Sama Ravinder Reddy, Hyderabad V. ITO,Ward 9(4), Hyderabad

ITA 193/HYD/2014

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0499 (ITAT-HYDERABAD)
• Duration Of Justice: 7 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 29-04-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 07-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Non-deduction of tax
• Section: 143(3); 234B; 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO .193 /HYD/20 14 ASSESSMENT YEAR: 20 10 - 11 SAMA RAVINDER REDDY, HYDERABAD. PAN: ALAPS 3812 K VS. INCOME TAX OFFICER, WARD - 9(4), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI S. RAMA RAO REVENUE BY: SRI ROHIT MUJUMDAR, DR DATE OF HEARING: 29/04/2021 DATE OF PRONOUNCEMENT: 15 /07/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - VI, HYDERABAD IN APPEAL NO. 0134/2013 - 14/CIT(A) - VI, DATED 28/10/ 2013 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE AY 2010 - 11. 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN ITS APPEALS HOWEVER THE CRUXES OF THE ISSUES ARE: (I) THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 14,09,090/ - TOWARDS 2 DISALLO WANCE OF EXPENDITURE INCURRED FOR JACK HAMMER CHARGES DUE TO NON - DEDUCTION OF TAX AT SOURCE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C(5) OF THE ACT. (II) THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 5,21,819/ - TOWARDS DISALLOWANCE OF EXPENDITURE INCURRED FOR TRANSPORT CHARGES DUE TO NON - DEDUCTION OF TAX AT SOURCE INVOKING THE PROVISIONS OF SECTION 40(A)(IA) R. W.S 194C(5) OF THE ACT. (III) THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. AO WHO HAD MADE ADDITION OF RS. 1,44,76,916/ - TOWARDS DISALLOWANCE OF LOSS WRITTEN OFF ON ACCOUNT OF SALE OF CRUSHER. (IV) THE LD. CIT (A) HAS ERRED IN CONFIRMING T HE ORDER OF THE LD. AO WHO HAD LEVIED INTEREST U/S. 234B OF THE ACT AMOUNTING TO RS. 20,77,416/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN UNDERTAKING SUB - CONTRACT OF CIVIL WORK AND ALSO ENGAGED IN MINING (STONE CRU SHING) ACTIVITIES IN THE NAME AND STYLE OF M/S VENKATESWARA CONSTRUCTIONS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT AY ON 11/10/2010. SUBSEQUENTLY, THE CASE WAS TAKEN 3 UP FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 31/03/2013. 4. GROUND NO.1: ADDITION OF RS. 14,09,090/ - U/S. 40(A)(IA) OF THE ACT BEING DISALLOWANCE OF JACK HAMMER CHARGES. 5. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD CLAIMED RS. 14,09,090/ - AS EXPENDITURE TOWARDS JACK HAMMER CHARGES FOR WHICH THE PAYMENT WAS ALSO MADE. IT WAS ALSO OBSERVED THAT THE PAYMENT MADE TO VARIOUS PARTIES ON THIS REGARD INDIVIDUALLY EXCEEDED RS. 75,000/ - DURING THE RELEVANT FINANCIAL YEAR. THEREFORE AS PER THE PROVISIONS OF SECTION 194C(5) OF THE ACT IT WAS MANDATORY TO DEDUCT TAX AT SOURCE. SINCE THE ASSESSEE FAILED TO DEDUCT THE TAX AT SOURCE THE LD. AO INVOKED THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT AND DISALLOWED THE EXPENDITURE OF RS. 14,09,090/ - ACCORDINGLY ADDITIONS WERE MADE TO THAT EXTENT. BEFORE THE LD. CIT (A) ALSO THE ASSESSEE COULD NOT JUSTIFY FOR HIS FAILURE TO DEDUCT TAX AT SOURCE. HENCE, THE LD. CIT (A) CONFIRMED THE ADDITION. THE LD. AR SUBMITTED BEFORE US THAT THE PROVISIONS OF SECTION 194C AND 40(A)(IA) OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE BY STATING THAT THE PAYMENTS WERE MADE TO LABOURERS , H ENCE PROVISIONS OF SECTION 194C HAS NO APPLICATION . HOWEVER, THE FINDING OF THE LD. REVENUE AUTHORITIES IS THAT THE PAYMENTS WERE MADE TO INDIVIDUALS EXCEEDING THE AMOUNT OF RS. 75,000/ - DURING THE RELEVANT ASSESSMENT 4 YEAR WHICH COULD NOT BE REBUTTED WITH EVIDENCE NEITHER BY THE ASSESSEE NOR HI S REPRESENTATIVE. THEREFORE, WE DO NOT HAVE ANY OTHER OPTION BUT TO SUSTAIN THE ORDERS OF THE LD. REVENUE AUTHORITIES ON THIS COUNT. IT IS ORDERED ACCORDINGLY. 6. GROUND NO. 2 : ADDITION OF RS. 5,21,819/ - U/S. 40(A)(IA) OF THE ACT BEING DISALLOWANCE OF TRANSPORT CHARGES. 7. SIMILARLY, THE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE TOWARDS THE PAYMENT MADE BY HIM EXCEEDING THE STATUTORY LI MIT DURING THE RELEVANT FINANCIAL YEAR WITH RESPECT TO TRANSPORT CHARGES FOR RS. 5,21,819/ - . THEREFORE, THE LD. AO INVOKED THE PROVISIONS OF SECTION 40(A)((IA) OF THE ACT WHICH WAS SUSTAINED BY THE LD. CIT (A). THE LD. AR SUBMITTED BEFORE US THAT THE TRANSPOR T CHARGES WERE PAID AS AND WHEN THE GOODS WERE TRANSPORTED AND THERE WAS NO CONTRACT / AGREEMENT FOR THE SAME . IT WAS THEREFORE PLEADED THAT THE PROVISIONS OF SECTION 194C & 40(A)(IA) OF THE ACT WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE. HOWEVER, THE FINDING OF THE LD. REVENUE AUTHORITIES IS THAT THE PAYMENTS WERE MADE TO INDIVIDUALS EXCEEDING THE AMOUNT OF RS. 75,000/ - DURING THE RELEVANT ASSESSMENT YEAR FOR TRANSPORT CHARGES WHICH COULD NOT BE REBUTTED WITH EVIDENCE NEITHER BY THE ASSESSEE NOR HIS REPRESENTATIVE. THEREFORE, WE DO NOT HAVE ANY OTHER OPTION BUT TO SUSTAIN THE ORDERS OF THE LD. REVENUE AUTHORITIES ON THIS COUNT. IT IS ORDERED ACCORDINGLY. 5 8. GROUND NO. 3 : ADDITION OF RS. 1,44,76,916/ - BEING DISALLOWANCE OF LOSS INCUR RED TOWARDS SALE OF CRUSHER UNIT. 9. THE ASSESSEE HAD CLAIMED LOSS ON SALE OF CRUSHER UNIT AMOUNTING TO RS. 1,44,76,916/ - AS DEDUCTION. THE LD. AO DISALLOWED THE SAME BECAUSE THE CRUSHER UNIT IS A DEPRECIABLE BUSINESS ASSET AND ACCORDINGLY DEPRECIATION WAS ALLOWABLE & ALLOWED AT 15%. THEREFO RE, THE LD.AO OPINED THAT THE CRUSHER UNIT FALLS UNDER THE HEAD PLANT & MACHINERY AND MUST BE CLUBBED WITH BLOCK OF ASSETS. SINCE THE WRITTEN DOWN VALUE OF ASSETS IN THAT BLOCK WAS EXCEEDING RS. 1,44,76,916/ - THE LD. AO HELD THAT AS PER THE PROVISIONS OF THE ACT ., AND AS PER NEW APPENDIX - 1 OF THE RULES IT IS MANDATORY TO REDUCE THE LOSS FROM THAT BLOCK OF ASSETS . THEREFORE , THE LD. AO REJECTED THE CLAIM OF THE ASSESSEE TO WRITE OFF THE LOSS IN THE P & L ACCOUNT. ON APPEAL, THE LD. CIT (A) CON FIRMED THE ORDER OF THE L D. AO, BECAUSE THE L D. AO HAD RIGHTLY FOLLOWED THE PROVISIONS OF THE ACT. BEFORE US THE L D. AR COULD NOT CONTROVERT TO THE ACTION TAKEN BY THE LD. REVENUE AUTHORITIES WITH COGENT EXPLANATIONS OTHER THAN BY STATING THAT THE ENTIRE BUSINESS OF STONE CRUSHING WAS SOLD AND HENCE THE LOSS ON SALE OF THE BUSINESS SHOULD BE ALLOWED AS DEDUCTION DURING THE RELEVANT ASSESSMENT YEAR . THIS CLAIM OF THE ASSESSEE IS NOT TENABLE BECAUSE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF UNDERTAKING CIVIL CONTRACT AND THE STONE 6 CRUSHER IS REQUIRED TO SOURCE THE RAW MATERIALS IN HIS BUSINESS AND THEREFORE THIS ACTIVITY IS A PART AND PARCEL OF HIS OVERALL BUSINESS . THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LD. REVENUE AUTHORITIES ON THIS COUNT ALSO B ECAUSE THE LD. REVENUE AUTHORITIES HAS HELD THE ISSUE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT . 10. GROUND NO.4: LEVY OF INTEREST U/S. 234B OF THE ACT AMOUNTING TO RS. 20,77,416/ - : 11. LEVY OF INTEREST U/S. 234B OF THE ACT IS CONSEQUENTIAL IN NATURE , THEREFORE THIS GROUND RAISED BY THE ASSESSEE IS DEVOID OF MERITS. 1 2 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 15 TH JULY, 2021 . SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 15 TH JULY , 2021 OKK COPY TO: - 1) SAMA RAVINDER REDDY C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H.NO. 3 - 6 - 643, ST. NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2) INCOME TAX OFFICER, WARD - 9(4), HYDERABAD. 3) THE CIT (A) - VI, HYDERABAD. 4) THE ADDL. CIT, RANGE - 9, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE