A & A International Trading Pvt. Ltd., CHENNAI V. DCIT Corporate Circle 1(1), CHENNAI

ITA 2010/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9250 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 22-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: D ANAND
• Keywords: Set aside
• Section: 40A(3); 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2010/CHNY/2018 & '& / ASSESSMENT YEAR : 2014-15 M/S A&A INTERNATIONAL TRADING PVT. LTD., 6-5-140, BLOCK 5, KAVIARASU KANNADASAN NAGAR, KODUNGAIYUR, CHENNAI - 600 118. PAN : AAICA 0039 J V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI D. ANAND, ADVOCATE +,)* - . / RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL.CIT / - 0# / DATE OF HEARING : 28.02.2019 12' - 0# / DATE OF PRONOUNCEMENT : 01.04.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, CHENNA I, DATED 26.03.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2 I.T.A. NO.2010/CHNY/18 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF 24,04,100/- UNDER SECTION 40(A)(IA) OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE RECIPIENT OF THE AMOUNT HAS INCLUDED THE A MOUNT RECEIVED FROM THE ASSESSEE IN THE TOTAL INCOME AND PAID THE TAXES. THEREFORE, ACCORDING TO THE LD. COUNSEL, THERE CANN OT BE ANY DISALLOWANCE IN THE HANDS OF THE ASSESSEE. 4. WE HEARD SHRI R. CLEMENT RAMESH KUMAR, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. WHEN THE RECIPIE NT OF THE AMOUNT HAS PAID TAXES, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. HOWEVER, THE FACT WHETHER THE RECIPIENT HAS P AID THE TAXES HAS TO BE VERIFIED. ACCORDINGLY, BOTH THE ORDERS OF TH E AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE MADE UN DER SECTION 40(A)(IA) OF THE ACT IS REMITTED BACK TO THE FILE O F THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE TH E MATTER AND FIND OUT WHETHER THE AMOUNT RECEIVED FROM THE ASSESSEE W AS INCLUDED IN THE TOTAL INCOME OF THE RECIPIENT AND THEREAFTER DE CIDE THE ISSUE 3 I.T.A. NO.2010/CHNY/18 AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASO NABLE OPPORTUNITY TO THE ASSESSEE. 5. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF TH E ACT. 6. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COA L. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE PAID LABOUR CHARGES T HROUGH AGENT / MAISTRY TO THE LABOURERS WHO WERE ENGAGED IN SCREEN ING OF THE COAL. ACCORDING TO THE LD. COUNSEL, THE COAL HAS TO BE SE GREGATED DEPENDING UPON THE SIZE WHICH IS KNOWN AS SCREENING . THE ASSESSEE HAS TO NECESSARILY EMPLOY THE LABOURERS FO R SCREENING THE COAL. THE ASSESSEE HAS PAID THE AMOUNT THROUGH AGE NT. THE LD.COUNSEL FURTHER CLARIFIED THAT THE PAYMENT TO EA CH LABOURER DOES NOT EXCEED 20,000/-. SINCE THE PAYMENT WAS MADE THROUGH AGENT , ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY D ISALLOWANCE UNDER RULE 6DD(K) OF THE INCOME-TAX RULES, 1962. P RODUCING A COPY OF VOUCHER, THE LD.COUNSEL SUBMITTED THAT THE AGENT HAS RECEIVED THE MONEY ON BEHALF OF THE LABOURERS AND I T WAS DISTRIBUTED AMONG THE LABOURERS. ACCORDING TO THE LD. COUNSEL, THE ASSESSING 4 I.T.A. NO.2010/CHNY/18 OFFICER HAS NOT DISPUTED THE PAYMENT, THEREFORE, TH ERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. 7. ON THE CONTRARY, SHRI R. CLEMENT RAMESH KUMAR, T HE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE PAY MENT ON A PARTICULAR DAY TO A PARTICULAR PERSON EXCEEDED 20,000/-. THE LD. D.R. FURTHER CLARIFIED THAT THE PAYMENT WAS MADE IN CASH. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE THE C IT(APPEALS). THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT FOR SEGREGATING / CLASSIFICATION OF COA L WHICH IS KNOWN AS SCREENING OF COAL IN THE MARKET, ENGAGED LABOURERS. THE SALARY / WAGES TO THE LABOURERS HAS TO BE PAID ONLY IN CASH. IT IS COMMON KNOWLEDGE THAT THE LABOURERS WOULD BE ENGAGED THROU GH AGENT / MAISTRY IN THE PROCESS OF SCREENING. THE ASSESSEE HAD TO MAKE PAYMENT OF WAGES THROUGH AGENT / MAISTRY. THE FACT THAT THE ASSESSEE ENGAGED LABOURERS FOR SCREENING THE COAL I S NOT IN DISPUTE. THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER ON 5 I.T.A. NO.2010/CHNY/18 THE GROUND THE ASSESSEE HAS NOT PRODUCED ANY EVIDEN CE IN THIS REGARD. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE VOUCHER FOR PAYMENT OF AMOUNT TO THE LABOURERS THRO UGH AGENT WAS PRODUCED BY THE ASSESSEE AND THE ASSESSING OFFICER MADE IT AS PART OF ORDER BY SCANNING THE SAME. THEREFORE, THE CIT(APPEALS) IS NOT CORRECT IN SAYING THAT THE ASSESSEE HAS NOT PRO DUCED ANY EVIDENCE TO SHOW THAT THE PAYMENT WAS MADE TO THE L ABOURERS. 9. NO DOUBT, THE PAYMENT MADE TO THE AGENT WAS EXCE EDED 20,000/- IN A DAY. HOWEVER, THE INDIVIDUAL LABOURE R HAS NOT RECEIVED ANY PAYMENT MORE THAN 20,000/-. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF RULE 6DD(K) OF THE INCOME-TAX RULES, 1962, EVEN THOUGH THE PAYM ENT WAS MADE EXCEEDING 20,000/- IN A DAY TO THE AGENT / MAISTRY OF THE LAB OURERS, THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 40A( 3) OF THE ACT. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD THE O RDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER WITH REGARD TO PAYMENT MADE TO THE LABOURERS IS DEL ETED. 6 I.T.A. NO.2010/CHNY/18 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 1 ST APRIL, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 1 ST APRIL, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-1, CHENNAI 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.