The ITO, Ward-9(4), Ahmedabad V. Shri Prakash Nivrutti Pawar, Ahmedabad

ITA 61/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9905 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 61/AHD/2013 (ASSESSMENT YEAR: 2008-09) INCOME-TAX OFFICER, WARD-9(4), AHMEDABAD APPELLANT VS. SHRI PRAKASH NIVRUTTI PAWAR (PROP: ANANTKRUPA ROADLINES) 15, FIRST FLOOR, KRISHNA VILLA COMPLEX, LAMBHA TURNING, ASLALI ROAD, NAROL, AHMEDABAD - 382405 RESPONDENT PAN: AKLPP2810J / BY REVENUE : SHRI SHIVA SEWAK, SR. D.R. /BY ASSESSEE : NONE /DATE OF HEARING : 18.10.2016 /DATE OF PRONOUNCEMENT : 24.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE CIT(A)- XV, AHMEDABADS ORDER DATED 1 ST OCTOBER, 2012, IN APPEAL NO. ITA NO. 61/AHD/2013 (ITO VS. SHRI PRAKASH N. PAWAR) A.Y. 2008-09 - 2 - CIT(A)-XV/9(4)/204/10-11, IN PROCEEDINGS UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. CASE CALLED TWICE. NONE APPEARS AT ASSESSEES B EHEST. HE IS ACCORDINGLY PROCEEDED AGAINST EX PARTE. 3. WE NOW COME TO THE REVENUES PLEADINGS. THE REV ENUES SOLE SUBSTANTIVE GROUND SEEKS TO REVIVE THE ASSESSING OF FICERS ACTION DISALLOWING /ADDING A SUM OF RS.1,42,15,795/- MADE ON ACCOUNT O F NON DEDUCTION OF TDS ON FREIGHT EXPENSES AFTER INVOKING SECTION 40(A)(IA ) OF THE ACT. 4. WE HAVE HEARD THE REVENUE. CASE FILE PERUSED. THERE DOES NOT APPEAR TO BE ANY DISPUTE THAT THIS ASSESSEE IS A TRANSPORT ER. HE MADE THE IMPUGNED FREIGHT PAYMENTS IN THE RELEVANT PREVIOUS YEAR AMOU NTING TO RS.1,42,15,795/- WITHOUT DEDUCTING ANY TDS THEREUPON. HIS CASE WAS THAT THE INCOME DECLARED WAS ONLY IN THE NATURE OF COMMISSION PAYME NTS WHEREIN THE SAME IS MADE BY THE PARTY WHO DEBIT THE SAME IN ASSESSEES BOOKS AGAINST THE FREIGHT INCOME. THE ASSESSING OFFICER FRAMED THE IMPUGNED ASSESSMENT ON 23.11.2010 DISALLOWING THE ENTIRE PAYMENTS CITING A SSESSEES FAILURE IN NOT DEDUCTING ANY TDS THEREUPON U/S.194C OF THE ACT. 5. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) UPHOL DS ASSESSING OFFICERS ACTION INVOKING THE IMPUGNED DISALLOWANCE SO FAR AS APPLICABILITY OF SECTION 194C OF THE ACT IS CONCERNED. HE HOWEVE R QUOTES THIS TRIBUNALS SPECIAL BENCH DECISION IN M/S. MERILYN SHIPPING & T RANSPORTS VS. ACIT 146 TTJ 1 (VIZAG) TO CONCLUDE THAT THE IMPUGNED STATUTO RY PROVISION I.E. SECTION 40(1)(IA) IS EXIGIBLE ONLY QUA THE AMOUNTS WHICH RE MAIN TO BE PAYABLE ON 31.03.2008 AND NOT THOSE ALREADY PAID BEFORE CLOSIN G DAY OF THE RELEVANT ACCOUNTING PERIOD. WE DEEM IT APPROPRIATE TO REPRO DUCE THE LOWER APPELLATES OBSERVATIONS AS UNDER: ITA NO. 61/AHD/2013 (ITO VS. SHRI PRAKASH N. PAWAR) A.Y. 2008-09 - 3 - GROUND NO.2 IS RELATED TO DISALLOWANCE U/S.40(A)(I A) OF THE ACT AND ADDITION OF RS. 1,42,15,795 ON ACCOUNT OF FAILURE TO DEDUCT TDS U/S.194C OF THE ACT. I AM NOT INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT HE WAS NOT LIABLE TO DEDUCT THE TDS U/S.194C OUT OF 'TO PAY' FREIGHT PAYMENTS. WHEN THE ENTIRE RECEIPT FROM THE CONSIGNER IS SHOWN BY THE APPELLANT WITH CLAIM OF TDS DEDUCTED BY CONSIGNER OF THE APPELLANT THEN THE THEORY OF EARNING 'COMMIS SION 1 ONLY DOES NOT SURVIVE. THE TRANSPORTATION MEMO/BILTY IN RESPECT OF TRANSPORTAT ION OF GOODS FROM CONSIGNER TO FINAL PARTY IS MADE BY APPELLANT WHERE THE TRUCK NU MBER AND ITS DRIVER'S SIGNATURE AFFIRMS VARIOUS TERMS AND CONDITIONS. THIS ACCEPTAN CE OF TERMS AND CONDITIONS ARE IN TURN A CONTRACT FOR EACH SUCH MEMO/BILTY AND THE RE ESTABLISHES THE RELATIONSHIP OF SUB-CONTRACTOR BETWEEN APPELLANT AND / THOSE TRU CK DRIVER/TRANSPORTER PARTIES. CONSIDERING THE HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF ASSOCIATED CEMENT COMPANIES (SUPRA) AND BOARD CIRCULAR NO.681 DTD.8.3.1994 THE APPELLANT WAS THEREFORE LIABLE TO DEDUCT IDS OUT OF SUCH PAYM ENT IF MADE DIRECTLY OR TO INSTRUCT THE PARTY WHO IS MAKING PAYMENT OF TO PAY FREIGHT TO TRUCK OWNER/TRANSPORTER PARTY ON BEHALF OF APPELLANT. IF THE APPELLANT'S CONTENTION OF EARNING 'COMMISSION' ONLY IS ACCEPTED THEN THE OBJE CTIVE OF PROMULGATING PROVISIONS OF IDS GETS VIOLATED IN SO MUCH SO THAT A HUGE RECEIPT TO THOSE TRUCK OWNERS/TRANSPORT PARTIES GO OUT OF THE PURVIEW OF S UCH PROVISIONS AND TAX NET. IT IS THEREFORE, A.O.'S CONTENTION IN THIS REGARD ARE UPH ELD. THE SECOND PART OF THIS GROUND IS RELATED TO DISALL OWANCE U/S.40(A)(IA) OF THE ACT OF THE COMPLETE AMOUNT OF RS.1,42,15,795. I N THIS REGARD, I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT THAT AS PER THE RECENT ORDER OF HON'BLE ITAT VISHAKHAPATTNAM SPECIAL BENCH ORDER IN THE CASE OF M/S. MERILYIN SHIPPLING & TRANSPORT (SUPRA) IT IS ONLY THE AMOUNT OUT OF THE EXPENDITURE TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF INFRINGEMENT OF SECTION 194C OF THE ACT THAT REMAINED 'PAYABLE' AS ON LAST DAY OF PREVIOUS YEAR. IT IS IN THIS REGARD, AUDITED FINANCIAL ACCOUNTS OF THE APPELLANT WERE CALLED AND EXAMINED. IT IS VERIFIED THAT THERE IS NO AMOUNT WHICH REMAINED PAYABLE AS ON 31. 3.2008. IN THE AUDITED BALANCE SHEET AS ON 31.3.2008 THERE IS NO SUNDRY CR EDITOR OR UNPAID FREIGHT EXPENSES. IT IS THEREFORE, THERE WON'T BE ANY AMOUN T WHICH CAN BE DISALLOWED U/S.40(A)(IA) OF THE ACT. THE A.O. IS THEREFORE DIR ECTED TO ALLOW THE EXPENSES AND DELETE THE ADDITION SO MADE OF RS.1,42,15,795. THE APPELLANT GETS RELIEF ACCORDINGLY. THIS LEAVES THE REVENUE AGGRIEVED. 6. WE HAVE HEARD LD. DEPARTMENTAL REPRESENTATIVE ST RONGLY REITERATING REVENUES CASE IN SUPPORT OF THE IMPUGNED DISALLOWA NCE. IT HAS COME ON RECORD THAT THE ASSESSEE HAS NOT CHALLENGED THE LOW ER APPELLATE FINDINGS ON MERITS AS EXTRACTED HEREINABOVE SO FAR AS MERIT OF THE ISSUE ARE CONCERNED THAT THE IMPUGNED TDS WAS VERY MUCH DEDUCTIBLE U/S.194C OF THE ACT. LD. CIT(A) HAS PLACED RELIANCE UPON THIS TRIBUNALS SPE CIAL DECISION IN MERILYN ITA NO. 61/AHD/2013 (ITO VS. SHRI PRAKASH N. PAWAR) A.Y. 2008-09 - 4 - SHIPPING CASE (SUPRA). LD. DEPARTMENTAL REPRESENTA TIVE PRODUCES BEFORE US HONBLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. SIKANDAR KHAN TUNVAR (2013) 33 TAXMANN.COM 133 (GUJ) REVERSING SPECIAL B ENCH VERDICT HEREINABOVE. WE FIND THAT THIS LEGAL CONTENTION DE SERVES TO BE ACCEPTED AS PER HONBLE JURISDICTIONAL HIGH COURTS DECISION. WE THUS RESTORE THE IMPUGNED DISALLOWANCE IN VIEW OF HONBLE JURISDICTI ONAL HIGH COURTS DECISION. 7. THIS REVENUES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 24/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0