS OF SECTION 194C INSOFAR AS THE BULK OF THE EXPENDITURE HAS BEEN ALLOWED IRRESPECTIVE OF THE PAYMENTS BEING MADE MORE THAN 50,000 EACH. THERE WAS NO REASON TO DEDUCT T AX AT SOURCE ON PAYMENTS MADE IN THE SIMILAR MANNER AS THE OWNERS MACHINERIES WERE HIRED OUT BY THE ASSESSEE FOR OTHERS BUSINESS WHICH WAS ALSO CONSIDERED BY THE ITAT , CUTTACK IN THEIR DECISION RELIED UPON (SUPRA) WHEN IT WAS HELD THAT THE CASE - LAWS CITE D BY THE LEARNED CIT(A) IN HIS ORDER ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE AS PER THE INCOME RENDERED FROM HIRING OUT WAS NOT ALONE FOR THE ASSESSEES BUSINESS AS A CONTRACTOR BUT INSOFAR AS HE HIMSELF WAS OBTAINING SERVICES OF TRUCK OWNERS FOR HIRING OUT WITHOUT ANY CONTRACT. THE BUSINESS OF HIRING OUT WAS ESTABLISHED BEYOND DOUBT BY RENDERING INCOME AND EXPENDITURE ON BOTH SCORES THEREFORE ENTITLED THE ASSESSEE TO CLAIM HIGHER DEPRECIATION AS IF IN THE BUSINESS OF HIRING OUT THESE ASSETS. IT IS THE ASSESSEES BUSINESS OF HIRING OUT ITS OWN ASSETS THEREFORE WAS RIGHTLY CONSIDERED BY THE LEARNED CIT(A). THE LEARNED CIT(A) THEREFORE RIGHTLY APPLIED THE DECISION OF ITAT, KOLKATA BE NCH IN THE CASE OF BOTHRA SHIPPING SERVICE V. CIT (2011) 37(II) ITCL, 56 (KOL C TRIB). IN I.T.A.NO. 123/CTK/2012 & I.T.A.NO. 092/CTK/2012 (CR OSS APPEALS) 5 THIS VIEW OF THE MATTER, THE ISSUE RAISED BY THE ASSESSEE IS ALLOWED AND THE ISSUE RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.09.2012 - COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE : M/S.SAHOO & BROTHERS, AT: ATHARBANKI, PARADEEP, DIST. JAGATRSINGHPUR PAN: AANHS 8692 F 2 THE DEP ARTMENT : 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.9.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.