Aurofood P Ltd., CHENNAI V. ACIT, CHENNAI

ITA 135/CHNY/2015

• Counselvise Citation: 13521714 RSA 2015
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKIRSHNAN
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' ! # . $% , & '( BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 135/MDS/2015 / ASSESSMENT YEAR : 2005-06 M/S. AUROFOOD P. LTD., CS TOWERS, FLAT 2A, 34, BAZULLAH ROAD, CHENNAI 600 010. PAN AAACA5360Q APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(1), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI P. RADHAKIRSHNAN, JCIT ! / DATE OF HEARING : 27.10.2015 '# ! / DATE OF PRONOUNCEMENT: 11.11.2015 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) 24.9.201 4 FOR THE ASSESSMENT YEAR 2005-06. - - ITA 135/15 2 2. THE ONLY GROUND IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE OF FREIGHT CHARGES BY INVOKING THE PRO VISIONS OF SEC.40(A)(IA) OF THE I.T. ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF WHEAT FLO UR, VERMICELLI AND OTHER ALLIED PRODUCTS. FOR THE ASSE SSMENT YEAR 2005-06, RETURN OF INCOME WAS FILED ON 28.10.2005 D ISCLOSING A LOSS OF ` 2,06,36,697/-. THE RETURN WAS PROCESSED U/S.143(1 ) ACCEPTING THE LOSS RETURNED. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) WAS ISSUED. AFTER HEARING TH E ASSESSEE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) ON 29.11.2007 DETERMINING THE TOTAL LOSS AT ` 1,75,67,306/- AFTER MAKING DISALLOWANCES. AGGRIEVED BY THIS, THE ASSES SEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEAL S). 4. ON APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEAL S) OBSERVED THAT THE ASSESSING OFFICER DISALLOWED ` 10,60,034/- RELATING TO THE FREIGHT CHARGES CLAIMED BY THE ASSE SSEE TOWARDS HIRING OF VEHICLES AND PAID IN EXCESS OF ` 20,000/- AT A TIME AND IN EXCESS OF ` 50,000/- FOR THE WHOLE YEAR TO ANY PERSONS WITHOUT DEDUCTING TAX AT SOURCE IN TERMS OF SEC.194C OF THE ACT. FURTHER, - - ITA 135/15 3 THE COMMISSIONER OF INCOME-TAX(APPEALS) OBSERVED TH AT THE CONTENTION OF THE AO IS THAT AS PER THE PROVISIONS OF SEC.40(A)(IA), ANY EXPENDITURE CLAIMED ON WHICH TDS PROVISIONS ATTRACT AS PER CHAPTER XVIIB, SHALL NOT BE ALLOWED AS A DEDUCTION. AFTER CONSIDERING CASE LAWS OF VARIOUS HIGH COURTS AND THE TRIBUNAL, THE CIT (APPEALS) UPHELD THE FIND ING OF THE AO ON THIS GROUND. AGAINST THIS, THE ASSESSEE IS IN A PPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. IN OUR OPINION, SIMILAR ISSUE WAS CONSI DERED BY THIS TRIBUNAL IN THE CASE OF N THE CASE OF N. PALANIVELU V. ITO IN ITA NO.618/MDS/2015 DATED 29.4.2015, WHEREIN IT WAS HEL D AS UNDER: 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ACIT (2012) 136 ITD 23 (VISAKHAPATNAM) AND JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICE S (P) LTD IN ITA NO.122 OF 2013 DATED 09.7.2013 HELD THAT SEC 40(A)(IA) IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEA IN RESPECT OF THESE PAYMENT. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPEN SES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE - - ITA 135/15 4 CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE INTEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FILE OF THE ASSESSI NG OFFICER WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. 4. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED AMOUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE O F THE ASSESSMENT YEAR IN RESPECT OF THE EXPENSES EITH ER AS OUTSTANDING EXPENSES OR AS SUNDRY CREDITORS, THI S AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTE D BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATI ON. IN VIEW OF THE ABOVE, WE REMIT THIS ISSUE BACK TO T HE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 11 TH OF NOVEMBER, 2015 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 11 TH NOV., 2015. MPO* - - ITA 135/15 5 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.