ACIT, New Delhi V. Sh. G Nand Gopal, New Delhi

ITA 2560/DEL/2012

• Counselvise Citation: 256020114 RSA 2012
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Bad and doubtful debts
• Section: 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO: 2560/DEL/2012 AY : - 2008-09 ACIT VS. G NAND GOPAL CIRCLE-38(1) C-47, LG-II, MALVIYA NAGAR, NEW DELHI. NEW DELHI 110 017 (PAN AEAPG7392H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.VASANTHAN, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 19.5.2015 DATE OF PRONOUNCEMENT :02.06 .2015 O R D E R PER G.C. GUPTA, VICE PRESIDENT THIS APPEAL FILED BY THE REVENUE FOR THE A SSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF CIT(A). AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE RESPONDENT AND ACCORDINGLY THE APPEAL OF T HE REVENUE IS BEING DECIDED EX PARTE QUA THE ASSESSEE RESPONDENT ON MERITS AFTER H EARING THE LD. DR. 2. GROUND OF APPEAL OF THE REVENUE NO. 1 & 2 ARE AS UNDER :- 1. THE LD. CIT(A) ERRED IN DELETING THE ADDITION MAD E OF RS. 20,22,841/- TOWARDS TRANSPORTATION CHARGES NOT APPRECIATING THE FACT THAT THE PROVISIONS OF SECTION 194C(6) FOR NON REQUIREMENT OF DEDUCTION OF TDS IN CASE OF TRANSPORTERS IF THEY PROVIDE THE PAN WAS EFFECTIVE FROM 1.10.2009 AND HENCE NOT APPLICABLE FOR THE RELEVANT A.Y. 2008-09. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 17,77,844/- MADE BY THE AO FOR NON-DEDUCTION OF TDS W.R.T. PAYMENTS MAD E TO M/S. JAIN STEEL INDUSTRIES TOWARDS TRANSPORTATION CHARGES AS THE AS SESSEE HIMSELF AGREED THAT A PORTION OF TOTAL BILL RAISED BY M/S. JAIN ST EEL INDUSTRIES RELATED TO TRANSPORTATION CHARGES AND HENCE THE OBLIGATION TO DEDUCT TDS ON SUCH PAYMENTS RESTS WITH THE ASSESSEE. ITA NO. 2560/DEL/2012 ACIT VS. G. NAND GOPAL 2 3. LD. DR REFERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED THAT THE ASSE SSEE HAS DEBITED A SUM OF RS. 30,11,841/- IN THE FREIGHT AND TRANSPORTATION CHARG ES AND THAT AS PER THE PROVISIONS OF SECTION 194-C ANY PAYMENT MADE UNDER THE HEAD F REIGHT AND TRANSPORTATION WAS LIABLE FOR DEDUCTION OF TDS IF INDIVIDUAL PAYMENT EXCEEDS OF RS. 20,000/- AND AGGREGATE PAYMENT EXCEEDS RS. 50,0000/- IN A YEAR. HE SUBMITTED THAT AS PER THE DETAILS FILED BY THE ASSESSEE, NO TDS WAS DEDUCTED ON THE PAYMENT OF RS. 30,11,841/- MADE UNDER THE HEAD FREIGHT AND CHARGES AND, THEREFORE, DUE TO NON DEDUCTION OF TDS, THE PROVISION OF SECTION 40(A) (I A) OF THE ACT WAS APPLICABLE AND THE DISALLOWANCE OF RS. 30,11,841/- WAS RIGHTLY MAD E BY THE AO. HE RELIED ON THE ORDER OF THE AO. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND HAVE PERUSED THE ORDER OF THE AO AND CIT(A). WE FIND THAT THE ASSESS EE HAS DEBITED A SUM OF RS. 30,11,841/- UNDER THE HEAD FREIGHT AND TRANSPORTATI ON CHARGES DURING THE YEAR. THE PROVISION OF SECTION 194-C OF THE ACT FOR MAKING TD S SHALL BE APPLICABLE IF ANY PAYMENT UNDER THE HEAD FREIGHT AND TRANSPORTATION E XCEEDS THE AMOUNT OF RS. 20,000/- INDIVIDUALLY AND THE AGGREGATE PAYMENT TO SINGLE PARTY EXCEEDS RS. 50,000/- IN A YEAR. WE FIND THAT THE ASSESSEE HAS C ONTENDED BEFORE THE REVENUE AUTHORITIES THAT NO BREAK UP OF THE EXPENSES DEBITE D UNDER THE HEAD FREIGHT AND TRANSPORTATION CHARGES WAS CALLED FOR. THE CIT(A) H AS CONSIDERED THE ENTIRE FACTUAL MATRIX OF THE MATTER AND HAS CONCLUDED THAT THE ASS ESSEE HAS FILED COMPLETE DETAILS OF THE TRANSPORTATION CHARGES AND THAT EITHER THE P ERMANENT ACCOUNT NUMBERS OF THE PAYEES PARTIES WERE FURNISHED OR PAYMENT MADE TO TH E PARTIES WERE LESS THAN RS. 20,000/- PER TRANSACTION OR LESS THAN RS. 50,000/- PER PARTY IN THE RELEVANT YEAR, ITA NO. 2560/DEL/2012 ACIT VS. G. NAND GOPAL 3 WHERE THE PARTY HAVE NOT MENTIONED THEIR PERMANENT ACCOUNT NUMBERS. REGARDING THE FREIGHT CHARGES PAID TO M/S. JAIN STEEL INDUST RIES AGGREGATING TO RS. 17,77,844/- , THE PARTY WAS NOT A TRANSPORTER BUT A SUPPLIER OF SPECIAL GALVANISHED STEEL STRUCTURES TO THE ASSESSEE FOR HIS VARIOUS PROJECTS UNDERTAKEN FOR THE INDIAN RAILWAYS/RITES. WE FIND THAT THE CIT(A) HAS RECORDE D THE FINDING THAT THE ASSESSEE HAS BEEN ISSUING PURCHASE ORDER ON THE SUPPLIERS M /S. JAIN STEEL INDUSTRIES REQUIRING SUPPLY OF GALVANISHED ITEMS AT THE SITE O F THE CONSIGNEE WHERE THE CONTRACT WAS BEING UNDERTAKEN. IT WAS SPECIFICALLY MENTIONED IN EACH PURCHASE ORDER THAT THE PURCHASE PRICE OF THE STEEL WOULD BE INCLUSIVE OF F REIGHT. COPIES OF THE SOME OF THE INVOICES AND PURCHASE ORDERS WERE PLACED ON RECOR D. THE CIT(A) HAS CONCLUDED THAT THE PAYMENTS MADE TO M/S. JAIN STEEL INDUSTRIE S WERE TOWARDS PURCHASES. IN THESE FACTS, THE CIT(A) HAS HELD THAT THE OBLIGATIO N TO DEDUCT OR NOT TO DEDUCT TAXES AT SOURCE WAS WITH THE SUPPLIER M/S. JAIN STEEL IND USTRIES WHO HAS HIRED THE TRANSPORTER AND NOT WITH THE ASSESSEE. IN THESE FAC TS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MISTAKE IN THE ORD ER OF THE CIT(A) ON THESE ISSUES AND THE PROVISIONS OF SECTION 194-C WERE NOT ATTRAC TED TO THE FACTS OF THE CASE OF THE ASSESSEE. ACCORDINGLY ORDER OF THE CIT(A) IS CONFIR MED AND THE GROUND NO. 1 AND 2 OF THE REVENUE ARE DISMISSED. 5. GROUND NO. 3 OF THE REVENUE IS AS UNDER :- 3. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 12,65,623/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF AMOUNTS WRITTE N OFF AS BAD DEBTS AS THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENTS EVIDEN CING THAT THESE SUMS WERE ACTUALLY OFFERED FOR TAXATION IN EARLIER YEARS AND ALSO PROOF THAT THE ABOVE SUMS WERE IRRECOVERABLE. 6. LD. DR SUBMITTED THAT THE ASSESSEE COULD NO T PROVE THE JUSTIFICATION FOR WRITING OFF THE AMOUNT PERTAINING TO M/S. TALUPULA ENGINEER ING COMPANY AS IT WAS NOT CLEAR ITA NO. 2560/DEL/2012 ACIT VS. G. NAND GOPAL 4 THAT THE AMOUNT SO WRITTEN OFF PERTAINS TO WHICH YE AR AND TO WHICH PARTY. HE SUBMITTED THAT THE ASSESSEE HAS FAILED TO FILE DOCU MENTARY EVIDENCE IN SUPPORT OF THE CLAIM OF AMOUNT WRITTEN OFF AND IT IS NOT KNOW N THAT WHETHER AMOUNT WRITTEN OFF WERE CAPITAL OR REVENUE IN NATURE. HE RELIED ON THE ORDER OF THE AO. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND HAVE PERUSED THE ORDER OF THE AO AND CIT(A). WE FIND THAT THE AMOUNT WRITTEN OFF PERTAINS TO M/S. TALAPULA ENGINEERING COMPANY. THE ASSESSEE HAS FILE D THE DETAILS AS REQUIRED BY THE AO AND THE BOOKS OF ACCOUNTS OF THE TWO UNITS WERE FURNISHED AS REQUISITIONED BY THE AO. THE AMOUNT IN QUESTION WAS 10 YEARS OLD AND WAS DUE FROM GOVT. UNDERTAKINGS. THE CIT(A) HAS RECORDED THAT ALL THE AMOUNTS WRITTEN OFF WERE APPEARING IN THE BALANCE SHEET OF EARLIER YEARS AND DULY EXAMINED BY THE AO IN THE CURRENT YEAR AS WELL AS IN THE RELEVANT YEARS AND THAT MOST OF THE ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE ACT. THE CIT(A) HAS REC ORDED A FINDING THAT THE INCOME EARNED FROM EACH OF THE PROJECT HAS BEEN OFFERED F OR TAXATION BY THE ASSESSEE IN THE PREVIOUS YEARS. THE CIT(A) HAS CITED DECISIONS IN SUPPORT OF HIS CONCLUSION THAT CLAIM OF THE ASSESSEE WAS ALLOWABLE U/S 36 OF THE I .T. ACT. THE CIT(A) HAS CITED THE DECISION OF DELHI TRIBUNAL IN ALL GROW FINANCE AND INVESTMENT PVT. LTD. (DE) ITA NO. 682/D/2011 AND HELD THAT AMOUNT OF BAD DEBT WRITTE N OFF IN RESPECT OF M/S. TALUPULA ENGINEERING CO. WAS RIGHTLY ALLOWED U/S 3 6 OF THE ACT. IN THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT ALL THE CONDITIONS F OR ALLOWABILITY OF THE AMOUNT WRITTEN OFF BY THE ASSESSEE WERE FULFILLED IN THIS CASE AND THERE WAS NO MISTAKE IN THE ORDER OF THE CIT(A) IN HOLDING THAT THE AMOUNT OF BAD DEBT WRITTEN OFF IN RESPECT OF TALUPULA ENGINEERING CO. WAS RIGHTLY CLAIMED BY THE ASSESSEE U/S 36 OF THE I.T. ITA NO. 2560/DEL/2012 ACIT VS. G. NAND GOPAL 5 ACT. ACCORDINGLY THE ORDER OF THE CIT(A) ON THIS IS SUE IS CONFIRMED AND GROUND OF APPEAL NO. 3 IS DISMISSED. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02-0 6-2015. SD/- SD/- (T.S. KAPOOR) (G.C. GUPTA) ACCOUNTANT MEMBER VICE PRESIDE NT DATED: 02-06-2015 *VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 19.5.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 19.5.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER ITA NO. 2560/DEL/2012 ACIT VS. G. NAND GOPAL 6 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER