DCIT, CHENNAI V. M/s. Maruti Transports Pvt. Ltd., CHENNAI

ITA 3154/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4056 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: K B MURALIDHARAN
• Keywords: Depreciation
• Section: 40A(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 3154 /MDS/201 6 / ASSESSMENT YEAR :20 1 2 - 1 3 THE DEPUTY COMMISSIONER OF INCOME TAX, CO RPORATE CIRCLE 4 (1) , CHENNAI . VS. M/S. MARUTI TRANSPORTS PVT. LTD., NO. 151, SRI RANGA, MAMBALAM HIGH ROAD, T. N AGAR, CHENNAI 600 0 17 . [PAN: A AECM1295N ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL , J CIT / RESPONDENT BY : SHRI K.B. MURALIDHARAN, C.A. / DATE OF HEAR ING : 0 8 . 0 5 .201 7 / DATE OF P RONOUNCEMENT : 28. 0 7 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8 , CHENNAI DATED 2 9 .0 8 .201 6 REL E VANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 , WHERE IN, THE REVENUE HAS RAISED THREE EFFECTIVE GROUNDS, VIZ., (I) DELETING THE DISALLOWANCE TOWARDS PAYMENT OF COMMISSION, (II) DELETING THE DISALLOWANCE TOWARDS LOADING & UNLOADING CHARG ES AND (III) DELETING THE DISALLOWANCE TOWARDS REPAIRS & MAINTENANCE EXPENSES. I.T.A. NO . 3154 /M/ 1 6 2 2. THE FIRST GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD TO DISALLOWANCE OF COMMISSION OF . 5,65,900/ - BY THE ASSESSING OFFICER. THE ASSESSEE HAS CLAIMED COMMISSION AND BROKERAGE PAYMENT OF .28,29,493/ - IN ITS RETURN OF INCOME. WHEN THE ASSESSEE WAS ASKED TO FURNISH PROOF OF PAYMENT, THE ASSESSEE HAS PRODUCED SELF MADE VOUCHERS. VIDE LETTER D ATED 12.03.2015, THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT COMMISSION/BROKERAGE WAS PAID TO INDIVIDUAL LORRIES TO VARIOUS AGENCIES. IT WAS ALSO SUBMITTED THAT SINCE THERE EXISTS NO PRINCIPAL - AGENT RELATIONSHIP, THE COMMISSION PAYMENT MAD E ARE OUTSIDE THE PROVISIONS OF SECTION 194H OF THE ACT AND NOT APPLICABLE. HOWEVER, NO PROPER PROOF FOR PAYMENT OF THE COMMISSION WAS FURNISHED, THE ASSESSING OFFICER DISALLOWED 20% OF THE COMMISSION AND BROKERAGE OF .28,29,493/ - CLAIMED BY THE ASSESSEE AND BROUGHT THE SAME TO TAX. 3. ON APPEAL, AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT SINCE THE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE AND MOREOV ER, THE EXPENDITURE WAS INCURRED IN RELATION TO LORRY BOOKING AGENTS WITH WHOM THE ASSESSEE DOES NOT HAVE A PRINCIPAL - AGENT RELATIONSHIP, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAI LABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHEN THE ASSESSING I.T.A. NO . 3154 /M/ 1 6 3 OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE, THE ASSESSING OFFICER HAS NOT RECORDED ANY VALID REASON FOR DISALLOWING 20% OF SUCH EXPENDITURE. FURTHER, THE C OMMISSION/BROKERAGE WAS PAID TO INDIVIDUAL LORRIES TO VARIOUS AGENCIES WITH WHOM THE ASSESSEE DOES NOT HAVE A PRINCIPAL - AGENT RELATIONSHIP, THE ABOVE EXPENDITURE CANNOT BE BROUGHT UNDER THE PROVISIONS OF SECTION 194H OF THE ACT. IN VIEW OF THE ABOVE, THE L D. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE ON THIS ACCOUNT AND HENCE, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 5. THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD TO DISALLOWANCE OF LOADING AND UNLOADING CHARGES TO THE T UNE OF .17,25,750/ - MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THESE PAYMENTS WERE MADE ON BEHALF OF THEIR CUSTOMER, NAMELY, MIDAS GOLDEN DISTILLERIES PVT. LTD., FOR UNLOADING THE GOODS AT VARIOUS TASMAC DE POTS, AND THAT THEY WERE RECOVERED AS REIMBURSEMENT ALONG WITH LORRY HIRE CHARGES FROM THEIR CUSTOMER. COPIES OF INVOICES ISSUED TO THEIR CUSTOMER ALONG WITH THE RELATED COMMUNICATION IN THIS REGARD WERE FURNISHED IN SUPPORT OF THEIR CONTENTION BEFORE THE ASSESSING OFFICER . HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE TRIES TO DEVIATE FROM SECTION 40(3) OF THE ACT BY MAKING VOUCHERS OF LESS THAN .35,000/ - . BY NOT ACCEPTING THE EXPLANATION GIVEN BY I.T.A. NO . 3154 /M/ 1 6 4 THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED 20% OF THE SAID EXPENSES OF .8 6 ,2 8 , 817 / - CLAIMED BY THE ASSESSEE AND BROUGHT THE SAME TO TAX. 6. ON APPEAL, AFTER CONSIDERING THE SUBMISSION OF THE ASSE SSEE, THE LD. CIT(A) HAS OBSERVED THAT SINCE THE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE AND MOREOVER, O N VERIFICATION OF THE DETAILS IN THE INVOICES RAISED BY THE ASSESSEE , HE HAS NOTICED THAT UNLOADING CHARGES HAVE BEEN RECOV ERED FROM THE CUSTOMER AT A FIXED RATE ON PER CASE BASIS. MOREOVER, THERE APPEARS TO BE NO EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUPPORT HIS VIEW THAT THE ASSESSEE TRIED TO DEVIATE FROM THE PROVISIONS S ECTION 40A(3) ACT . THEREFORE, THE LD. CIT(A) DELETED THE DISALLOWANCE OF .17,25,750/ - . 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHEN THE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITURE, TH E ASSESSING OFFICER HAS NOT RECORDED ANY VALID REASON TO STATE THAT THE ASSESSEE TRIED TO DEVIATE FROM THE PROVISIONS S ECTION 40A(3) ACT. FURTHER, O N VERIFICATION OF THE DETAILS IN THE INVOICES RAISED BY THE ASSESSEE , THE LD. CIT(A) HAS NOTICED THAT UNLOAD ING CHARGES HAVE BEEN RECOVERED FROM THE CUSTOMER AT A FIXED RATE ON PER CASE BASIS. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS NO VALID GROUND TO MAKE I.T.A. NO . 3154 /M/ 1 6 5 20% DISALLOWANCE OF THE EXPENDITURE INCURR ED BY THE ASSESSEE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. THE NEXT GROUND RAISED BY THE REVENUE IN ITS APPEAL IS WITH REGARD TO DELETING THE DISALLOWANCE OF R EPAIRS & MAINTENANCE E XPENSES CLAIMED BY THE ASSESSEE AT .23,90,13 4/ - . ON VERIFICATION OF DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS ENTERED INTO A CONTRACT WITH MEENAKSHI INDUSTRIES , WHEREAS , THE PAYMENTS WERE MADE TO MEENAKSHI TRADING COMPANY. THUS, THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENSES AND BROUGHT THE SAME TO TAX. 9. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DELETED THE DISALLOWANCE. 10. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IS A GOODS TRANSPORT OPERATOR WITH MORE THAN 90 VEHICLES AND CLAIMED REPAIRS AND MAINTENANCE EXPENSES ON VEHICLES AT .23,90,134/ - . THE ASSESSING OFFICER MADE THE DISALLOWA NCE ON THE GROUND THAT THE ASSESSEE HAS ENTERED INTO A CONTRACT WITH MEENAKSHI INDUSTRIES , WHEREAS , THE PAYMENTS WERE MADE TO MEENAKSHI TRADING COMPANY. IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE PAYMENTS MADE TO MEENAKSHI TRADING / MEENAKSHI AGENCIES WERE TOWARDS BODY BUILDING OF THE CHASSIS ACQUIRED FROM TVS I.T.A. NO . 3154 /M/ 1 6 6 SUNDARAM INDUSTRIES AND THE SAME WERE CAPITALISED UNDER ADDITION TO THE VEHICLES AS PER THE DEPRECIATION SCHEDULE. IT WAS ALSO CONTENDED THAT THE R EPAIRS & M AINTENANCE E XPENSE S ARE ROUTINE EXPENSES INCURRED IN VARIOUS PLACES. THE ASSESSEE HAS PRODUCED DETAILS OF ADDITION MADE TO VEHICLES AND THE LEDGER EXTRACTS OF THE REPAIRS & MAINTENANCE ACCOUNT . THE ASSESSEE HAS ALSO FURNISHED DETAILS WITH REGARD TO NEW VEHICLE BODY BUILDING CHARGES PAID TO VARIOUS PARTIES TO THE EXTENT OF .23,50,000/ - . 11. FROM THE ORDERS OF AUTHORITIES BELOW, IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS ACCOUNTED THE NEW BODY BUILDING CHARGES UNDER REPAIRS AND MAINTENANCE AND CLAIMED THE EXPENSES. IF IS SO, THE BALANCE AMOUNT OF .40,134/ - [ .23,90,1 34 - 23,50,000/ - ] WOULD BE VERY REASONABLE EXPENSES TOWARDS MAINTENANCE AND REPAIRS OF VEHICLES OF THE ASSESSEE. THE LD. CIT(A) HAS GIVEN A FINDING THAT THE EXPENSES WITH REGARD TO REPAIRS AND MAINTENANCE ARE REASONABLE AND FOUND TO HAVE BEEN REDUCED IN THE FINANCIAL YEAR UNDER CONSIDERATION AS COMPARED TO THE PRECEDING FINANCIAL YEAR. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDINGS OVER NEW BODY BUILDING EXPENSES INCURRED BY THE ASSESSEE OR THAT WOULD HAVE BEEN INCLUDED UNDER REPAIRS AND MAINTENANCE CHARGE S CLAIMED BY THE ASSESSEE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE REPAIR AND MAINTENANCE EXPENSES AS TO WHETHER THE NEW BODY BUILDING EXPENSES HAVE BEEN INCLUDED IN THE EXPENSES CLAIMED UNDER I.T.A. NO . 3154 /M/ 1 6 7 REPAIRS AND MAI NTENANCE OF VEHICLE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 1 2 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS PARTLY ALLOWED FOR STATISTICAL PURPOSE S . ORDER PRONOUNCED ON THE 28 TH JULY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 0 7 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / C IT(A) , 4. / CIT , 5. / DR & 6. / GF.