Indo Swiss Anti-Shock Limited, Bangalore V. The Income Tax Officer, Ward-2(1)(3), Ahmedabad

ITA 2437/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6266 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 27-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Section: 194C; 201(1)

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH- -- - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2437/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) INDO SWISS ANTI-SHOCK LTD., 143A-1, BOMMASANDRA INDL. AREA, BOMMASANDRA, BANGALORE 560 099, KARNATAKA # VS. INCOME TAX OFFICER, WARD 2(1)(3), AHMEDABAD. $ # % & # PAN/GIR NO. : AAACI 5889 G ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI TUSHAR HEMANI, A.R. ($'*) / RESPONDENT BY : SHRI SANTOSH KARNANI, SR.D.R + ,*-. / DATE OF HEARING 09/01/2018 /012*-. / DATE OF PRONOUNCEMENT 11/01/2018 3# O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD, VIDE APPEAL NO.CIT(A)-2/14/ITO,WD.2(1)(3)/2015-16 DATED 07/09/2 016 FOR THE ASSESSMENT YEAR (AY) 2012-13 AND FOLLOWING GROUNDS OF APPEAL HAS TAKEN BY THE ASSESSEE: 1. THE ORDER PASSED BY THE LEARNED CIT(A) IS PERVERSE SINCE IT IS CONTRARY TO THE FACTS, PROVISIONS OF THE ACT AND EVIDENCES O N RECORD. ITA NO.2437/AHD /2016 INDO SWISS ANTI-SHOCK LTD VS. ITO ASST.YEAR 2012-13 - 2 - 2. THE LEARNED C1T(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF FOREIGN EXCHANGE FLUCTUATION LOSS O F RS.50,24,452/-. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF FREIGHT CHARGES/TRANSPORT CHARGES O F RS.1,99,395/ U/S.40(A)(IA)OF THE ACT. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWE R AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTI CE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF AO IN LEVYING INTEREST U/S.234A/B/C OF TH E ACT. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF AO IN INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. 2. SO FAR AS GROUND NO.1 IS GENERAL AND NEED NOT TO BE ADJUDICATED AND GROUND NO.2 IS NOT PRESSED. 3. SO FAR AS GROUND NO.3 AND 4 ARE CONCERNED. ON VE RIFICATION OF DETAILS FILED BY THE ASSESSEE, IT IS SEEN THAT ASSE SSEE HAS PAID AN AMOUNT OF RS.1,99,395/- TO SHRI RAGHAVENDRA TRANSPORT ON WHIC H NO TDS HAS DEDUCTED AS REQUIRED U/S.194C OF THE ACT. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED T O SHOW-CAUSE AS TO WHY THE AMOUNT OF RS.1,99,395/- SHOULD NOT BE DISAL LOWED U/S.40(A)(IA) OF THE ACT. THE ASSESSEE DID NOT SUBMIT ANY REPLY A ND FAILED TO GIVE ANY EXPLANATION ON THIS ISSUE. AS PER THE PROVISION OF SUB-SECTION (7) OF ITA NO.2437/AHD /2016 INDO SWISS ANTI-SHOCK LTD VS. ITO ASST.YEAR 2012-13 - 3 - SECTION 194C OF THE ACT THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON CARRYING ON THE BUSINESS OF P LAYING, HIRING OR LEASING GOODS CARRIAGES SHALL FURNISH TO THE PRESCR IBED INCOME TAX AUTHORITY SUCH PARTICULARS IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. THE ASSESSEE FAILED TO FURNISH ANY EVID ENCE TO PROVE THAT IT HAS COMPLIED THE PROVISIONS OF SUB-SECTION (7) OF S ECTION 194C OF THE ACT. AS THE ASSESSEE MADE PAYMENT OF RS.1,99,395/- WITHOUT DEDUCTING THE TAX IS DISALLOWED U/S.40(A)(IA) OF THE ACT AS T HE ASSESSEE FAILED TO COMPLY THE PROVISIONS OF SUB-SECTION (7) OF SECTION 194C OF THE INCOME TAX ACT. 3.2 ASSESSEES CONTENTION WITH REGARD TO THE GROUND IN QUESTION IS REPRODUCED HERE UNDER: DURING THE YEAR UNDER APPEAL, THE APPELLANT HAD IN CURRED EXPENDITURE ON PAYMENT OF FREIGHT/TRANSPORT CHARGES AMOUNTING T O RS.1,99,395/-, WHICH WAS PAID TO RAGAVENDRA TRANSPORT. NO TAX WAS DEDUCTED AT SOURCE FROM THE SAID PAYMENT OF FREIGHT/TRANSPORT C HARGES AS THE ASSESSEE HAD FURNISHED HIS PAN (ABOPN0110H) AND ACC ORDINGLY NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE PURSUANT T O SECTION 194(6). HIS COPY OF ACK. IS SUBMITTED HEREWITH AS PER ANNEXURE - 7 (PAGE 46). THE ASSESSING OFFICER HAS DISALLOWED THE SAME BY INVOKI NG THE PROVISIONS OF SECTION 40(A)(IA). THE AO HAS DISCUSSED THIS ISSUE AT PARAGRAPH 6, PAGE 6 OF THE ASSESSMENT ORDER UNDER APPEAL. RELEVANT EX TRACT FROM THE PARA 6 OF THE ASSESSMENT ORDER READS AS UNDER: 6. DISALLOWANCE U/S.40(1)(IA): ON VERIFICATION OF THE DETAILS FILED, IT IS SEEN TH AT THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,99,395/- (204395-5000) (SERV ICE TAX) TO SHRI RAGHAVENDRA TRANSPORT ON WHICH NO TDS HAS BEEN DEDUCTED AT REQUIRED U/S.194C OF THE ACT. DURING TH E COURSE OF ITA NO.2437/AHD /2016 INDO SWISS ANTI-SHOCK LTD VS. ITO ASST.YEAR 2012-13 - 4 - ASSESSMENT PROCEEDINGS. THE ASSESSES WAS REQUIRED T O SHOW CAUSE AS TO WHY THE AMOUNT OF RS.1,99,395/- SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT , THE SUB-SECTION (7) OF SECTION 194C OF THE ACT THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON ON THE BUSINESS OF PLAYING, HIRING OR LEASING GOODS CARRIAGES SHALL FURNISH TO THE PRESCRIBED INCOME-TAX AUTHORITY SUCH PARTICULARS IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. THE_ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO PROVE THAT IT HAS COMPLIED THE PROV ISIONS OF SUB- SECTION(7)_OF SECTION 194C OF THE ACT. AS THE ASSES SEE MADE 'PAYMENT OF RS.1,99,395/- WITHOUT DEDUCTING THE TAX IS DISALLOWED U/S.40(A)(IA) OF THE ACT AS THE ASSESSEE FAILED TO COMPLY THE PROVISIONS OF SUB-SECTION (7) OF SECTION 194 OF THE INCOME-TAX.' THE APPELLANT SUBMITS THAT THE ACTION OF THE AO IN MAKING THE IMPUGNED DISALLOWANCE IS MISCONCEIVED, MISDIRECTED AND CONTR ARY TO THE FACTS AND EVIDENCE ON RECORD AND ALSO THE PREVISIONS OF THE I NCOME TAX ACT PARTICULARLY SECTION 194(6) AND SECTION 40(A)(IA) O F THE I.T. ACT. THERE IS NO DISPUTE OVER THE FACT THAT THE EXPENDITURE IN QUESTION IS GENUINELY INCURRED BY THE APPELLANT COMPANY IN THE COURSE OF ITS NORMAL BUSINESS AND FOR THE PURPOSE OF THE BUSINESS. THE PAYMENT IN QUESTION HAS BEEN MADE TO SHRI RAGAVENDRA TRANSPORT. NO TDS WAS MADE FROM SUCH PAYMENTS FOR THE OBVIOUS REASON THAT THERE WAS NO L EGAL OBLIGATION TO DEDUCT TAX AT SOURCE FROM SUCH PAYMENTS IN VIEW OF THE EXPRESS PREVISION CONTAINED IN SUB-SECTION (6) OF SECTION 1 94C OF THE I.T. ACT. AS A PAYEE HAD FURNISHED ITS INCOME TAX PERMANENT A CCOUNT NUMBER TO THE APPELLANT ASSESSEE, AS PER SECTION 194C(6) OF T HE IT. ACT, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT ANY TAX AT SOURCE FROM SUCH PAYMENTS. IT IS THEREFORE PRAYED THAT THE IMPUGNED ADDITION/D ISALLOWANCE MAY PLEASE BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, IT IS FURTHER SUBMITTED THA T THE APPELLANT HAS NOT BEEN TREATED AS AN ASSESSEE IN DEFAULT U/S. 201(1) OF THE IT. ACT FOR THE ALLEGED OMISSION TO DEDUCT TAX AT SOURCE FR OM THE PAYMENT OF RS.1,99,395/- MADE TO RAGHAVENDRA TRANSPORT. KINDLY APPRECIATE THAT PAYEE RAGAVENDRA TRANSPORT IS A RESIDENT IN INDIA. AS PER THE SECOND ITA NO.2437/AHD /2016 INDO SWISS ANTI-SHOCK LTD VS. ITO ASST.YEAR 2012-13 - 5 - PROVISO BELOW SECTION 40(A)(IA), IF AN ASSESSEE HAS NOT BEEN TREATED AS AN ASSESSEE IN DEFAULT U/S.201(1) FOR ITS FAILURE T O DEDUCT TAX AT SOURCE FROM THE PAYMENT MADE TO A RESIDENT PAYEE, IT SHALL HE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUN. THE PROVISO IS APPLICABLE TO THE APPELLANT'S CASE. THE APPELLANT T HEREFORE PRAYS THAT THE IMPUGNED ADDITION MAY PLEASE DELETED.' 3.3 BUT LD. CIT(A) WAS NOT AGREE WITH THE CONTENTIO N OF THE APPELLANT HENCE HE CONFIRMED THE ADDITION OF RS.1,99,395/-. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. WE HEARD BOTH THE PARTIES AND APPELLANT STATED THAT THE PAYEE IS HAVING A) PAN: ABOPN 0110 H (COPY OF THE ACKNOWLEDGEMENT OF T HE RETURN OF INCOME ENCLOSED). IN VIEW OF THIS, NO TAX IS REQUIR ED TO BE DEDUCTED AT SOURCE U/S.194C(6), B) AS REGARDS SECTION 194C(7), IT IS SLATED THAT THE SAME IS REQUIRED TO BE FURNISHED IN SUCH FORM AND W ITHIN SUCH TIME AS MAY BE PRESCRIBED. HOWEVER, NO REFERENCE HAS BEEN M ADE IN THE ACT AS TO WHICH FORM OR WHICH TIME IT REFERS TO. C) WITHOUT P REJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THIS IS PURELY PROCEDURAL, WHI CH SHOULD NOT BE A CAUSE FOR DISALLOWANCE. THEREFORE, WE REMAND THIS MATTER BACK TO THE FILE OF THE AO WHO WILL VERIFY THE DETAILS WHETHER PARTIES IN Q UESTION HAVE DEPOSITED THE TAX OR NOT. 5. SO FAR AS GROUND NO.5 IS CONSEQUENTIAL. GROUND N O.6 IS CONCERNED FOR INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) IS CONCERNED. SAME IS PREMATURE. ITA NO.2437/AHD /2016 INDO SWISS ANTI-SHOCK LTD VS. ITO ASST.YEAR 2012-13 - 6 - 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 11/01/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/01/2017 PRITI YADAV, SR.PS !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-6, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 09/01/2018 (DICTATION-PAD 2 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10/01/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER