DFC Services P Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2893/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90291 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 24-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO. 2893/MDS/2014 ( / ASSESSMENT YEAR: 2006-07) M/S DFC SERVICES P.LTD., 45, HARBOUR GATE HOME, RAJAJI SALAI, CHENNAI-600 001. VS ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(4) CHENNAI. PAN: AAACD1191Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.S.SRIRAMAN, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 5 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 17 TH APRIL, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CHENNA I DATED 23.09.2014 FOR THE ASSESSMENT YEAR 2006-07. THE ON LY GRIEVANCE OF THE ASSESSEE IN ITS APPEAL IS THAT COM MISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE DIS ALLOWANCE OF CLAIM OF PAYMENT MADE TO CHENNAI CONTAINER TERMI NAL P.LTD. FOR WANT OF TDS ON APPLICATION OF SECTION 4 0(A)(IA) OF THE ACT. 2 ITA NO.2893/MDS/2014 2. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE D URING THE ASSESSMENT YEAR 2006-07 PAID ` 1,26,729/- TO CHENNAI CONTAINER TERMINAL P.LTD. AND SUCH PAYMENT WAS DIS ALLOWED INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY THE ASSESSING OFFICER. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS TRIBUNAL IS CONSISTENTLY HOLDING THAT WHEN THE PAYM ENT IS ALREADY PAID BEFORE THE END OF THE ACCOUNTING YEAR, PROVISIONS OF SECTION 40(A)(IA) HAVE NO APPLICATION . HE PLACES RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH O F THIS TRIBUNAL IN THE CASE OF ACIT VS. S.ARJUN IN ITA NO.1848/MDS/2012 DATED 19 TH DECEMBER, 2014. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 4. HEARD BOTH SIDES. ON GOING THROUGH THE ORDERS OF LOWER AUTHORITIES, WE FIND THAT THE ISSUE IN APPEAL IS SQ UARELY COVERED BY THE DECISION OF THIS TRIBUNAL WHEREIN TH IS TRIBUNAL IS CONSISTENTLY HOLDING THAT PROVISIONS OF SECTION 40(A)(IA) HAVE NO APPLICATION, WHEN THE PAYMENTS WERE ALREADY MADE BEFORE END OF THE ACCOUNTING YEAR. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. S.ARJUN IN IT A NO.1848/MDS/2012 DATED 19.12.2014 HELD AS UNDER:- 3 ITA NO.2893/MDS/2014 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHORITIES. THE ASSESSING OFFICER WHILE COMPLETIN G THE ASSESSMENT DISALLOWED EXPENDITURE INCURRED BY THE A SSESSEE IN CONNECTION WITH PRODUCTION OF THE FILMS MADARAS I AND SIVAKASHI FOR THE REASON THAT ASSESSEE HAS NOT D EDUCTED TDS AND THEREFORE SUCH EXPENDITURE IS LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. T HE COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINING T HE ISSUE IN DETAIL AND FOLLOWING THE DECISION OF THE S PECIAL BENCH OF TRIBUNAL (VISAKHAPATNAM) IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (136 ITD 23) (SB) DELETE D THE DISALLOWANCE SINCE ALL THE EXPENDITURE WERE PAID BY THE ASSESSEE BEFORE THE END OF THE RELEVANT ACCOUNTING YEAR. WE FIND THAT THIS ISSUE HAS BEEN CONSIDERED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. ANABOND LTD. VS. DCIT IN ITA NOS.1576 & 1577/MDS/2014 DATED 13.11.20 14 OBSERVING AS UNDER:- 7. THE NEXT ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS WITH REGARD TO DIS-ALLOWANCE U/S.40(A)(IA ). THE ASSESSING OFFICER HAS MADE DIS-ALLOWANCE OF ` 47,98,284/- FOR NON-DEDUCTION OF TAX AT SOURCE ON PAYMENTS EXCEEDING ` 50,000/- MADE TO TRANSPORTERS. THE CLAIM OF THE ASSESSEE IS THAT TH E PAYMENTS WERE MADE FOR TRANSPORTATION OF GOODS. THE EXPENDITURE ON TRANSPORTATION IS DIRECT EXPENDITURE AND FALLS U/S.28 OF THE ACT AND NOT UNDER THE PROVISIONS OF SECTION 30 TO 38. THE LD.AR MADE ALTERNATE SUBMISSION THAT EVEN IF THE PAYMENTS ARE HELD TO BE COVERED U/S.30 TO 38 OF THE ACT, THE PROVISIONS OF SECTION 40(A)(IA) APPLY TO EXPENDITURE WHICH IS PAYABLE AND NOT IN THE CASES WHERE EXPENDITURE IS PAID. THE LD.AR IN ORDER TO STRENGTHEN HIS SUBMISSIONS DRAWS SUPPORT FROM THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICE PVT. LTD., IN ITA NO.122 OF 2013 DECIDED ON 09-07-2013 AND THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. THEEKATHIR PRESS (SUPRA). ON THE OTHER HAND, THE DEPARTMENT DRAWS SUPPORT FROM THE JUDGMENTS RENDERED BY THE HON'BLE HIGH COURTS IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (SUPRA) AND CIT VS. SIKANDAR KHAN N.TUNVAR (SUPRA). SIMILAR ISSUE HAD COME UP BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. THEEKATHIR PRESS (SUPRA). THE BENCH OBSERVED THAT, IN CIRCUMSTANCES, WHERE TWO DIFFERENT POSSIBL E VIEW ARE AVAILABLE, THE RULE OF JUDICIAL PRECEDENCE 4 ITA NO.2893/MDS/2014 DEMANDS THAT THE VIEW FAVOURABLE TO THE ASSESSEE MUST BE ADOPTED, AS HAS BEEN HELD BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., REPORTED AS 88 ITR 192 (SC). APPLYING THE PRINCIPLE LAID DOWN BY THE HON'BLE APEX COURT, WE FOLLOW THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT, WHICH IS IN FAVOUR OF THE ASSESSEE. WE HOLD THAT DIS-ALLOWANCE U/S.40(A)(IA) APPLIES TO AMOUNT PAYABLE AND NOT THOSE AMOUNTS WHICH HAVE ALREADY BEEN PAID. ACCORDINGLY, THE FINDINGS OF CIT(APPEALS) ON THIS ISSUE ARE SET ASID E AND DELETE THE ADDITION MADE U/S.40(A)(IA). THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL, WE ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DAY OF APRIL, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 17 TH APRIL, 2015 SOMU 12 32 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .