ITO, Jaipur V. ROGHT MOTORS PVT. LTD., Jaipur

ITA 252/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2028 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 17-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Section: 143(3); 194C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 252/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. THE ITO, WARD-2(2), JAIPUR. CUKE VS. M/S RIGHT MOTORS PVT. LTD., A-78, DUNDLOD HOUSE, HAWA SARAK, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AADCR 8316 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.06.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21/06/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A), ALIGARH, DATED 15.12.2015 PERTAINING TO A.Y. 2010-1 1. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING HE DISALLOWANCE OF RS. 40,62,024/- MADE BY AO BY APPLYING PROVISIONS OF SECTION 40(A)(IA) OF I T ACT, 1961. THE APPELLANT CRAVES THE INDULGENCE TO MODIFY, ALTE R, ADD OR ANY OTHER GROUND OF APPEAL. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) VIDE ORDER DATED 2 ITA NO. 252/JP/2016 M/S RIGHT MOTORS PVT. LTD.JAIPUR. 18.03.2013. WHILE FRAMING THE ASSESSMENT, THE AO O BSERVED THAT THE ASSESSEE COMPANY MAINTAINING TWO ACCOUNTS ONE IN THE NAME OF SHRI MANISH (RTO AGENT) SHOWING CREDIT BALANCE OF RS. 1,63,740/- AND OTHER IN THE NAME OF SHRI YOGENDRA (RTO OFFICE) SHOWING CREDIT BALANCE OF RS. 7,765/-. THE AO OBSERVED THAT THE TOTAL TRANSACTION MADE WITH THESE PERSONS, IN THE CASE OF MANISH CREDIT RS. 4,85,860/- DEBIT RS. 3,22,120/- AND IN THE CASE OF YOGENDRA CR EDIT RS. 35,76,164/- AND DEBIT OF RS. 35,68,399/-. THE ASSESSEE WAS ASKED TO EXPLAIN THESE PAYMENTS, IT WAS STATED THAT THESE PERSONS WERE ENGAGED FOR THE PURPOSE OF REGISTRATION OF VEHICLES AND THE EXPENDITURE WAS BEING INCURRED ON BEHALF OF THE OWN ERS OF THE VEHICLES. THEREFORE, ON SUCH PAYMENTS NO TAX WAS REQUIRED TO BE DEDUCTED . THE AO DID NOT ACCEPT THIS EXPLANATION AND MADE ADDITION ON THIS AMOUNT OF RS. 40,62,024/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AGAINST THIS ORDER, WHO AFTER CONSIDERING THE SUBMISSIONS ALLOWED THE APPEAL. THEREBY, HE DELETE D THE ADDITION. 3. NOW, THE REVENUE IS IN APPEAL. AT THE TIME OF H EARING, NO ONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSION S ARE ON RECORD. THE WRITTEN SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER :- 1. THE RESPONDENT IS PASSENGER CAR DEALER AND TO GIVE EXTRA SERVICES TO HIS CUSTOMERS AND MARKET COMPETITION WITHOUT ANY CH ARGE RTO REGISTRATION FACILITY IS PROVIDED THROUGH RTO AGENT . MONEY IS COLLECTED FROM THE CUSTOMERS AND HANDED OVER TO THE RTO AGAIN ST WITHOUT KEEPING ANY PROFIT MARGIN AND AS A WHEN REGISTRATIO N CERTIFICATE RECEIVED FROM RTO AGENT IS HANDED OVER TO THE RESPE CTIVE CUSTOMER. WE ENCLOSING HEREWITH LEDGER COPY OF BOTH THE RTO A GENT FROM WHOM THE WORK HAS BEEN GOT DONE AND SOME COPIES OF CUSTO MER ACCOUNTS TO WHOM CAR HAS BEEN SOLD WHICH CLEARLY SHOWS THAT WHA TEVER AMOUNT FOR RTO WORK HAS BEEN COLLECTED IS HANDED OVER TO THE R TO AGENT WITHOUT ANY PROFIT MARGIN THUS BY DOING SO RESPONDENT IS JU ST ONLY DOING THIS WORK AS FACILATOR BETWEEN RTO AGENT AND RESPECTIVE CUSTOMERS AND THIS IS NOT A BUSINESS ACTIVITY THAT'S WHY AMOUNT C OLLECTED HAS NOT BEEN 3 ITA NO. 252/JP/2016 M/S RIGHT MOTORS PVT. LTD.JAIPUR. ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND DIRE CTLY CREDITED/DEBITED TO THE CONCERN CUSTOMER AND RTO AG ENT ACCOUNT. ACCOUNTING PRINCIPAL IS ALSO SUPPORT THIS ACCOUNTIN G THAT WHERE TRANSACTION IS NOT A BUSINESS ACTIVITY OF THE RESPO NDENT THAT HE JUST ONLY COLLECTING THE STATUTORY MONEY FOR SOME SPECIF IC SERVICES WITHOUT ANY PROFIT MARGIN AND IN A FACILATOR CAPACITY THEN ONLY WAY TO ACCOUNT FOR THE SAME BY DEBITING/CREDITING THE CONCERN AS C URRENT LIABILITY/CURRENT ASSETS AND SAME HAS BEEN DONE BY THE RESPONDENT AND WHEN NO PROFIT/LOSS IN AN ACTIVITY NO TDS LIABILITY ARISES. THESE SERVICES ARE LIKEWISE E-MITRA FACILITY PROVIDED BY THE GOVER NMENT AND PASSES THE SAME AMOUNT COLLECTED TO CONCERN GOVERNMENT DEP ARTMENT WITHOUT ANY TDS LIABILITY. 2. SINCE RS. 4062024/- PAYMENT MADE TO RTO AGENT I S RECEIVED FROM RESPECTIVE CUSTOMERS IS NEITHER DEDUCTED NOR CLAIM AS EXPENSES AND NO PROFIT MARGIN IS TAKEN THEN SEC. 194C IS NOT APPLIC ABLE AND SIMILARLY DISALLOWING THE SAME U/S (A) (IA) BE THE LD. A. O. IS NOT JUSTIFIED. EVEN AUDITOR U/S 44AB HAS NOT GIVEN ANY QUALIFYING COMME NT ON SAME. 3. AS REGARDS VERBAL CONTRACT BETWEEN RESPONDENT A ND RTO AGENT AS DECIDED BY THE LD. AO IS NOT CORRECT, THIS IS A FAC T THAT MOST OF THE WORK HAS BEEN GOT DONE BY THE TWO RTO AGENTS BUT BY DOING THIS IT CAN'T BE IMPLIED THAT THERE IS A VERBAL AGREEMENT B ETWEEN THE RTO AGENT AND RESPONDENT. IN AN AGREEMENT/CONTRACT THE RE ARE SOME PRINCIPLE BY WHICH THIS CAN BE JUDGE THAT THERE IS A CORRECT. A. PRINCIPAL AND AGENT WHEREAS IN RESPONDENT CASE RESP ONDENT AND RTO AGENT ARE WORKING AS PRINCIPAL TO PRINCIPAL. B. THE RESPONDENT IS JUST FACILATING CUSTOMERS. TH US IN SUCH A CASE SEC. 194C IS NOT APPLICABLE. SINCE THE JOB HAS BEE N ASSIGNED TO THE RTO AGENT ON BEHALF OF CUSTOMERS AND ALL THE RELEVA NT DOCUMENT REQUIRED FOR REGISTRATION ARE SIGNED BY THE CUSTOME RS THE ONLY THING IS THAT AMOUNT FOR REGISTRATION IS PASSED THROUGH THE RESPONDENT WHICH IS PROVIDED BY THE RESPECTIVE CUSTOMER FOR PASSING THE SAME TO THE RTO AGENT FOR HIS STATUTORY WORK. 4. IN THE MATTER OF SIKAR JHUNJHNU DUGDH UTPADAK S AHAKARI SANGH LTD. V/S ASST. COMMISSIONER OF INCOME TAX (TDS) JAIPUR ( 2016) THIS HONOURABLE BENCH DECIDED WHEN THERE IS NO ELEMENT O F PROFIT PAYMENT IN QUESTION DID NOT REQUIRE DEDUCTION OF TAX AT SOU RCE. 4 ITA NO. 252/JP/2016 M/S RIGHT MOTORS PVT. LTD.JAIPUR. 5. NO OPPORTUNITY HAS BEEN PROVIDED TO THE RESPOND ENT TO CROSS EXAMINING THE RTO AGENT AND THEIR STATEMENT ARE REC ORDED IN THE BACK OF RESPONDENT THUS THE STATEMENT RECORDED CAN'T BE BELIEVED. 4. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVES SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT LD. CIT(A) WAS NOT JUSTIF IED IN DELETING THE ADDITION. 5. WE FIND THAT THE AO MADE ADDITION BY INVOKING TH E PROVISION OF SECTION 40(A)(IA) OF THE ACT, ON THE GROUND THAT NO TAX WAS DEDUCTED. THE LD. CIT(A) HAS GIVEN A FINDING THAT THESE PAYMENTS WERE IN THE NAT URE OF REIMBURSEMENT. MOREOVER THAT PAYMENT TO THE RTO AGENT CANNOT BE TREATED AS PAYMENT FOR WORK U/S 194 OF THE ACT BECAUSE THE MAJOR COMPONENT OF THESE PAYMEN TS ARE STATUTORY REGISTRATION CHARGES BY NO STRETCH IMAGINATION CAN BE HELD THAT PAYMENT OF REGISTRATION CHARGES IS SUCH KIND OF WORK. THESE ARE STATUTORY PAYMENT AND IT CANNOT BE TREATED AS PAYMENT OF SOME KIND OF WORK. WE FIND THAT IN THE STATEMENT, AGENTS HAVE STATED THAT AMOUNT OF RS. 4,85,860 IS NOT CORRECT AS OBSER VED BY LD. CIT(A), THERE ARE TWO COMPONENT ANOTHER REGISTRATION CHARGES. THE AO HAS NOT GIVEN ANY FINDING AS WHAT WAS THE REGISTRATION CHARGES AND WHAT WAS THE COMPO NENT OF THE SERVICES RENDERED BY THE AGENTS EVEN IF THE TAX WAS TO BE DEDUCTED. IT WAS NOT ON THE ENTIRE PAYMENT AS THE PAYMENTS TOWARDS REGISTRATION FEE CANNOT BE CONSTRUED AS PAYMENT FOR ANY CONTRACT. UNDER THESE FACTS, WE DO NOT SEE ANY REA SON TO INTERFERE INTO THE ORDER OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THIS GROU ND OF THE REVENUES APPEAL IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON WEDNESDAY THE 21 ST DAY OF JUNE 2017. 5 ITA NO. 252/JP/2016 M/S RIGHT MOTORS PVT. LTD.JAIPUR. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 21/06/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ITO, WARD-2(2), JAIPUR. 2. THE RESPONDENT M/S RIGHT MOTORS PVT. LTD. JAIP UR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 252/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR