IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 215/MDS/2013 ASSESSMENT YEAR 2009-10 THE INCOME TAX OFFICER, BUSINESS WARD III(1), CHENNAI. VS. SMT. ANANDHANAYAKI, PROPRIOTRIX OF M/S. AARTHI BROILERS, NO. 77, NEDUNCHEZHIYAN ST., MGR NAGAR, CHENNAI 600 078 [PAN:ADCPA2483N] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETGERI, JCIT RESPONDENT BY : SHRI K. MEENAKSHISUNDARAM, ITP DATE OF HEARING : 24.10.2013 DATE OF PRONOUNCEMENT : 24.10.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) VIII, CHEN NAI DATED 29.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A RETAIL TRADER FOR EDIBLE CHICKEN, NURTURED AND MARKETED BY M/S. SUGUN A CHICKEN, COIMBATORE. THE MODUS OPERANDI OF M/S. SUGUNA CHICK EN IS TO DELIVER THE DRESSED CHICKEN AND OTHER VARIETIES AT THE DOOR STEP OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.215 215215 215/M/ /M/ /M/ /M/13 1313 13 2 ASSESSEE IN THEIR OWN VEHICLES AND THE DUTY OF THE ASSESSEE IS TO SELL THE CHICKEN AT THE PREDETERMINED PRICE AFTER PAYING ALL THE DUES TO M/S. SUGUNA CHICKEN. DURING THE YEAR, THE ASSESSEE PAID ` .13,75,495/- TO M/S. SUGUNA CHICKEN FOR DELIVERY OF THE CHICKEN. SI NCE THE PAYMENT FOR TRANSPORT CHARGES WAS NOT MADE TO ANY TRANSPORT OPE RATOR DIRECTLY BY THE ASSESSEE, NO TAX WAS DEDUCTED UNDER SECTION 194 C. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER HAS OBSERVED THAT THE ASSESSEE HAS PAID AN AMOUNT OF ` .13,75,495/- AS FREIGHT AND COOLI TO M/S. SUGUNA POULTRY. THE ASS ESSING OFFICER, WHILE EXAMINING THE LEDGER ACCOUNT, HE HAS NOTICED THAT A LL THE PAYMENTS WERE MADE TO M/S. SUGUNA POULTRY ONLY. WHEN THE ASS ESSING OFFICER ASKED THE ASSESSEE WHY NO TDS WAS DEDUCTED, THE ASS ESSEE HAS SUBMITTED THAT M/S. SUGUNA POULTRY HAS DELIVERED CH ICKEN TO THE ASSESSEE AND SHE HAD NOT PAID ANY SEPARATE TRANSPOR T CHARGES AND ALL PAYMENTS WERE MADE TO M/S. SUGUNA POULTRY ONLY. HOW EVER, THE ASSESSING OFFICER HAS REJECTED THE EXPLANATION OF T HE ASSESSEE THAT THE ASSESSEE HAD PAID TRANSPORT CHARGES TO M/S. SUGUNA POULTRY AND SHE HAS TO DEDUCT TDS. THEREFORE, BY INVOKING SECTION 4 0(A)(IA) OF THE ACT, THE CLAIM UNDER THE HEAD FREIGHT AND COOLI OF ` .13,75,495/- HAS BEEN DISALLOWED BY THE ASSESSING OFFICER. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.215 215215 215/M/ /M/ /M/ /M/13 1313 13 3 3. ON APPEAL, THE LD. CIT(APPEALS), AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE, HAS HELD AS UNDER: 6. I HAVE VERIFIED THE SUBMISSIONS OF THE AR OF T HE APPELLANT AS WELL AS THE ASSESSMENT ORDER. THE ASSESSING OFFICER MADE ADDITION OF RS.13,75,495/- TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE HAS CLAIMED THIS AMOUNT IN HIS P & L ACCOUNT AS FREIGHT AND COOLIE TO M/S SUGUNA POULTRY. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE APPELLANT HAS EXPLAINED THAT THE VEHICLE HAS BEEN H IRED BY M/S SUGUNA POULTRY FOR DELIVERY AND NOT BY THE APPELLANT. M/S SUGUNA POULTRY COLLECTS THE PAYMENTS FROM THE ASSESSEE AND PAYS TO THE RELATED PARTIES. THE ASSESSING OFFICER HIMSELF HAS ADMITTED IN HIS O RDER THAT THE APPELLANT HAS NEVER PAID ANY TRANSPORT OR COOLIE CH ARGES TO ANY THIRD PARTY AND ALL THE PAYMENTS WERE MADE TO M/S SUGUNA POULTRY ONLY AND APPLIED THE PROVISIONS OF 194C BY THE ASSESSING OFF ICER FOR NON- DEDUCTION OF TDS ON THE PAYMENTS MADE BY THE APPELL ANT DURING THE YEAR UNDER CONSIDERATION AND THE ENTIRE PAYMENT OF RS.13,75,495/- HAS BEEN DISALLOWED. 7. HAVING GONE THROUGH THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT AND ALSO VERIFYING THE RATIO HELD IN SEVE RAL CASES DECIDED BY THE HIGHER JUDICIAL AUTHORITIES THE PROVISIONS OF S EC.40(A)(IA) ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT AS THE PROV ISION DO NOT COVER FREIGHT AND COOLIE CHARGES PAID AND DEBITED TRADING ACCOUNT OR IN THE P & L ACCOUNT FOLLOWING RESPECTABLY RATIOS HELD IN SE VERAL CASE LAWS AS MENTIONED SUPRA, THE PROVISIONS U/S 40(A)(IA) ARE N OT ATTRACTED TO THE PAYMENTS MADE BY THE APPELLANT ON ACCOUNT OF FREIGH T AND COOLIE CHARGES TO M/S SUGUNA POULTRY. THEREFORE, THE ASSES SING OFFICER IS DIRECTED TO DELETE THE ADDITION U/S 40(A)(IA). THE APPELLANT GETS RELIEF ON THIS GROUND OF APPEAL. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BE FORE THE TRIBUNAL. 5. THE LD. DR HAS RELIED ON THE DECISION OF THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. CRESCENT EXPORT SY NDICATES IN ITA NO. 20 OF 2013 DATED 03.04.2013 IN WHICH, THE HONBLE H IGH COURT HAS HELD I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.215 215215 215/M/ /M/ /M/ /M/13 1313 13 4 THAT THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT VS. ADDL. CIT 16 ITR ( TRIB) 1 IS NOT ACCEPTABLE. THE SAME VIEW HAS ALSO BEEN REPEATED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. MD. JAKIR HOSSAIN MONDAL, THROUGH THEIR JUDGEMENT DELIVERED ON 04.04.2013 IN ITA NO. 31 OF 2013 AND SUBMITTED THAT THE APPEAL OF THE REVENUE MAY BE ALLOWED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE RELIED ON THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. M/S. VECTOR SHIPPING SERVICES (P) LTD. VIDE JUDGEMENT DA TED 09.07.2013 IN ITA NO. 122 OF 2013. THE LD. COUNSEL FOR THE ASSESS EE HAS ALSO SUBMITTED THAT THE ISSUE IS NOW COVERED BY THE DECI SION OF THE COORDINATE BENCH IN THE CASE OF ITO V. M/S. THEEKAT HIR PRESS IN I.T.A. NO. 2076/MDS/2012 ORDER DATED 18.09.2013 FOR THE AS SESSMENT YEAR 2009-10. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE ALSO PERUSED THE CASE LAW RELIED ON BY BOTH SIDES AND FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED THE DECISION IN THE CASE OF ITO V. M/S. THEEKATHIR PRESS (SUPRA), IN WHICH THE TRIBUNAL HAS HELD AS UNDER: 5. WE FIND THAT THE JUDGMENT OF THE HONBLE ALLAH ABAD HIGH COURT IS IN FAVOUR OF THE ASSESSEE. AT THE SAME TIME, WE FIND THAT THE ORDERS OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.215 215215 215/M/ /M/ /M/ /M/13 1313 13 5 THE CALCUTTA HIGH COURT AND THE GUJARAT HIGH COURT ARE AGAINST THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE RULE OF JUDICI AL PRECEDENCE DEMANDS THAT THE VIEW FAVOURABLE TO THE ASSESSEE MU ST BE ADOPTED, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CI T V. VEGETABLE PRODUCTS LTD., 88 ITR 192. FOLLOWING THE ABOVE FUND AMENTAL RULE DECLARED BY THE HONBLE SUPREME COURT, WE HAVE TO F OLLOW THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT, WHICH IS IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE HOLD THAT THE DISALLO WANCE UNDER SECTION 40(A)(IA) APPLIES ONLY TO THOSE AMOUNTS PAYABLE A ND NOT TO THOSE AMOUNTS PAID. ACCORDINGLY, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IN THE PRESENT CASE. THE APP EAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. 8. THE REVENUE COULD NOT CONTROVERT THE FINDINGS O F THE ABOVE DECISION. THEREFORE, RESPECTFULLY FOLLOWING THE ABO VE DECISION OF THE TRIBUNAL, WE UPHOLD THE ORDER OF THE LD. CIT(APPEAL S) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 24 TH OF OCTOBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE - PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 24.10.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.