ACIT, Circle, Haldia, Purba Medinipur V. Shri Shyamal Kr. Dey, Purba Medinipur

ITA 1394/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99930 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-09-2012
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: VA RSHA JALA
• Section: 194C; 201(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO.1394/KOL/2012 ASSESSMENT YEAR: 2007-08 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SHRI SH YAMAL KR. DEY CIRCLE-HALDIA (PAN: ADQPD6172M) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 26.10.2015 DATE OF PRONOUNCEMENT: 29.10.2015 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: SHRI SUBASH AGARWAL & MISS VA RSHA JALAN, ADVOCATES ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXXIII, KOLKATA IN APPEAL NO.356/CIT(A)-XXXIII/DCIT,CIR-HAL/09-10 DATED 18.07 .2012. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-HALDIA U/S. 144 OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORD ER DATED 24.12.2009. 2. AT THE OUTSET, IT IS NOTICED THAT THE REVENUE HA S MOVED ADJOURNED PETITION IN ALMOST 19 CASES OUT OF THE LISTED CASE OF 23. THIS EN BLO CK ADJOURNMENT IS NOT POSSIBLE AND HENCE, THE POSSIBLE CASE, WE HAVE TAKEN UP FOR HEARING AND DECIDED THE ISSUE BY REJECTING THE ADJOURNMENT PETITION. IN THIS CASE ALSO, WE HAVE R EJECTED THE ADJOURNMENT PETITION AND HEARD THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE BY AO U/S. 40(A)(IA) OF THE ACT B Y FOLLOWING THE DECISION OF SPECIAL BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD. VS. ACIT, ITA NO. 477/VIZAG/2008. FOR THIS, REVENUE HA S RAISED FOLLOWING GROUND: THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWA NCE U/S. 40(A)(IA) OF THE I. T. ACT TO THE OUTSTANDING BALANCE LYING AT THE END OF THE PREVIOU S YEAR ONLY AND DELETING THE DISALLOWANCES FOR THE PAID PORTION DURING THE YEAR RELYING ON THE JUDGMENT IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT LTD. VS. ACIT, IT A NO. 477/VIZAG/2008 OF SPECIAL BENCH OF ITAT, VISHAKHAPATNAM AND M/S. WOODPLAST AG ENCY VS. ITO, ITA NO. 241/KOL/2010 OF ITAT, KOLKATA. 2 ITA NO.1394/K/2012 SHRI SHYAMAL KR. DEY AY 2007-08 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A TRANSPORTER AND CLAIMED FREIGHT CHARGES OF RS.80,20,365/-. AS THE ASSESSEE FAILED TO DEDUC T TDS ON FREIGHT CHARGES, THE AO MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR A SUM OF RS.80,20,365/-. AGGRIEVED, ASSESSEE PREFERRED APPE AL BEFORE CIT(A). THE CIT(A) HAS DIVIDED THESE FREIGHT CHARGES IN TWO PARTS - 1 ST , THE PAYMENTS BELOW RS.50,000/- IN AGGREGATE IN A YEAR AND 2 ND - PAYMENTS ABOVE RS.50,000/- IN AGGREGATE IN A YEA R. THE CIT(A) HAS ASKED FOR REMAND REPORT FROM THE AO THAT HOW MUCH PAYMENT IS BELOW RS.50,000/- IN AGGREGATE IN A YEAR AND HOW MUCH IS ABOVE RS.50,000/- IN AGGREGATE IN A YEAR. THE AO VIDE REMAND REPORT NO. ACIT/CIR-HALDI A/REMAND/2012-13/169 DATED 04.06.2012 HAS STATED AS UNDER: AS DIRECTED, HEARING WAS FIXED ON 22.05.2012, 28.0 5.2012 AND AGAIN ON 04.06.2012. THE A/R OF THE ASSESSEE SHRI V. D. SHARMA APPEARED AND GAVE WRITTEN SUBMISSION (COPY ENCLOSED) IN RESPECT OF LIST OF TRUCKS OWNED BY SAM E PERSON. THE MATTERS WERE DISCUSSED. AS PER DISCUSSION AND WRITTEN SUBMISSION IT IS OBSE RVED THAT THE ASSESSEE HAD DONE PAYMENT OF TRANSPORT CHARGES TO SOME PERSONS FOR THE YEAR A BOVE RS.50,000/- DURING THE RELEVANT PREVIOUS YEAR WITHOUT DEDUCTING TAX AT SOURCE, VIOL ATING THE PROVISIONS OF SECTION 194C OF THE I. T. ACT. THE AGGREGATE OF TOTAL SUCH PAYMENT IS RS.13,30,707/- WHICH ARE LIABLE TO BE DISALLOWED U/S. 40(A)(IA) OF THE I. T. ACT AS PER T HE SUBMISSION GIVEN BY THE ASSESSEE. ACCORDING TO AO, THE PAYMENT IN EXCESS OF RS.50,000 /- IN AGGREGATE IS ONLY RS.13,30,707/- AND ACCORDINGLY, CIT(A) DELETED THE ADDITION IN CAS E OF PAYMENTS BELOW RS.50,000/- IN AGGREGATE IN A YEAR IN VIEW OF THE PROVISO TO SECTI ON 194C(5) OF THE ACT. IN REGARD TO THE PAYMENTS EXCEEDING RS.50,000/- IN AGGREGATE IN A YE AR THAT COMES TO RS.13,30,707/-, THE CIT(A) DELETED BY FOLLOWING THE DECISION OF SPECIAL BENCH ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD., SUPRA BY OBSERVING IN PA RA 7 AS UNDER: 7. I HAVE CONSIDERED FACTS OF THE CASE. THOUGH TH E ASSESSMENT IN THIS CASE WAS COMPLETED UNDER THE PROVISIONS OF SECTION 144, THE ONLY ADDIT ION MADE WAS BY WAY OF DISALLOWANCE OF FREIGHT CHARGES MADE U/S 40(A)(IA). NEITHER IN THE ASSESSMENT ORDER, NOR IN THE REMAND REPORT, THE ASSESSING OFFICER HAS RAISED ANY DOUBT ON GENUINENESS OF THE EXPENSES OR ANY OTHER ISSUE. IN HIS REPORT, IT HAS BEEN STATED BY T HE ASSESSING OFFICER THAT OUT OF TOTAL PAYMENTS MADE, AGGREGATE OF THE PAYMENTS WHERE AMOU NT PAID TO A PERSON EXCEEDED RS. 50,000/- CAME TO RS. 13,30,707/- WHICH WAS LIABLE F OR DISALLOWANCE U/S. 40(A)(IA). HOWEVER, IT HAS BEEN CLAIMED BY THE APPELLANT THAT THE ENTIRE TRANSPORT CHARGES WERE ACTUALLY PAID DURING THE FINANCIAL YEAR ITSELF AND NO AMOUNT REMAINED OUTSTANDING. RECENTLY, SPECIAL BENCH OF ITAT, VISHAKHAPATNAM HAS HELD, BY MAJORITY, IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT, ITA NO.477/ VIZAG/2008 THAT THE PROVISIONS OF SECTION 40(A) (IA) ARE ATTRACTED ONLY ON THE AMOUNT REMAINING OUTSTANDING AT THE END OF THE YEAR AND CANNOT BE INVOKED TO DISALLOW EXPENDITURE WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YEAR. THE SAID DECISION HAS BEEN FOLLO WED BY THE JURISDICTIONAL BENCH OF TRIBUNAL IN THE CASE OF M/S. WOODPLAST AGENCY VS. I TO, ITA NO. 241/KOL/2010 AND SEVERAL OTHER CASES. IT IS CLAIMED BY THE APPELLANT THAT AL L THE FREIGHT CHARGES UNDER CONSIDERATION HAVE BEEN ACTUALLY PAID DURING THE YEAR AND NOTHING REMAINED PAYABLE. HOWEVER, THIS ASPECT HAS NOT BEEN EXAMINED BY THE ASSESSING OFFIC ER WHILE SENDING HIS REPORT. IN LINE WITH 3 ITA NO.1394/K/2012 SHRI SHYAMAL KR. DEY AY 2007-08 THE PRINCIPLE OF JUDICIAL DISCIPLINE, I FOLLOW THE RATIO SET BY SPECIAL BENCH OF ITAT AND FOLLOWED BY THE JURISDICTIONAL BENCH, AND DIRECT TH E ASSESSING OFFICER TO VERIFY THIS POINT AND RESTRICT THE DISALLOWANCE ONLY TO THE EXTENT OF THE AMOUNT REMAINING OUTSTANDING AT THE END OF THE PREVIOUS YEAR. 5. NONE APPEARED ON BEHALF OF REVENUE BUT LD. COUNS EL FOR THE ASSESSEE STATED THAT THE PAYMENT BELOW RS.50,000/- IN AGGREGATE IN A YEAR IS NOW COVERED BY THE PROVISION TO SECTION 194(5) OF THE ACT AND NO TDS IS TO BE DEDUC TED AND, THEREFORE, THERE IS NO QUESTION FOR DISALLOWANCE BY INVOKING THE PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT. HOWEVER, IN RESPECT TO THE PAYMENTS EXCEEDING RS.50,000/- IN AG GREGATE IN A YEAR I.E. RS.13,30,707/-, LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS IS AL SO COVERED BY THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WHICH IS HELD TO BE R ETROSPECTIVE BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD., ITA NOS. 160 & 161/KOL/2015. 6. WE HAVE LD. COUNSEL FOR THE ASSESSEE AND GONE TH ROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS DELETED THE DISALLOWANCE BY OBSERVING THAT WHEREVER THE PAYMENTS ARE COVERED BY THE PROVISO TO SECTION 194C(5) OF THE ACT BY VIRTUE OF WHICH THE PAYMENTS UPTO RS.50,000/- IN AGGREGATE IN A YEA R IS ALLOWED WITHOUT DEDUCTION OF TAX AND THEREBY NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. WE FIND NO INFIRMITY IN THIS FINDING OF C IT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. AS REGARDS TO THE DISALLOWANCE OF A SUM OF RS.13 ,30,707/-, THE PAYMENTS EXCEEDING RS.50,000/- IN AGGREGATE IN A YEAR TO EACH PERSON, THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 194C OF THE ACT BUT ASSESSEE FAILED TO DEDUCT TDS. THE CIT(A) RELYING ON THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL OF VISHAKHAPATNAM BE NCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD., SUPRA DELETED THE ADDITION IN RES PECT TO PAID AMOUNT AND DIRECTED THE AO TO DELETE THE DISALLOWANCE FOR THE PAID AMOUNTS BUT RETAINED THE DISALLOWANCE ON PAYABLE AMOUNTS. NOW, MERILYN SHIPPING & TRANSPORT LTD., S UPRA HAS BEEN REVERSED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. CRESCENT EXPORTS SYNDICATE (2013) 216 TAXMAN 258 (CAL) AND HELD THE SAME TO BE APPLICABLE TO ALL THE PAYMENTS WHETHER PAID OR PAYABLE. ACCORDINGLY, QUA THIS ASPECT, WE REVERSE THE ORDER OF CIT(A) BY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT CITED ABOVE. THE ALTERNATIVE PLEA OF THE ASSESSEE THAT NOW THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS HELD TO BE RETROSPECTIVE BY 4 ITA NO.1394/K/2012 SHRI SHYAMAL KR. DEY AY 2007-08 HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD., SUPRA, WHEREIN IT IS HELD THAT IN BOTH THE PROVISO TO SECT ION 40(A)(IA) AND SECTION 201(1) OF THE ACT IS THAT AS LONG AS THE PAYEE HAS FILED ITS RETURN O F INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAXES ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERS ON IN DEFAULT. IN VIEW OF THE PRINCIPLE LAID DOWN BY HONBLE DELHI HIGH COURT, WE ARE OF TH E VIEW THAT LET THE ISSUE BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION WHETHER THE REC IPIENT OF INCOME I.E. PAYEE HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAXES ON SUCH INCOME. THE ASSESSEE WILL FILE ALL THE DETAILS REGARDING RECIPIENTS. ACCORDINGLY, THIS ISSUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29.10.2 015 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29TH OCTOBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT ACIT, CIRCLE-HALDIA. 2 RESPONDENT SHRI SHYAMAL KR. DEY, KOLAGHAT, PURBA MEDINIPUR- 721134. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .