M/s Silver Salt Industries, JAMNAGAR V. The Income Tax Officer, Ward-2, GANDHIDHAM

ITA 134/RJT/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9040 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: USHA N SHROTE
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 134/RJT/2016 (ASSESSMENT YEAR: 2007-08) M/S. SILVER SALT INDUSTRIES 102, CHETAN CHAMBERS, GANDHIDHAM V/S INCOME TAX OFFICER, WARD- 2, GANDHIDHAM (APPELLANT) (RESPONDENT) PAN: AAACW1838K APPELLANT BY : SHRI CHETAN AGARWAL, A.R. RESPONDENT BY : MS. USHA N. SHROTE, SR. D.R. ( )/ ORDER DATE OF HEARING : 31 -05-201 7 DATE OF PRONOUNCEMENT : 05 -06-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- 3, RAJKOT DATED 08.01.2016 PERTAINING TO A.Y. 2007- 08. ITA NO. 134/ RJT/2016 . A.Y. 2007-08 2 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THA T HE IS NOT PRESSING GROUND NO. 2 AND, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. THE ONLY GROUND THAT SURVIVES RELATES TO THE DISALLOWANCE OF RS. 9,47,777/- MADE BY THE A.O. U/S. 40(A)(IA) OF THE ACT. 3. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AN D TRADING IN SALT. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS MADE PAYMENT TO THE FOLLOWING PERS ONS EXCEEDING RS. 20,000/AGGREGATING RS. 50,000/- FOR WORK GET DONE:- (A) HIRE CHARGES LOADING AND LOOSE FOR VARIOUS TRUC KS RS. 8,82,519/- (B) LABOUR CHARGES TO NETARAM RS. 65,285/- 4. THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE ABOVE PAYMENTS SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT AS NO TDS H AS BEEN MADE BY THE ASSESSEE ON THE IMPUGNED PAYMENTS. ON RECEIVING NO PLAUSIBLE REPLY, THE A.O. DISALLOWED THE AFORE-STATED EXPENSES TOTALING TO RS. 9,47,777/- U/S. 40(A)(IA) OF THE ACT. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TO THE DETAILS OF THE HIRE CHARGES PAID TO TRUCK AND POINTED OUT T HAT NONE OF THE PAYMENT EXCEEDED RS. 20,000/- AND IN AGGREGATE NONE OF THE PAYEE WAS PAID RS. 50,000/-. THEREFORE, PROVISIONS OF SECTION 194C OF THE ACT DO NOT APPLY ON ITA NO. 134/ RJT/2016 . A.Y. 2007-08 3 THE FACTS. INSOFAR AS THE PAYMENT OF LABOUR CHARGES TO NETARAM IS CONCERNED, THE LD. COUNSEL STATED THAT THERE WAS NO CONTRACT WITH NETARAM WHO WAS DOING LABOUR WORK ON DAY TO DAY BASIS AS AN D WHEN HIS WORK WAS REQUIRED. THEREFORE, THERE WAS NO REQUIREMENT FOR D EDUCTING THE TAX AT SOURCE. 7. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FIN DINGS OF THE A.O. AND PRAYED FOR UPHOLDING THE ORDER OF THE LD. CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. WE HAVE ALSO GIVEN A THOUGHTFUL CONSIDERATION TO THE DETAIL S OF THE HIRE CHARGES EXHIBITED AT PAGES 3 TO 6 OF THE PAPER BOOK. A PERU SAL OF THE SAME SHOWS THAT NONE OF THE PAYMENT EXCEEDED RS. 20,000/- NOR THE AGGREGATE PAYMENT TO THE PAYEES EXCEEDED RS. 50,000/-. EXCEPT FOR THE AGGREGATE PAYMENT OF RS. 88,510/- PAID TO TRUCK NO. 4705 WHIC H IS AT PAGE 5 SERIAL NO. 22 OF THE PAPER BOOK. BARRING THIS AMOUNT, ALL OTHE R PAYMENTS ARE OUTSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 194C OF TH E ACT. WE, THEREFORE, MODIFY THE FINDINGS OF THE LD. CIT(A) AND DIRECT TH E A.O. TO MAKE ADDITION OF RS. 88,510/- ONLY IN RESPECT OF HIRE CHARGES OF RS. 8,82,519/-. THE ASSESSEE GETS A RELIEF OF RS. 7,94,369/- ON THIS ACCOUNT. IN SOFAR AS THE LABOUR CHARGES AMOUNTING TO RS. 65,285/- PAID TO NETARAM IS CONCER NED, IT IS TRUE THAT NETARAM WAS ENGAGED FOR THE LABOUR WORK ON DAILY WA GES BASIS AS AND WHEN HIS SERVICES WERE REQUIRED. THEREFORE, WE DO N OT FIND ANY REASON WHY THE PROVISIONS OF SECTION 194C SHOULD BE APPLIED ON SUCH PAYMENT. WE, ACCORDINGLY, DIRECT THE A.O. TO DELETE THE ADDITION OF RS. 65,285/-. ITA NO. 134/ RJT/2016 . A.Y. 2007-08 4 9. APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 06 - 20 17 SD/- SD/- (MHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED: 05/06/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKO T