M/S. R.G.S. TRANSPORTS, ARIYALUR V. ITO, WARD -IV (2), TRICHY

ITA 1919/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4110 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ! ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1919/CHNY/2019 / ASSESSMENT YEAR : 2010-11 M/S. R.G.S TRANSPORTS, NO.1, MCL COMPLEX, CEMENT NAGAR, ALATHIYUR POST, SENDURAL TALUK, ARIYALUR DISTRICT 621 730 [PAN: AABFR 4017M] VS. THE INCOME TAX OFFICER, WARD -2, PARAMBALUR. ( / APPELLANT) ( #$%& /RESPONDENT ) %& ' ( / APPELLANT BY : SHRI. SAROJ KUMAR PARIDA, ADVOCATE #$%& ' ( / RESPONDENT BY : SHRI. AR V SREENIVASAN, JCIT * '+! /DATE OF HEARING : 19.11.2019 ,-. '+! /DATE OF PRONOUNCEMENT : 12.02.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, TRICHY IN ITA NO. 12/2013- 14/CIT(A)-1/TRY DATED 03.05.2019 FOR ASSESSMENT YEA R 2010-11. :-2-: ITA NO.1919/CHNY/2019 2. M/S. RGS TRANSPORTS, THE ASSESSEE, IS A FIRM ENG AGED AS A CONTRACTOR FOR TRANSPORTING CEMENT FOR MADRAS CEMEN T LTD., BY ENGAGING LORRIES ON HIRE. WHILE MAKING THE ASSESSMENT FOR A SSESSMENT YEAR 2010-11, THE AO MADE A DISALLOWANCE U/S. 40A(3) STA TING THAT IT HAS INCURRED EXPENDITURE EXCEEDING RS. 20,000/- OTHERWI SE THAN BY AN A/C PAYEE CHEQUE DRAWN ON A BANK OR BY ACCOUNT PAYEE BA NK DRAFT IN A SINGLE DAY. AGGRIEVED, THE ASSESSEE FILED AN APPEA L BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGA INST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE WAS ACTIN G AS AN AGENT AND HENCE AS PER RULE 6DDK, HE COULD NOT BE HELD LI ABLE U/S. 40A(3). AS PER FORM 3CD, THE ASSESSEE HAS MENTIONED TO BE A FORWARDING AGENT LORRY TRANSPORTER. THE ASSESSEE WAS MAINLY HANDLING THE WORK OF M/S. RAMCO CEMENTS LTD, WHO HAD APPOINTED THE ASSES SEE AS A FORWARDING AGENT. THE ASSESSEE PLEADED BEFORE THE LOWER AUTHORITIES THAT 40A(3) WOULD NOT BE APPLICABLE TO ASSESSEE. F URTHER, SOME OF THE HIRE CHARGES WERE REQUIRED TO BE PAID ON SUNDAYS AN D MANY A TIMES IN NIGHT WHEN THE BANKS WERE CLOSED AND HENCE THE ASSE SSEE HAD A GENUINE BUSINESS REASONS TO MAKE THE IMPUGNED PAYME NT IN CASH. THOUGH THE LD. CIT(A) RECORDED THE FINDING THAT IT HAS NOTICED THAT ALL TRANSPORT OPERATORS ARE GENERALLY ACTING AS AGENTS FOR VARIOUS PARTIES WHILE SENDING/PROCURING GOODS, HOWEVER, HE DISMISSE D THE APPEAL :-3-: ITA NO.1919/CHNY/2019 STATING THAT SECTION 40A(3) WILL APPLY TO ASSESSEE WHO IS ACTING AS AN AGENT. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS. IT IS CLEAR FRO M THE ABOVE THAT THE ASSESSEE WAS A CONTRACTOR FOR TRANSPORTING CEME NT FOR MADRAS CEMENT LTD BY ENGAGING LORRIES FOR HIRE. IT IS PLE ADED THAT THE IMPUGNED PAYMENTS WERE MADE ON SUNDAYS AND MANY A T IMES LATE IN THE NIGHTS WHEN THE BANKS WERE CLOSED FOR THE GENUI NE BUSINESS REASON AND IT WAS REQUIRED TO BE DONE AS AN AGENT, WHICH I S COVERED UNDER RULE 6DDK. CONSIDERING THE NATURE OF ASSESSEES BU SINESS, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO IS NO T WARRANTED AND HENCE ALLOW THE CORRESPONDING GROUNDS OF THE ASSESS EES APPEAL. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, 12 TH FEBRUARY, 2020 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ! ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, / /DATED: 20 TH FEBRUARY, 2020 JPV '#+0121.+ /COPY TO: 1. %& / APPELLANT 2. #$%& /RESPONDENT 3. * 3+ ) ( /CIT(A) 4. * 3+ /CIT 5. 14#+ /DR 6. 567 /GF