ITO, UDAIPUR V. M/s. Keshriyaji Minerals Pvt. Ltd., UDAIPUR

ITA 135/JODH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3087 (ITAT-JODHPUR)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation
• Section: 194C

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO.135/JODH/2013 ASSESSMENT YEAR:2007-08 INCOME TAX OFFICER, VS. M/S KESHRIYAJI MINERALS PVT. LTD. WARD-1(4), 206, HIRAN MAGARI, SEC. NO. 11, UDAIPUR. UDAIPUR. PAN:AACCK2011J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. R. KOKANI, D.R. RESPONDENT BY : NONE DATE OF HEARING : 02/07/2013 DATE OF PRONOUNCEMENT : 10/07/2013 ORDER PER N. K., SAINI: THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER DATED 03/12/2012 OF CIT(A), UDAIPUR. DURING THE COURSE O F HEARING NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE, THEREFORE, WE PR OCEEDED EX-PARTE QUA THE ASSESSEE AND APPEAL IS DECIDED ON MERIT AFTER H EARING LEARNED D.R. 2. THE FIRST ISSUE IN THIS APPEAL RELATES TO THE DE LETION OF ADDITION OF RS.9,96,538/- MADE BY THE ASSESSING OFFICER U/S 40( A)(IA) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE T HAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD [2] DEBITED RS.14,43,278/- UNDER THE HEAD JOB CHARGES WHICH INCLUDED RS.9,96,538/- PAID TO KESHRIYAJI MARBLE & GRANITES PVT. LTD. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ABOVE EXPENSES BE NOT DISALLOWED U/S 40(A)(IA) OF THE ACT. IN RESPON SE THE ASSESSEE SUBMITTED THAT THE TDS WAS NOT TO BE DEDUCTED ON JOB WORK AS THE ASSESSEE DID NOT HAVE ANY REGULAR CONTRACT. IT WAS FURTHER STATED T HAT THE ASSESSEE WAS PURCHASING MARBLE BLOCKS FROM MINE OWNERS AND GETTI NG IT SAWING ON GANGSAW SO IT WAS A BUSINESS TRANSACTION AND WAS NO T COVERED BY THE DEFINITION OF WORK CONTRACT. IT WAS ALSO STATED TH AT FULL PAYMENTS OF SAWING CHARGES DURING THE YEAR HAD BEEN MADE AND NO AMOUNT WAS PAYABLE, HENCE IT WAS NOT COVERED BY SECTION 40(A)(IA) OF THE ACT. THE RELIANCE WAS PLACED ON THE DECISION OF ITAT, JAIPUR A BENCH IN THE CA SE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DY. CIT [2009] 123 TTJ (JP) 888. H OWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASS ESSEE AND OBSERVED THAT THE PARTY TO WHOM THE PAYMENT WAS MADE IN THE FORM OF JOB WORK CHARGES HAD TO PUT IN VARIOUS INPUTS WHICH COMPRISED OF THE GANGSAW MACHINE, VARIOUS COMPONENTS, TOOLS, FUEL, ELECTRICITY, LABOU R WORKING ON MACHINE AND REPAIR & MAINTENANCE COST IN ORDER TO UNDERTAKE THE ABOVE TASK. THEREFORE, THE PAYMENT WAS MADE TO THE PARTY WHICH WAS A COMPO SITE PAYMENT COMPRISING OF THE COST OF VARIOUS INPUTS ON THE BAS IS OF WHICH THE JOB WORK WAS PERFORMED. THE ASSESSING OFFICER HELD THAT THE WORK DONE WAS OF CONTRACT NATURE IN WHICH TDS LIABILITY U/S 194C OF THE ACT EXISTED WHICH THE ASSESSEE DID NOT PERFORM AND WAS LIABLE TO BE DISAL LOWED U/S 40(A)(IA) OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND THE SUBMISSIONS MADE, AS INCORPORATED IN PARA 4.2 OF THE IMPUGNED ORDER, WERE AS UNDER: [3] 'IN THE PREVIOUS YEAR THE APPELLANT HAS PAID RS.9,96,538/- MARBLE SAWING CHARGES TO THE DIFFEREN T MARBLE GANGSAWS, WHICH THE LEARNED ASSESSING OFFICER HAS D ISALLOWED U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961 FOR NON DEDUCTION OF TAX AT SOURCE. WE SUBMIT YOUR HONOUR THAT THE APPELLANT IS DOING BUSINESS OF MARBLE TRADING AND HE IS GETTING MARBLE SAWING FROM VARIOUS GANGSAW, HE DOES NOT HAVE ANY FIXED CO NTRACT WITH ANY GANGSAW. IT IS HIS REGULAR BUSINESS TRANSA CTION AND MAY NOT BE COVERED WITHIN THE DEFINITION OF WORKS C ONTRACT, HENCE THE SEC. 40(A)(IA) OF THE INCOME-TAX ACT MAY NOT BE APPLICABLE. WE FURTHER SUBMIT IN THE LIGHT OF THE DECISION OF H ON'BLE ITAT, JAIPUR 'A BENCH IN CASE OF JAIPUR VIDYUT VIT RAN NIGAM LTD. VS. DY. CIT, REPORTED AT (2009) 123 TTJ (JP) 8 88 (PHOTOCOPY ENCLOSED), THE APPELLANT DOES NOT HAVE A NY OUTSTANDING PAYMENT OF JOB WORK AT THE YEAR END. MO STLY PAYMENTS ARE MADE AT THE TIME OF BILLS RAISED. THE SEC. 40(A)(IA) IS ONLY APPLICABLE ON THE AMOUNT S PAYABLE TO A CONTRACTOR OR SUB CONTRACTOR. THE APP ELLANT DOES NOT HAVE ANY AMOUNT PAYABLE ON ACCOUNT OF SAWING CHARGES HENCE IT DOES NOT COVERED BY SEC. 40(A)(IA) OF THE INCOME TAX ACT, 1961. OUR FURTHER HUMBLE SUBMISSION IS THAT THE RECIPIENT OF THE SAWING CHARGES ARE ALSO REGULAR ASSESSEE OF THE INCOME TAX, DECLARING THE SAWING CHARGES RECEIPTS AS THEIR INCOME AND ALSO PAYING INCOME TAX AS APPLICABLE. IT WILL B E DOUBLE TAXATION ON ONE TRANSACTION.' 4.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING IN PARA 4.3 OF THE IMPUGNED ORDER AS UNDER: [4] 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDINGS OF THE AO. IT IS SEEN THAT OUT OF TOTAL JOB CHARGES PAID RS.14,43,278/-, RS.9,96,538/- HAS BEEN DISALLOWED BY THE A.O. U/S.4(A)(IA) OF THE IT. ACT, 1961 FOR NON DEDUCTION OF TAX AT SOURCE AS REQUIRED U/S.194C OF THE ACT. IN THIS CONNECTION IT MAY BE MENTIONED HERE THAT ADMIT TEDLY, ALL THE JOB CHARGES WERE PAID AND NO JOB CHARGES HAVE B EEN REMAINED AS PAYABLE AS ON 31/3/2007. THEREFORE, THERE IS NO LIABILITY TO DEDUCT THE TAX AT SOURCE AS THE TDS IS REQUIRED TO BE MADE ONLY ON THE PAYMENTS REMAINED PAYABLE AND N OT ON THE AMOUNT ALREADY PAID AS HELD BY THE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LT D VS. DCIT (2009) 123 TTJ (JP) 888. THIS VIEW HAS BEEN FURTHE R CONFIRMED BY THE HON'BLE ITAT, SPECIAL BENCH, VISAK HAPATNAM IN THE CASE MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT RANGE-1, VISKHAPATANAM IN ITA NO.477/VIZAG/2008 ASS TT. YEAR 2005-06 DATED 09/04/2012 [70 DTR (SB] 81. IN T HE ABOVE DECISION, IT HAS BEEN HELD AS UNDER: 'PROVISIONS OF S. 40(A)(IA) ARE APPLICABLE ONLY TO THE AMOUNT OF EXPENDITURE WHICH IS PAYABLE AS ON 31ST MARCH OF EVERY YEAR AND IT CANNOT BE INVOKED TO DISALLOW THE EXPENDITURE WHICH HAD BEEN ACTUALLY PA ID DURING THE PREVIOUS YEAR WITHOUT DEDUCTION OF TDS.' IN VIEW OF ABOVE DISCUSSION AND THE JUDICIAL DECISI ON MENTIONED SUPRA, IT IS HELD THAT TDS PROVISION IS N OT APPLICABLE ON THE AMOUNT OF JOB CHARGES OF RS.9,96,538/- AS TH E SAME HAS ALREADY BEEN PAID BEFORE THE LAST DAY OF THE RE LEVANT PREVIOUS YEAR. THUS, THE DISALLOWANCE OF RS.9,96,53 8/- IS LIABLE TO BE DELETED AND I ORDER ACCORDINGLY. THIS GROUND OF APPEAL IS ALLOWED. 5. NOW THE DEPARTMENT IS IN APPEAL. THE LEARNED D. R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND RE ITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER DATED 30/12/2009. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D. R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE IT IS AN [5] ADMITTED FACT THAT THERE WAS NO CONTRACT BETWEEN TH E ASSESSEE AND M/S KESHRIYAJI MARBLE & GRANITES PVT. LTD. THE ASSESSE E WAS PURCHASING THE MARBLE BLOCKS FROM THE MARKET. IN THE INSTANT CASE NOTHING WAS PAYABLE AS ON 31/03/2007 ON ACCOUNT OF JOB CHARGES. THE LEARN ED CIT(A) AFTER KEEPING IN VIEW THE DECISION OF ITAT, SPECIAL BENCH, VISAKHAPATNAM IN THE CASE MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT RA NGE-1, VISKHAPATANAM 70 DTR (SB] 81 DELETED THE ADDITION MADE BY THE ASS ESSING OFFICER. NO CONTRARY DECISION WAS BROUGHT ON RECORD. THEREFORE , WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO H AS DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE ITAT (SPECIAL BENCH) VISHAKHAPATNAM IN THE AFORESAID REFERRED TO CASE. ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS GROUND OF DEPARTMENTAL APPEAL. 7. THE NEXT ISSUE, VIDE GROUND NO. 2, RELATES TO TH E DELETION OF DISALLOWANCE OF RS.1,41,298/- ON ACCOUNT OF EXCESS DEPRECIATION ON DUMPERS. 8. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS.2,82,597/- @30% ON THE D UMPERS WHILE THE ALLOWABLE RATE OF DEPRECIATION WAS ONLY 15%. WHEN ASKED TO JUSTIFY THE SAME, THE ASSESSEE SUBMITTED AS UNDER: '1. THE DEPRECIATION OF DUMPER IS CLAIMED @30% CONSIDERING THEIR MOTOR LORRIES USED IN A BUSINESS OF RUNNING THEM ON HIRE. THE DUMPERS ARE USED TO TRANSPORT THE MATERIAL ONLY AND ALSO IT SATISFIED THE DEFINITION OF MOTOR VEHICLE ACT. THE DUMPERS ARE ALSO REGISTERED UNDER THE MOTOR VEH ICLE ACT, THE PHOTOCOPIES OF REGISTRATION CERTIFICATES ARE AL READY SUBMITTED.' [6] 8.1 HOWEVER, THE ASSESSING OFFICER DID NOT FIND MER IT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT T IPPERS WERE NON-TRANSPORT VEHICLES ALTHOUGH REGISTERED UNDER MOTOR VEHICLE ACT. HE FU RTHER OBSERVED THAT THE DEPRECIATION @30% WAS AVAILABLE TO THE VEHICLES WHI CH ARE IN THE NATURE OF LORRY HAVING CAPACITY AND CAPABILITY FOR CARRYING ON GOODS OR OTHER ITEMS. HE FURTHER STATED THAT THE DUMPER COMES WITHIN THE EXPRESSION OF EARTH MOVING MACHINERY. THE RELIANCE WAS PLACED ON THE D ECISION OF HON'BLE GUWAHATI HIGH COURT IN THE CASE OF CIT VS. SIBSON C ONSTRUCTION COMPANY 221 ITR 468 (GAUHATI). THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF RUNNING THE MOT OR BUSES/MOTOR LORRIES ON HIRE AND THE HIRING BUSINESS OF THE ASSESSEE WAS WITH REGARD TO THE PLANT & MACHINERY PERTAINING TO THE MARBLE BUSINESS RATHE R THAN THE BUSINESS OF RUNNING MOTOR BUSES/MOTOR LORRIES ON HIRE ON WHICH 30% DEPRECIATION WAS ALLOWED. THE ASSESSING OFFICER HELD THAT THE ASSESS EE WAS ENTITLED FOR DEPRECIATION @15% AND THE RELIANCE WAS PLACED ON TH E FOLLOWING CASE LAWS: (I) CIT VS. SARDAR STONES 215 ITR 350 (RAJ) (II) CIT VS. AR ENTERPRISES P. LTD. IN DBIT NO. 77/2002 DATED 06/09/2007 9. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED C IT(A) AND SUBMITTED AS UNDER: OUR HUMBLE SUBMISSION ON THE SECOND POINT OF THE A PPEAL IS THAT THE APPELLANT IS ALSO HAVING BUSINESS OF HIRIN G OF MINING MACHINERIES AND EQUIPMENTS. THE DUMPERS ALSO USED FOR TRANSPORT VEHICLE ACT. HENCE THE DEPRECIATION CLAI MED MAY BE ALLOWED. 9.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON DUMPER/ [7] TIPPER AT THE RATE ON WHICH DEPRECIATION WAS ALLOWA BLE ON TRANSPORT VEHICLE HAD BEEN EXAMINED BY THE JURISDICTIONAL TRIBUNAL IN THE CASE OF SAYEED IQBAL IN ITA NO.39/JU/2009 FOR THE ASSESSMENT YEAR 2005-06. THE LEARNED CIT(A), BY FOLLOWING THE DECISION OF THE ITAT JODHP UR BENCH, ALLOWED THE CLAIM OF THE ASSESSEE AND HELD THAT THE ASSESSEE WA S ELIGIBLE FOR CLAIMING DEPRECIATION AT THE SAME RATE AT WHICH DEPRECIATION WAS ALLOWABLE ON MOTOR LORRIES. NOW THE DEPARTMENT IS IN APPEAL. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D .R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HE PRESENT CASE IT APPEARS THAT LEARNED CIT(A) HAS ALLOWED THE CLAIM O F THE ASSESSEE BY FOLLOWING THE DECISION OF THE JURISDICTIONAL TRIBUN AL AND NOTHING IS BROUGHT ON RECORD THAT THE DECISION OF THE ITAT JODHPUR BEN CH RELIED BY THE LEARNED CIT(A), HAVING SIMILAR FACTS, HAD BEEN REVERSED BY THE HIGHER FORUM. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF T HE DEPARTMENTAL APPEAL. 11. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 10/07/2013) SD/. SD/. ( HARI OM MARATHA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:10/07/2013 *CL SINGH COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. D.R. ASSISTANT REGISTRAR