DCIT, Rohtak V. M/s. Mahanadi Coal Transport, Rohtak

ITA 4708/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5086 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 16-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAIN SOIN KAPIL
• Assessee Lawyers: A K JAIN
• Keywords: Search and seizure; Non-deduction of tax
• Section: 15; 40(a)(ia); 194C

Judgement Text

DCIT ROHTAK CIRCLE V. M/S. MAHANADI COAL TRANSPORT /I.T.A. NO. 4708/DEL/2015/A.Y.11-12 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH DNEW DELHI BEFORE SHRIK. NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 4708/DEL/2015: ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE ROHTAK VS. M/S. MAHANADI TRANSPORT HOUSE NO. 199, SECTOR NO.14, ROHTAK PAN:AAQFM 9726 M APPELLANT RESPONDENT ASSESSEE BY SHRI A.K. JAIN, ADVOCATE REVENUE BY SMT. NAIN SOIN KAPIL, SR. D.R. DATE OF HEARING 07.02.2019 DATE OF PRONOUNCEMENT 07.02.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-ROHTAK (IN SHORT THE CIT (A)) DATED 09.05.2015PERTAINING TO ASSESSMENT YEAR 2011-12, WH ICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DTD. 26.03.2014 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE DEP UTY COMMISSIONER OF INCOME TAX, CIRCLE ROHTAK (IN SHORT THE AO). 2. GROUND NO. 1 STATES THATLD. CIT (A) HAS ERRED IN DEL ETING DISALLOWANCE OF RS. 85,78,788 MADE UNDER SECTION 40(A)(IA) OF THE A CT BY INTERPRETING WRONGLY THE PROVISION OF SECTION 40(A)(IA) OF THE ACT AS TH E DISALLOWANCE PROPORTIONATE AMOUNT ON WHICH TDS WAS NOT DEDUCTED. 3. FACTS APROPOS OF THIS GROUND ARE THAT THE AO FOUND THAT THE ASSESSEE HAS PAID CONTRACT PAYMENTS OF RS. 1,71,57,577 TO M/S. N ARWAL TRANSPORT (P) LTD. BY DEDUCTING TDS @ 1% AS AGAINST THE TAX DEDUCTION RATE @2% UNDER SECTION 194C OF THE ACT.ACCORDINGLY, THE AO HAS WORKED OUT SHORT DEDUCTION OF TDS AT RS. DCIT ROHTAK CIRCLE V. M/S. MAHANADI COAL TRANSPORT /I.T.A. NO. 4708/DEL/2015/A.Y.11-12 PAGE 2 OF 4 85,78,788 AND DISALLOWED THE SAME BY INVOKING THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). HOWEVER, THE LD. CIT (A) FOLLOWING THE DECISION OF C O-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF DCIT V. CHANDABHOY & JASSOBHOY [I.T.A. NO. 20/MUM/2010/A.Y. 06-07 DTD. 08.07.2011 HELD THAT APPLICABILITY OF SE CTION 40(A)(IA) OF THE ACT IS NOT CORRECT. THE GENUINENESS OF THE PAYMENT IS NOT IN DISPUTE. THE ONLY COURSE OF ACTION IN SUCH A CASE WAS THAT INTEREST SHOULD H AVE BEEN CHARGED ON SHORT DEDUCTION. THE PROVISIONS OF SECTION 40(A)(IA) APPL IES IN THE CASE OF NON- DEDUCTION OF TAX AND NOTFOR SHORT DEDUCTION OF TAX. THIS PRINCIPLE HAS BEEN CONFIRMED IN THE CASE OF ABOVE DECISION BY TRIBUNAL . HENCE, ADDITION /DISALLOWANCE SO MADE WERE DELETED. 5. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL B EFORE THE TRIBUNAL. THE LD. SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT PROVISION OF SECTION 40(A)(IA) HAS BEEN RIGHTLY APP LIED FOR PROPIONATE AMOUNT OF NON-DEDUCTION OF TAX. 6. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ISSUE IS COVERED BY DECISION OF HON`BLE KOLKATA HIGH COUR T IN THE CASE OF CIT V. S. K TEKRIWAL 361 ITR 432 (KOL), DCIT V. S. K TEKRIWAL 15 TAXMANN.COM 289 (KOL)- TRIB) AND DCIT V. CHANDABHOY & JASSOBHOY 17 TAXMANN.C OM 158 (MUM-TRIB) AND U E TRADE CORPORATION LTD. V. DCIT 18(1) NEW DEL HI IN I.T.A.NO. 2303/DEL/2011 DTD. 18.05.2012. HENCE, LD. CIT (A) HA S RIGHTLY ALLOWED THE DELETED THE DISALLOWANCE MADE BY INVOKING THE PROVI SION OF SECTION 40(A)(IA) AS THE SAME ARE NOT APPLICABLE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS DEDUCTED T DS @1% AS AGAINST THE PRESCRIBED RATE OF TDS AT 2% AS PER PROVISION OF SE CTION 194C OF THE ACT.WE FIND THAT PROVISION OF SECTION 40(A)(IA) PROVIDES THE DI SALLOWANCE UNDER SECTION DCIT ROHTAK CIRCLE V. M/S. MAHANADI COAL TRANSPORT /I.T.A. NO. 4708/DEL/2015/A.Y.11-12 PAGE 3 OF 4 40(A)(IA) WOULD BE MADE IF THERE IS NO DEDUCTION OF TAX OR AFTER DEDUCTION OF TAX NOT DEPOSITED THE SAID TAX IN GOVERNMENT ACCOUNT. HOWEVER, THESE PROVISIONS WOULD NOT APPLY WHERE TDS HAS BEEN MADE EVEN THOUGH AT LESSER RATE. FOR WHICH THERE IS REMEDY TO CHARGE INTEREST AS PER PROVISION OF THE ACT. THIS VIEW HAS BEEN AFRAID BY THE HON`BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. S. K TEKRIWAL 361 ITR 432 (KOL), DCIT V. S. K T EKRIWAL 15 TAXMANN.COM 289 (KOL)-TRIB) AND DCIT V. CHANDABHOY & JASSOBHOY 1 7 TAXMANN.COM 158 (MUM-TRIB) AND U E TRADE CORPORATION LTD. V. DCIT 18 (1) NEW DELHI IN I.T.A.NO. 2303/DEL/2011 DTD. 18.05.2012. THEREFORE, RESPECTFU LLY FOLLOWING THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), A CCORDINGLY, SAME IS UPHELD. THIS GROUNDS OF APPEAL OF REVENUE IS THEREFORE, DIS MISSED. 8. GROUND NO. 2 STATES THAT LD. CIT (A) HAS ERRED IN DE LETING THE DISALLOWANCE OF ADDITION OF RS. 5,29,936 MADE BY TH E AO ON ACCOUNT OF INCURRING EXPENSES IN CASH/ VOUCHERS AND WITHOUT VER IFICATION. 9. THE AO HAS NOTICED THAT THE ASSESSEE HAS INCURRED E XPENDITURE OF RS. 11,50,573 AS STAFF WELFARE, RS. 11,17,191 AS GENERA L EXPENSES AND RS. 3,81,918 AS REPAIRS AND MAINTENANCE WHICH ARE HIGHLY INCREAS ED FROM PRECEDING ASSESSMENT YEAR, AND SAME WERE INCURRED IN CASH AND NOT PROPERLY VOUCHED. HENCE, THE AO HAS DISALLOWED 20% OF SAME, WHICH WOR KED OUT TO RS. 5,29,936. 10. IN APPEAL, LD. CIT (A) HAS DELETED THE SAME BY OBSERV ING THAT THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECTS OR DISCREPANCY IN THE ACCOUNT BOOKS OF THE ASSESSEE. IT WAS FURTHER OBSERVED THAT NET PROFIT RA TE IS AT 2.81 % AS COMPARED TO LAST YEAR NET PROFIT RATE OF 2.71 AND GROSS PROF IT RATE IS 2.91 % AS COMPARED TO LAST YEAR OF 2.77%, WHICH IS HIGHER THAN LAST YE AR. THE LD. CIT (A) HAS ALSO RELIED IN THE CASE OF M/S. GOLDCREST EXPORT V. ITO 12 (2) MUMBAI 134 TTJ 355 (MUMBAI) AND ACCORDINGLY, DELETED THE SAID DISALLOW ANCE OF EXPENSES. 11. THE LD. SR. D.R. RELIED ON THE ORDER OF THE AO, BUT COULD NOT CONTROVERT THE FINDING OF LD. CIT (A). DCIT ROHTAK CIRCLE V. M/S. MAHANADI COAL TRANSPORT /I.T.A. NO. 4708/DEL/2015/A.Y.11-12 PAGE 4 OF 4 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. WE FIND THAT THE NET PROFIT RATE RATIO S HOWS INCREASE AT 2.81% AS COMPARED TO LAST YEARS NET PROFIT RATE OF 2.71%. T HEREFORE, INCREASE IN EXPENDITURE FROM LAST YEAR IS JUSTIFIED. FURTHER, TH E LD. CIT (A) HAS RIGHTLY OBSERVED THAT THE AO HAS NOT POINTED OUT ANY DEFECT AND DISCREPANCY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WHEREAS BOOKS OF ACCOUNTS ARE AUDITED. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD. THIS GROUNDS OF APPEAL IS ACCORDINGLY, DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. 14. THE ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.201 9 SD/- SD/- (K.NARSIMHA CHARAY) (O.P. MEENA) JUDICIAL MEMBER ACCOUNTANT M EMBER NEW DELHI: DATED: 07FEBRUARY 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, NEW DELHI STANDARD PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1 DATE OF DICTATION 07 .02.2019 2 DRAFT PLACED BEFORE THE AUTHOR 07 .02.2019 3 DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 07 .02.2019 4 DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER 07 .02.2019 5 APPROVED DRAFT COMES TO SR. PS /PS 07 .02.2019 6 KEPT FOR PRONOUNCEMENT ON 07 .02.2019 7 DATE OF UPLOADING ORDER ON THE WEB SITE 8 FILE SENT TO BENCH CLERK 9 DATE ON WHICH THE FILE GOES TO THE A.R. FOR SIGNATU RE ON THE ORDER 10 DATE ON WHICH FILE GOES TO HEAD CLERK 11 DATE OF DISPATCH OF ORDER