ACIT, Circle-2(2), Bhubaneswar, Bhubaneswar V. Utkal Moulders Limited, Bhubaneswar

ITA 400/CTK/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6332 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: P C SETHI
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , . . , BEFORE SHRI P.K.BANSAL , AM & SHRI D.T.GARASIA , JM ./ ITA NO. 400 / C TK /20 1 3 ( / ASSESSMENT YEAR : 200 9 - 10 ) ACIT, CIRCLE - 2(2) , BHUBANESWAR, ODISHA VS. UTKAL MODULERS LIMITED, MIG - II, 2/8, BDA COLONY, CHANDRASEKHARPUR, BHUBANESWAR, ODISHA ./ ./ PAN/GIR NO. : A A ACU 3990 J ( / APPELLA NT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI N.K.NEB /ASSESSEE BY : SHRI P.C.SETHI / DATE OF HEARING : 2 4 TH APRIL , 201 4 / DATE OF PRONOUNCEMENT : 01/05 /2014 / O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 5 - 3 - 2013 BY TAKING THE FOLLOWING EFFECTIVE GROUND S : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS NOT JUSTIFIED I N DELETING THE ADDITION OF RS. 31,61,997/ - MADE BY THE AO U/S.40(A)(IA) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 3,72, 714/ - MADE BY THE AO ON ACCOUNT OF PART DISALLOWANCE O F EXPENSES IN ABSENCE OF DETAILS FURNISHED BY THE ASSESSEE. 2 . BRIEF FACTS OF THE CASE RELATE TO THE FIRST GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE HAS INCURRED SUBSTANTIAL EXPENDITURE ON TRANSPORTATION, THEREFORE, PROVISION OF SECTION 194C WERE APPLICABLE. IT 2 ITA NO. 400 /201 3 WAS ALSO NOTED BY HIM THAT THE PAYEE M/S SHANTI ROAD SERVICES PVT. LTD. HAD OBTA INED A NIL TDS CERTIFICATE U/S. 197(1) FROM THE ITO(TDS) , WARD - 59(3) , KOLKATA . THE SAID CERTIFICATE IS RELEVANT FOR THE IMPU G NED ASSESSMENT YEAR AND ISSUED ON 8 - 8 - 2008, WHICH WAS VALID UPTO 31 - 3 - 2009 . THE AO NOTED THAT ALTHOUGH THE PAYEE HAD STARTED MAKING ADVANCE RAISING BILLS ONLY FROM 8 - 4 - 2008, THE ASSESSEE HAD STARTED MAKING ADVANCE PAYMENTS FROM 3 - 4 - 2008. DURING THE PERIOD 1 - 4 - 2008 AND 8 - 8 - 2008, THE ASSESSEE H AD INCURRED A SUM OF RS. 1,65,38,003/ - ON ACCOUNT OF M/S SHANTI ROAD SERVICES PVT. LTD. THE APPROPRIATE TAX WAS DEDUCTED AT SOURCE ON THIS AMOUNT. AFTER RECEIVING THE CERTIFICATE U/S. 197(1) , NO TDS WAS DEDUCTED BY THE ASSESSEE. THE AO NOTED THAT THE ASSESS EE HAD MADE PAYMENT TO THE TUNE OF RS. 1,97,00,000/ - AND THE BALANCE AMOUNT WAS SHOWN AS ADVANCES. THE AO, THEREFORE, WAS OF THE VIEW THAT THE ASSESSEE SHOULD HAVE TAXED ON A SUM OF RS. 31,61997/ - AND, THEREFORE, HE DISALLOWED THE SAME U/S. 40(A)(IA) . WHEN TH E MATTER WENT BEFORE THE CIT(A) , THE CIT(A) DELETED THE SAID ADDITION ON THE BASIS OF THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT AND UPTO 8 - 8 - 2008 ONLY A SUM OF RS. 1,65,38,003/ - IS ACCRUED TOWARDS THE EXPENDITURE ON WHICH THE ASSESSEE HAS DULY DEDUCTED THE TDS, REST OF THE EXPENDITURE AS ACCRUED SUBSEQUENT TO 8 - 8 - 2008 FOR WHICH THE PAYEE HAS RECEIVED NIL TDS CERTIFICATE FROM THE ITO. 3 ITA NO. 400 /201 3 3 . WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. IN OUR OPINION, NO INTERFERENCE IS C ALLED FOR IN THE ORDER OF THE CIT(A) . THE CIT(A) HAS RIGHTLY BEEN DELETED THE ADDITION AS IN THIS CASE UPTO 8 - 8 - 2008, THE ASSESSEE IS CLAIMING THE EXPENDITURE ONLY TO THE EXTENT OF RS. 1,65,38,003/ - ON THE BASIS OF METHOD OF ACCOUNTING FOLLOWED BY THE ASSES SEE. IN RESPECT OF THE SUM OF RS. 31,61, 997/ - WHICH WAS PAID BY THE ASSESSEE IN ADVANCE TO THE PARTY THE EXPENDITURE HAS NOT ACCRUED AND, THEREFORE, NO QUESTION OF DEDUCTION ON THIS EXPENDITURE ARISES. WHEN THESE EXPENSES WERE ACCRUED THE PAYEE HAS ALREADY RECEIVED NIL TDS CERTIFICATE AS PER THE PROVISIONS OF SECTION 197(1) OF THE I.T. ACT, AND, THEREFORE, IN OUR OPINION, THE PROVISIONS OF SECTION 40(A)(IA ) WERE NOT APPLICABLE FOR THE BALANCE SUM OF RS. 31, 61, 997/ - AS THIS AMOUNT WAS MERELY AN ADVANCE PAID BY THE ASSESSEE TO THE PARTY AND THE EXPENDITURE TO THAT EXTENT HAS NOT ACCRUE PRIOR TO ISSUANCE NIL TDS CERTIFICATE BY THE CONCERNED AO U/S.197(1) OF THE ACT. WE, THEREFORE, DISMISS THE GROUND NO.1. 4 . GROUND NO.2 RELATES TO THE DISALLOWANCE MADE BY THE AO ON ESTIMATE BASIS IN RESPECT OF REPAIR AND MAINTENANCE. FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 14,90,856/ - IN THE PROFIT AND LOSS ACCOUNT TOWARDS REPAIR AND MAINTENANCE OF PLANT AND MACHINERY. IN THE ABSENCE OF PROPER SUPPORTING BILLS, THE AO ESTIMATED THE DISALLOWANCE AT THE RATE OF 25%. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : - 4 ITA NO. 400 /201 3 6.2 . I AM INCLINED TO AGREE WITH THE VIEW OF THE AR. THE LETTER ISSU ED BY THE AO DOES NOT SHOW THAT HE HAD EVER ASKED THE APPELLANT TO SUBMIT THE SUPPORTING BILLS AND VOUCHERS ON ACCOUNT OF REPAIR AND MAINTENANCE OF PLANT AND MACHINERY. SECONDLY, AN ESTIMATED DISALLOWANCE IS NOT PROPER UNLESS THE AO POINTS OUT SPECIFIC DEF ECTS IN ACCOUNTS SO AS NOT TO BELIEVE THE ACCOUNTS. ACCORDINGLY, THE ADDITION OF RS. 3,72,714/ - IS NOT SUSTAINABLE AND DIRECTED TO BE DELETED. 5 . WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME . WE NOTED THAT THE ASSESSEE HAS SUBMITTED DE TAILS OF REPAIR AND MAINTENANCE. THE AO HAS NOT ASKED FOR THE SUPPORTING BILLS AND VOUCHERS. HE MERELY MADE AN ADHOC DISALLOWANCE ON ESTIMATE BASIS. WHEN THE ASSESSEE HAS FILED DETAILS, THE ONUS SHIFTED ON THE AO TO ASK FROM THE ASSESSEE ABOUT THE SUPPORTI NG BILLS AND VOUCHERS OR TO ASK THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE. FROM THE ORDER OF THE AO, IT IS APPARENT THAT THE AO HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE. EVEN NO SPECIFIC EXPEN DITURE HAS BEEN POINTED OUT BY THE AO WHICH MAY BE RECORDED TO BE NON - GENUINE IN THE ORDER OF THE CIT(A) . IN OUR OPINION, THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE. THIS GROUND ALSO STANDS DISMISSED. 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01/05 / 201 4 . 01/05 /2014 SD/ - SD/ - ( . . ) ( D.T.GARASIA ) ( . . ) ( P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 01/05 /2014 . . /PKM , . / PS 5 ITA NO. 400 /201 3 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, CUTTACK 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , CUTTACK 4. / CIT , CUTTACK 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//