Shuvendu Bhusan Behera, Bhadrak V. JCIT, Balasore

ITA 512/CTK/2012

• Counselvise Citation: 51222114 RSA 2012
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 26-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Court: TRIBUNAL
• Department Lawyers: PRAMITA TRIPATHY
• Assessee Lawyers: S C BHADRA
• Section: 10; 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 512/CTK/2012 / ASSESSMENT YEAR 2009 - 10 SRI SH UVENDU BHUSAN BEHERA, CINEMA HAL ROAD, BASUDEVPUR,BHADRAK PAN: AEWPB 4509 E - - - VERSUS - JOINT COMMISSIONER OF INCOME - TAX,BALASORE RANGE,BALASORE. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.C.BHADRA, AR / FOR THE RESPONDENT: / S MT. PRAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 26.11.2012 / DATE OF PRONOUNCEMENT: 30.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE RAISES A SOLITARY GROUND WITH RESPECT TO DISALLOWANCE OF EXPENSES INCURRED ON HIRING OUT TRANSPORTERS FOR CARRYING OUT THE ASSESSEE HAVING ENTERED INTO A CONTRACT WITH LARSON & TU BRO FOR TRANSPORTING ITS MATERIAL WHEN THE MATERIAL HAS BEEN TRANSPORTED ALONG WITH THE TRANSPORT CHARGES PAID BY THE ASSESSEE TO OTHER TRANSPORT OWNERS ON THE SUBMISSION OF FORM 15 - I TO THE ASSESSEE FOR NON - DEDUCTION OF TAX AT SOURCE U/S.194C. 2. THE GROUND RAISED BY THE ASSESSEE READS AS UNDER : THE LEARNED ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAVE APPLIED THE MISCHIEF OF PROVISION OF SECTION 40(A) (IA) OF INCOME TAX ACT, DISALLOWING RS. 3,92,32,730/ - , TREATING THE APPELLANT IN DEFAULT FOR NOT DEDUCTING TAX FROM TRUCK OWNERS, WHEN THERE IS NO EXPLICIT CONTRACT BETWEEN THE TRUCK OWNERS AND THE APPELLANT. AND ALSO THE TRUCK OWNERS, TO DISCHARGE THEIR RESPONSIBILITY HAVE FILED DECLARATION IN FORM NO. 15 - I, IN ADVANCE, REQUESTING THE APPELLANT FOR NON - DEDUCTION OF TAX FROM SOURCE. I.T.A.NO. 512/CTK/2012 2 3. THE LEARNED COUNSEL OF THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THE BRIEF FACTS WHEN T HE ASSESSEE IS CARRYIN G ON BUSINESS OF TRANSPORT CONTRACTOR BY TRANSPORTING MATERIALS FOR PRINCIPAL THROUGH HIRING TRUCKS WHENEVER REQUIRED FROM TRUCK OWNERS. THERE IS A CONTRACT BETWEEN THE PRINCIPAL AND THE ASSESSEE FOR TRANSPORTATION OF MATERIALS ON CERTAIN TERMS AND CONDITI ONS. THE ASSESSEE IN RETURN HIRES TRUCKS FROM TRUCK OWNERS, WHENEVER REQUIRED, WITHOUT ANY EXPLICIT CONTRACT EITHER WRITTEN OR VERBAL. DEPENDING UPON THE REQUIREMENT, THE TRUCK OWNERS ARE ASKED TO PROVIDE TRUCK ON PAYMENT BASIS TO TRANSPORT THE MATERIALS. SUO - MOTTO THE TRUCK OWNERS FURNISH ED DECLARATION FOR NON DEDUCTION OF TAX AT SOURCE IN FORM NO. 15 - I . THE ASSESSEE IN COURSE OF ASSESSMENT FURNISHED NAME S OF THE T RANSPORT OWNERS AND AMOUNT PAID /CREDITED. AND ALSO AS DESIRED BY THE ASSESSING OFFICER FURNIS HED THE DECLARATIONS IN FORM NO. 15 - I SUPPLIED BY THE TRUCK OWNER S . THE ASSESSEE FILED FORM NO. 15 - J, ALONG WITH FORM NO. 15 - I, BEFORE THE ASSESSING OFFICER, INSTEAD OF JURISDICTIONAL COMMISSIONER OF INCOME TAX. THE ASSESSING OFFICER TR IED TO VERIFY THE FI LING OF FORM 1 5 - J BEFORE THE ASSESSING OFFICER AND NO EVIDENCE WAS AVAILABLE IN HIS OFFICE AS PER HIS CONCLUSION CONTAINED IN THE BODY OF THE ORDER. ALTHOUGH, THE ASSESSEE FURNISHED EVIDENCE OF FILING OF FORM NO. 15 - J, THE ASSESSING OFFICER BRUSHED ASIDE T HE SAME AND MADE THE IMPUGNED ADDITION OF RS.3,92,32,730 U/S.40(A)(IA). BEFORE THE LEARNED CIT(A), P LETHORA OF JUDGMENTS WERE FILED BEFORE HIM, STATING THAT ONCE FORM NO. 15 - I IS COLLECTED, THE TRUCK OWNER HAS DISCHARGED HIS RESPONSIBILITY FOR WHICH NO DED UCTION OF TAX FROM SOURCE IS REQUIRED. MOREOVER, JUDGMENTS OF JURISDICTIONAL APPELLATE TRIBUNAL WERE FILED TO ESTABLISH THAT THE ABOVE TYPE OF TRANSACTION DOES NOT RESULT ANY CONTRACT FOR WHICH TAX WAS REQUIRED TO BE DEDUCTED. THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) BRUSHING ASIDE THE SUBMISSIONS MADE BY THE I.T.A.NO. 512/CTK/2012 3 ASSESSEE, TREATED HIM AS IN DEFAULT FOR NON - DEDUCTION OF TAX FROM TRUCK OWNER U/S.194C AND APPLIED THE PROVISIONS OF SECTION 40(A)(IA) BY MAKING DISALLOWANCE OF RS.3,92,32,730. 4. THE LEARNE D COUNSEL OF THE ASSESSEE ARGUED THAT THE SOLE CONSIDERATION BY THE LEARNED CIT(A) WAS TRYING TO ESTABLISH THAT A CONTRACT HAD BEEN ENTERED INTO BETWEEN THE ASSESSEE AND TRANSPORTERS FROM WHOM THE ASSESSEE HAD OBTAINED THE PURPORTED FORMS 15 - I WHICH THE AS SESSING OFFICER HAS NOTED OTHERWISE. THE LEARNED CIT(A) THEREFORE PROPOSED TO CONSIDER THE CASE OF THE HONBLE KAR NATAKA HIGH COURT IN THE CASE O F SMT. J.RAMA V. CIT (344 ITR 608) WHEN IT WAS CONSIDERED BY THE HONBLE HIGH COURT FOR TAX DEDUCTION AT SOURCE OUGHT TO BE AT THE INSTANCE OF THE PAYER AND NOT BECAUSE SUBSEQUENTLY IT WAS TO BE FOUND OUT THAT A CONTRACT MUST EXIST BEFORE THE PROCEDURE OF PAYMENTS BEGAN WAS CONSIDERED BY IT APPROPRIATE WHEN THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN TH E INSTANT CASE WAS ENTIRELY DIFFERENT. IN FACT THE LEARNED CIT(A) COULD NOT CORRELATE WHETHER FOR THE PURPOSE OF NON - DEDUCTION OF TAX AT SOURCE EVEN THE RE QUIREMENT OF OBTAINING FOR 15 - I WAS NOT STIPULATED BY THE ACT WAS NOT CONSIDERED BY THE HONBLE HIGH COURT HAS NOT BEEN ADDRESSED BY HIM. THEREFORE, FINDING TO THE ISSUE ON HAND HE SUBMITTED THAT AS PER THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO HAVE DETERMINE D TAXABILITY OR OTHERWISE FOR THE PURP OSE OF INVOKING THE PROVISIONS OF SECTION 194C ON THE PAYMENTS MADE AMOUNTING TO RS.3.92 CRORES WHEN THE PAYMENT WAS AGAINST MATERIAL AND INCLUDING TRANSPORT COST ON THE CONTRACT AMOUNTING TO MORE THAN RS.10 CRORES. HE ARGUED THAT THE TOTAL AMOUNT PAID INC LUDING THE TRANSPORTATION HIRING CHARGES ALONG WITH THE MATERIAL WAS RS.9.41 CRORES THEREFORE WOULD NOT BE A CONSIDERATION AGAINST CONTRACT BUT REIMBURSEMENT OF EXPENSES INCLUDING I.T.A.NO. 512/CTK/2012 4 TRANSPORTATION CHARGES. THE LEARNED CIT(A) THEREFORE, ERRED IN MISINTERPRETI NG THESE FACTS WHICH ARE BROUGHT ON RECORD BY THE ASSESSING OFFICER ITSELF WHEN THE ASSESSING OFFICER WAS CONFINED TO HIS FINDING WHETHER FORM 15 - I HAD BEEN RECEIVED ENTITLING THE ASSESSEE THE CLAIM OF NON - DEDUCTION OF TAX AT SOURCE WHETHER COULD BE FURTHE R LOOKED UPON TO FIND AN EXISTENCE OF CONTRACT. THE SAID ADDITION OF RS.3,92,32,730 MADE BY THE ASSESSING OFFICER U/S.40(A)(IA) AND SUSTAINED BY THE LEARNED CIT(A) MAY THEREFORE BE DELETED. 5. THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE INSOFAR AS THE LEARNED CIT(A) RIGHTLY TRIED TO FIND A CASE WHEN THE HUGE SUM HAS BEEN PAID FOR TRANSPORTATION COST WHETHER COULD BE PAID WITHOUT ENTERING INTO CONTRACT WAS TO BE CONSIDERED ON THE CASE LAWS CITED BY THE LEARNED CIT(A). FILING OF FORM 15 - I THEREFORE LOOSES SIGNIFICANCE INSOFAR AS THE ASSESSING OFFICER HAS NOTED THAT IT WAS NOT FILED IN HIS OFFICE COUPLED WITH THE FACT THAT THE SAME WAS TO BE SUBSTANTIATED BY FILING FORM 15 - J TO REGULARIZE THE HOLDING OF FORM 15 - I BY THE ASSESSEE WAS TO BE EXAMINED BY THE CIT, ADMINISTRATION. SHE FULLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HER PART OF SUBMISSIONS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED COUNSEL OF THE ASSESSEE EMPHASIS IS ON THE LEARNED CIT(A) TELESCOPING T HE FINDING OF FACTS BY THE ASSESSING OFFICER TO HOLD THE APPLICABILITY OF THE HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF SMT. J. RAMA VS. CIT, 344 ITR 608 INSOFAR AS NO EFFORT WAS MADE IN THE CITED DECISION OF HIGHLIGHTING THE PROVISIONS FOR INV OKING THE PROVISIONS OF SECTION 194C WITHOUT CONSIDERING THE CASE OF THE ASSESSEE WHETHER THE EXPENDITURE HAD BEEN DISALLOWED U/S.40(A)(IA) . IN OTHER WORDS, THE LEARNED CIT(A) THEREFORE RENDERED THE DECISION THAT TOO ON A THEORITICAL WAY OF CONSIDERATION OF THE ISSUE AND NOT PRACTICAL CONSIDERATION I.T.A.NO. 512/CTK/2012 5 AS WOULD BE MORE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE WAS THE REASON THE EFFORTS MADE BY THE ASSESSING OFFICER WAS TO BE CONSIDERED WHETHER NON - DEDUCTION OF TAX AT SOURCE WOULD AUTOMATICALLY LEAD TO T HE FINDING WHEN THE EFFORTS HAVE BEEN MADE BY THE ASSESSEE TO OBTAIN FORM 15 - I FROM THE TRUCK OWNERS WHO ARE ENTITLED TO HOLD A PERMANENT ACCOUNT NUMBER WHETHER WOULD BE AN EXHAUSTIVE EXERCISE TO BE MADE BY THE ASSESSING OFFICER WAS PARTLY RENDERED INEFFE CTIVE BY THE ASSESSING OFFICER HIMSELF WHEN HE CHOSE TO DISALLOW FROM THE TOTAL EXPENDITURE INCURRED INCLUDING 3,92,32,730 FREIGHT ALONE . IN OTHER WORDS, THE INTENTION OF THE ASSESSEE WAS FROM THE VERY BEGINNING THAT HAVING TAKEN SUB - CONTRACT FOR TRANSPOR TATION OF MATERIAL AMOUNTING TO 10 CRORES , IT WAS THE ASSESSEES ENDEAVOR TO ENGAGE TRUCKS AND OBTAIN PERMANENT ACCOUNT NUMBER AS PER THE PROVISIONS OF SECTION 194C(6) AS CLARIFIED W.E.F. 1.10.2009 WHEN NO DEDUCTION WAS TO BE MADE HAVING OBTAINED PERMANEN T ACCOUNT NUMBER AS MENTIONED BY THE ASSESSING OFFICER HIMSELF. A PROCEDURAL OR THE TECHNICAL DEFECT ON THE ASSESSEE COULD NOT BE CONSIDERED FOR DEEMING PROVISIONS U/S.40(A)(IA) WHICH ONLY INDICATES THAT ONLY THOSE AMOUNTS ARE TO BE SUBJECTED TO DISALLOWAN CE ON WHICH TAX WAS DEDUCTIBLE. HERE THE ASSESSEE HAS ESTABLISHED ALONG WITH THE ASSESSING OFFICER THAT THE TAX WAS NOT TO BE DEDUCTED WHEN THE LAW PROVIDES THAT ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER THE ASSESSEE WAS NOT TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THEM. THEREFORE, THE DISALLOWANCE U/S.40(A)(IA) COULD NOT HAVE BEEN MADE WHEN THE NON - DEDUCTION OF TAX AT SOURCE AS PER THE FINDING OF FACT BY THE ASSESSING OFFICER WOULD HAVE MADE THE ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SECTI ON 201. IN OTHER WORDS, THE DEEMING PROVISIONS OF SECTION 40(A)(IA) WOULD NOT HAVE BEEN CONSIDERED AS HAVE BEEN NOW CONSIDERED BY THE LEARNED CIT(A) FOR DISTINGUISHING THE FACTS OF THE I.T.A.NO. 512/CTK/2012 6 ASSESSEES CASE AS PER THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFF ICER VIS - - VIS THE CASE LAW CITED BY THE LEARNED CIT(A) IN THE CASE OF SMT. J. RAMA VS. CIT, 344 ITR 608 . FOR OBTAINING A PERMANENT ACCOUNT NUMBER THERE WAS NO REQUIREMENT OF ORAL OR WRITTEN CONTRACT INSOFAR AS THE RECIPIENT KNOWS THAT THE AMOUNT EXCEEDI NG 50,000 WAS NOT TO BE CHARGED TO TAX FURNISHING THE FORM 15 - I WHICH RELATE TO THE FINDING THAT THE OWNER OF TWO TRUCKS ARE TO BE TAXED UNDER THE PROVISIONS OF SECTION 44AE. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HIMSELF HAS C LARIFIED THE DECISION REGARDING NON - DEDUCTION OF TAX AT SOURCE VIS - A - VIS APPLICABILITY OF DEEMING PROVISIONS OF SECTION 40(A)(IA) BY IMMEDIATELY THEREAFTER PROCEEDED TO DISALLOW THE ENTIRE CLAIM, WHICH IN OUR VIEW HAS BEEN CORRELATED BY THE LEARNED CIT(A) TO THE FINDING THAT THE MAGNITUDE OF THE TRUCKS ENGAGED BY THE ASSESSEE FOR TRANSPORTING MATERIAL NOT BELONGING TO IT WAS PURELY FOR EXECUTING THE SUB - CONTRACT WHICH HE HAD UNDERTAKEN WAS NOT TO BE CONSIDERED AFTER HAVING CONSIDERED THE PROVISIONS OF SECTI ON 194C(5) AS CLARIFIED W.E.F. 1.10.2009. THIS MEANS THE ASSESSEE NEVER ENTERED INTO ANY CONTRACT WHEN THE LAW PROVIDES THAT THE DEDUCT OF TAX AT SOURCE HAS TO BE MADE ON PAYMENT EXCEEDING 50,000 FOR THE IMPUGNED ASSESSMENT YEAR WAS ON THE BASIS OF A CONT RACT ENTERED INTO BETWEEN THE ASSESSEE AND THE TRUCK OWNERS. CONSIDERING THE TOTALITY OF THE FACTS AS HAVE BEEN BROUGHT ON RECORD, THE NUMEROUS TRUCK OWNERS AS WERE TO BE CONSIDERED BY THE ASSESSING OFFICER RESULTED ONLY IN A FINDING THAT THE COMPLIANCE OF THE LAW HAS BEEN MADE TO THE EXTENT THAT THE ASSESSEE WAS NOT TO DEDUCT TAX AT SOURCE AS PER THE PLETHORA OF JUDGMENTS ALREADY RENDERED IN FAVOUR OF THE ASSESSEE ON HAND WAS NOT TO BE TELESCOPED ON THE DISTINGUISHABLE FACTS WHICH ARE NOT DISPUTED AS SPECI FICALLY POINTED OUT BY THE LEARNED DR WHEN THE LEARNED CIT(A) CHOOSE TO CONSIDER THE IMPLICATIONS OF THESE PROVISIONS PRACTICALLY I.T.A.NO. 512/CTK/2012 7 AND THEORETICALLY. THE CRYSTALLIZED FACTS HAVE BEEN OTHERWISE DEALT WITH BY THE LEARNED CIT(A) ON THE SOLE CRITERIA WHETHER TH E DEEMING PROVISION COULD APPLY PRIOR TO ENTERING INTO CONTRACT AT ALL. IT WAS NEVER THE CASE OF THE ASSESSEE NOT TO DEDUCT TAX PROVIDED HE WAS NOT IGNORANT OF THE FACT THAT FORM 15 - I OUGHT TO HAVE BEEN OBTAINED ONLY IN RESPECT OF THE TRUCK OWNERS. THE ASS ESSING OFFICER APPRECIATED THE INCURRING OF EXPENDITURE FOR LORRY FREIGHT. THIS IN ITSELF SHOULD HAVE LED TO THE LEARNED CIT(A) TO GIVE A FINDING THAT NON - DEDUCTION OF TAX COULD ONLY HAVE BEEN RECTIFIED U/S.201 AND NOT BECAUSE THE ASSESSEE AFTER HAVING OBTAINED PERMANENT ACCOUNT NUMBER WOULD HAVE BEEN CONSIDERED FOR DISALLOWANCE U/S.40(A)(IA). IN THIS VIEW OF THE MATTER, THE ORDER OF THE LEARNED CIT(A) IS SET ASIDE INSOFAR AS THE FACTS AS HAVE BEEN BROUGHT ON RECORD HAVE TO BE CONSIDERED AS NARRATED BY THE LEARNED COUNSEL OF THE ASSESSEE AS OF NOW WHEN THE PLETHORA OF JUDGMENTS CITED BY HIM ARE APPLICABLE DO NOT REQUIRE FURTHER DELIB ERATION . THE ASSESSING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE OF 3,92,32,730 U/S.40(A)(IA). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 30.11.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 512/CTK/2012 8 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SRI SH UVENDU BHUSAN BEHERA, CINEMA HAL ROAD, BASUDEVPUR,BHADRAK 2 / THE RESPONDENT: JOINT COMMISSIONER OF INCOME - TAX,BALASORE RANGE,BALASORE. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 27.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..