ITO, Tuticorin V. Shri R.K.V.Govindarajan, Kovilpatti

ITA 1625/CHNY/2010

• Counselvise Citation: 162521714 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO. 1625/MDS/2010 ASST. YEAR : 2007-08 THE INCOME TAX OFFICER, WARD-I(1) TUTICORIN (APPELLANT) V. SHRI R.K.V. GOVINDARAJAN, 465, J.J. COMPLEX, KOVILPATTI 628 501. PAN : AGMPG7484F. (RESPONDENT) APPELLANT BY : SHRI S. DASGUPTA, JCIT RESPONDENT BY : SHRI S. SRIDHAR , ADVOCATE DATE OF HEARING : 01 AUGUST 2012 DATE OF PRONOUNCEMENT : 01 AUGUST 2012 O R D E R PER S.S. GODARA, JUDICIAL MEMBER : THE REVENUES APPEAL HAS ARISEN FROM THE ORDER OF THE CIT(APPEALS)-I, MADURAI, DATED 07.7.2010 IN ITA NO. 0171/2009-10 FOR ASST. YEAR 2007-08 IN PROCEEDINGS UNDER SEC.143(3) OF THE INCO ME TAX ACT, IN SHORT 'THE ACT'. I.T.A. 1625/MDS/10 2 2. THE DEPARTMENTAL REPRESENTATIVE BEFORE US, HAS SUBMITTED THAT CIT(APPEALS) HAS ERRED IN DELETING ADDITIONS MADE B Y ASSESSING OFFICER IN THE NATURE OF EXPENSES UNDER SEC.40(A)(IA) READ WITH SE C.194C OF THE ACT AND THAT MADE UNDER THE HEAD MISCELLANEOUS EXPENSES TO TH E EXTENT OF H 3,66,347/-. THE AUTHORISED REPRESENTATIVE HAS OPPOSED THE REVEN UES SUBMISSIONS AND SUPPORTED THE CIT(APPEALS)S FINDINGS. SINCE THE P ARTIES ARE AT VARIANCE, WE FIND THAT FOLLOWING ISSUES ARISE FOR OUR CONSIDERATION : - I) WHETHER THE CIT(APPEALS) HAS CORRECTLY DELETED ADDITION OF H 19,70,600/- MADE BY ASSESSING OFFICER BY INVOK ING SEC.40(A)(IA) OF THE ACT? II) WHETHER THE CIT(APPEALS) HAS RIGHTLY DELETED TH E ADDITION UNDER THE HEAD ADHOC DISALLOWANCE OF MISCELLANEOUS EXPENSES TO THE EXTENT OF H 3,66,347/- OUT OF H 4,1 6,347/- MADE BY ASSESSING OFFICER? ISSUE NO.1 : 3. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE, (ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACT) HAD FILED HIS RETUR N ADMITTING INCOME OF H 1,39,200/-. IN SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER TOOK COGNIZANCE OF THE FACT THAT THE ASSESSEE IN HIS PROFIT AND LOSS ACCOU NT HAD SHOWN PAYMENT OF H 51,30,500/- REGARDING HIRE PURCHASE CHARGES. HE AL SO FILED TRUCK-WISE DETAILS BUT DENIED TO HAVE DEDUCTED ANY TDS. HENCE, ASSESSING OFFICER APPLIED SEC.194C OF I.T.A. 1625/MDS/10 3 THE ACT AND INVOKED SEC.40(A)(IA) THEREBY MAKING DI SALLOWANCE OF H 19,70,600/- IE. QUA ALL PAYMENTS MADE IN EXCESS OF H 50,000/- T O 25 VEHICLES. 4. IN APPEAL, THE CIT(APPEALS) HAS ACCEPTED ASSESSE ES CONTENTIONS THEREBY DELETING THE ADDITION BY HOLDING THAT NEITH ER ANY FIXED TERMS OF CONTRACT EXISTED BETWEEN THE ASSESSEE AND THE VEHICLES OWNE RS WHICH COULD MAKE THE ASSESSEE TO DEDUCT TDS NOR SEC.194C WAS APPLICABLE IN CASE OF AN INDIVIDUAL ASSESSEE IN ASST. YEAR 1007-08 AS THE SAME HAS COME INTO OPERATION WITH EFFECT FROM 01.6.2007 ONLY BY WAY OF FINANCE ACT 2007. IN THIS MANNER, THE ASSESSEES PLEA STANDS ALLOWED ON MERITS AS WELL AS LEGALITY. THEREFORE, THE REVENUE IS IN APPEAL. 5. THE DEPARTMENTAL REPRESENTATIVE BEFORE US WHILE ARGUING THE APPEAL HAS DRAWN SUPPORT FROM PLEA RAISED IN GROUNDS AND A LSO PACED RELIANCE ON CASE LAW REPORTED AS 46 DTR 248 (HONBLE KARNATAKA HIGH COURT) TO CONTEND THAT LAW DOES NOT STIPULATE ANY WRITTEN AGREEMENT FOR APPLYI NG SEC.194(C). IN THE END, HE PRAYED FOR ACCEPTANCE OF THE ISSUE.. 6. REPLYING REVENUES CONTENTIONS, THE AUTHORISED R EPRESENTATIVE HAS DRAWN SUPPORT FROM CIT(APPEALS)S ORDER. 7. WE HAVE HEARD BOTH PARTIES AT LENGTH AND ALSO G ONE THROUGH THE RELEVANT FINDINGS AND CASE LAW (SUPRA). UNDISPUTE DLY, THE ASSESSING OFFICER HAD MADE ADDITION UNDER SEC.40(A)(IA) OF THE ACT OF PAY MENTS MADE BY THE ASSESSEE TO VARIOUS TRUCKERS/SUB CONTRACTORS. IT IS EVIDENT FROM THE GROUNDS THAT ENTIRE FOCUS OF THE REVENUE IS ON THE PREMISE THAT TDS PRO VISIONS ARE APPLICABLE EVEN IN I.T.A. 1625/MDS/10 4 CASE OF SUB CONTRACTORS WHO HAVE BEEN MADE PAYMENTS . THEREFORE, EVEN IF WE ACCEPT THE REVENUES VERSION, STILL THE FACT REMAIN S THAT THE CIT(APPEALS)S FINDINGS REGARDING APPLICABILITY OF SEC.194C QUA IN DIVIDUALS AS ON 01.4.2007 (SUPRA) REMAINS UNCHALLENGED IN GROUNDS AS WELL AS IN ARGUMENTS. SO, ONCE IT IS CLEAR THAT AN INDIVIDUAL ASSESSEE IS NOT COVERED BY SEC.194C (INCORPORATED IN THE ACT WITH EFFECT FROM 01.6.2007 ONLY BY FINANCE ACT, 2007), THERE IS NO POINT EXAMINING THE ASPECT OF APPLICATION OF SEC.194C VIS --VIS PAYMENTS MADE TO SUB CONTRACTORS. THEREFORE, WE ALSO HOLD THAT SEC.194C DOES NOT COVER AN INDIVIDUAL ASSESSEE AS ON 01.4.2007. ONCE THAT IS SO, THE AD DITION IN QUESTION CANNOT BE RESTORED. CONSEQUENTLY, ISSUE STANDS DECIDED AGAIN ST REVENUE. ISSUE NO.(II) : 8. THE FACTUAL MATRIX OF THIS ISSUE IS THAT IN THE ENCLOSURES FILED WITH RETURN THE ASSESSEE HAD SHOWN EXPENSES OF H20,81,73 4/- DEBITED TOWARDS MISCELLANEOUS EXPENSES WHOSE DETAILS WERE SUBMITTED AS FOLLOWS:- 1. VEHICLE MAINTENANCE H 7,51,889 2. LOADING & UNLOADING H 3,13,153 3. HALTING CHARGES & OTHERS H 3,51,927 4. TOLLGATE AND FOOD EXPENSES H 1,93,492 5. WHEEL ALIGNMENT, OIL & MECHANIC CHARGES H 2,3 7,283 6. PHONE EXPENSES H 27,099 7. CLERK MAMOOL AND DOCUMENT H 84,804 8. BREAK DOWN AND HOLDING CHARGES H 1,15,957 9. HOSPITAL EXPENSES H 6,130 TOTAL H 20,81,734 I.T.A. 1625/MDS/10 5 IN SUPPORT THEREOF, THE ASSESSEE PRODUCED ONLY SELF MADE VOUCHERS. THE ASSESSING OFFICER DISALLOWED THE SAME @ 20% IE. H 4 ,16,347/- FOR WANT OF SUPPORTING BILLS AND INVOICES. 9. THE CIT(APPEALS) IN ASSESSEES APPEAL HAS ONLY CONFIRMED DISALLOWANCE OF H 50,000/- IE. @ 20% OF H 4,16,347/- BY OBSERVING THAT ASSESSEES NATURE OF BUSINESS IS OF A KIND WHERE SU PPORTING VOUCHERS OF EXPENSES ARE ALMOST NOT FEASIBLE AND THEREFORE RELIED ON INT ERNAL VOUCHERS. HENCE, THIS GROUND HAS BEEN RAISED BEFORE US. 10. THE DEPARTMENTAL REPRESENTATIVE HAS ASSAILED T HE CIT(APPEALS)S OBSERVATION IN THE LIGHT OF SUBMISSIONS RAISED IN G ROUNDS AND PRAYED FOR ACCEPTANCE OF ISSUE. 11. THE AUTHORISED REPRESENTATIVE HAS RELIED UPON CIT(APPEALS)S ORDER. 12. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RESPECTIVE CONTENTIONS OF BOTH PARTIES AND PERUSED THE RELEVAN T FINDINGS. ADMITTEDLY, THE ASSESSEE IS A TRANSPORT CONTRACTOR. THE LINE OF BU SINESS, IN OUR OPINION, IS SUCH THAT IT MAY BE ALMOST IMPOSSIBLE TO GET VOUCHERS AN D INVOICES. THEREFORE, AT THE BEST ASSESSEE COULD HAVE DONE WAS TO PRODUCE SELF M ADE VOUCHERS. IT IS NOT REVENUES CASE THAT THE SAME ARE NOT GENUINE OR THE EXPENSES WERE NOT INCURRED SINCE DISALLOWANCE IS @ 20% ONLY. HENCE, KEEPING IN VIEW TOTALITY OF CIRCUMSTANCES, WE SEE NO REASON TO INTERFERE IN CIT (APPEALS)S ORDER. 13. ACCORDINGLY, BOTH ISSUES ARE DECIDED AGAINST R EVENUE. I.T.A. 1625/MDS/10 6 14. THE APPEAL IS DISMISSED. 15. THE ORDER WAS PRONOUNCED IN THE OPEN COURT, AF TER HEARING THE APPEAL ON WEDNESDAY, THE 1 ST AUGUST 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) (S.S. GODARA ) ACCOUNTAT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 01 AUGUST 2012 JLS COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II, COIMBATORE (4) CIT-III, COIMBATORE (5) D.R. (6) GUARD FILE