Sk. Asgar, Kolkata V. ITO, Ward - 28(2), Kolkata, Kolkata

ITA 237/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54614 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M BHATTACHARYA
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Depreciation
• Section: 143(3); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . , '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 237/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2005-06 SK. ASGAR VS. INCOME-TAX OFFICER, WD-28(2), KOLK ATA (PAN: ALNPS 9811 M) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 25.10.2011 DATE OF PRONOUNCEMENT: 31.10.2011 FOR THE APPELLANT : SHRI SOUMITRA CHOWDHURY FOR THE RESPONDENT: SHRI M. BHATTACHARYA '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIX, KOLKATA IN APPEAL NO 109/CIT(A)-XIX/ITO,WD-28(2)/08-09 DATED 12.11.20 09. ASSESSMENT WAS FRAMED BY ITO, WARD-28(2), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE DATE D 24.12.2007. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS A GAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OFFICER ON ACCOU NT OF EXPENDITURE INCURRED ON BODY REPAIRING EXPENSES AND TYRE EXPENSES. FOR THIS, AS SESSEE HAS RAISED FOLLOWING GROUND NO.2: FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) W AS WRONG IN CONFIRMING DISALLOWANCE MADE BY THE A.O. AMOUNTING TO RS.9,59, 000/- ON ACCOUNT OF BODY REPAIRING EXPENSES AND TYRE PURCHASE WHICH IS COMPL ETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF CASE. WE FIND THAT ASSESSING OFFICER DISALLOWED A SUM OF RS.9,59,000/- INCURRED BY ASSESSEE ON ACCOUNT OF BODY REPAIRING EXPENSES AND TYRE PURCHAS E EXPENSES. ASSESSING OFFICER NOTED THAT ASSESSEE HAS INCURRED TOTAL EXPENDITURE AT RS. 10,98,292/- OUT OF WHICH TYRE PURCHASE AND OTHER EXPENSE WERE AT RS.7,87,700/- AND BODY RE PAIRING EXPENDITURE CAPITALIZED BY THE ASSESSEE WERE AT RS.3,10,592/-. ASSESSING OFFICER NOTED THAT ASSESSEE ONLY ACCEPTED THAT HE SHOULD HAVE CAPITALIZED EXPENSES TOWARDS BODY MA KING OF VEHICLES INSTEAD OF CLAIMING EXPENSES IN P&L ACCOUNT. CIT(A) ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER WITHOUT GOING INTO THE DETAILS. WE FIND THAT THE ASSESSEE BEFORE US FILED COMPLETE DETAILS OF TYRE 2 ITA 237K/2010 SK. ASGAR, A.Y.2005-06 PURCHASE AND OTHER EXPENSES IN HIS PAPER BOOK AT PA GES 6 TO 11, WHICH ARE TO THE TUNE OF RS.7,87,700/-. IT IS NOT THE CASE OF REVENUE THAT THESE ARE NOT GENUINE EXPENDITURE OR THE PURCHASE BILLS ARE BOGUS. ALL THESE DETAILS ARE FIL ED BY ASSESSEE BEFORE ASSESSING OFFICER AS WELL AS BEFORE CIT(A). ONCE THE EXPENSES ARE GENUI NE, WE CANNOT HOLD THAT TYRE PURCHASE AND OTHER SIMILAR EXPENSES ARE FOR PURCHASE OF CAPI TAL ASSET. HENCE, BOTH THE AUTHORITIES BELOW HAVE ERRED IN CAPITALIZING THESE EXPENSES. A CCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE QUA THE TYRE PURCHASE AND OTHER EXPENSES A T RS.7,87,700/-. BUT THE LD. COUNSEL FOR THE ASSESSEE IN HIS ALL FAIRNESS ADMITTED THAT THE BODY BUILDING EXPENSES AT RS.3,10,590/- HAS ALREADY BEEN CAPITALIZED IN THE E XPENSES OF PURCHASE OF VEHICLE AND THE SAME HAVE BEEN UTILIZED TOWARDS PURCHASE OF TRUCK. WE FIND THAT THE ASSESSEE IN HIS ALL FAIRNESS ADMITTED EXPENDITURE OF RS.3,10,592/-, WHI CH HE HAS CAPITALIZED UNDER THE HEAD TRUCK ACCOUNT AND HE CANNOT CLAIM THIS DEDUCTION TWICE. ACCORDINGLY, WE ALLOW THIS ISSUE TO THE EXPENDITURE OF RS.7,87,700/- BUT CONFI RMED THE DISALLOWANCE OF BODY BUILDING EXPENSES, WHICH WAS CAPITALIZED AT RS.3,10,592/-. ASSESSING OFFICER WILL COMPUTE THE INCOME ACCORDINGLY. THIS ISSUE OF ASSESSEES APPEA L IS PARTLY ALLOWED. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF DEPRECIATION. FOR THIS, ASSESS EE HAS RAISED FOLLOWING GROUND NO.3: FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A) W AS WRONG IN CONFIRMING DISALLOWANCE OF DEPRECIATION MADE BY THE A.O. AMOU NTING TO RS.2,59,457/- WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF CASE. WE FIND THAT ASSESSING OFFICER MADE DISALLOWANCE OF DEPRECIATION ONLY ON THE PREMISE THAT THE ASSESSEE HAS NOT USED THESE NEW VEHICLES AT MOR E THAN 180 DAYS DURING F.Y. 2004-05 RELEVANT TO THIS ASSESSMENT YEAR 2005-06. ACCORDIN G TO ASSESSEE, THESE VEHICLES WERE PURCHASED AS ON 30.07.2004 AND CANNOT BE PUT TO USE ON OR BEFORE 30.09.2004. ACCORDINGLY, HE DISALLOWED THE DEPRECIATION. CIT(A ) CONFIRMED THE ACTION OF ASSESSING OFFICER SIMILARLY. AFTER HEARING THE RIVAL SUBMISS IONS, WE FIND FROM RECORDS THAT ASSESSEE HAS PURCHASED THESE VEHICLES ON 31.07.2004 AS PER I NVOICE ISSUED BY FRENCH MOTOR CAR CO. LTD. 234/3A, A.J.C. BOSE ROAD, KOLKATA-700 006 AND THESE VEHICLES WERE REGISTERED AS ON 31.08.2004 WITH REGISTRATION AUTHORITY NAGALAND AS THE VEHICLE REGISTRATION NOS. INDICATE. THE ASSESSEE HAS PROVIDED COMPLETE DETAILS OF GROUP VEHICLES ASSETISED DURING THE YEAR ENDING AS ON 31.03.2005. RELEVANT DETAILS ARE AS U NDER: DETAILS OF GOODS VEHICLES ASSETISED DURING THE YEAR ENDED ON 31.03.2005 3 ITA 237K/2010 SK. ASGAR, A.Y.2005-06 SL. NO. BILL DATE BILL NO. NAME OF THE PARTY VEHICLE NO. DATE OF REGISTRATIO N AMOUNT (RS.) 1. 2. 3. 4. 5. 30/07/04 30/07/04 31/07/04 31/07/04 31/07/04 PFR/H/04/07/217 PFR/H/04/07/218 PFR/H/04/07/261 PFR/H/04/07/262 PFR/H/04/07/263 FRENCH MOTOR CAR CO. FRENCH MOTOR CAR CO. FRENCH MOTOR CAR CO. FRENCH MOTOR CAR CO. FRENCH MOTOR CAR CO. NL-01A/9981 NL-01A/9982 NL-01A/9983 NL-01A/9984 NL-01A/9985 31/08/04 31/08/04 31/08/04 31/08/04 31/08/04 827284.00 827284.00 827284.00 827284.00 827284.00 4136420.00 THE ABOVE DETAILS ARE SUPPORTED BY BILLS AND VOUCHE RS. VEHICLES WERE REGISTERED AS ON 31.08.2004 AND BODY BUILDING WAS DONE BEFORE REGIST RATION AS THESE WERE PASSED BY REGISTERING AUTHORITIES. THE ENTIRE PREMISE OF THE ASSESSING OFFICER AS WELL AS CIT(A) IS THAT BODY BUILDING OR ERECTION OF BODY BUILDING CA NNOT BE DONE EVEN WITHIN SIX MONTHS. HE HAS NOT POINTED OUT ANY EVIDENCE QUA HIS FINDING . ASSESSEE HAS FILED COMPLETE DETAILS OF BODY BUILDING WHICH PROVES THAT THESE VEHICLES W ERE USED FOR BUSINESS PURPOSE ON OR BEFORE 30.09.2004, ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION AT FULL. HENCE, WE DIRECT ASSESSING O FFICER TO ALLOW DEPRECIATION AND ACCORDINGLY COMPUTE THE INCOME. THIS ISSUE OF ASSE SSEES APPEAL IS ALLOWED. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING VEHI CLE HIRE CHARGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE A SSESSEE HAS NOT DEDUCTED TAX UNDER THE PROVISION OF SECTION 194C OF THE ACT. FOR THIS, ASS ESSEE HAS RAISED FOLLOWING GROUND NOS. 4 AND 5: 4. FOR THAT ON THE FACTS OF THE CASE THE LD. CIT(A ) WAS WRONG IN CONFIRMING THE VEHICLE HIRE CHARGES DISALLOWED U/S. 40(A)(IA) OF T HE I. T. ACT AMOUNTING TO RS.7,50,857/- WHICH IS COMPLETELY ARBITRARY, UNJUST IFIED AND ILLEGAL. 5. FOR THAT ON THE FACTS OF THE CASE THE ORDER OF T HE LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDITION U/S. 40(A)(IA) AMOUNTING TO RS.7,50,857/- ON VEHICLE HIRE CHARGES WITHOUT CONSIDERING THE FACT THAT SEC. 194C OF THE I. T. ACT WAS NOT APPLICABLE TO THE ASSESSEE, THEREFORE, THE ACTION O F THE CIT(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF CASE. WE FIND THAT ADMITTEDLY, ASSESSEE HAS NOT DEDUCTED TAX U/S. 194C OF THE ACT AND ASSESSING OFFICER HAS MADE DISALLOWANCE OF VEHICLE HIRE CHARG ES BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. CIT(A) ALSO CONFIRMED THE AC TION OF ASSESSING OFFICER. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FILED COPY OF TRIBUNAL S ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07, ITA NO.2000/K/2009 DATED 3 1.08.2010 WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF RAKSHIT TRANSPORT VS. ACI T, ITA NO. 261/K/2009, ASSESSMENT YEAR 2005-06 DATED 11.09.2009 HAS HELD AS UNDER: 4 ITA 237K/2010 SK. ASGAR, A.Y.2005-06 4. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESSEE PLACED RELIANCE ON A DECISION OF KOLKATA ITAT A BENCH IN THE CASE OF RAKSHIT TRANSPORT VS. ACIT ITA NO. 261/KOL/2009 FOR AY 2005-06 DATED 11 TH SEPTEMBER, 2009 AND SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION CITED ABOVE AND THE HONBLE TRIBUNAL IN THE SAID CASE HAD DELETED THE ADDITION ON THE SELF SAME GROUND AS THAT OF THE ASSESSEE IN THE INSTANT CASE. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS, CAREFULLY P ERUSING THE MATERIAL AVAILABLE ON RECORD AND THE DECISION CITED BY THE LD. COUNSEL (SUPRA), WE FIND THAT ON THE SAME AND IDENTICAL ISSUE, THE TRIBUNAL DELETED THE ADDIT ION ON ACCOUNT OF PAYMENT MADE FOR HIRING OF TRUCKS. IN THE SAID ORDER, THE TRIBUNAL H AS HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSE L. WE FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISION OF S. 194C(2) OF THE I.T. ACT IS NOT APPLICABLE TO THE CASE OF TH E ASSESSEE AS THERE IS NO CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTERS. IN THE PRESENT FACTS OF THE CASE THE AO HAS SIMPLY OBSERVED THAT THE VERY FACT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND IS ENGAGING OTHER TRANSPORTERS FOR CARRYING OUT THE TRANSPORT WORK MEANS THAT THERE IS A SUB-CONTRACT FOR TRANSPO RTATION OF CEMENT WHICH NEED NOT BE A WRITTEN CONTRACT. THE LD. CIT(A) AL SO HAS COME TO THE CONCLUSION THAT THE ACTIVITY IS THE ONE AND THE SAM E AND NOT DIFFERENT FOR WHICH THE ASSESSEE HAS UNDERTAKEN THE CONTRACT FROM THAT COMPANY AND THE SAME WORK HAD BEEN EXECUTED BY ENGAGING THE TRUCKS FROM THE V ARIOUS TRUCKERS/TRANSPORTERS, THEREFORE, THERE IS A RELATI ONSHIP OF CONTRACTOR AND SUB- CONTRACTOR BETWEEN THE ASSESEE AND THE TRANSPORTERS /TRUCKERS WITHOUT ANALYZING THE FACTS OF THE CASE. IT IS FURTHER OBSERVED THAT THE LD. CIT(A) PLACED RELIANCE ON SO MANY CASES TO SUBSTANTIATE HIS VIEW BUT BASIC ALLY HE HAS NOT ANALYSED THE FACTS. ON CAREFUL PERUSAL OF THE MATERIAL AVAILABL E ON RECORD AT PAGE NOS. 42 TO 78 I.E. STATEMENT OF TRUCK DRIVERS PAYMENT FOR THE YEAR ENDED 31.3.2005, PAGE NOS. 79 TO 94 CONSISTING OF THE TRUCK WISE TRANSPOR TATION CHARGES FOR THE PERIOD 1.4.2004 TO 31.9.2004, VOUCHERS FOR PAYMENT OF SUCH TRANSPORT CHARGES AT PAGES 145 TO 184, WE ARE OF THE CONSIDERED OPINION THAT THERE IS NEITHER ORAL NOR WRITTEN AGREEMENT WITH THESE TRUCK DRIVERS FOR TRANSPORTATION OF THE CEMENT MANUFACTURED BY ULTRATECH CEMENT MANUFACTURING CO. TO DIFFERENT DESTINATIONS. UNDER THESE FACTS AND CIRCUMSTANCES, WE FIND THAT THE RATIO LAID DOWN IN THE CASE OF CIT VS- UNITED RICE LAND LTD. REPORTED IN (2008) 174 TAXMAN 286 (PUNJ. & HAR) IS COMPLETELY IN FAVOUR O F THE ASSESSEE AS THE HONBLE HIGH COURT AS PER HEAD NOTE HAS HELD AS UND ER : SECTION 194C OF THE INCOME TAX ACT, 1961 DEDUCTI ON OF TAX AT SOURCE CONTRACTORS/SUB-CONTRACTORS, PAYMENTS TO ASSESEE- COMPANY WAS ENGAGED IN BUSINESS OF MANUFACTURE AND EXPORT OF RICE DURING COURSE OF EXPORT ACTIVITY, IT TRANSPORTED RICE FROM ITS PLACE OF BUSINESS TO P ORT BY ENGAGING TRUCKS THROUGH TRANSPORTERS-FREIGHT CHARGES WERE PAID BY ASSESSEE DIRECTLY TO TRUCK OWNERS/OPERATORS OR THROUGH TRANSPORTERS THERE WA S NO ORAL OR WRITTEN CONTRACT BETWEEN ASSESSEE AND TRANSPORTERS WHETHE R ON FACTS, ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON FREIGHT CHARGES P AID TO TRUCK OWNERS/OPERATORS HELD, NO. WE ALSO FIND THAT THE COORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF M/S. SAMANWAYA VS- ACIT IN ITA NO.484/KOL/2008 FOR AY 2 005-06 DATED 23.4.2009 HAS HELD THAT SECTION 194C(2) OF THE ACT BEING NOT APPLICABLE AS THERE WAS NO CONTRACT BETWEEN THE ASSESEE AND THE L ABOUR SARDARS FOR SUPPLY OF LABOURS AND WITHOUT WHICH THERE CANNOT BE ANY APPL ICATION OF S. 194C AND AS SUCH THE INVOCATION OF PROVISION OF S. 40A(IA) IS O UTSIDE THE SCOPE AND AMBIT OF THE SUCH ENACTMENT. IN THE INSTANT CASE ALSO THERE IS NO ORAL AGREEMENT OR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE TRANS PORTER EXISTS. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE DECISIONS AS CITED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDIT ION AMOUNTING TO 5 ITA 237K/2010 SK. ASGAR, A.Y.2005-06 RS.3,08,48,474/- AS MADE BY THE AO AND SUSTAINED B Y THE LD. CIT(A) IS HEREBY DELETED. THEREFORE, THE GROUNDS OF APPEAL OF THE A SSESSEE ARE ALLOWED. RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION CI TED SUPRA, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD . CIT(A) IS HEREBY DELETED. THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE, THEREF ORE, ALLOWED . AS THE ISSUE IS SQUARELY COVERED, WE ALLOW THIS ISS UE OF ASSESSEES APPEAL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. ORDER PRONOUNCED IN OPEN COURT ON 31.10.2011. SD/- SD/- . ! ! ! ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 31ST OCTOBER, 2011 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SK. ASGAR, PROP. XOHRA ENTERPRISES, 5, BHUKAILASH ROAD, BABUBAZAR, KOLKATA-23. 2 ,-*+ / RESPONDENT, ITO, WARD-28(2), KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%@/ BY ORDER, 2 /ASSTT. REGISTRAR .