Dipendra Bahadur Singh, Cuttack V. ACIT, Sambalpur

ITA 358/CTK/2013

• Counselvise Citation: 35822114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Assessee Lawyers: S N SAHU
• Keywords: Question of law
• Section: 194C

Judgement Text

I.T.A. NO. 358 / CTK ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI S .V. MEHROTRA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 358 / CTK / 20 1 3 ASSESSMENT YEAR : 200 9 - 20 10 DIPENDRA BAHADUR SINGH,....... .......... ...... ..... .. .APP ELL ANT HUDI SAHI, JODA, KEONJHAR, ODISHA [PAN : A DJPS 5869 D ] - VS. - ASSISTANT COMMISSIONER OF INCOME TAX, ... . RESPONDENT CIRCLE1(1) , SAMBALPUR APPEARANCES BY: SHRI S.N. SAH U , A .R. , FOR THE ASSESSEE SHRI K. AJAY KUMAR, CIT , D .R, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : OCTOBER 1 6 , 2 01 4 DATE OF PRONOUNCING THE ORDER : OCTOBER 20 , 201 4 O R D E R PER GEORGE MATHAN : TH IS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) , BERHAMPUR IN I.T. APPEAL NO. 0 607 / 1 1 - 1 2(SBP) DATED 14 . 02 .20 1 3 FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 24 DAYS FOR WHICH THE ASSESSEE HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY. THE DELAY IS ON ACC OUNT OF MEDICAL REASONS FOR WHICH THE MEDICAL CERTIFICATE IS ALSO PRODUCED. CONSEQUENTLY THE DELAY IN FILING THE APP E AL IS CONDONED AND THE APPEAL IS DISPOSED OF ON MERIT. 3 . SHRI S.N. SAH U , A DVOCATE , REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K. AJAY KUMAR, CIT , D.R, REPRESENTED ON BEHALF OF THE REVENUE . I.T.A. NO. 358 / CTK ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 2 OF 5 4 . AT THE TIME OF HEARING, I T WAS SUBMITTED BY THE LD. A.R. THAT THE ONLY ISSUE IN THIS APPEAL IS DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(I A) IN RESPECT OF THE PAYMENTS MADE TO THE TRUCK OWNERS TEMPORARILY EMPLOYED AS AND WHEN REQUIRED BASIS AND NOT IN PURSUANCE TO ANY AGREEMENT OR CONTRACT. IT WAS THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE KOLKATA BENCH OF THI S TRIBUNAL IN THE CASE OF SHRI KAJAL DAS IN ITA NO. 1131/KOL/2011 DATED 03.01.2012 WHEREIN THE KOLKATA BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS: - 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THE FAC TS ARE NOT DISPUTED. BEFORE LD. CIT(APPEALS), IT WAS SUBMITTED THAT THE ASSESSEE HAD HIRED TRUCKS FROM OPEN MARKET AS PER ITS REQUIREMENTS, AND PAYMENTS WERE MADE ACCORDINGLY. BUT THERE WERE NEITHER ORAL NOR WRITTEN CONTRACT BETWEEN THE ASSESSEE AND TRUCK OWNERS. THE PAYMENTS TO THE TRUCK OWNERS WERE MADE THROUGH BANKING CHANNEL. FURTHER THE ASSESSEE DID NOT ASSIGN ANY PARTICULAR PORTION OF WORK TO THE TRUCK OWNERS. NO SUB - CONTRACT AGREEMENT EITHER WRITTEN OR ORAL EXISTED BETWEEN THE ASSESSEE AND THE TRUCK OWNERS. THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS: - (I) ACIT VS. - STUMM INDIA IN ITA NO. 1158/KOL/2008 (ITAT, B BENCH, KOLKATA); (II) RAKSHIT TRANSPORT VS. - ACIT IN ITA 261/KOL/2009 (ITAT, A BENCH, KOLKATA); (III) M/S. SAMANWAYA VS. - ACIT IN ITA NO. 484/KOL/2 008; (IV) CIT VS. - UNITED RICE LAND LTD. (2008) 217 CTR (P&H) 332; (V) M/S. KAVITA CHUNG IN ITA NO. 253/KIOL/2010 [124 ITD 40 (VISHAKHAPATNAM)]. THE AFOREMENTIONED FACTS HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT AND, THEREFORE, IN VIEW OF THE DECISION OF THE H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF UNITED RICE LAND LTD. (SUPRA), THE PROVISIONS OF SECTION 194C WERE NOT APPLICABLE. IT IS NOT DISPUTED THAT THE ASSESSEE HAD NOT ASSIGNED ANY OF ITS CONTRACTUAL OBLIGATIONS TO THE TRANSPORTERS. IT WAS A MERE CASE OF HIRING THE TRUCKS FROM THE MARKET AS PER THE REQUIREMENTS AND NOT AS PER ANY CONTRACT. WE, THEREFORE, IN VIEW OF VARIOUS DECISIONS RELIED UPON BY LD. CIT(APPEALS) NOTED ABOVE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS) I.T.A. NO. 358 / CTK ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 3 OF 5 AND UPHOLD H IS ORDER AND REJECT THE GROUND OF APPEAL TAKEN BY THE REVENUE. 5. IN REPLY, LD. CIT, DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS TH AT THE ASSESSING OFFICER HAS DISALLOWED THE PAYMENTS MADE FOR HIRING OF THE TRUCKS ON THE GROUND THAT NO TDS HAD BEEN MADE. CONSEQUENTLY THE PROVISIONS OF SECTION 40(A)(IA) HAD BEEN INVOKED. A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS) SHOWS THAT ON IDEN TICAL REASON LD. CIT(APPEALS) HAS CONFIRMED THE ORDER OF THE ASSESSING AUTHORITY. A PERUSAL OF THE ORDER OF THE KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI KAJAL DAS SHOWS THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE KOLKATA BENCH OF TH IS TRIBUNAL, WHEREIN ONE OF US IS ALSO A CO - MEMBER. CONSEQUENTLY RESPECTFULLY FOLLOWING THE DECISION OF THE KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI KAJAL DAS, THE ADDITION AS MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT STANDS DELETED. EVEN OTHERWISE , THE PAYMENT S HAV E BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN AND NO AMOUNT REMAINING UNPAID TO THE TRUCK OWNERS . IN THIS CONTEXT THE DECISION OF THE COOR DINATE BENCH OF THIS TRIBUNAL DATED 16.10.2014 IN ITA NO. 54/CTK/2013 IN THE CASE OF TYBAS PROJECTS PVT. LTD. HAS HELD AS FOLLOWS: - 19. HAVING HEARD BOTH THE SIDES, WE FIND THAT ITAT DELHI BENCH IN THE CASE OF MRS KANAK SINGH IN ITA NO.5530/DEL/2012 OR DER DATED 19.9.2012 HELD AS UNDER: 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE FACTS ARE NOT DISPUTED. ADMITTEDLY ASSESSEE DID NOT DEDUCT THE TAX AS REQUIRED UNDER THE PROVISIONS OF SECTION 194C. HOWEVER, IT IS ALSO NOT DISP UTED THAT NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR TO SUB - CONTRACTORS. UNDER SUCH CIRCUMSTANCES, THE MAJORITY VIEW DECISION OF SPECIAL BENCH IN THE CASE MERILYN SHIPPING & TRANSPORTS (SUPRA), IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. HOWEVER, TH E SPECIAL BENCH DECISION WAS EXAMINED BY VARIOUS HIGH COURT AND IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S VECTOR SHIPPING SERVICES (P) LTD. (SUPRA), AS UNDER: WE DO NOT FIND THAT THE REVENUE CAN TAKE ANY BENEFIT FROM THE OBSERVATIONS MADE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND I.T.A. NO. 358 / CTK ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 4 OF 5 TRANSPORT LTD. (136 ITD 23) (SB) QUOTED AS ABOVE TO THE EFFECT SECTION 40 (A) (IA) WAS INTRODUCED IN THE ACT BY THE FINANCE ACT, 2004 WITH EFFECT FROM1.4.2005 WITH A VIEW TO AUGM ENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISALLOW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. IN THE PRESENT CASE TAX WAS DEDUCTED AS TDS FROM THE SALARIES OF THE EMPLOYEES PAID BY M/S MERCATOR LINES LT D., AND THE CIRCUMSTANCES IN WHICH SUCH SALARIES WERE PAID BY M/S MERCATOR LINES LTD., FOR M/S VECTOR SHIPPING SERVICES, THE ASSESSEE WERE SUFFICIENTLY EXPLAINED. IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND T HAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. WE DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED ANY ERROR IN RECORDING THE FINDING ON THE FACTS, WHICH WERE NOT CONTROVERTED BY THE DEPARTMENT AN D THUS THE QUESTION OF LAW AS FRAMED DOES NOT ARISE FOR CONSIDERATION IN THE APPEAL. THE INCOME TAX APPEALIS DISMISSED. 5.1. THESE OBSERVATIONS HAVE BEEN MADE WITH REFERENCE TO THE FINDINGS OF THE TRIBUNAL IN ITA NO. 5219/DEL/2012 IN THE CASE OF M/S VECTO R SHIPPING SERVICES, WHICH IS REPRODUCED HEREUNDER: - 7 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE SUBMISSIONS MADE BEFORE LD. CIT(A), AS NOTED EARLIER, HAVE NOT BEEN CONTROVERTED BY THE DEPARTMENT. IT IS NOT DISPUTED THAT M/S MERCATOR LINES LIMITED HAD DEDUCTED TDS ON SALARIES PAID BY IT ON BEHALF OF ASSESSEE. UNDER SUCH CIRCUMSTANCES ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON REIMBURSEMENT BEING MADE BY IT TO M/S MERCATOR LINES LIMITED. FURTHER IN A NY VIEW OF THE MATTER, SINCE IT IS NOT DISPUTED THAT NO AMOUNT REMAINED PAYABLE AT THE YEAR END, THEREFORE, IN VIEW OF THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., (136 ITD 23) (SB), ADDITION COULD NOT BE MADE. IN THIS CAS E, IT WAS HELD AS UNDER: - SECTION 40(A)(IA) WAS INTRODUCED IN T HE ACT, BY THE FINANCE ACT, 2004 WITH EFFECT FROM 1.4.2005 WITH A VIEW TO AUGMENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISAL LOW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITUR E ON WHICH SUCH TDS WAS DEDUCTIBLE. 5.1.1. THE SLP FILED AGAINST THE ORDER OF THE HONBLE HIGH COURT STANDS DISMISSED BY THE HONBLE SUPREME COURT: 5.2. 5.3. SINCE NO DECISION OF HONBLE JURISDICTIONAL HIGH COURT DIRECTLY ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE, THEREFORE, CONSIDERING THE CONFLICT OF OPINION BETWEEN VARIOUS HIGH COURT AND THE DECISION OF SPECIAL BENCH OF THE ITAT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THE ISSUE IN QUESTION. 20. RESPECTFULLY, FOLLOWING THE SAME, GR OUND NOS.2 & 3 ARE ALLOWED . I.T.A. NO. 358 / CTK ./20 1 3 ASSESSMENT YEAR: 200 9 - 20 10 PAGE 5 OF 5 BY RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL (SUPRA) , THE ADDITION IS LIABLE TO BE DELETED AND WE DO SO. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCTOBER , 2014. SD/ - SD/ - S .V. MEHROTRA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 20 TH D AY OF OCTO BER , 201 4 COPIES TO : (1) THE ASSESSEE (2) THE DEPARTMENT (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APP ELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK LAHA/SR. P.S.