ACIT 16(2), MUMBAI V. MOHAMED YAHYA ABDUL GANI BATAWALA, MUMBAI

ITA 3356/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7852 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Additional evidence; Non-deduction of tax
• Section: 143(3); 142(1)

Judgement Text

1 ITA NO.3356/MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.3356/MUM/2014 (ASSESSMENT YEAR: 2010-11) ACIT-16(2), MUMBAI VS SHRI MOHAMMAD YAHYA ABDUL G ANI BATATAWALA, FLAT NO.91, REWA APARTMENTS, HAJI ALI, BHULABHAI DESAI ROAD, MUMBAI-400 026 PAN : AFHPB4491G APPELLANT RESPONDEDNT APPELLANT BY SHRI T.A. KHAN RESPONDENT BY NONE DATE OF HEARING 04-12-2017 DATE OF PRONOUNCEMENT 29-12-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-27, MUMBAI DATED 26-02-2014 AND IT PERTAINS TO AY 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW , THE LD. CIT(A) ERRED IN ALLOWING OF EXPENSES OF RS.52,24,15 0/- U/S 40(A)(IA) OF THE ACT IGNORING THE FACT THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD CLAIMED THE EXPENSES AS HIRE CHARGES WHERE IN TDS IS MANDATORY IN NATURE WHICH WAS NOT D EDUCTED BY THE ASSESSEE AGAINST THE HIRE CHARGES PAID TO THE CLIEN TS?' 2 WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW , THE LD. 2 ITA NO.3356/MUM/2014 CIT(A) IN ALLOWING EXPENSES AT THE TIME OF APPELLAT E PROCEEDINGS IN CONTRAVENTION OF RULE 46A OF THE ACT ?' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF GENERAL OFFSHORE SUPPLIERS AND HIRE OF VESSELS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 14-10-201 0 DECLARING TOTAL INCOME OF RS.67,44,729. THE CASE WAS SELECTED FOR SCRUTIN Y BY CASS AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED. IN RESPONSE TO NOTI CES, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILE D THE DETAILS, AS CALLED FOR. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 11-03-20 13 DETERMINING TOTAL INCOME AT RS.1,22,57,804 INTERALIA MAKING ADDITIONS TOWARDS INCOME FROM HOUSE PROPERTY AND DISALLOWANCE OF HIRE CHARGES U/S 40(A )(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE U/S U/S 194I. AGGRIEVED BY THE ASSESSMEN T ORDER, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A), FOR THE DETA ILED DISCUSSION MADE IN HIS ORDER DATED 26-02-2014 HAS PARTLY ALLOWED APPEAL FI LED BY THE ASSESSEE WHEREIN HE HAS ALLOWED PARTIAL RELIEF IN RESPECT OF ADDITIO N MADE TOWARDS INCOME FROM HOUSE PROPERTY AND DELETED ADDITION MADE BY THE AO TOWARDS HIRE CHARGES U/S 40(A)(IA). AGGRIEVED BY THE ORDER OF CIT(A), THE R EVENUE IS IN APPEAL BEFORE US. 3. THE LD.DR SUBMITTED THAT THE LD.CIT(A) ERRED IN ALL OWING EXPENSES OF RS.52,24,150 U/S 40(A)(IA) OF THE ACT, IGNORING THE FACT THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD CLAIMED EXPENS ES ON HIRE CHARGES WHERE TDS IS MANDATORY IN NATURE WHICH WAS NOT DEDUCTED A S PER THE PROVISIONS OF SECTION 194I. THE LD.DR FURTHER SUBMITTED THAT THE LD. CIT(A) ERRED IN 3 ITA NO.3356/MUM/2014 ADMITTING ADDITIONAL EVIDENCES FILED BY THE ASSESSE E IN CONTRAVENTION OF RULE 46A OF THE IT RULES, WITHOUT AFFORDING AN OPPORTUNI TY OF HEARING TO THE AO TO OFFER HIS COMMENTS ON ADMISSIBILITY OR OTHERWISE OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. 4. NONE APPEARED FOR THE ASSESSEE. 5. WE HAVE HEARD THE LD.DR, PERUSED THE MATERIAL AVAIL ABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. TH E SOLITARY ISSUE THAT CAME UP FOR OUR CONSIDERATION IS DISALLOWANCE OF HIRE CHARG ES U/S 40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TAX AT SOURCE U/S 194I. THE AO D ISALLOWED HIRE CHARGES OF RS.52,24,150 ON THE GROUND THAT THE ASSESSEE HAS DE BITED EXPENDITURE UNDER THE HEAD HIRE CHARGES; HOWEVER, FAILED TO DEDUCT TAX AT SOURCE U/S 194I EVEN THOUGH THE IMPUGNED EXPENDITURE IS LIABLE FOR TDS. THE AO FURTHER OBSERVED THAT THOUGH ASSESSEE CLAIMS TO HAVE DEDUCTED TDS ON HIRE CHARGES EXCLUDING COST OF SAMPLES, FAILED TO JUSTIFY HIS CLAIM WITH NECESSARY EVIDENCES. IT IS THE CONTENTION OF THE ASSESSEE THAT HIRE CHARGES PAID TO M/S GENER AL OFFSHORE INTERNATIONAL AND M/S GENERAL MARINE & DIVING ENTERPRISES INCLUDES SA MPLE ITEM. THE ASSESSEE FURTHER SUBMITTED THAT HE HAD DEDUCTED TDS ON HIRE CHARGES EXCLUDING SAMPLES AND THE RELEVANT DETAILS HAS BEEN FURNISHED TO THE AO. THE AO HAS IGNORED ALL EVIDENCES FILED TO MAKE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE BREAK UP OF EXPENSES TO PROVE HIRE CHARGES IS INCLUSIVE OF SAMPLE ITEMS AND HENCE, THERE WAS A REQUIREMENT OF DEDUCTION OF TDS ON SUCH PAYMENT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS 4 ITA NO.3356/MUM/2014 FURNISHED BIFURCATION OF EXPENSES INCURRED UNDER TH E HEAD HIRE CHARGES WHICH INCLUDES OTHER PURCHASES ON WHICH TDS WAS NOT REQUI RED TO BE DEDUCTED WITH NAMES OF THE PARTIES TO WHOM PAYMENT IS MADE. THE CIT(A) HAS RECORDED A CATEGORICAL FINDING IN RESPECT OF HIRE CHARGES AND OTHER PURCHASES WHICH IS INCLUDED IN AMOUNT PAID TO M/S GENERAL OFFSHORE INT ERNATIONAL AND M/S GENERAL MARINE & DIVING ENTERPRISES, IN HIS ORDER AT PARA 2 .4.5. ON PAGE 6. THE RELEVANT OBSERVATIONS OF THE CIT(A) IS EXTRACTED BELOW:- 2.4.5 PER CONTRA, LD. AR HAS SUBMITTED THAT FOLLOWI NG ARE THE DETAILS OF HIRE CHARGES AND OTHER PURCHASES WHICH WERE ALSO SU BMITTED BEFORE THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE AP PELLANT'S LETTER DATED 15-02- 2013 GENERAL OFFSHORE INTERNATIONAL (PROP. SHRI MOHAMED YAHYA ABDUL GANI BATATAWALA): HIRE CHARGES PAID ON WHICH TDS MADE 20,66,746/- OTHER PURCHASES ON WHICH TDS NOT DEDUCTIBLE WITH 25,84,597/- NAMES OF THE PARTIES GIVEN. TOTAL RS. 46,51,343/- B) GENERAL MARINE & DIVING ENTERPRISES (PROP. SHRI MOHAMED YAHYA ABDUL GANI BATATAWALA): HIRE CHARGES PAID ON WHICH TDS MADE 27,96,278/- OTHER PURCHASES ON WHICH TDS NOT DEDUCTIBLE WITH 26 ,39,553/- NAMES OF THE PARTIES GIVEN. TOTAL 54,35,831/- 6. THE FACTS REMAIN UNCHANGED. THE REVENUE FAILS TO B RING ON RECORD ANY EVIDENCES TO PROVE FINDINGS OF FACT RECORDED BY THE LD.CIT(A) IS INCORRECT. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) WAS R IGHT IN DELETING ADDITION MADE 5 ITA NO.3356/MUM/2014 BY THE AO TOWARDS DISALLOWANCE OF HIRE CHARGES U/ 4 0(A)(IA) FOR FAILURE TO DEDUCT TDS. HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017. SD/- SD/- (D.T. GARASIA) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 29 TH DECEMBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI