M/s. Shree Choudhary Transport Co., JODHPUR V. ACIT, JODHPUR

ITA 576/JODH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78274 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 576 / JU/ 20 1 3 ASSESSMENT YEAR: 200 7 - 0 8 M/S S HREE CHOUDHARY TRANSPORT VS. THE A.C.I.T E 119/120, KALPATARU CINEMA ROAD CIRCLE - 1 JODHPUR JODHPUR PAN NO. AAPFS 6308 A (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI U.C. JAIN SHRI GAUTAM BAID DEPARTMENT B Y : SHRI N.A. JOSHI , DR DATE OF H EA RING : 1 8 . 0 7 .201 4 DATE OF PRONOUNCEMENT : 30 . 0 7 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH IS APPEAL BY THE ASSESSEE , A.Y 200 7 - 200 8 IS DIRECTED A GAINST THE ORDER OF THE CIT (A) , UDAIPUR , DATED 2 5 . 11 .20 1 3 . 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT ASSESSEE FIRM FILED ITS REGULAR RETURN OF INCOME [ROI] FOR A.Y. 2007 - 08 ON 23.10.2007 DECLARING TOTAL INCOME OF RS. 3,55,450/ - . THE ASSESSMENT ORDER WAS COMPLETED U/S 143( 3 ) OF THE INCOME - TAX ACT, 1961 [THE ACT FOR SHORT] , ON 13.11.2009 , AT A TOTAL INCOME OF RS. 1,19,36,240/ - . IN ARRIVING AT THE ABOVE INCOME THE A.O. HAS DISALLOWED A SUM OF RS. 1,15,80,790/ - BY INVOKING SECTION 40A(IA) OF THE ACT FOR NON DEDUCTION OF TAX ON THE DISBURSEMENT OF FREIGHT RECEIPT FROM THE CEMENT COMPANY . THIS AMOUNT IN CLUDED A SUM OF RS. 81,52,800/ - WHICH WAS ALLEGEDLY PAID BY THE ASSESSEE TO THE TRUCK OWNERS /OPERATORS FROM WHOM THE ASSESSEE NEITHER RECEIVED FORM NO. 15 - I NOR DEDUCT TAX AT SOURCE IN TERMS OF PROVISIONS OF SECTION 194C ALTHOUGH SINGLE PAYMENT MADE EXCEED ED RS. 20,000/ - . THUS, TOTAL DISALLOWANCE OF RS. 1,15,80,790/ - WAS MADE U/S 40A(IA) OF THE ACT WHILE COMPLETING ASSESSMENT U/S 143(3) ON 13.11.2009. AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CIT(A), JODHPUR IN ITA NO. 194/2009 - 10 DATED 13.4.2010 H ELD AS UNDER: AS THE FACTS DURING THE CURRENT YEAR REMAIN IDENTICAL TO THOSE FOR THE A.Y. 2005 - 06 FOR WHICH 3 SIMILAR ADDITION STAND CONFIRMED BY BOTH THE LD. CIT(A) AND THE ITAT AS MENTIONED IN MY ORDER DATED 11.2.2009 IN APPELLANTS OWN CASE FOR A.Y. 206 - 07 AND ALSO TAKING NOTE OF THE FACT THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM THAT FORM NO. 151 WERE OBTAINED AND FAILURE OF THE ASSESSEE TO FILE FORM NO. 15J WITHIN THE STIPULATED PERIOD AND THAT THE ASSESSEE AS PER ITS LETTER DATED 16.3.2010 WI THDREW THE PLEA THAT ALL SINGLE PAYMENTS TO THE TRUCK OPERATORS WERE BELOW RS 20,000/ - WHICH ALL CUMULATIVELY ESTABLISH THAT THE PROVISIONS OF SECTION194 ARE ATTRACTED IN THE INSTANT CASE AND UPON CAREFUL CONSIDERATION OF ELABORATE SUBMISSIONS MADE BY THE APPELLANT IN ITS WRITTEN SUBMISSIONS DATED 13.1.2010, 16.3.2010 AND 8.4.2010, THE ADDITION OF RS. 1,15,80,790/ - FOR THE CURRENT A.Y. IS ALSO UPHELD AND CONFIRMED. THE APPEALS ON THESE VARIOUS GROUNDS ARE NOT ALLOWED. 3. AGAINST THE ABOVE FINDING, THE AS SESSEE PREFERRED APPEAL BEFORE THE ITAT WHO HAS RESTORED THE MATTER TO THE FILE OF THE A.O. WITH THE FOLLOWING OBSERVATIONS AND DIRECTIONS: THE LD. COUNSEL FOR ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS RECEIVED FORM NO. 15I IN RESPECT OF THE AMOUNT OF RS. 34,27,900/ - AND THE SANE WAS EXPLAINED BEFORE THE LD. CIT(A) . THE LD. CIT(A) WITHOUT CONSIDERING 4 THE SUBMISSION OF THE A SSESSEE CONFIRMED THE ORDER OF THE A.O. BY FOLLOWING THE ORDER OF THE A.Y. 2006 - 07. ON THE OTHER HAND, THE LD . D.R HAS SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED FORM NO. 15I AND FORM NO. 15J WAS NOT SUBMITTED BEFORE THE A.O. AND FURTHER SUBMITTED THAT THE A.O. AND THE LD. CIT(A) HAVE RIGHTLY INVOKED SECTION 40(A)(IA) OF THE ACT. WE, AFTER CONSIDERING THE ORDER OF THE AUTHORITIES BEL OW AND ALSO CONSIDERING THE SUBMISSION OF THE A S SESSEE, FIND THAT THIS ISSUE HAS TO BE DECIDED DE NOVO AFTER VERIFICATION OF THE ENTIRE DETAILS. WE, TH EREFORE, ACCORDINGLY SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE A.O. TO DECIDE THE MATTER AFRESH AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE . IN THE LIGHT OF THE ABOVE DIRECTION OF THE TRIBUNAL, THE A.O. HAS GIVEN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS, THE A.O. EXA MINED THE I S SUE REGARDING OBTAINING FORM NO. 15 I BY THE ASSESSEE FROM TRUCK OPERATORS/TRANSPORTERS BY CALLING THEM AND BY RECORDING THEIR STATEMENTS . HE A.O. HAS CONCLUDED THAT EVEN IF FORM NO. 15 - I WERE GIVEN BY THEM TO THE ASSESSEE, THE SE BEING NOT FILE D WITHIN TIME WILL MAKE NO DIFFERENCE . THE A.O. ALSO HELD THAT THE GENUINENESS OF THE FORM NO. 15 - I WAS IN DOUBT BEING NOT 5 PROVED . HENCE, HE HAS ONCE AGAIN MADE DISALLOWANCE OF RS. 1,15,80,790/ - INVOKING PROVISIONS OF SECTION 40(A)(IA) AND THE LD. CIT(A) HAS UPHELD THE SAME, ONCE AGAIN VIDE ORDER DATED 25.11.2013 . A GAIN , THE ASSESSEE HAS COME BEFORE THE TRIBUNAL IN THE SECOND ROUND BY RAISING THE FOLLOWING GROUNDS: 1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE FACTUAL FINDING RECORDED BY THE LD. CIT(A) THAT IT IS NOT CORRECT ON THE PART OF THE ASSESSEE TO STATE THAT IT ACCOUNTS FOR ONLY COMMISSION INCOME. IS ERRONEOUS AND WITHOUT ASSIGNING ANY REASON AS TO WHY THE SUBMISSION MADE BY THE APPELLANT SUPPORTED WITH THE DOCUMENTARY EVIDENCE OF REGISTERS MAINTAINED BY THE ASSESSEE WAS INCORRECT. 2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE EVEN IF THE ASSESSEES INCOME IS COMMISSION ONLY, THE SAME IS NOT DECISIVE IN THE MATTER OF DISALLO WANCE U/S 40(I)(IA) DUE TO FAILURE OF TDS NOT DEDUCTED. 3] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE FACTUAL FINDING RECORDED BY THE LD. CIT(A) THAT IN THE AGREEMENT WITH AADITYA CEMENTS LTD. RATES ARE FIXED FOR THE WHOLE YEAR ON THE B ASIS OF PER K.M. AND WEIGHT BASIS WHEREAS RATES AT WHICH PAYMENTS ARE MADE TO THE TRUCK 6 OWNERS VARY FROM DAY TO DAY DEPENDING ON AVAILABILITY OF NUMBER OF TRUCKS GOING TO A PARTICULAR DESTINATION. THEREFORE, THERE IS NO CO RELATION BETWEEN RATES CHARGED BY THE ASSESSEE FROM THE AADITYA CEMENTS LTD. AND THE PAYMENTS MADE TO THE TRUCK OWNERS. IS ERRONEOUS AND CONTRARY TO THE DOCUMENTS AND EVIDENCES PRODUCED BEFORE THE LD. CIT(A). 4] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRE D IN SUSTAINING THE DISALLOWANCE U/S 40(A)(IA) FOR RS. 1,15,80,790/ - MERELY BECAUSE HONBLE HIGH COURT IN THE A.Y. 2005 - 06 UPHELD THE ORDER OF THE HONBLE TRIBUNAL WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT: A. THE HONBLE TRIBUNAL FOR THE YE AR UNDER CONSIDERATION SET ASIDE THE CASE TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION OF AVAILABILITY OF FORM 15 I WITH THE ASSESSEE. B. THE HONBLE TRIBUNAL FOR THE A.Y. 2006 - 07 AND A.Y. 2008 - 09 SET ASIDE THE CASE TO THE FILE OF ASSESSING OFF ICER FOR EXAMINATION OF THE SUBMISSION OF THE ASSESSEE BEFORE THE TRIBUNAL REGARDING BOOKING CHARGES AS INCOME NOT THE ENTIRE FREIGHT AS INCOME IN ADDITION TO THE VERIFICATION OF FORM 15I OBTAINED AFRESH BY THE ASSESSEE AS ORIGINAL FORMS WERE MISPLACED. 7 C. THE HONBLE TRIBUNAL SET ASIDE THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION AND THE ASSESSMENT ORDER FOR THE A.Y. 2006 - 07 AND A.Y. 2008 - 09, EVEN AFTER THE ORDER OF HONBLE TRIBUNAL FOR THE A.Y. 2005 - 06 AGAINST THE ASSESSEE, WHICH STOOD CONFIRME D BY THE HONBLE HIGH COURT. 5] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN SUSTAININ G THE DISALLOWANCE U/S 40(A)(IA) FOR RS. 1,15,80,790/ - AND SAME MAY KINDLY BE ALLOWED AS : A. THE REVENUE AUTHORITIES FAILED TO VERIF Y THE DETAILS OF 47 TRUCK OWNERS IN TOTALITY OUT OF 70 TRUCK OWNERS EVEN AFTER ISSUING SUMMONS TO THE TRUCK OWNERS AND AS SUCH ADDITION SUSTAINED IN RESPECT OF SUCH PAYMENT IS CONTRARY TO THE DIRECTION OF THE HONBLE TRIBUNAL AND DESERVES TO BE DELETED. B. THE DISALLOWANCE U/S 40(A)(IA) WAS CONFIRMED BY THE LD. CIT(A0 WITHOUT ANY EXAMINATION OF RECIPIENTS OF FREIGHTS WHO APPEARED BEFORE THE LD. A.O., AS TO WHETHER THEY DISCHARGED THEIR TAX LIABILITY AND WHETHER THE ASSESSEE FIRM CAN BE HELD AS ASSESSEE IN DEFAULT UNDER CHAPTER XVII - B SO AS TO RESULTED IN ANY DISALLOWANCE U/S 40(A)(IA). C. THE LD. AO RECORDED THE STATEMENT AT THE BACK OF APPELLANT PARTICULARLY WHEN THE AR OF THE APPELLANT WAS 8 PRESENT AND REQUESTED TO RECORD STATEMENT IN HIS PRESENCE BUT THE SAME AS REFUSED. D. THE DISALLOWANCE MADE U/S 40(A)(IA) FOR THE AMOUNT PAID BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION IS INCORRECT AND ONLY AMOUNT REMAINS PAYABLE ON THE 31 ST MARCH CAN ONLY BE DISALLOWABLE. 6] THAT THE PETITIONER MAY KINDLY BE PERMITTED TO RAISE ANY ADDITIONAL AND / OR ALTERNATIVE GROUND AT OR BEFORE THE HEARING OF APPEAL. 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENT S. THE LD. A.R. HAS INVITED OUR ATTENTION TOWARDS HIS SUBMISSIONS MADE BEFORE THE LD. CIT(A), THE A.OS REPORT, JCITS REMAND REPORT, ASSESSEES REGISTER ON BOTH THE REMAND REPORTS APART FROM VARIOUS OTHER DOCUMENTS ENCLOSED IN PAPER BOOKS AT PAGES 1 TO 7 ; 217 TO 241; 242 TO 255; 256 TO 259 AND 262 TO 266. WITH REFERENCE TO THE ABOVE, IT WAS ARGUED THAT THE PROVISIONS OF SECTION 40A(IA) HAS BEEN WRONGLY INVOKED IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. IT IS ASSERTED THAT THE ASSESSEE IN SUBSTANC E IS ONLY A CONDUIT FOR DISBURSING FREIGHTS TO 9 INDIVIDUAL TRUCK OWNERS ; AND THERE WAS AN UNDERSTANDING BETWEEN THE ASSESSEE AND THE PERSON ACTUALLY CARRYING GOODS THAT THEY WILL RECEIVE ENTIRE FREIGHT FROM M/S ADITYA CEMENT LIMITED AND AFTER DEDUCTING BOOK ING CHARGES ON EACH BOOKING WOULD PASS ON TO THEM . THUS, ACCORDING TO THE LD. A.R. THE ONLY SOURCE OF ASSESSEES INCOME IS FROM BOOKING CHARGES , AND IN HIS BOOKS THE ASSESSEE HAS RECORDED THE TRANSACTIONS AS A BOOKING AGENT ONLY. IT WAS PLEADED THAT WHIL E APPLYING THE PROVISIONS OF THE ACT, IT IS THE SUBSTANCE OF THE TRANSACTION WHICH HAS TO BE TAKEN INTO ACCOUNT AND NOT THE FORM IN WHICH A PARTICULAR TRANSACTIONS APPEARS TO BE. IT WAS ARGUED THAT THE FREIGHTS WERE PAID TO TRUCK OWNERS AFTER RECEIVIN G IT FROM M/S ADITYA CEMENT LTD. AFTER DEDUCTING ITS BOOKING CHARGES, WHICH CAN B E TERMED AS BILTY COMMISSION . HE ARGUED THAT IN A.Y. 2005 - 06, 2006 - 07 AND 2008 - 09 SIMILAR ISSUES WERE INVOLVED. IN A.Y. 2005 - 06, THE TRIBUNAL HAS HELD , AS REPORTED IN 119 ITR TTJ [JD] 3 THAT SECTION 194C IS APPLICABLE IN THE CASE OF THE ASSESSEE AND THE ALTERNATIVE PLEA THAT NO EXPENDITURE HAD BEEN CLAIMED BY THE ASSESSEE WAS ALSO REJECTED BY MAKING THE FOLLOWING OBSERVATION: 10 WE ARE UNABLE TO AGREE WITH THE ASSESSEE THAT IT HAS NOT CHARGED THE AMOUNT OF EX PENDITURE TO THE P ROFIT AND LOSS ACCOUNT AS THE TRANSACTION OF PAYMENT OF FREIGHT CHARGES AND RECEIPT OF FREIGHT BY IT ARE REFLECTED IN TWO SEPARATE ACCOUNTS AND ONLY COMMISSION IS SHOWN AS INCOME. ON THE MERE REFLECTION BY THE APPELLANT IN TWO SEPARATE DISTINCT ACCOUNT IN HIS BOOKS DO NOT BY ITSELF QU A LIFY FOR DISTINCT AND DIFFERENT TREATMENT AND SINCE BOTH I.E. FREI G HT PAID AND FREI G HT CHARGED PAR T AKE OF SAME CHARACTER, THE SAID ACCOUNTING ASSUMED BY T HE ASSESSEE BY REF LECTING ONLY COMMISSION INCOME WILL NOT CHANG E THE CHARACTER OF PAYMENT AS EXPENDITURE. THIS VIEW FINDS SUPPORT FROM THE JUDGMENT RENDERED BY THE HONBLE ORISSA HIGH COURT IN TATA SPONGE IRON LTD. VS. CIT [2007] 292 ITR 175 [ORI] AT P. 187 AS UNDER : .T HE MERE REFLECTION OF TRANSACTIONS IN TWO SEPARATE OR DISTINCT ACCOUNTS IN THE BOOKS OF THE COMPANY DO NOT BY ITSELF QUALIFY FOR DISTINCTLY DIFFERENT TREATMENT AND SINCE BOTH I.E. THE INTEREST EARNED AND INTEREST PAID PARTAKE OF THE SAME CHARACTER, SET OFF AS CLAIMED AS PERMISSIBLE UNDER THE LAW. IN THIS RESPECT, RELIANCE IS PLACED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF KESHAVJI RAVJI & CO. VS. CIT [1990] 82 CTR [SC] 123 : [1990] 183 ITR 1 [SC] KEEPING IN VIEW THE OVERALL CONSPECTUS OF T HE CASE AND FINDING NO MERIT IN THE GROUNDS RAISED IN THE APPEAL OF THE 11 ASSESSEE , THE SAME STAND REJECTED AND THE APPEAL STANDS DISMISSED. 5. THE MATTER TRAVELLED UPTO THE HON'BLE JURISDICTIONAL HIGH COURT WHO UPHELD THE FINDING OF THE TRIBUNAL THAT THE PROVISIONS OF SECTION 194C ARE APPLICABLE TO THE FACTS OF THE GIVEN CASE BUT NO FINDING WAS GIVEN REGARDING THE OTHER ALTERNATIVE PLEA AS TO WHETHER EXPENDITURE HAD BEEN CLAIMED BY THE ASSESSEE OR NOT. IN A.Y. 2006 - 07 AND 2008 - 09, WHILE DECIDING ITA NO S . 197 & 198/JU/2012, THE TRIBUNAL HAS RESTORED THE MA T TER BACK TO THE A.O WITH A DIRECTION TO EXAMINE THE ISSUE AND HAS OBSERVED THAT IT APPEARED THAT FOR THE YEAR UNDER CONSIDERATION NOTHING HAS BEEN DEBITED , ON ACCOUNT OF FREIGHT CHARGES IN THE PROFIT AND LOSS ACCOUNT SINCE THE AMOUNT COLLECTED FROM THE CEMENT FACTORY WAS CLAIMED TO BE PAID TO TRUCK OPERATORS AFTER DEDUCTING COMMISSION CHARGES FOR PREPARATION OF BILTY. THE TRIBUNAL HAS ALSO DIRECTED THE A.O. VIDE ORDER DATED 22.12.2009 TO QUANTIFY THE AMOU NT AFTER CONSIDERING FORM NO. 15 - I OBTAINED FROM THE TRUCK OPERATORS . HOWEVER, THE A.O. HAS REP E ATED THE ENTIRE ADD ITION . FOR THIS A.Y. THE T RIBUNAL DIRECTED THE A.O. TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE ABOVE 12 FINDING GIVEN BY IT FOR A.Y S . 2006 - 07 AND 2008 - 09 . D URING THE PENDENCY OF THE APPEAL BEFORE THE LD. CIT(A) F OR A.Y. 2007 - 08, THE FOLLOWING ADDITIONAL GROUND WAS RAISED BY THE ASSESSEE : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE MADE U/S 40(A)(IA) AMOUNTING TO RS . 1,15,80,790/ - IS ERRONEOUS AS THE INCOME OF THE ASSESSEE IS OF COMMISSION ON THE BOOKING OF TRUCK AND THE FREIGHT PAYMENT TO THE TRUCK OWNERS WAS NOT CLAIMED AS EXPENSES IN THE PROFIT AND LOSS ACCOUNT. 6. IT WAS ARGUED BEFORE HIM THA T THE ASSESSEES IN COME IS ONLY FROM COMMISSION AND TRANSPORTATION AMOUNT PAID H AS NOT BEEN CLAIMED AS EXPENDITURE AGAINST SUCH COMMISSION INCOME. THE ASSESSE E HAS SHOWN COMMISSION INCOME AT RS. 8,95,420/ - AS ITS INCOME AND THE ASSESSEE HAS GOT ONLY THIS SOURCE AS HIS INCOM E. IT WAS STATED THAT THE LD. CIT(A) HAS NOT EXAMINED THE FINANCIAL STATEMENT AND EXTRACTED FROM THE DISPATCH REGISTER AND MERELY ON THE BASIS OF REMAND REPORT OF THE JCIT RELATING TO THE FINDING THAT IN THE AGREEMENT OF ADITYA CEMENT LTD THE RATES ARE FI XED FOR WHOLE YEAR ON THE BASIS OF PER KM AND WEIGHT BASIS WHEREAS RATES AT WHICH THE 13 PAYMEN T S ARE MADE TO THE TRUCK OWNERS VARY FROM DAY TO DAY DEPENDING UPON THE AVAILABILITY OF NUMBER OF TRUCKS GOING TO A PARTICULAR DESTINATION. HE HAS MENTIONED THAT T HERE IS NO CORRELATION BETWEEN THE RATE CHARGED BY THE ASSESSEE FROM M/S ADITYA CEMENT LTD AND THE PAYMENTS MADE TO THE TRUCK OWNERS. THIS FINDING HAS BEEN DUBBED BY THE LD. A.R. AS PERVERSE AND CONTRARY TO THE MATERIAL AVAILABLE ON RECORD. IN THE BACKDR OP OF THE ABOVE SUBMISSION, IT WAS ARGUED BY THE LD. A.R. THAT IT CAN BE SEEN THAT ANY EXPENDITURE TO BE ALLOWED AS DEDUCTION HAS TO BE CLAIMED AS SUCH. BUT IN CASE WHERE NO SUCH CLAIM IS MADE BY ANY ASSESSEE, THERE CANNOT BE ANY DISALLOWANCE AS HELD BY TH E COORDINATE BENCH IN THE CASE OF BALAJI ENGINEERING AND CONSTRUCTION WORKS REPORTED IN 323 ITR 351 [KAR] WHICH VIEW HAS BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT. THUS, FINALLY, IT HAS BEEN ARGUED THAT THE ASSESSEE HAS BEEN EARNING ONLY BOOKIN G CHARGES AND IS ONLY A CONDUIT IN PASSING THE FREIGHT TO THE TRUCK OWNERS WHO ACTUALLY WERE PLYING TRUCKS AND SINCE NO EXPENDITURE OF FREIGHT PAYMENT IS CLAIMED IN THE COMPUTATION OF BUSINESS INCOME, NO SUCH DISALLOWANCE US/ 40A(IA) CAN BE MADE AND AS 14 SUC H, THE ENTIRE DISALLOWANCE MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) NEEDS TO BE DELETED. 7. PER CONTRA, IT HAS BEEN ARGUED BY THE LD. D.R. THAT THE FACTS OF THE CASE FOR A.Y. 2007 - 08ARE NOT DIFFERENT FROM OTHER A.Y., AND THAT ON SIMILAR FACTS THE HONBLE RAJASTHAN HIGH COURT HAS HELD THAT SECTION 194C APPLIES. IT WAS STATED THAT THE ASSESSEE HAS MOVED AG AINST THAT FINDING BEFORE THE SC BY WAY OF SLP WHICH IS PENDING. HE HAS REPEATED THE REASONS GIVEN BY THE AUTHORITIES BELOW TO SUPPORT HIS POINT OF VIEW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOUND THAT IN THE CASE OF ASSESSEE FOR A.Y. 2005 - 06 BOTH THE TRIBUNAL AND THE HONBLE HIGH COURT HAS HELD THAT SECTION 194C APPLIED TO THE FACTS OBTAINING IN THAT YEAR. AS PER THE LD. A.R., THE APPEAL OF ASSESSEE BY WAY OF SLP, IS PENDING BEFORE THE SC. THE TRIBUNAL RESTORED THE MATTER BACK TO THE A.O FOR A.Y. 2006 - 07 AND 2008 - 09. THIS APPEAL PERTAINS TO A.Y. 2007 - 08. AFTER COGITATING THE RIVAL SUBMISSIONS WE ARE OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF THE A.O. TO CONSIDER THE CHARGED NUANCE OF THE FACTS OBTAINING IN THIS YEAR AS HAS BEEN CANVASSED BEFORE US. WE MAKE IT AMPLY CLEAR THAT THE VIEW TAKEN O N 15 THE SET OF FACTS BY THE HONBLE JURISDICTIONAL HIGH COURT HAS TO BE ADOPTED AND WE DO NOT AND CANNOT DEVIATE FROM THE SAME. HOWEVER, AS DISCUSSED ABOVE THE OTHER POINTS OF THE CASE AND THE ARGUMENTS ADVANCED BY THE LD. A.R. NEEDS TO BE CONSIDERED IN THE IR CORRECT PERSPECTIVE. THEREFORE WE RESTORE THIS APPEAL TO THE FILE OF THE AO SO THAT HE CAN CONSIDER AND DECIDE THE SAME DE NOVO. 1. WE FURTHER SPECIFICALLY DIRECT THE AO TO ASCERTAIN FOLLOWING ISSUES BEFORE COMING TO ANY CONCLUSION ABOUT THE NATURE OF EX PENDITURE AND ITS DISALLOWANCES U/S 40(A)(IA): (I) TO ASCERTAIN WHETHER ANY EXPENDITURE IN THE NATURE OF FREIGHT PAYMENT IS CLAIMED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT OR THE ASSESSEES ONLY SOURCE OF INCOME IS FROM BILTY COMMISSION. (II) IF IT IS FOUND THAT NOTHING HAS BEEN CLAIMED AS EXPENDITURE IN THE NATURE OF FREIGHT PAYMENT WHILE COMPUTING THE INCOME, THAN NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40(A)(IA) ON THE BASIS OF PRINCIPAL LAID DOWN BY THE BY HONBLE 16 KARNATAKA HIGH COUR T IN THE CASE OF CIT VS BALAJI ENGINEERING AND CONSTRUCTION WORKS [323 ITR 351(KAR)]. (III) TO CONSIDER THE FORM NO 15I OBTAINED BY THE ASSESSEE, AS ITS NON FILING WITH THE CONCERNED AUTHORITY WITH FORM NO 15J IS NOT A GROUND FOR ITS DISALLOWANCE AS HELD BY HON BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS VALIBHAI KHANBHAI MANKAD [92 DTR (GUJ) 267]. (IV) IF IT IS HELD THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE THAN THE QUANTUM OF DISALLOWANCES IS TO BE RESTRICTED ONLY TO AMOUNT OUTSTANDING FREIGHT AT THE END OF THE YEAR IN RESPECT OF PERSONS PAYMENT TO WHOM DISALLOWED WHILE PASSING THE ORIGINAL AS WELL AS SET ASIDE ASSESSMENT ORDER, KEEPING IN VIEW THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS VECTOR SHIPPING SERVICES (P) LTD [357 ITR 642 (ALL)]. THE MAXIMUM AMOUNT WHICH CAN BE DISALLOWED WORKS OUT BY THE AR OF THE ASSESSEE AT RS. 6,43,296/ - , THE AO IS DIRECTED TO VERIFY THE SAME. 17 (V) STATEMENTS OF TRUCK OWNERS, IF RECORDED, HAVE TO BE CONFRONTED TO THE ASSESSEE BEFORE USING THEM AGAINST THE ASSESSEE. 9 . IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRON OUNCED IN THE COURT ON 30 TH JULY , 2014. SD/ - SD/ - (N.K.SAINI) [HARI O M MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 30 TH JULY , 201 4 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGIS TRAR ITAT, JODHPUR