ACIT, Circle-15(1), Hyderabad, Hyderabad V. P. Bhadraiah & Sons, Hyderabad, Secunderabad

ITA 583/HYD/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4969 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-09-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA
• Assessee Lawyers: T CHAITANYA KUMAR
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 583 /HYD/ 2017 ASSESSMENT YEAR: 20 08 - 09 ACIT, CIRCLE - 15(1), HYDERABAD. VS. P. BHADRAIAH & SONS, HYDERABAD. PAN: AAHEP 4206 E (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI T. CHAITANYA KUMAR REVENUE BY: SRI K. GOPALA KRISHNA, DR DATE OF HEARING: 18 .09.2018 DATE OF PRONOUNCEMENT: 24 .10 .2018 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS REVENUES APPEAL FOR THE ASSESSMENT YEAR 2008 - 2009 AGAINST THE ORDER OF THE CIT(A) - 7, HYDERABAD DATED 30.09.2016. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 18,00,000/ - , RS. 1,50,000/ - AND RS. 60,28,230/ - MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 3. THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL WITHOUT CONSIDERIN G THE FACT THAT THE ASSESSEE FAILED TO PROVE THAT THE PAYMENTS MADE TO VARIOUS PERSONS AND THUS FAILED IN MAKING TDS WHILE MAKING THE PAYMENTS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, WHICH IS ENGAGED IN THE BUSINESS OF CONTRACTS , FILED ITS RETU RN OF INCOME ON 30.09.2008 ADMITTING A TOTAL INCOME OF RS. 69,95,811/ - . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE IT ACT, 1961 (THE ACT) ON 15.12.2010 2 DETERMINING THE TOTAL INCOME AT RS. 82,35,133/ - . THEREAFTER , THE ASSESSMENT WAS REOPENED BY ISSUIN G NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE SAID NOTICE, ASSESSEE FILED A LETTER DATED 15.06.2014 REQUESTING THAT THE RETURN ALREADY FILED ON 30.09.2008 BE TREATED AS THE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. DURING THE RE - ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO SHOW - CAUSE AS TO WHY THE HIRE CHARGES OF RS. 18 LAKHS PAID TO ONE MR. M.S. GUPTA AND HIRE CHARGES OF RS. 1,50,000/ - PAID TO ONE MR. B.V. REDDY SHOULD NOT BE DISALLOWED U/S 40(A)(IA) OF THE ACT. THE ASSESSEE FI LED ITS REPLY VIDE LETTER DATED 18.06.2015. THEREAFTER, THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAS MADE PAYMENTS TO THE TUNE OF RS. 42,28,230/ - TO VARIOUS PARTIES WITHOUT MAKING ANY TDS. THEREFORE, HE HELD THAT THIS AMOUNT ALSO ATTRACT S THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, HE MADE THE DISALLOWANCE OF A TOTAL OF RS. 60,28,230/ - AND BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CHALLENGING THE VALIDITY OF REOPENING OF THE ASSE SSMENT AND ALSO AGAINST THE MERITS OF THE ADDITIONS MADE BY THE A.O. THE CIT(A) DISMISSED THE GROUND RAISED AGAINST THE VALIDITY OF REOPENING BUT DELETED THE ADDITIONS MADE CONSEQUENT TO THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE A.O. AND SUBMITTED THAT THE LD. CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITHOUT CONSIDERING THAT THE ASSESSEE FAILED TO PROVE THAT THE PAYMENTS WERE MADE TO VARIOUS PERSONS THOUGH TDS WAS REQUIRED TO BE MADE FROM SUCH PAYMENTS. 5. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD FILED ALL THE 3 RELEVAN T MATERIAL BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS AND ALSO BEFORE THE CIT(A) AND, THE CIT(A) AFTER CONSIDERING THE ISSUE ON MERITS AND AFTER BEING SATISFIED WITH THE EVIDENCE FILED BY THE ASSESSEE, ALLOWED THE APPEAL. HE FURTHER SUBMITTED THAT IN NO CASE THE ASSESSEE HAS PAID MORE THAN RS. 1 LAKH TO ANY SINGLE PERSON, REQUIRING TDS FROM SUCH PAYMENT. THEREFORE, HE PRAYED THAT THE APPEAL OF THE REVENUE BE DISMISSED. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND TH AT THE PAYMENTS MADE BY THE ASSESSEE ARE MOSTLY HIRE CHARGES FOR ENGAGING THE TIPPERS , TRACTORS ETC., AND THEREFORE IT FALLS UNDER THE TERM RENT U/S 19 4I OF THE ACT. UNDER THE PROVISIO TO THIS SECTION , NO DEDUCTION SHALL BE MADE UNDER THIS SECTION WHERE THE AMOUNT OF SUCH INCOME OR, AS THE CASE MAY BE, THE AGGREGATE OF THE AMOUNTS OF SUCH INCOME CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE RELEVANT FINANCIAL YEAR , IF SUCH SUM DOES NOT EXCEED TWENTY THOUSAND RUPEES (AS WAS APPLICABLE FOR T HE RELEVANT FINANCIAL YEAR I.E., 2007 - 08) . WE FIND THAT THE CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ON THE GROUND THAT NO PAYMENT EXCEEDED RS. 1 LAKH. IN SO FAR AS THE HIRE CHARGES ARE CONCERNED , WE FIND THAT NO SINGLE PAYMENT EXCEED ED RS. 90,000/ - TO ANY OF THE PAYEE S. T HEREFORE, IN OUR OPINION, THE CIT(A) HAS CORRECTLY APPRECIATED THE ISSUE ON THE BASIS OF THE MATERIAL ON RECORD AND HAS DELETED THE DISALLOWANCE. LEARNED DR HAS NOT BEEN ABLE TO REBUT THE FINDING OF THE CIT(A) WITH ANY MATERIAL TO THE CONTRARY. IN VIEW OF THE SAME, WE SEE NO REASON TO INTERFERE WITH THE DECISION OF THE CIT(A) AND THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 4 PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBE R , 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 24 TH OCTOBER , 2018 OKK COPY TO: - 1) ACIT, CIRCLE - 15(1), 5THFLOOR, D - BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2) M/S. P. BHADRAIAH & SONS, H.NO.1 - 3 - 83, OLD ALWAL, SECUNDERABAD. 3) THE CIT(A) - 7 , HYDERABAD 4) THE PR. CIT - 7 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE