Tybas Projects Pvt. Ltd, Bhubaneswar V. ACIT, Bhubaneswar

ITA 54/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81448 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Source of fund; Question of law
• Section: 69C; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI S.V.MEHROTRA (AM) AND GEORGE MATHAN (JM) I.T.A. NO. 54/CTK/2013 ASSESSMENT YEAR: 2009-2010 TYBAS PROJECTS PVT LTD., PLOT NO.2289, CUTTACK ROAD, BHUBANESWAR PA NO.AABCT 5283 A ACIT, CIRCLE - 1(1), BHUBANESWAR. APPELLANT RESPONDENT I.T.A. NO. 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 ACIT, CIRCLE - 1(1), BHUBANESWAR. TYBAS PROJECTS PVT LTD., PLOT NO.2289, CUTTACK ROAD, BHUBANESWAR PA NO.AABCT 5283 A. APPELLANT RESPONDENT FOR THE ASSESSEE: SHRI SUNIL MISHRA FOR THE REVENUE: SHRI ANIL SHARMA DATE OF HEARING: 13/10/.2014 DATE OF PRONOUNCEMENT: 16 /10/2014 ORDER PER S.V.MEHROTRA, AM THE CROSS APPEALS FILED BY THE ASSESSE AND REVENUE ARE DIRECTED AGAINST ORDER DATED 23.11.2012 OF LD CIT(A), BERHAMPUR, CAMP: BHUBANE SWAR FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE COMPANY, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE BUSINESS OF WORKS CONTRACT IMPLEMENTATION. IT FILED THE RE TURN OF INCOME DECLARING TOTAL INCOME AT 2 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 RS.43,25,184/-. THE ASSESSING OFFICER COMPLETED TH E ASSESSMENT AT RS.1,05,68,280/- AFTER MAKING THE FOLLOWING ADDITIONS: 1. UNSECURED LOAN FROM ANAND EXPORTS : RS.28,60,0 00/- 2. UNSECURED LOAN FROM B.BEHERA : RS.10,00,000/- 3. NON-ACCOUNTING OF HIRE CHARGES PAYABLE : RS. 9,75,000/- 4. NON-ACCOUNTING OF TDS : RS. 4,08,100/- 5. LOW RATE OF TDS ON SUB-CONTRACTS : RS.10,00,00 0/- 3. LD CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL. BEING AGGRIEVED BY ORDER OF LD CIT(A), BOTH THE ASSESSEE AND DEPARTMENT ARE IN APPEAL BEFO RE US. 4. FIRST, WE TAKE UP THE APPEAL OF THE DEPARTMENT. GROUNDS RAISED ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.28,60,000/ - AND RS. 10,00,000/- MADE ON ACCOUNT OF DISCREPANCY IN THE BALANCE SHEET REGARDI NG UNSECURED LOANS CLAIMED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.9,75,000/- MADE BY T HE AO U/S.69C. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 1,55,000/- MADE BY THE AO U/S.40(A)(IA). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE CONTENTIONS OF THE ASSESSEE IN VIO LATION OF RULE 46A OF THE I.T. RULES, WHEN THE REMAND REPORT OF THE AO WAS NOT COM PREHENSIVE AND THE SAME WAS NOT BINDING UPON THE LD. CIT(A). 5. BRIEF FACTS APROPOS GROUND NOS.1 & 2 ARE THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT ANOTHER FILE UN DER SCRUTINY FOR ASSESSMENT YEAR 2008-09 WAS OF M/S. ANAND EXPORTS. IN THE COURSE OF STUDY O F BANK BOOK OF ANAND EXPORTS, IT WAS FOUND THAT THIS PARTY HAD MADE LOANS AND ADVANCES' TO TH E ASSESSEE. HOWEVER, THE FIGURE FOR UNSECURED LOANS STOOD AT RS. 16.5 LAKHS FOR BOTH 31 ST MARCH, 2007 AND 31 ST MARCH, 2008. THE 3 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE LIST OF UNSECURED LOANS, SUNDRY CREDITORS, AND ALSO THE GENERAL LEDGER. FROM THE PERUSAL OF GE NERAL LEDGER, IT WAS FOUND THAT NET RECEIPT OF RS. 28,60,000/- FROM ANAND EXPORTS HAD BEEN ACCO UNTED IN GENERAL LEDGER. HOWEVER IT HAD NOT BEEN ACCOUNTED IN UNSECURED LOANS OR SUNDRY CRE DITORS. THE ASSESSEE EXPLAINED THAT IT MIGHT HAVE BEEN INCLUDED IN LOANS AND ADVANCES'. THE AO POINTED OUT THAT THE LOANS AND ADVANCES IS A DEBIT ENTRY I.E. ITEMS WHICH SHOULD B E INCLUDED IN ASSETS; WHEREAS UNSECURED LOANS TAKEN BY THE COMPANY ARE LIABILITIES. HE O BSERVED THAT IF THE ASSESSEE DID NOT MENTION THE SOURCE OF FUND OF RS. 28,60,000/-, IT IMPLIES THAT LIABILITIES ARE MORE THAN ASSETS. HE ACCORDINGLY MADE AN ADDITION OF RS.28,60,000/- UNDE R SECTION 69C OF THE ACT. 6. THE ASSESSING OFFICER FURTHER OBSERVED THAT THER E WAS ANOTHER CREDIT BALANCE UNDER THE HEAD 'B.BEHERA' OF RS. 10,00,000/-. HE OBSERVED T HAT THIS LOAN WAS NOT INCLUDED IN THE BALANCE SHEET AND MADE ADDITION UNDER SECTION 69C O F THE ACT OF RS.10,00,000/-, INTER ALIA, OBSERVING THAT IT WAS AN OPENING BALANCE, WHICH HAD NOT BEEN MADE AS CLOSING BALANCE. 7. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN T HE GENERAL LEDGER, THERE WAS A CREDIT ENTRY OF RS.9,75,000/- AS HIRE CHARGES PAYABLE, W HICH HAD NOT BEEN MADE ACCOUNTED FOR AS LIABILITY. THEREFORE, HE MADE AN ADDITION OF RS.9, 75,000/- UNDER SECTION 69C OF THE ACT. 8. BEFORE LD CIT(A), ASSESSEE HAD FILED WRITTEN SUB MISSIONS WHICH HAVE BEEN REPRODUCED IN PARA 5. 2 OF THE IMPUGNED ORDER. THESE WRITTEN SUB MISSIONS WERE REFERRED TO THE ASSESSING OFFICER FOR VERIFICATION. THE CONTENTS OF THE REMA ND REPORT DATED 9.4.2012 HAVE BEEN REPRODUCED IN PARA 5.2.1. AFTER CONSIDERING THE REM AND REPORT, LD CIT(A) OBSERVED IN PARA 5.3 AS UNDER: I HAVE CAREFULLY CONSIDERED THE MATTER. AS IS CLE AR FROM THE REMAND REPORT OF THE AO, THE CREDITS OF RS.28,60,000/- AND RS. 10,00,000 /- APPEAR UNDER THE HEAD 'ADVANCE FROM CUSTOMERS' AND ARE DULY DISCLOSED IN THE BALANCE SHEET. FURTHER, THE LOAN FROM SHRI BEHERA IS ADMITTEDLY A BROUGHT F ORWARD LOAN. SINCE THESE LOANS WERE NOT SHOWN UNDER THE HEAD LOANS AND ADVANCES OR UNSECURED LOANS, THE AO APPARENTLY MADE THE ADDITION IN THE ASSESSMENT. HOW EVER, WITH THE REMAND REPORT OF THE AO CLEARLY SUBSTANTIATING THE CONTENT IONS OF THE ASSESSEE THAT THESE AMOUNTS HAVE BEEN SHOWN IN THE BALANCE SHEET, I AGR EE WITH THE VIEW OF THE AO GIVEN IN THE REMAND REPORT THAT THESE ADDITIONS ARE NOT SUSTAINABLE. SIMILARLY, THE HIRE CHARGES PAYABLE OF RS.9,75,000/- IS AGAIN CLEA RLY A PART OF THE BALANCE SHEET AND THE ADDITION WAS DUE TO THE FACT THAT BECAUSE O F TYPOGRAPHICAL OMISSION OF 4 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 THIS AMOUNT IN THE BALANCE SHEET. HOWEVER, THIS AMO UNT IS PART OF THE LIABILITIES IN SCHEDULE - 4 AMOUNTING TO RS.1,01,31,350/- AS VERIF IED BY THE AO DURING REMAND AND, ACCORDINGLY, THE ADDITION OF RS.9,75,000/- IS ALSO NOT SUSTAINABLE. THUS, THE ADDITIONS OF RS.28,60,000/-, RS. 10,00,000/- AND RS .9,75,000/- ARE DELETED AND THE GROUND NO.5 IS, THUS, DECIDED IN FAVOUR OF THE APPELLANT. 9. IN VIEW OF THE FINDINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT, INTER ALIA, THAT ..ON VERIFICATION OF THE SAME, IT WAS FOUND THAT THE TOT AL FIGURE OF RS.41,71,000/- SHOWN UNDER THE HEAD ADVANCE FROM CUSTOMERS IN THE BALANCE SHEET AS AT 31.3.2008 INCLUDES THE SUM OF RS.28,60,000/- . NOW IT CAN BE CONCLUDED THAT INST EAD OF SHOWING THIS AMOUNT UNDER UNSECURED LOAN THE ASSESSEE HAS INCLUDED IT IN A DVANCE FROM CUSTOMERS UNDER THE MAJOR HEAD OF CURRENT LIABILITIES AND PROVISIONS, AND IN RE GARD TO THE AMOUNT OF RS.10,00,000/-, IT IS, INTER ALIA, STATED THAT IT IS CONCLUDED THAT THE UNSECUR ED LOAN OF RS.10,00,000/- WAS RECEIVED BY THE ASSESSEE FROM SRI BIJAY KUMAR BEHERA DURING FINANCI AL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08 WHICH STILL REMAINS ADVANCE FROM CUST OMERS INSTEAD OF UNSECURED LOAN INCLUDED IN THE LIABILITIES OF THE BALANCE SHEET, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) TO INTERFERE AS THE AO HAS CLEARLY ACCEPTED THE ASSESS EES CONTENTION AFTER DUE VERIFICATION. HENCE, GROUND NOS.1 & 2 ARE DISMISSED. 10. APROPOS GROUND NO.3, FACTS ARE THAT THE ASSESSI NG OFFICER, INTER ALIA, REQUIRED THE ASSESSEE TO SHOW WHETHER TDS HAD BEEN DEDUCTED IN R ESPECT OF PAYMENTS MADE TO PRABIR KUMAR ROUT IN REGARD TO MATERIAL SUPPLIED AND TRUCK HIRE AMOUNTING TO RS.1,55,000/-. THE AO CONCLUDED THAT PROVISIONS OF SECTION 194C WERE ATTR ACTED AND SINCE TDS WAS NOT MADE, THEREFORE, DISALLOWANCE WAS CALLED FOR UNDER SECTIO N 40(A)(IA) OF THE ACT. LD CIT(A) DELETED THE ADDITION RELYING ON THE FINDINGS OF THE ASSESSING O FFICER IN THE REMAND REPORT, WHEREIN, HE HAS CLEARLY STATED THAT ALL PAYMENTS WERE MADE ON DIFFE RENT DATES AND TO DIFFERENT PERSONS, WHICH ARE BELOW RS.20,000/- AND, THEREFORE, PROVISIONS OF SECTION 194C WERE NOT ATTRACTED. 11. HAVING HEARD BOTH THE SIDES AND IN VIEW OF THE OBSERVATIONS OF THE AO IN THE REMAND REPORT THAT ALL THE PAYMENTS MADE IN DIFFERENT DATE S ARE TO DIFFERENT PERSONS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD CIT(A). H ENCE, GROUND NO.3 IS REJECTED. 5 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 12. AS FAR AS GROUND NO.4 IS CONCERNED, WE DO NOT FIND ANY VIOLATION OF RULE 46A BECAUSE LD CIT(A) HAD CALLED FOR A REMAND REPORT AND ON THE BA SIS OF THE REMAND REPORT, DECIDED THE ISSUE. THEREFORE, GROUND NO.4 IS REJECTED. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. 14. NOW, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.85/C TK/2013 . 15. GROUNDS ARE AS UNDER: 1. FOR THAT THE ORDERS OF FORUM BELOW ARE ILLEGAL, ARBITRARY AND NON-APPLICATION OF MIND AND AS SUCH ARE LIABLE TO BE QUASHED IN IT' S ENTIRETY IN THE INTEREST OF JUSTICE. 2. FOR THAT DISALLOWANCE OF EXPENSES OF RS. 1,75,000/- PAID TO SRI SUBRAT SAHOO U/S.40(A) (IA) OF THE ACT IS OUT AND OUT ILLEGAL, S INCE, THE SAID PAYMENT MADE AS ADVANCE TO THE SAID EMPLOYEE TOWARDS PAYMENT OF EXP ENSES AND THE INDIVIDUAL ENTRY IN THE LEDGER IS THE CONGLOMERATION OF SEVERA L VOUCHERS OF BELOW RS.20,000/-, THEREBY, THE TDS PROVISION IS NOT ATTR ACTED TO THIS EXPENSES. HENCE THIS DISALLOWANCE MAY KINDLY BE ALLOWED FOR THE INT EREST OF JUSTICE. 3. FOR THAT, THE DISALLOWANCES OF EXPENSES OF RS.78,10 0/- U/S. 40 (A) (IA) IS ARBITRARY SINCE THE INDIVIDUAL DEBIT ENTRY IN THE LEDGER IS T HE CONGLOMERATION OF SEVERAL VOUCHERS OF BELOW RS.20,000/- AND AS SUCH THE TDS P ROVISION IS NOT ATTRACTED AND LIABLE TO BE ALLOWED. 4. FOR THAT, THE DISALLOWANCE OF EXPENSES OF RS.10,00, 000/- PAYMENT MADE TO SUB- CONTRACTOR M/S. S.S. BUILDERS, U/S. 40 (A) (IA) IS ILLEGAL AND NON-APPLICATION OF MIND, SINCE THE AUTHORITIES BELOW FAILED TO APPRECI ATE THE FACT THAT, THE TOTAL BALANCE TO THE CREDIT OF S.S. BUILDERS IS RS.47,58, 316/- WHICH INCLUDES AN OPENING BALANCE OF RS. 10,00,000/- AND UNDER THE PROVISION OF SECTION 194C TAX IS REQUIRED TO BE DEDUCTED AT THE TIME OF CREDIT OF SU CH SUM TO THE ACCOUNT OF CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CAS H OR BY ISSUE OF CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER. H ENCE, SINCE THE PAYMENT HAS BEEN CREDITED IN THE EARLIER YEAR, THE SAME CANNOT BE DISALLOWED IN THE IMPUGNED YEAR AND AS SUCH LIABLE TO BE ALLOWED. 5. FOR THAT, THE DISALLOWANCES OF EXPENSES U/S.40 (A)( IA) OF THE ACT IS OUT AND OUT ILLEGAL SINCE THE PROVISION OF SECTION 40(A) (IA) I S ONLY APPLICABLE TO THE EXPENSES 'PAYABLE' IN THE YEAR ENDING NOT TO THE EXPENSES WH ICH HAS BEEN PAID DURING THE YEAR AND SINCE THE ENTIRE EXPENDITURE HAVE BEEN PAI D DURING THE YEAR, THE PROVISION IS NOT APPLICABLE TO THE CASE OF THE APPE LLANT AND AS SUCH LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. 6 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 16. GROUND NO.1 IS GENERAL, HENCE DOES NOT REQUIRE ANY ADJUDICATION. 17. APROPOS GROUND NOS.2 & 3 ARE THAT THE ASSESSING OFFICER, INTER ALIA, NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS TO THE FOLLOWING PARTIES : 1. BISWAJIT CONSTRUCTION : RS. 78,100/- 2. SUBRAT SAHOO : RS.1,75,000/- HE OBSERVED THAT HIRE CHARGES ACTUALLY FALL UNDER T HE SCOPE OF SECTION 194C BECAUSE ROLLERS AND TRUCKS ARE NOT HIRED, RATHER THE OWNER IS PROVI DED THE SUM FOR DOING SOME JOB. HE POINTED OUT THAT OWNER SUPPLIES THE TRUCK/ROLLER AS WELL AS THE DRIVER/OPERATOR. HENCE, THIS WAS A SERVICE CONTRACT AS CLARIFIED BY THE CBDT CIR CULAR NO.715 DT.8.8.1995. THUS, TDS WAS REQUIRED TO BE MADE. SINCE TDS HAD NOT BEEN MADE, HE MADE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. LD CIT(A) CONFIRMED THE ADDI TION, INTER ALIA, AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFICER. 18. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSE SSEE SUBMITTED THAT IN ANY VIEW OF THE MATTER, SINCE NO AMOUNT WAS OUTSTANDING FOR PAYMENT AT THE END OF THE YEAR, THEREFORE, IN VIEW OF THE DECISION OF ITAT VISAKHAPATNAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS ACIT, 20 TAXMAN.COM.244(VISAKHAPATHAM TRIB)(SB) AND ALSO IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT VS. VEETOR SHIPPING SERVICES (P)LTD., NO DISALLOWANCE IS CALLED FOR UNDER SECTIO N 40(A)(IA) OF THE ACT. 19. HAVING HEARD BOTH THE SIDES, WE FIND THAT ITAT DELHI BENCH IN THE CASE OF MRS KANAK SINGH IN ITA NO.5530/DEL/2012 ORDER DATED 19.9.201 2 HELD AS UNDER: 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. THE FACTS ARE NOT DISPUTED. ADMITTEDLY ASSESSEE DID NOT DEDUC T THE TAX AS REQUIRED UNDER THE PROVISIONS OF SECTION 194C. HOWEVER, IT IS ALSO NOT DISPUTED THAT NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR TO SUB-CONTRACTORS. UNDER SUCH CIRCUMSTANCES, THE MAJORITY VIEW DECISION OF SPECIAL BENCH IN THE CASE MERILYN SHIPPING & TRANSPORTS (SUPRA), IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. HOWEVER, THE SPECIAL BENCH DECISION WAS EXAMINED BY VARIOUS HIGH COURT AND IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S VECTOR SHIPPING SERVI CES (P) LTD. (SUPRA), AS UNDER: WE DO NOT FIND THAT THE REVENUE CAN TAKE ANY BENEF IT FROM THE OBSERVATIONS MADE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CA SE OF MERILYN SHIPPING 7 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 AND TRANSPORT LTD. (136 ITD 23) (SB) QUOTED AS ABOV E TO THE EFFECT SECTION 40 (A) (IA) WAS INTRODUCED IN THE ACT BY THE FINANC E ACT, 2004 WITH EFFECT FROM1.4.2005 WITH A VIEW TO AUGMENT THE REVENUE THR OUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISION WAS BROUGHT ON STATUTE TO DISALLOW THE CLAIM OF EVEN GENUINE AND ADMISSIBLE EXPENSES O F THE ASSESSEE UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION' IN C ASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DED UCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. IN THE PRESENT CASE TAX WAS DEDUCTED AS TDS FROM THE S ALARIES OF THE EMPLOYEES PAID BY M/S MERCATOR LINES LTD., AND THE CIRCUMSTANCES IN WHICH SUCH SALARIES WERE PAID BY M/S MERCATOR LINES LTD., FOR M/S VECTOR SHIPPING SERVICES, THE ASSESSEE WERE SUFFICIENTLY EXPLAINED. IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FRO M BUSINESS AND PROFESSION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE A MOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF T HE YEAR. WE DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED ANY ERROR IN RECORD ING THE FINDING ON THE FACTS, WHICH WERE NOT CONTROVERTED BY THE DEPARTMEN T AND THUS THE QUESTION OF LAW AS FRAMED DOES NOT ARISE FOR CONSIDERATION I N THE APPEAL. THE INCOME TAX APPEALIS DISMISSED. 5.1. THESE OBSERVATIONS HAVE BEEN MADE WITH REFEREN CE TO THE FINDINGS OF THE TRIBUNAL IN ITA NO. 5219/DEL/2012 IN THE CASE OF M/ S VECTOR SHIPPING SERVICES, WHICH IS REPRODUCED HEREUNDER:- 7 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE SUBMISSIONS MADE BEFORE LD. CIT(A), AS NOTED EARLIER, HAVE NOT BEEN CONTROVERTED BY THE DEPARTME NT. IT IS NOT DISPUTED THAT M/S MERCATOR LINES LIMITED HAD DEDUCTED TDS ON SALARIES PAID BY IT ON BEHALF OF ASSESSEE. UNDER SUCH CIRCUMSTANCES ASSESS EE WAS NOT REQUIRED TO DEDUCT TDS ON REIMBURSEMENT BEING MADE BY IT TO M/S MERCATOR LINES LIMITED. FURTHER IN ANY VIEW OF THE MATTER, SINCE I T IS NOT DISPUTED THAT NO AMOUNT REMAINED PAYABLE AT THE YEAR END, THEREFORE, IN VIEW OF THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., (136 ITD 23) (SB), ADDITION COULD NOT BE MADE. IN THIS CASE, IT WAS HELD AS UNDER:- SECTION 40(A)(IA) WAS INTRODUCED IN T HE ACT, BY T HE FINANCE ACT, 2004 WITH EFFECT FROM 1.4.2005 WITH A VIEW TO AUGMENT THE REV ENUE THROUGH THE MECHANISM OF TAX DEDUCTION AT SOURCE. THIS PROVISI ON WAS BROUGHT ON STATUTE TO DISALLOW THE CLAIM OF EVEN GENUINE AND A DMISSIBLE EXPENSES OF THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND P ROFESSION IN CASE THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES. THE DEFAULT IN DEDUCTION OF TDS WOULD RESULT IN DISALLOWANCE OF EXPENDITURE ON WHICH SUCH TDS WAS DEDUCTIBLE. 8 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 5.1.1. THE SLP FILED AGAINST THE ORDER OF THE HONB LE HIGH COURT STANDS DISMISSED BY THE HONBLE SUPREME COURT: 5.2. 5.3. SINCE NO DECISION OF HONBLE JURISDICTIONAL HI GH COURT DIRECTLY ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE, THEREFORE, CONSIDERING THE CONFLICT OF OPINION BETWEEN VARIOUS HIGH COURT AND THE DECISION OF SPECIAL BENC H OF THE ITAT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THE ISSUE I N QUESTION. 20. RESPECTFULLY, FOLLOWING THE SAME, GROUND NOS.2 & 3 ARE ALLOWED. 21. AS FAR AS GROUND NO.4 IS CONCERNED, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TOTAL BALANCE TO THE CREDIT OF S.S.BUILDERS WAS OF RS.47,58,316/-, WHICH INCLUDED OPENING BALANCE OF RS. 10 LAKHS, THEREFORE, PROVISIONS OF S ECTION 194C WERE NOT ATTRACTED TO SUM OF RS.10 LAKHS. 22. HAVING HEARD BOTH THE SIDES, WE RESTORE THIS IS SUE TO THE FILE OF THE AO TO VERIFY THE ASSESSEES CONTENTION AND IF IT IS FOUND THAT A SUM OF RS.10 LAKHS REPRESENTED THE OPENING BALANCE IN THE ACCOUNTS OF S.S.BUILDERS, THEN THE C ONTENTION OF THE ASSESSEE THAT PROVISIONS OF SECTION 194C ARE NOT ATTRACTED, HAS TO BE ACCEPT ED. THE CONTENTION OF LD COUNSEL FOR THE ASSESSEE THAT PROVISIONS OF SECTION 194C ARE NOT AT TRACTED, IS NOT ACCEPTABLE BECAUSE ON ONE HAND, ASSESSEE IS PLEADING THAT SECTION 194C IS NOT ATTRACTED AS THE AMOUNT REPRESENTED OPENING BALANCE BUT ON THE OTHER HAND, HE IS CLAIMING THAT DISALLOWANCE CANNOT BE MADE UNDER SECTION 40(A)(IA) OF THE ACT BECAUSE PAYMENT HAD BEEN MADE. THUS, THE ASSESSEE IS TAKING CONTRADICTORY STAND. HENCE, GRO UND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES. 23. AS FAR AS GROUND NO.5 IS CONCERNED, SAME STANDS PARTLY ALLOWED IN VIEW OUR FINDINGS IN RESPECT OF GROUND NOS. 2 & 3 ABOVE. 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- ( GEORGE MATHAN) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, CUTTACK 16 /10/2014 9 I.T.A. NO. 54 & 85/CTK/2013 ASSESSMENT YEAR: 2009-2010 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: TYBAS PROJECTS PVT LTD.,PLOT NO.2289, CUTTACK ROAD,BHUBANESWAR 1. THE REVENUE: ACIT, CIRCLE-1(1),BHUBANESWAR 2. THE CIT, BHUBANESWAR 3. THE CIT(A), BHUBANESWAR. 4. DR, CUTTACK BENCH 5. GUARD FILE. TRUE COPY// BY ORDER ASST. REGISTRAR, ITAT, CUTTACK