The ACIT, Circle-5, Baroda V. Shri Dharmendra M.Patel, Baroda

ITA 1719/AHD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9899 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITA RAM MEENA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 1719/AHD/2012 (ASSESSMENT YEAR: 2008-09) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 5, 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA - 390007 APPELLANT VS. SHRI DHARMENDRA M. PATEL 4, DEV SHREE BUNGLOW, NEAR REVA PARK SOCIETY, B/H. MAHESH COMPLEX, WAGHODIA ROAD, BARODA RESPONDENT PAN: AIIPP0335R / BY REVENUE : SHRI SITA RAM MEENA, SR. D.R. /BY ASSESSEE : URVASHI SHODHAN, A.R. /DATE OF HEARING : 16.11.2016 /DATE OF PRONOUNCEMENT : 24.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE CIT(A)- V, BARODAS ORDER DATED 31.05.2012, IN APPE AL NO. CAB/(A) V- 256/10-11, IN PROCEEDINGS UNDER SECTION 143(3) OF T HE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 1719/AHD/2012 ( ACIT VS. SHRI DHARMENDRA M. PATEL) A.Y. 2008-09 - 2 - 2. THE INSTANT APPEAL RAISES FOLLOWING SUBSTANTIVE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, (I) THE LD. CIT(A) ERRED IN HOLDING THAT THE NATURE OF ARRANGEMENT OF THE TRANSACTION MADE BY THE ASSESSEE IS CLEARLY A W ORK CONTRACT AND THAT THE ASSESSEE HAS CORRECTLY DEDUCTED TAX U/S 19 4-C OF THE IT ACT, IGNORING THE FACT THAT THE PAYMENTS ARE MADE ON A P ERIODICAL BASIS WHICH CLEARLY HAS THE CHARACTER OF RENT AS PER SECT ION 194-I RATHER THAN CONTRACT UNDER SECTION 194-C OF THE IT ACT. (II) THE LD. CIT(A) ERRED IN LAW IN HOLDING (A) THAT PROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT WOULD NOT BE ATTRACTED ON SHORT DEDUCTION OF TAX. (B) THAT SECTION 40(A)(IA) OF THE IT ACT IS ATTRACT ED ONLY WHEN THERE IS TAX PAYABLE AT THE END OF THE YEAR AND IS NOT ATTRACTED WHEN THE AMOUNT HAS BEEN PAID DURING THE YEAR. 3. FACTS OF THE CASE ARE IN A NARROW COMPASS. THIS ASSESSEE IS A CONTRACTOR CARRYING OUT CIVIL CONSTRUCTIONS WORK. HE PAID TRANSPORTATION CHARGES OF RS.44,74,852/- TO VARIOUS PAYEES IN THE RELEVANT PREVIOUS YEAR. THE ASSESSEE WOULD TREAT THE SAME AS CONTRACTUAL PA YMENT TO DEDUCT TDS THEREUPON U/S.194C OF THE ACT PAID IN LIEU OF CARRY ING HIS BUILDING MATERIAL FROM ONE PLACE TO ANOTHER. THE ASSESSING OFFICER I N HIS ASSESSMENT ORDER DATED 28.12.2010 HELD THAT THE SAID TDS OUGHT TO HA VE BEEN DEDUCTED IN THE NATURE OF RENT U/S.194I PAID FOR ENGAGING TRANSPORT VEHICLES IN QUESTION. HE WOULD THUS INVOKE SECTION 40(A)(IA) DISALLOWANCE QU A THE ABOVE PAYMENTS. 4. THE CIT(A) IN HIS OPERATIVE PARA 4.2 INTER ALIA HOLDS THAT THE ARRANGEMENT BETWEEN THE DEDUCTOR ASSESSEE AND HIS P AYEES DEMONSTRATES THAT THE IMPUGNED PAYMENTS HAVE BEEN MADE FOR TRANSPORTA TION AND NOT FOR LEASING OF THE VEHICLES IN QUESTION SINCE OWNERS THEREOF HA D THEMSELVES BORNE ALL EXPENSES MEANING THEREBY THAT THE SAME IS IN THE NA TURE OF WORKS CONTRACT U/S.194C AND NOT COVERED U/S.194I OF THE ACT. HE F URTHER OBSERVES WITHOUT ITA NO. 1719/AHD/2012 ( ACIT VS. SHRI DHARMENDRA M. PATEL) A.Y. 2008-09 - 3 - PREJUDICE THAT THE ASSESSEE HAS ADMITTEDLY DEDUCTED TDS ON THE ABOVE PAYMENTS. HE THUS OPINES THAT THE IMPUGNED SECTION 40(A)(IA) DISALLOWANCE IS NOT EXIGIBLE IN CASE OF SHORT DEDUCTION OF TDS A S PER TRIBUNALS ORDER IN DCIT VS. S. K. TEKRIWAL 48 SOT 515 (CAL.) AS UPHELD IN THE VERY CASE (2014) 361 ITR 432 (CAL.). THE CIT(A)S LAST CONCLUSION T HAT SECTION 40(A)(IA) DISALLOWANCE IS APPLICABLE ONLY QUA THE AMOUNTS PAY ABLE AS ON 31.03.2008 AND NOT QUA THOSE ALREADY PAID BEFORE THE SAID DATE AS PER THIS TRIBUNALS SPECIAL BENCH DECISION IN M/S. MERILYN SHIPPING & T RANSPORTS VS. ACIT 146 TTJ PAGE 1 (VIZAG). THIS LEAVES THE REVENUE AGGRIE VED. 5. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. SUFFICE TO SAY, IT HAS ALREADY COME ON RECORD THAT THE ASSESSEE HAS DE DUCTED TDS UPON THE IMPUGNED TRANSPORTATION CHARGES U/S.194C OF THE ACT BY TREATING THE IMPUGNED PAYMENTS AS CONTRACTUAL IN NATURE. WE OBS ERVE IN THESE FACTS THAT HONBLE KOLKATA HIGH COURT HEREINABOVE AS WELL AS H ONBLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO.1237/2014 CIT VS. PRAYAS ENG INEERING DECIDED ON 17.11.2014 HOLD THAT SECTION 40(A)(IA) DOES NOT APP LY IN SUCH AN INSTANCE OF SHORT DEDUCTION OF TDS. LD. DEPARTMENTAL REPRESENT ATIVE FURTHER FAILS TO REBUT THE CIT(A)S CONCLUSION THAT THE ASSESSEE HAS NOT UNDERTAKEN ALL EXPENSES PERTAINING TO THE VEHICLES IN QUESTION ENG AGED FOR TRANSPORTATION SINCE OWNERS THEREOF HAD ENJOYED ALL NECESSARY CONT ROL AND WOULD BEAR ALL THE NECESSARY CHARGES. WE OBSERVE IN THESE FACTS THAT THE ASSESSEES PAYMENTS HAVE RIGHTLY BEEN TREATED AS NOT AMOUNTING TO RENT U/S.194I OF THE ACT. WE THUS FIND NO REASON TO INTERFERE WITH THE CIT(A)S ORDER UNDER CHALLENGE. LD. DEPARTMENTAL REPRESENTATIVE AT THIS STAGE SEEKS TO INVITE OUR ATTENTION TO HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IN CIT VS. SIKANDAR KHAN TUNVAR (2013) 33 TAXMANN.COM 133 (GUJ) REVERSING TH IS TRIBUNALS SPECIAL BENCH DECISION HEREINABOVE. WE ARE OF THE VIEW THA T EVEN IF THIS GROUND IS ITA NO. 1719/AHD/2012 ( ACIT VS. SHRI DHARMENDRA M. PATEL) A.Y. 2008-09 - 4 - ACCEPTED, THAT MAKES NO DIFFERENCE TO THE ABOVE OUT COME OF THE INSTANT APPEAL SINCE THE REVENUE HAS ALREADY LOST ITS OTHER SUBSTA NTIVE GROUNDS. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 24/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+23 / GUARD FILE. BY ORDER / . // ./0