JANSEVA MAJOOR SAHAKARI SANSTHA MARYADIT, MUMBAI V. ITO 18(3)(2), MUMBAI

ITA 2300/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79522 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 23-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J B ENCH, MUMBAI ! , ' #$ % % % % , , #$ & BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUICIAL MEMBER ./ I.T.A. NO.2300/MUM/2013 ( ' ' ' ' / ASSESSMENT YEAR :2009-10 M/S. JANSEVA MAJOOR SAHAKARI SANSTHA MARYADIT, 1, DEVDARSHAN BLDG., T.H. KATARIA MARG, MAHIM, MUMBAI-400 016 / VS. THE ITO 18(3)(2), MUMBAI ./ I.T.A. NO.2493/MUM/2013 ( ' ' ' ' / ASSESSMENT YEAR :2009-10 THE ITO 18(3)(2), MUMBAI / VS. M/S. JANSEVA MAJOOR SAHAKARI SANSTHA MARYADIT, 1, DEVDARSHAN BLDG., T.H. KATARIA MARG, MAHIM, MUMBAI-400 016 $( ' ./ ) ./ PAN/GIR NO. : AADFJ 0626J ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / ASSESSEE BY: SHRI H.N. MOTIWALA SHRI PIYUSH CHHAJED +,(* . - / DEPARTMENT BY: SHRI JEEVANLAL LAVIDIYA . /0' / DATE OF HEARING :23.07.2014 12' . /0' / DATE OF PRONOUNCEMENT :23.07.2014 ITA NOS.2300 & 2493/M/2013. 2 #3 / O R D E R PER N.K. BILLAIYA, AM: THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENU E ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-29 , MUMBAI DT. 8.1.2013 PERTAINING TO A.Y.2009-2010. 2. GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN TREAT ING CHARGES PAID FOR CARRYING OUT THE WORK COVERED U/S. 194C, S PECIFICALLY WHEN THERE WAS NO CONTRACT FOR SUBCONTRACT BETWEEN APPEL LANT AND THE PAYEES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DISAL LOWING THE TOTAL AMOUNT ON WHICH NO TDS WAS DEDUCTED INSTEAD O F AMOUNTS PAYABLE AS AT 31-3-2009 AMOUNTING TO RS.2,13,28,310 AS REQUIRED BY SECTION 40A(IA). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ERRED IN UPHOL DING ADHOC DISALLOWANCE OF RS.8,134/- BEING 10% OF MOBILE EXPE NSES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING ADHOC DISALLOWANCE OF RS.7,0861- BEING 10% OF VEHICLE EXP ENSES. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DISAL LOWING THE CLAIM OF APPELLANT U/S. 80P(2) (VI) OF THE INCOME T AX ACT. 3. GRIEVANCES OF THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,81,59,057/- MADE ON ACCOUNT OF DISALLOWANCES U /S 40(A)(IA). ITA NOS.2300 & 2493/M/2013. 3 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE LABOUR CHARGES PAID TO ALL THE PARTIES EXCEEDED THE THRESHOLD LIMIT OF RS.20,000/- AND WHEN THE ASSESSE E HAS SEPARATELY DEBITED THE PURCHASES OF RS.3,23,16,515/ - IN THE P&L A/C, THE QUESTION OF REDUCING THE COST OF MATERIALS FROM THE LABOUR CHARGE DOES NOT ARISE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT DISCUSSING WHETHER THE AMOUNT ON WHICH THE RELIEF WAS ALLOWED CONSISTED OF ANY MATERIAL COST OR WAS BELOW THE THRESHOLD LIMIT OF RS.20,000/- 4. THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION. FOR THE YEAR, THE RETURN WAS FILED ON 14.2.2011 DECLARING TOTAL INCOM E AT RS. 1,02,277/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES WERE ISSUED ACCORDINGLY AND SERVED UPON THE ASSESSE E. WHILE SCRUTINIZING THE PROFIT AND LOSS ACCOUNT, THE ASSES SING OFFICER NOTICED THAT THE ASSESSEE HAS PAID LABOUR CHARGES OF RS. 24.36 C RORES. THE AO FURTHER FOUND THAT THE ASSESSEE HAS DEDUCTED TAX ONLY ON T HE LABOUR CHARGES PAID AMOUNTING TO RS. 13.84 CRORES. THE TDS AMOUNT WAS R S. 15.68 LAKHS. THE ASSESSEE WAS ASKED TO JUSTIFY WHY TDS WAS NOT M ADE ON THE ENTIRE LABOUR CHARGES PAID AMOUNTING TO RS. 24.36 CRORES. THE ASSESSEE CONTENDED THAT ALL THE LABOUR CHARGES PAID WERE NOT LIABLE FOR DEDUCTION OF TDS AS THE AMOUNT UNDER THIS HEAD ALSO INCLUDED 50 TO 65% ON ACCOUNT OF MATERIALS INVOLVED IN THE CONTRACT WORK. THE AO DI D NOT ACCEPT THIS SUBMISSION OF THE ASSESSEE. THE AO WENT ON TO DISA LLOW THE LABOUR CHARGES ON WHICH NO TAX WAS DEDUCTED AT SOURCE. 4.1. THE DISALLOWANCE WAS AT RS. 10.51 CRORES. THE AO FURTHER DISALLOWED 10% OUT OF MOBILE EXPENSES AMOUNTING TO RS. 8,134/- AND ITA NOS.2300 & 2493/M/2013. 4 10% OUT OF VEHICLE EXPENSES AMOUNTING TO RS. 7,086/ - AND COMPLETED THE ASSESSMENT. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED ITS CLAIM IN RESPECT OF NON DEDUCTION OF TAX AT SOURCE ON ACCOUNT OF LABOUR CHARGES PAID. AFTER CONSIDERING THE FACT S AND THE SUBMISSIONS AND THE DETAILS FURNISHED BY THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS. 5.69 CRORES. 6. AGGRIEVED BY THIS FINDINGS OF THE LD. CIT(A), AS SESSEE AND REVENUE ARE IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AO HAS FAILED TO CONSIDER THE DETAILS FURNISHED BY THE ASSESSEE DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT IS THE SAY OF THE LD. C OUNSEL THAT FULL DETAILS WERE PROVIDED TO THE AO IN RESPECT OF PARTIES WHERE NO TAX WAS DEDUCTED AT SOURCE. THE LD. COUNSEL FURTHER ARGUED THAT THE AO HAS FAILED TO CONSIDER THE DETAILS FURNISHED BY THE ASSESSEE AND FURTHER STATED THAT THE ACTION OF THE AO IN DISALLOWING THE BALANCE AMOUNT OF LABOUR CHARGES PAID WITHOUT TDS U/S. 40(A)(IA) OF THE ACT IS NOT P ROPER AND THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE SAME. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED THAT THESE DETAILS NEED RE-VERIFICATION AT THE ASSESSMENT STAG E. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT MATERIAL EVIDENCES BROUGHT ON RECORD B EFORE US. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHED PARTY-WISE DETAILS BEFORE THE AO. THE SAID DETAILS ARE BEFORE US FROM PAGES 10 TO 12 OF THE PAPER BOOK WHEREIN WE FIND THAT LABOUR CHARGES HAVE BEEN PAID TO 113 PARTIES. THE ASSESSEE HAS ALSO GIVEN THE DETAILS IN RESPECT OF T HOSE PARTIES WHERE NO TAX ITA NOS.2300 & 2493/M/2013. 5 WAS DEDUCTED AT SOURCE. THE AO HAS DISALLOWED LABO UR CHARGES OF WHICH NO TAX WAS DEDUCTED AT SOURCE IN A SUMMARY MANNER W ITHOUT GIVING ANY SPECIFIC FINDING OR POINTING OUT HOW THE PROVISIONS OF SEC. 194C APPLY ON THESE PAYMENTS WHICH ALSO INCLUDED PURCHASE OF MATE RIAL. IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS RE-VERIFICATION. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECT ED TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF THE PROVISIONS OF SEC. 194C OF THE ACT CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE AFTER GIVING A REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSEE IS DIRECTED TO PROVIDE ALL THE NECESSARY DETAILS TO TH E AO. GROUND NO. 1 & 2 OF ASSESSEES APPEAL AND GROUND NO. 1 TO 3 OF REVEN UES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. 10. GROUND NO. 3 & 4 OF ASSESSEES APPEAL RELATE TO THE CONFIRMATION OF ADHOC DISALLOWANCE OUT OF MOBILE EXPENSES AND VEHIC LE EXPENSES. 11. NOTHING HAS BEEN BROUGHT BEFORE US TO SHOW WHY THE ADHOC DISALLOWANCE IS UNJUSTIFIED. WE, ACCORDINGLY, CONF IRM THE FINDINGS OF THE LD. CIT(A). GROUND NO. 3 & 4 ARE ACCORDINGLY DISM ISSED. 12. GROUND NO. 5 RELATES TO THE CLAIM OF THE ASSESS EE U/S. 80P(2)(VI) OF THE ACT. 13. THIS CLAIM WAS MADE BEFORE THE LD. CIT(A) BY RA ISING AN ADDITIONAL GROUND. THE LD. CIT(A) DISMISSED THE CL AIM OF THE ASSESSEE STATING THAT THIS CLAIM WAS NOT MADE BY THE ASSESSE E IN THE RETURN OF INCOME. THE LD. CIT(A) RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZ LTD. 284 ITR 323 . IN OUR CONSIDERED VIEW, THE RATIO LAID DOWN BY THE DECISION OF THE HO NBLE SUPREME COURT DOES NOT APPLY TO THE APPELLATE AUTHORITIES. WE, T HEREFORE, RESTORE THIS ITA NOS.2300 & 2493/M/2013. 6 ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AS PER THE PROVISIONS OF LAW AND IN PA RTICULAR SEC. 80P(2)(VI) OF THE ACT. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL FILED BY THE REV ENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 23 RD JULY, 2014. #3 . 2' ' 4 5#6 23.7.2014 2 . 7 SD/- SD/- (VIVEK VARMA ) (N.K. BILLAIYA) #$ / JUDICIAL MEMBER ' #$ / ACCOUNTANT MEMBER MUMBAI; 5# DATED : 23.7.2014 . . ./ RJ , SR. PS #3 #3 #3 #3 . .. . +/ +/ +/ +/ 8'/ 8'/ 8'/ 8'/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. #3 #3 #3 #3 / BY ORDER, ,/ +/ //TRUE COPY// = == = / > > > > (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI