M/s. Narayan Harikrishna Traders, Nani Daman V. The Income tax Officer,Vapi Ward-4, Daman

ITA 1632/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5977 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Keywords: Opportunity of being heard; TDS; Set aside
• Section: 194C; 139(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD CAMP AT SURAT (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE SH RI D.C. AGRAWAL , A.M.) I.T.A. NO. 1632/AHD./2008 ASSESSMENT YEAR : 2005-2006 NARAYAN HARIKRISHNA TRADERS, DAMAN -VS.- INCOME T AX OFFICER, VAPI, WARD-4, DAMAN (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH UPADHYAY RESPONDENT BY : SMT. JYOTI LAXMI, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 11.01.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), VALSAD FOR THE ASSESSMENT YEAR 2005-06. 2. GROUNDS NO. 1 TO 4 ARE AGAINST CONFIRMING THE DI SALLOWANCE OF RS.2,91,699/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(IA) OF THE INCO ME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2005-06. 3. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI RAJESH UPADHYAY, LD. COUNSEL APPEARED AND FILED WRITTEN SUBMISSION. IN THE WRITT EN SUBMISSION, IT WAS STATED THAT THE ASSESSEE- FIRM IS A LICENSED ELECTRICAL CONTRACTOR. IT HAS DE DUCTED TDS FROM THE PAYMENT MADE TO FOLLOWING SEVEN PARTIES :- SR. NO. NAME AMOUNT OF PAYMENT 1. SHRI S.M. PANCHAL RS.29,017/- 2. SHRI RAJU SOLUKHE RS.1,27,930/- 3. ANAND CONTRACTOR RS.53,377/- 4. SHRI RAJUBHAI BHALABHAI RS.41,400/- 5. SHRI D.T. JADAV RS.24,775/- 6. SHRI NANJIBHAI D. PATEL RS.5,800/- 7. SHRI KALJIBHAI D. PATEL RS.9,400/- TOTAL RS.2,91,699/- 2 ITA NO. 1632/AHD/2008 THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED T HAT TAX WAS NOT PAID ON OR BEFORE THE STIPULATED DATE PROVIDED UNDER SECTION 200(1) OF THE INCOME TA X ACT, 1961. PROVISIONS OF SECTION 40A(IA) PRE-AMENDED AND AMENDED BY FINANCE ACT, 2008 WITH E FFECT FROM 1.4.2005 I.E. ASSESSMENT YEAR 2005-06 READ AS UNDER :- SECTION 40A(IA) PRE-AMENDED AFTER AMENDED BY F.A. 2008 W.E.F. DATE 1.4.2005 ANY INTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR TECHNICAL SERVICES, PAYMENT PAYABLE TO RESIDENT OR AMOUNT PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID DURING THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF TIME (PRESCRIBED UNDER SUB- SECTION 91) OF SEC. 200) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO RESIDENT OR AMOUNT PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR, BEING RESIDENT FOR CARRYING OUT ANY WORK INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK, ON WHICH TAX AT SOURCE UNDER CHAPTER-XVII AND SUCH TAX HAS NOT BEEN PAID. (A) IN THE CASE OF WHERE TAX AS DEDUCTIBLE AND WAS DEDUCTED DURING THE LAST MONTH OF THE PREVIOUS YEAR, ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION 1 OF SECTION 139 OR (B) IN ANY OTHER CASE, ON OR BEFORE THE LAST DAY OF THE PREVIOUS YEAR. PROVIDED THAT WHEREIN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED (A) DURING THE LAST MONTH OF THE PREVIOUS YEAR BUT PAID AFTER SAID DATE OR (B) DURING ANY OTHER MONTH OF THE PREVIOUS YEAR BUT PAID AFTER THE END OF SUCH PREVIOUS YEAR. SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING INCOME OF THE PREVIOUS YEAR IN WHICH TAX HAS BEEN PAID. THE LD. COUNSEL OF THE ASSESSEE IN HIS WRITTEN SUBM ISSION SUBMITTED AS UNDER :- AS PER SECTION 194C UPTO DATE 30.09.2004, TAX WAS N OT REQUIRED TO BE DEDUCTED WHERE AMOUNT CREDITED OR PAYING SINGLE AMOUNT DOES NOT EX CEED RS.20,000/-. 3 ITA NO. 1632/AHD/2008 AFTER THE DATE 1.10.2004 IF THE INDIVIDUAL PAYMEN TS ARE LESS THAT RS.20,000/-, NO TAX IS TO BE DEDUCTED AT SOURCE. HOWEVER, IF ANY PAYMENT T O A CONTRACTOR OR SUB-CONTRACTOR EXCEEDS RS.50,000/- IN A YEAR, PAYER HAS TO DEDUCT TAX AT SOURCE. COPY OF LEDGER A/C,. OF THE PARTIES MENTIONED BY A. O. IN HIS ASSESSMENT ORDER :- (1) S.M. PANCHAL- RS.29,017/- [COPY OF LEDGER A/C. IS F ILED] AMOUNT OF RS.46,303/- THERE IS NO AMOUNT CREDITED IN AY 2005-06, AMOUNT OF RS.46,3 03/- IS THE OPENING BALANCE OF THE YEAR, I.E. AMOUNT CREDITED OF EARLIER YEAR. PROVISION OF SEC. 40A(IA) INSERTED FROM AY 2005-06. INDIVIDUAL PAYMENT DOES NOT EXCEED RS.50,000/- [TDS IS NOT DEDUCTIBLE. THEREFORE, AMOUNT OF RS.29,017/- BEING NOT EXIGIBLE TO TDS, DI SALLOWANCE CANNOT BE ADDED AS INCOME. (2) RAJU SALUKKHE : RS.1,27,930 INDIVIDUAL PAYMENT DOES NOT EXCEED RS.20,000/- LABOUR CHARGES CREDITED TO THE PARTYS A/C. (1) DT. 31.3.2005- RS.1,33,695/- 2. DT. 31.03.2005 RS.97,500/- ______________ RS.2,31,195/- TDS DEDUCTED OF RS.2,416/- IF PAID ON 31.5.2005, BE FORE DUE DATE OF FILING RETURN OF INCOME FOR AY 2005-06 ON OR BEFORE DT. 31.10.2005, THERE IS NO DEFAULT OF DEPOSITING TDS TO THE ACCOUNT OF GOVERNMENT BEFORE DT. 31.10.2005, NO DEFAULT IS COMMITTED U/S. 40A(IA). (3) ANAND CONSTRUCTION : RS.53,377/- (COPY OF LEDGER AC COUNT IS FILED) AMOUNT APPEARING AS OPENING BALANCE OF RS.96,950/- ON DT. 1.4.2004 IS NOT LIABLE FOR PROVISION OF SEC. 40A(IA) WHICH IN FORCE DURING AY 2005-06 (I.E. FY 2004-05) ANAND CONSTRUCTION IS NOT CONTRACTOR FOR WORK. ON D T. 18.5.2004, HIS A/C. IS CREDITED BY RS.50,000/- TOWARDS GOODS SUPPLIED BY HIM. APPELLAN T AS STATED IN PARA 3 OF ASSESSMENT ORDER IS ENGAGED IN THE PROFESSION OF ELECTRICAL LI CENCED CONTRACTOR. THIS IS A CASE WHERE ELECTRICAL FITTING SERVICE ALO NG WITH ELECTRICAL GOODS TO BE USED, IS INVOLVED. IN THIS CASE, JUDGMENT OF BOMBAY HIGH COU RT IN THE CASE OF BDA LTD. VS.- ITO(TDS) (2006) 281 ITR 999 (BOM. H.C.) WILL APPLY. PROVISION OF SEC. 194C DO NOT APPLY. (4) RAJUBHAI BHALABHAI RS.41,400/- COPY OF LEDGER A/C . IS ENCLOSED HEREWITH. (1) INDIVIDUAL PAYMENT DOES NOT EXCEED RS.20,000/- DURI NG THE WHOLE OF THE YEAR. (2) AMOUNT OF LABOUR CHARGES CREDITED TO HIS A/C. OF RS .99,800/- ON DT. 31.3.2005 AND TDS OF RS.1,547/- IS PAID ON DT. 31.5.2005 I.E. BEF ORE FILING RETURN OF INCOME U/S. 139(1) IT CANNOT BE SAID THAT TDS IS DEPOSITED IN T IME. (5) SHRI D.T. JADAV RS.24,775/- [COPY OF LEDGER A/C. IS ENCLOSED HEREWITH] AMOUNT OF RS.15,300/- WAS CREDIT BALANCE ON DT. 1.4 .2004 TO THIS ACCOUNT. AMOUNT PAID RS.15,300/- IS BELOW RS.20,000/- AND IT IS BEING CR EDITED IN THE EARLIER YEAR, IT CANNOT BE SAID AMOUNT IS CREDITED FOR EXPENSES OF THE YEAR UN DER ASSESSMENT AND THEREFORE, NO DISALLOWANCE OF SUCH EXPENSES OF EARLIER YEAR IN WH ICH SEC. 40A(IA) WAS NOT IN EXISTENCE COULD BE APPLIED. AMOUNT OF RS.23,400/- IS CREDITED TO THIS A/C. ON D T..31.3.2005 I.E. [RS.13,755/- + 11,020/- = 24,775/- - TDS RS.1,295/- (RS.719/- + RS.576/-) = RS.23,480/-. 4 ITA NO. 1632/AHD/2008 AMOUNT OF RS.23,480/- CREDITED EXCEEDED RS.20,000/- BUT TDS DEDUCTIBLE OF RS.1,295/- BEING DEDUCTED ON DT. 31.3.2005 AND PAID ON DT.5.4. 2005 I.E. BEFORE FILING ROI U/S. 139(1), SUCH EXPENSES CANNOT BE DISALLOWED U/S. 40A (IA). (6) NANJIBHAI B. PATEL : RS.5,800/- [COPY OF LEDGER A/C . IS ENCLOSED HEREWITH] TOTAL PAYMENT INCLUDING OPENING BALANCE AMOUNT TO R S.11,512/- WHICH IS LESS THAN RS.50,000/- AND HENCE PROVISION OF SEC. 194C ARE NO T APPLICABLE. SIMILARLY AMOUNT CREDITED TO THIS A/C. EXCEPT RS.1,35,000/- (LABOUR CHARGES ON DT. 31.3.2005 ON WHICH TDS IS BEING MADE OF RS.1,517/- - INT. RS.5/- = RS.1,51 2/-) IS PAID ON DT. 31.2.2005, BEFORE FILING ROI. PROVISION OF SECTION 40A(IA) DO NOT APP LY. (7) KALJIBHAI B. PATEL : RS.9,400/- [ COPY OF LEDGER A/ C. IS ENCLOSED HEREWITH] (1) INDIVIDUAL PAYMENT DOES NOT EXCEED RS.20,000/- AND AGGREGATE AMOUNT OF PAYMENT DURING THE YEAR DOES NOT EXCEED RS.50,000/-. (2) AMOUNT CREDITED TO THIS A/C. EXCEED RS.50,000/- AND INDIVIDUAL CREDIT ALSO EXCEEDS RS.20,000/- BUT THAT IS ON DT. 31.3.2005. TDS DUE O N THIS AMOUNT RS.1,582/- AFTER DEDUCTED INTEREST FOR LATE PAYMENT OF RS.8/- = RS.1 ,576/- PAID ON DT. 5.4.2005 I.E. BEFORE FILING OF ROI U/S. 139(1), DEPOSIT OF TDS IS TO BE TREATED IN ORDER AND THEREFORE, PROVISION OF SEC. 40A(IA) WILL NOT APPLY AND EXPENSES CANNOT BE DISALLOWED. 4. THE LD. COUNSEL OF THE ASSESSEE ON THE BASIS OF AFORESAID WRITTEN SUBMISSION, CONTENDED THAT THE ASSESSING OFFICER BE DIRECTED TO RE-WORKOU T THE DISALLOWANCE AS PER SECTION 40A(IA) AMENDED BY FINANCE ACT, 2008 WITH EFFECT FROM 1.4.2 005, I.E. ASSESSMENT YEAR 2005-06. 5. ON THE OTHER HAND, SMT. JYOTI LAXMI, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE CONTENDED THAT WHEN LEARNED COMMISSIONER OF INCOME TAX(APPEALS) PASSED THE IMPUGNED ORDER ON 11.01.2008, THE FINANCE ACT, 2008 WAS NOT PASSED . IN VIEW OF THIS, MATTER BE RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT H E WILL RE-WORKOUT THE DISALLOWANCE UNDER SECTION 40A(IA) AMENDED BY FINANCE ACT, 2008 W.E.F. 1.4.2005 AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY WHEN LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) PASSED THE IMPUGNED ORDER, AMENDED SECTION 40A(IA) WAS NOT AVAILABLE AS IT WAS AMENDED BY FINANCE ACT, 2008 W.E.F. 1.4.2005.WE, THEREFORE, SET ASIDE THE ORDER OF LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSIN G OFFICER, WHO WILL RE-WORKOUT THE DISALLOWANCE UNDER SECTION 40A(IA) AS PER AMENDED SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. RESULTANTLY, FOR STATISTICAL PURPOSES, GROUNDS NO. 1 TO 4 IS TREATED AS ALLOWED. 5 ITA NO. 1632/AHD/2008 7. THE GROUND NO. 5 OF THE APPEAL RAISED BY THE ASS ESSEE READS AS UNDER :- LEARNED A.O. ERRED IN LAW AND ON FACT TO DISALLOW AN AMOUNT OF RS.28,208/- ON AD HOC BASIS OF 10% OUT OF VEHICLE E XPENSES CLAIMED AT RS.2,82,085/-, THOUGH ACCOUNTS ARE AUDITED AND AUDI TOR HAS NOT PASSED ANY ADVERSE REMARK. LEARNED CIT(A.) INSTEAD OF DELE TING ENTIRE DISALLOWANCE OF RS.28,208/- SUSTAINED ADDITION OF R S.18,208/-. 8. IN THE ASSESSMENT ORDER, ASSESSING OFFICER DISAL LOWED RS.28,208/- BEING 10% OUT OF TOTAL VEHICLE EXPENSES AMOUNTING TO RS.2,82,085/- AS AGAI NST RS.10,000/- SUO MOTU DISALLOWED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE US, THE LD . COUNSEL OF THE ASSESSEE SUBMITTED THAT DISALLOWANCE TO THE EXTENT OF RS.18,208/- SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS EXCESSIVE. HE SUBMITTED THAT DISALL OWANCE BE RESTRICTED TO RS.10,000/- AS DISALLOWED BY ASSESSEE IN THE RETURN OF INCOME. ON THE OTHER HAND, THE LD. D.R. VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS). 9. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUT HORITIES BELOW. IT IS PERTINENT TO NOTE THAT TOTAL EXPENSES INCURRED BY THE ASSESSEE ON VEHICLES ARE RS.2,82,085/-. OUT OF THIS, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER SUSTAINED THE ADDITION TO THE EXTENT OF RS.18,208/-. ADMITTEDLY, THE VEHICLES WER E USED FOR PERSONAL PURPOSES ALSO. THE DISALLOWANCE SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LESS THAN 10% OF TOTAL EXPENDITURE INCURRED ON VEHICLES. WE ARE, THEREFORE, OF THE VIEW THAT EXPENSES TO THE EXTENT OF RS.28,208/- SUSTAINED BY THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER NEITHER EXCESSIVE NOR UNREASONABLE. WE, THEREFORE, INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). RESULT ANTLY, THIS GROUND OF APPEAL IS REJECTED. 10. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 11.06.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 / 06 / 2010 6 ITA NO. 1632/AHD/2008 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.