Asst. Commissioner of Income tax Cir. 1, Belgaum V. Keshav Cements & Infra Ltd., Belgaum

ITA 265/PAN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75952 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR
• Assessee Lawyers: A S PATIL ITP
• Keywords: Question of law
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 264/PNJ/2013 (ASSESSMENT YEAR-2007-08) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELGAUM. (APPELLANT) VS. SHRI KESHAV CEMENTS AND INFRA LIMITED, JYOTI TOWERS, M VADAGAON, BELGAUM. PAN:AAACK8074H (RESPONDENT) CROSS OBJECTION NO. 50/PNJ/2013 OUT OF ITA NO. 264/PNJ/2013 (ASSESSMENT YEAR- 2007-08) SHRI KESHAV CEMENTS AND INFRA, LIMITED, JYOTI TOWERS, M VADAGAON, BELGAUM. PAN:AAACK8074H (OBJECTOR) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELGAUM. (RESPONDENT) ITA NO. 265/PNJ/2013 (ASSESSMENT YEAR-2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELGAUM. (APPELLANT) VS. SHRI KESHAV CEMENTS AND INFRA LIMITED, JYOTI TOWERS, M VADAGAON, BELGAUM. PAN:AAACK8074H (RESPONDENT) CROSS OBJECTION NO. 51/PNJ/2013 OUT OF ITA NO. 265/PNJ/2013 (ASSESSMENT YEAR- 2008-09) SHRI KESHAV CEMENTS AND INFRA LIMITED, JYOTI TOWERS, M VADAGAON, BELGAUM. PAN:AAACK8074H (OBJECTOR) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, BELGAUM. (RESPONDENT) APPELLANT BY : SHRI B. BARTHAKUR, DR RESPONDENT BY : SHRI A.S. PATIL (ITP) DATE OF HEARING : 27/01/2014 DATE OF PRONOUNCEMENT : 27/01/2014 O R D E R 2. ITA NOS. 264 & 265/PAN/2013 (A.Y. 2007-08 & 2008-09) C.OS. 50 &51/PNJ/2013 PER D.T. GARASIA BOTH THE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF CIT(A)-BELGAUM BOTH DATED 06.07.2013 FOR ASSESSMENT YEAR 2007-08 & 2008-09. 2. THE REVENUE HAS TAKEN FOLLOWING COMMON GROUNDS IN BOTH THE APPEALS: (1) THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194C(3)(I) ARE NOT ATTRACTED IN THE CASE OF THE ASSESSEE WHEN THE MATERIAL PRODUCED BY THE ASSESSEE I.E. TRUCK-WISE DETAILS ON RECORD DO NOT SATISFY THE PRIMARY CONDITION ENVISAGED IN SECTION 194C(3)(I)? (2) THE LEARNED CIT(APPEALS) ERRED IN NOT APPRECIATING THE REQUIREMENT OF SECTION 194C(3)(I) WHICH PUT A CONDITION ON THE ASSESSEE THAT SUCH SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR OR SUB-CONTRACTOR DOES NOT EXCEED RS20,000 AND MERE TRUCK NUMBER-WISE DETAILS FURNISHED BY THE ASSESSEE CANNOT BE TREATED AS COMPLIANCE TO THE PROVISIONS OF SECTION 194C(3)(I). (3) THE LEARNED CIT(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SATISFY THE PRIMARY CONDITION FOR MAKING PAYMENT OF FREIGHT CHARGES WITHOUT DEDUCTING TAX AT SOURCE ON THE BASIS OF TRUCK-WISE WHEREAS THE CONDITION STIPULATED IN SECTION 194C(3)(I) PROVIDES SUM CREDITED OR PAID TO A PERSON? 2.1. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN MANUFACTURING OF CEMENT AND TRADING IN COKE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING A TOTAL INCOME OF RS. 57,17,630/- AND FOR A.Y 2008-09 ON 23.09.2008 DECLARING A TOTAL INCOME OF RS. 1,34,64,000/. THE AO NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS TO TRANSPORTERS OF RS.46,23,509/- AND RS. 30,33,770/- FOR A.Y. 2007-08 AND 2008-09 RESPECTIVELY WITHOUT DEDUCTING OF TAX AT SOURCE IN CONTRAVENTION TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. THUS, THE AO WAS OF THE VIEW THAT INCOME OF RS.46,23,509/- FOR A.Y. 2007-08 AND RS.30,33,770/- FOR A.Y 2008-09 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A.Y. 2007-08 AND AO HAS ISSUED NOTICE U/S. 148 AND ENTIRE AMOUNT OF TRANSPORTATION CHARGES OF RS.46,23,509/- FOR A.Y.2007-08 AND RS. 30,33,770/- FOR A.Y 2008-09 WAS DISALLOWED AND 3. ITA NOS. 264 & 265/PAN/2013 (A.Y. 2007-08 & 2008-09) C.OS. 50 &51/PNJ/2013 ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSMENT WAS COMPLETED FOR A.Y. 2007-08 U/S. 143(3) R.W.S. 147 AND FOR A.Y. 2008-09 ASSESSMENT WAS COMPLETED U/S. 143 OF THE INCOME TAX ACT. 2.2. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS HELD AS UNDER: 6.3 FOR THE A.Y.2007-08, FROM THE SUBMISSIONS MADE BY THE APPELLANT, A COPY OF WHICH AS MENTIONED ABOVE IN PARA 5.1 ABOVE WAS FORWARDED TO THE A.O FOR HIS REMAND REPORT, IT IS SEEN THAT THE APPELLANT HAS MADE PAYMENT TOWARDS FREIGHT CHARGES TO VARIOUS TRUCK OPERATORS AND ALSO MAINTAINED TRUCK NUMBER-WISE DETAILS WHICH INDICATE THAT NO PAYMENT TO A PARTICULAR TRUCK HAS EXCEEDED RS. 20,000 ON A SINGLE OCCASION OR EXCEEDED RS. 50,000 PUT TOGETHER FOR THE ENTIRE FINANCIAL YEAR. THEREFORE, THE PROVISIONS OF SECTION 194C(1) ARE NOT ATTRACTED IN THE APPELLANTS CASE AS THE APPELLANTS CASE IS COVERED BY THE EXEMPTION CLAUSE UNDER SECTION 194C(5) OF THE I.T. ACT. FURTHER, THE APPLICABILITY OF SEC.40(A)(IA) OF THE I.T. ACT IS ATTRACTED ONLY WHEN THE ASSESSEE IS FOUND TO HAVE COMMITTED DEFAULT OF EITHER NOT DEDUCTING TAX AT SOURCE OR NOT PAYING AFTER SUCH DEDUCTION. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE DECISION OF THE I.T.A.T AND MY PREDECESSOR, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA) AMOUNTING TO RS. 46,23,509/- IS FOUND TO BE NOT WARRANTED. HOWEVER, FOLLOWING THE DECISIONS, SUPRA, ON ACCOUNT OF SELF MADE VOUCHERS IN RESPECT OF PAYMENTS MADE TO TRANSPORTERS AND THE NATURE OF EXPENSES, A DISALLOWANCE OF RS.1,50,000/- OUT OF RS. 46,23,509/- WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE AO IS DIRECTED TO DISALLOW RS.1,50,000/- ON THIS ACCOUNT WHILE GIVING EFFECT TO IS ORDER. THUS, THE APPELLANT GETS RELIEF OF RS.44,73,509/- ON THIS GROUND. 2.3. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT CIT(A) HAS FOLLOWED THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 100/PNJ/2012 WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE BY HOLDING THAT THERE WAS NO VIOLATION OF SECTION 194C(1) SO AS TO ATTRACT THE DISALLOWANCE OF TRANSPORTATION CHARGES U/S 40(A)(IA). WE FIND THAT SAME APPEAL WAS TRAVELLED TO HIGH COURT AND HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA HAS HELD AS UNDER: HAVING HEARD THE COUNSEL FOR THE PARTIES WE DO NOT SEE ANY SUBSTANTIAL QUESTION OF LAW ARISING IN THIS APPEAL BECAUSE WHETHER THE ASSESSEE HAS FAILED TO DEDUCT T.D.S. FROM THE CAREERS TO FREIGHT CHARGES WERE PAID BY IT IN EXCESS OF RS.20,000/- IN A PARTICULAR TRANSACTION OR IN A SUM OF RS. 50,000/- P.A. TO A PARTICULAR CAREER, IS A QUESTION OF FACT AND NOT A QUESTION OF LAW. THE COMMISSIONER OF INCOME TAX APPEALS 4. ITA NOS. 264 & 265/PAN/2013 (A.Y. 2007-08 & 2008-09) C.OS. 50 &51/PNJ/2013 AS WELL AS THE TRIBUNAL HAVE CONCURRENTLY HELD THAT MATERIAL PLACED BY THE ASSESSEE DISCLOSES THAT NO PAYMENT HAS BEEN MADE IN EXCESS OF RS.20,000/- IN REGARD TO SINGLE TRANSACTION OR IN EXCESS OF RS.50,000/- P.A. TO A PARTICULAR CAREER. THEREFORE, WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE CONCURRENT FINDINGS. ACCORDINGLY, THE APPEAL IS DISMISSED RESPECTFULLY FOLLOWING THE DECISION OF KARNATAKA HIGH COURT (DB) IN ITA NO. 5002/2013 WE DISMISS THE DEPARTMENTS APPEAL FOR BOTH THE YEARS. C.O NO. 50/PNJ/2013 FOR A.Y. 2007-08 AND C.O NO.51/PNJ/2013 FOR A.Y.2008-09. 3. GROUND NO. 1 IS COMMON IN BOTH CROSS OBJECTIONS AND IS GENERAL IN NATURE. 4. GROUND NO. 2 IS SUPPORTIVE TO THE ORDER OF CIT(A) AND GROUND NO. 3 READS AS UNDER. (III) LEARNED COMMISSIONER(APPEALS) ERRED IN DIRECTING AO TO DISALLOW RS. 150000 OUT OF TRANSPORT CHARGES OF RS. 4623509/- ONCE IT IS HELD THAT NO VIOLATION OF SECTION 40(A)(IA) NO DISALLOWANCE IS WARRANTED. FURTHER NO DISALLOWANCE WAS MADE BY A.O. IN HIS ASSESSMENT ORDER OUT OF TRANSPORT CHARGES. HENCE: ADDITION OF RS. 150000/- REQUIRES TO BE DELETED. 5. THE SHORT FACTS OF THE CASE THAT ASSESSEE IS A TRANSPORTER AND THE ASSESSING OFFICER DISALLOWED TRANSPORTATION CHARGES OF RS. 46,23,509/- FOR A.Y. 2007-08 AND RS. 30,33,770/- FOR A.Y. 2008-09 U/S. 40(A)(IA) OF THE ACT. 5.1 THE MATTER TRAVELLED TO CIT(A) AND CIT(A) IN HIS ORDER IN PARAGRAPH 6.3 HAS FOLLOWED THE DECISION OF ASSESSEES OWN CASE BUT HE HAS DISALLOWED RS.1,50,000/- TOWARDS TRANSPORTATION CHARGES FOR A.Y. 2007-08 AND RS. 1,00,000/- FOR A.Y. 2008-09 FOLLOWING THE DECISION OF TRIBUNAL. 5.2. THE ASSESSEE BY WAY OF C.O HAS CHALLENGED THE AD HOC DISALLOWANCE OF RS. 1,50,000/- FOR A.Y. 2007-08 AND RS. 1,00,000/- FOR A.Y. 2008-09. 5.3. WE HAVE ALREADY HELD IN THE ABOVE PARAGRAPH THAT ISSUE IN CONTROVERSY IS COVERED BY THE ASSESSEES OWN CASE AND ASSESSEES OWN CASE WAS TRAVELLED TO HONBLE JURISDICTIONAL HIGH COURT WHEREIN THE SIMILAR ISSUE WAS DECIDED BY 5. ITA NOS. 264 & 265/PAN/2013 (A.Y. 2007-08 & 2008-09) C.OS. 50 &51/PNJ/2013 HONBLE HIGH COURT AND HIGH COURT HAS CONFIRMED THE ORDER OF TRIBUNAL WHEREIN THE TRIBUNAL HAS HELD THAT THERE CANNOT BE ANY DISALLOWANCE U/S. 40(A)(IA) OF THE ACT IN BOTH THE YEARS. WE HAVE TO FOLLOW THE JUDGEMENT OF TRIBUNAL AND THE ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR. THE CIT(A) HAS DISALLOWED AD HOC TRANSPORTATION CHARGES WITHOUT ANY EVIDENCE. THEREFORE, WE ARE OF THE VIEW THAT AD HOC DISALLOWANCE CANNOT BE MADE U/S. 40(A)(IA) OF THE ACT. IN THE RESULT, GROUND NO. 3 IN BOTH THE C.OS ARE ALLOWED. 5.4. DURING THE COURSE OF HEARING LEARNED AR HAS NOT PRESSED GROUND NO. 4 IN C.O, THEREFORE, GROUND. NO. 4 IN BOTH THE YEARS IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMISSED IN BOTH THE YEARS. THE C.OS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.1.2014. SD/- SD/- ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 6.2.2014 P.S.- *PK* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY BY ORDER SR. PRIVATE SECRETARY, ITAT, PANAJI, GOA