M/s Dhot Agro Service, Kapurthala V. The Income Tax Officer, Kapurthala

ITA 165/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3305 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SHARMA LD
• Assessee Lawyers: SANDEEP VIJH L D
• Keywords: TDS
• Section: 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.165(ASR)/2017 ASSESSMENT YEAR:2010-11 M/S. DHOT AGRO SERVICE VILL. BRINDPUR, SHEIKHUPUR KAPURTHALA PAN:AAFFD5155Q VS. INCOME TAX OFFICER KAPURTHALA-1 (APPELLANT) (RESPONDENT) APPELLANT BY: SH SANDEEP VIJH (LD. CA) RESPONDENT BY: SH. S.K.SHARMA (LD. DR) DATE OF HEARING: 13.06.2018 DATE OF PRONOUNCEMENT: 27.06.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 24.01.2017, IMPUGNED HEREIN, PASSED BY THE LD. CIT(A )- JALANDHAR, U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAF TER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ), HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.75,000/- IN RESPECT OF PAYMENT TO M/S. THAKUR TRANSPORT CO., TOWARDS TRANS PORTATION CHARGES IN VIEW OF PROVISIONS OF SECTION 40(A)(IA). THE SUBMISSIONS MADE ON THE ISSUE WERE NOT PROPERLY APPRECIATED. ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.62,500/- IN RESPECT OF PAYMENT MADE FOR SUPPLY OF FOOD IN VIEW OF THE PROV ISIONS OF SECTION 40(A)(IA). THE COMMISSIONER OF INCOME TAX (APPEALS) , HAS ALSO FAILED TO APPRECIATE THAT SUPPLY OF FOOD WAS NOT COVERED U /S 194C AND CONSEQUENTLY SECTION 40(A)(IA) WAS NOT APPLICABLE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.117.054/ - IN RESPECT OF PAYMENT MADE FOR HIRING FURNITURE. THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194-C ARE APPLICABLE DESPITE CLEAR PROVISIO NS OF SECTION 194- 1 COVERING SUCH A SITUATION. 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE OUT OF COMMISSION PA ID TO THE EXTENT OF RS.45,600/- @ 20% OF THE EXPENSE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING DISALLOWANCE OUT OF TRAVELING EXPENSE S @ 10% OF THE EXPENSE AT RS.18,688/-. THE SUBMISSION ON THE ISSUE HAS NOT BEEN PROPERLY APPRECIATED. 3 THE FACTS ARE ALREADY ON RECORD IN THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED ORDER, THEREFORE, FOR THE SAKE O F CONVENIENCE AND BREVITY THE SAME ARE NOT REPEATED HERE IN. 4. THE LD. AR IN SUPPORT OF THE ASSESSEES CASE FILED THE WRITTEN SUBMISSIONS, JUDGMENTS AS WELL AS RELEVANT DOCUME NTS AND ALSO REITERATED THE ARGUMENTS RAISED BEFORE THE AU THORITIES BELOW. 5. ON THE CONTRARY, THE LD. DR RELIED UPON THE ORDER PA SSED BY THE AUTHORITIES BELOW. ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 3 6. GROUND NO.1 RELATES TO THE SUSTAINING OF THE DISALLOWANCE OF RS.75,000/- QUA PAYMENT TO M/S THAKUR TRANSPORT CO MPANY TOWARDS TRANSPORTATION CHARGES IN VIEW OF THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT. IN THE INSTANT CASE THE TOTAL SUM OF RS.75,000/- HAD BEEN PAID TOWARDS TRANSPORTATION CHARGE S TO M/S THAKUR TRANSPORT COMPANY FOR TRANSPORTING TRUCKS FRO M THE SUPPLIERS AT KHARAR TO THE SHOW ROOM OF THE ASSESSEE AND THE SAID AMOUNT WAS INCLUDED IN THE TOTAL PAYMENT OF RS.230 ,000/- CLAIMED FOR ALL THE TRANSPORTERS INVOLVED AND THE PART Y WISE DETAILS OF THE TRANSPORTATION CHARGES HAVE BEEN GIVEN TO THE AUTHORITIES BELOW AS WELL AS PLACED BEFORE US AT PAGE NO.23 OF THE PB. IT IS ADMITTED FACT THAT THE DISALLOWANCES QUA OTHER PARTIES HAVE BEEN DELETED BY THE LD. CIT(A) AS THE AM OUNT OF EACH PARTY DID NOT EXCEED RS.50,000/- HOWEVER, IN RESPE CT OF M/S THAKUR TRANSPORT THE DISALLOWANCE WAS SUSTAINED. ALTHO UGH, IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THERE WA S NO CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTER AND THE CONFIRMATION OF THE TRANSPORTER TO THIS EFFECT DULY ENCL OSED AT PAGE NO.18 OF THE PB. FURTHER, IT WAS ALSO SUBMITTED T HAT TRANSPORTER WAS TRANSPORTING TRUCKS TO THE ASSESSEE AS PER TH E UNDERSTANDING WITH THE SUPPLIER COMPANY BASED AT KHARAR . IT IS THE CLAIM OF THE ASSESSEE THAT THERE WAS NO CONTRACT BETWEE N THE ASSESSEE AND SUPPLIER HENCE, PROVISIONS OF SECTION 194-C ARE NOT APPLICABLE. EVEN OTHERWISE, THE TAX HAS ALREADY BE EN PAID BY THE PARTY CONCERN BY FILING THE RETURN OF INCOME WHICH IS EVIDENT FROM FORM-26A AS AVAILABLE AT PAGE NOS.24-27 OF THE PB, ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 4 THEREFORE, THE SECOND PROVISO TO SECTION 40(A)(IA) SHALL BE APPLICABLE. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE CONTENTION RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES B ELOW AS WELL AS BEFORE US TO THE EFFECT THAT THE TRANSPORTER M/S THAKUR TRANSPORT HAS ALREADY PAID THE TAXES AS APPLICABLE THERE TO IN RESPECT OF DISALLOWANCES MADE BY THE DEPARTMENT, HENCE, I N VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CA SE OF HINDUSTAN COCA COLA BEVERAGE VS. CIT, [CIVIL APPEAL NO.3765/2007] DATED 16.08.2007, WE FEEL IT APPROPRI ATE TO DIRECT THE LD. ASSESSING OFFICE TO DECIDE THE AFRESH THE DISALLOWANCE UNDER DISPUTE IN THE INSTANT APPEAL AS PER THE OBSERVATION OF THE HINDUSTAN COCA COLA BEVERAGE (SUPRA). WE CLARIFY THAT THE ONUS EITHER WAY WOULD BE UPON THE ASSE SSEE TO SUBSTANTIATE ITS CLAIM, HOWEVER, THE ASSESSING OFFICER SHALL BE AT LIBERTY TO CALL FOR THE RECORDS OF M/S THAKUR TRANSPORT. RESULTANTLY, THE GROUND NO.1 STANDS ALLOWED. GROUND NO.2 , RELATES TO THE SUSTAINING THE DISALLOWANCE OF RS.62,500/- IN RESPECT OF PAYMENT MADE FOR SUPPLY OF FO OD IN VIEW OF THE PROVISION OF SEC.40(A)(IA) OF THE ACT. DUR ING THE COURSE OF HEARING, IT WAS CONTENDED BY THE LD. AR THAT THE PAYMENT MADE FOR SUPPLY OF FOOD IS NOT COVERED BY SEC. 194C AND CONSEQUENTLY SEC.40(A)(IA) IS NOT APPLICABLE. FURTHE R THE SUM OF RS.62,500/- WAS PAID FOR PURCHASE OF COOKED FOOD, THEREFORE, THE SAME IS NOT LIABLE FOR DEDUCTION OF TDS . FURTHER IT ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 5 WAS ARGUED THAT THE ASSESSING OFFICER HAD HIMSELF STATED TH AT THE COOK WAS ARRANGED FOR SUPPLY OF FOOD FOR 125 PERSON S ON THE AFORESAID DATE. ON BEING ASKED SPECIFIC BY THE BENCH ABOU T THE BILL RAISED BY THE SUPPLIER OF FOOD, THE LD. AR SHOWN HIS INABILITY TO PRODUCE THE BILL AT THAT PARTICULAR TIME, HOWEVER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FEEL IT APPRO PRIATE TO REMAND THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRESH WHILE TAKING INTO CONSIDERATION THE BILL OF THE COOK OR OTHER CONTEMPORANEOUS MATERIAL QUA THE EXPENDI TURE, AGAINST WHICH THE DISALLOWANCE HAS BEEN MADE. RESULTANT LY THE GROUND NO.2 ALSO STANDS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.3 RELATES TO THE SUSTAINING THE DISALLOWANCE OF RS.117,054/- IN RESPECT OF PAYMENT MADE FOR HIRING FUR NITURE. FURTHER, THIS ADDITION WAS SUSTAINED BY THE LD. CIT ( A) BY HOLDING THAT THE PROVISION OF SEC.194C ARE APPLICABLE. THE LD. AR SUBMITTED THAT THERE IS CLEAR PROVISION OF SEC.19 4 (I) OF THE ACT, WHICH IS COVERING SUCH A SITUATION. IT WAS FURTH ER CONTENDED THAT THE SUM OF RS.1,17,054/- PAID TO STAR T ENT CATERERS FOR HIRING OF TENT, CROCKERY TABLES AND CHAIRS ETC, WHICH IS SUPPORTED BY THE CONFIRMATION OF THE PARTY CONCERN WH ICH IS AVAILABLE AT PAGE NO.62 OF THE PB. FURTHER, IT WAS S UBMITTED THAT HIRING THE AFORESAID ITEMS ARE COVERED BY SEC.194(I) BU T NOT SEC.194C AS PER EXPLANATION OF SECTION 194-I. THEREFO RE, NO TDS WAS REQUIRED TO BE DEDUCTED AS PER SECTION 194-I. THE T DS ONLY REQUIRES TO BE DEDUCTED IF THE AMOUNT PAID WHICH CREDIT ED TO A PARTY IS IN EXCESS OF RS.120,000/- IN THE ENTIRE FINANCIA L YEAR ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 6 WHEREAS IN THE INSTANT CASE, THE AMOUNT INVOLVED IS RS.117,054/- ONLY, HENCE, DOES NOT COME WITHIN THE PURV IEW OF DEDUCTION OF TDS. WE HAVE GIVE OUR THOUGHTFUL CONSIDE RATION TO THE PROVISION OF SEC.194-I AND FIND FORCE IN THE CONT ENTION OF THE ASSESSEE BECAUSE IF THE AMOUNT INVOLVED DOES NOT EXCEED THE LIMIT AS PRESCRIBED U/S 194(I) THEN IT CANNOT BE SUBJECT ED TO SEC.194C, HENCE, WE ARE INCLINED TO DELETE THE DISALLOW ANCE OF RS.117,054/- WHICH IS UNDER CHALLENGE IN GROUND NO.3. GROUND NO.4 RELATES TO THE SUSTAINING OF THE DISALLOWANCE OUT OF COMMISSION PAID TO THE EXTENT OF RS.45,600/- @ 2 0% OF THE EXPENSES. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER HAS OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABLE TO GIVE COMPLETE ADDRESS OF THE PERSON TO WHOM COMMISSION WAS PAID AND CERTAIN VOUCHERS FOR COMMISSION EVEN DO NOT BEAR THE SIGNATURES OF THE PERSONS. FURTHER, IT WAS ALSO OBSERVED THAT IN THE ABSENCE OF THE DETAILS REGARDING T HE IDENTITY OF THE PERSONS THE GENUINENESS OF THE EXPENDITURE COULD NOT BE VERIFIED. HOWEVER, THE CONTENTION OF THE ASSESSEE TO THE EFFECT THAT THE ADDRESSES OF THE PERSONS WHO HAVE RECEIVED TH E COMMISSION ARE OF VILLAGES WHERE THERE ARE USUALLY NO STR EET AND HOUSE NUMBERS SPECIFIED, WHICH ALSO REFLECTS FROM THE ADDR ESSES OF THE PERSONS TO WHOM COMMISSION WAS PAID. WE REALIZED THAT THAT THE ASSESSING OFFICER AS WELL AS LD. CIT(A) WHILE SUST AINING THE DISALLOWANCE UNDER THIS HEAD MADE A GENERAL OBSER VATION BUT NOT SPECIFIED ANY PARTICULAR INSTANCE. IT IS RELEVANT TO MENTION HEREIN THAT THE LD. CIT(A) ADMITTED IN HIS ORDER THA T THERE IS ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 7 GENUINE FACT THAT SOME AMOUNT OF COMMISSION HAS BEEN P AID TO INCREASE THE SALES, THEREFORE, GIVING DUE REGARD TO CONT ENTION OF THE APPELLANT, HE RESTRICTED THE DISALLOWANCE TO THE TU NE OF 20% OF THE TOTAL EXPENSES AS JUST AND FAIR. CONSIDERING T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IN HAND, IN OUR CONSIDERE D VIEW THE AD HOC DISALLOWANCE SUSTAINED @ 20% DOES NOT STAN D ON A FIRM FOOTING BECAUSE THE CONTENTION OF THE APPELL ANT APPEARS TO BE GENUINE WITH REGARD TO THE ADDRESSES OF THE VILLAGES WHERE GENERALLY THE HOUSE NUMBERS AND WARD NU MBERS ARE NOT SPECIFIED, HENCE THE GROUND NO.4 STANDS ALLOWED. CONSEQUENTLY THE ADDITION QUA DISALLOWANCE OF RS.45,600 /- STANDS DELETED. GROUND NO.5 , RELATES TO THE SUSTAINING THE DISALLOWANCE RS.18,688/- QUA TRAVELING EXPENSES @ 10% OF THE TOTAL EXPENSES. WE AGAIN PERUSED THE ORDER PASSED BY THE AUTH ORITIES BELOW AND REALIZED THAT THE DISALLOWANCE OF RS.30,000/ - WAS MADE BY THE ASSESSING OFFICER UNDER THIS HEAD ON THE GRO UND THAT THE EXPENSES ARE NOT PROPERLY VOUCHED, CASH PAYMEN TS HAVE BEEN MADE AND THE RECIPIENTS ARE NOT VERIFIABLE . THE SAID DISALLOWANCE WAS RESTRICTED TO RS.18,688/- BY THE LD. CIT (A) AS JUST AND FAIR, WHICH IN OUR CONSIDERED OPINION BASED ON LOGICAL REASONING, HENCE DOES NOT REQUIRES ANY INTERFERENCE, RESU LTANTLY THE GROUND NO. 5 STANDS DISMISSED. ITA NO.165/ASR/2017 (A.Y:2010-11) M/S DHOT AGRO SERVICE, KAPURTHAL A VS. ITO 8 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTL Y ALLOWED AND PARTLY REMANDED TO THE FILE OF THE ASSESSIN G OFFICER FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .06.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:27.06.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S DHOT AGRO SERVICE, KAPURTHALA (2) THE ITO, KAPURTHALA (3) THE CIT(A)-2, JALANDHAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER