Speed & Movers India Pvt. Ltd., Behala V. I.T.O.,Ward-10(4), Kolkata

ITA 310/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7242 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 20-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 40A(3); 143(3); 201

Judgement Text

ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ & HZ) I.T.A. NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED,................. ........................APPELLANT 25, DIAMOND HARBOUR ROAD, BEHALA, KOLKATA-700038 [PAN: AARCS0298J] -VS.- INCOME TAX OFFICER,................................ ...................................RESPONDENT WARD-10(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI VIKASH SHARMA, ACA, FOR THE APPELLANT SMT. RANU BISWAS, ADDL. CIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : SEPTEMBER 04, 201 9 DATE OF PRONOUNCING THE ORDER : OCTOBER 25, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA & HYD ERABAD ZONE) :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-24, KOLKATA DA TED 28.12.2018, WHEREBY HE SUSTAINED PARTLY THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE RETURN OF INCOM E FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.10.2015 DECLARI NG TOTAL INCOME OF RS.2,61,434/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER NOTICED THAT THE PAYMENTS AGAINST THE FOLLOWING EXPENDITURE WERE MADE BY THE ASSESSEE IN CASH:- ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 2 SR. NO. HEAD OF EXPENDITURE AMOUNT OF EXPENDITURE 1. BUSINESS PROMOTION RS. 1,48,520/ - 2. STORES & CONSUMABLES RS. 74,422/ - 3. ELECTRICITY, POWER & FUEL RS. 9,45,100/ - 4. CAR HIRE CHARGES (FREIGHT CHARGES) RS.19,93,575/ - SINCE THE ABOVE PAYMENTS WERE MADE BY THE ASSESSEE IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) AND THERE WERE NO E XCEPTIONAL CIRCUMSTANCES EXPLAINED BY THE ASSESSEE FOR MAKING THE SAID PAYMENTS IN CASH AS SPECIFIED IN RULE 6DD, THE ASSESSING OFFICE R DISALLOWED THE SAID EXPENDITURE AGGREGATING TO RS.31,61,637/- UNDER SEC TION 40A(3) OF THE ACT IN THE ASSESSMENT MADE UNDER SECTION 143(3) VID E AN ORDER DATED 17.12.2017. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS FILED BY THE ASSESSEE CHALLEN GING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD, T HE LD. CIT(APPEALS) FOUND THAT OUT OF THE CAR HIRE CHARGES OF RS.19,93, 575/- DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40A(3), A SUM OF RS .9,96,507/- WAS PAID ON ACCOUNT OF FREIGHT CHARGES IN RESPECT OF WHICH P AYMENTS IN CASH WERE MADE NOT EXCEEDING RS.35,000/- IN ANY SINGLE CASE. ACCORDINGLY BY RELYING ON THE PROVISO TO SECTION 40A(3), HE HELD THAT THE DISALLOWANCE TO THAT EXTENT MADE BY THE ASSESSING OFFICER WAS NOT SUSTAI NABLE. AS REGARDS THE BALANCE AMOUNT OF CAR HIRE CHARGES DISALLOWED BY TH E ASSESSING OFFICER UNDER SECTION 40A(3), THE LD. CIT(APPEALS) FOUND TH AT THERE WERE FOUR BILLS AGGREGATING TO RS.1,03,500/- WHERE THE AMOUNT OF BILL AS WELL AS THE PAYMENT MADE BY THE ASSESSEE IN CASH WAS EXCEEDING RS.20,000/-. HE ACCORDINGLY RESTRICTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CAR HIRE CHARGES TO THE EXTENT OF RS.1,0 3,500/-. AS REGARDS THE ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 3 ELECTRICITY, POWER AND FUEL EXPENSES AGGREGATING TO RS.9,45,100/- DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 4 0A(3), THE LD. CIT(APPEALS) FOUND THAT THERE WERE TEN INSTANCES IN VOLVING THE TOTAL EXPENDITURE OF RS.3,51,300/- WHERE THE BILL AMOUNT AS WELL AS CASH PAYMENT MADE BY THE ASSESSEE EXCEEDED RS.20,000/-. HE ACCORDINGLY SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER UNDER SECTION 40A(3) ON ACCOUNT OF ELECTRICITY, POWER AND FUEL CH ARGES TO RS.3,51,300/-. SIMILARLY HE FOUND THAT OUT OF THE BUSINESS PROMOTI ON EXPENSES OF RS.1,48,520/- AND STORES & CONSUMABLES OF RS.74,422 /- DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40A(3), THE AMOUNT TO THE EXTENT OF RS.1,28,134/- AND RS.54,949/- WAS RELATED TO THE EX PENSES INCURRED BY THE ASSESSEE, WHERE THE BILL AMOUNT AS WELL AS CASH PAYMENT MADE BY THE ASSESSEE EXCEEDED RS.20,000/-. HE ACCORDINGLY SUSTA INED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF THE SAID EXPENDITURE UNDER SECTION 40A(3) TO THAT EXTENT. TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) THUS WAS PARTLY SUSTAINED BY THE LD. CIT(APPEALS) VIDE HIS APPELLATE ORDER DA TED 28.12.2018 AND AGGRIEVED BY THE SAME, THE ASSESSEE HAS PREFERRED T HIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS:- (1) LD. CIT(A) ERRED IN DISALLOWING RS.1,03,500/- U NDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. (2) LD. CIT(A) ERRED IN DISALLOWING RS.3,51,300/- U NDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. (3) THE LD. CIT(A) ERRED IN DISALLOWING PAYMENTS MA DE IN EXCESS OF RS.20,000/- TO A SINGLE PERSON IN A DA Y IN CASH WITHOUT CONSIDERING THE BILL AMOUNT. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE ISSUE RAISED IN GROUND NO. 1, I FIND MERIT IN THE CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE NATURE OF EXPENDITURE INCURRE D BY THE ASSESSEE UNDER THE CAR HIRE CHARGES, WHICH IS DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40A(3) AND SUSTAINED BY THE LD. CIT(A PPEALS) TO THE EXTENT ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 4 OF RS.1,03,500/- IS SUCH THAT THE SAME IS COVERED B Y THE PROVISO TO SECTION 40A(3) BEING PAYMENT MADE FOR PLYING, HIRIN G OR LEASING GOODS CARRIAGES AND SINCE THE PAYMENTS OF SUCH EXPENDITUR E WAS MADE BY THE ASSESSEE IN CASH NOT EXCEEDING A SUM OF RS.35,000/- , THE DISALLOWANCE CONFIRMED BY THE LD. CIT(APPEALS) IS NOT SUSTAINABL E. I ACCORDINGLY DELETE THE SAID DISALLOWANCE SUSTAINED BY THE LD. CIT(APPE ALS) TO THE EXTENT OF RS.1,03,500/- AND ALLOW GROUND NO. 1 OF THE ASSESSE ES APPEAL. 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 2 RE LATING TO THE DISALLOWANCE OF RS.3,51,300/- MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) OUT OF ELECTRICIT Y, POWER AND FUEL, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE SAID EXPENDITURE, KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS O F TRANSPORTATION OF GOODS, SHOULD BE TREATED AS FREIGHT CHARGES AND THE DISALLOWANCE MADE UNDER SECTION 40A(3) TO THE EXTENT IT INVOLVED THE PAYMENTS IN CASH NOT EXCEEDING RS.35,000/- SHOULD BE DELETED AS PER THE PROVISO TO SECTION 40A(3). HE HAS CONTENDED THAT THE ACTUAL NATURE OF THE EXPENDITURE IS TO BE SEEN KEEPING IN VIEW THE UNDERLYING PURPOSE OF I NCURRING SUCH EXPENDITURE AND NOT THE TREATMENT GIVEN IN THE BOOK S OF ACCOUNT WHILE BOOKING THE SAID EXPENDITURE. I AM UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. THE RELEVANT PROVISO TO SECTION 40A(3) IS APPLICABLE ONLY IN THE CASE OF PAYMENT MADE FOR PLY ING, HIRING OR LEASING GOODS CARRIAGES AND THE BENEFIT OF THE SAME, IN MY OPINION, CANNOT BE EXTENDED TO COVER THE EXPENDITURE INCURRED ON POWER AND FUEL IRRESPECTIVE OF THE NATURE OF SUCH EXPENDITURE OR T HE NATURE OF THE ASSESSEES BUSINESS. I, THEREFORE, FIND NO MERIT IN GROUND NO. 2 RAISED BY THE ASSESSEE IN THIS APPEAL AND DISMISS THE SAME. 6. AS REGARDS THE ISSUE RAISED IN GROUND NO. 3, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT GOING BY THE LANGUAGE O F SUB-SECTION (3) OF SECTION 40A AS WELL AS THE LEGISLATIVE INTENTION BE HIND MAKING AMENDMENT IN SECTION 40A(3) WITH EFFECT FROM 1 ST APRIL, 2009, THE AMOUNT OF EACH BILL ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 5 OR THE INSTANCE OF EXPENDITURE INCURRED BY THE ASSE SSEE IS TO BE TAKEN INTO CONSIDERATION AND IF SUCH AMOUNT DOES NOT EXCEED TH E LIMIT SPECIFIED, DISALLOWANCE UNDER SECTION 40A(3) IS NOT ATTRACTED EVEN IF THE PAYMENT MADE IN CASH AGAINST SUCH EXPENDITURE OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY EXCEEDS THE SPECIFIED LIMIT. I AM UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. AS PER THE PROVISIONS OF SECTION 40A(3), WHERE THE ASSESSEE INCURS ANY EXPEN DITURE IN RESPECT OF WHICH THE PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS THE SPECIFIED LIMIT, NO DE DUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. IT IS THUS CLEAR THAT WHAT IS RELEVANT FOR THE PURPOSE OF APPLICABILITY OF SECTIO N 40A(3) IS A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT AGAINST ANY EXPENDITURE INCURRED BY THE ASSESSEE EX CEEDING THE SPECIFIED LIMIT OF RS.20,000/- AS APPLICABLE TO THE YEAR UNDE R CONSIDERATION. IN THE PRESENT CASE, SUCH PAYMENTS IN CASH WERE MADE BY TH E ASSESSEE IN RESPECT OF CERTAIN EXPENDITURE INCURRED AS ENUMERATED BY TH E LD. CIT(APPEALS) IN HIS IMPUGNED ORDER EXCEEDING THE SPECIFIED LIMIT OF RS.20,000/- AND SINCE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40A(3) ONLY TO THE EXTENT OF SUCH PAYMENT/PAYMENTS WAS SUSTAINE D BY THE LD. CIT(APPEALS), I FIND NO INFIRMITY IN THE SAME CALLI NG FOR ANY INTERFERENCE. GROUND NO. 3 OF THE ASSESSEES APPEAL IS ACCORDINGL Y DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 25, 2 019. SD/- (P.M. JAGTAP) VICE-PRESIDENT (KZ & HZ) KOLKATA, THE 25 TH DAY OF OCTOBER, 2019 COPIES TO : (1) SPEED & MOVERS INDIA PVT. LIMITED, 25, DIAMOND HARBOUR ROAD, BEHALA, KOLKATA-700038 ITA NO. 310/KOL/2019 ASSESSMENT YEAR: 2015-2016 SPEED & MOVERS INDIA PVT. LIMITED 6 (2) INCOME TAX OFFICER, WARD-10(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-24, KOLKA TA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.