ITO, CHENNAI V. Globe Transport Corporation Pvt Ltd., CHENNAI

ITA 1783/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96327 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Opportunity of being heard
• Section: 143(3); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1783/MDS/2015 ' $ %$ / ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, CORPORATE WARD 2(2) CHENNAI 600 034. VS. M/S. GLOBE TRANSPORT CORPORATION PVT. LTD, AE BLOCK NO.6, 7 TH STREET, ANNA NAGAR, CHENNAI 600 040 [PAN AACCG 4784A] ( / APPELLANT) ( /RESPONDENT) &' ( ) / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. *+&' ( ) /RESPONDENT BY : SHRI. V.S. JAYAKUMAR, ADVOCATE ( , / DATE OF HEARING : 29-10-2015 -.% ( , / DATE OF PRONOUNCEMENT : 06-11-2015 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI, DA TED 17.02.2015 FOR THE ASSESSMENT YEAR 2006-2007 IN ITA NO.119/CIT (A)-6/2008-09 ITA NO.1783/MDS/2015. :- 2 -: PASSED UNDER SECTIONS 143(3) AND 250 OF THE INCOME TAX ACT (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED ONLY ONE SUBSTANTIVE GROUND WITH RESPECT TO DEDUCTION OF TDS ON LORRY HIGH CHARGES A ND ALSO APPLICABILITY OF PROVISIONS OF SEC.40(A)(IA) OF THE ACT ON SUCH P AYMENTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PRIVATE LIMITED COMPANY IS IN THE BUSINESS OF TRANSPORTATIO N AND FILED RETURN OF INCOME ON 30.11.2006 ADMITTING TOTAL INCOME OF ?17, 970/- AND THE RETURN WAS PROCESSED U/SEC. 143(1). SUBSEQUENTLY, T HE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSING OFFICER ISSUED NOTICE. IN RESPONSE TO THE NOTICE LD. AUTHORISED R EPRESENTATIVE FOR ASSESSEE SUBMITTED NECESSARY DETAILS AND ALSO EVIDE NCES IN SUPPORT OF THE FINANCIAL STATEMENTS. THE ASSESSING OFFICER BA SED ON THE INFORMATION OF PROFIT AND LOSS ACCOUNT RESTRICTED T HE PRELIMINARY EXPENSES TO 1/5 TH OF TOTAL EXPENSES AND DISALLOWED ?28,640/-. FURTH ER, THE ASSESSING OFFICER FOUND THAT THE COMPANY HAS CL AIMED EXPENDITURE OF ?66,19,771/- ON LORRY HIGH CHARGES PAYMENTS AND THE LD.AR PRODUCED EVIDENCES TO THE EXTENT OF PAYMENT OF ?33, 23,095/- AND ALSO SUBMITTED THAT REMAINING AMOUNT OF ?32,96,674/- ARE NOT SUB- CONTRACTORS COVERED UNDER PREVIEW OF SEC 194C OF TH E ACT. CONSIDERING THE ASPECT OF NON DEDUCTION OF TDS THE ASSESSING O FFICER HAS ITA NO.1783/MDS/2015. :- 3 -: DISALLOWED ?32,96,674/- AND ASSESSED TOTAL INCOME O F ?33,43,284/- AND RAISED DEMAND. AGGRIEVED BY THE ORDER OF THE A SSESSING OFFICER, THE ASSESSEE COMPANY HAS PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI. 4. IN THE APPELLATE PROCEEDINGS, THE LD.AR HAS SUBMITT ED THAT OUT OF TOTAL EXPENDITURE OF ?66,19,771/- TDS WAS D EDUCTED FOR ?33,23,095/- AND FOR THE BALANCE AMOUNT THE COMPANY HAS OBTAINED FORM 15I FROM THE SUB-CONTRACTORS ALONGWITH FOR NO. 15J AND FILED WITH THE ITO, TDS WARD, CHENNAI. FURTHER, THE LD.AR SUB MITTED HIS CLAIM WITH ABOVE DOCUMENTS AND MENTIONED THAT SUCH PAYMEN TS TO TRUCK OWNERS HAVE ALREADY BEEN PAID BEFORE 31.03.2006 AND HENCE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT ARE NOT APP LICABLE AND RELIED ON THE DECISIONS OF SPECIAL BENCH OF VIZAG BENCH IN TH E CASE OF MERILYN SHIPPING AND TRANSPORTS VS. ADDL. CIT (136 ITD 23) VIZAG(SB) AND ALSO JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES P. LTD 357 ITR 642 (ALL) . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER PERUSING FORM NO.15I AND 15J FILED BEFORE THE INCOME TAX OFFICER, TDS WARD, CHENNAI ON 04.04. 2006 AND ALSO LIST OF TRUCK DRIVERS TO WHOM TRUCK CHARGES WAS PAI D HAS HELD THAT PROVISIONS OF U/SEC 40(A)(IA) CANNOT BE INVOKED SIN CE ABOVE AMOUNT WAS ALREADY PAID AND THERE ARE NO OUTSTANDING PAYAB LE AS ON 31.03.2006 AND FURTHER EMPHASIZED THE DEFINITIONS O F PAID AND ITA NO.1783/MDS/2015. :- 4 -: PAYABLE SUPPORTED WITH VARIOUS TRIBUNALS DECIS IONS AND HIGH COURT DECISIONS AND ALSO RELIED ON THE DECISION OF APEX C OURT ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING IN HIS ORDER AT PA RA 4.1.8:- FURTHER RECENTLY, THE HONBLE SUPREME COURT OF INDIA VIDE CC NO.8068/2014 DATED 02.07.2014 HAS UPHELD TH E DECISION OF THE ALLAHABAD HIGH COURT (IN THE CASE O F VECTOR SHIPPING SERVICES P. LTD) BY DISMISSING THE SLPL FI LED BY THE REVENUE. THEREFORE, IN VIEW OF THE DECISIONS OF THE ALLAHABA D HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES P. LT D (357 ITR 642) (ALL) WHICH HAS ALSO BEEN UPHELD BY THE AP EX COURT, AND ALSO THE JURISDICTIONAL ITAT IN THE CASE OF ITOVS. M/S. THEEKATHIR PRESS, MADURAI (ITA NO.2076/MDS/2012, DATED 18.09.2013), I HOLD THAT TH E PROVISIONS OF SEC.40(A)(IA) ARE APPLICABLE ONLY IF THE AMOUNTS ARE PAYABLE AND OUTSTANDING AS ON 31 ST MARCH OF THE FINANCIAL YEAR. IN THE PRESENT CASE, SINCE THE ASSESSEE HAS ALREADY PAID THE ABOVE MENTIONED TRANS PORT EXPENSES AS ON 31.03.2006, THE SAME CANNOT BE DISAL LOWED U/S.40(A)(IA) OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE ABOVE TRANSPORT EXPENSES OF 32,96,674/- AS ALLOWABLE DEDUCTIONS. THE DISALLOWA NCE MADE BY THE ASSESSING OFFICER STANDS DELETED. THE A SSESSEE SUCCEEDS IN ITS APPEALS IN THIS REGARD . 5. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS) THE REVENUE HAS FILED APPEAL BEFORE THE TRIBUNAL BY RAISING GROUNDS ON VARIOUS ISSUES AND SUPPORTED WITH THE J UDICIAL DECISIONS. LD. DR HAS ARGUED THAT THE ASSESSEE HAS ONLY DEDUC TED TDS IN RESPECT OF ONE PART OF LORRY HIRE CHARGES AND NOT S UPPORTED WITH ANY MATERIAL EVIDENCE BEFORE THE ASSESSING OFFICER FURT HER SUBMITTED THAT AS PER THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT TAX HAS TO BE ITA NO.1783/MDS/2015. :- 5 -: DEDUCTED BY THE ASSESSEE IRRESPECTIVE OF AMOUNT PAI D OR PAYABLE AND MADE AN DISTINCTION OF THE DECISION OF VECTOR SHIP PING SERVICES P. LTD (SUPRA) IS ON DIFFERENT GROUND APPLICABLE FOR SALAR Y PAYMENT AND THEREFORE CANNOT BE CONSIDERED AND RELIED ON JUDICI AL DECISIONS AND CBDT CIRCULAR. FURTHER, SUBMITTED THAT THE COMMISSI ONER OF INCOME TAX (APPEALS) HAS NOT PUT THE MATERIALS FOR ANY VER IFICATION OR CALLED FOR THE REMAND REPORT IN RESPECT OF EVIDENCES FILED BY WAY OF FROM 15I AND FORM 15J IN THE APPELLATE PROCEEDINGS AND PRAYE D THE TRIBUNAL TO SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). 6. ON THE OTHER HAND, THE LD. COUNSEL RELIED ON THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED THAT THE SAID INFORMATION WAS FILED BEFORE THE ASSESSING OFFICER AND WAS NOT CONSIDERED IN ASSESSMENT ORDER AND PRAYED FOR DISMI SSAL OF REVENUE APPEAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PARTIE S, ORDERS OF LOWER AUTHORITIES AND ALSO MATERIAL PERUSED ON R ECORD. THE COMPANY IS IN THE BUSINESS OF TRANSPORTATIONS AND I N THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DISALLOWED T HE LORRY HIRE CHARGES WITHOUT MAKING ANY INQUIRY. THE ASSESSEE H AS SUBSTANTIATED HIS GROUNDS BY SUBMITTING DETAILS FILED IN FORM 15I AND FORM 15J BEFORE THE ITO, TDS WARD ON 04.04.2006 ALONGWITH L IST OF TRUCK ITA NO.1783/MDS/2015. :- 6 -: OWNERS NAME AND TRANSPORT CHARGES AND THERE IS NO A MOUNT OUTSTANDING PAYABLE AS ON 31 ST MARCH 2006. THE LD.CIT(A) ACCEPTED THE EVIDENCES FILED AND RELIED UPON THE SUPPORTING DECISIONS OF TRIBUNAL OBSERVED AT PAGE 4.1.5AS UNDER;- THE WORDS PAID AND PAYABLE FOR THE PURPOSE OF SECTION 40(A)(IA) HAVE BEEN DELIBERATED BY VARIOUS TRIBUNALS AND HIGH COURTS. THE SPECIAL BENCH OF IT AT (VIZAG BENCH) IN THE CASE OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL.CIT 136 ITD 23 (VIZ.SPL) HAS HELD THAT THE PROVISIONS OF SEC.40(A) (IA) ARE APPLICABL E ONLY TO THE EXPENSES THAT ARE PAYABLE AND OUTSTANDING A S ON 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR IN WHICH THE E XPENSES ARE CLAIMED. THIS VIEW HAS ALSO BEEN ENDORSED BY TH E HIGH COURT OF ALLAHABAD IN THE CASE OF VECTOR SHIPPING S ERVICES P.LTD 357 ITR 642 (ALL) WHERE IT HAS CLEARLY BEEN H ELD THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSI ON ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOU NT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY TH E END OF THE YEAR. WE ARE OF THE OPINION THAT THE PROVISIONS OF SEC.4 0(A)(IA) OF THE ACT ARE APPLICABLE ONLY WHEN THE AMOUNT OF EXPENDITURE IS PAYABLE AND OUTSTANDING AS ON 31 ST MARCH OF THE PREVIOUS YEAR IN WHICH THE ASSESSEE HAS CLAIMED EXPENDITURE. THE ADDITIONAL INFORMATION WAS FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL S) AND NO REMAND REPORT WAS CALLED FOR FROM ASSESSING OFFICER. IT IS APPARENT THAT SUCH STATEMENTS AND INFORMATIONS WAS NOT AVAILABLE TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THEREFORE, WE A RE INCLINED TO SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE DISPUTE D ISSUE TO THE ASSESSING OFFICER WITH THE DIRECTION TO VERIFY WHET HER ANY AMOUNT IS ITA NO.1783/MDS/2015. :- 7 -: OUTSTANDING OR PAYABLE AS ON 31 ST MARCH OF PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR SO AS TO ATTRACT THE PROVISIONS OF SEC 40(A)(IA) OF THE ACT. IT IS NEEDLESS TO STATE THAT THE ASSESSEE SHA LL BE PROVIDED WITH ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE ADJUDICA TING THE ISSUE ON MERITS. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1783/MDS/2015 IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED ON FRIDAY, THE 6 TH DAY OF NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI / / DATED:06.11.2015 KV 0 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 389 *',' / DR 2. *+&' / RESPONDENT 4. 5, / CIT 6. 9:$ ; / GF