Dandasi Sahu, Gajapati V. ACIT, Berhampur

ITA 34/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4379 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 14-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-01-2011
• Court: TRIBUNAL
• Department Lawyers: K N JANA
• Assessee Lawyers: K C DAS
• Keywords: Depreciation

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL,CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 034/CTK/2011 (ASSESSMENT YEAR 2006 - 07) DANDASI SAHU, PROP. MAA MANIKESWARI ST ORE, MAIN ROAD, MOHANA, DIST. GAJAPATI PAN: ACCPS 3807 M VERSUS ASST.COMMISSIONER OF INCOME - TAX,BERHAMPUR CIRCLE, BERHAMPUR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI K.C.DAS, AR FOR THE RESPONDENT SHRI K.N.JANA, DR ORDER SHRI K.K.GUPTA, ACCO UNTANT MEMBER : THIS APPEAL BY THE ASSESSEE AGITATE S THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN PARTIALLY CONFIRMING THE ADDITIONS AS COMPUTED BY THE ASSESSING OFFICER IN HIS ORDER U/S.143(3). 2. THE LEARNED COUNSEL FOR THE ASSESSE E INITIATING HIS ARGUMENTS SUBMITTED THE FACTS THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR AND WHOLESALE DEALER IN CEMENT ETC. DURING THE ASSESSMENT YEAR 2006 - 07, THE ASSESSEE HAS RECEIVED COMMISSION AND HE USE TO ALLOW A PORTION OF THE SAME TO HIS CUSTOME R PURCHASERS. DURING THE ASSESSMENT YEAR THE ASSESSEE HAS PAID SUCH COMMISSION AMOUNTING TO RS.4,11,024 TO HIS CUSTOMERS. THE ASSESSING OFFICER HAS ADDED THE SAID SUM TO THE INCOME OF THE ASSESSEE DOUBTING THE NATURE OF PAYMENT. THE ASSESSEE IS THE OWNER O F SEVEN TRUCKS DURING THE YEAR I N QUESTION OUT OF WHICH ONE OF THEM IS AN OLD TRUCK. THE ASSESSEE CLAIMED DEPRECIATION AT 40% BUT THE LEARNED ASSESSING OFFICER HAS ALLOWED DEPRECIATION AT 30% AND ADDED A SUM OF RS.2,45,723.62 BEING THE FIGURE DIFFERENCE BE TWEEN DISCLOSED FIGURE AND DETERMINED TO THE INCOME OF THE ASSESSEE. WHILE COMPARING THE ACCOUNTS OF PARADEEP PHOSPATE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ACCOUNT THE ASSESSING OFFICER OBTAINED FROM PARADEEP PHOSPATE THERE WAS A DIFFERENCE OF RS.4 2,534 WHICH THE ASSESSING ITA NO.034/CTK/2011 2 OFFICER HAS ADDED TO THE INCOME DISCLOSED. LASTLY THE ASSESSING OFFICER INCLUDED A SUM OF RS.55,700 BEING THE CLAIM TOWARDS ROAD TAX ON THE GROUND THAT THE ASSESSEE HAS ALREADY CLAIMED RS.45,685 TOWARDS ROAD TAX IN THE TRUCK PLYIN G BUSINESS OVERLOOKING THE FACT THAT THE ASSESSEE POSSESSED VEHICLES OTHER THAN THE TRUCKS FOR WHICH ROAD TAX AND INSURANCE IS PAID WHICH ASPECT THE ASSESSING OFFICER DID NOT CONSIDER. AGAINST THE SAID ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE CIT(A).THE LEARNED CIT(A)HAS CONFIRMED THE VIEW OF THE ASSESSING OFFICER WITH REGARD TO DEPRECIATION AND ROAD TAX CLAIM BUT DELETED THE SUM OF RS.42,534 BEING THE DIFFERENCE BETWEEN BALANCE AS PER BOOKS OF ACCOUNT OF PARADEEP PHOSP ATE IS RS.8,73,588 AND RS.8,31,054 AS PER ACCOUNTS OF THE ASSESSEE AS THERE IS NO ELEMENT OF INCOME ON THE EXCESS AMOUNT PAYABLE. THE ASSESSEE DURING THE COURSE OF HEARING FILED THE STATEMENT CONTAINING DETAILS OF COMMISSION PAID TO VARIOUS CUSTOMERS HOWEV ER THE LEARNED CIT(A) IN HIS ORDER OBSERVED THAT THE NATURE OF EXPENDITURE IS CLOSELY ASSOCIATED WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE, THE GENUINENESS OF THE EXPENDITURE CANNOT BE IGNORED BY DISALLOWING THE ENTIRE EXPENSE UNDER THE HEAD THEREFORE R ESTRICTED THE DISALLOWANCE TO 25% OF RS.4,11,024 AND THUS GRANTED RELIEF TO THE TUNE OF RS.3,08,268 AND ADDED A SUM OF RS. (RS.4,11,024 RS.3,08,268*) RS.1,02,756 TO THE INCOME OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL SUBMITTED A PAPER BOOK WHICH ALSO HAS A COMPILATION OF DECISIONS WHICH INTER ALIA LEAD TO THE FINDING THAT THE DEDUCTION ON ACCOUNT OF DISCOUNT CLAIMED WHEN THE FULL AMOUNT OF SALES HAVE BEEN RENDERED TO TAX CANNOT BE DISALLOWED PARTLY. 3. THE LEARNED DR SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW FOR HIS PART SUBMISSIONS. ITA NO.034/CTK/2011 3 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE PROPOSE TO TAKE UP AND DEAL THE ISSUES GROUND WISE AS HAVE BEEN PUT FORTH BEFORE US. 5. THE ASSESSING OFFIC ER HAS ERRED IN CONSIDERING THE CLAIM OF COMMISSION EARNED WITHOUT INDICATING THE NON - DEDUCTION OF TDS WAS THE INCOME FOREGONE BY THE ASSESSEE ON THE BASIS OF COMMISSION EARNED AMOUNTING TO RS.6,34,459. AN INCOME WHICH HAS ALREADY BEEN SUFFERED TAX CANNOT BE FURTHER SUBJECTED TO TAX WAS THE CONTENTION OF THE ASSESSEE WAS MISCONSTRUED BY THE ASSESSING OFFICER WHICH STOOD PARTLY CORRECTED BY THE LEARNED CIT(A) BY ALLOWING THE DISCOUNT ALLOWED AT 75% THEREOF. THE RESIDUAL PERCENTAGE OF 25% THEREFORE CANNOT BE CONFIRMED ON THE BASIS OF THESE FINDING OF FACTS BROUGHT O N RECORD BY THE ASSESSING OFFICER IN VIEW OF THE FACT THAT THE LEARNED CIT(A) HAS CATEGORICALLY HELD THAT IT WAS NOT A CASE OF DISALLOWANCE ON ACCOUNT OF NON - DEDUCTION OF TAX AT SOURCE U/S.194H. WE HAVE PERUSED THE STATEMENT SHOWING DISCOUNT ON SALES WHICH INCOME HAS ALREADY BEEN RENDERED TO TAX BY THE ASSESSEE THEREFORE CANNOT BE DISALLOWED ON ESTIMATION. THE 25% SUSTAINED BY THE LEARNED CIT(A) IS, THEREFORE, DIRECTED TO BE DELETED. 6. ON THE NEXT GROUND RELATING TO ROAD TAX AMOUNTING TO RS.55,700 DISALLOWED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) HAS NOT BEEN CLARIFIED BY THE LEARNED COUNSEL FOR THE ASSESSEE INSOFAR AS THE ASSESSEE MAINTAINS SEPARATE BOOKS FOR RENDERING INCOME FROM TRUCK PLYING. THE CLAIM OF PAYING ROAD TAX AMOUNTING TO RS.55,700 ON THE DEPRECIATED VALUE OF TWO WHEELERS AT RS.45,310 WAS TO BE EXPLAINED EITHER BEFORE THE ASSESSING OFFICER OR THE LEARNED CIT(A)WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE WAS THE REFORE RIGHTLY DISALLOWED BY THE LEARNED ASSESSING OFFICER . WE UPHOLD THE SAME. ITA NO.034/CTK/2011 4 7. WITH RESPECT TO THE NEXT GROUND FOR THE CLAIM OF DEPRECIATION, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE ITSELF HAS CLAIMED HIGHER DEPRECIATION ON THE BASIS OF IT INDU LGED IN TRUCK PLYING BUSINESS ON HIRE. THE TRUCKS WERE HELD FOR THE BUSINESS OF HIRING OUT THEREFORE CANNOT BE CONSIDERED FOR UTILISATION FOR THE ASSESSEES OWN BUSINESS INSOFAR AS THE LEARNED CIT(A) CATEGORICALLY NOTED THAT AS PER THE MATERIALS AVAILABLE ON RECORD, THE ASSESSEE DERIVES INCOME FROM WHOLESALE TRADING IN CEMENT, TRUCK PLYING BUSINESS FROM SEVEN TRUCKS OWNED BY HIM, TRANSPORT CONTRACT WORKS AND INTEREST INCOME ETC. HE HAS MAINTAINED SEPARATE TRADING ACCOUNT FOR WHOLESALE TRADING IN CEMENT, TRU CK PLYING BUSINESS AND TRANSPORT CONTRACT WORKS AND A CONSOLIDATED P&L A/C FOR ALL ACTIVITIES. THE GROSS HIRE CHARGES RECEIVED FROM TRUCKS HAS BEEN DISCLOSED AT RS.23,22,138 AND AFTER CLAIMING DEDUCTIONS ON EXPENSES LIKE FUEL & MAINTENANCE, PAYMENT TO DRIV ERS & HELPERS, DEPRECIATION ETC, THE NET INCOME OF RS.2,24,000 HAS BEEN OFFERED FOR TAXATION. HE HAS CLAIMED DEPRECIATION OF RS.9,82,876 @ 40% ON WDV OF THE TRUCKS WRONGLY INSTEAD OF 30% ADMISSIBLE AS PER PROVISION OF LAW. ACCORDINGLY, THE A.O. DISALLOWED THE EXCESS CLAIM OF RS. 2,45,723. THE APPELLANT COULD HAVE DISCLOSED THE INCOME FROM SEVEN TRUCKS AS PER PROVISION U/S.44AE(1) OF THE ACT. BUT, HE HAS PREFERRED LOWER RATE OF TAX AS PER SUB SECTION (6) OF SECTION 44AE AND CLAIMED TO HAVE MAINTAINED BOOKS O F ACCOUNT AUDITED AS PER U/S 44AB OF THE ACT. THE LD. A R CONTENDED THAT THE INCOME DISCLOSED AT RS.2,24,000 IS NOT LESS THAN THE INCOME THAT COULD HAVE BEEN ESTIMATED U/S. 44AE(1) OF THE ACT. THE ARGUMENT IS NOT CORRECT SINCE, AS RIGHTLY POINTED OUT BY THE A.O., INCOME WOULD HAVE BEEN RS.2,31,000. MOREOVER, THE RECORDS REVEAL THAT THE APPELLANT HAS NOT FILED HIS INCOME FROM TRUCK PLYING BUSINESS AS PER PROVISION U/S 44AE(1) OF THE ACT. THAT APART, THE EXCESS CLAIM OF DEPRECIATION OF RS.2,45,723 IN HIS BOOKS OF ITA NO.034/CTK/2011 5 ACCOUNT VOS - A - VIS AS PER LAW HAS NEVER BEEN DISPUTED BY HIM. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE ABOVE FINDING OF THE LEARNED CIT(A). WE, THEREFORE, ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A) IN THIS REG ARD. 8. THE OTHER REMAINING GROUNDS ARE CORRELATED AND HAVE BEEN DEALT WITH BY US IN OUR ABOVE ORDER THEREFORE DO NOT REQUIRE SEPARATE DELIBERATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON DT. 17 TH JUNE, 2011 SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 17 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY . COPY OF THE ORDER FORWARDED TO : 1. THE AP PELLANT: DANDASI SAHU, PROP. MAA MANIKESWARI STORE, MAIN ROAD, MOHANA, DIST. GAJAPATI. 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX,BERHAMPUR CIRCLE, BERHAMPUR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.