M/s. Kohinoor Alu Co., Vapi V. The Income tax Officer,Vapi Ward-2, Vapi

ITA 2302/AHD/2009

• Counselvise Citation: 230220514 RSA 2009
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: WRITTEN SUBMISSION
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : SMC BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M .) I.T.A. NO. 2302/AHD./2009 ASSESSMENT YEAR : 2006-2007 M/S. KOHINOOR ALU CO., VAPI - VS- I.T.O., VAPI WARD-2, VAPI (PAN : AACCK 4689C) (APPELLANT) (RESPONDEN T) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI VINOD TANWANI, SR. D.R. DATE OF HEARING : 18.08.2011 DATE OF PRONOUNCEMENT : 18.08.2011 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 29.05.2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), V ALSAD CONFIRMING THE DISALLOWANCE OF RS.1,09,986/- UNDER SECTION 40A(3) OF THE I.T.ACT, 1961 FOR THE ASSESSMENT YEAR 2006-2007. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN TRADING OF POTATOES. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,21,560/-. THE AO FRAMED THE AS SESSMENT UNDER SECTION 143(3) ON 22.12.2008 WHEREIN HE DISALLOWED 20% OF PAYMENT MAD E TO TRANSPORTERS ON BEHALF OF THE FARMERS BY INVOKING THE PROVISIONS OF SECTION 40A(3 ) OF THE I.T. ACT, 1961. 3. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE CO NTENDED THAT THE PAYMENT MADE IS COVERED BY EXCEPTIONS UNDER RULE 6DD OF THE I.T. RU LES, 1962. IN SUPPORT OF THIS, 2 ITA NO. 2302-AHD-2009 RELIANCE WAS ALSO PLACED ON THE DECISION OF THE ITA T, MUMBAI DATED 31/01/2007 IN THE CASE OF PARAKH LONIWALA & SONS VS- ITO IN ITA NO.9 347/MUM/2004 & 727/MUM/2005. IN THE IMPUGNED ORDER, THE LD. CIT(A) UPHELD THE ACTION OF THE AO FOR THE DETAILED REASONS GIVEN IN PARA 5.3, WHICH READS AS UNDER: 5.3 CONSIDERING THE RIVAL CONTENTIONS, THE ARGUMENT S ADVANCED BY THE AR OF THE APPELLANT IS HIGHLY DECEPTIVE. THE ASSESSEE IS ENGA GED IN THE BUSINESS OF TRADING OF POTATOES. THOUGH, HE DEALS WITH THE AGRICULTURAL PR ODUCE, IT IS NOT SPECIFIED AS TO WHETHER, HE PROCURING MATERIALS FROM THE FARMERS AN D THEREFORE, THE ARGUMENTS ADVANCED BY THE AR OF THE APPELLANT IN RESPECT OF E XCEPTIONAL UNDER RULE-6DD OF THE I.T. RULES, 1962 IS NOT ACCEPTABLE. SO FAR AS T HE DECISION OF THE ITAT, MUMBAI IS CONCERNED IN THE SAID CASE, THE APPELLANT IS A C OMMISSION AGENT, OPERATING FROM APMC, MUMBAI, WHO PROCURES THE AGRICULTURAL PRODUCE FROM THE FARMERS AND THEREFORE, THE SAID DECISION IS NOT APPLICABLE TO T HE CASE OF THE APPELLANT, SINCE IN THE INSTANT CASE, THE APPELLANT IS TRADE IN POTATOE S. THEREFORE, THE ADDITION IS UPHELD. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, NONE WAS PRESE NT FROM THE SIDE OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS WERE FILED WHEREIN IT WAS CONTENDED THAT CONTROVERSY INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF PARAKH LONIWALA & SONS VS- ITO ( SUPRA ) WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSEE PAYS THE TRANSPORT CHARGES AND RECOVERS THE SAME FROM THE SALE PROCEEDS OF FARMERS, THE SAID PAYMENT IS NEITHER IN COME NOR EXPENDITURE OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT PAYMENT OF RS.5,42,930/- WAS MADE ON THE DIRECTION OF FARMERS TO THEIR TRANSPORTERS. THIS PAYMENT IS SQUARELY COV ERED UNDER RULE 6DD CLAUSE (D), (E) AND (K) EXCLUDED FROM DISALLOWANCE U/S.40A(3). ON T HIS BASIS, IT WAS CONTENDED THAT DISALLOWANCE OF RS. 1,09,986/- MADE BY THE AO BE DE LETED. 6. ON THE OTHER HAND, SHRI VINOD TANWANI, SR.D.R., APPEARING FOR THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). H E POINTED OUT THAT THE PAYMENT IS MADE TO TRANSPORTERS AND NOT TO FARMERS. THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 3 ITA NO. 2302-AHD-2009 7. HAVING HEARD BOTH THE SIDES, I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT PAYMENT HAS BEEN MADE TO THE TRANSPORTERS BUT THEY HAVE ACCEPTED THE PAYMENT IN QUESTION ON BEHALF OF THE F ARMERS. I AM, THEREFORE, OF THE VIEW THAT THE PAYMENT IS SQUARELY COVERED UNDER RULE 6DD CLAUSE (D), (E) AND (K). THE SIMILAR VIEW IS TAKEN BY THE ITAT F BENCH IN THE CASE OF M/S. PARAKH LONIWALA & SONS VS- ITO ( SUPRA ), RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE. 7.1 FOR THE AFORESAID REASONS, THE DISALLOWANCE OF RS. 1,09,986/- MADE BY THE AO UNDER SECTION 40A(3) AND CONFIRMED BY THE LD. CIT(A ) IS HEREBY DELETED. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 .08.2011. SD/- (T.K. SHARMA) JUDICIAL MEMBER DATED : 18/08/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.