ITO 13(1)(4), MUMBAI V. BHIWANDIWALA & SONS, MUMBAI

ITA 2131/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8163 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B,MUM BAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2131/MUM/2013 (ASSESSMENT YEAR- 2009-10) ITO-13(1)(4), ROOM NO. 471, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI-400020. VS. M/S BHIWANDIWALA & SONS 1, JOSHI BUILDING, 1 ST NAGDEVI STREET, MANDVI, MUMBAI 400003. PAN: AAAFB0786E (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T.A. KHAN (DR) ASSESSEE BY : NONE DATE OF HEARING : 12.12.2017 DATE OF PRONOUNCEMENT : 12 .12.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE INC OME TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX [LD. CIT(A)] (APPEALS)-24, MUMBAI DATED 20.12.2012 FOR ASSESSMENT YEAR (AY) 20 09-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 65 ,99,154/- MADE U/S. 40(A)(IA) OF THE I.T. ACT, 1961 ON ACCOUNT OF NON-D EDUCTION OF TDS U/S. 194C OF THE I.T. ACT, 1961 FROM THE HIRE CHARGES PAID TO TANKER OWNERS. (II) WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE PAYMENTS MADE TO TANKER OWNERS WERE IN THE NATURE O F SUB-CONTRACTUAL PAYMENTS WITHIN THE MEANING OF SECTION 194C(2) OF T HE I.T. ACT, 1961 AS EXPLAINED IN 163 ITR 702(H.P). 2 ITA NO.2131/M/2013 M/S BHIWANDIWALA & SONS 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON TH E ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORT COMMISSION AGENT, DELIVERING THE SUPPLIES OF INDUSTRIAL FUELS AND CHEMICALS, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 30.09.2009 DECLARING TOTAL INCOME OF RS. 8,01,003/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER BESIDES THE OTHER ADDITION DISALLOWED RS. 65, 99,154/- UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX ON PAY MENT OF TANKER HIRE CHARGES. ON APPEAL BEFORE THE LD. CIT(A), THE ENTIRE DISALLO WANCE WAS DELETED. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE SERV ICE OF NOTICE THROUGH REGISTERED AD ON SEVERAL OCCASIONS. THE PERUSAL OF RECORD REVEALS THAT LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE APPE ARED ON 18.06.2014 AND THEREAFTER NONE HAS APPEARED ON BEHALF OF ASSESSEE. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER (AO) AND A RGUED THAT DURING THE RELEVANT PERIOD, THE ASSESSEE HAS PAID TANKER HIRE CHARGES OF RS. 65,99,154/- WITHOUT MAKING TDS ON SUCH CHARGES. THE AO DISALLOW ED THE ENTIRE AMOUNT OF RS. 65,99,154/- PAID TO VARIOUS CONTRACTOR. AS THE PAYMENT WAS MADE TO THE CONTRACTOR AND THE ASSESSEE WAS LIABLE TO DEDUCT TA X AT SOURCE UNDER SECTION 194C 3 ITA NO.2131/M/2013 M/S BHIWANDIWALA & SONS OF THE ACT. THE LD. DR FOR THE REVENUE PRAYED TO SE T-ASIDE THE ORDER OF LD. CIT(A) AND TO RESTORE THE ORDER OF AO. 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE RECORD CAREFULLY. THE AO DISALLOWED TANKER HIRE CHARGES OF RS. 66,99,154/- HOLDING THAT IN FULFILMENT OF ORDER OF GOODS CARRIE S, THE ASSESSEE ENGAGED OUTSIDE TANKER. THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE FROM PAYMENT MADE TO SUB-CONTRACTOR. THE ASSESSEE FAILED TO DISC HARGE ITS OBLIGATION UNDER SECTION 194C AND THEREFORE, HIT BY THE PROVISION OF SECTION 40(A)(IA) AND DISALLOWED THE ENTIRE AMOUNT PAID TO VARIOUS CONTRA CTOR. BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT SECTION 40(A)(IA) IS AP PLICABLE WHEN EXPENSES ARE INCURRED ON ACCOUNT OF INTEREST, COMMISSION, BROKER AGE, RENT AND FEES FOR TECHNICAL AND PROFESSIONAL ETC. THE PROVISION IS NO T APPLICABLE EITHER ON PURCHASE AND SALE COMPONENT OF THE BUSINESS OF THE ASSESSEE DURING THE PERIOD, THE ASSESSEE ENGAGED TANKER FROM OUTSIDE TO AFFECT THE DELIVERY OF THE FUELS AT THE DESTINATION OF ITS CLIENT. THERE IS NO WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE TANKER OWNER. THE ASSESSEE RELIED UPON THE DECISION OF VIS HAKHAPATNAM TRIBUNAL IN CASE OF MYTHRI TRANSPORT CORPORATION VS. ACIT (2009 ) 124 TTJ (VISAKHA) (970), ON THE RATIO OF LAW THAT WHEN THE RISK ASSOCIATED, THE MAIN CONTRACT ARE NOT BASED ON THE OTHER PERSON AND NO TIME OR ENERGY IS SPENT BY THE OTHER PERSON AND THE PERSON FROM WHOM THE VEHICLES HAVE BEEN HIRED HAVE NOT BEEN FASTED WITH SUCH LIABILITY, THAN IT CANNOT SAID THAT THE PAYMENT MAD E FOR HIRING OF SUCH VEHICLE FALLS INTO CATEGORY OF PAYMENT TOWARDS SUB-CONTRACT. AFTE R CONSIDERING THE CONTENTION, 4 ITA NO.2131/M/2013 M/S BHIWANDIWALA & SONS THE LD. CIT(A) WHILE RELYING UPON THE DECISION OF M YTHRI TRANSPORT CORPORATION (SUPRA) AND THE ORDER IN ASSESSEES OWN CASE BY LD. CIT(A) FOR AY 2005-06 & 2007-08 DELETED THE ADDITIONS/DISALLOWANCE. WE HAVE NOTED THAT THE FINDING OF THE LD CIT(A) IS BASED ON THE ORDER OF CIT(A) IN AS SESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS AND THE DECISION OF COORDINATE BE NCH OF TRIBUNAL MYTHRI TRANSPORT CORPORATION (SUPRA). THE LD. DR FOR THE REVENUE FAILED TO BRING ANY MATERIAL OR ANY LAW TO OUR NOTICE AS TO WHY THE FIN DING OF LD. CIT(A) REQUIRE INTERFERENCE AT OUR END. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). 7. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF DECEMBER, 2017. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 12/12/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/