ITO, Dindigul V. R.Balachandran, Dindigul

ITA 1574/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6239 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Section: 194C; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . ! , ' $ BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1574 / MDS/2013 ( / ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER, WARD-I(1), DINDIGUL. VS MR. R.BALACHANDRAN, 50, PENSIONER STREET, PALANI ROAD, DINDIGUL PAN:AAZPB4121E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. GURU BHASHYAM, JCIT /RESPONDENT BY : MR. ANANDD BABUNATH, C.A / DATE OF HEARING : 1 ST MAY, 2014 /DATE OF PRONOUNCEMENT : 13 TH JUNE, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-VIII, CHEN NAI DATED 01.02.2013 FOR THE ASSESSMENT YEAR 2008-09. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE COMMISS IONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLO WANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF ITA NO.1574/MDS/2013 2 PAYMENTS MADE FOR FREIGHT AND SOIL PURCHASE AND TRANSPORTATION CHARGES. 2. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENTS DISALLOWED FREIGHT AND SOIL PURCHASE A ND TRANSPORTATION CHARGES INVOKING THE PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE DID NOT DEDUCT TDS ON SUCH PAYMENTS. ON APPEAL, COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE ADDITION AGAINST WHICH THE RE VENUE IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE FREIGHT, SOIL PURCHASE AND TRANSPORTATION CHARGES AS THE ASSESSEE HAS NOT DEDU CTED TDS ON SUCH PAYMENTS. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSIONER OF INCOME TAX (APPEALS) D ELETED THE DISALLOWANCE HOLDING THAT SUCH EXPENSES ARE COV ERED BY SECTION 28 OF THE ACT AND ARE BEYOND THE SCOPE OF T HE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ITA NO.1574/MDS/2013 3 4. COUNSEL FOR THE ASSESSEE SUBMITS THAT PROVISIONS OF SECTION 194C ARE NOT ATTRACTED TO THE PAYMENTS MADE TO THE GOODS TRANSPORTERS. THE COUNSEL FURTHER SUBMITS THA T EACH PAYMENT MADE TO THE TRANSPORTERS IS BELOW ` 20,000/- AND THEREFORE, PROVISIONS OF SECTION 194C ARE NOT ATTRA CTED, CONSEQUENTLY DISALLOWANCE UNDER SECTION 40(A)(IA) C ANNOT BE SUSTAINED. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) ELABORATEL Y DISCUSSED THE ISSUE WITH REFERENCE TO THE CIRCULAR NO.715 DATED 8.8.1995 ISSUED BY THE CBDT AND THE CASE LAWS ON THE ISSUE AND DELETED THE DISALLOWANCE OBSERVING AS UND ER:- 4.6. KEEPING IN VIEW OF THE INTENTION OF THE LEGISLATU R E BY CONSCIOUSLY REPLACING W ORDS FROM ' CREDITED' OR ' PAID' IN FINANCE (NO . 2) BILL,2004 TO ' PAYABLE' IN FINANCE (NO . 2) ACT, 2004 HAS MADE IT CLEAR TH A T ONLY OUTSTANDING AMOUNT F OR PROVISION FOR EXPENSES WHICH ARE L I ABLE FOR T DS ARE TO BE DISALLOWED IN EVENT THERE IS DEFAULT IN NOT FOLLOWING TDS PROVISIONS UNDER CHAPTER XVII-B OF ACT AND CBDT'S CIRCULAR NO.5 OF 2005 DATED S' JULY ITA NO.1574/MDS/2013 4 2005 CLARIFIES THAT INTENT OF SEC .40 (A)(IA) IS TO CURB BOGUS PAYMENTS BY CREATING . BOGUS LIABILITIES . THUS, IT IS SEEN THAT THE DETAILS OF PA Y MENTS MADE ON ACCOUNT OF FREIGHT AND SOIL PURCHASE AND TRANSPORTATION CH A RGES TO WHOM THE AMOUNTS PAID ARE LESS THAN RS.20 , 000/ - ON EACH PAYMENT OF FREIGHT CHARGES PAID FROM 01.04.2007 TO 31 . 03 . 2008 AS WELL AS TRANSPORT AND SOIL FILLING CHARGES A S PER THE LEDGER ACCOUNTS WHICH HAVE BEEN FI L ED , AND FOUND TO BE IN ORDER . THE AMOUNT PRESCRIBED FOR DEDUCTION ' OF TDS ON EACH PAYMENT IS BELOW RS . 20,000/- TOTALLING TO RS . 15,58,930/- (RS . 2 , 4 8 ,680 / - +RS . 12,1 0,250 /-) FOR WHICH AMOUNT TDS IS NOT APPLICABLE U/S 194C AND HENCE SECTION 40(A)(IA) C ANNOT BE INVOKED. THEREFORE, THE ADDITIO N MADE BY THE ASSESSING OF FICER ON THIS ACCOUNT IS DELETED AND THE APPELLANT SUCCEEDS ON THIS GROUND OF APPEAL . 6. ON GOING THROUGH THE ABOVE ORDER, WE FIND THAT COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE DISALLOWANCE FOR THE REASON THAT EACH PAYMENT MADE TO TRANSPORTERS ARE LESS THAN ` 20,000/- AND THEREFORE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE AND THUS SECTION 40(A)(IA) CANNOT BE INVOKED. WE DO NOT FIND ANY VALID REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME TAX ITA NO.1574/MDS/2013 5 (APPEALS) IN HOLDING SO. THEREFORE, WE SUSTAIN THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND REJECT THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , T HE 13 TH DAY OF JUNE, 2014 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) ( C HALLA NAGENDRA PRASAD ) ( . . ) ( % '( ) ACCOUNTANT MEMBER / * JUDICIAL MEMBER/ ' * ' /CHENNAI, + /DATED, 13 TH JUNE, 2014 SOMU -. /. /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 0 () /CIT(A) 4. 0 /CIT 5. . 4 /DR 6. /GF .