The ITO, Ward-4(3), Ahmedabad V. Hans Road Carriers Pvt.Ltd., Ahmedabad

ITA 1792/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9988 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-08-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS

Judgement Text

FIT FOR PUBLICATION SD/- SD/- (A.N. PAHUJA) (MUKUL KR.SHRAWAT) AM JM IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 26/08/2010 DRAFTED ON: 27 /08/2010 ITA NO.1792/AHD/2007 ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER WARD-4(3) AHMEDABAD VS. HANS ROAD CARRIERS PVT.LTD. I/B SUFRAM ESTATE NR. AVTAR HOTEL ISANPUR, AHMEDABAD PAN/GIR NO. : AAACH 7584 D ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI VIMALENDU, SR.D.R. RESPONDENT BY: SHRI S.N.DIVATIA, ADV. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VIII, AHMEDA BAD DATED 20/02/2007 AND THE SOLITARY SUBSTANTIAL GROUND READ S AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.33,80,680/- BEING THE DIFFERENCE IN THE TRUCK HIRE CHARGE RECEIPTS SHOWN AT RS.44,000/- IN THE P & L A /C. AS AGAINST THE SAME SHOWN AT RS.34,24,868/- IN THE TDS CERTIFICATE . ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 08 /09/2006 WERE THAT THE ASSESSEE-COMPANY DURING THE YEAR WAS ENGAGED IN THE BUSINESS OF PROVIDING TRANSPORTATION SERVICE. 2.1. ON PERUSAL OF TDS CERTIFICATES IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE AMOUNT DEDUCTED AT SOURCE WAS A S UM OF RS.1,52,307/- WHICH HAD COVERED THE INCOME OF RS.90,95,287/-. HO WEVER, IT HAS ALSO BEEN NOTICED THAT IN THE PROFIT & LOSS ACCOUNT RECE IPTS SHOWN BY THE ASSESSEE WERE ONLY RS.72,70,562/-. THE ASSESSEE W AS ASKED TO RECONCILE THE SAME. THE ASSESSING OFFICER HAS FURNISHED THE DETAILS OF DEDUCTION OF TDS IN RESPECT OF M/S.SUPREME ROADLINES CORPORATION , MUMBAI ACCORDING TO WHICH ON THE AMOUNT OF RS.34,24,868/- TDS OF RS.35,982/- WAS DEDUCTED. HOWEVER, AS AGAINST THAT, THE RECEIP TS FROM M/S.SUPREME ROADLINES CORPORATION AS SHOWN BY THE ASSESSEE WAS ONLY RS.44,000/-. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAID A MOUNT RECEIVED FROM M/S.SUPREME ROADLINES CORPORATION HAD A COMPONENT OF A COMMISSION PER TRUCK OF RS.500/- ONLY, WHICH WAS THE RECEIPT I N THE HANDS OF THE ASSESSEE AND THE REMAINING AMOUNT WAS PAID BY M/S. SUPREME ROADLINES CORPORATION TO THE OWNERS OF THE TRUCK. SO, IT W AS INFORMED THAT THE ENTIRE AMOUNT AS PER THE TDS CERTIFICATE WAS NOT RE CEIVED BY THE ASSESSEE BUT IT HAD GONE DIRECTLY TO THE TRUCK OWNERS. THE QUESTION OF THE ASSESSING OFFICER WAS THAT IF THERE WAS A COMMISSIO N OF RS.500/- PER TRUCK, THEN WHY THE TDS WAS DEDUCTED ON THE ENTIRE AMOUNT. EVEN THE TDS CERTIFICATES HAVE SHOWN THE AMOUNT AT RS.34,24 ,868/- AND NOT A SUM OF RS.44,000/- AS ALLEGED BY THE ASSESSEE. THE ASS ESSING OFFICER HAS, THUS, CONCLUDED THAT SINCE THE AMOUNT AS PER THE TD S CERTIFICATE ON WHICH ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 3 - TDS DEDUCTED WAS AT RS.34,24,868/- AND AS AGAINST THAT ONLY RS.44,000/- WAS DISCLOSED BY THE ASSESSEE, THEREFORE, THE BALAN CE AMOUNT OF RS.33,80,868/- WAS THE INCOME TO BE TAXED IN THE HA NDS OF THE ASSESSEE. ACCORDINGLY, THE ADDITION WAS MADE WHICH WAS CHALLE NGED. 3. WHEN THIS ISSUE WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY AGAIN THOSE FACTS WERE REITERATED AND THE LEARNED C IT(APPEALS) HAS GIVEN HIS FINDING VIDE PARAGRAPH NO.3 AS UNDER:- 3. I HAVE PERUSED THE ASSESSMENT ORDER AND ALSO CA REFULLY EXAMINED THE ISSUE WITH REFERENCE TO THE ACCOUNT CO PIES AND THE CONFIRMATORY LETTER GIVEN BY M/S.SUPREME ROADLINES CORPORATION WHICH WERE FILED BEFORE THE AO DURING THE ASSESSME NT PROCEEDINGS. IT IS NOW CLEAR FROM THE HIRE CHARGES ACCOUNT AS WELL AS THE LEDGER ACCOUNT OF M/S.SUPREME ROADLINES CORPORATION IN THE BOOKS OF THE APPELLANT THAT THER E WERE CONTRA ENTRIES AS REGARDS THE AMOUNT BEING HIRE CHARGES PAYABLE T O THE TRUCK OWNERS WHO WERE ARRANGED BY THE APPELLANT COM PANY FOR AND ON BEHALF OF M/S.SUPREME ROADLINES CORPORATION. WHAT WAS ACCOUNTED AS INCOME IN THE HANDS OF THE APPELLANT C OMPANY WAS THE NET AMOUNT OF RS.44,000/- WHICH WERE RECEIVED BY TH E APPELLANT COMPANY PARTLY AS TDS CERTIFICATE OF RS.35,982/- AND BALANCE BY CASH. THUS, DEBIT AND CREDIT BY WAY OF CONTRA ENTRIES CANCELLED OUT LEADING TO NEITHER SUPPRESSION OF INC OME NOR INFLATION OF EXPENDITURE. THIS FACTUAL ASPECT BEIN G NOT IN DISPUTE, MERE ARITHMETICAL EXTRAPOLATION OF CONTRACT RECEIPT S WITH REFERENCE TO THE TDS CERTIFICATE WITHOUT DUE CONSIDERATION OF THE RELEVANT LEDGER ACCOUNT WOULD ONLY LEAD TO ABSURD RESULTS. THE INCOME OF THE APPELLANT CANNOT BE ARTIFICIALLY ENHANCED THERE BEING NO CORRESPONDING DEBIT IN THE PROFIT AND LOSS ACCOUNT. NO DOUBT THE TDS RECEIPTS HAVE TO BE RECONCILED BUT ONCE THE SAM E IS EXPLAINED WITH VERIFIABLE LEDGER ACCOUNTS THEN NO SEPARATE AD DITION COULD BE MADE WHEN THE EXPLANATION ARE VERIFIABLE WITH REFER ENCE TO CONTRA ENTRIES IN THE RESPECTIVE ACCOUNTS. THERE IS ALSO NO OUTSTANDING RECEIVABLE FROM THE TAX DEDUCTOR. IN THAT VIEW OF THE FACTUAL SEQUENCE, THE ACTION OF THE AO IN MAKING THE ADDIT ION IS WITHOUT ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 4 - SUPPORT OF FACTS OF THE CASE AND HENCE TO BE ELIMIN ATED AND I DIRECT IT TO BE SO DELETED. 4. WITH THIS FACTUAL BACKGROUND, WE HAVE HEARD BOTH THE SIDES. FROM THE SIDE OF THE REVENUE LEARNED SR.DEPARTMENTAL RE PRESENTATIVE SHRI VIMALENDU APPEARED AND PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. HE HAS ARGUED THAT THE AMOUNT OF RECEIPT S ON WHICH TDS WAS DEDUCTED OUGHT TO HAVE BEEN SHOWN IN THE HANDS OF T HE ASSESSEE, THEREFORE, THE ACCOUNTS HAVE NOT DEPICTED THE CORRE CT POSITION OF THE INCOME WHICH WAS RIGHTLY TAXED BY THE ASSESSING OFF ICER. ON THE OTHER HAND, FROM THE SIDE OF THE RESPONDENT-ASSESSEE LEAR NED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SHRI S.N.DIVATIA HAS DRAWN OUR ATTENTION FROM A CERTIFICATE ISSUED BY M/S.SUPREME ROADLINES CORPORATION DATED 10/03/2004 WHICH WAS STATED TO HAVE BEEN FILED BEFO RE THE ASSESSING OFFICER TO DEMONSTRATE THAT THE SAID CONCERN HAS AC TUALLY PAID RS.500/- AS A COMMISSION PER TRUCK, BUT THE TDS WAS DEDUCTED ON THE WHOLE AMOUNT FREIGHT OF TRUCKS SUPPLIED. HE HAS ALSO REFERRED THE LEDGER ACCOUNT OF TRUCK HIRE CHARGES TO EXPLAIN THAT ONLY THE BALANCE AMOUNT WAS SHOWN AS RECEIPT FROM M/S.SUPREME ROADLINES CORPORATION. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS ALSO CITED A DECISION OF ITAT AHMEDABAD BENCH D IN THE CASE OF SHUSHILADEV I ANILKUMR SINGHAL VS. ITO REPORTED AS (2008) 10 DTR (AHD)(TRI B) 558. 5. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND ALSO CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF A SHORT COMPILATION FILED AND THE CASE LAW CITED. THE SHO RT LEGAL ISSUE BEFORE US IS THAT WHETHER THE RECEIPTS SHOWN AS PER THE TDS C ERTIFICATE IS THE ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 5 - INCOME OF THE ASSESSEE TO BE TAXED WHOLLY WITHOUT A NY ADJUSTMENTS. TO ANSWER THIS LEGAL QUESTION, WE HAVE EXAMINED THE NA TURE OF BUSINESS ACTIVITY OF THE ASSESSEE AND IT WAS FOUND THAT THE ASSESSEE-COMPANY IS CARRYING ON TRANSPORTATION BUSINESS. BROADLY SPEAK ING TWO TYPES OF BUSINESS ACTIVITY BEING CARRIED OUT BY THE ASSESSEE, ONE, SUPPLY OF ITS OWN TRUCKS ON HIRE FOR TRANSPORTATION OF GOODS AND THE HIRE CHARGES ARE CREDITED IN THE BOOKS, SECOND, TRUCKS ARE ARRANGED FOR THE CUSTOMERS ON COMMISSION BASIS AND THE PAYMENTS WERE BEING MADE D IRECTLY BY THE CUSTOMER TO THE TRUCK-OWNERS AND THE ASSESSEE ONLY OBTAINED COMMISSION. IT WAS EXPLAINED TO REVENUE AUTHORITIES THAT THOUGH AS PER THE TDS CERTIFICATE, THE AMOUNT MENTIONED WAS RS.34,24,868/ - ON WHICH TDS OF RS.35,482/- WAS DEDUCTED BUT ON THOSE TRANSACTIONS THE ASSESSEE HAD RECEIVED ONLY COMMISSION OF RS.500/- PER TRUCK. TH EREFORE, THE FACTS HAVE REVEALED THAT THE TDS WAS DEDUCTED ON THE WHOL E AMOUNT OF FREIGHT ON TRUCKS SUPPLIED THROUGH ASSESSEE BUT SAID AMOUNT HAD AN OVER-RIDING RIGHT OF THE TRUCK-OWNERS THEREFORE DIRECTLY DIVERT ED TO THEIR RESPECTIVE ACCOUNTS. ON CAREFUL EXAMINATION OF THE STATUTORY PROVISIONS TO ANSWER THIS LEGAL QUESTION, IT IS EVIDENT THAT THE DEDUCTION OF TAX AT SOURCE IS NOT A LEVY OF TAX UNLESS AND UNTIL IT IS FOLLOWED BY AN ASSESSMENT O RDER MAKING A CHARGE OF TAX. EVEN THIS IS ALSO A SETTLED POSITION THAT THE DEDUCTION OF TAX AT SOURCE IN NO WAY EXPRESSLY INDI CATES THAT IPSOFACTO THE ASSESSEE IS ENTITLED FOR THE REFUND OR ADJUSTMENT O F TAX OF THE TDS AMOUNT AGAINST THE INCOME MENTIONED THEREIN. THE DEDUCTI ON OF TAX IS NOT A LEVY OF TAX. DEDUCTION OF TAX AT SOURCE IS MERELY ONE O F THE MODE OF COLLECTION OF TAX. THE AMOUNT ON WHICH TDS IS DED UCTED IS SUBJECT TO CHARGE AS PER THE PROVISIONS OF THE ACT. THERE AR E FEW INSTANCES WHICH CAN FURTHER ELABORATE THIS VIEW. FOR EXAMPLE, THE RECIPIENT MAINTAINS ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 6 - ACCOUNT ON CASH BASIS WHICH MAY NOT MATCH WITH THE AMOUNTS CERTIFIED IN THE TDS CERTIFICATE DUE TO THE REASON THAT THE DEDU CTOR HAS MAINTAINED THE ACCOUNT ON MERCANTILE BASIS. NATURALLY THE DEDUCTOR WILL DEDUCT THE TAX ON ACCRUAL BASIS, HOWEVER, THE RECIPIENT SH ALL DISCLOSE THE INCOME ON RECEIPT BASIS . IN THIS SITUATION, THERE SHALL ALWAYS BE A MISMATCH BETWEEN THE AMOUNT OF RECEIPT AS PER TDS C ERTIFICATE AND THE TAXABLE INCOME OFFERED BY THE ASSESSEE. DUE TO TH IS REASON, THE STATUTE HAS CLARIFIED THAT IT IS NOT NECESSARY THAT THE REC EIPTS ON WHICH TAX WAS DEDUCTED AS PER TDS CERTIFICATE SHOULD BE OFFERED T O TAX IN THE SAME ASSESSMENT YEAR AS PER THE DATES MENTIONED IN THE T DS CERTIFICATE. THIS IS ONE OF THE FEW EXAMPLES, HOWEVER, ONE MORE EXAMP LE CAN ALSO BE CITED. THERE CAN BE AN INSTANCE THAT THE TDS WAS DEDUCTED ON THE INCOME WHICH MAY NOT BE SUBJECT TO TAX AT ALL, SUCH AS, ELIGIBLE FOR DEDUCTION U/S.10A, ETC. SO THE DEDUCTION OF TAX ON AN INCOME DOES NOT IPSO FACTO DECLARE THAT THE AMOUNT REFERRED IN THE TDS CERTIFICATE IS SUBJECT TO TAX ON THE WHOLE FIGURE THAT TOO ON THE SAME YEAR MENTIONED IN THE CERTIFICATE . AN OBSERVATION AT THIS STAGE CAN BE MADE THAT THE PROVISIONS RELATING TO TAX DEDUCTION AT SO URCE ARE NOT THE PROVISIONS FOR THE COMPUTATION OF INCOME. AN INCOM E OF A TAXPAYER IS NOT REQUIRED TO BE COMPUTED MERELY WITH REFERENCE T O THE TDS CERTIFICATE BUT ASSESSMENT OF AN INCOME IS ALTOGETHER AN INDEPE NDENT EXERCISE. WITH THIS UNDERSTANDING OF LAW IF WE COMPARE THE FACTS OF THE CASE, AND THEN IT IS EVIDENT THAT THE AMOUNT WHICH WAS CERTIFIED ON T HE TDS CERTIFICATE COULD OR COULD NOT HAVE BEEN SUBJECT TO TAX IN THE HANDS OF THE ASSESSEE- RECIPIENT. THE DEDUCTOR HAD CHOSEN A SAFE PROCEDU RE OF DEDUCTION OF TAX ON THE ENTIRE AMOUNT OF FREIGHT. OTHERWISE THE FRE IGHT WAS TO BE PAID TO THE TRUCK OWNERS AND NOT TO THE ASSESSEE-COMPANY, WHO IS ONLY A ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 7 - CONDUIT IN ARRANGING THE HIRING OF THE TRUCKS. TH E FREIGHT WAS TO BE PASSED ON TO THE TRUCKS OWNERS, THEREFORE, THE FREI GHT WAS NOT SUBJECT TO TAX IN THE HANDS OF THE ASSESSEE. NEVERTHELESS, A CCOUNTS OF THE ASSESSEE HAVE ALSO DEMONSTRATED THE SAME. WITH THE RESULT, THE AMOUNT ON WHICH THE TDS WAS DEDUCTED HAD NOT MATCHED WITH THE FIGUR ES OF THE INCOME DISCLOSED BY THE ASSESSEE IN RESPECT OF THOSE TRANS ACTIONS. SUCH A BUSINESS TRANSACTION CAN BE DEALT WITH IN TWO WAYS; I.E. EITHER TO BE TREATED AS THE RECEIPTS WITH OVERRIDING LIABILITY OR SECONDLY THAT THE FREIGHT RECEIPTS WERE SUBJECT TO THE EXPENDITURE OF FREIGHT CHARGES TO BE PAID TO THE TRUCK-OWNERS. ON APPRECIATION OF THE FA CTS, THE TRANSACTION IN QUESTION HAD FALLEN IN FIRST CATEGORY. IN VIEW OF ABOVE OBSERVATION, THE GROUND OF THE REVENUE HAS NO LEGAL STAND, THEREFORE , DESERVES TO BE REJECTED. ADDITIONALLY, A DECISION OF THIS CO-ORDI NATE BENCH HAS ALSO BEEN CITED IN THE CASE OF SHUSHILADEVI ANILKUMAR SI NGHAL REPORTED AS (2008) 10 DTR (AHD)(TRIB) 558; RELEVANT PORTION IS REPRODUCED BELOW:- IN OUR CONSIDERED OPINION, THE PROVISIONS OF DEDU CTION OF TDS HAVE BEEN BROUGHT IN THE STATUTE TO FACILITATE THE COLLECTION OF TAX. IT IS NOT THE INTENTION OF THE LEGISLATURE THAT THE CREDIT FOR A PORTION OF TDS DEDUCTED AND PAID IS NEVER GRANTED. IN THE INSTANT CASE, IT IS ADMITTED BY THE REVENUE THAT THE AMOUNT OF THE T DS COVERED BY TDS CERTIFICATES IN QUESTION COULD NOT BE GRANTED T O TRUCK OPERATORS/OWNERS AS THE RELEVANT TDS CERTIFICATES S TAND IN THE NAME OF THE ASSESSEE AND NOT IN THEIR NAME. THUS, CREDIT AGAINST THE ABOVE TDS CAN BE GRANTED TO THE ASSESSEE ALONE. FURTHER, THE SAID TDS RELATES TO THE BUSINESS TRANSACTIONS OF TH E ASSESSEE OF THE YEAR UNDER APPEAL AND THE ASSESSEE HAS DULY DISCLOS ED HER INCOME RELATING TO THE TRANSACTIONS REPRESENTED BY THE SAI D CERTIFICATES FORT THE YEAR UNDER APPEAL. THERE IS NO MATERIAL ON REC ORD TO SHOW THAT THE AMOUNT OF TDS WAS NOT DEDUCTED FORM THE AS SESSEE AND IT WAS BORNE BY SOMEBODY ELSE. THE ONLY DISPUTE IS TH AT THE ASSESSEE INSTEAD OF SHOWING RECEIPT OF FULL FREIGHT AND THEN SHOWING THE FREIGHT PAID TO TRUCK OPERATORS/OWNERS, HAS SHOWN O NLY THE ITA NO. 1792/AHD/2007 ITO VS. HANS ROAD CARRIERS PVT.LTD. ASST.YEAR - 2004-05 - 8 - DIFFERENCE BETWEEN THE AFORESAID TWO AMOUNTS AS HER E INCOME AS BECAUSE THE PAYMENTS OF FREIGHT WERE DIRECTLY COLLE CTED BY THE TRUCK DRIVERS. IN OUR CONSIDERED OPINION, THIS IS SIMPLY A MATTER OF PRESENTATION OF ACCOUNTS AND MERELY FOR NOT PRESENT ING IN THE ACCOUNTS, THE AMOUNT OF THE GROSS FREIGHT AND THEN FREIGHT PAID TO TRUCK OPERATOR/OWNER SEPARATELY, THE CLAIM OF TDS C ANNOT BE DENIED TO THE ASSESSEE 5.1. THE VIEW EXPRESSED BY THE RESPECTED CO-ORDINAT E BENCH ALSO BUTTRESS OUR HUMBLE UNDERSTANDING OF LAW, AS ALSO S UPPORTS THE REASONS ASSIGNED HEREINABOVE, HENCE RESULTANTLY WE FIND NO FORCE IN THE GROUND OF THE REVENUE, THEREFORE, HEREBY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 31/ 08 /2010. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPAR TMENT. 3. THE CIT CONCERNED. 4. THE LD. CIT(AP PEALS)-VIII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD