DY.C.I.T. CIR.8, Nagpur V. M/S ACHARYA BROTHERS, Nagpur

ITA 465/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1534 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D RAVI KUMAR
• Assessee Lawyers: R B BHUSARI
• Keywords: Question of law; Non passing of speaking order
• Section: 143(3)

Judgement Text

1 ITA NO. 465/NAG/2014 & C.O. NO. 01/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 465/NAG/2014 ASSESSMENT YEAR : 2006 - 07. DY. COMMISSIONER OF INCOME - TAX, M/S ACHARYA BROTHERS, CIRCLE - 8, NAGPUR. VS. NAGPUR. PAN AAKFA4998H APPELLANT RESPONDENT. C.O. NO. 01/NAG/2015 (IN ITA NO. 465/NAG/2014) ASSESSMENT YEAR : 2006 - 07. M/S ACHARYA BROTHERS, DY. COMMISSIONER OF INCOME - TAX, NAGPUR. V S. CIRCLE - 8, NAGPUR. CROSS OBJECTOR. RESPONDENT. DEPARTMENT BY : SHRI D. RAVI KUMAR. ASSESSEE BY : SHRI R.B. BHUSARI. DATE OF HEARING : 28 - 12 - 2015 DATE OF PRONOUNCEMENT : 31 ST DEC., 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. REVENUE DEPARTMENT HAS FILED THE APPEAL AND THE ASSESSEE IS IN CROSS OBJECTION ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 22 - 08 - 2014. THE GROUNDS OF THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT ( A ) WAS NOT JUSTIFIED IN ALLOWING APPEAL ON THE BASIS OF A NON SPEAKING ORDER OF HON ' BLE SUPREME COURT REJECTING SLP IN THE CASE OF VICTOR SHIPPING SERVICES (P) LTD . THE CIT ( A) FAILED TO APPRECIATE THAT IT HAS BEEN HELD IN 2 ITA NO. 465/NAG/2014 & C.O. NO. 01/NAG/2015 VARIOUS DECISIONS OF THE APEX COURT ITSELF INCLUDING THE DEC I SION IN THE CASE OF KUNHAYAMMED & OTHERS VS STATE OF KERALA ( 245 ITR 360 ) THAT A DECISION NOT ASSIGNING REASONS FOR DISMISSING THE SLP WOULD NEIT HER ATTRACT THE DOCTRINE OF MERGER NOR WOULD IT BE A DECLARATION OF LAW BY THE SUPREME COURT UNDER ARTICLE 141 OF CONSTITUTION . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD . CIT (APPEALS ) WAS NOT CORRECT IN HOLDING THAT SECTION 40 ( A ) (IA ) COVERS ONLY THE AMOUNTS WHICH ARE PAYABLE AT ON 31 S T MARCH OF A PARTICULAR YEAR EXCLUDING THE PAYMENT WHICH HAVE ALREADY BEEN MADE , DURING THE ACCOUNTING YEAR FROM THE PURVIEW OF SECTION 40(A)(IA) . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT ( A ) WAS NOT CORRECT IN DIRECTING TO DELETE THE ADD I TION W I THOUT APPRECIATING THE FACT 4. THAT THE AA HAD MADE DISALLOWANCE U/S 40 ( A )(I A ) OF THE I . T . ACT ON TRANSPORTATION CHARGES ONLY AMOUNTING TO RS . 56 , 86 , 316/ - FOR WHICH TAX WAS NOT DEDUCTED AT SOURCE BY THE ASSESSEE . 5. THE CIT ( A ) FAILED TO APPRECIATE THE VIEW GIVEN BY THE BOARD VIDE CIRCULAR NO . 1 0/DV/2013 , NEW DELH I , DATED 16 TH DECEMBER , 2013 OF CBDT , WHICH HAS CATEGORICALLY NULL I FIED THE CASE LAWS RELIED UPON BY THE LD . CIT ( A ) . 2, ASSESSMENT WAS MADE UNDER SECTION 143(3) READ WITH SECTION 254 OF THE I.T. ACT VIDE ORDER DATED 31 ST AUGUST, 2013. IN THIS CASE IN THE PAST AN ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 30 TH OF DECEMBER, 2008 WHEREI N THE FOLLOWING ADDITIONS HAVE BEEN MADE: I) DISALLOWANCE TRANSPORTATION PAYMENT U/S 40(A)(IA) RS. 56,86,316/ - II) DISALLOWANCE LABOUR PA YMENTS U/S 40(A)(IA) RS. 54,58,831/ - TOTAL RS.1,1 1,45,147/ - AN APPEAL WAS PREFERRED BEFORE THE LEARNED CIT(APPE A LS) WHO HAS GRANTED RELIEF AND DELETED THE DISALLOWANCE OF RS.54,58,831/ - , HOWEVER, CONFIRMED THE DISALLOWANCE OF RS.56,86,316/ - . BEING AGGRIEVED BY THE PART RELIEF, FURTHER AN APPEAL WAS FILED BEFORE THE TRIBUNAL, NAGPUR BENCH WHO HAD SET ASIDE THE MATTER TO THE AO . IN COMPLIANCE OF THE DIRECTION AGAIN THE IMPUGNED ASSESSMENT WAS FINALISED. HOWEVER, THE DISALLOWANCE WAS MADE U/S 40(A)(IA) AT 3 ITA NO. 465/NAG/2014 & C.O. NO. 01/NAG/2015 RS.54,58,831/ - . AGAIN AN APPEAL WAS FILED BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR IN THE FOLLOWING MANNER : 6.2 T HE ABOVE DEC I S I O N O F T HE H O N'BLE ALLAHABAD HI G H COURT I N THE CASE OF CIT VS. VECTOR SHIPP - ING SERVI C ES (P ) L TD. HAS B E EN U P H E LD BY THE HON ' BLE SC VIDE ITS ORDER DATED 02 - 07 - 2014 WHERE I N IT H AS BEEN H E LD THAT THE DISALL O W A NCE U/S 40(A) ( IA) WOULD APP L Y ONLY TO THE AMOUNTS WHICH ARE ' PAYABLE ' AS ON 3 1 ST O F M A RCH AND NOT TO AMOUNTS ALREADY ' PA I D ' DUR I NG THE YEAR. THE DEPARTMENT HAD GO N E I N APP E A L BE FOR E THE H O N ' BLE SC I N TH E SA ID CASE OF CI T VS . VECTOR SHIPP I NG SERVICES (P) LTD (SUPRA) AND THE H O N' B L E SC HAS DI SM I S SED THE S P E C I A L L E AVE P E TIT I ON FILED BY REVENUE AND APPROVED THE JUDGEMENT P AS SE D B Y THE H ON ' B L E AL L A HABAD HE . I N OTHER WORDS SUPREME COURT HAS APPROVED THE SPECIAL BENCH J UD G M E NT I N THE CASE OF MERILYN SH I PPING AND TRANSPORT LTD . I N WHICH I T WAS HELD THAT DISALLOWANCE U/S . 40 ( A )(IA) APPL I ES ONLY TO AMOUNTS ' PAYAB L E ' AS OF 31ST M A RCH AND NOT T O AMOUNTS ALREADY ' PAID ' DURIN G THE YEAR . SINCE THE SA I D MATTER HAS NOW REACHED FINALITY, I T IS HELD THAT THE DISALLOWANCE MADE B Y THE AO U/S 40(A)( I A) WOULD APPLY ONLY TO AMOUNTS WHICH ARE ' PAYABLE ' AS ON 31 S T OF MARCH 2006. IT WAS SUBMITTED BY THE APPELLANT BEFORE THE AO AS WELL AS BEFORE THE HON'BLE I TA T THAT THE AMOUNT PAYABLE I S RS . 3,20,547/ - AS ON 31 . 03 . 2006 AND CONSEQUENTLY T HE DISALLOWA N C E V L S 40 ( A ) ( I A ) H AS T O BE LIMITED TO THE SA I D AM O UNT . 3. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE ISSUE IS NOW COVERED BY SEVERAL DECISIONS, NAMELY, MERILYN SHIPPING AND TRANSPORTS 16 ITR (TRIB) 1, M/S VICTOR SHIPPING SERVICES (P) LTD. ETC. 4. LEARNED CIT(APPEALS) HAS REPRODUCED THE FI NDING OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VICTOR SHIPPING SERVICES (P) LTD. AS UNDER : 6. 1 IT ALSO RELEVANT TO REPRODUCE THE FINDINGS GIVEN BY THE ALLAHABAD HIGH COURT IN FAVOUR OF THE ITO IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD WHEREIN IT WAS HELD AS UNDER: '9. WE DO NOT FIND THAT THE REVENUE CAN TAKE ANY BENEFIT FROM THE OBSERVATIONS MADE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD . (136 ITO 23) (SB) QUOTED A ' S ABOVE TO THE EFFECT SECTION 40 (A) (IA) WAS INTRODUCED IN THE ACT BY THE FINANCE ACT, 2004 WITH I EFFECT FROM 1 . 4 . 2005 WITH A VIEW TO AUGMENT THE REVENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STA TUTE TO DISALLOW THE I 4 ITA NO. 465/NAG/2014 & C.O. NO. 01/NAG/2015 CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IN CASE THE ASSESSEE DOES NOT DEDUCT TOS ON SUCH EXPENSES . THE DEFAULT IN DEDUCTION OF TOS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TOS WAS DEDUCTIBLE. IN THE PRESENT CASE TAX WAS DEDUCTED AS TOS FROM THE SALARIES OF THE EMPLOYEES PAID BY MLS I MERCATOR LINES LTD . , AND THE CIRCUMSTANCES IN WHICH SUCH SALARIES WERE PAID BY MLS MERCATOR : LINES LTD., FOR MLS VECTOR SHIPPING SERVICES, THE ASSESSEE WERE SUFFICIENTLY EXPLAINED. ' I 10. IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FRO 'Q BUSINESS AND PROFESSION ON THE GROUND THAT TOS HAS NOT BEEN DEDUCTED, THE AMOUNT SHO) D BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR . 11. WE DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED AN ERROR IN RECORDING THE FINDING ON THE FACTS, WHICH WERE NOT CONTROVERTED BY THE DEPARTMENT AND THUS THE QUESTION OF LAW AS FRAMED DOES NOT ARISE F OR CONSIDERATION IN THE APPEAL. 5. EVEN IN THE GROUNDS OF APPEAL THE REVENUE DEPARTMENT HAS SIMPLY RAISED THE TECHNICAL REASONS BUT WE ARE OF THE VIEW THAT THE DECISION OF SUPERIOR AUTHORITY HAS TO BE FOLLOWED IF THE ISSUE IS IDENTICAL. WE FIND NO FALLACY IN THE ORDER OF LEARNED CIT(APPEALS) WHO HAS FOLLOWED FEW DECISIONS OF THE HONBLE HIGH COURTS. WE FIND NO FORCE IN THE GROUNDS OF THE REVENUE. HENCE REJECTED. 6. IN THE CROSS OBJECTION, THE RESPONDENT - ASSESSEE HAS SUPPORTED THE ORDER OF LEARNED CIT(APPEALS) AND NO SPECIFIC GRIEVANCE HAS BEEN RAISED, THEREFORE, NEEDS NO ADJUDICATION. THE SAME IS HEREBY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS T HE CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF DEC., 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 31 S T DEC., 2015. 5 ITA NO. 465/NAG/2014 & C.O. NO. 01/NAG/2015 COPY FORWARDED TO : 1. M/S ACHARYA BROTHERS, 106, SAI LEELA APARTMENT, NEAR DIPTI SIGNAL RAILWAY CROSSING, CHI KHALI LAYOUT, KALMANA ROAD, NAGPUR. 2. D.C.I.T., CIRCLE - 8, NAGPUR. 3. C.I.T. - NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE