Naresh Kumar Yadav, CHENNAI V. ACIT, CHENNAI

ITA 443/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8833 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHADEVAN
• Assessee Lawyers: N DEVANATHAN
• Keywords: Non-deduction of tax
• Section: 194C; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.315 & 443/MDS/2016 ( )( / ASSESSMENT YEAR : 2008-09 SHRI NARESH KUMAR YADAV, 344, WALLTAX ROAD, CHENNAI - 600 079. PAN : ABAPY 9894 P V. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XI, CHENNAI - 600 006. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. N. DEVANATHAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. SAHADEVAN, JCIT 1 / 2% / DATE OF HEARING : 09.06.2016 3') / 2% / DATE OF PRONOUNCEMENT : 15.07.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS ARE FILED BY THE ASSESSEE. WHEN I.T.A. NO.443/MDS/2016 IS DIRECTED AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) IV, CHENNAI, DATED 28.11. 2011, I.T.A. NO.315/MDS/2016 IS DIRECTED AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) 5, CHENNAI, DATED 28.01.2 016. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE A PPEALS, WE 2 I.T.A. NOS.315 & 443/MDS/16 HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF BY THIS COMMON ORDER. 2. SH. N. DEVANATHAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT DURING THE ASSESSMENT YEAR 2008-09, THE ASSESSEE PAID HIRE CHARGES FOR HIRING LORRIES. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONTRACT WORK. FOR CONTRACT WORK, THE ASSESSEE HIRED LORRIES FROM OTHE RS AND PAID HIRE CHARGES. SINCE THE RECIPIENTS OF THE HIRE CHARGES FILED FORM 15-I DECLARING THAT THEIR INCOME IS NOT TAXABLE, THE ASS ESSEE PAID THEIR HIRE CHARGES WITHOUT MAKING ANY DEDUCTION. ACCORDI NG TO THE LD. COUNSEL, HIRING OF LORRY FOR USING THE SAME IN THE ASSESSEES WORK CANNOT BE CONSTRUED AS WORKS CONTRACT UNDER SECTION 194C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THEREFO RE, ACCORDING TO THE LD. COUNSEL, THE PROVISIONS OF SECTION 194C OF THE ACT IS NOT APPLICABLE AT ALL WHEREVER THE ASSESSEE HIRED LORRI ES AND PAID ONLY HIRE CHARGES. THE LD.COUNSEL FURTHER POINTED OUT T HAT NO PART OF WORK WAS ALLOTTED TO THE LORRY OWNERS TO CARRY OUT. THEREFORE, WHEN THE WORK WAS NOT GIVEN ON SUB-CONTRACT TO ANY ONE, MERE PAYMENT OF HIRE CHARGES CANNOT BE CONSTRUED AS SUB-CONTRACT . THEREFORE, THE PAYMENT OF HIRE CHARGES CANNOT BE CONSTRUED AS PAYM ENT FOR SUB- 3 I.T.A. NOS.315 & 443/MDS/16 CONTRACT UNDER SECTION 194C OF THE ACT. SINCE THE RECIPIENTS OF HIRE CHARGES FILED FORM 15-I, ACCORDING TO THE LD. COUNS EL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM O F THE ASSESSEE. 3. REFERRING TO THE ORDER OF THE CIT(APPEALS), THE LD.COUNSEL SUBMITTED THAT THE CIT(APPEALS), IN FACT, ACCEPTED THE CLAIM OF THE ASSESSEE AND FOUND THAT WHEN THE RECIPIENTS OF THE HIRE CHARGES FILED FORM 15-I, THE ASSESSEE IS NOT LIABLE TO DEDU CT TAX AT THE TIME OF PAYMENT. HOWEVER, THE CIT(APPEALS) FORCED THE R EPRESENTATIVE OF THE ASSESSEE TO FILE A PETITION STATING THAT THE ASSESSEE IS WILLING TO SURRENDER AN EXTRA AMOUNT OF ` 11,53,890/- AND THE ASSESSEE WILL FOREGO THE ENTIRE REFUND OF CLAIM. ACCORDING TO TH E LD. COUNSEL, THE ASSESSEE NEVER INSTRUCTED THE REPRESENTATIVE, WHO A PPEARED BEFORE THE CIT(APPEALS), TO GIVE SUCH A KIND OF LETTER WHE N THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX. ACCORDING TO THE LD. COU NSEL, IT IS NOT KNOWN WHY THE REPRESENTATIVE FILED A LETTER STATING THAT THE ASSESSEE WILL NOT CLAIM THE REFUND AND ALSO WILLING TO SURRE NDER THE EXTRA AMOUNT OF ` 11,53,890/-. SINCE THE LETTER WAS FILED BY THE REPRESENTATIVE INDEPENDENTLY WITHOUT CONSULTING THE ASSESSEE, ACCORDING TO THE LD. COUNSEL, THE LETTER SAID TO BE GIVEN BY THE REPRESENTATIVE IS NOT BINDING ON THE ASSESSEE. THE LD.COUNSEL 4 I.T.A. NOS.315 & 443/MDS/16 PLACED HIS RELIANCE ON THE JUDGMENT OF APEX COURT I N HIMALAYAN COOPERATIVE GROUP HOUSING SOCIETY V. BALWAN SINGH I N CIVIL APPEAL NOS.4360-4361 OF 2015 DATED 29.04.02015 AND SUBMITT ED THAT WHEN THE REPRESENTATIVE OF THE ASSESSEE FILED LETTE R BEFORE THE CIT(APPEALS) WITHOUT THE INSTRUCTIONS OF THE ASSESS EE, THE SAME IS NOT BINDING ON THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, SUCH A KIND OF LETTER WAS EXTRACTED FROM THE REPRESENTATIV E OF THE ASSESSEE WITHOUT ANY AUTHORITY BY THE CIT(APPEALS) JUST TO W ITHHOLD THE REFUND OF TAX. THEREFORE, IT IS NOT BINDING ON THE ASSESS EE. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF KAR NATAKA HIGH COURT IN CIT V. SRI MARIKAMBA TRANSPORT COMPANY (20 15) 379 ITR 129 AND SUBMITTED THAT WHEN THE PAYMENT WAS AFTER R ECEIVING FORM 15-I, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX. 4. REFERRING TO I.T.A. NO.315/MDS/2016, THE LD.COUN SEL FOR THE ASSESSEE SUBMITTED THAT THIS APPEAL IS ARISING OUT OF CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 / 155 OF THE ACT. 5. ON THE CONTRARY, SHRI SAHADEVAN, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE PAID HI RE CHARGES WITHOUT DEDUCTING TAX AS REQUIRED UNDER SECTION 194 -I OF THE ACT. 5 I.T.A. NOS.315 & 443/MDS/16 EVEN THOUGH SECTION 195C OF THE ACT IS FOR THE PURP OSE OF PAYMENT MADE TO SUB-CONTRACTOR, SECTION 194-I IS SQUARELY A PPLICABLE IN RESPECT OF PAYMENT OF RENT. THEREFORE, THE ASSESSE E IS LIABLE TO DEDUCT TAX WHEREVER THE HIRE CHARGES ARE PAID FOR H IRING THE LORRIES. REFERRING TO FORM 15-I, THE LD. D.R. SUBMITTED THAT NO DOUBT, THE ASSESSEE FILED FORM 15-I BEFORE THE ASSESSING OFFIC ER. HOWEVER, DURING THE APPELLATE PROCEEDING BEFORE THE CIT(APPE ALS), THE LD. REPRESENTATIVE OF THE ASSESSEE FILED A LETTER SAYIN G THAT THE ASSESSEE WAS WILLING TO SURRENDER AN EXTRA AMOUNT O F ` 11,53,890/- AND ALSO TO FOREGO THE ENTIRE REFUND BEFORE THE ASS ESSING OFFICER. ON THE BASIS OF THAT UNDERTAKING GIVEN BY THE REPRE SENTATIVE FOR THE ASSESSEE, THE CIT(APPEALS) DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER. THEREFORE, AT THIS STAGE, ACCOR DING TO THE LD. D.R., THE ASSESSEE CANNOT CLAIM THAT THE UNDERTAKIN G WAS GIVEN WITHOUT HIS INSTRUCTION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAS PAID HIRE CHARGES WITHOUT DEDUCTING TA X. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS RECEIVED FORM 15-I FR OM THE RECIPIENTS OF HIRE CHARGES. THIS TRIBUNAL IS OF TH E CONSIDERED 6 I.T.A. NOS.315 & 443/MDS/16 OPINION THAT SECTION 194-I OF THE ACT IS VERY MUCH APPLICABLE FOR PAYMENT OF HIRE / RENT FOR HIRING THE LORRIES. THE REFORE, THE ASSESSEE IS LIABLE TO DEDUCT TAX WHENEVER THE HIRE CHARGES A RE PAID FOR HIRING LORRIES. IN THE CASE BEFORE US, THE ASSESSEE CLAIM S THAT THE RECIPIENTS OF HIRE CHARGES FILED FORM 15-I DECLARIN G THAT THEIR INCOME DOES NOT EXCEED TAXABLE LIMIT. UNDER THE SCHEME OF INCOME-TAX ACT, WHEN THE RECIPIENT OF AMOUNT FILED FORM 15-I O R 15-H, IT IS NOT REQUIRED FOR THE PAYER TO DEDUCT TAX. IN THE CASE BEFORE US, THE ADMITTED CASE OF THE REVENUE IS THAT THE RECIPIENTS OF THE AMOUNT HAVE FILED FORM 15-I, THEREFORE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT T AX. IF AT ALL THE DECLARATION FILED BY THE RECIPIENT IS WRONG, IT IS OPEN FOR THE REVENUE TO PROCEED AGAINST THOSE PERSONS WHO FILED FORM 15- I. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSEE CANNOT BE BLAMED FOR NON-DEDUCTION OF TAX. THE ASSESSEE COMP LIED WITH THE SCHEME OF THE TAX AFTER RECEIVING FORM 15-I FROM TH E RECIPIENTS OF THE AMOUNT. THIS WAS EXACTLY CONFIRMED BY THE CIT( APPEALS) AT PARA 4C OF HIS IMPUGNED ORDER. 7. THE CIT(APPEALS) FURTHER OBSERVED THAT THE LD. REPRESENTATIVE FOR THE ASSESSEE FILED A LETTER DATE D 28.11.2011 7 I.T.A. NOS.315 & 443/MDS/16 STATING THAT THE ASSESSEE IS WILLING TO SURRENDER A N EXTRA AMOUNT OF ` 11,53,890/-. NOW, THE ASSESSEE CLAIMS THAT THE REP RESENTATIVE WHO APPEARED BEFORE THE CIT(APPEALS) WAS NOT AUTHOR IZED TO GIVE SUCH AN UNDERTAKING. ADMITTEDLY, THIS LETTER / UND ERTAKING WAS NOT FILED BEFORE THE ASSESSING OFFICER. THE LETTER WAS UNILATERALLY FILED BY THE REPRESENTATIVE BEFORE THE CIT(APPEALS). THE RE IS NO MATERIAL ON RECORD TO INDICATE THAT THE ASSESSEE INSTRUCTED THE REPRESENTATIVE TO FILE SUCH A KIND OF LETTER. THEREFORE, AS HELD BY THE APEX COURT IN HIMALAYAN COOPERATIVE GROUP HOUSING SOCIETY (SUPRA) , THE SAME IS NOT BINDING ON THE ASSESSEE. EVEN OTHERWISE, WHEN THE ASSESSEE RECEIVED FORM 15-I, THERE IS NO QUESTION OF DEDUCTI NG TAX UNDER THE SCHEME OF INCOME-TAX ACT. THEREFORE, THERE CANNOT BE ANY DISALLOWANCE. WHEN THERE CANNOT BE ANY DISALLOWANC E, IT IS NOT NECESSARY FOR THE ASSESSEE TO OFFER ANY AMOUNT FOR TAXATION OR TO FOREGO THE REFUND. THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT SINCE THE RECIPIENTS OF THE HIRE CHARGES FILED FORM 15-I, THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX, THEREFORE, TH E ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. ACCORDI NGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTI RE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 8 I.T.A. NOS.315 & 443/MDS/16 8. NOW COMING TO THE APPEAL FILED BY THE ASSESSEE I N I.T.A. NO.315/MDS/2016, THIS APPEAL IS FILED AGAINST THE O RDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 OF THE ACT. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE CIT (APPEALS) PASSED UNDER SECTION 155 READ WITH SECTION 250 OF THE ACT, HE REFERRED IN THE APPEAL PROCEEDING AS IF THE ORDER WAS PASSED UN DER SECTION 154 OF THE ACT. FROM THE ORDER OF THE CIT(APPEALS) IT APPEARS THAT THE ASSESSING OFFICER HAS ALSO PASSED ORDER UNDER S ECTION 154 OF THE ACT ON 23.07.2012. THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT IN VIEW OF THE ORDER OF THIS TRIBUNAL IN I.T.A . NO.443/MDS/2016, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO.315/M DS/2016 BECOMES INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO.443/MDS/2016 IS ALLOWED. HOWEVER, THE APPEAL FI LED IN I.T.A. NO.315/MDS/2016 IS DISMISSED. ORDER PRONOUNCED ON 15 TH JULY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 15 TH JULY, 2016. 9 I.T.A. NOS.315 & 443/MDS/16 KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT, 5. 7: -2 /DR 6. ;( < /GF.