MESAGE. NORTHERN TRASFORMERS. INDUSTRIAL ESTATE, SRINAGAR V. INCOME TAX OFFICER WARD-2, SRINAGAR

ITA 329/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3170 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.329/Asr/2019 Assessment Year: 2007-08 M/s Northern Transformers, Industrial Estate, Sanat Nagar, Srinagar, J & K. [PAN:- AADFN6327J] (Appellant) Vs. ITO, Ward-2, Srinagar, Kashmir (J & K) (Respondent) Appellant by None. (Written Submission) Respondent by Sh. S.M. Surendranath, Sr. DR. Date of Hearing 24.08.2022 Date of Pronouncement 26.08.2022 ORDER Per:Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals)-1, Amritsar, [in brevity the CIT(A)] bearing appeal no. 87/2009-10,date of order 27.02.2019, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2007-08.The impugned order was originated against the order of the Income Tax Officer, Ward- I.T.A. No.329/Asr/2019 2 2, Srinagar (in brevity the AO), order passed u/s 143(3) of the Act, date of order 21.12.2009. 2. Brief facts of the case are that the assessee is a manufacturer of distribution transformers, conductors and steel tubular poles. During the year under consideration, sale amount of Rs.53,13,804/- on which the gross profit was declared amount to Rs.1,32,859/- which is worked out @ 2.5%. In assessment proceeding the addition was made by disallowing the different expenses total amount as of Rs.7,99,997/- which was added with the total income of the assessee. Also, the disallowance of expenses u/s 40(a)(ia) for non-deduction of TDS u/s 194C for payment to transporter amount of Rs.22,850/- and Rs.26,723/- which is worked out total amount of Rs.49,573/- was added back with total income of the assessee.Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the addition made by AO. 3. Aggrieved assessee filed an appeal before us. 4. During the hearing nonewas appeared on behalf of the assessee. The ld. Counsel filed a paper book and prayed to adjudicate the issues on basis of written submission. With the consent of the ld. DR the matter is taken for adjudication. 4.1 Addition was made in different expenses like manufacturing charges, wages, labour charges, salary, travelling, conveyance, staff welfare and maintaining the I.T.A. No.329/Asr/2019 3 total amount of Rs.7,99,997/- &was added back with the total income of the assessee on the ground that the expenses was booked on 31.03.2007. In this respect the assessee made the submission in the paper book which is extracted as below: “Explanation from Assessee as to why expenses were debited on 31.03.2007 “During the year, the assessee received orders for erection of tubular poles in far flung areas under the Govt’s rural electrification scheme. Since it was not possible to erect such poles from the factory at Srinagar, it was decided to move erection infrastructure to the rural village (Wusun, Anantnag) & open a sub erection centre there. To meet the expenses of such centre, the assessee has paid amounts first as imprests to one of its partners through cheques duly drawn from banks and debited under the accounting head ‘advance against supplies’. The total imprest during the year amounted to Rs.7,83,130/- for which the partner has rendered accounts at the year end and accordingly expenses incurred out of such imprest booked on 31-03-2007’. Details of such expenses are enclosed”. Your honour, the above explanation is self-explanatory. Actually, during the year, the assessee received orders for erection & installation of tubular poles in far flung areas under the Gods rural electrification scheme. Since the men & material required for erection & installation of such poles was moved near the site, the expenses for the purpose were incurred I.T.A. No.329/Asr/2019 4 through imprest given to partner who rendered the account at the year end. Your honor, in support of the above contention, the appellant assessee also furnished his bank account from which cheques have been drawn towards imprest account. The appellant assessee also submitted details of wages &labor charges and also salaries paid to staff at erection site.(These details were also submitted before worthy CIT(A), which is acknowledged by him in last para of page 4 of Appellate order).Since labor had to be engaged at remote sites, the appellant assessee had to arrange for their boarding expenses for which an amount of Rs. 50,000/- was incurred. The details of this expense head were also furnished. Vouchers for materials procured for erection like steel plates, welding rods, black glasses, gloves, electrodes etc are also furnished. .Your honor-All these expenses are very reasonable expense incurred wholly & solely for business purposes and its disallowance is a grave injustice to an assessee.lt needs to be appreciated that the mere fact that expenses have been booked on 31st March of the financial year out of the imprest paid to one of the partners cannot be held to be fake & fictitious merely on the ground of having been booked on last day of the year and infact it is a common practice in such types of businesses or eventualities that advances for expenses are first paid to managers or partners & then adjusted in books of accounts upon rendering of accounts by such persons. It is an absurd view to hold such expenses as I.T.A. No.329/Asr/2019 5 fake and in view of the above details & information & explanation submitted to Ld. ITO & CIT (A), the addition needs to be deleted.” 5. The ld. Sr. DR argued and relied on the order of revenue authorities and not made any strong objection against the submission of the assessee. 6. We considered the documents available in the record& the orders of revenue authorities. The assessee hadpaid the expenses through banking channel. The amount was incurred out of such imprest booked on 31.03.2007, the details explanation was filed by the assessee, supra. The expenses are paid in job-site and all the expenses are accumulated from different site to head office which was entered in books of accounts on dated 31.03.2007. The AO did not find any specific lacuna or did not point out any discrepancies related to the expenses disallowed amount of Rs.7,99,997/-. Without any specific finding the addition of expenses is liable to be deleted. 6.1. The disallowance was made u/s 40(a)(ia) amount to Rs.49,573/-. In support the assessee took the plea that the amount was paid not payable. So the section 40(a)(ia) will not be applicable. The assessee paid the transporter amount of Rs.22,850/- and on date 26.06.2006 and dated 27.02.2007 amount of Rs.22,850/-, accordingly the total amount is worked out amount to Rs.49,573/- which is contravention of section 194C of the Act for non-deduction of TDS. The assessee I.T.A. No.329/Asr/2019 6 was not able to clarify properly for reason for non-deduction of TDS on payment to transporter. The assessee was unable to mention any supporting case law in support of its reason for non-deduction of tax by contravening section 194C. Accordingly, this ground of the assessee is deleted. The addition amount of Rs. 49,573/- is upheld. 7. In the result, the appeal of the assessee in ITA 329/Asr/2019 is partly allowed. Order pronounced in the open court on 26.08.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order