M/s. Amruta Quarry Works, Sabarkantha V. The Income Tax Officer, Sabarkantha Ward-4, Modasa

ITA 1481/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0891 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P PATEL
• Assessee Lawyers: M J SHAH
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1481/AHD/2013 / ASSESSMENT YEAR : 2008-09 M/S. AMRUTA QUARRY WORKS, MOTIVENI CAMPA TALUKA, DHANSURA, DIST: SABARKANTHA PAN : AACFP 0895 Q VS INCOME TAX OFFICER, SABARKANTHA WARD-4, MODASA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M. J. SHAH, AR REVENUE BY : SHRI N.P. PATEL, SR. DR / DATE OF HEARING : 10/06/2016 / DATE OF PRONOUNCEMENT: 19/07/2016 / O R D E R THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABA D DATED 08.02.2013 FOR ASSESSMENT YEAR 2008-09. 2. ASSESSEE HAS RAISED FOLLOWING TWO GROUNDS:- 1. THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF AN AMOUNT OF RS.1,91,065/- UNDER THE PROVISIONS OF SEC. 40(A)(IA) OF THE I.T. ACT, 1961. 1.1 THE CIT(A) FAILED TO APPRECIATE THE FACTUAL AS WELL AS LEGAL SUBMISSIONS MADE IN THIS REGARD, AND HENCE, ERRED IN DISALLOWIN G THE AMOUNT OF RS.1,91,065/- U/S 40(A)(IA). 2. THE CIT(A) FURTHER ERRED IN HOLDING THAT THE AS SESSEE OUGHT TO HAVE DEDUCTED TDS U/S 194C ON AN AMOUNT OF R.77,045/- AN D THAT NOT BEING DONE DISALLOWANCE OF THE SAID AMOUNT IS JUSTIFIED UNDER THE PROVISIONS OF SEC. 40(A)(IA). 3. BRIEF FACTS ARE THE ASSESSEE IS ENGAGED IN THE STONE QUARRY WORKS MANUFACTURING KAPCHI, GREET METAL FROM BIG STONE RO CKS RECOVERED FROM ITS MINE BY BLASTING PROCESS. ASSESSEE EMPLOYED SERVIC ES OF A TRANSPORT CONTRACTOR ONE SHRI BABLUBHAI JAYNARAN DUBE WHICH EX PLAINED AS NOT A REGULAR TRANSPORT CONTRACTOR; THE WORK WAS ASSIGNED ON REQUIREMENT BASIS ONLY. THERE IS NO WRITTEN OR ORAL CONTRACT AND THE PAYMENT FOR EACH TRIP DID SMC-ITA NO. 1481/AHD/2013 M/S. AMRUTA QUARRY WORKS VS. ITO AY : 2008-09 2 NOT EXCEED RS.20,000/-. SIMILARLY, ONE SHRI SOMAJI PUJAI PARMAR IS ALSO AN AGRICULTURIST AND NOT A TRANSPORT CONTRACTOR. WHEN THERE IS NO AGRICULTURAL WORK, HE USED TO TRANSPORT GOODS ON REQUIREMENT BAS IS ONLY IN SIMILAR MANNER. THE ASSESSING OFFICER HELD THAT BOTH THESE PERSONALS WERE TRANSPORT CONTRACTORS AND AS THE TDS U/S 194C WAS N OT DEDUCTED, APPLYING PROVISIONS OF SECTION 40(A)(IA) THESE AMOUNTS WERE DISALLOWED. 4. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL W HERE THE SAME WAS CONFIRMED. 5. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. [[[[ 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE ASSESSEE DOES NOT WANT TO GO WITH ANY OTHER FACTUAL ARGUMENTS EXCEPT THAT BY AMENDMENT IN SECTION 40(A)(IA) BROUGHT IN BY FINANCE (NO.2) ACT, 2014, WHICH READS AS UNDER:- 14.4 ACCORDINGLY, SECTION 40(A)(IA) OF THE INCOME-TAX ACT HAS BEEN AMENDED TO PROVIDE THAT IN CASE OF NON-DEDUCTION OF TAX AT SOURCE OR NON- PAYMENT OF TAX SO DEDUCTED ON PAYMENTS MADE TO RESI DENTS AS SPECIFIED IN SECTION 40(A)(IA) OF THE INCOME-TAX ACT, THE DISALLOWA NCE SHALL BE RESTRICTED TO 30% OF THE AMOUNT OF EXPENDITURE CLAIMED. 6.1 LD. COUNSEL FOR THE ASSESSEE THEN CONTENDS THAT THE AMENDMENT IS CLARIFICATORY IN NATURE INASMUCH AS IN CLAUSE 14.3 OF THE EXPLANATORY NOTES IN THIS BEHALF MENTIONED AS UNDER:- 14.3 AS MENTIONED ABOVE, IN CASE OF NON-DEDUCTION OF TAX AT SOURCE OR NON- PAYMENT OF TAX SO DEDUCTED FROM CERTAIN PAYMENTS MA DE TO RESIDENTS, THE ENTIRE AMOUNT OF EXPENDITURE ON WHICH TAX WAS DEDUC TIBLE IS DISALLOWED UNDER SECTION 40(A)(IA) FOR THE PURPOSES OF COMPUTIN G INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE DISALLOWANCE OF WHOLE OF THE AMOUNT OF EXPENDITURE CAUSES HARDSHIP, ESPECIAL LY IN CASE OF PAYMENT MADE TO A RESIDENT IN WHOSE CASE THE WITHHOLDING OF TAX IS ONLY A MODE OF COLLECTION OF TAX AND DOES NOT RESULT INTO FINAL DI SCHARGE OF TAX LIABILITY. SMC-ITA NO. 1481/AHD/2013 M/S. AMRUTA QUARRY WORKS VS. ITO AY : 2008-09 3 6.2 SINCE THE AMENDMENT HAS BEEN BROUGHT TO REMOVE THE HARDSHIP CAUSED TO THE ASSESSEE, THE AMENDMENT ASSUMES THE C HARACTER OF BEING CLARIFICATORY IN NATURE AND IS RETROSPECTIVELY APPL ICABLE. RELIANCE IS PLACED ON FIVE MEMBERS CONSTITUTION BENCH OF SUPREME COURT IN THE CASE OF CIT VS. VATIKA TOWNSHIP PRIVATE LIMITED, REPORTED IN (2 014) 367 ITR 466 (SC), WHEREIN IT HAS BEEN OBSERVED THAT IN CASE THE AMEND MENT IS BROUGHT TO REMOVE THE HARDSHIP CAUSED TO THE ASSESSEE, THE SAM E ASSUMES THE CHARACTER OF BEING CLARIFICATORY IN NATURE. 6.3 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE AMENDMENT TO SECTION 40(A)(IA) BROUGHT IN BY FINANCE (NO.2) ACT, 2014 MA Y BE HELD AS RETROSPECTIVELY APPLICABLE; IN VIEW THEREOF 30% OF THE AMOUNT ON WHICH TDS HAS NOT BEEN DEDUCTED MAY BE HELD AS DISALLOWAB LE U/S 40(A)(IA). 7. LD. DEPARTMENTAL REPRESENTATIVE IS HEARD. 8. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. I FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE . RESPECTFULLY FOLLOWING THE JUDGMENT OF VATIKA TOWNSHIP PRIVATE LIMITED (SU PRA), THE AMENDMENT BROUGHT IN BY FINANCE (NO.2) ACT OF 2014 IN SECTION 40(A)(IA), THE SAME IS HELD TO BE RETROSPECTIVE IN NATURE; THEREFORE, THE AMOUNT TO BE DISALLOWED U/S 40(A)(IA) SHOULD BE RESTRICTED TO 30% OF THE IM PUGNED AMOUNT. THUS, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH JULY, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 19/07/2016 *BIJU T. SMC-ITA NO. 1481/AHD/2013 M/S. AMRUTA QUARRY WORKS VS. ITO AY : 2008-09 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD