THE ACIT, 2(1), Ujjain V. SHRI RAKHAB CHAND JAIN, Agar

ITA 433/IND/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2161 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.433/IND/2014 ASSESSMENT YEAR: 2010-11 ACIT, 2 (1) AAYAKAR BHAWAN, BHARATPURI, UJJAIN / VS. SHRI RAKHAB CHAND JAIN, 27, HATPURA, AGAR MALWA, DIST- AGAR (M.P.) ( REVENUE ) ( RESPONDENT ) P.A. NO. ADKPJ4754H REVENUE BY SHRI K. G. GOYAL SR. DR RESPONDENT BY SHRI SHARAD JAIN , AR DATE OF HEARING: 07.12.2017 DATE OF PRONOUNCEMENT: 13 .12.2017 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS), UJJAIN, (IN SH ORT CIT(A)), DATED 28.02.2014 PERTAINING TO THE A.Y. 2010-11. TH E REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF RS.19,50,019/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF NON DEDUCTION OF TDS ON THE PAYMENT MADE TO M/S GAY ATRI RAKHAB CHAND JAIN 2 BORING, TANODIYA TOWARDS BLASTING EXPENSES EVEN WHE N BILLS PRODUCED BY THE ASSESSEE AND KEPT ON RECORD DO NOT REFLECT ANY SUCH BIFURCATION TOWARDS LABOUR CHARGES AND MATERIA L USED AND ASSESSEE FAILED TO DEDUCT TDS ON ENTIRE AMOUNT OF RS.21,87,970/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS.17,00,000/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DIESEL EXPENSES SHOWN BY THE ASSESSEE. 2 . BRIEFLY STATED THE FACTS ARE THAT THE CASE OF THE ASSESSEE WAS TAKEN FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 14 3(3) OF THE INCOME TAX ACT, 1961( HEREINAFTER REFER TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 22.02.2013 WHILE FRAMING THE ASSES SMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T DEDUCTED TAX, THEREFORE, HE INVOKED THE PROVISIONS OF U/S 40(A)(I A) AND MADE ADDITION OF RS.21,78,970/- IN RESPECT OF BLASTING E XPENSES. THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS.4,25, 000/- ON ACCOUNT OF NON DEDUCTION OF TAX ON JCB RENT, FURTHE R THE ASSESSING OFFICER MADE ADDITION OF RS.80,305/- ON ACCOUNT OF PAYMENT MADE ONE M/S SHRINATH BOREWELL, JAVRA. THE ASSESSING OFF ICER ALSO MADE ADDITION IN RESPECT OF PAYMENTS MADE TO SHRI VISHNU SHASTRI ON WHICH TAX WAS NOT DEDUCTED AMOUNTING TO RS.4,26,155 /-. FURTHER THE ASSESSING OFFICER MADE DISALLOWANCE OUT OF DIES EL EXPENSES OF RS.17,00,000/- AND OUT OF SALARY EXPENSES OF RS.1,5 0,000/-. 3. AGGRIEVED BY THIS THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED. THEREBY, THE LD. CIT(A) DELETED TH E DISALLOWANCE OF RAKHAB CHAND JAIN 3 RS.19,50,019/- AND DELETED THE ADDITION OF RS.17,00 ,000/- MADE ON ACCOUNT OF DIESEL EXPENSES. 4. GROUND NO.1 IS AGAINST THE DELETING ADDITION OF RS.19,50,019/-. LD. DEPARTMENTAL REPRESENTATIVE (DR IN SHORT) VEH EMENTLY SUPPORTED THE ORDER OF THE AO, ON THE CONTRARY LD. AUTHORIZED REPRESENTATIVE (AR IN SHORT) SUPPORTED THE ORDER OF LD. CIT(A). HE SUBMITTED THAT THE ASSESSING OFFICER MADE DISALLOWA NCE ON THE BASIS THAT THE PAYMENTS MADE TO M/S. GAYATRI BORING , TANODIA ON WHICH TAX WAS NOT DEDUCTED. THE ASSESSEE HAD CREDIT ED IN HIS BOOKS OF ACCOUNT THE EXPENDITURE ONLY IN A COMPOSITE MANN ER. HE SUBMITTED THAT THIS FINDING OF THE ASSESSING OFFICE R IS CONTRARY TO THE RECORD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) IN HIS DECISION DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND ALSO THE REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER. IN MY OPINION THAT ARGUMENTS AND THE SUBMISSIONS FILED BY THE APP ELLANT HAVE SUFFICIENT MERIT. THE APPELLANT IS A CIVIL CONTRACT OR AND THE BLASTING HAS BEEN THE CONSEQUENTIAL WORK TO THE MAI N CONTRACT OF THE APPELLANT. IT IS ALSO OBSERVED THAT THE AO H AS NOT DISPUTED THAT THE MATERIAL COMPONENT OF THE BLASTIN G EXPENSES WAS RS.19,50,019/- AND THE LABOUR COMPONENT BEING O NLY AN AMOUNT OF RS.2,28,941/-. THE ABSENCE OF WRITTEN AGR EEMENT TO DISALLOW THE ENTIRE EXPENDITURE FOR THE REASONS BRO UGHT OUT BY THE AO ARE NOT WELL FOUNDED PARTICULARLY WHEN THE E NTIRE FACTS HAVE BEEN CONFIRMED BY THE PAYEE PARTY. THE DOCUMEN TARY EVIDENCES IN THE FORM OF SEPARATE SHEETS INDICATING THE AMOUNT OF MATERIAL AND THE LABOUR COMPONENT HAVE ALSO BEEN FILED BY THE PAYEE PARTY. NOTHING HAD PREVENTED THE AO TO CO NDUCT RAKHAB CHAND JAIN 4 FURTHER INQUIRIES WITH REGARD TO THE AUTHENTICITY O F THE SEPARATE SHEETS FILED DURING THE ASSESSMENT PROCEEDINGS. THE SE SHEETS GIVE COMPLETE DETAILS OF LABOUR COMPONENT AND THE M ATERIAL COMPONENT OF THE TRANSACTION. MOREOVER, THE AO HAS ALSO NOT CARRIED OUT ANY EXAMINATION OF BOOKS OF ACCOUNTS AN D RETURN OF INCOME OF M/S. GAYATRI BORING TANODIA TO ASCERTAIN IF THE AMOUNT UNDER CONSIDERATION HAS BEEN REFLECTED AS A CONTRACTUAL RECEIPT OR SALE OF MATERIAL. SIMPLY BECAUSE THE PAR TY HAS TAKEN THE COMPOSITE AMOUNT TO LEDGER ACCOUNT IS NOT SUFFI CIENT REASON TO TREAT THE AMOUNT AS ATTRIBUTABLE TO THE WORK LIA BLE FOR TDS U/S 194C OF THE ACT, WHEN IT HAD CONTAINED AMOUNT A 90% OF MATERIAL COMPONENT. THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FILED XEROX COPIES OF ALL TH E RELEVANT BILLS, BIFURCATION OF AMOUNT OF LABOUR CHARGES AND BLASTING MATERIALS, THE SLIPS INDICATING THE BIFURCATION OF MATERIAL PRICE AND LABOUR CHARGES ATTACHED BY M/S GAYATRI BORING T ONADIA WITH THE VARIOUS BILLS. THE AO HAS NOT DENIED THE F ILING OF THESE RELEVANT MATERIALS BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO HAS ALSO NOT DOUBTED THE AUTHEN TICITY OF THE CONFIRMATIONS FILED BY THE PAYEE PARTY AND THE ABOVE BILLS. IT IS ALSO NOT A CASE OF THE AO THAT THE EXPENSES WERE NOT GENUINE AND FOR NON-BUSINESS PURPOSE. THEREFORE, IN MY CONS IDERED OPINION, IT IS NOT JUSTIFIABLE TO DISALLOW THE ENTI RE EXPENDITURE ON ACCOUNT OF BLASTING ONLY FOR THE REASON THAT THE TD S WAS NOT DONE U/S 194C OF THE ACT PARTICULARLY WHEN 90% OF T HE EXPENDITURE PERTAINED TO THE PURCHASE OF MATERIAL A ND JUST 10% PERTAINED TO THE WORK WHICH CAN BE CONSIDERED AS FA LLING WITHIN THE PURVIEW OF THE RELEVANT TDS PROVISIONS. THE REA SONS BROUGHT OUT BY THE APPELLANT FOR NON-DEDUCTION OF TDS ON TH E WORK COMPONENT OF THE BLASTING AMOUNTING TO RS.2,28,941/ - HAS NOT BEEN FOUND TENABLE. IN MY OPINION, THE TDS AT THE S PECIFIED RATE WAS STATUTORILY REQUIRED TO BE DEDUCTED ON THIS PAR T OF AMOUNT. THEREFORE, TO THIS EXTENT, THE AO WAS JUSTIFIED IN DISALLOWING THE EXPENDITURE FOR THE REASON OF NON-DEDUCTION OF TDS. THEREFORE, THE REMAINING ADDITION OF RS.19,50,019/- IS HEREBY DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED . RAKHAB CHAND JAIN 5 6. THE ABOVE FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. AS THE LD. CIT(A) HAS GIVEN SPECIFIC FINDING THAT LABOUR CHARGES COMPONENT WAS OF RS.2,28,940/-. UNDER THESE FACTS, WE DO NOT SEE ANY REASON TO INTERFERE IN THE FINDINGS OF LD. CIT(A), MORE PARTI CULARLY WHEN THE ASSESSEE HAS DEMONSTRATED THAT THERE WAS NOT A COMP OSITE APPEAL FOR BLASTING AND LABOUR CHARGES. THIS GROUND OF THE REVENUE APPEAL IS DISMISSED. 7. GROUND NO.2 IS AGAINST THE DELETING ADDITION OF RS.17,00,000/- MADE BY THE AO ON ACCOUNT OF DIESEL EXPENSES. THE LD. DR SUPPORTED THE ORDER OF THE AO ON THE CO NTRARY THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEBITED POWER AND FUEL EXPENSES OF RS. 77,22,683/- AGAINST SALE AND CONTRACT RECEIPTS OF RS.2.19 CRORE . THE ASSESSING OFFICER OBSERVED THAT PAYMENTS WERE MADE BOTH IN CH EQUE AND CASH. THE ASSESSING OFFICER DID NOT BELIEVE THE EVI DENCES PRODUCED BY THE ASSESSEE ON THE GROUND THAT IT REMAINED UNVE RIFIABLE WHETHER THE DIESEL PURCHASE WAS USED FOR BUSINESS OF THE AS SESSEE, HOWEVER, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING TH AT IN THE ASSESSMENT YEAR 2009-10 LABOUR EXPENSES CLAIMED WER E OF RS.23.35 CRORES AGAINST THE TOTAL TURNOVER OF RS.1.01 CRORE S. HOWEVER, DURING THE YEAR UNDER APPEAL, THE LABOUR EXPENSES HAVE BEE N CLAIMED AT RAKHAB CHAND JAIN 6 RS.33.55 LACS WHICH IS JUST 15% OF TOTAL TURNOVER O F RS.2.19 CRORES THEREFORE, THE LD. CIT(A) WAS OF THE VIEW THAT USE OF MACHINE WAS HIGHER WHICH DECREASED THE LABOUR COST AND INCREASE D THE DIESEL COST. THIS FINDINGS OF LD. CIT(A) IS NOT REBUTTED B Y THE REVENUE BY GIVING ANY CONTRARY MATERIAL ON RECORD. THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 .12 .2017. SD/- (MANISH BORAD) SD/- (KUL BHARAT) /ACCOUNTANT MEMBER / JUDICIALMEMBER INDORE; DATED : 13/12/2017 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE