Hafijur Rahman, Burdwan V. ACIT, Circle-2, Burdwan, Burdwan

ITA 397/KOL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0880 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP LAKRA
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI A.T. VARKEY, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 397/KOL/201 7 ASSESSMENT YEAR : 2010-1 1 HAFIJUR RAHAMAN -VS- ACIT, CIRCLE-2, BURDWAN [PAN: AEMPR 2275 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITR A CHOUDHURY, ADVOCATE FOR THE RESPONDENT : SHRI SANDEEP LAKRA, ADDL. CIT SR. DR DATE OF HEARING : 27.09.2018 DATE OF PRONOUNCEMENT : 05.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-BURDWAN [IN SHORT THE LD CIT(A) ] IN APPEAL NO. DATED 30.12.2016 AGAINST THE ORDER PASSED BY THE ACIT, C IRCLE-2, BURDWAN [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT) DATED 15.03.2013 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE IN THE SUM OF RS. 9,13,700/- U/S 40A(IA) OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 2 ITA NO.397/KOL/2017 HAFIJUR RAHAMAN A.YR. 2010-11 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS A GOVERNMENT CONTRACTOR. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 WA S FILED BY THE ASSESSEE INDIVIDUALLY ON 16.09.2010 ELECTRONICALLY DISCLOSING TOTAL INCOM E OF RS. 10,21,911/-. THE LD. AO OBSERVED FROM THE PROFIT AND LOSS ACCOUNT OF THE AS SESSEE THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 9,13,700/- UNDER THE HEAD HIRE CHARGES. THE ASSESSEE EXPLAINED THAT THE SAID PAYMENT TOWARDS HIRE CHARGES WERE MADE FOR HIRING T HE MACHINERY REQUIRED FOR EXECUTION OF THE GOVERNMENT TENDER WORKS. THE ASSE SSEE FURNISHED PARTY WISE DETAILS OF PAYMENT OF HIRE CHARGES AS UNDER: THE ASSESSEE STATED THAT HIS CASE DOES NOT FALL UND ER THE PROVISIONS OF SECTION 194C OF THE ACT AND THAT THE CASE FALLS UNDER 194I OF THE A CT AS THE HIRE CHARGES ON EQUIPMENTS/ MACHINERIES ARE COVERED IN SECTION 194I OF THE ACT . THE ASSESSEE FURTHER PLEADED THAT SINCE THE PAYMENT MADE TO EACH OF THE AFORESAID PAR TIES DID NOT EXCEED THE PRESCRIBED 3 ITA NO.397/KOL/2017 HAFIJUR RAHAMAN A.YR. 2010-11 3 AMOUNT OF RS. 1,20,000/- IN AGGREGATE DURING THE YE AR, THERE IS NO OBLIGATION TO DEDUCT TAX AT SOURCE IN TERMS OF 194I OF THE ACT. THE LD. AO HOWEVER DISREGARDED THE CONTENTIONS OF THE ASSESSEE AND HELD THAT CASE FALL S UNDER THE AMBIT OF SECTION 194C OF THE ACT AND ACCORDINGLY THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE MAKES THE EXPENDITURE DISALLOWABLE U/S 40A(IA) OF THE ACT. T HE LD. CIT(A) OBSERVED THAT IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE CASE FALLS UNDE R 194C OR 194I OF THE ACT INASMUCH AS THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON T HE PAYMENTS MADE TOWARDS HIRE CHARGES TO THE AFORESAID PARTIES. ACCORDINGLY, HE U PHELD THE ACTION OF THE LD. AO. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSION. AT THE OUTSET, W E FIND THAT THERE IS NO DISPUTE THAT THE PAYMENT OF RS. 9,13,700/- WAS MADE BY THE ASSES SEE TOWARDS HIRE CHARGES FOR TAKING CERTAIN MACHINERIES/EQUIPMENT ON HIRE FOR THE PURPO SE OF EXECUTION OF GOVERNMENT CONTRACT BY THE ASSESSEE. HENCE THE EQUIPMENT TAKEN ON HIRE HAS BEEN USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS. THE EXPRE SSION RENT IS DEFINED IN SECTION 194I OF THE ACT TO IMPROVE MACHINERY, EQUIPMENT ETC. AMO NG OTHERS. HENCE HIRE CHARGES PAID FOR HIRING OF EQUIPMENT / MACHINERY WOULD SQUARELY FALL WITHIN THE AMBIT OF PROVISIONS OF SECTION 194I OF THE ACT. IT IS NOT IN DISPUTE TH AT THE PAYMENT MADE BY THE ASSESSEE TOWARDS HIRE CHARGES TO EACH OF THE AFORESAID PARTI ES DID NOT EXCEED RS. 1,20,000/-, I.E THE PRESCRIBED LIMIT AS PER SECTION 194I OF THE ACT . HENCE THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE ON THE SAID PAYMENTS. WE HOLD THAT THE LD. CIT(A) ERRED IN HOLDING THAT THERE WOULD BE NO DIFF ERENCE WHETHER THE CASE FALLS U/S 194C OR 194I OF THE ACT IN THE INSTANT CASE, INASMU CH AS, THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE. AS PER THE PROVISIONS OF SECTION 194 I OF THE ACT, THE ASSESSEE IS OBLIGED TO DEDUCT TAX AT SOURCE ONLY IF THE AGGREGATE OF THE P AYMENTS EXCEED THE PRESCRIBED LIMITS THEREON. IN THE INSTANT CASE, THE PAYMENT MADE IS W ITHIN THE PRESCRIBED LIMIT. 4 ITA NO.397/KOL/2017 HAFIJUR RAHAMAN A.YR. 2010-11 4 ACCORDINGLY, WE DIRECT THE LD. AO TO DELETE THE DIS ALLOWANCE MADE IN THE SUM OF RS. 9,13,700/- U/S 40A(IA) OF THE ACT. ACCORDINGLY, GRO UND RAISED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 05.10.2018 SD/- SD/- [A.T. VARKEY] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 05.10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. HAFIJUR RAHAMAN, BHANAKUTHI, NEAR MEEN BHAWAN, G .T. ROAD, DIST-BURDWAN- 713101. 2. ACIT, CIRCLE-2, BURDWAN, AAYAKAR BHAWAN, COURT C OMPOUND, BURDWAN-713101. 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S