The ITO, Ward-8(2), Ahmedabad V. Someshwat Real Estate Pvt.Ltd., Ahmedabad

ITA 2474/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89523 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 10-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 30-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE S/SHRI N. S. SAINI, AM & RAJPAL YADAV, JM. ITA NO.2474/AHD/2011 ASST. YEAR 2005-06 INCOME - TAX OFFICER, WARD 8(2), AHMEDABAD. VS SOMESHWAR REAL ESTATE PVT. LTD., 19, SUNVILA BUNGLOWS, THALTEJ-SHILAJ ROAD, AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO. AAHCS 8333A APPELLANT BY SHRI M. K. SINGH, SR.DR RESPONDENT BY SHRI UMAIDSINGH BHATI, AR DATE OF HEARING: 10/06/2015 DATE OF PRONOUNCEMENT: 12/06/2015 O R D E R PER N. S. SAINI, ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) XIV, AHMEDABAD, DATED 25/07/2011. 2. GROUND NO.1 OF THE APPEAL IS DIRECTED AGAINST TH E ORDER OF CIT(A) DELETING DISALLOWANCE OF RS.1,35,000/-MAD E BY THE AO UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF PAYMENT TOWARDS CARTING EXPENSES. ITA NO2474/AHD/2011 ASST. YEAR 2005-06 2 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT ASSESSEE MADE PAYMENT OF RS.57,000 TO HEMAJI GOPAJI AND RS.78,000 TO JARUBA BHARWAD BY CHEQUES FOR CARTING OF SAND. THIS BEING EXPENSES IN NATURE OF CONTRACT FOR LABOUR, PROVISION OF SECTION 194C WAS APPLICABLE. THE ASSES SEE WAS ASKED BY AO AS TO WHY TDS WAS NOT DEDUCTED FROM THE ABOVE PAYMENTS. THE ASSESSEE SUBMITTED THAT THE AMO UNT WERE CREDITED ON DIFFERENT DATES AND EACH AMOUNT DI D NOT EXCEED RS.20,000/- HENCE TDS WAS NOT DEDUCTED. THE AO INVOKING THE PROVISIONS OF SECTION 194C HELD THAT T HOUGH THE AMOUNT CREDITED DID NOT EXCEED RS.20,000 BUT AT THE TIME OF PAYMENT THE AMOUNT WAS PAID IN EXCESS OF RS.20,000 AND THERE WERE NO SEPARATE CONTRACT AND HENCE THRESHOLD LIMIT OF RS.20,000 WAS APPLICABLE TO THE SAID PAYMENT. ACCOR DINGLY HE DISALLOWED RS.1,35,000/- UNDER SECTION 40(A)(IA) OF THE ACT. 4. ON APPEAL BEFORE THE CIT(A) ASSESSEE PRODUCED VOUCHERS FOR SAND PURCHASES AND SUBMITTED THAT THE PAYMENT WAS FOR PURCHASE OF SAND AND NOT FOR CARTIN G OF SAND. THE ASSESSEE RELIED UPON THE DECISION OF HON BLE GUJARAT HIGH COURT IN CIT VS. GIRNAR FOOD & BEVERAG E PVT. LTD. 306 ITR 23 WHERE IT WAS HELD THAT WHERE THERE WAS A CONTRACT FOR SUPPLY OF MATERIAL I.E. SALE OF MATERI ALS IT CANNOT BE TERMED AS CONTRACT FOR WORK OR LABOUR AND, THERE FORE, THE ITA NO2474/AHD/2011 ASST. YEAR 2005-06 3 PROVISIONS OF SECTION 194C WERE NOT APPLICABLE. THE ASSESSEE ALSO RELIED ON THE BOARDS CIRCULAR NO.715. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT SINCE THE PAYMENTS WERE MADE FOR PURCHASE OF SANDS AS EVIDENCED BY VOUCHERS OF SAND PURCHASES PRODUCED BY THE ASSESSEE WHICH WERE IGNOR ED BY THE AO, IT WAS A CONTRACT FOR SUPPLY OF MATERIAL AN D NOT FOR WORK OR LABOUR. CONSIDERING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GIRNAR FOOD & BEV ERAGE PVT. LTD. (SUPRA) WHERE IT WAS HELD THAT IN CASE OF CONTRACT FOR SUPPLY OF MATERIAL I.E. SALE OF MATERIAL PROVIS IONS OF SECTION 194C DOES NOT APPLY. THEREFORE, THE CIT(A) DELETED THE ADDITION. 6. THE DR RELIED ON THE ORDER OF AO AND THE AR OF T HE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE AO BY INVOKING THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT MADE ADDITION OF RS.1,35,000 ON THE GROUND THAT THE ASSESSEE HAD MADE PAYMENT TOWARDS CARTING OF SAND A ND, THEREFORE, ASSESSEE WAS LIABLE TO DEDUCT TDS UNDER SECTION ITA NO2474/AHD/2011 ASST. YEAR 2005-06 4 194C OF THE ACT WHICH THE ASSESSEE FAILED TO DO. TH E CIT(A) AFTER EXAMINING THE VOUCHERS FOR PURCHASE OF SAND S UBMITTED BY THE ASSESSEE BEFORE HIM WAS SATISFIED THAT THE P AYMENTS WERE TOWARDS PURCHASE OF SAND AND, THEREFORE, THE PROVISIONS OF SECTION 194C WERE NOT APPLICABLE TO T HE ASSESSEE AND DELETED THE ADDITION BY PLACING RELIAN CE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GIRNAR FOOD & BEVERAGE PVT. LTD.(SUPRA) WHERE IT WA S HELD THAT IN A CASE OF CONTRACT FOR SUPPLY OF MATERIAL P ROVISION OF SECTION 194C ARE NOT APPLICABLE. THE DR SIMPLY RELI ED ON THE ORDER OF A.O. HE COULD NOT POINT OUT ANY SPECIFIC E RROR IN THE ORDER OF CIT(A). HE ALSO COULD NOT BRING ANY MATERI AL TO SHOW THAT THE PAYMENT OF RS.1,35,000 MADE BY THE ASSESSEE WAS TOWARDS CARTING OF SAND AND NOT FOR PU RCHASE OF SAND. IN ABSENCE OF ANY SUCH MATERIAL BEING AVAI LABLE ON RECORD, WE FIND NO GOOD REASON TO INTERFERE WITH TH E ORDER OF CIT(A) WHICH IS CONFIRMED AND THE GROUND OF REVENUE IS DISMISSED. 8. GROUND NO.2 IS DIRECTED AGAINST ORDER OF CIT(A) DELETING DISALLOWANCE OF RS.7,60,095 MADE BY AO UND ER ECTION 40(A)(IA) OF THE ACT. 9. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED TRANSPORT EXPENSES OF ITA NO2474/AHD/2011 ASST. YEAR 2005-06 5 RS.10,92,702/- ON WHICH NO TDS WAS DEDUCTED. FROM T HE DETAILS FURNISHED BY THE ASSESSEE THE AO OBSERVED T HAT THE FOLLOWING PAYMENTS MADE TO TRANSPORTERS WERE IN EXC ESS OF RS.20,000 :- SL.NO. NAME OF PARTY AMOUNT 1. HITESH TRANSPORT 42000 2. GAYATRI TRANSPORT 30625 3. SHREENATH TRANSPORT 21300 4. NARENDRA V. PATE L 37925 5. BHARAT MERABHAI MUDHVA 36000 6. GOPIJI PIRAJI VANJARA 38500 7. SHREE GANESH EARTHMOVERS 32320 8. HITESH TRANSPORT 42000 9. NAGRAJ TRANSPORT 23300 10. NIKUL TRANSPORT 33000 11. YOGESHWAR FERTILISERS 21400 12. SHREE CHAMUNDA TRANSPORT CO. 22500 13. - DO - 22500 14. RAXIT TRANSPORT 32375 15. HARSHAD TRANSPORT 24050 16. - DO - 24050 17. HEMAJI GOPIJI 30000 18. SHIV TRANSPORT 33300 ITA NO2474/AHD/2011 ASST. YEAR 2005-06 6 19. SHRI HARSHAD TRANSPORT CO. 36975 20. JAY VANZARI TRANSPORT 41625 21. RTILAL B. BHARWARD 27000 22. LAXMA NBHAI B. BHARWARD 45975 23. RAJVI TRANSPORT 32375 24. GANESH TRANSPORT CO. 29000 TOTAL 760095 THE AO, THEREFORE, DISALLOWED RS.7,60,095/- BY INVO KING PROVISIONS OF SECTION 40(A)(IA) FOR NON-DEDUCTION O F TDS UNDER SECTION 194C FROM THE PAYMENTS MADE TO THE TRANSPORTERS. 10. ON APPEAL BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT PROVISO TO SECTION 194C (5) PROVIDES THAT NO TDS WA S REQUIRED TO BE DEDUCTED FROM THE PAYMENTS MADE IF T HE AMOUNT OF ANY SINGLE SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE CONTRACTOR DOES NOT EXCEED RS.20,000 AND THAT THE AGGREGATE AMOUNT OF SUCH SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DOES NOT EXCEED RS .50,000. IT WAS ALSO SUBMITTED THAT SUB-SECTION (2) OF SECTION 194C PROVIDES THAT LIABILITY OF TDS ARISES AT THE TIME O F CREDIT OR PAYMENT WHICHEVER IS EARLIER. IN THE CASE OF THE AS SESSEE BOTH THE CONDITIONS ARE FULFILLED. IN VIEW OF PROVI SO TO SECTION ITA NO2474/AHD/2011 ASST. YEAR 2005-06 7 194C (5) THE INDIVIDUAL CREDITS OF THE ASSESSEE COM PANY IN EACH ACCOUNT DOES NOT EXCEED RS.20,000 AND THE TOTA L PAYMENT IN A YEAR DOES NOT EXCEED RS.50,000 HENCE N O TDS IS APPLICABLE IN VIEW OF SECTION 194C. 11. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT IN THE CASE OF THE ASSESSEE IT I S NOTICED THAT INDIVIDUAL CREDIT IN EACH ACCOUNT DOES NOT EXC EED RS.20,000 AND THE TOTAL PAYMENT/CREDIT IN A YEAR DO ES NOT EXCEED RS.50,000. THE ASSESSEE HAD ALSO PRODUCED CO PIES OF ACCOUNTS OF EACH PERSON TO WHOM TRANSPORT EXPENSES HAD BEEN PAID. IN VIEW OF THIS FACTUAL POSITION, NO DIS ALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) AS THE ASSESSEE WAS NOT SUPPOSED TO DEDUCT TAX U/S 194C AND DELETED THE DISALLOWANCE. 12. THE LD. DR SUPPORTED THE ORDER OF AO AND POINTE D OUT FROM PAGE 3 & 4 OF THE ASSESSMENT ORDER THAT PAYMEN TS MADE TO ALL THE 24 PARTIES ARE ALSO BY SINGLE CHEQU E EXCEEDING RS.20,000/- SO THE CIT(A) WAS NOT JUSTIFI ED IN DELETING THE DISALLOWANCE. SO HIS ORDER MAY BE SET AND THAT OF THE AO BE RESTORED. ITA NO2474/AHD/2011 ASST. YEAR 2005-06 8 13. ON THE OTHER HAND SUBMITTED THAT DISALLOWANCE O R PAYMENT MADE TO HITESH TRANSPORT OF RS.84,000 MAY B E CONFIRMED AS THE PAYMENT MADE DURING THE YEAR EXCEE DED RS.50,000 AND IN THE CASE OF OTHER PARTIES HE SUBMI TTED THAT THE ADDITION WAS RIGHTLY DELETED BY THE CIT(A). 14. A PERUSAL OF SECTION 194C AS WAS IN FORCE AT TH E MATERIAL TIME SHOWS THAT A PERSON WAS LIABLE TO DED UCT TAX AT SOURCE WHEN PAYMENT IN PURSUANCE OF A CONTRACT F OR WORK EXCEEDS OR LIKELY TO EXCEED RS.20,000/-. FURTHER IT WAS ALSO PROVIDED THAT IF AGGREGATE OF THE PAYMENT FOR WORK TO A PERSON EXCEEDS RS.50,000/- DURING THE YEAR THEN ALS O THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT IS LIABLE TO DEDUCT TAX AT SOURCE. THUS IN OUR CONSIDERED VIEW I F THE ASSESSEE IN PURSUANCE OF A SINGLE CONTRACT FOR WORK IS REQUIRED TO PAY RS.20,000/- OR MORE THEN THE ASSESS EE IS LIABLE TO DEDUCT TDS OR WHEN PAYMENT IN RESPECT OF A SINGLE CONTRACT FOR WORK DOES OR DOES NOT EXCEED RS.20,000 /- BUT THE AGGREGATE OF PAYMENT FOR WORK TO A PERSON DURIN G THE YEAR EXCEEDS RS.50,000/- THEN THE ASSESSEE IS ALSO LIABLE TO DEDUCT TDS. IN OTHER WORDS IF THE AGGREGATE PAYMENT FOR DIFFERENT CONTRACT FOR WORK EXCEEDS RS.20,000/- BUT DOES NOT EXCEED RS.50,000/- IN A YEAR AND THE PAYMENT FOR A SINGLE CONTRACT FOR WORK DOES NOT EXCEED RS.20,000/- THEN THE ASSESSEE IS NOT LEGALLY OBLIGED TO DEDUCT TAX AT SO URCE. ITA NO2474/AHD/2011 ASST. YEAR 2005-06 9 15. WE FIND THAT AGGREGATE OF PAYMENT FOR WORK MADE TO HITESH CONTRACTOR DURING THE YEAR WAS RS.84,000/- A ND THEREFORE, THE DELETION OF DISALLOWANCE BY THE CIT( A) WAS NOT JUSTIFIED. 16. IN RESPECT OF THE BALANCE AMOUNT OF RS.6,70,095 /- WE FIND THAT THE REVENUE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT IN THE ABOVE CASES PAYMENT IN RESPECT OF SINGLE CONTRACT WAS OF AN AMOUNT MORE THAN RS.20,000/- OR THE AGGREGATE PAYMENT FOR DIFFERENT CONTRACT FOR WORK E XCEEDED RS.50,000/-. THUS WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESPECT O F DELETION OF RS.6,70,095/-. WE, THEREFORE, MODIFY THE ORDER O F THE CIT(A) TO THE EXTENT MENTIONED HEREINABOVE AND PART LY ALLOW THIS GROUND OF APPEAL OF REVENUE. 17. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/06/2015 SD/- SD/- ( RAJPAL YADAV ) JUDICIAL MEMBER ( N. S. SAINI ) ACCOUNTANT MEMBER DATED : 12/06/2015 MAHATA/- ITA NO2474/AHD/2011 ASST. YEAR 2005-06 10 COPY OF THE ORDER FORWARDED TO: 1. TH E APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.REGIST RAR, ITAT, AHMEDABAD 1. DATE OF DICTATION:11/06/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER:11/06/2015 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: 12/6/2015 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: