Shri Ramesh Ambalal Modi L/H of late Ambalal Dattram Modi, Ahmedabad V. The Income Tax Officer, Ward-2(1), Ahmedabad

ITA 325/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9119 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMIR VAKIL
• Keywords: Presumptive income; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 40(a)(ia); 194C; 250; 201

Judgement Text

,, IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.325/AHD/2014 ( / ASSESSMENT YEAR : 2009-10) LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI 590/1/1, SUTARIA BUILDING GHEE BAZAR, KALUPUR AHMEDBAD-380 001 / VS. THE INCOME TAX OFFICER WARD-2(1) AHMEDABAD $ ./ ./ PAN/GIR NO. : ABIPM 7650 H ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : -NONE- ($'*) / RESPONDENT BY : MR.SAMIR VAKIL, SR.DR +,*- / DATE OF HEARING 23/02/2017 ./0*- / DATE OF PRONOUNCEMENT 01/03/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI [CIT( A), AHMEDABAD [CIT(A) IN SHORT] DATED 08/11/2013 FOR THE ASSESSME NT YEAR 9AY) 2009- 10. ITA NO.325/AHD/ 2014 LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI VS. ITO ASST.YEAR 2009-10 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- YOUR APPELLANT BEING DISSATISFIED WITH THE ORDER U /S. 250 OF THE INCOME TAX ACT, 1961 DATED 08/11/2013 PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD PRESENTS THIS APPEAL AG AINST THE SAME ON THE FOLLOWING AMONGST OTHER GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD GROSSLY ERRED IN DISMISSING THE APPELLANT'S APPEAL ON ERRONEOUS ASSU MPTION THAT THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX AT SOUR CE FROM THE PAYMENTS MADE TO THE INDIVIDUAL TRUCK OWNERS/TRANSP ORTERS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD, COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD GROSSLY ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING THE DISAL LOWANCE FOR AN AMOUNT OF RS. 43,22,000/- U/S.40(A)(IA) OF THE INCO ME TAX ACT,1961 BEING THE AMOUNT PAID FOR TRANSPORTATION CHARGES TO THE INDIVIDUAL TRUCK OWNERS/TRANSPORTERS COVERED UNDER THE PRESUMPTIVE T AXATION SCHEME AS LAID DOWN U/S. 44AE OF THE INCOME TAX ACT,1961 AND TO WHICH EXEMPTION AS LAID DOWN UNDER SUB SECTION (6) OF SEC TION 194C IS APPLICABLE AND THEREFORE NO TDS U/S.194C WAS REQUIR ED TO BE DEDUCTED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD GROSSLY ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING THE DISAL LOWANCE FOR AN AMOUNT OF RS. 43,22,000/- U/S.40(A)(IA) WITHOUT APP RECIATING THE FACT THAT THE ASSESSING OFFICER HAS WRONGLY CONCLUDED TH AT THE ASSESSEE HAS ENGAGED THE TRANSPORT COMPANY I.E. POOJA BULK CARRI ER TO WHOM DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS MADE TOTAL PAYMENT OF RS.42,67,000/-. WHEREAS, THE FACT IS THERE WAS NO S UCH ARRANGEMENT/ENGAGEMENT WHATSOEVER BETWEEN POOJA BUL K CARRIER AND THE ASSESSEE AS WELL AS THE ASSESSEE HAS NOT MADE A NY PAYMENT TO M/S. POOJA BULK CARRIER AS POOJA BULK CARRIER MERELY ISS UE THEIR LORRY RECEIPT AND IN CONSIDERATION THEREOF THEY GET CERTA IN COMMISSION FROM ITA NO.325/AHD/ 2014 LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI VS. ITO ASST.YEAR 2009-10 - 3 - THE TRUCK OWNERS AND THE ASSESSEE HAS PAID FREIGHT TO SUCH TRUCK OWNERS AND NOT TO THE TRUCK OPERATORS. THE ASSESSEE HAS AL SO FURNISHED THE TRUCK OWNER WISE DETAILS OF FREIGHT PAID BY THE ASSESSEE TOGETHER WITH THEIR PAN NOS. AND IN VIEW OF THIS IT IS SUBMITTED THAT A DDITION SO MADE U/S.40(A)(IA) OF THE INCOME TAX ACT,1961 BE DELETED . 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, AHMEDABAD GROSSLY ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING THE DISAL LOWANCE FOR AN AMOUNT OF RS. 43,22,000/- U/S.40(A)(IA) IN UTTER DI SREGARD TO THE FACT THAT THE APPELLANT ASSESSEE HAS NOT ENTERED INTO ANY AGR EEMENT WITH THE SAID POOJA BULK CARRIERS NOR THERE WAS ANY CONTRACT WITH THE SAID PARTY FOR TRANSPORTATION OF GOODS AND THEREFORE THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE TO THE TRUCK O WNERS/DRIVERS. 5. IT IS THEREFORE PRAYED THAT THE IMPUGNED ADDITION MAY PLEASE BE DELETED. 3. BRIEFLY STATED, THE ASSESSEE(DECEASED) WAS IN TH E BUSINESS OF TRADING IN EDIBLE OILS. THE RETURN OF INCOME FOR T HE AY 2009-10 WAS SELECTED UNDER SCRUTINY. THE ASSESSING OFFICER (AO ) NOTED INFRINGEMENT OF PROVISIONS OBLIGING DEDUCTION OF TDS BY THE PA YER TOWARDS EXPENDITURE ON TRANSPORTATION CHARGES RS.43,22,000 /-. CONSEQUENTLY, THE AO DISALLOWED THE AFORESAID EXPENDITURE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS 'THE ACT') FOR ALLEGED DEFAULT COMMITTED TOWA RDS NON-PAYMENT OF TDS. 4. IN FIRST APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO. ITA NO.325/AHD/ 2014 LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI VS. ITO ASST.YEAR 2009-10 - 4 - 5. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT (A) BEFORE THE TRIBUNAL. 6. NONE APPEARED FOR THE ASSESSEE. IT IS NOTED FRO M THE RECORDS THAT THE NOTICE WAS SERVED ON THE ASSESSEE INDICATING TH E DATE OF HEARING. ACCORDINGLY, THE MATTER IS HEARD EX-PARTE . THE LD.DR RELIED UPON THE ORDERS OF THE AO AND THE CIT(A). 7. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. THE SHORT QUESTION THAT ARISES FOR OUR CONSIDERATION IS WHETH ER DISALLOWANCE MADE UNDER S.40(A)(IA) OF THE ACT IS JUSTIFIED IN THE FA CTS OF THE CASE. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE HAS INTER-ALIA CHALLENGED THE ACTION OF THE REVENUE ON THE GROUND THAT PROVISIONS OF SECTION 40 (A)(IA) IS NOT APPLICABLE IN VIEW OF THE EXEMPTIONS LAID DOWN UNDE R SUB-SECTION 6 OF SECTION 194C OWING TO THE FACT THAT THE TRUCK OWNER S/TRANSPORTERS ARE COVERED UNDER THE PRESUMPTIVE TAXATION SCHEME AS LA ID DOWN UNDER 44AE OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS AL SO OBJECTED TO THE ACTION OF THE REVENUE ON THE GROUND THAT THE FREIGH T HAS BEEN PAID TO TRUCK OWNERS AND NOT TO THE TRUCK OPERATORS. THE G ROUNDS RAISED BY THE ASSESSEE REQUIRES EXAMINATION OF FACTUAL MATRIX. B ESIDES, AND WITHOUT PREJUDICE, WE OBSERVE THAT IF THE RECIPIENT PAYEES HAVE TAKEN INTO ACCOUNT THE IMPUGNED SUM OF TRANSPORTATION CHARGES RECEIVED FROM THE ASSESSEE HITHERTO WHILE COMPUTING INCOME IN THEIR HANDS AND PAID TAXES THEREON IN ITA NO.325/AHD/ 2014 LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI VS. ITO ASST.YEAR 2009-10 - 5 - ACCORDANCE WITH LAW, THE DISALLOWANCE OF EXPENDITUR E OUGHT NOT TO HAVE BEEN MADE IN VIEW OF SECOND PROVISO TO SECTION 40(A )(IA) OF THE ACT INTRODUCED BY FINANCE ACT, 2012 WITH EFFECT FROM 01 /07/2012 R.W.S. 201 DESPITE ALLEGED FAILURE TO DEDUCT TDS BY THE ASSESS EE. THE AFORESAID VIEW HAS BEEN PROPOUNDED IN LONG LINE OF JUDICIAL P RECEDENTS. THE LATEST DECISION ON THE ISSUE IS IN THE CASE OF CIT VS. ANS AL LAND MARK TOWNSHIP PVT.LTD. REPORTED AT 377 ITR 635 (DELHI). THUS, IN THE BACKDROP OF THE AFORESAID DECISION OF THE HONBLE D ELHI HIGH COURT, WE HOLD THAT DISALLOWANCE UNDER S.40(A)(IA) CANNOT BE FASTENED ON THE ASSESSEE WHERE THE RECIPIENTS HAVE DISCHARGED TAX O BLIGATION ON THE CORRESPONDING CHARGES INCOME RECEIVED BY THEM. T HEREFORE, WITH A VIEW TO RE-EXAMINE THE FACTUAL ASPECTS ON ASSERTION S MADE IN THE GROUNDS OF APPEAL BY THE ASSESSEE AND ALSO TO ENABLE TO THE ASSESSEE TO SATISFY THE REVENUE THAT THE RECIPIENTS HAVE EITHER DISCHARGED THEIR RESPECTIVE TAX OBLIGATIONS OR THE ASSESSEE IS OTHERWISE NOT OBLIGE D TO DEDUCT TDS IN VIEW OF SECTION 194C(6) OF THE ACT AS QUOTED, WE D EEM IT EXPEDIENT TO REMAND THE MATTER BACK TO THE FILE OF AO. THE AO M AY SATISFY ITSELF THAT THE RESPECTIVE RECIPIENTS HAVE DULY INCLUDED THE IM PUGNED TRANSPORTATION CHARGES RECEIVED FROM THE ASSESSEE IN THEIR RETURN OF INCOME. NEEDLESS TO SAY THAT SUITABLE OPPORTUNITY SHALL BE PROVIDED TO THE ASSESSEE WHILE DECIDING THE ISSUE. THE MATTER IS ACCORDINGLY REST ORED BACK TO THE FILE OF AO. WE DIRECT ACCORDINGLY. ITA NO.325/AHD/ 2014 LATE SHRI AMBALAL DATTRAM MODI THROUGH L.R.RAMESH AMBALAL MODI VS. ITO ASST.YEAR 2009-10 - 6 - 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED EX-PARTE FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/03/2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/ 03 /2017 4..+,.+../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-VI, AHMEDABAD 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 27.2.17 DICTATION-PAD 10- PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.2.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.01/03/17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 01/03/17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER