Shri Manish Raichand Shah, Ahmedabad V. The CIT-3, Ahmedabad

ITA 1512/AHD/2015

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7971 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-12-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: PF JAIN
• Keywords: Unexplained cash credit; Search and seizure; Principle of natural justice; Assessment record; TDS; Set aside
• Section: 143(3); 153A; 40(a)(ia); 194C; 48; 194A; 13; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1512/AHD/2015 & 2884/AHD/2017 (ASSESSMENT YEAR: 2010-11) SHRI MANISH RAICHAND SHAH B-11, WEST END PARK, NR. GURUDWARA, S.G. HIGHWAY, BODAKDEV, AHMEDABAD ACIT CIRCLE-3(3), AHMEDABAD V/S V/S COMMISSIONER OF INCOME- TAX-3, AHMEDABAD SHRI MANISH RAICHAND SHAH B-11, WEST END PARK, NR. GURUDWARA, S.G. HIGHWAY, BODAKDEV, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AVUPS3273N APPELLANT BY : SHRI P.F. JAIN, A.R. RESPONDENT BY : SHRI O.P. SHARMA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 09 -12-201 9 DATE OF PRONOUNCEMENT : 19 -12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 2 1. ITA NOS. 1512/AHD/2015 & 2884/AHD/2017 ARE CROSS AP PEALS BY THE ASSESSEE AND THE REVENUE DIRECTED AGAINST THE VERY SAME ORDER OF THE LD. PR. CIT(A)-3, AHMEDABAD DATED 13.03.2015 PERTAINING TO A.Y. 2010-11. SINCE THE FACTS IN ISSUES RELATE TO THE COMMON GRIEVANCE, BOT H THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER F OR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 1512/AHD/2015, THE ASSESSEE HAS TAKEN FO LLOWING GROUNDS OF APPEAL: 1. THE ORDER PASSED BY THE LEARNED C.I.T.-3 IS AG AINST THE LAW, EQUITY AND JUSTICE 2. THE LD.CIT-3 HAS ERRED IN LAW AND ON FACTS IN C ONSIDERING THAT THE ORDER OF THE LD. A.O. IS ERRONEOUS AND PREJUDICE TO THE INTERRES T OF REVENUE AS APPELLANT HAS NOT DEDUCTED TDS ON CONTAINER CHARGES OF RS. 8,37,1 7,443/- WHICH S LIABLE FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 3. THE LD. CIT -3 HAS ERRED IN LAW AND ON FACTS I N CONSIDERING THAT THE INTEREST PAYMENT MADE TO NBFC OF RS. 20,47,647/- IS LIABLE F OR DISALLOWANCE U/S 40(A)(IA) AND HENCE ORDER PASSED BY THE LD. A.O IS PREJUDICE TO THE INTEREST OF REVENUE. 4. APPELLANT CRAVES LIBERTY TO ADD, AMEND, ALTER OR MODIFY ANY OR ALL GROUNDS OF APPEAL BEFORE FINAL HEARING. 3. LD. PR. CIT SET ASIDE THE ASSESSMENT AND DIRECTED LD. A.O. TO BE MADE DE NOVO WITH FOLLOWING OBSERVATIONS: 2.1 ON PERUSAL OF THE ASSESSMENT RECORDS SHOWED TH AT THE ASSESSES WAS ENGAGED IN THE BUSINESS OF CLEARING AND FORWARDING AGENT FO R CUSTOM CLEARING AND ALSO IN TRADING OF SHARES, THE ASSESSEE WAS OBTAINING CONTA INERS FROM M/S. CONTAINER CORPORATION OF INDIA LTD, THE HIRING OF CONTAINERS FALLS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT, AS SUCH ASSESSEE WAS REQUI RED TO DEDUCT TAX AT SOURCE FROM PAYMENT MADE TO M/S. CONTAINER CORPORATION OF INDIA LTD. TOWARDS CONTAINER CHARGES. HOWEVER, ASSESSEE HAS NOT DEDUCT ED THE TAX AT SOURCE FROM ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 3 PAYMENT OF RS.8,37,17,443/- MADE TO M/S. CONTAINER CORPORATION OF INDIA LTD. THEREFORE, THE EXPENDITURE CLAIMED BY ASSESSEE WAS NOT ALLOWABLE; IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I T ACT. HOW EVER, THE A.O. WHILE PASSING THE ASSESSMENT ORDER OMITTED TO DISALLOW THE EXPENDITUR E CLAIMED. THEREFORE, THE ORDER PASSED U/S. 143(3) DATED 27.02.2013 APPEARED TO BE ERRONEOUS SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 2.2 THE NEXT ISSUE IS REGARDING INTEREST PAYMENT MADE BY THE ASSESSEE TO NON- BANKING FINANCE COMPANIES AMOUNTING TO RS , 20,47,647/-. THE BIFURCATION OF INTEREST PAID TO VARIOUS NBFC'S IS AS UNDER :- NAME OF THE PAYEE AMOUNT (RS.) INDIA BULLS FINANCIAL SERVICES 1,67,861/- KOTAK MAHINDRA PRIME LTD. 2,04,435/- RELIANCE CAPITAL LTD. 6,88,732/- TATA CAPITAL LTD. 1,55,182/- TATA CAPITAL LTD. 1,70,192/- TATA CAPITAL LTD. TOTAL 20,47,647/- 2.3 THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOUR CE FROM INTEREST PAYMENT TO THE ABOVE NBFCS AS PER THE PROVISIONS OF SECTION 19 4A OF THE I.T. ACT THE ASSESSEE HAS FAILED TO DO SO. THE EXPENDITURE ON ACCOUNT OF INTEREST PAYMENT CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE IN VIEW OF THE PROVI SIONS OF SECTION 40(A) (FA) OF THE L T. ACT . HOWEVER, THE A.O. WHILE PASSING THE ASSESSMENT ORDER, OMITTED TO DISALLOW THE EXPENDITURE OF RS.20,47,647/- CLAIMED. THEREFORE THE ORDER PASSED U/S.!43(3) DATED 27.02.2013 APPEARED TO BE ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THE ABOVE, A SHOW CAUSE NOTICE U/S 263 W AS ISSUED TO THE ASSESSES ON 5.9.2014 AS TO WHY THE ASSESSMENT ORDER BE NOT MODI FIED OR SET-ASIDE FOR RE- ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 4 EXAMINING THE ISSUE MENTIONED ABOVE. HOWEVER NONE A TTENDED ON THIS DATE AND NO ADJOURNMENT WAS SOUGHT. THIS NOTICE WAS SERVED U PON THE ASSESSES BY REGISTERED POST A.D. THEREAFTER VARIOUS REMINDER NO TICES WERE ISSUED AS UNDER:- DATE OF NOTICE DATE OF HEARING 10.11.2014 19.11.2014 26.11.2014 11.12.2014 07.01.2015 20.01.2015 03.02.2015 12.02.2015 2.4 IT IS ALSO SEEN THAT IN RESPONSE TO THE ABOVE REMINDER NOTICES NONE ATTENDED EXCEPT THE NOTICE- DATED 3.2.2015, IN RESPONSE TO W HICH THE ASSESSEE FILED ADJOURNMENT LETTER DATED 12.2.2015 THROUGH HIS REPR ESENTATIVE MAYUR M SHAH ASSOCIATES AND REQUESTED FOR ADJOURNMENT FOR 30 DAY S. THE ADJOURNMENT WAS GIVEN BY ISSUING A DETAILED SHOW CAUSE NOTICE DATED 19.2.2015 AND FIXING THE CASE FOR 12.3.2015. THEREFORE, ADJOURNMENT WAS GIVEN AND IT WAS STATED IN THIS NOTICE THAT FAILURE ON THE PART OF THE ASSESSES TO AVAIL T HESE OPPORTUNITY WOULD MEAN THAT THE ASSESSEE HAS NOTHING TO SAY IN THIS MATTER AND PROCEEDINGS U/S 263 WOULD BE CONCLUDED AFTER CONSIDERING MATERIAL ON RE CORD. THE ASSESSEE DID NOT ATTEND NOR SOUGHT ANY ADJOURNMENT ON THE APPOINTED DATE. 3.1 IN VIEW OF THE ABOVE THE MATTER IS DISCUSSED ON MERIT AS PER MATERIAL AVAILABLE ON RECORD. IT IS CLEAR THAT THE ASSESSEE WAS OBTAINING CONTAINERS FROM M/S. CONTAINER CORPORATION OF INDIA LTD, THE HIRING OF CONTAINERS FAILS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AS SUCH, ASSE SSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE FROM PAYMENT MADE TO M/S. CONTAINER C ORPORATION OF INDIA LTD. TOWARDS CONTAINER CHARGES. HOWEVER, ASSESSEE HAS NO T DEDUCTED-THE TAX AT SOURCE FROM PAYMENT OF RS.8,37,17,443/- MADE TO M/S . CONTAINER CORPORATION OF INDIA LTD. THEREFORE, THE EXPENDITURE CLAIMED BY AS SESSEE WAS NOT ALLOWABLE, IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I, T. ACT HOWEVER, THE A.O. WHILE PASSING THE ASSESSMENT ORDER OMITTED TO DISALLOW TH E EXPENDITURE CLAIMED, ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 5 THEREFORE, THE ORDER PASSED U/S. 143(3) DATED 27.02 .2013 IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3.2 WITH RESPECT TO THE INTEREST PAYMENT MADE BY TH E ASSESSEE TO NON-BANKING FINANCE COMPANIES AMOUNTING TO RS 20,47,647/-, THE BIFURCATION OF INTEREST PAID TO VARIOUS NBFC'S IS AS UNDER :- NAME OF THE PAYEE AMOUNT (RS.) INDIA BULLS FINANCIAL SERVICES 1,67,861/- KOTAK MAHINDRA PRIME LTD. 2,04,435/- RELIANCE CAPITAL LTD. 6,88,732/- TATA CAPITAL LTD. 1,55,182/- TATA CAPITAL LTD. 1,70,192/- TATA CAPITAL LTD. TOTAL 20,47,647/- THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE F ROM INTEREST PAYMENT TO THE ABOVE NBFC'S AS PER THE PROVISIONS OF SECTION 194A OF THE I.T. ACT. THE ASSESSEE HAS FAILED TO DO SO, THE EXPENDITURE ON ACCOUNT OF INTEREST PAYMENT CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE IN VIEW OF THE PROVI SIONS OF SECTION 40(A)(IA) OF THE I.T. ACT, HOWEVER,, THE A,G, WHILE PASSING THE ASSESSMENT ORDER, OMITTED TO DISALLOW THE EXPENDITURE OF RS.20,47,647/-CLAIMED, THEREFORE THE ORDER PASSED U/S, 143(3) DATED 27.02.2013 IS HELD TO BE ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4.1 IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. 243 ITR 83, THE HON'BLE SUPREME COURT HAS NOTED THAT 'THE COMMISSIONER CAN REVISE TH E ASSESSMENT ORDER IF THE TWIN CONDITIONS PROVIDED TO THE ACT ARE FULFILLED, THAT IS THAT THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS HUT IS ALSO PREJUDICIAL TO TH E INTEREST OF THE REVENUE, THE FULFILLMENT OF BOTH THE CONDITIONS IS IN ESSENTIAL PREREQUISITE.' 4.2 HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES 99 ITR 375 STATED THAT AN ORDER IS ERRONEOUS WHEN IT IS CONTRARY TO L AW OR PROCEEDS ON AN INCORRECT ASSUMPTION OF FACTS OR IS IN BREACH OF THE PRINCIPL ES OF NATURAL JUSTICE OR IS PASSED WITHOUT APPLICATION OF MIND, THAT IS, IS STEREO-TYP ED, INASMUCH AS THE ASSESSING ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 6 OFFICER, ACCEPTS WHAT IS STATED IN THE RETURN OF TH E ASSESSEE WITHOUT, MAKING ANY ENQUIRY CALLED FOR IN THE CIRCUMSTANCES OF THE CASE , THAT IS PROCEEDS WITH 'UNDUE HASTE'. 5. IN VIEW OF THIS REASON THE ASSESSMENT ORDER PASS ED U/S, 143(3) DATED 27/02/2013 FOR A,Y.2010-11 IS SET-ASIDE TO BE MADE DE-NOVO AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSES. 4. AT THE TIME OF HEARING, LD. A.R. CONTENDED THAT GRO UND NO. 1 IS SQUARELY COVERED BY THE ORDER OF THE ITAT AND STATED THAT CO NTAINER CORPORATION OF INDIA IS GOVT. COMPANY AND IF ANY PAYMENT IS MADE T O THE GOVERNMENT OF INDIA THAT THERE IS NO NEED TO DEDUCT THE TDS AS PE R LAW. 5. AND IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED A N ORDER OF ITAT VISAKHAPATNUM BENCH, WHEREIN IT WAS DECIDED THAT IF PAYMENT IS MADE TO THE CONTAINER CORPORATION OF INDIA THAT THERE IS NO NEE D TO DEDUCT TDS WITH FOLLOWING OBSERVATIONS: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF HANDLING AND TRANSPORT CONTRACTORS AT V ISAKHAPATNAM AND CONSIGNMENT AGENT OF RINL, NAGPUR. THE ASSESSEE FIL ED ITS RETURN OF INCOME FOR THE A.Y.2005-06 ORIGINALLY ON 01.10.2005 ADMITTING THE TOTAL INCOME OF RS.1,33,430/-. CONSEQUENT TO SEARCH AND SEIZURE OPE RATIONS IN THE CASE OF M/S. MAHA MARUTHI LOGISTICS PRIVATE LIMITED, A NOTICE U/ S.153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT1) WAS ISSUED O N 29.12.2010 AND IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED THE RETURN OF INC OME ON 14.2.2011 ADMITTING THE TOTAL INCOME OF RS.1,33,430/-. THE ASSESSMENT WAS C OMPLETED U/S. 143(3) R.W.S. 153A OF THE ACT VIDE ORDER DT.29.12.2011 WHEREIN TH E INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 1,33,430/-. VIDE ORDER DT.03.03.201 4. U/S. 263 OF THE ACT, THE COMMISSIONER OF INCOME TAX (CENTRAL) HELD THAT THE ASSESSMENT ORDER DT.29.12.2011 IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE ON THE GROUND THAT THE ASSESSING OFFICER DID NOT PROPERLY EXAMINE SOME OF THE ISSUES RELATING TO BANK DEPOSITS AND IDS. CONSEQUENTLY THE ASSESSING OFFICER HAS TAKEN UP THE CASE FOR REASSESSMENT AS PER THE DIRECTION O F THE ORDER PASSED UNDER SECTION 263 OF THE ACT AND GIVEN EFFECT TO THE REVI SION ORDER BY PASSING ASSESSMENT ORDER DT.26.03.2015 U/S. 143(3) R.W.S. 2 63 OF THE ACT. THUS THE TOTAL INCOME WAS ASSESSED AT RS.74,50,790/- BY MAKING AN ADDITION OF RS.27,00,000/- ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 7 TOWARDS UNEXPLAINED CASH CREDIT AND ADDITION OF RS. 46,17,360/-TOWARDS DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) OF THE A CT. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE DELETING BOTH THE ADDITION OF RS. 27,00,000/- IN RESPECT OF CASH CRED ITS AND THE ADDITION MADE IN RESPECT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REV ENUE IS IN APPEAL' BEFORE US AGAINST THE ADDITION U/S 40(A)(IA) OF THE ACT. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE DELETION OF ADDITION FOR MADE U/S 40(A)(IA) OF THE ACT. DURING THE APPEAL HEARING, THE LD. D.R. ARGUED THAT THE PAYMENT WAS M ADE TO CONCOR, A COMPANY WHICH IS ENGAGED IN THE CARRIAGE OF GOODS. SINCE TH E PAYMENT WAS NOT DIRECTLY MADE TO THE RAILWAYS, THE LD. D.R. CONTENDED THAT T HE PAYMENT ATTRACT THE IDS U/S 194C OF THE ACT. SINCE THE ASSESSEE FAILED TO D EDUCT THE IDS, THE A.O. HAS RIGHTLY MADE THE ADDITION, HENCE, REQUESTED TO CONF IRM THE ORDER OF THE A.O. 5. ON THE OTHER HAND, THE LD, A.R. ARGUED THAT AS P ER SECTION 194C OF THE ACT, IN EXPLANATION (IV)(C), WORK SHALL INCLUDE CARRIAGE OF GOODS OR PASSENGERS OR ANY MODE OF TRANSPORT, OTHER THAN BY RAILWAYS. SINCE TH E CONCOR IS A SUBSIDIARY ORGANIZATION OF THE INDIAN RAILWAYS AND THE RAILWAY S HAVE CARRIED THE GOODS, THERE IS NO CASE FOR IDS U/S 194C OF THE ACT. HE RE LIED ON THE ORDER OF THE COORDINATE BENCH OF JTAT, HYDERABAD IN THE CASE OF RAS POLYBUILD PRODUCT PVT. LTD. VS. DCIT (2016) 48 CCH 254 (HYD) (TRIB). 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. T HE ASSESSEE HAS TRANSPORTED THE GOODS BY RAILWAYS THROUGH CONCOR, THERE IS NO D ISPUTE WITH REGARD TO THE FACT THAT GOODS WERE CARRIED BY THE INDIAN RAILWAYS . AS PER SUB CLAUSE (C) OF EXPLANATION (IV) OF SECTION 194C OF THE ACT FROM TH E DEFINITION OF 'WORK', THE CARRIAGE OF GOODS BY RAILWAYS IS EXCLUDED FOR THE P URPOSE OF DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. THE LD. CIT(A) HAS DEAL T THE ISSUE IN DETAIL IN PARA NO.6.3 OF THE CIT(A) ORDER, WHICH IS EXTRACTED FOR THE SAKE OF CLARITY AND THE SAME READS AS UNDER: 6.3) GROUND NO. 2: THIS GROUND IS DIRECTED AGAINST ADDITION OF F 46,17,360/- TOWARDS DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE SHORT DISPUTE IS WHETHER THE AMOUNT PAID BY THE APPELLANT TO CONCOR TOWARDS RAIL WAY FREIGHT ATTRACTS THE PROVISIONS OF SECTION 194C OF THE ACT OR NOT. IN TH IS REGARD, IT IS PERTINENT TO CONSIDER THE RELEVANT PROVISIONS OF SECTION 194C OF THE ACT, WHICH ARE EXTRACTED AS UNDER: 194C. PAYMENT TO CONTRACTORS - (1) ANY PERSON RESPO NSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIE D PERSON SHALL, 'AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TOIL) ONE PER CE NT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 8 (H) TWO PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDE D FAMILY, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. .. EXPLANATION: FOR THE PURPOSES OF THIS SECTION: .. ' WORK ' SHALL IN ELUDE- (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTI ON OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCH ASED FROM SUCH CUSTOMER. FROM THE ABOVE EXPLANATION, IT IS VERY MUCH CLEAR T HAT THE EXPRESSION 'WORK' DOES NOT INCLUDE CARRIAGE OF GOODS BY RAILWAYS. FURTHER, THE PROVISIONS OF SECTION 194C ARE APPLICABLE ONLY FOR SUM PAID FOR CARRYING OUT A WORK, A SIMPLE READING OF THE PROVISIONS MAKES IT VERY CLEAR THAT WHEN THE AMOUNT PAID IS FOR CARRYING OUT A JOB WHICH INCLUDES CARRIAGE OF GOODS BY RAILWAYS, THEN SUCH AMOUNT PAID TO ANY PERSON SHALL NOT BE TREATED AS A PAYMENT FOR WORK I N TERMS OF SECTION 194C OF THE ACT. IT IS NOWHERE STIPULATED IN THIS SECTION THAT THE PAYMENT HAS TO BE MADE DIRECTLY TO RAILWAYS. THE APPELLANT HAS RIGHTLY PLA CED RELIANCE IN THE DECISION OF HYDERABAD BENCH OF ITA T IN THE CASE OF RASPOTYBUIL D PRODUCTS PVT LTD. VS. DCII (2016) 48 CCH 254 (HYD)(TRIB). THE HON'BLE TRIBUNAL HELD AS UNDER IN THEIR ORDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED THE RECORD. AS RIGHTLY POINTED OUT BY THE LEARNED COUNS EL APPEARING ON BEHALF OF THE ASSESSEE, SECTION 194C SPEAKS OF PAYMENT MAD E TO CONTRACTORS WITH AN EXCEPTION THAT EVEN PAYMENTS MADE TO CONTRA CTORS WOULD STAND OUTSIDE THE PURVIEW OF THAT PROVISION IF SUCH PAYME NT IS MADE TYIARDS CARNAGE CHARGES. IN THE INSTANT CASE, THE ASSESSEE CATEGORICALLY SUBMITTED THAT THE PAYMENT WAS MADE TO M/S. EXIM SERVICES TOW ARDS FREIGHT CHARGES THAT TOO FOR COM GOODS_BY RAIL. THIS CLAIM OF THE ASSESSEE IS NOT DISPUTED BY THE TAX AUTHORITIES EXCEPT STATING THAT THE PAYMENT IS NOT MADE DIRECTLY TO THE RAILWAYS BUT TO THE AGENT. IN OUR CONSIDERED OPINION THE OPENING PART OF SECTION 194C REFERS TO PAYMENTS MADE TO CONTRACTORS BUT AT THE SOME TIME MAKES AN EXCEPTION TO THE PAYM ENTS MADE TO SUCH CONTRACTORS IF THAT AMOUNT HAS TO BE UTILISED FOR P AYMENT OF RAIL FARES, IF THE INTENTION OF THE LEGISLATURE WAS TO MAKE THE PA YMENT DIRECTLY TO THE RAILWAY AUTHORITIES, THEN THE EXCEPTION PROVIDED IN THE EXPLANATION SHOULD NOT HAVE BEEN INTRODUCED IN SECTION 194C OF THE ACT . THUS, ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT E VEN IF PAYMENT IS MADE TO AN AGENT SO LONG AS THE PAYMENT IS MEANT FO R MEETING THE EXPENDITURE IN THE FORM OF PAYMENT TO THE RAILWAYS, T STANDS EXCLUDED ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 9 FROM THE PROVISIONS OF SECTION 194C OF THE ACT. UND ER THESE CIRCUMSTANCES, WE ACCEPT THE PLEA OF THE ASSESSEE B Y HOLDING THAT THERE WAS NO NEED TO DEDUCT TAX AT SOURCE WITH RESPECT TO THE IMPUGNED PAYMENT TO THE CONTRACTOR. EVEN OTHERWISE, IN THE L IGHT OF DECISION OF THE ITAT, HYDERABAD BENCH IN THE CASE OF ACIT, CENTRAL CIRCLE-2, HYDERABAD VS., MIS. JANAPRIYA PROPERTIES PVT. LTD., HYDERABAD (SUPRA) SECTION 40(A)(IA) CANNOT BE INVOKED IN RESPECT OF PAYMENTS ALREADY MADE BEFORE THE END OF THE ACCOUNTING YEAR. WE DIRECT THE A.O. ACCORDINGLY. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT, HYDERABAD BENCH, I HOLD THAT THE IMPUGNED PAYMENT DOES NOT FALL WITHIN THE SCOPE OF THE PROVISIONS OF SECTION 194C OF THE ACT AND CONSEQUEN TLY THE DISALLOWANCE PROVIDED IN SECTION 40(A)(IA) IS ALSO NOT APPLICABL E. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE OF RS.46,17,360 /-.' 7. THE LD. CIT(A) HAS FOLLOWED THE ORDER OF THE COO RDINATE BENCH OF HYDERABAD AND THE FACTS ARE NOT DISPUTED BY THE LD. D.R., THE LD. D.R. ALSO DID NOT BRING ANY OTHER DECISION IN FAVOUR OF THE REVENUE. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE COORDINATE BENCH, WE HOLD THAT THE IMP UGNED PAYMENT DOES NOT ATTRACT THE TDS U/S 194C OF THE ACT AND NO DISALLOW ANCE IS CALLED FOR U/S 40(A)(IA) OF THE ACT. HENCE THE ORDER OF THE LD.-CIT(A) IS UP HELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. AND LD. A.R. ALSO CITED AN ORDER OF ITAT HYDERABAD WHEREIN IT WAS HELD THAT IF PAYMENT IS MADE TO RAILWAY THROUGH ITS AGENT THEN T HERE IS NO LIABILITY OF THE ASSESSEE TO DEDUCT THE TDS WITH FOLLOWING OBSERVATI ONS: 2. BEFORE GOING INTO THE ISSUE ON HAND IT IS NECESS ARY TO REFER TO THE BRIEF FACTS OF THE CASE. THE ASSESSEE-COMPANY IS ENGAGED IN THE BU SINESS OF MANUFACTURE OF PUF BASED BUILDING COMPONENTS. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION IT MADE CERTAIN PAYMENTS TO M/S. EXIM SERVICES TOWARDS FREIGHT CHARGES WITHOUT DEDUCTING TAX. ACCORDING TO THE ASSESSEE THESE PAYMENTS ARE MADE IN RESPECT OF SUPP LY OF GOODS FROM HYDERABAD TO MUMBAI BY RAIL AND THEREFORE, THE PROVISIONS OF SECTION 194C DO NOT COME INTO PLAY; ANY PAYMENT MADE TO A CONTRACTOR FOR CARRIAGE OF GOODS BY RAIL IS EXCLUDED FROM THE PROVISIONS OF SECTION 194C OF THE ACT. 3. THE A.O. AS WELL AS THE CIT(A) REJECTED THE CONT ENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE ENGAGED AN AGENT FOR TRANS PORT OF THE MATERIAL AND THUS THE PAYMENT HAS TO BE TREATED AS PAYMENT TO TH E AGENT AND NOT TO THE RAILWAY AUTHORITIES. ACCORDINGLY, THE A.O. INVOKED THE PROVISIONS OF SECTION 194C ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 10 OF THE ACT AND TREATED THE ASSESSEE AS IN DEFAULT. CONSEQUENTLY, DISALLOWANCE WAS MADE UNDER SECTION 40(A)(IA) OF THE ACT. 4. BEFORE US, LEARNED COUNSEL APPEARING ON BEHALF O F THE ASSESSEE, RAISED TWO PRONGED ARGUMENTS. ITA.NO.221/HYD/2016 M/S. RAS POLYBUILD PRODUCTS P. LTD., HYDERABAD. (A) THAT THE PROVISIONS OF SECTION 194C HAS NO APPL ICATION WHEN THE PAYMENT IS MADE TO A CONTRACTOR FOR TRANSPORT OF GOODS BY RAIL . HE ADVERTED OUR ATTENTION TO SECTION 194C(3) AND EXPLANATION (IV) THEREOF WHEREI N IT IS STATED THAT 'WORK' INCLUDES CARRIAGE OF GOODS OR PASSENGERS BY ANY MOD E OF TRANSPORT OTHER THAN RAIL. NO DOUBT SECTION 194C IS APPLICABLE TO THE PA YMENT MADE TO THE CONTRACTORS BUT WHEN IT IS FOR TRANSPORT OF GOODS BY RAIL IT CA RVES OUT AN EXCEPTION AND THEREBY, THERE IS NO NEED FOR THE ASSESSEE TO DEDUC T TAX AT SOURCE ON PAYMENTS MADE TO THE CONTRACTORS. (B) IN THE ALTERNATIVE, IT WAS SUBMITTED THAT THE P AYMENT HAVING ALREADY BEEN MADE BY THE ASSESSEE SECTION 40(A)(IA) DO NOT COME INTO PLAY SINCE IT APPLIES ONLY WHEN AN AMOUNT IS 'PAYABLE'. ON THIS ASPECT THE LEA RNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE, RELIED UPON THE DECISION OF THE ITAT, SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT, VISAKHAP ATNAM 136 ITD 23 AS WELL AS THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT-II, HYDERABAD VS., M/S. JANAPRIYA ENGINEERS SYNDICATE 371 ITR 439] WHI CH WAS, INTURN, REFERRED TO BY THE ITAT 'B' BENCH, HYDERABAD IN THE CASE OF ACI T, VS., M/S. JANAPRIYA PROPERTIES PVT. LTD., IN ITA.NOS.1614, 1622, 1623 & 1624/HYD/2012 DATED 19.01.2015 WHEREIN THE BENCH [ONE OF US IS A PARTY] OBSERVED AS UNDER : '5. HAVING REGARD TO THE DIRECTION GIVEN BY THE HON' BLE HIGH COURT, THE MATTER WAS POSTED FOR HEARING. THE LEARNED COUNSEL APPEARI NG ON BEHALF OF THE ASSESSEE PLACED BEFORE US THE FOLLOWING ORDERS OF THE ITAT T O SUBMIT THAT THE HON'BLE ALLAHABAD HIGH COURT IN ITS DECISION IN THE CASE OF CIT V/S. VECTOR SHIPPING SERVICES PVT. LTD. (357 ITR 647) HAS TAKEN A VIEW O N THE ISSUE IN FAVOUR OF THE ASSESSEE IN CONSONANCE WITH THE VIEW TAKEN BY THE I TAT VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND TRANSPORT (SUPRA), AND THE VIEW TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT WAS IMPLIEDLY A FFIRMED BY THE ITA.NO.221/HYD/2016 M/S. RAS POLYBUILD PRODUCTS P. LTD., HYDERABAD. ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 11 HON'BLE SUPREME COURT BY DISMISSING AN SLP SOUGHT B Y THE REVENUE, AND THUS THE VIEW TAKEN BY THE ITAT SPECIAL BENCH VISAKHAPATNAM DESERVES TO BE FOLLOWED. (A) DECISION OF HYDERABAD BENCH 'A' OF THE TRIBUNAL IN USHODAYA ENTERPRISES LTD. HYDERABAD V/S. DY. COMMISSIONER OF INCOME-TAX CIRCL E 16(2), HYDERABAD (ITA NOS.676/HYD/2009 & 411/HYD/2010 DATED 7.1.2015) (B) DECISION OF MUMBAI BENCH 'A' OF THE TRIBUNAL IN M/S. ARCADIA SHARE & STOCK BROKERS PVT. LTD., MUMBAI V/S . DY. COMMISSIONER OF INCOME-TAX, RANGE 4(1), MUMBAI (ITA NO.1871/MUM/201 3 DATED 22.12.2014) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY A GREED THAT THE ITAT HYDERABAD BENCH CONSIDERED AN IDENTICAL ISSUE AND F OLLOWED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND T RANSPORT (SUPRA). 7. UPON HEARING THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THE DECISION OF THE ITAT SPECIAL BENCH IS BINDING ON THE TRIBUNAL, PART ICULARLY IN VIEW OF THE CLARIFICATORY ORDER PASSED BY THE HON'BLE HIGH COUR T OF JUDICATURE AT HYDERABAD IN THE INSTANT CASE, AND THUS, WE RESPECTFULLY FOLLOW THE DECISION OF SPECIAL BENCH IN THE CASE OF MERYLIN SHIPPING AND TRANSPORTS (SUPRA) , AND HOLD THAT THE PROVISIONS OF S.40(A)(IA) CANNOT BE INVOKED WHERE THE PAYMENTS WERE ALREADY MADE BY THE ASSESSEE. WE DIRECT THE ASSESSING OFFICER ACCORDING LY. IN THE RESULT, APPEALS OF THE REVENUE INSOFAR AS THE ABOVE ISSUE IS CONCERNED, AR E HEREBY DISMISSED. 5. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT S ECTION 194C WOULD NOT BE ATTRACTED ONLY WHEN THE PAYMENT IS MADE DIRECTLY TO THE RAILWAYS AND NOT TO THE PAYMENT MADE TO A MIDDLEMEN. HE ALSO SUBMITTED THAT IF TAX HAS TO BE DEDUCTED AT SOURCE, IN THE EVENT OF NON- PAYMENT OF SUCH TDS , SECTION 40(A)(IA) AUTOMATICALLY COMES INTO OPERATION AND ALSO SUBMITT ED THAT THE HON'BLE CALCUTTA HIGH COURT HAD TAKEN A DIFFERENT VIEW ON THIS MATTE R BY OBSERVING THAT THE DECISION OF THE ITAT, SPECIAL BENCH IN THE CASE OF M/S. MERILYN SHIPPING & ITA.NO.221/HYD/2016 M/S. RAS POLYBUILD PRODUCTS P. LTD., HYDERABAD. TRANSPORT, VISAKHAPATNAM 136 ITD 23 DOES NOT LAY DO WN CORRECT LAW. HE THUS STRONGLY SUPPORTED THE ORDERS PASSED BY THE LOWER A UTHORITIES. ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 12 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED THE RECORD. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL APPEARIN G ON BEHALF OF THE ASSESSEE, SECTION 194C SPEAKS OF PAYMENT MADE TO CONTRACTORS WITH AN EXCEPTION THAT EVEN PAYMENTS MADE TO CONTRACTORS WOULD STAND OUTSIDE TH E PURVIEW OF THAT PROVISION IF SUCH PAYMENT IS MADE TOWARDS CARRIAGE CHARGES. I N THE INSTANT CASE, THE ASSESSEE CATEGORICALLY SUBMITTED THAT THE PAYMENT W AS MADE TO M/S. EXIM SERVICES TOWARDS FREIGHT CHARGES THAT TOO FOR CARRI AGE OF GOODS BY RAIL. THIS CLAIM OF THE ASSESSEE IS NOT DISPUTED BY THE TAX AUTHORIT IES EXCEPT STATING THAT THE PAYMENT IS NOT MADE DIRECTLY TO THE RAILWAYS BUT TO THE AGENT. IN OUR CONSIDERED OPINION THE OPENING PART OF SECTION 194C REFERS TO PAYMENTS MADE TO CONTRACTORS BUT AT THE SAME TIME MAKES AN EXCEPTION TO THE PAYM ENTS MADE TO SUCH CONTRACTORS IF THAT AMOUNT HAS TO BE UTILISED FOR P AYMENT OF RAIL FARES. IF THE INTENTION OF THE LEGISLATURE WAS TO MAKE THE PAYMEN T DIRECTLY TO THE RAILWAY AUTHORITIES, THEN THE EXCEPTION PROVIDED IN THE EXP LANATION SHOULD NOT HAVE BEEN INTRODUCED IN SECTION 194C OF THE ACT. THUS, ON A C ONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT EVEN IF PAYMENT IS MADE TO AN AGENT SO LONG AS THE PAYMENT IS MEANT FOR MEETING THE EXPENDITURE IN THE FORM OF PAYMENT TO THE RAILWAYS, IT STANDS EXCLUDED FROM THE PROVISIONS OF SECTION 194C OF THE ACT. UNDER THESE CIRCUMSTANCES, WE ACCEPT THE PLEA OF THE ASSESSEE B Y HOLDING THAT THERE WAS NO NEED TO DEDUCT TAX AT SOURCE WITH RESPECT TO THE IM PUGNED PAYMENT TO THE CONTRACTOR. EVEN OTHERWISE, IN THE LIGHT OF DECISIO N OF THE ITAT, HYDERABAD BENCH IN THE CASE OF ACIT, CENTRAL CIRCLE-2, HYDERABAD VS ., M/S. JANAPRIYA PROPERTIES PVT. LTD., HYDERABAD (SUPRA) SECTION 40(A)(IA) CANNOT BE INVOKED IN RESPECT OF ITA.NO.221/HYD/2016 M/S. RAS POLYBUILD PRODUCTS P. LTD., HYDERABAD. PAYMENTS ALREADY MADE BEFORE THE END OF THE ACCOUNT ING YEAR. WE DIRECT THE A.O. ACCORDINGLY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 7. THE ASSESSEE ALSO CITED AN ORDER OF CO-ORDINATE BEN CH WHEREIN IT WAS HELD THAT IF PAYMENTS TOWARDS FREIGHT IS MADE TO THE CONTAINE R CORPORATION OF INDIA THAT THERE IS NO NEED TO DEDUCT THE TDS AND MATTER WAS D ECIDED IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS: 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL. SEARCH ACTION U/S. 132 OF THE INCOME TAX ACT, 1961, CARRIE D OUT IN THE GROUP CASES OF ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 13 TRIVEDI-SOMPURA ON 21/04/2010. SEARCH WARRANT WAS I SSUED U/S.132 OF THE ACT, IN THE NAME OF THE ASSESSEE. ASSESSEE FILED ITS ORIGIN AL RETURN OF INCOME ON 01/10/2011 DECLARING TOTAL INCOME AT RS.7,35,600/- 3. CASE WAS SELECTED FOR SCRUTINY, NECESSARY INFORM ATION CALLED AND DULY SUPPLIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS LEARNED ASSESSING OFFICER (IN SHORT LD. AO) OBSERVED THAT REIMBURSEMENT OF RS.56,689/- WAS MADE TO CLEARING AND FORWARDING AGENT M/S. S.M. ENTERPRISE, TOWARDS PAYM ENT TO CONCOR (TOWARDS RAILWAY FREIGHT CHARGES) AND ALSO RS.11,097/- TOWAR DS AGENCY AND OTHER CHARGES INCLUDING FUMIGATION. LD. AO WAS OF THE VIEW THAT A SSESSEE HAS NOT DEDUCTED TDS U/S. 194 C OF THE ACT, ON THE PAYMENT OF RS.56,689/ - AND ACCORDINGLY, DISALLOWED THE SAME U/S 40(A)(IA) OF THE ACT. ASSESSMENT WAS C OMPLETED BY ASSESSING INCOME AT RS.7,92,289/- 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE CIT(A) BUT THE APPEAL WAS DISMISSED BY LD. CIT(A) BY OBSERVING AS FOLLOWS:- '7. FACTS OF THE CASE AND ARGUMENTS OF THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. AO HAS GIVEN DETAILED REASONS FOR MAKIN G DISALLOWANCE U/S. 40(A)(IA). THE MAJOR REASONS GIVEN BY AO FOR MAKING DISALLOWAN CES ARE AS FOLLOWS: . . - (A) APPELLANT HAS MADE PAYMENT TO (CONCOR) CONTAINE R CORPORATION OF INDIA WHICH IS A CORPORATION ESTABLISHED BY A CENTRAL ACT . IT IS A LISTED COMPANY WHICH IS NOT EXEMPT FROM PAYMENT OF INCOME TAX ON ITS INCOME (B) THE APPELLANT HAS MADE PAYMENT THROUGH HIS CLEA RING AND FORWARDING AGENT. THEREFORE HIS CLAIM THAT HE MADE PAYMENT TO GOVERNM ENT AGENCY AND THEREFORE TAX WAS NOT DEDUCTIBLE AT SOURCE ON THE SAME IS NOT JUSTIFIED. (C) THERE EXISTS CONTRACTOR-CONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE CONCOR. (D) CBDT CIRCULAR NO.723 OF 19-091995 IS IN RESPECT OF PAYMENT MADE TO C&F AGENT ON ACCOUNT OF OCEAN FREIGHT. APPELLANT HAS IN CURRED EXPENSES IN RESPECT OF RAIL FREIGHT AND ROAD FREIGHT AND THEREFORE THE ABO VE MENTIONED CIRCULAR IS NOT APPLICABLE IN THE CASE OF APPELLANT. 8. RELIANCE PLACED BY APPELLANT ON VARIOUS JUDGMENT S IS OF NO HELP BECAUSE THEY ARE IN RELATION TO PAYMENTS MADE TO SHIPPING AGENTS OF NON RESIDENTS. HOWEVER, IN THE CASE OF APPELLANT THE MAJORITY PAYMENTS ARE MADE TO CONCOR FOR RAILWAY FREIGHT. I THEREFORE HOLD THAT AO HAS RIGHTLY MADE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE DISALLOWANCE MADE BY AO IS 'CONFIRMED. GROUNDS NO.2&3 OF THE APPEAL ARE THUS DISMISSED.' 5. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LEARNED COUNSEL SUBMITTED THAT AMOUNT OF RS.5668 9/- INCLUDED PAYMENT TO CONCOR ( TOWARDS RAILWAY FREIGHT) AT RS.45,592/- AN D PAYMENT OF RS.11,097/- TOWARDS AGENCY CHARGES AND INCLUDING FUMIGATION EXP ENSES. THIS SUM OF RS.56,689/- WAS MERE REIMBURSEMENT OF EXPENSES INCU RRED BY C&F AGENT. ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 14 7. LEARNED COUNSEL REFERRED TO THE DECISION OF CO-O RDINATE BENCH NEW DELHI IN ITA NO.4522/DEL/2012 DATED 28/01/2013 IN THE CASE OF M/ S.NATURE BIO FOODS LTD., V/S ACTIT CENTRAL CIRCLE-19 WHEREIN IT WAS HELD THA T PAYMENT TO CONCOR TOWARDS RAILWAY FREIGHT CHARGES IS NOT COVERED UNDE R THE PROVISION OF TAX DEDUCTED AT SOURCE U/S. 194C OF THE ACT AS THE PAYM ENT OF FREIGHT IS TO THE GOVERNMENT ORGANIZATION. FURTHER LEARNED COUNSEL SU BMITTED THAT AMOUNT OF RS.11,097/- WAS PAID TOWARDS REIMBURSEMENT OF FUMIG ATION EXPENSES AND ARE NOT SUBJECT TO DEDUCTION OF TAX AT SOURCE U/S.194C OF THE ACT, BEING BELOW THE CUMULATIVE THRESHOLD LIMIT OF RS.75,000/- AS PROVID ED IN PROVISO TO SECTION 194C(5) OF THE ACT. 8. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS BEFORE US. ASSESSEE IS AGGRIEVED WITH THE DISALLOWANCE U/S.40(A)(IA) OF TH E ACT, AT RS.56,689/- PAID TO M/S.S.M. ENTERPRISE ON ACCOUNT OF FOLLOWINGS:- 1. REIMBURSEMENT OF AMOUNT PAID TO CONTAINER CORPOR ATION OF INDIA (CONCOR) TOWARDS RAILWAY FREIGHT - 45, 592/- 2. AGENCY AND FUMIGATION CHARGES - 11,097/- 56,689/- 10. WE OBSERVE THAT THERE IS NO DISPUTE TO THE FACT THAT PAYMENT TO CONCOR (CORPORATION ESTABLISHED BY CENTRAL ACT) OF RS.45,5 92/- IS ON ACCOUNT OF RAILWAY FREIGHT CHARGES AND RS.11,097/- IS PAID TOWARDS REI MBURSEMENT OF FUMIGATION AND MISC. EXPENSES. FURTHER WE ALSO OBSERVE THAT CO -ORDINATE BENCH, DELHI, IN THE CASE OF M/S.NATURE BIO FOODS LTD.,(SUPRA) HAS ADJUD ICATED SIMILAR FACTS INVOLVING PAYMENT TO CONCOR TOWARDS RAILWAY FREIGHT AND HAS H ELD IT TO BE OUT OF THE PURVIEW OF THE PROVISION U/S.194C OF THE ACT, FOR D EDUCTION OF TAX AT SOURCE, AS PAYMENT IS MADE TO THE GOVERNMENT ORGANIZATION. 11. WE ALSO FIND FROM PAPER BOOKS AT PAGE 7 TO 10 T HAT PAYMENT OF RS.11,097/- MADE TOWARDS FUMIGATIONS EXPENSES ARE BELOW THE IND IVIDUAL TRANSACTION LIMIT OF RS.30,000/- AS PROVIDED IN PROVISO TO U/S. 194C(5) OF THE ACT. 12. RESPECTFULLY, FOLLOWING THE DECISION OF CO-ORDI NATE BENCH, DELHI, AS DISCUSSED ABOVE, APPLYING THE PROVISION OF U/S.194C OF THE AC T, ON THE FACTS OF THE CASE AND OBSERVING ABOVE DISCUSSIONS, WE ARE OF THE VIEW THA T ASSESSEE WAS NOT LIABLE TO TAX AT SOURCE U/S. 194C OF THE ACT, ON THE IMPUGNED PAYMENT OF RS.56,689/- AND THEREFORE NO DISALLOWANCE WAS CALLED FOR U/S.40(A)( IA) OF THE ACT. WE DELETE THE SAME. 13. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 15 8. AS IN THIS CASE, PAYMENTS HAVE BEEN MADE TO THE CON TAINER CORPORATION OF INDIA FOR FREIGHT AND SAME CORPORATIONS IS UNDERTAK ING OF INDIAN RAILWAYS BUT AFTER CONSIDERING THE AFORESAID ITAT ORDERS, WE ARE OF THE CONFIRMED OPINION, THAT ASSESSEE IS NOT REQUIRED TO DEDUCT TDS WHEN HE HAS MADE PAYMENT TO THE CONTAINER CORPORATION OF INDIA FOR FREIGHT. 9. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED. 10. NOW E COME TO GROUND NO. 2 RELATING TO THAT LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONSIDERING THAT THE INTEREST PAYMENT MADE TO NBFC OF RS. 20,44,647/- FOR DISALLOWANCE U/S 40(A)(IA) IS CONC ERNED, LD. A.R. SUBMITTED CERTAIN DETAILS AND HAS STATED THAT TAX HAVE BEEN P AID BY THE NBFC COMPANIES THEMSELVES. 11. SINCE ASSESSEE HAS NOT SUBMITTED THESE DETAILS BEFO RE THE LOWER AUTHORITIES BUT IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO FILE OF THE A.O TO EXAMINE THE PAYMENT OF TAX MADE BY THE NBFC PERTAINING TO ASSE SSEES TRANSACTIONS AND THEREAFTER WILL DECIDE MATTER AS PER PROVISIONS OF LAW. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. 13. NOW WE COME TO ITA NO. 2884/AHD/2017 FILED BY THE R EVENUE AGAINST THE ORDER OF THE LD. CIT(A) FOR DELETING THE PENALTY U/ S. 271(1)(C). 14. SINCE ALREADY WE HAVE GRANTED PART RELIEF TO THE AS SESSEE IN QUANTUM PROCEEDING AND GROUND NO. 2 WE HAVE SET ASIDE TO THE FILE OF T HE LD.A.O. TO DECIDE MATTER ITA NO. 1512 /AHD/2015 & 2884/A/17 . A.Y. 2010-11 16 AFRESH AFTER CONSIDERING THE DETAILS OF THE PAYMENT S OF TAX BY THE NBFC COMPANY. 15. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN T HE APPEAL OF THE REVENUE. THEREFORE, WE DELETE THE PENALTY AGAINST THE ASSESS EE. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED AND APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 12- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASA D) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 19/12/2019 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,AHME DABAD