D.C.I.T Cir - 52,kolkata., Kolkata V. M/s Savourites, Kolkata

ITA 202/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99991 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2013
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Assessee Lawyers: N O N E
• Keywords: Additional evidence
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO. 202/KOL/2013 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. SAVOUR ITES CIRCLE-52, KOLKATA. (PAN: AASFS6258G) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 29.10.2015 DATE OF PRONOUNCEMENT: 05.11.2015 FOR THE APPELLANT: SHRI S. S. ALAM, JCIT, SR. DR FOR THE RESPONDENT: N O N E ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XXXIII, KOLKATA IN APPEAL NO.299/CIT(A)-XXXIII/AC.CIRCLE-52/09-10 DATE D 23.11.2012. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-52, KOLKATA U/S. 143(3) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007- 08 VIDE HIS ORDER DATED 29.12.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE MADE BY AO ON ACCOUNT OF CLAIM OF EXPE NSES OF CARRIAGE OUTWARD EXPENSES AND TRANSPORTATION AND SERVICE CHARGES FOR NON-DEDU CTION OF TDS U/S. 194C OF THE ACT THEREBY INVOKING THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT. REVENUE HAS RAISED THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE IN VIOLAT ION OF RULE 46A OF THE I. T. RULES, 1962 WITHOUT GIVING OPPORTUNITY TO THE AO. FOR THIS, RE VENUE HAS RAISED FOLLOWING THREE GROUNDS: 1) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DELETING THE DISALLOWANCES MADE U/S 40(A)(IA) OF RS.7,32,679/- I N RESPECT OF CARRIAGE OUTWARDS AND RS.17, 16,256/- IN RESPECT OF TRANSPORTATION AND SE RVICE CHARGES. 2) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN RELYING UPON THE DECISION OF THE SPECIAL BENCH, ITAT, VISAKHAPAT NAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT, 136 ITO 23(VIZ) WITHOUT APPREC IATING THAT THE ANDHRA PRADESH HIGH COURT HAD SUSPENDED THE OPERATION OF THE SAID DECIS ION AS THE SAME DEFEATED THE VERY PURPOSE OF INTRODUCING SECTION 40(A)(IA) IN THE INC OME TAX ACT, 1961. 3) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) GROSSLY ERRED IN ADMITTING FRESH EVIDENCE IN VIOLATION OF RULE 46A W ITHOUT GIVING AN OPPORTUNITY TO THE A.O. TO REBUT THE CLAIMS OF THE ASSESSEE THAT IT HAD NO CONTRACT WITH THE TRANSPORT OPERATORS AND THAT THE PAYMENTS MADE BY IT WERE BELOW THE MONETAR Y LIMIT FOR MAKING TDS. 2 ITA NO.202/K/2013 M/S. SAVOURITES AY 2007-08 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS C LAIMED EXPENSES OF CARRIAGE OUTWARD CHARGES OF RS.7,32,679/- AND TRANSPORTATION AND SER VICE CHARGES OF RS.17,16,256/-. THE AO OBSERVED FROM THE P&L ACCOUNT THAT THE ASSESSEE HAS CLAIMED THESE EXPENSES BUT NOT DEDUCTED ANY TDS U/S. 194C OF THE ACT, ACCORDINGLY, INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, HE MADE DISALLOWANCE. AGGRIE VED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO FIRSTLY, THE CARRIAGE OUTWARD CHARGES WE RE ALLOWED FOR THE REASON THAT THESE ARE NOT HIRING CHARGES BUT PURCHASE OF DIESEL, ENGI NE OIL ETC. FOR HIRING VEHICLE FOR AN AMOUNT OF RS.7,32,679/-. SECONDLY, IN RESPECT TO T RANSPORTATION AND SERVICE CHARGES OF RS.17,16,256/- HE OBSERVED THAT THERE IS NO CONTRA CTUAL RELATIONSHIP EXISTED IN RESPECT OF CARRIAGE OUTWARD CHARGES AND TRANSPORTATION AND SER VICE CHARGES. THE CIT(A) ALSO RELIED ON THE SPECIAL BENCH OF ITAT, VISAKHAPATNA BENCH I N THE CASE OF MERILYN SHIPPING & TRANSPORT LTD. VS. ACIT, ITA NO. 477/VIZAG/2008 AND HELD THAT ONLY THE REMAINING OUTSTANDING EXPENSES AT THE END OF THE YEAR CAN BE BROUGHT UNDER THE PURVIEW OF SECTION 40(A)(IA) OF THE ACT AND ACCORDINGLY, HE ALSO DELET ED THE DISALLOWANCE IN RESPECT TO TRANSPORTATION AND SERVICE CHARGES OF RS.17,16,256/ -. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CLAIM OF CARRIAGE OUTWARD CHARGES IS AS REGARDS TO EXPENSES MADE FOR PURCHASE OF DIESEL, ENGINE OIL ETC. FOR THE HIRED V EHICLES AND NOT HIRE CHARGES. WE FIND THAT THE CIT(A) HAS GONE THROUGH THE VOUCHERS WHICH WERE PRODUCED BEFORE THE AO ALSO AND IN TERM OF THE FACT THAT THESE ARE PURCHASE OF DIESEL AND ENGINE OIL ETC. AND OTHER REPAIRS THIS DOES NOT COME WITHIN THE PURVIEW OF SECTION 194C OF THE ACT AND ACCORDINGLY, HE DELETED THE ADDITION. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS HEREBY CONFIRMED. THIS ISSUE OF REVENUES APPEAL IS DISMI SSED. 5. IN RESPECT TO TRANSPORTATION AND SERVICE CHARGES OF RS.17,16,256/-, WE FIND THAT THE FINDING OF CIT(A) THAT THERE IS NO CONTRACT AND HEN CE, ASSESSEE IS NOT COVERED BY THE PROVISION OF SECTION 194C OF THE ACT. WE ARE NOT I N AGREEMENT WITH THE FINDING OF CIT(A) BECAUSE THE ISSUE STANDS COVERED IN FAVOUR OF REVEN UE AND AGAINST ASSESSEE BY THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. KAMAL MUKJERJEE & CO. (SHIPPING) P. LTD., ITA NO. 199/KOL/2010 WHEREIN IT HAS BEEN HELD AS UNDER: ( FROM HEAD NOTES) . UNDOUBTEDLY, THESE DECISIONS DO INDICATE THAT THERE IS A WORKMAN EMPLOYER RELATIONSHIP BETWEEN THE DOCK WORK ERS AND THE STEVEDORES LIKE ASSESSEE WHEN THEY EMPLOY THOSE WOR KERS, BUT BE THAT 3 ITA NO.202/K/2013 M/S. SAVOURITES AY 2007-08 AS IT MAY, THE FACT REMAINS THAT THE ASSESSEE HAS M ADE PAYMENTS TO THE CDLB FOR SUPPLY OF LABOUR, EVEN WHEN THIS LABOU R MAY BE TREATED AS EMPLOYED BY THE ASSESSEE FOR ALL PRACTICAL PURPO SES, THE PROVISIONS OF SECTION 194C ARE CLEARLY ATTRACTED. I N SUCH A SITUATION, I.E. WHEN LABOUR HIRED BY THE ASSESSEE THROUGH CDLB IS CONSIDERED TO BE IN ASSESSEES EMPLOYMENT, THE PAYMENTS MADE T O CDLB CANNOT BE TREATED AS PAYMENTS FOR ANY WORK, BUT NEVERTHELE SS THESE PAYMENTS COULD STILL BE COVERED BY THE PROVISIONS O F SECTION 194C BECAUSE THESE ARE PAYMENTS MADE FOR SUPPLY OF LABOU R WHICH ARE SPECIFICALLY COVERED BY SECTION 194C(1). CDLB IS AN AGENT OF THE STEVEDORES LIKE THE ASSESSEE IN THE SENSE THAT THE LABOUR IS RECRUITED BY THE ASSESSEE THROUGH CDLB, BUT WHEN THIS FACT DO ES NOT AFFECT THE NATURE OF PAYMENT BY THE ASSESSEE TO THE CDLB WHICH IS ADMITTEDLY IN THE NATURE OF PAYMENT FOR SUPPLY OF LABOUR. THE REASONING ADOPTED BY THE COMMISSIONER (APPEALS), THOUGH SOMEWHAT IMPR ESSIVE AT FIRST GLANCE, IS FALLACIOUS. THERE IS NO CAUSE AND EFFECT RELATIONSHIP BETWEEN WORKERS ASSIGNED BY THE CDLB HAVING EMPLOYE R WORKMAN RELATIONSHIP WITH THE ASSESSEE, AND THE PAYMENTS BE ING MADE BY THE ASSESSEE TO CDLB BEING NOT IN THE NATURE OF PAYMEN T FOR SUPPLY OF LABOUR. 6. FURTHER, THE CIT(A) HAS RELIED ON THE DECISION O F SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD., SUPR A. WE FIND THAT THIS SPECIAL BENCH DECISION OF TRIBUNAL IS REVERSED BY JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. CRESCENT EXPORTS SYNDICATE (2013) 216 TAXMAN 258 (CAL) AND H ELD THE SAME TO BE APPLICABLE TO ALL THE PAYMENTS WHETHER PAID OR PAYABLE. ONCE THIS IS THE POSITION, THIS ISSUE IS AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE. HENCE, WE REVER SE THE ORDER OF CIT(A) ON THIS ASPECT OF TRANSPORTATION AND SERVICE CHARGES AMOUNTING TO RS.17,16,256/-. THIS ISSUE OF REVENUES APPEAL IS ALLOWED. 7. HOWEVER, AT THE TIME OF HEARING IT HAS BEEN POIN TED OUT TO LD. SR. DR THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO EXPLAIN WHETHER THE PAYMENTS FALL UNDER THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AS B ROUGHT OUT BY FINANCE ACT, 2012 WHICH IS HELD TO BE RETROSPECTIVE BY HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD., ITA NOS. 160 & 161/KOL/2015 . IN VIEW OF THE ABOVE, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 8. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.11.2 015 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05TH NOVEMBER, 2015 JD. SR. P.S 4 ITA NO.202/K/2013 M/S. SAVOURITES AY 2007-08 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-52, KOLKATA. 2 RESPONDENT M/S. SAVOURITES, 249A, JODHPUR PARK, K OLKATA-700068 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .