M/s. Rina Dyeing & Printing Works, Surat V. The Income tax Officer,Ward-9(3), Surat

ITA 1417/AHD/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5321 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 1417 /AHD/2009 (ASSESSMENT YEAR: 2006-07) M/S RINA DYEING AND PRINTING WORKS, LAL DARWAJA, VAST DEVDI ROAD, SURAT V/S THE ITO, WARD-9(3), SURAT (APPELLANT) (RESPONDENT) PAN: AADFR 1092E APPELLANT BY : SHRI SAKAR SHARMA A.R. RESPONDENT BY : SHRI K.C. MATHEWS SR. D.R. ( )/ ORDER DATE OF HEARING : 20-01-2014 DATE OF PRONOUNCEMENT : 07 -02-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-V, SURAT DATED 31.03.2009 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF DY EING, PRINTING AND FINISHING OF CLOTHS ON JOB WORK BASIS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2006-07 ON 30.12.2006 DECLARING TOTAL INCOME OF RS 3,48,305 /-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 31.12.2008 AND THE TOTAL INCOME WA S ASSESSED AT RS ITA NO 1417 /AHD/2009 . A.Y. 2006- 07 2 36,49,200/-. AGGRIEVED BY THE ORDER OF AO ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 31.3.2009 PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSE E IS IN NOW IN APPEAL BEFORE US. THE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN SUST AINING DISALLOWANCE OF TRANSPORT AND OCTROI CHARGES AMOUNTING TO RS. 30,73 ,023/- BY INVOKING PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C. 4. ON VERIFICATION OF THE PROFIT & LOSS ACCOUNT, AO NOTICED THAT ASSESSEE HAD DEBITED 'NOOR AND OCTROI' OF RS 33,14,974/- WHICH I NCLUDED RS 2,41,951/- TOWARDS OCTROI/HAMALI/KANTA SERVICES AND THE REMAIN ING RS 30,73,023/- WAS TOWARDS FREIGHT EXPENSES. HE ALSO NOTICED THAT ASSE SSEE HAD NOT DEDUCTED TDS U/S 194C BEFORE MAKING THE FREIGHT PAYMENTS AND THEREFORE THE TRANSPORTATION CHARGES ON WHICH TDS WAS NOT DEDUCTE D WAS LIABLE FOR DISALLOWANCE U/S 40A(IA) AND ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) UPHELD THE ORDER OF AO BY HOLDING AS UNDER:- I HAVE PERUSED THE FACTS AND ARGUMENTS ON BOTH SID ES. THE FACT OF THE MATTER IS THAT THE APPELLANT HA S MADE PAYMENT OF FREIGHT EXPENSES TO DRIVERS OF TRUC KS. BUT THE DRIVERS ARE ONLY COLLECTING THESE AMOUNTS ON BEHALF OF THE TRUCK OWNERS WHO IN THIS C ASE ARE TWO ROADLINES. ONCE THE COMMISSION AGENT HAS IDENTIFIED THE TRUCK OWNERS AND ENSURED TIMELY ENGAGEMENT OF THE VEHICLES AS AND WHEN THE NEED ARISES, HIS COMMISSION IS DUE AND THE SAME HAS BEEN PAID AFTER DEDUCTING TAX WHICH IS PERFECTLY LEGAL. THERE IS NO WRITTEN CONTRACT WITH ANKESH & CO. ALSO . THEREFORE THE ACTUAL WORK OF TRANSPORTATION IS DONE BY THE TWO TRANSPORTERS AND COLLECTION OF FREI GHT EXPENSES HAS BEEN DONE BY THE TRUCK DRIVERS INSTEAD OF CONSOLIDATED MONTHLY OR ANNUALLY RAISED BILLS. THE FACTS OF DIFFERENT TRUCK DRIVERS, VEHICL ES, THEIR REGISTRATION NOS. DATES, MODES OF PAYMENT AND QUANTUM OF PAYMENT (LESS OR MORE THAN 20,000/-) ARE ALL IRRELEVANT. TRANSPORTATION IS THE SERVICE A ND FREIGHT IS THE PAYMENT FOR AVAILING THIS SERVICE . THIS IS AN IMPLICIT CONTRACT. THUS SERVICE ACTUALLY HAS BEEN DISCHARGED BY NUMEROUS TRUCKS AND THEIR DRIVERS BUT ON BEHALF OF THE TWO TRANSPORTERS. PRES ENCE OR ABSENCE OF A COMMISSION AGENT, WILL NOT ALTER THE CHARACTER OF THE CONTRACT BETWEEN THE APP ELLANT AND HIS TRANSPORTERS. THERE MAY NOT BE A WRITTEN CONTRACT. IN THIS CASE CONTRACT IS IMPLICIT . THE TRANSPORTER IS ENTITLED TO FREIGHT CHARGES IF HE TRANSPORTS CERTAIN GOODS TO CERTAIN PLACE FOR THE A PPELLANT. THE APPELLANT HAS TO MAKE PAYMENT OF THE CHARGES - CASH, CHEQUE, MONTHLY OR PER TRIP ARE IRR ELEVANT AS ALSO WHO COLLECTS THE PAYMENT ON BEHALF OF THE TRANSPORTER. THE APPELLANT'S OTHER ARGUMENT THAT TDS IS TO BE DEDUCTED ON AMOUNT PAYABLE AND NOT ON PAID, CONTRADICTS APPELLANTS MAIN ARGUMENT T HAT PAYMENT MADE COULD NOT BE SUBJECTED TO TDS LEGALLY. IN THE SECOND ARGUMENT IS ADMISSION THAT I TS DEFENCE IN THE FIRST ARGUMENT LACKS IN MERIT. LASTLY THE TWO TRANSPORTERS ARE 'AUTHORISED' TRANSP ORTERS OF GMDC AND THEREFORE INDIVIDUAL TRUCK DRIVERS OR OWNERS (EVEN IF THEY ARE DIFFERENT FROM THE AUTHORISED FIRMS) DRIVE THEIR BUSINESS FROM THE TWO TRANSPORTERS ONLY. WITHOUT THEM, THEIR ENTIRE O PERATIONS BECOME UN AUTHORISED AND CLANDESTINE. THUS IT IS CLEAR THAT THERE IS MERIT IN AO'S ACTION AND APPELLANT'S DEFENCE SUFFERS FROM SEVERE LEGAL AND FACTUAL INFIRMITIES. THE APPEAL IS DISMISSED ON THI S GROUND. 5. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NO W IN APPEAL BEFORE US. ITA NO 1417 /AHD/2009 . A.Y. 2006- 07 3 6. BEFORE US, THE LD.A.R. SUBMITTED THAT ASSESSEE H AS APPOINTED M/S ANKESH & CO FOR ARRANGING THE TRUCKS FROM TRUCK DRIVERS/TRUC K OWNERS FOR TRANSPORTATION OF COAL. ANKESH & CO WAS PAID FIXED COMMISSION ON P ER TRUCK BASIS AND ON WHICH ASSESSEE DEDUCTED TDS U/S 194H BEFORE MAKING THE PAYMENT OF COMMISSION. THE FREIGHT CHARGES THAT HAS BEEN DEBIT ED IN THE BOOKS OF ASSESSEE WERE PAID DIRECTLY TO THE TRUCK DRIVERS/OW NERS AT THE TIME OF DELIVERY OF COAL. THE LD A.R. FURTHER SUBMITTED THAT THE ASS ESSEE WAS NOT HAVING ANY CONTRACT WITH THE TRUCK OWNERS/DRIVERS AND THEREFOR E ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS. HE FURTHER SUBMITTED THAT E ACH PAYMENT TO THE TRANSPORTER WAS LESS THAN RS 20,000/- AND THE AGGRE GATE PAYMENT TO THEM IN THE YEAR ALSO DID NOT EXCEED RS 50,000/- AND ON THI S GROUND ALSO AS PER THE PROVISIONS OF S. 194C(5) OF THE ACT THE ASSESSEE WA S NOT REQUIRED TO DEDUCT TDS AND FOR WHICH HE ALSO PLACED RELIANCE ON THE DE CISION IN THE CASE OF CIT VS UNITED RICE LAND LTD (2008) 174 TAXMAN 286 (P&H) AND ALSO PLACED ON RECORD THE COPY OF THE AFORESAID ORDER. HE THUS SUB MITTED THAT WHILE UPHOLDING THE ORDER OF AO, CIT(A) HAS GIVEN NO FINDING ON THE AFORESAID SUBMISSIONS AND THEREFORE THE MATTER MAY BE REMITTED BACK TO TH E FILE OF CIT(A) WITH NECESSARY DIRECTIONS. THE LD. D.R. ON THE OTHER HAN D SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, LD A.R APART FROM OTHER ARGUMENTS, HAS T AKEN AN ALTERNATE PLEA THAT AS PER THE PROVISIONS OF S. 194C(5) OF THE ACT , ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS AS EACH OF THE PAYMENT TO TRANSPORTER WAS LESS THAN RS. 20,000/- AND THE AGGREGATE PAYMENT IN THE FINANCIAL YEAR WAS LESS THAN RS. 50,000/-. HE HAS FURTHER SUBMITTED THAT THOUGH THIS PLEA WAS TAKEN BEFORE CIT(A), BUT NO FINDING HAS BEEN GIVEN ON THE AFORES AID ISSUE BY CIT(A). ON PERUSAL OF THE ORDER OF CIT(A), WE FIND THAT CIT(A) HAS HELD THE ISSUE OF PAYMENT TO DIFFERENT TRUCK DRIVERS, DATES, MODES AN D QUANTUM OF PAYMENT TO BE IRRELEVANT AND THERE IS NO FINDING OF CIT(A) OF THE SUBMISSIONS OF THE ITA NO 1417 /AHD/2009 . A.Y. 2006- 07 4 ASSESSEE. WE THEREFORE REMIT THE ISSUE TO THE FILE OF CIT(A) TO DECIDE THE AFORESAID ISSUE AS PER LAW AND AFTER CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE AND MORE SO WITH REFERENCE TO THE APPLICAB ILITY OF PROVISIONS OF 194C(5) OF THE ACT. THE ASSESSEE IS ALSO DIRECTED T O FURNISH ALL THE NECESSARY DETAILS PROMPTLY BEFORE CIT(A). NEEDLESS TO STATE T HAT CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES BEFORE DECIDING THE ISSUE. IN THE RESULT THIS GROUND OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 07 - 02 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY 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,AHM EDABAD