The ITO, Ward-3, Bharuch V. The Ankleshwar Taluka ONGC Land Looser Travellers Co.Op.So.Ltd., Bharuch

ITA 3286/AHD/2011

• Counselvise Citation: 328620514 RSA 2011
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYA
• Assessee Lawyers: J P SHAH
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NOS. 1397/AHD/2009, 1702/AHD/2010 & 3286/AHD/2011 ASSESSMENT YEARS :2006-07, 2007-08 & 2008-09, RESPECTIVELY. INCOME TAX OFFICER, WARD.3, BHARUCH V/S . THE ANKLESHWAR TALUKA ONGC LAND LOOSER TRAVELLERS CO-OP. SOCIETY LTD., PAN NO. AATFS0453Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI B.K.S.PANDYA, SR. D.R /BY RESPONDENT SHRI J.P.SHAH, A.R. /DATE OF HEARING 12.06.2012 /DATE OF PRONOUNCEMENT 22.06.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THESE ARE THREE APPEALS AT THE BEHEST OF THE REVENU E WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A), BARODA, ORDERS DATED 05. 03.2009 24.02.2010 & 14.10.2011 FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY. 2. THE ISSUE IN THREE YEARS ARE SIMILAR. THE FIRST GROUND IS AGAINST DISALLOWANCE U/S 40(A)(IA) AND SECOND IS AGAINST DI SALLOWANCE U/S 40A(3) OF THE IT ACT. THE AMOUNT OF DISALLOWANCE IN EACH ASS ESSMENT YEAR IS DIFFERENT BUT ISSUE IS SAME. ITA NOS. 1397.A.09, 1702.A.10 & 3286/AHD/2011 A.Y.2006-07, 2007-08 & 2008-09 PAGE 2 3. THE BRIEF FACT OF THE CASE IS THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND ASSESSED AS AOP. THE ASSESSEE HAD RECEIVED JEE P RENT INCOME OF RS. 2,66,91,496/- FOR A.Y. 06-07, RS.3,53,60,268/- FOR A.Y. 07-08 & RS.4,17,35,747/- FOR A.Y. 08-09 FROM O.N.G.C. LTD., ANKLESHWAR, WHO HAD DEDUCTED THE T.D.S. AS PER THE PROVISIONS OF THE IT ACT. THE ASSESSEE HAD CLAIMED EXPENDITURE OF ABOVE RECEIPTS ON ACCOUNT OF JEEP RENT EXPENSES. THE AUDITOR IN COLUMN NO.27(A) REGARDING THE DEDUCTION OF T.D.S. HAS STATED AS NO. FURTHER FROM THE DETAILS FURNISHED BY THE AS SESSEE, IT WAS NOTICED BY THE A.O. THAT PAYMENT HAD BEEN MADE ON MONTHLY BASI S AND MODE OF PAYMENT WERE MADE IN CASH. LD. A.O. HAD GIVEN REASONABLE O PPORTUNITY AS TO WHY T.D.S. WAS NOT DEDUCTED ON JEEP RENT PAID TO MEMBER S AND DISALLOWANCE @ 20% ON CASH PAYMENT U/S 40A(3) OF THE IT ACT. THE ASSESSEE FURNISHED REPLY VIDE ITS LETTER DATED 27.11.2008 FOR A.Y. 06-07, 20 .10.2009 FOR A.Y. 07-08 & 09.12.2010 FOR A.Y. 08-09. THE A.O. CONSIDERED THE SECTION 40(A)(IA) AND CIRCULAR NO. 681 IN RESPECT OF SECTION 194 C DATED 08.03.1994. THE A.O. ALSO RELIED ON MADRAS HIGH COURT JUDGMENT IN CASE OF SECY. FEDERN. OF BUS OPERATORS ASSOCIATION OF T.N. VS UNION OF INDIA (20 01) 134 ELT 618 (MAD.) AND CONCLUDED AS UNDER:- CONSIDERING THE FACTS OF THE CASE, IN RESPECT OF J EEP RENT EXPENSES OF RS. 2,66,91,496/- FOR A.Y. 06-07, RS.3, 53,60,268/- FOR A.Y. 07-08 & RS.4,17,35,747/- FOR A.Y. 08-09, AS PER PRO VISION OF THE SECTION 40(A)(IA) OF THE I.T. ACT IS NOT ALLOWABLE AS TDS H AS NOT BEEN DEDUCTED ON THE EXPENDITURE. THEREFORE, THE ENTIRE EXPENDIT URE OF RS. 2,66,91,496/- FOR A.Y. 06-07, RS.3,53,60,268/- FOR A.Y. 07-08 & RS.4,17,35,747/- FOR A.Y. 08-09 IS DISALLOWED AND A DDED BACK TO THE ITA NOS. 1397.A.09, 1702.A.10 & 3286/AHD/2011 A.Y.2006-07, 2007-08 & 2008-09 PAGE 3 INCOME OF THE ASSESSEE. I AM SATISFIED THAT THE AS SESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS EVADED THE TAX THEREON SECTION 271(1)(C) IS ALSO APPLICABLE TO THE FACTS O F THE CASE. HENCE, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ARE I NITIATED. IN VIEW OF THE FACTS OF THE CASE AND DETAILS SUBMIT TED, IT IS SEEN THAT THE PAYMENT MADE TOWARDS JEEP RENT EXPENSES RS . 2,66,91,496/- FOR A.Y. 06-07, RS.3,53,60,268/- FOR A.Y. 07-08 & R S.4,17,35,747/- FOR A.Y. 08-09 ARE BY WAY OF CASH. AS PER PROVISION OF SECTION 40A(3) OF THE I.T. ACT, 20% OF SUCH EXPENDITURE WHICH COMES T O RS. 53,28,299/- FOR A.Y. 06-07, RS.70,72,053/- FOR A.Y. 07-08 & RS. 83,47,149/- FOR A.Y. 08-09 SHALL NOT BE ALLOWED AS DEDUCTION AND THEREFO RE, THE SAME IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE. I AM SATISFIED THAT THE ASSESSEE HAS BY FURNISHED INACCU RATE PARTICULARS OF INCOME AND HAS EVADED THE TAX THEREON SECTION 271(1 )(C) IS ALSO APPLICABLE TO THE FACTS OF THE CASE. HENCE, PENALT Y PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE INITIATED. ADDITIONS WERE MADE U/S 40(A)(IA) AT RS. 2,66,91,49 6/- FOR A.Y. 06-07, RS.3,53,60,268/- FOR A.Y. 07-08 & RS.4,17,35,747/- FOR A.Y. 08-09 AND U/S 40A(3) AT RS. 53,28,299/- FOR A.Y. 06-07, RS.70,72, 053/- FOR A.Y. 07-08 & RS. 83,47,149/- FOR A.Y. 08-09. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE FILED FIRST APPEAL BEFORE LD. CIT(A), BARODA, WHO HAD ALLOWED THE APPE AL IN THREE ASSESSMENT YEARS AS PER THE CIT(A) ORDER OF A.Y. 05-06 IN FAVO UR OF THE ASSESSEE. 5. NOW THE REVENUE BEFORE US AGAINST THE ORDER OF T HE LD. CIT(A), BARODA. LD. D.R. CONTENTED THAT THESE PAYMENTS WERE MADE TO THE JEEP OWNERS BY THE ASSESSEE WHICH IS LIABLE TO BE DEDUCTED T.D.S. U/S 40(A)(IA). THE SOCIETY IS AN ASSESSEE UNDER THE INCOME TAX ACT. EVEN IT RUNS ON THE BASIS OF NO PROFIT AND ITA NOS. 1397.A.09, 1702.A.10 & 3286/AHD/2011 A.Y.2006-07, 2007-08 & 2008-09 PAGE 4 NO LOSS. THE T.D.S. ON CONTRACT PAYMENT IS LIABLE TO BE DEDUCTED. FURTHER, THE ASSESSEE MADE CASH PAYMENT TO THE JEEP OWNERS WHICH IS THE VIOLATION OF THE SECTION 40A(3) OF THE IT ACT ON WHICH THE ITO RIGHT LY ADDED 20% OF TOTAL EXPENSES IN THE INCOME OF THE ASSESSEE. THEREFORE, HE PRAYED TO CONFIRM THE ORDER OF THE A.O. 6. FROM THE ASSESSEE SIDE, SHRI J.P. SHAH, ADVOCATE , APPEARED AND FILED A COPY OF ITAT B BENCH, AHMEDABAD, IN ASSESSEES OWN CASE IN ITA NO. 2303/AHD/2008 FOR A.Y. 05-06, IN WHICH SIMILAR ISSU E HAD BEEN DEALT AND IT WAS HELD IN PARAGRAPH NO.9 ON PAGE NO.7 IS AS UNDER :- 9. HAVING HEARD BOTH THE PARTIES, WE HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINE NT TO NOTE THAT IN THE ASSESSMENT ORDER, THE AO DISALLOWED THE ENTIRE PAYM ENT MADE TO THE FARMERS AMOUNTING TO RS.2,57,62,253/- BY INVOKING T HE PROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT. APART FROM THIS, THE AO DISALLOWED RS. 51,47,250/- UNDER SECTION 40A(3) OF THE ACT. THUS, THE DISALLOWANCE OF RS.51,47,250/- WAS MADE TWICE I.E. ONCE UNDER SECTI ON 40A(3) AND THEN INVOKING SECTION 40(A)(IA). AFTER CAREFULLY CONSID ERING THE REASONS WHICH LEAD TO FORMATION OF THE SOCIETY, WE ARE CONVINCED THAT THE ASSESSEE HAS NO PROFIT MOTIVE AND MORE OF A WELFARE ACTIVITY PERFORMED BY THE ASSESSEE. IT WAS ACTED AS AN INTERFACE BETWEEN FAR MERS AND THE ONGC FOR THE LIMITED PURPOSE OF RECEIVING THE JEEP RENTA L INCOME ON BEHALF OF THE ILLITERATE FARMERS. THE MAIN PURPOSE OF THIS M ECHANISM IS TO HELP BOTH ONGC AND THE FARMERS AS IT PRECLUDED THE INDIV IDUAL INTERACTION AND SMOOTHEN THE ENTIRE OPERATION. THE SOCIETY WAS ALSO DEBARRED FROM HIRING THE VEHICLES OF THE FARMERS TO OTHER CL IENTS WHOSE LAND IS ACQUIRED BY THE ONGC. IN THESE CIRCUMSTANCES, THE LEARNED CIT(A) IS FACTUALLY AND LEGALLY CORRECT IN HOLDING THAT THE A SSESSEE HAS NOT PERFORMED THE SERVICE OF TOUR OPERATORS. IT WAS PR OVIDING SERVICES TO THE ITA NOS. 1397.A.09, 1702.A.10 & 3286/AHD/2011 A.Y.2006-07, 2007-08 & 2008-09 PAGE 5 MEMBERS OF THE SOCIETY ONLY. IN THESE CIRCUMSTANCE S, THE DECISION OF THE ITAT, PUNE BENCH IN THE CASE OF DATTA DIGAMBER SAHA. KAMGAR SANSTHA LTD. (SUPRA) RELIED UPON BY THE LEARNED CIT (A) IN THE IMPUGNED ORDER IS MORE RELEVANT AND IDENTICAL TO THE FACTS B EFORE US. IN VIEW OF THIS, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE PERUSED THE ORDER OF THE AUTHORITY BELOW AND GONE THROUGH THE ITAT B BENCH DECISION IN ASSESSEES CASE FOR A.Y. 05-06 AS DISCUSSED ABOVE. BOTH THE ISSUE IN ALL THREE ASSESSMENT YEAR S ARE SIMILAR TO A.Y. 05-06. THE ASSESSEE HAD ACTED AS INTERFACE BETWEEN FARMER S AND THE ONGC FOR THE LIMITED PURPOSE OF RECEIVING THE JEEP RENTAL INCOME ON BEHALF OF THE ILLITERATE FARMERS. THE ONGC CANNOT ENTERTAIN INDIVIDUAL FARM ERS. THEREFORE, THE ASSESSEE CAME TO IN EXISTENCE TO SMOOTHEN THE ENTIR E OPERATION. THE SOCIETY WAS ALSO DEBARRED FROM HIRING THE VEHICLES OF THE F ARMERS TO OTHER CLIENTS WHOSE LAND IS ACQUIRED BY THE ONGC. THE ASSESSEE H AD NOT PERFORMED THE SERVICE OF THE TOUR OPERATORS. IT HAS BEEN PROVIDI NG SERVICE TO THE MEMBERS OF THE SOCIETY ONLY. WE FOLLOW THE RESPECTED CO-ORDIN ATE B BENCH DECISION, AND ALSO CONCLUDED THAT T.D.S. PROVISION U/S 40(A)(IA) IS NOT APPLICABLE IN THIS CASE AND THERE IS NO CASH PAYMENT BY THE ASSESSEE TO THE JEEP OWNERS. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDERS OF THE CIT(A). 8. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED IN ALL THREE YEARS. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY ITA NOS. 1397.A.09, 1702.A.10 & 3286/AHD/2011 A.Y.2006-07, 2007-08 & 2008-09 PAGE 6 S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 19.06.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 19.06.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON