Sh. Ramesh Kumar Thakur, Ropar V. ITO, Ropar

ITA 430/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73551 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI J S NAGAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.430/CHD/2011 ASSESSMENT YEAR:2006-07 SHRI RAMESH KUMAR THAKUR, VS. THE ITO, PROP M/S JAI MATA DURGA TRANSPORT CO. WARD-2(2), ROPAR ROPAR PAN NO. AADPC9947Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI SHRI J.S.NAGAR DATE OF HEARING : 19.03.2014 DATE OF PRONOUNCEMENT : 24.3.2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 22.11.2010 OF CIT (APPEALS), CHANDIGARH. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ADDITION OF RS. 3,15,080/- MADE ON ACCOUNT OF NON-DEDUCTION OF TDS ON INTEREST PAYMENTS MADE T O M/S SUNDRAM FINANCE COMPANY LIMITED WHICH WAS IN FACT N OT DEDUCTIBLE AT ALL APPLYING THE PROVISIONS OF SECTIO N 40(I)(IA) OF THE ACT AND AS SUCH THE ORDER IS ARBITRARY & UNJ USTIFIED. 2. THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT APPRECIATING THE CONTENTION OF THE ASSESSEE THAT EV EN IF TDS WAS TO BE DEDUCTED, IT WAS ONLY ON THE AMOUNT PAYAB LE IN THE ACCOUNTS AND NOT ON THE AMOUNTS HAVING ALREADY BEEN PAID 2 DURING THE YEAR AND AS SUCH THE ORDER IS ILLEGAL, A RBITRARY & UNJUSTIFIED. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE ADDITION OF RS. 99,452/- ON ALLEGED SALE OF SCRAP W HEN IN FACT HERE HAD BEEN NO SALE WHATSOEVER AND AS SUCH THE OR DER IS ARBITRARY AND UNJUSTIFIED 4. THAT THE LD. CIT(A) HAS FURTHER ERRED IN SUSTAIN ING AN ADHOC DISALLOWANCES AMOUNTING TO RS. 28,330/- ON AC COUNT OF EXPENSE CLAIMED UNDER THE HEAD MISC EXPENSES, STA FF WELFARE. GENERAL EXPENSES, CONVEYANCE EXPENSES, AND INTEREST ON CAR LOAN, WHICH IS ARBITRARY AND UNJU STIFIED. 3. OUT OF THE ABOVE GROUND NO.4 WAS NOT PRESSED BEF ORE US, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 4. GROUND NO.1 & 2: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSESS ING OFFICER THAT ASSESSEE MADE PAYMENT OF INTEREST AMOUNTING TO RS. 3,15,080/ - TO SUNDRAM FINANCE COMPANY LTD. THE ASSESSEE HAD NOT DEDUCTED TAX ON THIS AMOUNT AS PER SECTION 194A OF THE ACT. IN RESPONSE TO THE QUERY WHETHER A NY TDS HAS BEEN DEDUCTED AND IF NOT SO THEN WHY ADDITION SHOULD NOT BE MADE U/S 40(A)(IA) OF THE ACT. THE ASSESSEE FILED REPLY VIDE LETTER DATED 29.12.2008 W HICH IS AS UNDER:- THE SUNDRAM FINANCE CO., KOTAK MAHINDRA, ICICI, CENTURION, HDFC LISTED FINANCE CO. THE INTEREST PAI D TO THESE PARTIES IS ALLOWED AS DEDUCTIBLE EXPENDITURE AND ON SAME TDS IS NOT REQUIRED TO BE DEDUCTED. THE ASSESSING OFFICER DID NOT FIND FORCE IN THE ABO VE SUBMISSIONS AND THEREFORE, THIS SUM OF RS. 3,15,080/- WAS DISALLOWED BY INVOKI NG SECTION 40(A)(IA) OF THE ACT. 5. ON APPEAL, IT WAS MAINLY SUBMITTED THAT NO TAX W AS REQUIRED TO BE DEDUCTED IN RESPECT OF HIRE-PURCHASE AGREEMENT. IN THIS REGARD RELIANCE WAS 3 PLACED ON THE DECISION OF LUCKNOW BENCH OF THE TRIB UNAL IN THE CASE OF COMMERCIAL MOTORS FINANCE LTD VS. ACIT 82 ITD 176. OTHERWISE ALSO THE ASSESSEE WAS UNDER THE BONAFIE BELIEF THAT NO TAX W AS DEDUCTIBLE, THEREFORE, NO DISALLOWANCE SHALL BE MADE. THE LD. CIT(A) DID NOT FIND FORCE IN THESE SUBMISSIONS BECAUSE NO EVIDENCE WAS PRODUCED TO SHO W THAT AMOUNT WAS PAID TOWARDS HIRE-PURCHASED AGREEMENT. 6. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND EMPHASIZED THAT TDS IS NO T REQUIRED TO THE DEDUCTED IN THE CASE OF HIRE-PURCHASE AGREEMENT. HOWEVER, HE FAILED TO BRING ANY EVIDENCE ON RECORD TO SHOW THAT AMOUNT WAS PAID TOW ARDS HIRE-PURCHASE AGREEMENT. 7. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y WE FIND THAT TAX IS CLEARLY DEDUCIBLE AGAINST THE PAYMENT OF INTEREST I N TERMS OF SECTION 194A. ONCE THE TDS IS NOT DEDUCTED, PROVISION OF SECTION 40(A)(IA) IS CLEARLY APPLICABLE. SINCE NO EVIDENCE HAS BEEN PRODUCED BEF ORE ASSESSING OFFICER OR CIT(A) OR EVEN BEFORE US THAT INTEREST HAS BEEN PAI D ON ACCOUNT OF HIRE-PURCHASE AGREEMENT, THEREFORE, NO COGNIZANCE CAN BE TAKEN OF THIS CONTENTION. IN VIEW OF THIS FACT AND DISCUSSION WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 9. GROUND NO. 3 : AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS INCURRED EXPENSES FOR A SUM OF RS. 49,72,618/- TOWARDS TRUCK REPAIRS AND TYRES. THE ASSESSEE HAS NOT FURNISHED COMPLETE VOUCHERS IN RES PECT OF THESE ITEMS. THE ASSESSEE WAS FURTHER ASKED TO EXPLAIN AS TO WHY HE HAS NOT SHOWN ANY INCOME FROM THE SALE OF SCRAP I.E. WORN OUT TYRES AND OTHE R REPLACEMENTS. NO REPLY WAS FURNISHED AND ACCORDINGLY ASSESSING OFFICER DISALLO WED 2% OF THESE EXPENSES. 4 10. ON APPEAL IT WAS MAINLY SUBMITTED THAT ENTIRE A DDITION WAS MADE ON THE BASIS OF SUSPICION WHICH IS NOT PERMISSIBLE. THE CI T. CIT(A) DECIDED THE ISSUE VIDE PARA 23 WHICH IS AS UNDER;- I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS A WELL KNOWN FACT THAT THE WORN OUT TYRES AND TUBES ARE HAVING S CRAP VALUE AND SOLD FOR SOME AMOUNT,. THE APPELLANT HAS SHOWN HUGE EXPENSES FOR THE PURCHASE OF TRUCK, REPAIRS AND TYR ES BUT NO ACCOUNT FOR THE OLD SPARE PART AND TYRES HAS BEEN M AINTAINED OR SHOWN IN THE RETURN OF INCOME. I FIND THAT THE A SSESSING OFFICER HAS RIGHTLY DISALLOWED AS SUM OF RS. 99,452 /- ON ACCOUNT OF SALE OF SCRAP NOT SHOWN BY THE APPELLANT . THE ADDITION ON THIS GROUND IS SUSTAINED, DISMISSING TH E APPEAL. 11. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ESTIMATE FOR SALE OF SCARP HAS BEEN MADE ON HIGHER SIDE AND A REASONABLE ESTIMATE MAY BE ADDED. 12. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER O F CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT ADDITION IS JUSTIFIED BECAUSE ASSESSEE HAS NOT PRODUCED FULL VO UCHERS AND ALSO HAD NOT SHOWN ANY RECEIPT FROM SALE OF OLD PARTS IN THE FO RM OF SCRAP. HOWEVER, AT THE SAME TIME ADDITION OF 2% OF THE REPAIR EXPENSES SEE MS TO BE ON HIGHER SIDE AND THEREFORE, IN OUR OPINION ADDITION OF 1% WOULD MEET S THE ENDS OF JUSTICE AND ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AN D DIRECT THE ASSESSING OFFICER TO MAKE ADDITION OF 1% OF THE REPAIR EXPENS ES AS DISALLOWANCE OF SUCH EXPENSES AND TOWARDS SALE OF SCRAP ETC. 14. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24.3.30 14. SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 24 TH MARCH, 2014 5 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR