NAYEEM NOOR KHAN MOMIN, MUMBAI V. CIT 21, MUMBAI

ITA 6259/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0561 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.6259/M/2014 ASSESSMENT YEAR: 2009-10 MR. NAYEEM NOOR KHAN MOMIN, 39/04, 1 ST FLOOR, GULAM RASOOL BLDG., QURESHI NAGAR, KURLA (W), MUMBAI-400 070 PAN: AMVPK 1833G VS. COMMISSIONER OF INCOME TAX -21, & 21(3)(4), INCOME TAX DEPT, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 51 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DINKLE HARIA, A.R. REVENUE BY : SHRI RAHUL RAMAN, D.R. DATE OF HEARING : 02.02.2018 DATE OF PRONOUNCEMENT : 07.02.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 19.03.2014 OF THE COMMISSIONER OF I NCOME TAX [HEREINAFTER REFERRED TO AS THE CIT] RELEVANT TO AS SESSMENT YEAR 2009- 10. 2. THE SHORT FACTS OF THE CASE ARE THAT ASSESSEE IS A PROPRIETARY CONCERN ENGAGED IN THE BUSINESS OF TOURS AND TRAVEL S. ASSESSEE HAS ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 2 DERIVED THE INCOME FROM RENT A CAR BUSINESS. FOR A .Y. 2009-10 THE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING T OTAL INCOME OF RS.9,54,242/-. ORDER OF ASSESSMENT UNDER SECTION 1 43(3) OF THE ACT WAS PASSED ON 09.12.11 AFTER MAKING ADDITION BY SOM E DISALLOWANCE. 3. THE LD. CIT IN HIS EXERCISE OF POWER UNDER SECTI ON 263 OF THE ACT WAS OF A VIEW THAT ASSESSEE HAS PAID HIRE CHARG ES AMOUNTING TO RS.73,67,114/- TO VARIOUS PARTIES AND ON VERIFICATI ON OF THE RECORD IT WAS OBSERVED BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) THAT ON DEBIT SIDE OF P & L ACCOUNT AN AMOUNT O F RS.73,67,114/- WAS EVEN CLAIMED AS VEHICLE RENT PAID ON TDS HAS NO T BEEN DEDUCTED UNDER SECTION 194-I OF THE ACT. ACCORDING TO LD. C IT, UNDER SECTION 194-I OF THE ACT, ANY PERSON, BEING AN INDIVIDUAL O R A HINDU UNDIVIDED FAMILY WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF RENT SHALL BE AT THE TIME OF CREDI T OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY WAY OF ANY OTHE R MODE, WHICHEVER IS EARLIER, TDS @ 2% FOR USE OF MACHINERY OR PLANT BE 10% FOR USE OF LAND AND BUILDING PROVIDED THAT NO DEDUCTION BE MADE UNDER THIS SECTION WHERE AMOUNT OF SUCH INCOME AS THE CASE MAY BE AGGREGATE AMOUNT OF SUCH INCOME SHOULD NOT EXCEED RS.1,80,000 /- AND ASSESSEE IS LIABLE TO PAY THE TDS. THEREFORE, THE LD. CIT W AS OF A VIEW THAT IN AUDIT REPORT IN FORM NO.3CD AT COLUMN NO.17F THA T AN AMOUNT OF RS.73,67,114/- IS INADMISSIBLE UNDER SECTION 40(A)( IA) OF THE ACT. IT MEANS THAT ASSESSEE HAS NOT DEDUCTED TDS WHICH WAS REQUIRED TO BE DONE UNDER SECTION 194-I OF THE ACT. HENCE, ENTIRE EXPENSES ON ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 3 WHICH THE TDS WAS DEDUCTABLE HAS TO BE DISALLOWED U NDER SECTION 40(A)(IA) OF THE ACT. IN RESPONSE TO THAT ASSESSEE SUBMITTED THAT BY MIST AKE THERE WAS NON DEDUCTION OF TDS DUE TO IGNORANCE. THE LD. CIT PROPOSED TO SET ASIDE THIS ISSUE AND TO DECIDE THE ISSUE AFRESH AFTER DUE VERIFICATION OF THE ABOVE DIRECTION. 4. DURING THE COURSE OF HEARING, LD. A.R. HAS FILED THE COPY OF PAYMENT MADE TO VARIOUS PERSONS. THE LD. A.R. SUBM ITTED THAT THE ASSESSEE IS RUNNING THE BUSINESS OF PROVIDING VEHIC LE ON HIRE. THE ASSESSEE IS HAVING OFFICE AT KURLA (WEST). THE LD. A.R. SUBMITTED THAT WHENEVER ANY NEED OF VEHICLE AROSE ASSESSEE US ED TO DIVERT THE REQUIREMENT OF PROVIDING CARS ON HIRE TO VARIOUS PE RSONS AND THAT PERSONS USED TO PROVIDE THE CARS WITH DRIVER AND FU LLY LOADED TO ASSESSEES CLIENTS. IN TURN, THE ASSESSEE WAS PAYI NG THE PAYMENT TO VARIOUS CAR OWNERS THROUGH CHEQUE. THE LD. A.R. SU BMITTED THAT ASSESSEE AND THE CAR OWNERS HAD NO WRITTEN AGREEMEN T FOR PROVIDING THE VEHICLES BUT THERE WAS AN ARRANGEMENT BETWEEN A SSESSEE AND CAR OWNERS THAT ASSESSEE HAS TO COLLECT THE RENT FROM T HE PERSONS WHO HIRE THE VEHICLES AND HE WAS GIVING THIS RENT TO THE CAR OWNERS AFTER DEDUCTING HIS COMMISSION. THE LD. A.R. SUBMITTED T HAT AS PER SECTION 194-I THE RENT HAS BEEN EXPLAINED BY EXPLAN ATION WHEREIN IT IS EXPLAINED THAT RENT MEANS ANY PAYMENT BY WHATEVER N AME CALLED, UNDER ANY LEASE, SUB LEASE, TENANCY OR ANY OTHER AG REEMENT OR ARRANGEMENT FOR USE OF EITHER SEPARATELY OR TOGETHE R OR ANY MACHINERY OR PLANT. THE LD. A.R. SUBMITTED THAT AS PER SECTI ON 194-I OF THE ACT WHERE THERE SHOULD BE A PAYMENT OF CARRYING OUT ANY WORK IN ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 4 PURSUANCE TO THE CONTRACT, THE LD. A.R. SUBMITTED T HAT IT IS THE DUTY OF THE REVENUE TO ESTABLISH THAT BEFORE PROVISION OF S ECTION 194-I IS INVOKED THE BURDEN IS UPON THE REVENUE TO SHOW THAT THE PAYMENT IN RESPECT OF HIRING VEHICLES WHEREIN CONSEQUENCES OF ANY WRITTEN OR ORAL AGREEMENT BEFORE PROVISIONS OF SECTION 194-I W OULD BE INVOKED. 5. KEEPING IN MIND THE PRINCIPLES LAID DOWN IN MANY CASES LIKE IN THE CASE OF CIT VS. UNITED RICE LAND LTD. 322 ITR 5 94 (P&H) WHEREIN IT WAS HELD THAT WHEREVER THE TRUCKS WERE T AKEN ON HIRE BY THE ASSESSEE ON AS AND WHEN BASIS IT WAS HELD THAT SECTION 194(C) WOULD NOT BE APPLICABLE. WE FIND THAT ASSESSEES PL EA IS THAT ASSESSEE HIRES THE VEHICLES FROM VARIOUS PERSONS. WE FIND T HAT ASSESSEE HAS HIRED VEHICLES FROM 56 PERSONS WHICH READS AS UNDER : ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 5 FROM THE ABOVE CHART IT IS CLEAR THAT THE ASSESSEE HAS PAID RENT FOR VARIOUS VEHICLES FROM 01.04.08 TO 31.03.09 TO V ARIOUS OWNERS. OUT OF WHICH SL. NO.1 TO 32 THE PAYMENT IS LESS THA N RS.1,20,000/- LAKHS. THEREFORE, IN OUR OPINION SECTION 194-I IS NOT APPLICABLE TO ABOVE PAYMENTS. MOREOVER, IN RESPECT OF SL.NO.33 T O 56 THE ASSESSEE HAS MADE PAYMENT ABOVE RS.1.20,000/- TO VARIOUS PER SONS BUT THERE NO ANY CONTRACT BETWEEN ASSESSEE AND THOSE PERSONS. THEY HAVE MADE AN ARRANGEMENT FOR PROVIDING VEHICLES ON HIRE AND IN OUR OPINION SECTION 194-I IS NOT APPLICABLE. WE FIND TH AT SIMILAR ISSUE HAS BEEN DECIDED BY TRIBUNAL IN ITA NO.6870/M/2007 IN CASE OF DEVI DAYAL STAINLESS STEEL VS. ACIT WHEREIN THE TRI BUNAL HAS DEALT THIS SIMILAR ISSUE IN PARA 8 WHEREIN IT IS HELD THA T THE LAW WITH REGARDS TO APPLICABILITY OF PROVISIONS OF SECTION 194(C) OF THE ACT, THERE SHOULD HAVE BEEN PAYMENT FOR CARRYING OUT ANY WORK IN PURSUANCE OF A CONTRACT. IN THE CASE OF CIT VS. UNITED RICE LAN D LTD. (SUPRA) IT WAS HELD THAT WHEREVER THE TRUCKS WERE TAKEN ON HIR E BY THE ASSESSEE ON AS AND WHEN BASIS IT WAS HELD THAT SECTION 194(C ) WOULD NOT BE APPLICABLE. IN THE CASE OF CHANDRAKANT THACKER VS . ACIT 129 TTJ 1 IT WAS HELD THAT THE BURDEN IS ON THE REVENUE TO SH OW THAT PAYMENT IN RESPECT OF HIRED VEHICLES WERE IN CONSEQUENCE OF AN Y WRITTEN OR ORAL ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 6 AGREEMENT BEFORE PROVISIONS OF SECTION 194(C) WOULD BE INVOKED. RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL AND KEEPING IN MIND THE PRINCIPLE LAID DOWN IN AFORESAID CASES, WE ANAL YZE THE PRESENT FACTS AND FIND THAT MERELY PRESUMING THAT THERE WAS AN ORAL AGREEMENT FOR CARRYING OUT THE WORK BETWEEN ASSESSE E AND VARIOUS PARTIES, LD. CIT BRUSHED ASIDE THE BELIEF OF ASSESS EE THAT THERE WAS AN ORAL CONTRACT BETWEEN THE ASSESSEE AND OTHER PARTIE S AND THE CARS WERE TAKEN ON HIRE AS AND WHEN IT WAS REQUIRED BY THE AS SESSEE. IN OUR VIEW, LD. CIT HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THERE WAS ANY ORAL CONTRACT OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE OTHER PARTIES. THEREFORE, VEHICLES WERE USED ON RE QUIREMENT BASIS. THEREFORE, ANY PAYMENT MADE IN PURSUANCE OF THE REQ UIREMENT THE PROVISION OF SECTION 194-I IS NOT APPLICABLE. THER EFORE, CONSEQUENT TO THIS DIRECTION DISALLOWANCE UNDER SECTION 40(A)( IA) WOULD NOT BE SUSTAINED. THEREFORE, WE QUASH THE ORDER OF LD. CI T UNDER SECTION 263 OF THE ACT. 6. WE FIND THAT THE MERE FACT THAT ADOPTING SOME OTH ER ALTERNATIVE METHOD FETCH MORE REVENUE OR COMMISSIONER IS NOT IN AGREEMENT WITH THE METHOD ADOPTED BY AO WOULD NOT RENDER THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WE FIND THAT IN THIS CASE THE AO HAS ALSO VERIFIED THE PAYM ENT AND SOME OF THE PAYMENTS WERE BELOW RS.1,20,000/- IN INR. THER EFORE ONE THE POSSIBLE VIEWS AS STATED ABOVE IS TAKEN BY THE AO. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE. ITA NO.6259/M/2014 MR. NAYEEM NOOR KHAN MOMIN 7 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.2018. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 07.02.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, I TAT, MUMBAI.