Prudential Logistics and Transorts, Calicut V. ITO, Calicut

ITA 153/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2532 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: M V VENUGOPAL
• Section: 194C

Judgement Text

1 ITA NO.146 & 153/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 146 & 1153/COCH/2013 (ASSESSMENT YEARS 2006-07 & 2007-08) PRUDENTIAL LOGISTICS & TRANSPORTS VS ITO, WD.1(2) EAST NADAKKAVU, WYNAD ROAD CALICUT CALICUT PAN : AAIFP0707F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.V. VENUGOPAL RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 26-06-2013 DATE OF PRONOUNCEMENT : 28-06-2013 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE COMMON ORDER OF CIT(A), KOZHIKODE DATED 28-01-2013 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. 2. SHRI M.V. VENUGOPAL, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS A TRANSPORT CONTRAC TOR. IN THE COURSE OF ITS BUSINESS, THE ASSESSEE HIRED SOME LORRIES AND P AID HIRE CHARGES WITHOUT DEDUCTING TAX AT SOURCE. THE LD.REPRESENTA TIVE SUBMITTED THAT 2 ITA NO.146 & 153/COCH/2013 WHEN THE ASSESSEE HIRED LORRIES, THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. AT THE BEST, THE ASSESSEE MAY BE REQUI RED TO DEDUCT TAX U/S 194-I OF THE ACT. 3. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT FOR THE ASSESSMENT YEAR 2006-07 THE PROVISIONS OF SECTION 194-I ARE NOT APP LICABLE IN RESPECT OF HIRING CHARGES. FOR THE ASSESSMENT YEAR 2007-08, A CCORDING TO THE LD.REPRESENTATIVE, THE PAYMENTS WERE MADE TO THE PA RTNER OF THE FIRM, SHRI V KOYAKUTTY. THE PARTNER OF THE FIRM HAD ALREADY F ILED RETURN OF INCOME AND PAID TAXES THEREON. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD VS CIT (2007) 293 ITR 226 (SC). HENCE, ACCORDING TO THE LD.REPRESENTATIVE, THE DISA LLOWANCE MADE BY THE LOWER AUTHORITIES IS NOT JUSTIFIED. 4. ON THE CONTRARY, SMT. S VIJAYAPABHA, THE LD.DR S UBMITTED THAT THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER PROVISIO NS OF SECTION 194C ARE APPLICABLE OR PROVISIONS OF SECTION 194-I ARE APPLI CABLE. MOREOVER, FOR DISALLOWANCE U/S 40(A)(IA) RETURN FILED BY THE RECI PIENT IS IRRELEVANT. IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES LTD (SUPRA), THE APEX COURT FOUND THAT IF THE RETURN WAS FILED BY THE RECIPIENT THEN THE ASSESSEE NEED NOT BE TREATED AS ASSESSEE IN DEFAULT AND AT THE BEST, THE INTEREST COULD BE 3 ITA NO.146 & 153/COCH/2013 RECOVERED FROM THE DATE ON WHICH THE TAX WAS TO BE DEDUCTED AND TILL THE DATE OF PAYMENT OF TAX BY THE RECIPIENT. THEREFORE , MERELY BECAUSE THE PARTNER OF THE FIRM WHO RECEIVED THE PAYMENT HAS PA ID THE TAXES DOES NOT ABSOLVE THE ASSESSEE FROM THE RIGORS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ACCORDING TO THE LD.DR, THE ASSESSING OFF ICER HAS RIGHTLY DISALLOWED THE PAYMENT MADE FOR HIRING THE LORRIES. THE LD.DR PLACED HER RELIANCE N THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF NALINI VS DY.COLLECTOR, LAND ACQUISITION (2007) 294 ITR 423 ( KER) AND CIT VS VELLAPALLY BROS (2011) 196 TAXMAN 269 (KER). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE ASSESSMENT ORDER IT APPEARS THAT THE ASSESSEE PAID HIRE CHARGES AS FOUN D IN FORM 3CD ENCLOSED WITH THE RETURN OF INCOME, BUT NO TAX WAS DEDUCTED. THEREFORE, THE ADMITTED CASE OF THE ASSESSING OFFICER IS THAT THE PAYMENT WAS MADE FOR HIRING THE LORRIES AND NO PART OF THE WORK WAS ENTRUSTED TO THE LORRY OWNERS WHICH IS OBVIOUS FROM THE ASSESSMENT ORDER. IN THE ADMITTED FACTS OF THE CASE THAT THE ASSESSEE HAS HIRED THE LORRIES AND PAID HIRE CHARGES, WE CANNOT SAY THAT THERE WAS A CONTRACT OR SUB CONT RACT TO TRANSPORT FOR CARRIAGE OF ANY GOODS. IT IS A SIMPLE HIRING OF LO RRIES AND PAYMENT OF HIRE CHARGES. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE TO TH E FACTS OF THE CASE. AS 4 ITA NO.146 & 153/COCH/2013 RIGHTLY SUBMITTED BY THE LD.REPRESENTATIVE FOR THE ASSESSEE, AT THE BEST, THE PROVISIONS OF SECTION 194-I WOULD BE APPLICABLE FOR PAYMENT OF HIRE CHARGES. EXPLANATION 1 TO SECTION 194-I WAS INTROD UCED BY TAXATION LAWS (AMENDMENT) ACT, 2006 WITH EFFECT FROM 13-07-2006. THEREFORE, THIS IS APPLICABLE FROM ASSESSMENT YEAR 2007-08 ONLY. IN V IEW OF THE ABOVE, EVEN THE AMENDED EXPLANATION 1 OF SECTION 194-I IS NOT A PPLICABLE FOR THE ASSESSMENT YEAR 2006-07. ACCORDINGLY, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE ASSESSEE CANNOT BE FOUND FAULT WIT H FOR NOT DEDUCTING TAX WHEN THE EXPLANATION 1 TO SECTION 194-I WAS INTRODU CED IN THE STATUTE BOOK ONLY WITH EFFECT FROM 13-07-2006. THEREFORE, WE AR E UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SE T ASIDE AND THE APPEAL OF THE ASSESSE FOR THE ASSESSMENT YEAR 2006-07 IS ALLO WED. 6. NOW COMING TO THE APPEAL FOR ASSESSMENT YEAR 200 7-08, ADMITTEDLY, THE PAYMENT WAS MADE TOWARDS HIRE CHARGES AND TAX W AS NOT DEDUCTED. THE ONLY CONTENTION OF THE ASSESSEE IS THAT THE REC IPIENT HAPPENED TO BE A PARTNER; HE FILED THE RETURN OF INCOME AND PAID TAX ES. AS RIGHTLY SUBMITTED BY THE LD.DR DISALLOWANCE U/S 40(A)(IA) DOES NOT DE PEND UPON PAYMENT OF TAX BY THE RECIPIENT. SECTION 40(A)(IA) ENABLES TH E ASSESSING OFFICER TO DISALLOW THE PAYMENT IF TAX WAS NOT DEDUCTED. NO D OUBT, SECTION 40(A)(IA) IS VERY HARSH. EVEN THE GENUINE PAYMENT MADE BY TH E ASSESSEE WITHOUT 5 ITA NO.146 & 153/COCH/2013 DEDUCTING TAX HAS TO BE DISALLOWED. HARDSHIP AND E QUITY HAS NO ROLE TO PLAY IN THE TAXATION MATTERS. IRRESPECTIVE OF ITS HARDSHIP IN COMPLYING WITH THE PROVISIONS OF LAW, THE ASSESSEE IS EXPECTED TO DEDUCT TAX AT SOURCE. SINCE THE ASSESEE HAS FAILED TO DEDUCT TAX IN RESPE CT OF HIRE CHARGES AS REQUIRED U/S 194-I OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CL AIM OF THE ASSESSEE. THE JUDGMENTS RELIED UPON BY THE LD.DR IN THE CASE OF N ALINI (SUPRA) AND VELLAPALLI BROS (SUPRA) ARE NOT RELEVANT AS THEY DO NOT PERTAIN TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 7. IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 20 06-07 IN ITA NO.153/COCH/2013 IS ALLOWED AND APPEAL FOR ASSESSME NT YEAR 2007-08 IN ITA NO.146/COCH/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH JUNE, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH JUNE, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH