M/s Vcare Seed Services, Hyderabad V. ITO,Ward-2, Kurnool

ITA 1308/HYD/2014

• Counselvise Citation: 130822514 RSA 2014
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Assessment record; Condonation of delay
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1308/HYD/2014 ASSESSMENT YEAR: 2009-10 M/S VCARE SEED SERVICES, KURNOOL. PAN AAFFV8223P VS. INCOME TAX OFFICER, WARD 2, KURNOOL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.A. SAI PRASAD REVENUE BY : SHRI D. SUDHAKAR RAO DATE OF HEARING 25-05-2015 DATE OF PRONOUNCEMENT 03-06-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 12/03/2014 PASSED BY LD. CIT-III, HYDERABAD U/S 263 OF THE ACT, FOR THE AY 2009-10. 2. THERE IS A DELAY OF 32 DAYS IN FILING THE APPEAL . ASSESSEE HAS FILED A PETITION SEEKING CONDONATION OF DELAY SUPPO RTED BY AN AFFIDAVIT. ON CONSIDERING THE CAUSE OF DELAY, WE AR E INCLINED TO CONDONE THE SAME AND ADMIT THE APPEAL FOR HEARING A ND ADJUDICATION. 3. BRIEFLY THE FACTS ARE, ASSESSEE A FIRM IS ENGAGE D IN THE BUSINESS OF TRADING IN SEEDS. FOR AY UNDER CONSIDERATION, AS SESSEE FILED ITS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL INCO ME OF RS. 8,63,110. ASSESSMENT IN CASE OF ASSESSEE WAS COMPLE TED U/S 143(3) OF THE ACT VIDE ORDER DATED 28/12/2011 DETERMINING TOTAL INCOME AT 2 ITA NO. 1308 /HYD/2014 M/S VCARE SEED SERVICES RS. 21,34,600 AFTER MAKING ADDITION ON ACCOUNT OF D ISALLOWANCE U/S 40(A)(IA) AND EXPENSES DISALLOWED ON ADHOC BASIS. 4. LD. CIT IN EXERCISE OF POWER CONFERRED U/S 263 O F THE ACT, CALLED FOR THE ASSESSMENT RECORDS OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND AFTER EXAMINING THE SAME, FOUND T HAT ASSESSEE HAD PAID FREIGHT CHARGES OF RS. 20,50,000 TO SRI N.V. P ARAMESHWAR DURING THE YEAR. SHE FURTHER NOTICED THAT THIS PERSON HAD ACTED AS AN AGENT/ORGANIZER FOR PROCUREMENT OF SEEDS AND ARRANG ED FOR TRANSPORTATION OF THE SEEDS THROUGH VEHICLES. SHE W AS OF THE VIEW THAT ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S 194 C ON THE PAYMENTS MADE TO SHRI N.V. PARAMESHWAR SINCE THERE IS A CONTRACT BETWEEN ASSESSEE AND THE SAID PERSON. ACCORDING TO LD. CIT, AS NO TAX WAS DEDUCTED BY ASSESSEE, AO SHOULD HAVE DISALL OWED THE SAID PAYMENT U/S 40(A)(IA). SINCE AO FAILED TO DO SO, L D. CIT OPINED THAT ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF REVENUE. ACCORDINGLY, SHE ISSUED A NOTICE TO ASSESS EE TO SHOW CAUSE AS TO WHY ASSESSMENT ORDER SHOULD NOT BE REVISED. I N RESPONSE TO THE SAID NOTICE, ASSESSEE SUBMITTED ITS REPLY OBJECTING TO THE INITIATION OF PROCEEDING U/S 263, BUT, LD. CIT HAVING NOT FOUND M ERIT IN THE SUBMISSIONS OF ASSESSEE PASSED THE IMPUGNED ORDER D IRECTING AO TO RECOMPUTE ASSESSEES INCOME AFTER DISALLOWING THE A MOUNT OF RS. 20,50,000 U/S 40(A)(IA) OF THE ACT. IN CONSEQUENCE TO THE DIRECTION OF LD. CIT, AS HAS BEEN BROUGHT TO OUR NOTICE BY LD. A R, AO RECOMPUTED THE INCOME OF ASSESSEE BY DISALLOWING THE PAYMENT O F RS. 20,50,000 UNILATERALLY WITHOUT GIVING OPPORTUNITY TO ASSESSEE . BEING AGGRIEVED ASSESSEE IS BEFORE US CHALLENGING THE ORDER OF LD. CIT BOTH ON JURISDICTIONAL ISSUE AS WELL AS ON MERITS OF THE DI SALLOWANCE U/S 40(A)(IA) OF THE ACT. HOWEVER, AT THE TIME OF HEARI NG, LD. AR SUBMITTED A PETITION SEEKING TO RAISE THE FOLLOWING ADDITIONA L GROUND: WITHOUT PREJUDICE TO THE GROUNDS ALREADY FILED, THE CIT FAILED TO APPRECIATE THE LEGAL POSITION THAT THE PROVISIONS O F SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE FACTS OF THE CA SE SINCE NO PART OF THE DISPUTED AMOUNT IS PAYABLE AT THE END O F THE YEAR. 3 ITA NO. 1308 /HYD/2014 M/S VCARE SEED SERVICES 5. LD. AR SUBMITTED BEFORE US, AS THE ENTIRE FREIGH T CHARGES WERE PAID TO SHRI N .V. PARAMESHWAR DURING THE RELEVANT PY AND NOTHING REMAINED PAYABLE AT THE END OF THE PY, NO DISALLOWA NCE COULD BE MADE U/S 40(A)(IA) IN VIEW OF THE DECISION OF THE I TAT, VIZAG BENCH IN CASE OF M/S MERLYN SHIPPING TRANSPORT & OTHERS, 136 ITD 23(SB)(VIZAG). 6. LD. DR, HOWEVER, SUPPORTED THE ORDER OF LD. CIT. 7. HAVING CONSIDERED THE SUBMISSIONS OF THE PARTIES , WE ARE OF THE VIEW THAT IF THE AMOUNT CONSIDERED FOR DISALLOW ANCE U/S 40(A)(IA) WAS ACTUALLY PAID BY ASSESSEE DURING THE RELEVANT PY AND NOTHING REMAINED PAYABLE AS ON THE LAST DAY OF THE PY, THEN, NO DISALLOWANCE COULD BE MADE U/S 40(A)(IA) IN VIEW OF THE PRINCIPLE LAID DOWN BY THE ITAT, VIZAG BENCH IN CASE OF M/S M ERLYN SHIPPING TRANSPORT & OTHERS (SUPRA). IN THE AFORESAID VIEW O F THE MATTER, WE DIRECT ASSESSING OFFICER TO VERIFY THIS FACT AND IF IT IS FOUND THAT THE AMOUNT OF RS. 20,50,000 WAS PAID BY ASSESSEE DU RING THE RELEVANT PY AND NOTHING REMAINED PAYABLE AS ON THE LAST DAY OF RELEVANT PY, NO DISALLOWANCE U/S 40(A)(IA) SHOULD B E MADE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 3 RD JUNE, 2015 KV 4 ITA NO. 1308 /HYD/2014 M/S VCARE SEED SERVICES COPY TO:- 1) M/S VCARE SEED SERVICES, C/O CH. PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2) ITO, WARD 2, KURNOOL 3 CIT- III, HYDERABAD 4) ADDL. CIT, KURNOOL RANGE, KURNOOL 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.