M/s.J&J Timbers, Chalakkudy V. ITO, Trichur

ITA 319/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58341 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 319/COCH/2010 ASSESSMENT YEAR : 2006-07 M/S. J.&J TIMBERS, 23/418, MAIN ROAD, CHALAKUDY, THRISSUR. [PAN:AABFJ 7528B] VS. THE INCOME TAX OFFICER, WARD- 2(2), THRISSUR. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SMT. VIJAYAPRABHA, JR. DR DATE OF HEARING 01/03/2012 DATE OF PRONOUNCEMENT 23/03/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 25/02/2010 PASSED BY LD CIT(A)-V, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) OF THE AC T IN RESPECT OF THE FOLLOWING PAYMENTS, HAVING BEEN CONFIRMED BY LD CIT(A), THE A SSESSEE IS IN APPEAL BEFORE US. INTEREST PAID TO KOTAK MAHINDRA - RS. 42, 566 INTEREST PAID TO SUNDARAM FINANCE - RS. 33,4 23 SAWING CHARGES PAID - R S.2,24,469 THE AO DISALLOWED THE EXPENSES CITED ABOVE, SINCE T HE ASSESSEE DID NOT DEDUCT TDS U/S 194A IN RESPECT OF FIRST TWO PAYMENTS CITED ABOVE A ND U/S 194C IN RESPECT OF THE LAST ITEM. THE APPEAL FILED BY THE ASSESSEE BEFORE LD C IT(A) WAS DISMISSED. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. I.T.A. NO. 319/COCH/2010 2 2. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LD A.R SUBMITTED THE COPIES OF DOCUMENTS PERTAINING TO VEHICLE LOAN OBTAINED FROM M/S KOTAK MAHINDRA AND M/S SUNDARAM FINANCE. WE HAVE PERUSED THE SAME AND NOT ICE THAT THE M/S SUNDARAM FINANCE HAS SPLIT THE LOAN INSTALMENT INTO TWO PART S, VIZ., TOWARDS PRINCIPAL AND INTEREST. SINCE THE LENDER ITSELF HAS DESCRIBED THE PAYMENTS AS TOWARDS PRINCIPAL AND INTEREST, THE PAYMENT MADE TO M/S SUNDARAM FINANCE HAS TO BE TREATED AS INTEREST LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A OF THE ACT. SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON THE SAID PAYMENT, THE SAME IS LIAB LE FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT. ACCORDINGLY, WE UPHOLD THE VIEW OF THE LD CIT (A) IN RESPECT OF INTEREST PAID TO M/S SUNDARAM FINANCE. 3 IN THE STATEMENT FURNISHED BY M/S KOTAK MAHIND RA, WE NOTICE THAT THE INSTALMENT PAYMENT IS APPROPRIATED TOWARDS PRINCIPAL AND HI RE CHARGES. THE LD A.R SUBMITTED THAT THE PAYMENT OF HIRE CHARGES IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194A OF THE ACT. HOWEVER, WE FEEL THAT THIS ISSUE NEEDS RE -EXAMINATION AT THE END OF THE AO, AS THESE STATEMENTS HAVE BEEN FILED FOR THE FIRST TIME BEFORE US. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF PAYMENT MADE T O M/S KOTAK MAHINDRA AND RESTORE THE SAME TO THE FILE OF AO WITH A DIRECTION TO EXAM INE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THE LAST ISSUE PERTAINS TO PAYMENT OF SAWING CHARGES. THE LD A.R, BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD VS. CIT (293 ITR 226) AND THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ADIDAS INDIA MARKETING (P) L TD (288 ITR 379), CONTENDED THAT THE DISALLOWANCE U/S 40(A)(IA) IS NOT REQUIRED TO BE MA DE IF THE PAYEE HAS PAID INCOME TAX ON SUCH PAYMENTS. THE LD A.R ALSO FURNISHED THE COPIE S OF INCOME TAX RECORDS OF THE PAYEE OF SAWING CHARGES TO SUBSTANTIATE THAT HE HAS PAID INCOME TAX ON THE SAID RECEIPTS. THE LD A.R ALSO SUBMITTED THAT THERE IS NO CONTRACT BET WEEN THE ASSESSEE AND THE SAW MILL, WHICH IS OWNED BY THE ASSESSEES FATHER, FOR CARRYI NG OUT SAWING WORKS AND THE CHARGES FOR SAWING WORKS WERE PAID THEN AND THERE. HE CONT ENDED THAT SUCH KIND OF CASH AND I.T.A. NO. 319/COCH/2010 3 CARRY SYSTEM DOES NOT FALL WITHIN THE AMBIT OF CON TRACT. ACCORDINGLY HE SUBMITTED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF AO FOR M AKING FRESH CONSIDERATION OF THE ISSUE AFTER PROPERLY APPRECIATING THE FACTS SURROUNDING T HE ISSUE. 3.1 WE NOTICE THAT THE ASSESSEE HAS RAISED NEW CONTENTIONS BEFORE US AND HAS ALSO FILED CERTAIN NEW DOCUMENTS BEFORE US. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES RE-EXAMINATION AT THE END OF THE AO BY DULY CONSIDE RING THE VARIOUS FACTORS SURROUNDING THE ISSUE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO WITH A DIRECTION TO EXAMINE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCO RDINGLY ON 23-03-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 23 MARCH, 2012 GJ COPY TO: 1. M/S. J&J TIMBERS, 23/418, MAIN ROAD, CHALAKUDY, THRISSUR. 2. THE INCOME TAX OFFICER, WARD-2(2), THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN