M/s. Winner Dairy (P) Ltd., CHENNAI V. DCIT, Pondicherry

ITA 2027/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8177 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: S ELAMBHARATHI
• Keywords: Non-deduction of tax
• Section: 194C; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2027/MDS/2016 * +* / ASSESSMENT YEAR : 2012-13 M/S WINNER DAIRY (P.) LTD., SHRI S. ELAMBHARATHI & OTHERS, NEW NO.364 (OLD NO.210), LLOYDS ROAD, FLAT NO.5, GROUND FLOOR, KURUPAM COURT, GOPALAPURAM, CHENNAI - 600 034. PAN : AAACW 0573 F V. THE DEPUTY COMMISSIONER OF INCOME TAX, PONDICERRY CIRCLE, PONDICHERRY. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI S. ELAMBHARATHI, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT ' 1 3& / DATE OF HEARING : 28.09.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 28.10.2016 / 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), PUDUCHERR Y, DATED 31.03.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2 I.T.A. NO.2027/MDS/16 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF HIRE CHARGES FOR HIRING VEHICLES BY THE ASSESSEE. 3. SHRI S. ELAMBHARATHI, THE LD. COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF DISTRIBUTION OF MILK AND DAIRY PRODUCTS. THE LD. C OUNSEL FURTHER SUBMITTED THAT THE ASSESSEE IS HAVING A PROCESSING UNIT AT PUDUCHERRY. THE ASSESSEE PURCHASES RAW MILK AND PR OCESSING THE SAME IN PUDUCHERRY UNIT AND SELLING THE SAME IN POU CHES AND ALSO IN BULK. A PART OF MILK PURCHASED BY THE ASSESSEE WAS PROCESSED INTO SKIMMED MILK, BUTTER MILK, PROCESSED MILK AND CURD, ETC. IN THE COURSE OF BUSINESS ACTIVITY, THE ASSESSEE HIRED VAN FOR PROCURING THE RAW MILK FROM THE FARMERS AND ALSO HIRED VAN FOR DI STRIBUTION OF MILK TO VARIOUS DISTRIBUTION CENTRES. THE ASSESSEE PAID HIRE CHARGES FOR HIRING THE VAN FOR PROCURING MILK AND ALSO FOR DIST RIBUTION OF THE SAME. THE ASSESSEE CLAIMED THE HIRE CHARGES AS EXP ENDITURE WHILE COMPUTING THE TAXABLE INCOME. THE ASSESSING OFFICE R, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE MAINLY ON THE GROUND THAT TAX WAS NOT DEDUCTED AT THE TIME OF PAYMENT AS REQUIRED UNDER SECTION 194C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT '). ACCORDING TO THE LD. COUNSEL, SECTION 194C OF THE ACT IS APPLICA BLE ONLY IN 3 I.T.A. NO.2027/MDS/16 RESPECT OF SUB-CONTRACT AND NOT FOR HIRING OF VEHIC LES FOR THE ASSESSEES BUSINESS. THE LD. COUNSEL CLARIFIED THA T NO PART OF THE ASSESSEES WORK WAS GIVEN ON SUB-CONTRACT TO ANYONE . IT IS A CASE OF SIMPLY HIRING OF VAN / VEHICLE FOR TRANSPORTING THE MILK PROCURED AND DISTRIBUTION OF THE PROCESSED MILK. THEREFORE, THERE IS NO QUESTION OF SUB-CONTRACT COME INTO OPERATION. SINC E THERE IS NO SUB-CONTRACT OF WORK TO ANY THIRD PARTY, ACCORDING TO THE LD. COUNSEL, PROVISIONS OF SECTION 194C OF THE ACT IS NOT APPLIC ABLE AT ALL. HOWEVER, THE CIT(APPEALS) SIMPLY FOUND THAT THE PRO VISIONS OF SECTION 194C OF THE ACT IS APPLICABLE. ACCORDING T O THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN DISALLOWING TH E CLAIM OF THE ASSESSEE WITHOUT CONSIDERING ACTUAL TRANSACTION MAD E BY THE ASSESSEE. 4. REFERRING TO THE OBSERVATION MADE BY THE CIT(APP EALS) THAT THE EXPENDITURE IS NOT ALLOWABLE UNDER SECTION 37 O F THE ACT, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE AS SESSEE INCURRED EXPENDITURE FOR HIRING OF VAN FOR PROCURIN G THE MILK FROM THE FARMERS AND ALSO DISTRIBUTION OF THE PROCESSED MILK , IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS NO T FOR BUSINESS. THEREFORE, THE EXPENDITURE CLAIMED BY THE ASSESSEE IS ALLOWABLE 4 I.T.A. NO.2027/MDS/16 EXPENDITURE UNDER SECTION 37 OF THE ACT. REFERRING TO THE OBSERVATION MADE IN THE ASSESSMENT ORDER THAT THE A DDRESS AND PAN OF THE PARTIES TO WHOM THE PAYMENTS WERE MADE, ARE NOT AVAILABLE, THE LD. COUNSEL SUBMITTED THAT THE ASSES SEE IN FACT FURNISHED ENTIRE ADDRESS AND DETAILS OF THE PAYMENT BEFORE THE ASSESSING OFFICER. MAJORITY OF THE PAYMENTS WERE M ADE THROUGH BANKING CHANNEL AND THE AMOUNTS WERE CREDITED INTO RESPECTIVE BANK ACCOUNTS. THE ASSESSEE HAS FURNISHED THE STAT EMENT AND BANK ACCOUNT WHERE THE AMOUNTS WERE CREDITED. THER EFORE, THE ASSESSING OFFICER CAN VERY WELL FIND OUT WHETHER TH E PAYMENTS WERE MADE TO THE RESPECTIVE PERSONS. WHEN THE ASSESSEE HAS GIVEN BANK A/C NUMBERS AND NAMES OF BANK AND ADDRESS, IT COULD VERY WELL BE VERIFIED THROUGH BANK ACCOUNTS GIVEN BY THE ASSESSEE. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESS EE HAS NOT FURNISHED ADDRESS AND OTHER PARTICULARS OF THE PART IES TO WHOM THE PAYMENTS WERE MADE. 5. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT WITH REGARD TO SO-CALLED SUPPRESSION OF SALES TO THE EXT ENT OF ` 2,10,19,491/-, THE CIT(APPEALS) DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER AFTER CALLING FOR THE REMAND REPO RT FROM THE 5 I.T.A. NO.2027/MDS/16 ASSESSING OFFICER AND THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(APPEALS). THEREFORE, WHEN THE PURCHASE AND SALE OF MILK WERE INCREASED, THE HIRE CHARGES WERE ALSO EQUALLY INCREASED. HENCE, IT CANNOT BE SAID THAT THE EXPEN DITURE INCURRED BY THE ASSESSEE IS NOT FOR BUSINESS PURPOSE. 6. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R MADE ADDITION TOWARDS SUPPRESSED SALES TO THE EXTENT OF ` 2,10,19,491/-. THE ASSESSEE CLAIMED THAT THERE WAS INCREASE IN THE PUR CHASE AND SALE OF MILK. THE ASSESSING OFFICER FOUND THAT THE AVER AGE SALE PRICE OF THE MILK DURING THE YEAR WAS ` 40.42. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SUPPRESSED THE SALE OF MILK T O THE EXTENT OF 25% OF CONDENSED MILK WHICH WAS MIXED WITH BULK MIL K. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CALLED FOR REMAND REPORT AND ULTIMATELY THE ADDITION MADE TO THE EXTENT OF ` 2,10,19,491/- WAS DELETED. HOWEVER, IN RESPECT OF PAYMENT OF HIRE CH ARGES, THE CIT(APPEALS) CONFIRMED THE ADDITION MADE BY THE ASS ESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TA X UNDER SECTION 194C OF THE ACT. THE CIT(APPEALS) HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBU NAL IN DSM SOFT 6 I.T.A. NO.2027/MDS/16 PVT. LTD. V. ACIT IN I.T.A. NOS.1897 & 1898/MDS/201 5 DATED 13.11.2015. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSE SSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED A SUM OF ` 2,10,19,491/- TOWARDS SUPPRESSION OF SALE OF MILK. THE CIT(APPEALS), HOWEVER, DELETED T HE ADDITION MADE BY THE ASSESSING OFFICER AND THE DEPARTMENT HAS NOT FILED ANY APPEAL BEFORE THIS TRIBUNAL. 8. THE ONLY ISSUE ARISING FOR CONSIDERATION IN THE PRESENT APPEAL IS WITH REGARD TO DISALLOWANCE MADE BY THE ASSESSIN G OFFICER FOR NON-DEDUCTION OF TAX UNDER SECTION 194C OF THE ACT IN RESPECT OF HIRE CHARGES PAID FOR HIRING VAN / MOTOR VEHICLE FO R PROCURING AND SALE OF MILK. IT IS NOT IN DISPUTE THAT THE ASSESS EE HIRED VAN FOR TRANSPORTATION OF MILK PURCHASED AND TO SELL OR DIS TRIBUTE THE PROCESSED MILK. IT IS NOBODYS CASE THAT THE TRANS PORT OF MILK ITSELF WAS GIVEN TO THE VAN OWNER ON SUB-CONTRACT BASIS. IT IS A SIMPLE CASE OF HIRING OF VAN FOR THE PURPOSE OF BUSINESS O F THE ASSESSEE. THEREFORE, IT IS A CASE OF HIRING OF VEHICLE AND NO T A CASE OF SUB- CONTRACT. 7 I.T.A. NO.2027/MDS/16 9. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 194C OF THE ACT. THE PROVISIONS OF SECTION 194C OF THE ACT IS APPLICABLE ONLY IN RESPECT OF SUB-CONTRACT GIVEN TO THE THIRD PARTIES FOR CARRYING OUT THE WORK. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 1 94C OF THE ACT IS NOT APPLICABLE AT ALL. HENCE, THE ASSESSEE IS NOT REQUIRED TO DEDUCT TAX IN RESPECT OF HIRE CHARGES PAID TO VAN OWNERS. 10. THE ASSESSING OFFICER HAS ALSO DISALLOWED THE C LAIM OF THE ASSESSEE UNDER SECTION 37 OF THE ACT. WE HAVE CAR EFULLY GONE THROUGH THE PROVISIONS OF SECTION 37 OF THE ACT. S ECTION 37 OF THE ACT CLEARLY SAYS THAT WHEN THE EXPENDITURE WAS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON, SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER PR OFITS AND GAINS OF BUSINESS OR PROFESSION. IN THIS CASE, HIRING CH ARGES IS ONLY FOR THE PURPOSE OF TRANSPORTATION OF MILK PROCURED AND DIST RIBUTION OF PROCESSED MILK. THEREFORE, THE EXPENDITURE IS ONLY FOR THE PURPOSE OF BUSINESS AND NOT FOR ANYTHING ELSE. THEREFORE, THE EXPENDITURE CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED UNDER SEC TION 37 OF THE ACT. 8 I.T.A. NO.2027/MDS/16 11. THE NEXT CONTENTION OF THE REVENUE APPEARS TO B E THAT THE ASSESSEE HAS NOT FILED THE DETAILS OF PERSONS TO WH OM THE PAYMENTS WERE MADE. THE ASSESSEE HAS FURNISHED THE DETAILS OF PAYMENTS AND ADDRESS OF MOST OF THE INDIVIDUALS TO WHOM THE PAYMENTS WERE MADE. THE ASSESSEE HAS ALSO GIVEN THE BANK NAME AN D ACCOUNT NUMBERS OF THE PERSONS IN WHICH THE HIRE CHARGES WE RE CREDITED. ONLY IN RESPECT OF THE PAYMENT MADE TO SHRI V. MAHA LINGAM AND SHRI ARULRAJ, THE BANK ACCOUNT WAS NOT GIVEN. HOWE VER, THE ADDRESS WAS VERY MUCH AVAILABLE. IN RESPECT OF OTHER PERSO NS, THE ASSESSEE HAS GIVEN NAME OF THE BANK, A/C NOS. TO WHICH THE A MOUNTS WERE CREDITED. THEREFORE, THE ASSESSING OFFICER CAN VER Y WELL FIND OUT THE ACTUAL PAYMENT MADE BY THE ASSESSEE TO THE VAN OWNE RS. THE ASSESSING OFFICER HAS NOT TAKEN ANY PAIN TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE. HENCE, IT CANNOT BE SAI D THAT THE ASSESSEE HAS NOT FURNISHED ANY PARTICULARS WITH REG ARD TO WHOM THE MONEY WAS PAID. WHEN THE ASSESSEE HAS FURNISHED RE LEVANT DETAILS ALONG WITH BANK ACCOUNT TO WHICH THE AMOUNTS WERE C REDITED, BEFORE THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS N OT JUSTIFIED. IT IS FOR THE ASSESSING OFFICER TO EXAMINE THE DETAILS FU RNISHED BY THE ASSESSEE AND FIND OUT THE GENUINENESS OR OTHERWISE OF THE CLAIM. 9 I.T.A. NO.2027/MDS/16 REMANDING BACK THE MATTER AT THIS STAGE TO THE FILE OF THE ASSESSING OFFICER WOULD AMOUNT TO GIVING SECOND INNINGS TO TH E REVENUE TO FILL UP THE LACUNA. THE MATTER WOULD STAND IN DIFFERENT FOOTING, IF THE ASSESSEE HAS NOT FILED THE DETAILS. IN VIEW OF TH E ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUT HORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS PAYMENT OF HIRE CHARGES IS DELETED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 28 TH OCTOBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 28 TH OCTOBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A) 4. ' :3 /CIT, 5. 8; /3 /DR 6. * < /GF.