Appeal Details
Counselvise Citation
[2010] 135 COUNSELVISE.COM (IT) 2684 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-11-2010
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB
Next Hearing Date
04-10-2010
Assessment Year
2005-2006
Appeal Filed On
06-11-2008
Judgement Text
ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.560/VIZAG/2008 ASSESSMENT YEAR: 2005-06 NUTAKKI RAMA PARVATHI, TADEPALLEGUDEM VS. CIT, RAJAHMUNDRY (APPELLANT) PAN NO:ABDPN 8092 R (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI T.L. PETER, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE IS CHALLENGING THE ORDER DATED 21.8.2 008 PASSED BY LD. CIT, RAJAHMUNDRY UNDER SECTION 263 OF THE ACT FOR T HE ASSESSMENT YEAR 2005-06. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BR IEF. THE ASSESSEE- INDIVIDUAL HAS CONSTRUCTED GODOWNS; GIVEN THEM LEAS E FOR STORAGE OF FOOD GRAINS AND CLAIMED DEDUCTION OF THE INCOME RECEIVED FROM THE GODOWNS UNDER SECTION 80IB(11) OF THE ACT. THE ASSESSMENT F OR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) ON 27.9.2007. THE LEARNED CIT(A), BY INVOKING THE P OWERS VESTED WITH HIM UNDER SECTION 263 OF THE ACT SET ASIDE THE ASSESSME NT ORDER AND DIRECTED THE ASSESSING OFFICER TO PASS THE ORDER ACCORDING T O HIS DIRECTIONS ON THE FOLLOWING THREE ISSUES:- A) EXEMPTION UNDER SECTION 80IB(11A) SHOULD BE DENI ED. B) EXEMPTION UNDER SECTION 10(38) OF THE ACT ON THE LONG TERM CAPITAL GAINS ARISING ON SALE OF SHARES SHOULD BE D ENIED. ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 2 OF 6 C) DISALLOWANCE SHOULD BE MADE OUT OF LORRY TRANS PORT PAYMENTS AND INTEREST PAYMENTS IF NO TDS WAS DEDUCTED FROM T HEM. THE ASSESSEE IS AGGRIEVED BY THE SAID ORDER OF THE LEARNED CIT AND IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS. THE FI RST ISSUE RELATES TO THE ELIGIBILITY OF EXEMPTION UNDER SECTION 80IB(11A) OF THE ACT. THE FACTS RELATING TO THE SAID ISSUE ARE THAT THE ASSESSEE, A LONG WITH FOUR OTHERS HAD CONSTRUCTED GODOWNS AND ALL THE FOUR PERSONS HAVE L EASED THEM OUT TO M/S ANDHRA PRADESH WARE HOUSING CORPORATION (APSWC). T HE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(11A) OF THE ACT IN RESP ECT OF THE AMOUNT RECEIVED FROM THE LETTING OUT OF GODOWNS. THE LEAR NED CIT FELT THAT THE DEDUCTION UNDER SECTION 80IB(11A) IS AVAILABLE ONLY TO THE INTEGRATED BUSINESS OF HANDLING, TRANSPORTATION AND PRESERVATI ON. THE LEARNED CIT ALSO NOTICED THAT THE AGREEMENT WITH APSWC WAS ENTE RED BY SRI M.VENKATESWARA RAO, ANOTHER GODOWN OWNER VIZ., SRI M.VENKATESWRA RAO AND THE ASSESSEE WAS NOT A PARTY TO IT. ACCORDINGL Y HE CAME TO THE CONCLUSION THAT THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION UNDER THE ABOVE CITED SECTION. 3.1 WE NOTICE THAT THE ASSESSING OFFICER, DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, HAS RAISED A QUERY ABOUT TH E ALLOWABILITY OF DEDUCTION UNDER SECTION 80IB(11A) OF THE ACT, VIDE H IS LETTER DATED 21-1- 2007 AND THE ASSESSEE HAS GIVEN HER REPLY. THE COPI ES OF BOTH CORRESPONDENCES ARE PLACED IN PAGE 1 AND 2 OF THE P APER BOOK COMPILED BY THE ASSESSEE. BESIDES THE ABOVE, THE LEARNED AUTHOR ISED REPRESENTATIVE ALSO BROUGHT TO OUR NOTICE THE COPY OF PROFIT & LOS S ACCOUNT FILED BY THE ASSESSEE, WHICH IS PLACED IN PAGE 168 OF THE PAPER BOOK, WHEREIN THE AMOUNT RECEIVED TOWARDS THE RENT, HANDLING AND TRAN SPORT, PRESERVATION AND MAINTENANCE HAVE BEEN FOUND CREDITED. MEANING THER EBY THE ASSESSEE HAS CARRIED OUT THE INTEGRATED ACTIVITY MENTIONED IN SE CTION 80IB(11A). WITH ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 3 OF 6 REGARD TO THE AGREEMENT ENTERED BY ANOTHER GODOWN O WNER WITH APSWC THE LEARNED AUTHORISED REPRESENTATIVE BROUGHT TO OU R NOTICE THE AUTHORIZATION GIVEN BY THE ASSESSEE TO SHRI M. VENK ATESWARA RAO (ANOTHER GODOWN OWNER) TO ENTER INTO AN AGREEMENT ON BEHALF OF HER AND ALSO THE CERTIFICATE ISSUED BY APSWC TO THE ASSESSING OFFICE R CERTIFYING THAT THE PAYMENT IS MADE TO THE AUTHORISED PERSON ON BEHALF OF THE ASSESSEE AND OTHER GODOWN OWNERS. THESE DOCUMENTS ARE PLACED IN PAGE 12 TO 14 OF THE PAPER BOOK. IN VIEW OF THE ABOVE, WE FIND MERIT IN THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE HAS CARRIED OUT THE INTEGRATED ACTIVITY OF HANDLING/STORAGE AND TRANSPO RTATION OF FOOD GRAINS AND ACCORDINGLY THE INFERENCE DRAWN BY THE LEARNED CIT IS NOT CORRECT. HENCE WE ARE OF THE VIEW THAT THE DIRECTIONS GIVEN BY THE LEARNED CIT ON THIS ISSUE IS NOT IN ACCORDANCE WITH THE LAW AND ACCORDINGLY S ET ASIDE THE SAME. 4. THE NEXT ISSUE RELATES TO THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 10(38) OF THE ACT ON THE LONG TERM CA PITAL GAIN EARNED ON SALE OF EQUITY SHARES. THE LEARNED CIT WAS OF THE VIEW T HAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING PAYMENT OF SECURIT Y TRANSACTION TAX, WHICH IS A CONDITION STIPULATED IN SECTION 10(38) O F THE ACT FOR CLAIMING EXEMPTION OF LONG TERM CAPITAL GAIN ON SALE OF SHAR ES. 4.1 IT IS NOTICED THAT THE ASSESSING OFFICER HAS RAI SED A QUERY ASKING FOR DETAILS OF CAPITAL GAINS ON TRANSFER OF EQUITY SHAR ES VIDE HIS LETTER DATED 21- 1-2007 AND THE ASSESSEE HAS FURNISHED THE DETAILS D URING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SOLD THE S HARES THROUGH THE SHARE BROKER VIZ., M/S KARVY STOCK BROKING LTD., AN D HAS ALSO FILED COPIES OF CONTRACT NOTES RECEIVED FROM THE SAID SHARE BROKER IN PAGE NOS.48 TO 64 OF THE PAPER BOOK. AS SUBMITTED BY THE LEARNED AUTHOR ISED REPRESENTATIVE, IT IS NOTICED THE SECURITY TRANSACTION TAX IS DEDUCTED BY THE STOCK BROKER FROM THE AMOUNT PAYABLE TO THE ASSESSEE ON SALE OF SHARE S AND ONLY THE NET AMOUNT IS SHOWN AS PAYABLE TO THE ASSESSEE. FOR EX AMPLE, THE AMOUNT DUE ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 4 OF 6 TO THE ASSESSEE IS SHOWN AS UNDER BY M/S KARVY STOC K BROKING LTD. IN ITS CONTRACT NOTE PLACED IN PAGE NO.53 OF THE PAPER BOO K: GROSS AMOUNT DUE - 48,18,959.40 LESS: SALES TAX - 1231.45 SECURITY TRANSACTION TAX - 3623.00 4,854.45 --------------- ------------ -------- NET AMOUNT DUE = 48,14,104.95 ========== THUS IT CAN BE SEEN THE SECURITY TRANSACTION TAX IS COLLECTED BY THE SHARE BROKER FROM THE ASSESSEE. HENCE IT CAN NOT BE SAID THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE REGARDING PAYMENT OF SECURITY TRANSACTION TAX. HENCE, THE VIEW OF THE LEARNED CIT IS NOT CORRECT O N THIS ISSUE AND ACCORDINGLY WE SET ASIDE HIS ORDER ON THIS ISSUE. 5. THE NEXT ISSUE RELATES TO DEDUCTION OF TAX AT SO URCE ON TRANSPORT CHARGES PAYMENT AND THE INTEREST PAYMENT. THE LEARN ED CIT NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.3,31,922/- BY WAY OF TRANSPORT CHARGES AND A SUM OF RS.1,81,700/- BY WAY OF INTEREST PAYME NT. SINCE THESE PAYMENTS ARE SUSCEPTIBLE FOR TDS AND SINCE NO TDS W AS MADE ON THESE PAYMENTS, THE LEARNED CIT TOOK THE VIEW THAT BOTH T HE PAYMENTS ARE LIABLE FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT . 5.1 IT WAS BROUGHT TO OUR NOTICE BY THE LEARNED AUTH ORISED REPRESENTATIVE THAT THE ASSESSING OFFICER HAS RAISE D A QUERY WITH REGARD TO THE TDS LIABILITY ON THE TRANSPORT CHARGES OF RS.3, 31,922/- VIS--VIS SEC. 40(A)(IA) OF THE ACT, VIDE HIS LETTER DATED 21-1-20 07 AND THE ASSESSEE HAS ALSO FURNISHED THE REPLY DURING THE COURSE OF ASSES SMENT PROCEEDINGS. THE ASSESSEE HAS ALSO FILED THE DETAILS OF PAYMENTS MAD E TO EACH LORRY WHICH IS PLACED IN PAGES 79 TO 163 OF THE ASSESSEES PAPER B OOK. THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT TH E TRANSPORT CHARGES ARE PAID TO EACH LORRY ON INDIVIDUAL TRIP BASIS AND AVE RAGE FREIGHT PAID TO EACH ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 5 OF 6 LORRY IS ABOUT RS.525/- ONLY. ACCORDINGLY IT WAS SU BMITTED THAT THERE IS NO LIABILITY FOR DEDUCTION OF TAX AT SOURCE AND HENCE THE QUESTION OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT DOE S NOT ARISE. HENCE THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE UND ER SECTION 40(A)(IA) ON THE TRANSPORT PAYMENTS. THUS IT IS NOTICED THAT THE ASSESSING OFFICER HAS EXAMINED THE TRANSPORT CHARGES VIS--VIS SEC. 40(A) (IA) OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WAS SATISFIED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE. THE LEARNED CIT HAS NOT POINTED OUT ANY ERROR IN THE SAID DECISION OF THE ASSESSING OFFICER AND H AS ALSO NOT ESTABLISHED THAT THE DECISION OF THE ASSESSING OFFICER IS PREJU DICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT ON THIS ISSUE ALSO. 5.2 WITH REGARD TO THE INTEREST PAYMENT, THOUGH THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE PERSONS TO WH OM THE INTEREST PAYMENT WERE MADE HAVE FURNISHED FORM NO.15 G FOR N ON DEDUCTION OF TAX AT SOURCE, YET WE NOTICE THAT THERE IS NO EVIDENCE IN THE ASSESSMENT ORDER TO SUGGEST THAT THE ASSESSING OFFICER HAS EXAMINED THIS ISSUE. THE PARTY- WISE DETAILS OF INTEREST PAYMENTS ARE ALSO NOT AVAI LABLE ON RECORD. THERE CANNOT BE ANY DISPUTE THAT THE EXAMINATION OF TDS L IABILITY ON INTEREST PAYMENT VIS--VIS 40(A)(IA) OF THE ACT IS NECESSARI LY TO BE CARRIED OUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE FAILURE O F WHICH WILL RENDER THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LEARNED A.R RELIED ON THE DECISION OF THIS BENC H DATED 27-08-2010 IN THE CASE OF PANCHAJANYA CONSTRUCTIONS IN ITA NO.548 /VIZAG/2009 IN THIS REGARD. HOWEVER, WE NOTICE THAT THE DETAILS OF INT EREST PAID WERE AVAILABLE ON RECORD IN THAT CASE AND HENCE THE TRIBUNAL COULD TAKE A VIEW. IN THE INSTANT CASE, NO SUCH DETAILS ARE AVAILABLE. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT IN DIRECT ING THE ASSESSING OFFICER TO EXAMINE THE QUESTION OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT ON ITA NO.560/VIZAG/2008 NUTAKKI RAMA PARVATHI, TADAPAL LEGUDEM PAGE 6 OF 6 THE INTEREST PAYMENTS MADE. ACCORDINGLY WE UPHOLD THE ORDER OF LEARNED CIT ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 18-11-2010 COPY TO 1 SMT. NUTAKKI RAMA PARVATHI, D.NO.4-3-6/11 SUBBARA OPETA, TADEPALLIGUDEM 2 THE COMMISSIONER OF INCOME TAX, RAJAHMUNDRY 3 THE DR, ITAT, VISAKHAPATNAM. 4 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM
