The ITO, Ward-12(1), Ahmedabad V. M/s. Prakash Agro Mills, Ahmedabad

ITA 2394/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94247 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Keywords: Condonation of delay
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM & ANIL CHATURVEDI, AM. ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 INCOME-TAX OFFICER, WARD 12(1), AHMEDABAD. VS M/S PRAKASH AGRO MILLS, NEAR OMKAR TEXTILE MILL, MEMCO, NARODA ROAD, AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AACFP0947R APPELLANT BY SHRI D. C. MISHRA, SR.DR RESPONDENT BY SHRI PRATIK JAIN DATE OF HEARING: 11/8/2015 DATE OF PRONOUNCEMENT: 13/8/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF CIT(A) DATED 4 TH JULY,2011 PASSED FOR AY 2008-09. 2. THE APPEAL WAS PRESENTED BY THE REVENUE ON 21 ST SEPTEMBER, 2011. AN ACKNOWLEDGEMENT-CUM-NOTICE FOR FIXING THE HEARING IN THE APPEAL WAS ISSUED ON 21/9/2011 ITSELF. SIMULTANEOUS LY THE TRIBUNAL HAD ISSUED NOTICE TO THE ASSESSEE ALSO. THE ASSESSE E HAS FILED CROSS OBJECTION BEARING NO.50/AHD/2015. THE REGISTRY HAS POINTED OUT THAT THE CROSS OBJECTION IS TIME BARRED BY 1234 DAYS. ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 2 3. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.41,14,375/- WH ICH WAS ADDED BY THE AO U/S 40(A)(IA) OF THE I.T. ACT, 1961. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A F IRM ENGAGED IN THE TRADING, PROCESSING & COMMISSION AGENT OF PULSE AND OTHER MERCHANDISE. IT HAS FILED ITS RETURN OF INCOME ON 6 -10-2008 DECLARING TOTAL INCOME AT RS.7,83,300/-. THE CASE OF THE ASSE SSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 14 3(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE AC COUNTS, IT REVEALED TO THE AO THAT THE AUDITORS IN THE AUDIT R EPORT HAVE GIVEN A REMARK IN COLUMN NO.27 TAX WAS NOT DEDUCTED AT SOU RCE IN RESPECT OF FREIGHT RECOVERABLE (RS.41,14,375/- PAID DURING THE YEAR) AS THE ASSESSEE WAS OF THE OPINION THAT NO TDS LIABILITY A RISES IN SUCH CASES. ARMED WITH THIS REMARK, LD. AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE, INVITING ITS EXPLANATION AS TO WHY RS .41,14,375/- MAY NOT BE ADDED UNDER SECTION 40(A)(IA) READ WITH SECT ION 194C OF THE ACT. IN RESPONSE TO THE QUERY OF THE AO IT WAS CONT ENDED BY THE ASSESSEE THAT PAYMENT AGGREGATING TO RS.41,14,375/- WAS MADE ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 3 TOWARDS FREIGHT CHARGES ON BEHALF OF ARMY PURCHASES ORGANIZATION, MINISTRY OF DEFENSE FOR WHICH NO EXPENSES HAVE BEEN BOOKED IN BOOKS OF ACCOUNT. THE ASSESSEE HAS SUBMITTED SUPPOR TING DOCUMENTS CONTENDING THEREIN THAT IT HAS NOT INCURR ED ANY EXPENDITURE FOR FREIGHT. THEREFORE, IT WAS NOT SUPP OSED TO DEDUCT TDS. THE LD. AO HAS OBSERVED THAT ARMY PURCHASES OR GANIZATIONS (APO) ENTERED INTO CONTRACTS WITH GUJARAT STATE CO- OP. CONSUMER FEDERATION LTD. WHO IN TURN FURTHER ENTERED INTO CO NTRACTS WITH SEVERAL SELLERS/SUPPLIERS INCLUDING THE ASSESSEE FOR SUPPLY OF THE ITEMS ORDERED BY APO AS PER TERMS OF CONTRACT. ON AN ANAL YSIS OF THE CONTRACT LD. AO OBSERVED THAT PARA 2 OF THE CONTRAC T PROVIDES THAT INCIDENTAL EXPENSES SHALL HAVE TO BE PAID BY THE SE LLER AND, THEREFORE, ASSESSEE WAS SUPPOSED TO DEDUCT TDS ON THE TRANSPOR TATION CHARGES INCURRED ON THE SUPPLY MADE BY IT. SINCE ASSESSEE F AILED TO DEDUCT TDS, IT IS NOT ENTITLED FOR EXPENDITURE OF TRANSPOR T CHARGES. HE MADE AN ADDITION OF RS.41,14,375/-. 5. ON APPEAL LD. CIT(A) HAS DELETED THE ADDITION. T HE RELEVANT FINDING RECORDED BY THE CIT(A) READS AS UNDER :- ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 4 3.1(II) THIS ISSUE WAS DISCUSSED BY THE AO AT PAR A 4.1 OF THE ASSESSMENT ORDER. IT WAS HELD BY HIM THAT THE APPELLANT SHOULD HAVE DEDUCTED TDS ON THE FREIGHT PAYMENT MADE TO TRANSPORTERS AND SINCE IT WAS NOT DONE, THE PAYMENT WAS NOT DEDUCTIBLE IN COMPUTING THE INCOME. ACCORDINGLY, HE MADE THE IMPUGNED DISALLOWANCE U/S 40(A)(IA). THE C ONTENTION OF THE LD. AR IN THIS REGARD IN BRIEF ARE AS FOLLOWS. THE APPE LLANT MAINTAINED FREIGHT RECOVERABLEACCOUNT SEPARATELY, WHEREIN THE FREIGHT AMOUNT PAID TO TRANSPORTERS AND THE REIMBURSEMENT OF FREIGHT AMOUN T RECEIVED WERE ENTERED, AS MAY BE SEEN FROM THE L.RS OF THE TRANSP ORTERS THE CONSIGNOR IS ARMY SUPPLY CORE VFL, MUMBAI (A DIVISION OF ARMY PU RCHASE ORGANIZATION) AND THE CONSIGNEE IS THE RECEIVING SU PPLY DEPOT OF ARMY CORE (A DIVISION OF MINISTRY OF DEFENCE); THUS APPE LLANTS NAME DOES NOT APPEAR ON THE L.RS, THERE IS NO CONTRACT BETWEEN TH E APPELLANT AND THE TRANSPORTERS, IN ACCORDANCE WITH ACCOUNTING STANDAR DS NO ENTRIES NEED BE MADE IN THE P & L ACCOUNT AS THE FREIGHT PAYMENT WA S NOT AN EXPENDITURE IN THE HANDS OF THE APPELLANT NOR THE AMOUNT REIMBU RSED WAS APPELLANTS INCOME, IF THE SAID AMOUNT IS REFLECTED IN THE P & L ACCOUNT IT WOULD IN FACT GIVE A DISTORTED PICTURE OF THE INCOME OF THE APPEL LANT, SINCE THERE IS A TIME LAG BETWEEN THE PAYMENT OF FREIGHT AMOUNT AND GETTI NG IT REIMBURSED FROM THE APO; IN ACCORDANCE WITH PARA-6.11(A) OF THE TEN DER, THE TRANSPORTATION CHARGES ARE TO BE REIMBURSED; IN THE SAME PARA, IT IS ALSO CLEARLY MENTIONED THAT TENDER SHOULD NOT INCLUDE COST OF TR ANSPORTATION; SINCE THE APPELLANT DID NOT DEDUCT THE FREIGHT AMOUNT PAID WH ILE COMPUTING THE INCOME, THE QUESTION OF DISALLOWANCE U/S 40(A)(IA) DOES NOT ARISE. 6. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD. COUNSEL FOR T HE ASSESSEE HAS APPENDED COPY OF THE FORM INVITING TENDERS. THIS DO CUMENT IS DATED 18 TH FEBRUARY, 2008. IT IS IN RESPECT OF 4,300 MT OF AR HAR DAL. AT CLAUSE 6.11(A) THE DOCUMENT PROVIDES THAT FREIGHT C HARGES FOR SUPPLY OF PULSES, ANIMAL RATIONS WILL NOT BE INCLUDED BY T HE TENDERER. BECAUSE IT WILL BE REIMBURSED SEPARATELY. THIS CLAU SE READS AS UNDER: 6.11 (A) THE ROAD TRANSPORTATION CHARGES ARE REI MBURSED TO THE SUPPLIERS, AS PER THE GOVT. APPROVED RATES, ONLY IN THE CASE OF PULSES, ANIMAL RATIONS (CRUSHED), WMP, BUTTER TINNED, GHEE, EDIBLE OILS, VANASPATI AND TEA. (B) FOR ALL OTHER ITEMS THE SUP PLIER TENDERER WILL HAVE ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 5 TO BEAR THE ENTIRE COST OF TRANSPORTATION. (C) THE TENDERERS SHOULD NOT INCLUDE COST OF TRANSPORTATION IN THEIR OFFERED RAT ES FOR THOSE SPECIFIED ITEMS IN (A) ABOVE BUT ONLY FOR OTHER ITEMS, THE BA SIC RATE QUOTED BY THE TENDERER SHOULD INCLUDE THE COST OF TRANSPORTATION UP TO THE DESIGNATED ASC DEPOTS. ACCORDING TO THE ASSESSEE IT WAS NOT UNDER ANY OBLI GATION TO INCUR TRANSPORTATION CHARGES BECAUSE THEY ARE REIMBURSED BY THE APO. IT HAS ONLY ACCOMMODATED THE APO BY MAKING THE PAYMENT S TO THE TRANSPORTERS. IN OTHER WORDS, THE APO REIMBURSED TH E ACTUAL EXPENSES INCURRED ON THEIR BEHALF. THEREFORE, THE A SSESSEE HAS MAINTAINED A SEPARATE ACCOUNT FOR THIS PURPOSE. THI S ASPECT HAS BEEN SEEN BY THE CIT(A) IN THE FINDING EXTRACTED (S UPRA). ASSESSEE WAS NOT UNDER OBLIGATION TO DEDUCT TDS UNDER SECTIO N 194C BECAUSE THE TRANSPORTERS HAVE NOT ACTED ON BEHALF OF THE AS SESSEE. THEY HAVE TRANSPORTED THE GOODS OF APO. CONSIDERING THESE FAC TS WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). HENCE THE APPEAL OF THE REVENUE IS DISMISSED. 7. AS FAR AS THE C.O. IS CONCERNED, THE REGISTRY HA S POINTED OUT THAT THE CO IS TIME BARRED BY 1234 DAYS. THOUGH THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY WHERE IN IT HAS PLEADED THAT FILE WAS LOST AND THE CO COULD NOT BE FILED IN TIME. WE ARE OF THE ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 6 VIEW THAT THE CO ALSO DESERVES TO BE DISMISSED FOR TWO SIMPLE REASONS NAMELY IT IS TIME BARRED AND NO PLAUSIBLE EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE. SECONDLY SUB-SECTION (4 ) OF SECTION 253 OF THE I.T. ACT, AUTHORIZES THE RESPONDENT TO FILE A CROSS OBJECTION WITHIN 30 DAYS ON RECEIPT OF NOTICE IN AN APPEAL, S UCH C.O. WOULD BE VERIFIED IN THE PRESCRIBED MANNER AND IT WOULD BE F ILED AGAINST ANY PART OF THE ORDER. THE ASSESSEE HAS NOT DEMONSTRATE D ITS GRIEVANCE AGAINST ANY PART OF THE ORDER OF CIT(A). THE GROUND S TAKEN IN THE CO ARE IN SUPPORT OF THE FINDING OF THE CIT(A). THUS O THERWISE ALSO THESE GROUNDS ARE NOT MAINTAINABLE. 8. IN THE RESULT, THE APPEAL AND THE CROSS OBJECTIO N BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/8/2015 SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER DATED 13/8/2015 MAHATA/- ITA NO.2394/AHD/2011 ALONG WITH CO NO.50/AHD/2015 ASST. YEAR 2008-09 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION:11/8/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 11/8/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 13/8/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: