Sh. Hatkeshwara Cargo Movers, Pune V. ITO,Wd.-3(2), Pune

ITA 195/PUN/2010

• Counselvise Citation: 19524514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C H NANIWADEKAR SHRI S K SINGH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 195/PN/2010 (ASSTT. YEAR: 2006-07) SHREE HATKESHWARA CARGO MOVERS , ... APPELLANT OFFICE NO.8, WONDER CITY, KATRAJ BY PASS RD, KATRAJ, PUNE 411046 PAN : AATFS8504N V. INCOME TAX OFFICER, ... RESPONDENT WARD 3(2), PUNE APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : SHRI. S.K. SINGH DATE OF HEARING :26.9.11 DATE OF PRONOUNCEMENT: 18.11.11 ORDER PER I.C. SUDHIR, JM THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS ERR ED IN CONFIRMING DISALLOWANCE OF RS. 4,12,46,683/- U/S. 40(A)(IA) BEING TAX PAID TO TRUCK OWNERS. 2. IN SUPPORT OF THE GROUNDS, THE LD. A.R. SUBMITTE D THAT THE LD CIT(A) HAS ERRED IN COMING TO A CONCLUSION THAT THE TRUCK OWNE RS TO WHOM THE CHARGES ARE PAID ARE SUB-CONTRACTORS OF THE ASSESSEE. HE FURTHER ER RED IN NOT RESTRICTING THE DISALLOWANCE U/S. 40(A)(IA) TO NET AMOUNT PAYABLE TO TRUCK OWNERS AND NOT ON GROSS AMOUNT AS HAS BEEN MADE BY THE A.O. THE LD. A.R. A LSO POINTED OUT THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISI ON OF THE TRIBUNAL IN CASE OF ASSESSEE ITSELF FOR THE A.Y. 2005-06 IN ITA NO. 89/ PN/2009, ORDER DATED 31 ST JANUARY 2011, COPY SUPPLIED. THE LD. A.R. ALSO CITED A DEC ISION OF PUNE BENCH OF THE TRIBUNAL ON THE ISSUE IN THE CASE OF M/S. SUPER HAR YANA ROADWAYS VS. ITO, ITA NO. 193/PN/2009 (A.Y. 2005-06), ORDER DATED 7 TH JANUARY 2011, COPY SUPPLIED. ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 2 3. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE AUTHORITIES BELOW. 4. THE RELEVANT FACTS ARE THAT THE A.O. MADE ADDIT ION OF RS. 4,12,46,683/- U/S. 40(A)(IA) OF THE ACT (AS AMENDED BY FINANCE ACT 200 8 RETROSPECTIVELY, W.E.F. A.Y. 2005-06) IN RESPECT OF TRANSPORT CHARGES PAID TO TH E TRUCK OWNERS. THE A.O. OBSERVED THAT THE TRUCK OWNERS ENGAGED BY THE ASSES SEE WERE SUB-CONTRACTORS WITHIN THE MEANING OF SECTION 194C (2) OF THE I.T. ACT AND THE ENTIRE TDS OF RS. 4,72,851/- WAS MADE DURING THE MONTH OF MARCH 2006 AND THE ASSESSEE DID NOT DEDUCT ANY TAX FROM THE PAYMENTS MADE UPTO FEBRUAR Y 2006. THE A.O HAS POINTED OUT THAT, ON THE OTHER HAND, THE ASSESSEE W AS REGULARLY CREDITING THE TRANSPORT CHARGES TO THESE SUB-CONTRACTORS ACCOUNT S ON MONTHLY BASIS. THE A.O WHILE REFERRING THE PROVISION OF SECTION 194(2) HAS STATED THAT TDS WAS TO BE MADE AT THE TIME OF CREDITING OF THE AMOUNT TO THE ACCOU NT OF THE SUB-CONTRACTORS OR AT THE TIME OF PAYMENT WHICHEVER IS EARLIER. THE A.O. BIFURCATED THE PAYMENT CREDITED TO THE SUB-CONTRACTORS ACCOUNTS UPTO FEBRUARY 2006 AND THE PAYMENT CREDITED TO THESE ACCOUNTS DURING THE MONTH OF MARCH 2006 AS UN DER : I. THE AMOUNT OF TRANSPORT CHARGES PAID UPTO FEBRUARY 2006 RS. 4,12,46,683/- 2. AMOUNT OF TRANSPORT CHARGES PAID RS.45,54,970/- DURING MARCH 2006 SINCE ON THE PAYMENT OF RS. 45,54,970/- WAS MADE DU RING MARCH 2006, TDS WAS PAID DURING MARCH 2006 AND PAID INTO GOVERNMENT A/ C. BY DUE DATE OF FILING OF RETURN. THE A.O. ALLOWED DEDUCTION FOR THIS AMOUNT WHEREAS HE DISALLOWED THE CLAIMED DEDUCTION IN RESPECT OF RS.4,12,46,683/-. 5. BEFORE THE LD CIT(A), THE ASSESSEE HAS REITERATE D THE CONTENTION THAT THE PARTIES FROM WHOM THE WORK OF TRANSPORTATION WAS GO T CARRIED OUT BY UTILIZING THEIR ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 3 TRUCKS ETC., SHOULD NOT BE TREATED AS SUB-CONTRACTO R WITHIN THE MEANING OF SECTION 194C OF THE ACT AND IT WAS FURTHER CONTENDED THAT S INCE WHOLE OF THE TDS WAS MADE IN MARCH 2006 AND PAID BY THE DUE DATE OF FILING OF THE RETURN, PROVISIONS OF SECTION 40(A)(IA) MAY NOT BE MADE APPLICABLE. IT WAS ALSO CONTENDED THAT THERE WAS DELAY IN DEPOSIT OF TDS, THERE WAS ALSO A LIABILITY TO P AY INTEREST U/S. 201(1A) AND THEREFORE, IT SHOULD BE INTERPRETED THAT AS PER PRO VISION OF SECTION 40(A(IA), MONTH OF ACTUAL DEDUCTION OF TAX SHOULD BE TAKEN INTO CON SIDERATION AND NOT THE MONTH DURING WHICH SUCH TAX WAS DEDUCTIBLE. THE LD CIT(A ) REFERRING THE DECISION TAKEN BY THE FIRST APPELLATE AUTHORITY ON AN IDENTICAL IS SUE IN THE A.Y. 2005-06 HAS HELD THAT PAYMENT MADE TO THE TRANSPORT SUB-CONTRACTORS IN THE ASSESSEES CASE WAS LIABLE FOR TDS U/S. 194C(2) OF THE ACT, THEREFORE, PROVISIONS OF SECTION 40(A)(IA) WERE ATTRACTED. HE ALSO MADE OBSERVATION THAT IN A CCORDANCE WITH THE AMENDED PROVISION OF SECTION 40(A)(IA), IF TDS WAS LIABLE T O MAKE AND WAS SO MADE DURING THE MONTH OF MARCH 2006 IN THE A.Y, THEN IF THE PAY MENT OF TDS INTO THE GOVERNMENT A/C. WAS MADE BEFORE THE DUE DATE OF FIL ING OF RETURN U/S. 139(1) OF THE ACT, THERE WILL NOT BE ANY DISALLOWANCE. HOWEVER, IN CASE THE TDS WAS LIABLE TO BE MADE BEFORE MARCH 2006, THE PAYMENT OF THIS TDS INT O THE GOVERNMENT A/C. SHOULD HAVE BEEN MADE BEFORE 31 ST MARCH 2006 TO AVAIL THE BENEFIT OF THIS AMENDMENT. THE LD CIT(A) HAS ACCORDINGLY HELD THAT FROM TRANSP ORT CHARGES PAID UPTO FEBRUARY 2006 AMOUNTING TO RS.4,12,46,683/- TAX WAS NOT DEDU CTED AT THE TIME OF CREDITING TO THE RESPECTIVE ACCOUNTS BUT WAS DEDUCTED ONLY IN THE MONTH OF MARCH 2006, THEREFORE, THE ASSESSEE HAS FAILED TO COMPLY WITH T HE PROVISIONS OF SECTION 40(A)(IA) AND THE A.O HAS CORRECTLY DISALLOWED THIS AMOUNT U/ S. 40(A)(IA) OF THE ACT. THIS ACTION OF THE AUTHORITIES BELOW HAS BEEN QUESTIONED BY THE ASSESSEE BEFORE US. 6. HAVING GONE THROUGH THE DECISION OF PUNE BENCH O F THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF FOR THE A.Y. 2005-06 (SUPRA) REL IED UPON BY THE LD. A.R., WE FIND THAT THE FINDING ON THE ISSUE HAS BEEN GIVEN IN PAR A NO. 4 & 5 OF THE ORDER OF THE TRIBUNAL, WHICH ARE BEING REPRODUCED HEREUNDER FOR READY REFERENCE : ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 4 4. IN THIS MANNER, THE COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWED PARTIAL RELIEF AS PER ITEM (C) ABOVE, WHICH IS THE SUBJECT MATTER OF DISPUTE BY THE REVENUE BEFORE US. NOTABLY, THE IMPUGNED RELIEF HAS BEEN ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THE GROUND THAT AS PER THE FINANCE ACT, 2008, PROVISIONS OF SECTION 40(A)(IA) WERE AME NDED RETROSPECTIVELY FROM 1.6.2005 TO PROVIDE THAT WHERE TDS IS DEDUCTED ON T HE LAST MONTH OF THE PERIOD AND THE SAME IS DEPOSITED BEFORE THE END OF THE TIME ALLOWED FOR FILING OF THE RETURN UNDER SECTION 139(1) OF THE ACT, SUCH EXPENDITURE COULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. AGAI NST THE AFORESAID, REVENUE IS IN APPEAL BEFORE US. 5. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT THE AFORESAID PROPOSITION IS IN LINE WITH THE FOLLOWING DECISIONS OF THE TRIBUNAL: 1 M/S SUPER HARYANA ROADWAYS, NASHIK ITA NO 193/PN /09 VIDE ORDER DATED 7.1.2011, 2 BAPUSAHEB NANASAHEB DHUMAL, MUMBAI ITA NO 6628/MU M/09 VIDE ORDER DATED 25.6.2010, 3 BANSAL PARIVAHAN (I) P. LTD. MUMBAI ITA NO 2355/ MUM/10 VIDE ORDER DATED22.9.2010 IN THE CASE OF M/S BANSAL PARIVAHAN (I) P LTD., TH E TRIBUNAL HAS OBSERVED AS UNDER: THE PROVISIONS OF SECTION 40(A)(IA) AS STOOD PRIOR TO THE AMENDMENTS MADE BY THE FINANCE ACT 2010 THUS WERE RESULTING INTO UNINT ENDED CONSEQUENCES AND CAUSING GRAVE AND GENUINE HARDSHIPS TO THE ASSESSEE S WHO HAD SUBSTANTIALLY COMPLIED WITH THE RELEVANT TDS PROVISIONS BY DEDUCT ING THE TAX AT SOURCE AND BY PAYING THE SAME TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE OF FILING OF THEIR RETURNS U/S 139(1). IN ORDER TO REMEDY THI S POSITION AND TO REMOVE THE HARDSHIPS WHICH WAS BEING CAUSED TO THE ASSESSEES B ELONGING TO SUCH CATEGORY, AMENDMENTS HAVE BEEN MADE IN THE PROVISIO NS OF SECTION 40(A)(IA) BY THE FINANCE ACT 2010. THE SAID AMENDMENTS, IN OUR O PINION, THUS ARE CLEARLY REMEDIAL/CURATIVE IN NATURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. (SUPRA) AND ALOM EXTRUSIONS LTD (SUPRA) AND THE SAME THEREFORE WOULD APPLY RETROSPECTIVELY W.E.F. 1 ST APRIL, 2005. IN THE CASE OF R.B. JODHA MAL KUTHIALA 82 ITR 570, IT WAS HELD BY THE H ONBLE SUPREME COURT THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONS EQUENCES AND TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED AS RETRO SPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SEC TION AS A WHOLE. IN THE PRESENT CASE, THE AMOUNT OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DURING THE PERIOD 1.4.2005 TO 28.2.2006 WAS PAID BY THE ASSESSEE IN THE MONTHS OF JULY AND AUGUST 2006 I.E. WELL BEFORE THE DUE DA TE OF FILING OF ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THIS BEING THE UNDISPUTED POSITION, WE HOLD THAT THE DISALLOWANCE MADE BY THE A.O AND CONF IRMED BY THE LEARNED CIT(A) ON ACCOUNT OF FREIGHT CHARGES BY INVOKING TH E PROVISIONS OF SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENTS MADE IN THE SAID PROVISIONS BY THE FINANCE ACT, 2010 WHICH, BEING REMEDIAL/CURA TIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL HAS GIV EN RELIEF ON AN IDENTICAL ISSUE IN THE CASE OF ASSESSEE FOR A.Y. 2005-06 FOLLOWING THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF BANSAL PARIVAHAN (I) P. LTD . (SUPRA) WHEREIN ALSO THE AMOUNT ITA . NO 715/PN/2010 SHRI SATISH K BORA PAGE OF 5 5 OF TAX DEDUCTED AT SOURCE FROM THE FREIGHT CHARGES DURING THE PERIOD 1.4.2005 TO 28.2.2006 WAS PAID BY THE ASSESSEE IN THE MONTHS OF JULY AND AUGUST 2006 I.E. WELL BEFORE THE DUE DATE OF FILING OF ITS RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION. THE TRIBUNAL HELD THAT THE DISALLOWANCE MADE BY THE A.O AND CONFIRMED BY THE LD CIT(A) ON ACCOUNT OF FREIGHT CHARGES BY INVOKING PR OVISION OF SECTION 40A(IA) IS NOT SUSTAINABLE AS PER THE AMENDMENT MADE IN THE SAID P ROVISION BY THE FINANCE ACT 2010 WHICH BEING REMEDIAL/CURATIVE IN NATURE, HAVE RETROSPECTIVE APPLICATION. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, IN THE C ASE OF ASSESSEE ITSELF FOR A.Y. 2005-06, ON AN IDENTICAL ISSUE, WE WHILE SETTING A SIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD, DIRECT THE A.O TO DELETE THE DISALLOWANCE OF RS. 4,12,46,683/- MADE U/S. 40(A)(IA) BEING CHARGES PAID TO TRUCK OWN ERS. THE ISSUE IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS ARE ALL OWED. 7. IN RESULT, APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18TH NOVEMBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 18TH NOVEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -II, PUNE 4. THE CIT(A)-II, PUNE 4. THE D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE