The ITO, Ward-3, Mehsana V. Shri Narayanbhai Dahyabhai Prajapati, Gandhinagar

ITA 2775/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6658 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: G S PATEL
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.2775/AHD/2010 A. Y.: 2007-08 THE INCOME TAX OFFICER, WARD-3, 2 ND FLOOR APOLLO ENCLAVE, HIGHWAY, MEHSANA VS SHRI NARAYANBHAI DAHYABHAI PRAJAPATI, PROP. MAHALAXMI MARKETING, HIGH WAY, KALOL, DIST. GANDHINAGAR PA NO. ABRPP 9920 G (APPELLANT) (RESPONDENT) C. O. NO. 310/AHD/2010 (IN ITA NO.2775/AHD/2010: AY: 2007-08) SHRI NARAYANBHAI DAHYABHAI PRAJAPATI, PROP. MAHALAXMI MARKETING, HIGH WAY, KALOL, DIST. GANDHINAGAR VS THE INCOME TAX OFFICER, WARD-3, 2 ND FLOOR APOLLO ENCLAVE, HIGHWAY, MEHSANA PA NO. ABRPP 9920 G (APPLICANT) (RESPONDENT) DEPARTMENT BY SHRI H. P. MEENA, SR. DR ASSESSEE BY SHRI G. S. PATEL, AR O R D E R PER BHAVNESH SAINI: THE DEPARTMENTAL APPEAL IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), GANDHINAGA R DATED 27 TH JULY, 2010 FOR ASSESSMENT YEAR 200708. THE CROSS OBJECTI ON IS FILED BY THE ASSESSEE MERELY IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A). ITA NO.2775/AHD/2010 AND CO NO.310/AHD/2010 SHRI NARAYANBHAI DAHYABHAI PRAJAPATI,PROP. MAHALAXM I MARKETING 2 2. IN THE DEPARTMENTAL APPEAL, THE REVENUE CHALLENG ED THE DELETION OF ADDITION OF RS.10,47,748/- MADE ON ACCO UNT OF DISALLOWANCE U/S 40(A) (IA) OF THE IT ACT. IT IS ST ATED THAT THE DISALLOWANCE WAS MADE IN THE ABOVE SECTION FOR NOT DEDUCTING TAX AT SOURCE FROM THE FREIGHT EXPENSES PAID TO TRANSPORTE RS. THE AO DISCUSSED THIS ISSUE IN PARA 7 OF THE ASSESSMENT OR DER. THE ASSESSEE DEALS IN TRADING OF BRICKS AND TRANSPORTAT ION. AS PER THE AO, THE AMOUNT OF RS.11,27,540/- HAS BEEN DEBITED TOWAR DS FREIGHT EXPENSES PAID TO DIFFERENT TRANSPORTERS OUT OF WHIC H RS.10,47,748/- HAS BEEN PAID TO DIFFERENT TRANSPORTERS EXCEEDING R S.20,000/-. THE ASSESSEE HAS NOT DEDUCTED ANY TAX AT SOURCE. THE AO HAS ALSO OBSERVED THAT THE AUDITOR HAS ALSO MENTIONED THAT T HE ASSESSEE HAS NOT COMPLIED WITH TDS PROVISIONS. IN THE ABSENCE OF EXPLANATION, DISALLOWANCE WAS ACCORDINGLY MADE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE PURCHASED BUILDING MATERIALS I.E. KAPACI, SAND METALS AND GRITS ETC. FROM VARIOUS PAR TIES FROM DIFFERENT PLACES AND THESE PARTIES SEND THE BUILDING MATERIAL S THROUGH TRANSPORTERS FOR DELIVERY AT THE PLACE OF THE ASSES SEE FOR WHICH THE ASSESSEE PAID FREIGHT CHARGES. THE ASSESSEE HAS NOT ENTERED INTO ANY CONTRACT ORAL OR WRITTEN WITH ANY OF THE TRANSP ORTERS FOR DELIVERY OF THE GOODS PURCHASED FROM VARIOUS PARTIES BUT THE SE LLERS ARRANGED FOR DELIVERY OF THE GOODS AND THE ASSESSEE PAID THE CHA RGES TO THE TRANSPORTERS. NO FINDINGS HAVE BEEN GIVEN BY THE AO IF THERE WAS ANY RELATION OF CONTRACTOR OR SUB-CONTRACTOR BETWEEN TH E PARTIES AND, THEREFORE, PROVISIONS OF SECTION 194C OF THE IT ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT THE DISALLOWANCE IS ILLEGAL. THE ASSESSEE IN SUPPORT OF THE ABOVE ITA NO.2775/AHD/2010 AND CO NO.310/AHD/2010 SHRI NARAYANBHAI DAHYABHAI PRAJAPATI,PROP. MAHALAXM I MARKETING 3 CONTENTIONS RELIED UPON SEVERAL DECISIONS OF THE TR IBUNAL WHICH ARE QUOTED IN THE IMPUGNED ORDER. THE LEARNED CIT(A) AC CEPTED THE CONTENTION OF THE ASSESSEE THAT THERE IS NO ORAL OR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTERS TO WHOM F REIGHT CHARGES HAVE BEEN PAID. THE ASSESSEE PURCHASED THE MATERIAL S WHICH WERE TRANSPORTED BY THE SUPPLIERS AT THE PLACE OF THE AS SESSEE BY VARIOUS TRUCKS. THE ASSESSEE HAS NOT ENTERED INTO ANY AGREE MENT WITH THE TRANSPORTERS/TRUCK OWNERS. THE LEARNED CIT(A), THER EFORE, NOTED THAT THERE WAS NO CONTRACT BETWEEN TWO PERSONS AND NOTED THAT THE CASE IS COVERED BY THE DECISION OF ITAT CUTTACK BENCH I N THE CASE OF CHANDRAKANT THACKAR VS ACIT 129 TTJ 1. IT WAS ALSO FOUND THAT THE ASSESSEE HAD ALREADY PAID THE AMOUNT AND NOTHING IS PAYABLE WHICH FALLS OUTSIDE THE AMBIT OF SECTION 40 (A) (IA) OF T HE IT ACT AS DECIDED BY ITAT JAIPUR BENCH IN THE CASE OF JAIPUR VIDYUT V ITARAN NIGAM LTD. VS DCIT 123 TTJ 888 AND ALSO THE DECISION OF ITAT H YDERABAD BENCH IN THE CASE OF K. SRINIVAS NAIDU VS ACIT 131 TTJ 17. ADDITION WAS ACCORDINGLY DELETED. 3. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE AO SPECIFICAL LY NOTED THAT FREIGHTS HAVE BEEN PAID TO DIFFERENT TRANSPORTERS, THEREFORE, NOTHING IS PAYABLE AGAINST THE TRANSPORTERS/TRUCK OWNERS. THE ASSESSEE EXPLAINED THAT HE HAS PURCHASED BUILDING MATERIALS FROM VARIOUS SUPPLIERS WHICH HAVE BEEN DELIVERED BY THE SUPPLIER S AT THE PLACE OF THE ASSESSEE THROUGH THE TRUCKS. THEREFORE, PAYMENT S HAVE BEEN MADE FOR THE BUILDING MATERIALS AS WELL AS FOR THE TRANSPORTATION. THUS, THERE IS NO ORAL OR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND ITA NO.2775/AHD/2010 AND CO NO.310/AHD/2010 SHRI NARAYANBHAI DAHYABHAI PRAJAPATI,PROP. MAHALAXM I MARKETING 4 THE CONTRACTORS. THE TRUCKS ARE HIRED BY THE SELLER OF THE BUILDING MATERIALS FOR TRANSPORTING THE SAME AT THE PLACE OF THE ASSESSEE. THE AO HAS MERELY GONE BY THE AUDITORS REMARKS AND MAD E THE DISALLOWANCE WITHOUT VERIFYING THE FACTS. THE REMAR KS OF THE AUDITOR CANNOT BE TAKEN INTO CONSIDERATION IN THIS CASE AS AGAINST THE SPECIFIC PROVISIONS OF LAW. THE LEARNED CIT(A) WAS, THEREFO RE, JUSTIFIED IN RELYING UPON SEVERAL DECISIONS OF THE TRIBUNAL NOTE D ABOVE TO NOTE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE DECISIONS. THE LEARNED DR COULD NOT POINT OUT ANY I NFIRMITY IN THE ORDER OF THE LEARNED CIT(A). WE, THEREFORE, DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE SAME IS ACCORDINGLY DI SMISSED. 4. THE CROSS OBJECTION IS MERELY FILED BY THE ASSES SEE IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A). THE SAME IS, TH EREFORE, INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL A S THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-05-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 19-05-2011 LAKSHMIKANT/- ITA NO.2775/AHD/2010 AND CO NO.310/AHD/2010 SHRI NARAYANBHAI DAHYABHAI PRAJAPATI,PROP. MAHALAXM I MARKETING 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD