ITO, Ward 3(3), Latur V. Smt Vandana Dineshkumar Inani, Latur

ITA 2146/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72422 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Opportunity of being heard; Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2146/PN/2012 (ASSTT.YEAR : 2009-10) ITO, WARD-3(3), LATUR .. APPELLANT VS. SMT. VANDANA DINESHKUMAR INANI, PROP. PRAGYA ENTERPRISES, INANI HOUSE, MAIN ROAD, LATUR .. RESPONDENT PAN NO. AABPI2299G APPELLANT BY : SHRI P.L. PATHADE RESPONDENT BY : SHRI M.K. KULKARNI DATE OF HEARING : 05-12-2013 DATE OF PRONOUNCEMENT : 27-12-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30-08-2012 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2009-10. 2. GROUNDS OF APPEAL NO.1, 2 AND 3 BY THE REVENUE R EAD AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN HOLDING THAT THE PROVISIONS OF SECTION 40 (A)(IA) IS APPLICABLE ONLY ON THE AMOUNT PAYABLE AND NOT ON THE AMOUNT PAID AND DEBITED TO P&L ACCOUNT WITHOUT DEDUCTION OF TAX AT SOURCE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS RIGHT IN HOLDING THAT AS THE AMOUNT OF RS.69,27,6 93/- PAID TOWARDS WAREHOUSING CHARGES IS NOT PAYABLE AT THE YEAR END, TH E PROVISIONS OF SECTION 40(A)(IA) CANNOT BE ATTRACTED. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHERE A SUM OF RS.69,27,693/- WAS PAID TOWARDS WAREHOUSING CHARGES F OR THE PURPOSE OF STORAGE OF GOODS/STOCK FOR ASSESSEES BUSINESS IS COV ERED BY SECTION 1941 SO THAT THE FAILURE TO DEDUCT TAX WOULD WARRANT APPLICATION OF THE PROVISIONS OF SECTION 40(A)(IA). 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF COMMISSION AGENT AND GENERAL MERCHANT. HE FILED HIS RETURN OF INCOME ON 20-10-2009 DECLARI NG TOTAL INCOME OF RS.3,30,758/- AND AGRICULTURAL INCOME OF RS.37,412/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAS MADE PAYMENT TOWARDS WAREHOUSING CHARG ES TO THE EXTENT OF RS.69,72,693/- THE DETAILS OF WHICH ARE AS UNDER : 3.1 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AS NOT DEDUCTED TAX AT SOURCE FROM THE ABOVE PAYMENTS MADE TOWARDS STOR AGE CHARGES. HE, THEREFORE, CONFRONTED THE SAME TO THE ASSESSEE. IT WAS EXPLAINED THAT IT WAS ONLY REIMBURSEMENT OF EXPENSES/PAYMENT MADE BY OTHERS AND STORAGE CHARGE TRANSACTIONS ARE NOT COVERED BY ANY PROVISIONS OF TAX DEDUCTION AT SOURCE. 3.2 HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT T HE SAME. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT REPORTED IN 2 93 ITR 276 (SC) WHEREIN IT HAS BEEN HELD THAT THE WAREHOUSING CHARG ES WERE IN THE NATURE OF RENT AS DEFINED IN THE EXPLANATION TO SECTION 19 4I OF THE ACT, THE SR.NO. NAME OF THE WAREHOUSE ADDRESS AMOUNT PAID 1 HARYANA STATE CO-OPERATIVE SUPPLY AND MARKETING FEDERATION LTD. PANCHKULA 22,68,800/- 2 HARYANA WAREHOUSING CORPORATION (NUMBER OF GODOWNS AT VARIOUS PLACES NEARLY 8) PANCHKULA 45,66,136/- 3 SAFIDAN CO-OPERATIVE MARKETING CUM PROCESSING SOCIETY LTD. SAFIDAN 23,89,737/- 4 CENTRAL WAREHOUSING CORPORATION, NEW DELHI GOHANA 14,22,527/- 5 VARIOUS PAYMENT OF STORAGE CHARGES TO ABOVE WAREHOUSE 4,13,293/- TOTAL 69,27,693/- 3 ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWED THE ABOVE AMOUNT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.3 BEFORE THE CIT(A) IT WAS ARGUED THAT THE ASSESS EE HAS PURCHASED FOOD GRAINS AND STORED THE SAME IN THE WAREHOUSES A ND THE EXPENDITURE TOWARDS WAREHOUSING CHARGES WERE DEBITED IN PROFIT AND LOSS ACCOUNT. FURTHER, SHE HAS SOLD THE FOOD GRAINS STORED IN THE WAREHOUSES TO VARIOUS PARTIES AND HAS ISSUED BILLS IN WHICH THE SAID WARE HOUSING CHARGES WERE RECOVERED SEPARATELY AND THE SALE AMOUNT WAS SHOWN SEPARATELY. IT WAS ARGUED THAT THE WAREHOUSING CHARGES WERE DEBITED TO PROFIT AND LOSS ACCOUNT AND ALSO CREDITED TO PROFIT AND LOSS ACCOUN T UNDER THE HEAD SALE. THUS, EFFECTIVELY NO EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE AND HENCE THE SAME CANNOT BE DISALLOWED U/ S.40(A)(IA) OF THE ACT. THE EXPENDITURE ACTUALLY CLAIMED CAN BE DISAL LOWED U/S.40 AS THE HEADING OF THE SECTION IS AMOUNT NOT DEDUCTIBLE A ND THE ASSESSEE HAS NOT FACTUALLY CLAIMED THE WAREHOUSING CHARGES AS EX PENDITURE. IT WAS ARGUED THAT THE PAYMENT OF WAREHOUSING HAS ACTUALLY BEEN MADE BY THE PURCHASERS OF THE GOODS AND THEREFORE THEY MAY BE L IABLE FOR DEDUCTION AND PAYMENT OF TDS. IT WAS ALTERNATIVELY ARGUED TH AT SINCE NO WAREHOUSING CHARGES IS PAYABLE AT THE YEAR END, THE REFORE, NO DISALLOWANCE U/S.40(A)(IA) IS CALLED FOR. 3.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) HELD THAT SINCE NO AMOUNT IS OUTSTANDING AT THE YEA R END AS PAYABLE, THEREFORE, NO DISALLOWANCE U/S.40(A)(IA) CAN BE MAD E. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL B EFORE US. 4 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. SO FAR AS THE ISSUE RELATING TO NON APPLICABILITY OF PROVISIONS OF SECTION 40(A) (IA) IN A CASE WHERE NO AMOUNT IS OUTSTANDING AT THE END OF THE YEAR THE SA ME HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE DECISION OF THE COORDIN ATE BENCH OF THE TRIBUNAL IN THE CASE OF VINAY ASHWINIKUMAR JONEJA V S. ITO VIDE ITA NO.1514/PN/2012 ORDER DATED 22-10-2013 FOR A.Y. 200 6-07. IT HAS BEEN HELD IN THE SAID DECISION THAT PROVISIONS OF SECTIO N 40(A)(IA) ARE APPLICABLE IN A CASE EVEN IF NO AMOUNT IS PAYABLE AT THE END OF THE YEAR BUT WHICH HAS BEEN DEBITED TO THE PROFIT AND LOSS A CCOUNT AND ON WHICH NO TAX HAS BEEN DEDUCTED AT SOURCE. THEREFORE, THE ORDER OF THE LD.CIT(A) DELETING THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER ON THIS ACCOUNT BEING NOT IN CONSONANCE WITH THE DECIS ION OF THE TRIBUNAL IS REVERSED AND THE GROUND RAISED BY THE REVENUE ON TH IS ISSUE IS ALLOWED. 4.1 HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE AT TH E TIME OF HEARING HAS STATED THAT THE CIT(A) HAS NOT ADJUDICATED THE ISSUE RELATING TO THE APPLICABILITY OF PROVISIONS OF SECTION 40(A)(IA) TO THE FACTS OF THE PRESENT CASE ALTHOUGH A SPECIFIC GROUND HAD BEEN TAKEN BEFO RE HIM. THEREFORE, THE MATTER MAY BE RESTORED TO THE FILE OF THE CIT(A ) FOR ADJUDICATING THE SAME FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAD NO OBJECTION. WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE LD.CIT(A) TO ADJUDICATE THE APPLICABILITY OF THE PROVISIONS OF SECTION 40(A )(IA) TO THE FACTS OF THE PRESENT CASE. HE SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH 5 LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND APPEAL NO.4 BY THE REVENUE READ AS UNDER : 4. WHETHER ON THE FACTS AND CIRCUMSTANCES, THE HONB LE CIT(A), AURANGABAD HAS ERRED IN TAKING THE AVERAGE VALUE OF CLOSING STOCK OF SOYABEAN AT RS.2,127/- INSPITE OF THE ASSESSING OFFICER H AS CORRECTLY ADOPTED THE VALUE OF RS.2,255/- PER QUINTAL ON THE B ASIS OF THE RATE SUPPLIED BY APMC, LATUR. 5.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE A SSESSEE HAS SHOWN CLOSING STOCK OF SOYABEAN AT 750 QUINTALS BY APPLYI NG THE RATE OF RS.1,800/- PER QUINTAL. THE ASSESSING OFFICER NOTE D THAT THE OPENING STOCK OF SOYABEAN HAS BEEN SHOWN AT RS.2,300/- PER QUINTAL AND DURING THE YEAR THE ASSESSEE HAS SOLD SOYABEAN ONLY TO THE EXTENT OF 894 QUINTALS IN AUGUST 2008 @RS.2,599/- PER QUINTAL. THE ASSESS ING OFFICER OBTAINED THE PURCHASE RATES OF THE SOYABEAN FROM AP MC, LATUR FOR THE PERIOD 27-03-2009 TO 31-03-2009 WHICH WERE BETWEEN RS.2,000/- PER QUINTAL TO RS.2,255/- PER QUINTAL. THE ASSESSING O FFICER, THEREFORE, ADOPTED MARKET VALUE OF SOYABEAN AT RS.2,255/- PER QUINTAL AND ACCORDINGLY WORKED OUT THE CLOSING STOCK OF SOYABEA N AT RS.17,04,780/- AS AGAINST RS.13,61,142/- SHOWN BY THE ASSESSEE. T HE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.3,43,638/- ON ACCOU NT OF UNDER VALUATION OF STOCK OF SOYABEAN. 5.2 BEFORE CIT(A) IT WAS ARGUED THAT THE STOCK WAS VALUED AT MARKET PRICE WHICH IS LOW IN VIEW OF THE OLD STOCK OF DETE RIORATED QUALITY. IT WAS ALSO REQUESTED THAT TO THE EXTENT THE ADDITION IS C ONFIRMED, THE OPENING 6 STOCK OF SOYABEAN OF THE SUCCEEDING YEAR SHOULD BE CONSIDERED AT HIGHER VALUE TO THE SAME EXTENT AS THE CLOSING STOCK OF TH E CURRENT YEAR IS UNDISPUTEDLY OPENING STOCK OF THE SUBSEQUENT YEAR. 5.3 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) SUSTAINED AN ADDITION OF RS.2,47,248/- AS AGAINST R S.3,43,638/- MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER : 6.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTIC ED THAT THOUGH THE OPENING STOCK OF THE YEAR IS VALUED AT RS.2,300/-, THE VALUE OF SOYABEAN AS ON 31-03-2009 AS PER INFORMATION OBTAINED BY THE A.O . FROM APMC, LATUR IS ON LOWER SIDE, I.E. RS.2,000/- TO RS.2,255/-. THE A .O. HAS CONSIDERED THE VALUE OF THE CLOSING STOCK AT RS.2,255/- DURING 27-03- 2009 TO 31-03- 2009. THE AVERAGE PRICE OF THE SOYABEAN CONSIDERING THE VALUE PER QUINTAL OF SOYABEAN OF RS.2,000/- TO RS.2,255/- WORKS O UT TO RS.2,127.50 PER QUINTAL. THEREFORE, THE CLOSING STOCK OF SOYABEAN OF 756 QUINTALS IS TO BE VALUED @RS.2,127.50 PER QUINTAL WHICH WORKS OUT TO RS.16,08,390/- AS AGAINST RS.13,61,142/- SHOWN BY THE APPELLANT. THE DIFFERENCE BETWEEN THE VALUE OF THE STOCK SHOWN BY THE APPELLANT AND THE VALUE ARRIVED AT AS ABOVE IS RS.2,47,248/-. THE APPELLANT H AS NOT POINTED OUT AND PROVED AS TO HOW AND WHAT BASIS SHE HAS VALUED THE C LOSING STOCK @RS.1,800/- PER QUINTAL. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, THE ADDITION ON ACCOUNT OF UNDER VALUATION OF STOCK OF SO YABEAN HAS BEEN CONFIRMED TO THE EXTENT OF RS.2,47,248/- AS AGAINST MA DE BY THE A.O. AT RS.3,43,638/-. THE A.O. IS DIRECTED ACCORDINGLY. GR OUND NO.2 STANDS PARTLY ALLOWED. 5.4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIN D FROM THE ORDER OF THE CIT(A) THAT THE ASSESSING OFFICER HAD OBTAINED INFO RMATION FROM APMC, LATUR ACCORDING TO WHICH THE VALUE OF SOYABEA N AS ON 31-03- 2009 VARIES BETWEEN RS.2,000/- TO RS.2,255/-. THER EFORE, THE LD.CIT(A) HAS TAKEN THE AVERAGE VALUE OF THE SOYABEAN AT RS.2 ,127.50 PER QUINTAL 7 AND ACCORDINGLY CALCULATED THE VALUE OF CLOSING STO CK OF 756 QUINTALS AT RS.16,08,390/- AS AGAINST RS.13,61,142/- DECLARED B Y THE ASSESSEE AND ACCORDINGLY SUSTAINED AN AMOUNT OF RS.2,47,248/- WH ICH IN OUR OPINION IS A REASONED ONE. THE LD. DEPARTMENTAL REPRESENTA TIVE COULD NOT POINT OUT ANY MISTAKE IN THE ABOVE. ACCORDINGLY, THIS GR OUND BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27-12-2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE, DATED : 27 TH DECEMBER, 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A), AURANGABAD 4. THE CIT, AURANGABAD 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE