M/s. Dushasan Jena, Cuttack V. ACIT, Circle-1(1), Cuttack, Cuttack

ITA 154/CTK/2013

• Counselvise Citation: 15422114 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DUTTA
• Assessee Lawyers: P K PATTNAIK AVINASH KEDIA
• Keywords: Business expenditure
• Section: 194C

Judgement Text

INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( BEFORE SHRI P. M. JAGTAP , A.M. AND SHRI P. S. CHAUDHURY, J .M .) ITA NO.154 /CTK/2013 : ASSESSMENT YEAR 2008 - 09 M/ S. DUSHASAN JENA, CUTTACK - V S - A CIT, CIRCLE - 1(1), CUTTACK (APPELLANT) PAN: AAAFD 9502C (RESPONDENT) APPELLANT BY : S/ SHRI P.K.PATTNAIK / AVINASH KEDIA, A.R. . RESPONDENT BY : SHRI SUVENDU DUTTA, DR : O R D E R : P ER SHRI P.M.JAGTAP , AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), CUTTACK DATED 07.12.2012 FOR THE ASSESSMENT YEAR 2008 - 09 AND THE GROUNDS RAISED THEREIN BY THE ASSESSEE READ AS UNDER: 1. THAT, THE FACT AND IN THE CIR CUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS), CUTTACK DATED 07.12.2012 U/S 143 (3) OF THE I.T ACT,1961 IS UNJUSTIFIED AND CONTRARY IN LAW. 2. THAT, THE LEARNED C.I.T (APPEALS) ALTHOUGH APPRECIATED THE SUBMI SSION OF THE APPELLANT AND ALLOWED PARTLY RELIEF OF RS 1,10,000 - 00, WHEREAS APPELLANT MAINTAINED REGULAR BOOKS OF ACCOUNTS AND ALL EXPENSES CLAIMED UNDER ABOVE HEADS WERE TOTALLY VOUCHED AND VERIFIED BY THE LEARNED ASSESSING OFFICER. 3. THAT, THE LEARNED C.I.T. (APPEALS) IS UNJUSTIFIED BY GIVING PARTLY RELIEF AND THE APPELLANT FIRM SHOULD GET FULL RELIEF OF RS 15,09,340 - 00 UNDER THE HEAD A NORMAL BUSINESS EXPENDITURE. 4. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER AS WEL L AS C.I.T. (APPEALS) WAS NOT CORRECT TO TREAT THE APPELLANT AS A TDS DEFAULTER U/S 194 C & U/S 194 1 OF THE L.T ACT, 1961 IGNORING THE FACTUAL REALITY OF THE SITUATION. 2 5. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER A S WELL AS WAS NOT CORRECT TO TREAT A NORMAL BUSINESS EXPENDITURE AS A CONTRACTUAL HIRE CHARGE FOR THE SAKE OF DISALLOWANCE U/S 40 (A) (IA) OF THE INCOME TAX ACT, 1961. 6. THAT, THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT CRAVED LEAVES TO AMEND OR ADD TO THE ABOVE GROUNDS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL . 2. GROUND NOS.1 AND 6 RAISED BY THE ASSESSEE IN THIS APPEAL ARE GENERAL WHILE GROUND NO.2 HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING B EFORE US AND THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 3 . APROPOS THE COMMON ISSUE INVOLVED IN GROUND NOS. 3, 4 AND 5 RELATING TO DISALLOWANCE OF RS.15,09,340/ - MADE BY THE AO AND CONFIRMED BY THE LD. C IT(A) ON ACCOUNT OF TRANSPORTATION AND HIRIN G CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA), T HE RELEVANT FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND HANDLING. THE RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WA S FILED BY IT ON 10.10.2008 DECLARING A TOTAL INCOME AT RS.16,91,240 / - . IN THE PROFIT & LOSS A/C. FILED ALONG WITH THE SA ID RETURN, A SUM OF RS.51,50,540 / - WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF TRANSPORTATION AND HIRE CHARGES . DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF TRANSPORTATION AND HIRE CHARGES WERE VERIFIED B Y THE AO AND ON SUCH VERIFICATION , HE FOUND THAT TRANSPORTATION AND HIRE CHARGES EXCEEDING A SUM OF RS.5 0 ,000/ - WERE PAID BY THE ASSESSEE TO 13 VEHICLE OWNERS DURING THE YEAR UNDER CONSIDERATION AGGREGATING TO RS.15,09,340/ - . ACCORDING TO THE AO, TAX AT SOURCE WAS REQUIRED TO BE DEDUCTED BY THE ASSESSEE FROM THE SAID PAYMENTS AS PER THE PROVISIONS OF SECTION 194C AND SINCE THERE WAS A FAILURE O N THE PART OF THE ASSESSEE TO COMPLY WITH THE SAID REQUIREMENT, THE TRANSPORTATION AND HIRE CHARGES CLAIMED BY THE ASSESSEE WERE DISALLOWED BY THE 3 AO TO THE EXTENT OF RS.15,09,340/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO RELYING MAINLY ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SMT. J. RAMA VS - CIT 344 ITR 608, WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 194C ARE APPLICABLE EVEN IN A CASE WHERE THE CONTRACT IS ORAL AND NOT IN WRITING. 4. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40(A)(IA) IS SQUARELY COVERED IN F AVOUR OF THE ASSESSEE BY AT LEAST THREE DECISIONS RENDERED BY THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE FOLLOWING CASES, WHEREIN A SIMILAR DISALLOWANCE MADE UNDER SECTION 40(A)(IA) HAS BEEN HELD TO BE UNSUSTAINABLE IN THE IDENTICAL FACTS AND CIRCUMSTA NCES. A) ACIT VS - M/S. BABA LINGRAJ ENTERPRISES ITA NO.323/CTK/2012 DATED 10.10.2013 B) SRI NASIBSINGH VS - ACIT ITA NO.440/CTK/2011 DATED 13.01.2012 C) AZIZ SAHEB VS - ITO ITA NO.458/CTK/2011 DATED 16.01.2012 5. THE LD. DR, ON THE OTHER HAND, STRO NGLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THE ISSUE UNDER CONSIDERATION AND SUBMITTED THAT THE PAYMENT IN QUESTION HAVING BEEN REGULARLY MADE BY THE ASSESSEE TO THE CONCERNED PARTIES, IT IS IMPLIED THAT THERE WA S A VERBAL CONTRACT BETWEEN THE ASSESSEE AND THE SAID PARTIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE DISALLOWANCE MADE BY THE AO UNDER SECTION 40(A)(IA) ON ACCOUNT OF TRANSPOR TATION AND HIRE CHARGES HAS BEEN CONFIRMED BY THE LD. CIT(A) VIDE HIS IMPUGNED ORDER BY MAINLY RELYING ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SMT. J. RAMA - VS - CIT ( SUPRA ). IT IS 4 HOWEVER OBSERVED THAT THE DISALLOWANCE UNDER SECTI ON 40(A)(IA) WAS HELD TO BE SUSTAINABLE IN THE SAID CASE BY THE HONBLE KARNATAKA HIGH COURT ON THE GROUND THAT THE PROVISIONS OF SECTION 194C ARE APPLICABLE EVEN WHEN THE CONTRACT IS ORAL AND NOT IN WRITING AND IT WAS NOT THE CASE OF THE ASSESSEE AT ANY S TAGE THAT THERE WAS NOT EVEN ORAL CONTRACT BETWEEN HIM AND THE CONCERNED PARTIES AS IN THE PRESENT CASE. THE CASE OF SMT. J RAMA RELIED U PON BY THE LD. CIT(A) THUS IS DISTINGUISHABLE ON FACT S AND HIS RELIANCE THEREON TO CONFIRM THE DISALLOWANCE MADE BY THE AO UNDER SECTION 40(A)(IA) IS CLEARLY MISPLACED . IN THE PRESENT CASE, THE STAND OF THE ASSESSEE IS THAT THE IMPUGNED PAYMENTS ON ACCOUNT OF TRANSPORTATION AND HIRE CHARGES WERE COMPRISING OF SMALL AMOUNTS AND THE SAME REPRESENTED PAYMENTS MADE FROM TIME T O TIME AS AND WHEN TRUCKS ARE REQUIRED TO BE HIRED WITHOUT THERE BEING WRITTEN OR ORAL CONTRACT WITH THE CONCERNED PARTIES. THIS STAND OF THE ASSESSEE IS ALSO DULY SUPPORTED BY THE RELEVANT DETAILS FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE ON RECORD SH OWING THE INV OLVEMENT OF ALL SMALL PAYMENTS AND THIS POSITION IS NOT DISPUTED EVEN BY THE LD. DR. IN THE CASE OF AZIZ SAHEB ( SUPRA ) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR DISALLOWANCE MADE UNDER SECTION 40(A)(IA) ON ACCOUNT OF FREIGHT CHARG ES PAID BY THE ASSESSEE TO THE TRANSPORTERS AND VEHICLE OWNERS WAS DELETED BY THE TRIBUNAL OBSERVING THAT NOTHING WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT FREIGHT CHARGES WERE PAID BY THE ASSESSEE IN PURSUANCE OF EITHER WRITTEN OR ORAL CONTRACT WI TH THE CONCERN ED PARTIES. THIS DECISION HAS BEEN SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL IN THE CASE OF BABA LINGRAJ ENTERPRISE ( SUPRA ) TO DELETE A SIMILAR DISALLOWANCE MADE UNDER SECTION 40(A)(IA), WHEREIN RELIANCE IS ALSO PLACED BY THE TRIBUNAL ON THE DECI SION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT - VS - UNITED RICE LAND LTD. 322 ITR 594. IN OUR OPINION, THE ISSUE INVOLVED IN THIS APPEAL OF THE ASSESSEE RELATING TO THE DISALLOWANCE UNDER SECTION 40(A)(IA) THUS IS SQUARELY COVERED IN FAV OUR OF THE ASSESSEE INTER ALIA BY THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AZIZ SAHEB ( SUPRA ) AND M/S. BABA LINGRAJ ENTERPRISE ( SUPRA ) AND RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE DISALLOWANCE 5 MADE BY THE AO AND CONFIRMED BY T HE LD. CIT(A) UNDER SECTION 40(A)(IA). GROUND NOS. 3 TO 5 OF THE ASSESSEES APPEAL ARE ACCORDINGLY ALLOWED. 7 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE CO URT ON 30 TH OCTOBER, 2015 SD/ - SD/ - ( P.S. CHAUDHURY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 /10/2015 TALUKDAR,SR.PS COPY TO : 1. M/S. DUSHASAN JENA, TALA SAHI, JOBRA, CUTTACK - 753 003 2. ACIT, CIRCLE - 1(2), ARUNODAYA MARKET, CUTTACK 3. CIT(A) - CUTTACK 4. CIT CUTTACK 5. D. R., ITAT, TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T., CUTTACK