SHRI Jaswant Singh, Indore V. THE ITO 1(3), Indore

ITA 338/IND/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4310 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI JASWANT SINGH, PROP. M/S. GYANJI ROADLINES, 50, MANGAL NAGAR, INDORE. PAN: AHQPS8547K VS. ITO, 1(3), INDORE. APPELLANT RESPONDENT APPELLANT BY SHRI ATIK BANSAL, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 16.08.2016 DATE OF PRONOUNCEMENT 16.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-22, NEW DEL HI, CAMP OFFICE AT INDORE, [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 17.02.2016 AND PERTAINS TO ASSESSMENT YEAR 20 10-11 AS AGAINST APPEAL DECIDED IN ASSESSMENT ORDER DATED 30 .03.2013 OF ITO, 1(3),INDORE [HEREINAFTER REFERRED TO AS THE AO]. I.T.A. NO.338/IND/2016 ASSESSMENT YEAR: 2010-11 ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 2 OF 8 2 2. GROUND NOS. 1 TO 4 RELATE TO MAINTAINING THE AD HOC DISALLOWANCES MADE BY THE AO OF RS. 25,000/- OUT OF REPAIR AND MAINTENANCE OF VEHICLE, RS. 35,000/- OUT OF TRU CK RUNNING, RS. 50,000/- OUT OF DIESEL AND RS. 1,40,55 0/- OUT OF TELEPHONE EXPENSES. 3. GROUND NOS. 1 TO 4 EMANATE FROM THE ORIGINAL GROUND S OF APPEAL, REVISED GROUNDS OF APPEAL AND ADDITIONAL GROUNDS OF APPEAL. THEREFORE, THESE ARE BEING CONSIDERED TOGET HER. 4. FACTS APROPOS OF THE ABOVE GROUNDS ARE THAT THE AO DISALLOWED 15% OUT OF TELEPHONE AND OFFICE EXPENSES AND VEHICLES, 5.35% OUT OF REPAIRS AND MAINTENANCE OF V EHICLES, 0.5 % OUT OF TRUCK RUNNING EXPENSES AND 4.44 % OUT OF DIESEL EXPENSES. THE DISALLOWANCE IN PERCENTAGE TERMS IS C OMING TO ODD FIGURE AS LUMP SUM DISALLOWANCES OF ROUND FIGUR E HAVE BEEN MADE. THE REASONS FOR DISALLOWANCES MADE ARE OF NATURE LIKE THE PAYMENT IN CASH, NON-MAINTENANCE OF DRIVER S DIARY, NON-MENTIONING OF TRUCK NUMBERS ON DIESEL VOUCHERS AND NON- FURNISHING OF EVIDENCE ETC. ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 3 OF 8 3 5. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE AT 15% OUT OF TELEPHONE EXPENSES, AS PE RSONAL USE OF TELEPHONE CANNOT BE RULED OUT. SIMILARLY, TH E DISALLOWANCE OUT OF REPAIRS AND MAINTENANCE EXPENSES OF VEHICLE, TRUCK RUNNING EXPENSES AND DIESEL EXPENSES WERE ALSO CONFIRMED CONSIDERING THE NATURE OF DISALLOWANCE AND VERY SMALL AMOUNT IN TERMS OF PERCENTAGE. 6. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD AND HAVE GONE THROUGH THE ASSESSMENT ORDE R AS WELL AS APPELLATE ORDER OF THE CIT(A) AND FIND THAT CONS IDERING THE NATURE OF DISALLOWANCES AND THE REASONS ASSIGNED BY THE LOWER AUTHORITIES, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, GROUN D NOS. 1 TO 4 OF THE APPEAL ARE DISMISSED. 7. GROUND NO. 5 COMING OUT FROM ORIGINAL, REVISED GROUNDS OF APPEAL AND ADDITIONAL GROUNDS OF APPEAL IS RELATED TO DISALLOWANCE OF RS. 2,16,006/- BY INVOKING THE PR OVISIONS OF SECTION 40(A)(IA) WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE THE CIT(A). ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 4 OF 8 4 8. BRIEFLY STATED, THE FACTS OF THE CASE OF THIS GROUN D OF APPEAL ARE THAT THE ASSESSEE FIRM HAS DEBITED RS. 2 0,67,941/- UNDER THE HEAD INTEREST PAYMENT TO VARIOUS PERSONS/ CONCERNS. TO JUSTIFY PAYMENTS, THE ASSESSEE PRODUCED THE LEDG ER OF THE EXPENDITURE AND VOUCHERS. ON EXAMINATION OF THE LED GER, THE AO FOUND THAT THE ASSESSEE PAID RS. 2,25,092/- INTE REST TO M/S.CHOLAMANDLUM FINANCE LIMITED, RS. 40,000/- TO NARMADA INVESTMENT, RS. 40,000/- TO SMT. RATAN DEVI BOKADIA AND RS. 3,15,498 TO SUNDRAM FINANCE LIMITED WITHOUT DEDUCTING TDS U/S 194A AMOUNTING TO RS. 1,16 ,664/- TO AFORESAID NON-FINANCIAL BANKS/OTHERS. THEREFORE, THE AGGREGATE AMOUNT OF RS. 6,20,590/- TO AFORESAID FOU R PARTIES WAS DISALLOWED. 9. BEING NOT SATISFIED WITH THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). 10. THE LD. CIT(A) NOTED THAT AS REGARDS PAYMENT TO NARMADA INVESTMENT AND SMT. RATAN DEVI BOKADIA, THE ASSESSEE ACCEPTED THAT THERE WAS A DEFAULT OF NON-DE DUCTION OF TAX. THEREFORE, THE CORRESPONDING ADDITION WAS CONFI RMED. REGARDING PAYMENT TO SUNDERAM FINANCE LIMITED, THE ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 5 OF 8 5 ASSESSEE SUBMITTED THAT NON-DEDUCTION CERTIFICATE WA S ISSUED BY THE DEPARTMENT, WHICH WAS VALID TILL 30 TH SEPTEMBER, 2009. THE PAYMENT OF INTEREST UP TO 30 TH SEPTEMBER, 2009, IS RS. 1,79,492/- WHILE PAYMENT OF INTEREST AFTER THAT DATE IS RS. 1,36,006/-. IN VIEW OF THE SAME, THE ADDITION OF RS. 1,36,006/- WAS CONFIRMED AND ADDITION OF RS. 1,79,492/- WAS DEL ETED SUBJECT TO VERIFICATION BY THE AO THAT THIS PAYMENT OF INTEREST WAS MADE DURING THE PERIOD OF VALIDITY OF THE CERTIF ICATE. AS REGARDS PAYMENT TO CHOLAMANDLUM FINANCE LIMITED, TH E LD. CIT(A) NOTED THAT CERTIFICATE U/S 197(1) WAS VALID T ILL 31 ST MARCH, 2010. THEREFORE, THE ADDITION IN RESPECT OF PAYMENT TO CHOLAMANDLUM FINANCE LIMITED WAS DELETED. THUS, THE ADDITION OF RS. 2,16,006/- WAS CONFIRMED. 11. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE TO WHOM THE PAY MENT HAS BEEN MADE HAVE ALREADY ACCOUNTED FOR THIS INCOM E IN THEIR RETURN OF INCOME AND THEY HAVE ALREADY PAID THE TAX ES. THEREFORE, AS PER THE AMENDMENT IN SECTION 40(A)(IA ) OF THE ACT, NO DISALLOWANCE CAN BE MADE FOR NON-DEDUCTION O F TDS. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE A LSO ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 6 OF 8 6 CONTENDED THAT THE PAYMENT OF INTEREST TO THESE PAR TIES WERE MADE DURING THE YEAR AND NO AMOUNT WAS OUTSTANDING A S ON THE DATE OF BALANCE SHEET. THEREFORE, IN THE LIGHT OF DECISION IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LI MITED, 357 ITR 642 (ALL), NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. 12. ON THE OTHER HAND, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF TH E LOWER AUTHORITIES. 13. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD AND FIND THAT TDS TO THE AFORESAID PARTIE S WAS NOT MADE ON ACCOUNT OF CERTIFICATES ISSUED U/S 197(1) O F THE INCOME-TAX ACT, 1961, BY THE INCOME TAX AUTHORITIE S FOR NON- DEDUCTION OF TAX TO THESE PARTIES. HOWEVER, THE CE RTIFICATES SO ISSUED WAS VALID FOR A PARTICULAR PERIOD FALLING UND ER THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. WE ALSO FIND THAT GUIDANCE FROM THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ELI LILLY & CO. (INDIA)(P)LIMITED, (2009) 312 ITR 225 ( S.C.), WHEREIN IT HAD BEEN HELD THAT PERIOD OF DEFAULT STARTS FROM TH E DATE OF DEDUCTIBILITY OF TAX TILL THE DATE OF ITS ACTUAL PA YMENTS BY THE ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 7 OF 8 7 CONCERNED EMPLOYEE AND ALSO IN THE CASE OF HINDUSTA N COCA COLA BEVERAGE PVT. LIMITED VS. CIT, (2007) 293 ITR 226 (S.C.), WHEREIN IT HAS BEEN HELD THAT WHEN THE TAX HAS BEEN P AID BY THE DEDUCTEE-ASSESSEE, THE TAX COULD NOT BE RECOVE RED ONCE AGAIN FROM THE ASSESSEE. ALL THE FACTS ARE NOT BORN E OUT FROM THE ASSESSMENT ORDER AND FROM THE ORDER OF THE LD. CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , THIS ISSUE IS RESTORED BACK TO THE FILE OF AO WITH THE DIRECTION T HAT THE AO SHALL VERIFY WHETHER THE PAYMENTS SHOWN IN THE ASSESS MENT ORDER IS LIABLE FOR TDS OR NOT ON THE BASIS OF NON- DEDUCTION OF CERTIFICATES ISSUED BY THE INCOME TAX AUTHORITIES. SECONDLY, IF THERE IS ANY SHORT DEDUCTION OF TAX OR NOT AND IF T HERE IS ANY SHORT DEDUCTION OF TAX OR NON-DEDUCTION OF TAX, THE N THE RECIPIENT OR THE PAYEE HAS PAID THE TAX OR NOT AND THEY HAVE SHOWN IN THE RETURN OF INCOME HAS TO BE VERIFIED FRO M THE CONCERNED ASSESSES. THEREFORE, ALL THESE REQUIRE VE RIFICATION AT THE END OF AO. THE ASSESSEE IS ALSO DIRECTED TO COO PERATE WITH THE AO AND MUST PRODUCE ALL THE RELEVANT EVIDENCES BEFORE THE AO. THE AO IS FURTHER DIRECTED TO VERIFY THE SAME A ND DECIDE ITA NO.338/IND/2016 AY 2010-11 JASWANT SINGH, INDOR E. PAGE 8 OF 8 8 THE MATTER AFRESH KEEPING IN MIND THE DECISION OF H ON'BLE SUPREME COURT CITED SUPRA. 2. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 16 TH AUGUST, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 16 TH AUGUST, 2016. CPU* COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH