A.C.I.T Cir - 48,kolkata, Kolkata V. M/s G.M Dului & Sons, Howrah

ITA 1317/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4570 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 31-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KUMAR KUREEL
• Assessee Lawyers: K K GOSWAMI; ANKIT JAL
• Keywords: Additional evidence; Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1317/KOL/ 2013 ASSESSMENT YEAR: 2008-2009 ASSISTANT COMMISSIONER OF INCOME TAX,.............. ................APPELLANT CIRCLE-48, KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 -VS.- M/S. G.M. DALUI & SONS,............................ ............................RESPONDENT 8, KUCHIL GHOSHAL LANE, KADAMTALA, HOWRAH-711 101 [PAN : AACFG 8856 F] APPEARANCES BY: SHRI RAJAT KUMAR KUREEL, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI K.K. GOSWAMI, ADVOCATE & SHRI ANKIT JALAN, A.R ., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MAY 31, 2016 DATE OF PRONOUNCING THE ORDER : JULY 8, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXX, KOLKATA D ATED 20.12.2012, WHEREBY HE DELETED THE DISALLOWANCE OF RS.46,03,431 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSEES FAILURE TO DEDUCT TAX AT SOURCE FROM THE VARIOUS PAYMENTS. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF COCKS AND VALVES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON WAS FILED BY IT ON 30.09.2008 DECLARING TOTAL INCOME OF RS.16,11,620/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSES SING OFFICER THAT THE ASSESSEE HAS MADE THE FOLLOWING PAYMENTS WITHOUT DE DUCTION OF TAX AT SOURCE:- NATURE NAME OF PARTY AMOUNT SERVICE CHARGE (194C) SANCHIT DEVELOPERS (P) LTD. RS.19,86,535/- I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 7 KUNDAN CORPORATION RS. 5.00,000/- IMPEX INDIA CO. RS. 7,43,500/- SHREEJI CONSULTING AGENCY RS. 1,00,000/- L.S. CORPORATION RS. 1,00,000/- S.R. TRADING RS. 1,00,000/- NATURE NAME OF PARTY AMOUNT TRANSPORT CHARGES (194C) TIME & SPACE HAULERS RS.1,10.967/- JAIPUR GOLDEN TRANSPORT RS.1,21,714/- TCI LIMITED RS.1,05,436/- ASSOCIATED ROAD CARRIERS RS. 64,859/- NATURE NAME OF PARTY AMOUNT MOTOR CAR HIRE CHARGES (194C) SRI PROTAP SINGH RS.1,90,420/- NATURE NAME OF PARTY AMOUNT INTEREST (194A) SRI RADHAKRISHNA SMELTERS P. LTD. RS.2,40,000/- SRI GANESH TRUST RS. 96,000/- GAJANAND TRUST RS. 84,000/- ABHISHEK CHKEKHEMI RS. 60,000/- TOTAL RS.46,03,431/- ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WA S REQUIRED TO DEDUCT TAX AT SOURCE FROM THE ABOVE PAYMENTS AS PER THE PR OVISIONS OF SECTION 194C AND 194A AND SINCE THERE WAS FAILURE ON THE PA RT OF THE ASSESSEE TO DO SO, HE DISALLOWED THE SAID PAYMENTS AGGREGATING TO RS.46,03,431/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 27.12.2010 . 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40(A)(IA) WAS CHALLENGED BY THE ASSESSEE IN THE APP EAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESESE I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 7 AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED THE DISALLOWANCE OF RS.19,86,535/- AND RS.15,43,500 /- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUN T OF SERVICE CHARGES FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 2. 2 OF HIS IMPUGNED ORDER:- 2.2. THE SUBMISSIONS OF THE APPELLANT AS ABOVE HAV E BEEN CONSIDERED AND IT IS SEEN THAT IN RESPECT OF THE DI SALLOWANCE MADE BY THE AO U/S 194C TOWARDS PAYMENT OF RS.19,86 ,535/-, THE APPELLANT HAS FILED COPY OF FORM 16A DATED 21.0 5.2008 ISSUED TO M/S. SANCHIT DEVELOPERS PVT. LTD. THROUGH WHICH TOTAL AMOUNT OF RS.2,05,929/- HAD BEEN DEDUCTED AS TDS U/S 194J AGAINST PAYMENT OF RS.19,86,535/-. THE APPELLA NT HAS ALSO FILED COPIES OF CHALLANS THROUGH WHICH THIS TD S AMOUNT HAD BEEN DEPOSITED IN THE GOVT. ACCOUNT. IT IS THER EFORE CLEAR THAT THE AO HAD INCORRECTLY DISALLOWED THE ABOVE PA YMENT U/S 40(A)(IA) FOR NON-DEDUCTION OF TDS AND DISALLOWANCE IS NOT JUSTIFIED SINCE THE TDS HAD BEEN DEDUCTED AND PAID ACCORDINGLY THE DISALLOWANCE OF RS.19,86,535/- IS D ELETED. IN RESPECT OF THE REMAINING PAYMENT OF RS.15,43,500/- PAID BY THE APPELLANT AS UNDER:- KUNDAN CORPORATION RS.5,00,000/- IMPEX INDIA CO. RS.7,43,500/- SHREEJI CONSULTING AGENCY RS.1,00,000/- L.S. CORPORATION RS.1,00,000/- S.R. TRADING RS.1,00,000/- IT IS SEEN THAT THE APPELLANT HAS CLAIMED THAT THE PAYMENTS WERE NOT COVERED U/S 194C AS THEY WERE TOWARDS PROC UREMENT OF ORDERS WHICH IS NOT COVERED UNDER PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT AS PER CIRCULAR NO. 715 DATED 08.08.1995. THE SUBMISSIONS OF THE APPELLANT ARE FO UND TO BE CORRECT AND IT IS HELD THAT THESE PAYMENTS WERE NOT COVERED U/S 194C, WHEREAS THE AO HAD DISALLOWED THE SAME U/ S 40(A)(IA) FOR NON-DEDUCTION OF TDS U/S 194C. THEREF ORE, IT IS CLEAR THAT SINCE THE APPELLANT WAS NOT LIABLE TO DE DUCT TAX U/S 194C IN RESPECT OF THE ABOVE PAYMENTS IN DISALLOWIN G THE SAME U/S 40(A)(IA) AND THE DISALLOWANCE OF RS.15,43,500/ - IS DELETED. (RELIEF RS.19,86,535/- + RS.15,43,500/-. 4. THE LD. CIT(APPEALS) ALSO DELETED THE DISALLOWAN CE OF RS.4,02,976/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A) ON ACCOUNT OF TRANSPORT CHARGES BY RELYING ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.- UNITED RICE LAND LIMITED [322 ITR 594], WHEREIN A SIMILAR DISALLOWANCE MADE UNDER SECTION 40(A)(IA) ON ACCOUNT OF TRANSPORT CHARGES WAS HELD TO BE UNSUSTA INABLE IN THE ABSENCE I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 7 OF ANY CONTRACT BETWEEN THE ASSESSEE AND THE CONCER NED TRANSPORTERS. THE LD. CIT(APPEALS) FURTHER DELETED THE DISALLOWANCE O F RS.1,90,420/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF MOTOR CAR HIRE CHARGES BY HOLDING THAT SUCH PAYMENT WAS NOT C OVERED BY SECTION 194C AND THE ASSESSEE, THEREFORE, WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE FROM THE SAME. HE ALSO DELETED THE DISALLOWA NCE OF RS.4,80,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERES T UNDER SECTION 40(A)(IA) BY RELYING ON THE DECISION OF VISHAKHAPAT NAM SPECIAL BENCH OF ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS.- ACIT AS THE RELEVANT INTEREST HAD ENTIRELY BEEN PAID BY THE ASS ESSEE DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS NOT PAYABLE AS ON THE LAST DATE OF THE YEAR UNDER CONSIDERATION. THE LD. CIT(APPEALS) THUS DELETED THE ENTIRE DISALLOWANCE OF RS.46,03,431/- MADE BY THE A SSESSING OFFICER UNDER SECTION 40(A)(IA) AND AGGRIEVED BY THE SAME, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS:- 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) WAS JUSTIFIED, IN DELETING THE DISALLOWA NCE FOR RS.19,86,535/- MADE U/S. 40(A)(IA) OF THE ACT, ON A CCOUNT OF SERVICE CHARGES ALLOWED WITHOUT TDS, BY ADMITTING A DDITIONAL EVIDENCE IN VIOLATION OF RULE 46A AND 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS JUSTIFIED, IN DELETING THE DISALLOWA NCE FOR RS.15,43,500/- MADE U/S. 40(A)(IA) OF THE ACT, ON A CCOUNT OF SERVICE CHARGES ALLOWED TO SEVERAL PERSONS WITHOUT TDS, BY ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A AND HOLDING THAT THOSE EXPENSES RELATE TO ORDER PROCURE MENT CHARGES WHICH DOES NOT COME UNDER PURVIEW OF SECTIO N 194C, IN TERMS OF CBDT'S INSTRUCTION NO. 715 DT. 08.08.1995 AND 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS JUSTIFIED, IN DELETING THE DISALLOWA NCE OF RS.4,02,976/- MADE U/S. 40(A)(IA) OF THE ACT, ON AC COUNT OF TRANSPORT CHARGES, BY HOLDING THAT THERE WAS NO CON TRACT IN THIS REGARDS AS CONTEMPLATED IN SECTION 194C, AND T HUS IGNORING THE FACT THAT THIS INVOLVED AN ORAL CONTRA CT BETWEEN THE ASSESSEE AND THE PAYEE AND 4) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) WAS JUSTIFIED, IN DELETING THE DISALLOWA NCE FOR RS.1,90,420/- MADE U/S. 40(A)(IA) OF THE ACT, ON AC COUNT OF CAR HIRE CHARGES BY HOLDING THAT THIS MATTER BEING IN T HE I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 7 TEMPORARY NATURE DOES NOT COME UNDER PURVIEW OF SEC TION 194C AND 5) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) WAS JUSTIFIED, IN DIRECTING THE ASSESSING OFFICER TO WORK OUT THE AMOUNT OF INTEREST-DISALLOWANCE U/S.40 (A)(IA) OF THE ACT, ON THE BASIS OF AMOUNT ACTUALLY PAYABLE AS ON 31.03.2008, BY RELYING UPON THE DECISION OF SPECIAL BENCH, ITAT, VISHAKHAPATNAM, IN THE CASE OF MARILYN SHIPPING & T RANSPORT, WHEREAS THE OPERATION OF THIS JUDGEMENT HAD BEEN ST AYED BY THE HON'BLE ANDHRA PRADESH HIGH COURT AND MOREOVER THAT IN THE DECISIONS OF THE JURISDICTIONAL HIGH COURT OF CALCU TTA, DATED 03.04.2013 AND 04.04.2013 RESPECTIVELY IN ITA NO: 2 0 OF 2013/G.A. NO: 190 OF 2013 AND ITA NO: 31 OF 2013/GA NO: 320 OF 2013 RESPECTIVELY HAVE STRUCK DOWN THE VERY APPL ICABILITY OF THE SAID DECISION OF SPECIAL BENCH, ITAT, VISHAKHAP ATNAM, IN THE CASE OF MARILYN SHIPPING & TRANSPORT. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY P OINTED OUT BY THE LD. D.R. FROM PARA NO. 2.2 OF THE IMPUGNED ORDER OF THE LD. CIT(APPEALS), THE EVIDENCE REGARDING DEDUCTION OF TAX AT SOURCE FROM THE PAYMENT OF RS.19,86,535/- MADE TO M/S. SANCHIT DEVELOPERS (P) LIMITED AND DEPOSIT THEREOF IN THE GOVERNMENT ACCOUNT WAS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(APPEALS) AND THE SAID ADDIT IONAL EVIDENCE WAS RELIED UPON BY THE LD. CIT(APPALS) TO DELETE THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) WITHOUT G IVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. SIMILA RLY THE NATURE OF THE AMOUNT OF RS.15,43,500/- PAID TO OTHER FIVE PARTIES BEING TOWARDS PROCUREMENT OF ORDERS WAS CLAIMED BY THE ASSESESE F OR THE FIRST TIME BEFORE THE LD. CIT(APPEALS) AND THIS CLAIM WAS ACCE PTED BY THE LD. CIT(APPEALS) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. IN OUR OPINION, THERE IS THUS A CL EAR VIOLATION OF RULE 46A OF THE INCOME TAX RULES BY THE LD. CIT(APPEALS) WHI LE GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND EVEN THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO DISPUTE OR CONFRONT THE SAME BY BRINGI NG ANYTHING ON RECORD TO SHOW THAT THESE DETAILS AND DOCUMENTS WERE FILED BY THE ASSESSEE EVEN BEFORE THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS. WE, THEREFORE, FIND MERIT IN GROUNDS NO. 1 & 2 RAIS ED BY THE REVENUE IN I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 7 THIS APPEAL AND SETTING ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THESE ISSUES, WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH ON MERIT AFTER TAKING INTO CONSIDERATION ALL THE DETAILS AND DOCUMENTS FILED B Y THE ASSESEE BEFORE THE LD. CIT(APPEALS) FOR THE FIRST TIME. GROUNDS NO . 1 & 2 OF THE REVENUES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATI STICAL PURPOSES. 6. AS REGARDS GROUND NO. 3, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE DELETION BY THE LD. CIT(APP EALS) OF THE DISALLOWANCE OF RS.4,02,976/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) ON ACCOUNT OF TRANSPORT CHARGES I S SQUARELY COVERED BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF CIT VS.- UNITED RICE LAND LIMITED (SUPRA), WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY ORAL OR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND TRANSPORTERS, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON FREIGHT CHARGES PAID TO TRANSPORTERS AS PER THE PRO VISIONS OF SECTION 194C. IN THE PRESENT CASE, THERE IS NOTHING BROUGHT ON RE CORD BY THE REVENUE TO SHOW THAT THERE WAS ANY CONTRACT EITHER ORAL OR WRI TTEN BETWEEN THE ASSESSEE AND THE CONCERNED TRANSPORTERS AND THIS BE ING SO, WE ARE INCLINED TO AGREE WITH THE LD. CIT(APPEALS) THAT TH E PROVISIONS OF SECTION 194C ARE NOT ATTRACTED AND THE QUESTION OF DISALLOW ANCE UNDER SECTION 40(A)(IA) WOULD NOT ARISE. GROUND NO. 3 IS ACCORDIN GLY DISMISSED. 7. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 4 RE LATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E OF RS.1,90,420/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A) ON ACCOUNT OF CAR HIRE CHARGES, IT IS OBSERVED THAT THE LD. CIT(APPEA LS) HAS ALLOWED RELIEF TO THE ASSESSEE ON THIS ISSUE ON THE GROUND THAT THE C AR HIRE CHARGES ARE NOT COVERED BY SECTION 194C. AT THE TIME OF HEARING BEF ORE US, THE LD. D.R. HAS NOT BEEN ABLE TO CONTROVERT OR DISPUTE THIS POSITIO N. WE, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNE D ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 4 OF THE REVENUES APPEAL. I.T.A. NO. 1317/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 7 OF 7 8. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 5 RE LATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E OF RS.4,80,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERES T BY RELYING ON THE DECISION OF THE VISHAKHAPATNAM SPECIAL BENCH OF ITA T IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), THE LD. REPR ESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE NOW STANDS COVERE D IN FAVOUR OF THE REVENUE BY THE DECISION OF THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF CITVS.-CRESCENT EXPORT SYNDICATE REPORTED IN 262 C TR 525, WHEREBY THE DECISION OF SPECIAL BENCH OF ITAT AT VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS HAS BEEN OVERRULED BY THE HONBLE CALCUTTA HIGH COURT. RESPECTFULLY FOLLOWING THE SAI D DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON T HIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. GROUND NO. 5 IS ACCO RDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 8, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 8 TH DAY OF JULY, 2016 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-48, KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700 001 (2) M/S. G.M. DALUI & SONS, 8, KUCHIL GHOSHAL LANE, KADAMTALA, HOWRAH-711 101 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XXX, KOLK ATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.