Cee Pee Granites P.Ltd, Malappuram V. ACIt, Tirur

ITA 400/COCH/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7263 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-03-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2011
• Court: TRIBUNAL
• Department Lawyers: SHANTHOM BOSE
• Keywords: Question of law; Competent authority
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : COCHIN BENCH : KOCHI. [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMB ER AND SHRI GEORGE GEORGE. K., JUDICIAL MEMBER] ./I.T.A. NO.400/ COCH/2011 / ASSESSMENT YEARS : 2006-2007 CEE PEE GRANITES PVT. LTD, V/221B, VELIMUKKU SOUTH (POST) MALAPURRAM 676 317. [ PAN AACCC 3021G) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2) TIRUR. ./I.T.A. NO.401/ COCH/2011 / ASSESSMENT YEARS : 2006-2007 CEE PEE MARBLES & GRANITES, 278/5, VELIMUKKU SOUTH (POST) MALAPURRAM 676 317. [ PAN AADFC 5139P ) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2) TIRUR. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. ANIL D. NAIR, ADVOCATE /RESPONDENT BY : SHRI. SHANTHOM BOSE, CIT, DR. /DATE OF HEARING : 15 - 03 - 201 7 /DATE OF PRONOUNCEMENT : 17 - 03 - 201 7 !' !' !' !' / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER BOTH THESE APPEALS WERE REMITTED BACK TO THIS TRI BUNAL BY HONBLE JURISDICTIONAL HIGH COURT THROUGH ITS JUDGM ENT DATED 14.09.2012 IN ITA NO.77/2013. ITA NOS.400 & 401/COCH/2011. :- 2 -: 2. LD. ASSESSING OFFICER HAD DISALLOWED THE FREIGHT PA YMENT OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEARS SI NCE ASSESSEE HAD FAILED TO DEDUCT TAX AT SOURCE. WHEN THE MATTER RE ACHED THIS TRIBUNAL, IT WAS HELD BY THE TRIBUNAL IN THE FIRST T ROUND OF PROCEEDINGS THAT SEC. 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS NOT APPLICABLE SINCE PAYMENTS WERE EFFECTED DURING THE CURRENCY OF THE RELEVANT PREVIOUS YEARS AND WERE NOT AMOUNTS PAYABL E WHICH WERE OUTSTANDING AT THE END OF THE YEAR . THIS TRIBUNAL HAD FOLLOWED THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT (2012) 70 DTR 81. THE REVENUE THEREUPON MOVED THE HONBLE JURISDICTIONAL HIGH COURT IN FURTHER APPEAL. THEIR LORDSHIP, IN SUCH APPEAL HELD THAT THE VIEW TAKEN BY THE TRIBUNAL WAS INCORRECT. AS PER HONBLE JURISDICTIONAL HIGH COURT, THE TRIBUNAL HAD PLACED RELIANCE ENTIRELY ON THE DECISION OF SPECIAL BENCH IN THE CA SE OF SHIPPING & TRANSPORT (SUPRA) WHICH STOOD REVERSED BY ITS OWN JUDGMENT IN THE CASE OF SRI THOMAS GEORGE MUTHOOT VS. CIT (2016) 137 DTR 76 . HOWEVER, ASSESSEE HAD RAISED A PLEA BEFORE HONBLE JURISDICTIONAL HIGH COURT THAT IT WAS NOT OBLIGED TO DEDUCT TAX AT SOUR CE BY VIRTUE OF SEC. 194C (3) OF THE ACT AS IT STOOD PRIOR TO ITS SUBSTI TUTION BY FINANCE ACT, 2009. CONSIDERING THIS AS A FRESH CONTENTION, NEVE R RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL, HONBLE JURISDICTION AL HIGH COURT HAS REMITTED THIS ISSUE BACK TO THIS TRIBUNAL FOR ADJ UDICATING THE ITA NOS.400 & 401/COCH/2011. :- 3 -: APPLICABILITY OF SEC. 194C (3) OF THE ACT. RELEVAN T PARAGRAPHS 7 & 8 OF THE JUDGMENT ARE REPRODUCED HEREUNDER:- 7. ACCORDING TO US, HAVING REGARD TO THE JUDGMENT OF THE GUJARAT HIGH COURT IN MERILYN SHIPPING & TRANSPORT CASE (SUPRA) AND THE JUDGMENT OF THIS COURT IN ITA NO.278/14, THE ORDERS OF THE TRIBUNAL HAS TO BE SET ASIDE AND THE MATTER HAS TO BE REMITTED TO THE TRIBUNAL FOR FRESH CONSIDERATION. I T IS ALSO CLARIFIED THAT IF THE ASSESSEE SO DESIRE, IT WOULD BE OPEN TO THEM TO CLAIM THE BENEFIT OF SECTION 194(C) (3) AS IT STOOD PRIOR TO ITS SUBSTITUTION BY FINANCE ACT, 2009 BEFORE THE TRIBUNAL, IF NECESSARY BY PRODUCING ADDITIONAL MATERIALS ALSO. IT IS ALSO OR DERED THAT ON CONSIDERATION OF THE SAID CONTENTION, IF TH E TRIBUNAL FINDS THAT FACTUAL ADJUDICATION IS NECESSA RY, IT WOULD BE OPEN TO THE TRIBUNAL TO REMIT THE MATTER T O THE ASSESSING OFFICER FOR RECONSIDERATION. 8. ACCORDINGLY, SETTING ASIDE THE ORDERS PASSED BY THE TRIBUNAL IN ITA NOS. 325/10, 400/11 AND 401/11 AND ANSWERING THE QUESTION OF LAW RAISED IN FAVOR OF TH E REVENUE, THESE APPEALS ARE DISPOSED OF REMITTING TH E MATTER TO THE TRIBUNAL FOR FRESH CONSIDERATION. TH E TRIBUNAL SHALL CONSIDER THE MATTER IN THE LIGHT OF THE AFORESAID OBSERVATIONS AND PASS FRESH ORDERS. 3. NOW BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT BY VIRTUE OF SECOND PROVISO TO SUB SECTION 3 OF SEC . 194C OF THE ACT AS IT STOOD AT RELEVANT POINT OF TIME, THE SUBCONTRA CTORS TO WHOM ASSESSEE HAD PAID FREIGHT CHARGES WERE INDIVIDUA LS WHO OWNED NOT MORE THAN TWO GOODS CARRIAGES. ACCORDING TO HIM, AS SESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENTS EFFECT ED TO SUCH PERSONS. ITA NOS.400 & 401/COCH/2011. :- 4 -: 4. PER CONTRA, LD. DR SUBMITTED THAT WHETHER ASSESSEE HAD SATISFIED THE CONDITIONS SET OUT IN THE PROVISOS TO SECTION 194C(3) OF THE ACT WAS NEVER VERIFIED BY ANY OF THE LOWER AUT HORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. SECTION 194C(3) OF THE ACT IS REPRODUCED HEREUNDER:- (3) NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION( 1) OR SUB-SECTION (2) FROM-- (I) THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR OR SUB-CONTRACTOR, IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES : PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS FIFTY THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB-SECTION (1) OR, AS THE CASE MAY BE, SUB- SECTION (2) SHALL BE LIABLE TO DEDUCT INCOME-TAX UNDER THIS SECTION : PROVIDED FURTHER THAT NO DEDUCTION SHALL BE MADE UNDER SUB-SECTION (2), FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF THE SUB-CONTRACTOR DURING THE COURSE OF BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON PRODUCTION OF A DECLARATION TO THE PERSON CONCERNED PAYING OR CREDITING SUCH SUM, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND WITHIN SUCH TIME AS MAY BE PRESCRIBED, IF SUCH SUB-CONTRACTOR IS AN INDIVIDUAL WHO HAS NOT OWNED MORE THAN TWO GOODS CARRIAGES AT ANY TIME DURING THE PREVIOUS YEAR : ITA NOS.400 & 401/COCH/2011. :- 5 -: PROVIDED ALSO THAT THE PERSON RESPONSIBLE FOR PAYING ANY SUM AS AFORESAID TO THE SUB- CONTRACTOR REFERRED TO IN THE SECOND PROVISO SHALL FURNISH TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORISED BY IT SUCH PARTICULARS AS MAY BE PRESCRIBED IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED ; OR (II) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1972 ; OR (III) ANY SUM CREDITED OR PAID BEFORE THE 1ST DAY OF JUNE, 1973, IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A CO-OPERATIVE SOCIETY OR IN PURSUANCE OF A CONTRACT BETWEEN SUCH CONTRACTOR AND THE SUB-CONTRACTOR IN RELATION TO ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) UNDERTAKEN BY THE CONTRACTOR FOR THE CO- OPERATIVE SOCIETY. EXPLANATION FOR THE PURPOSES OF CLAUSE (I), GOODS CARRIAGE SHALL HAVE THE SAME MEANING AS IN THE EXPLANATION TO SUB-SECTION (7) OF SECTION 44AE . CONTENTION OF THE ASSESSEE IS THAT IT HAD PAID FRE IGHT CHARGES TO INDIVIDUALS WHO OWNED NOT MORE THAN TWO GOODS CARRI AGES AT ANY TIME DURING THE RELEVANT PREVIOUS YEARS. HOWEVER A READ ING OF THE ABOVE SECTION WOULD CLEARLY SHOW THAT THE PERSON LIABLE FOR PAYING SUCH FREIGHT CHARGES HAS TO FURNISH PARTICULARS IN THE P RESCRIBED FORM WITHIN PRESCRIBED TIME TO THE PRESCRIBED AUTHORITY. THE P AYEE IS ALSO REQUIRED TO PRODUCE A DECLARATION TO THE ASSESSEE IN THE PR ESCRIBED FORM WITHIN THE PRESCRIBED TIME. RULE 29D OF THE INCOME TAX RU LES, 1962 GIVES THE METHOD AND FORMS IN WHICH SUCH REPORTING HAS TO BE DONE. THE SAID RULE IS REPRODUCED HEREUNDER:- ITA NOS.400 & 401/COCH/2011. :- 6 -: (1) THE DECLARATION UNDER THE SECOND PROVISO TO CLAUSE (I) OF SUB-SECTION (3) OF SECTION 194C BY A SUB-CONTRACTOR SHALL BE IN FORM NO. 15-I AND SHALL BE VERIFIED IN THE MANNER INDICATED THEREIN BY SUCH SUB-CONTRACTOR. (2) THE DECLARATION REFERRED TO IN SUB-RULE (1) MAY BE FURNISHED TO THE CONTRACTOR RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE ACCOUNT OF THE SUB-CONTRACTOR BEFORE THE EVENT OF SUCH SUM BEING CREDITED OR PAID TO SUCH SUB-CONTRACTOR. (3) THE PARTICULARS UNDER THE THIRD PROVISO TO CLAUSE (I) OF SUB-SECTION (3) OF SECTION 194C TO BE FURNISHED BY A CONTRACTOR RESPONSIBLE FOR PAYING ANY SUM TO SUCH SUB-CONTRACTOR SHALL BE IN FORM NO. 15J. (4) THE PARTICULARS REFERRED TO IN SUB-RULE (3) SHA LL BE FURNISHED,- (I) TO THE COMMISSIONER OF INCOME-TAX, SO DESIGNATED BY THE CHIEF COMMISSIONER OF INCOME-TAX, WITHIN WHOSE AREA OF JURISDICTION, THE OFFICE OF THE CONTRACTOR REFERRED TO IN SUB-RULE (3) IS SITUATED ; (II) ON OR BEFORE THE 30TH JUNE FOLLOWING THE FINANCIAL YEAR. WHETHER THE ASSESSEE HAD OBTAINED FORM NO.15-I FRO M THE PAYEES AND WHETHER ASSESSEE HAD FILED FORM NO. 15J, WITHI N THE TIME ALLOWED TO THE COMPETENT AUTHORITY, SO AS TO ENABLE IT TO C LAIM THE BENEFIT OF THIRD PROVISO TO SECTION 194C(3) OF THE ACT, HAS NOT BEEN VERIFIED BY ANY OF THE LOWER AUTHORITIES. WE ARE OF THE OPINIO N THAT CONSIDERING THE FACTS AND CIRCUMSTANCES, THESE ARE ASPECTS ARE TO BE VERIFIED BY THE LD. ASSESSING OFFICER. WE THEREFORE, REMIT THE ISSUE OF DISALLOWANCE U/S.40(A)(IA) OF THE ACT AND APPLICABILITY OF SEC. 194C(3) ITA NOS.400 & 401/COCH/2011. :- 7 -: OF THE ACT BACK TO THE FILE OF THE LD. ASSESSING O FFICER FOR LIMITED PURPOSE OF VERIFYING COMPLIANCE OF THE ASSESSEE WI TH RULE 29D OF THE INCOME TAX RULES, 1962. ORDERED ACCORDINGLY. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17-03-201 7. SD/- SD/- ( GEORGE GEORGE. K) # # # # !$ !$ !$ !$ / JUDICIAL MEMBER (ABRAHAM P. GEORGE) !$ !$ !$ !$ / ACCOUNTANT MEMBER COCHIN %! / DATED: 17TH MARCH, 2017 KV !' ' (' / COPY TO: 1. M/S. CEE PEE GRANITES PVT. LTD, V/221B, VELIMUKKU S OUTH (POST) MALAPURRAM 676 317. 2. M/S. CEE PEE MARBLES & GRANITES, 278/5, VELIMU KKU SOUTH (POST), MALAPURRAM 676 317. 3. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRC LE 2(2), TIRUR. 4. THE COMMISSIONER OF INCOME TAX (APPEALS)-II, KO ZHIKODE. 5. THE PRINCIPAL COMMISSIONER OF INCOME TAX (APPEAL S) KOZHIKODE. 6. D.R. I.T.A.T., COCHIN BENCH, COCHIN. 7. GUARD FILE BY ORDER (ASSISTANT REGISTRAR I.T.A.T., COCHIN.