SURINDER CHAWLA, MUMBAI V. ITO 19(1)(2), MUMBAI

ITA 6480/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71981 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Section: 194C

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL E BEN CH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.6480/MUM/2011 ASSESSMENT YEAR:- 2006-07 MR. SURINDER CHAWLA 3, SATYAM LINKING ROAD KHAR (W), MUMBAI 400 052. VS. ITO 19(1)(2) PIRAMAL CHAMBERS MUMBAI. PAN:- ABWPC9255G APPELLANT RESPONDENT APPELLANT BY NONE RESPONDENT BY SHRI M.L. PERUMAL ORDER PER I.P. BANSAL, JM THIS APPEAL IS FILED BY THE ASSESSEE. IT IS DIRECTE D AGAINST THE ORDER PASSED BY CIT(A) DATED 26 TH AUGUST 2011 FOR ASSESSMENT YEAR 2006-07. GROUNDS O F APPEAL READS AS UNDER:- 1. THE LEARNED CIT-APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF TRANSPORT EXPENSES OF RS. 3,58,474/- U/S 40(IA) FOR NON DEDUCTION OF T DS. 2. THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF CONTRACTORS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD MADE PAYM ENT TO ONE PARTY NAMELY GANGOTRI FREIGHT LQUOKBZ DH RKJH[K@ DATE OF HEARING 18-12-2013 ?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT 18-12-2013 - 2 - AGGREGATING TO AN AMOUNT OF RS. 3,58,474/- ON ACCOU NT OF TRANSPORTATION OF GOODS. THE DETAILS OF THESE PAYMENTS ARE AS UNDER:- DATE RATE BILL AMOUNT 27/7/2005 1025/- 40477/- 29/7/2005 1025/- 38140/- 29/7/2005 1025/- 40743/- 4/8/2005 1025/- 43552/- 5/8/2005 1100/- 36696/- 185358/- BILL NO. 1312 16/8/05 1100/- 37477/- 31/8/05 1100/- 42724/- 3/9/05 1250/- 51562/- 140763/- BILL NO. 1312 14/12/2005 1200/- 32353/- 32353/- 3. ACCORDING TO AO THE ASSESSEE WAS REQUIRED TO DED UCT TAX ON THESE PAYMENTS UNDER THE PROVISIONS OF SECTION 194C. AS THE ASSESSEE DID NOT DEDUCT TAX AND PAID IT TO THE GOVERNMENT, THE AO INVOKED THE PROVISIONS OF SECTION 40(A)(IA) AND DISALLOWED THE AFOREMENTIONED AMOUNT. 4. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE CIT(A) WHO HAS ALSO UPHELD THE DISALLOWANCE. THE ASSESSEE IS AGGRIEVED HENCE HAS F ILED AFOREMENTIONED GROUND. 5. NOTICE OF HEARING WAS TO THE ASSESSEE THROUGH RP AD WHICH HAS BEEN DULY RECEIVED AS PER ACKNOWLEDGEMENT PLACED ON RECORD. HOWEVER ON TH E FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE, THEREFORE, WE PR OCEED TO DECIDE THE PRESENT APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LD. DR. - 3 - 6. THE FACTS AS MENTIONED IN THE STATEMENT OF FACTS ARE THAT THE PAYMENTS MADE BY THE ASSESSEE ARE NOT IN PURSUANCE TO ANY CONTRACT EITHE R ORAL OR WRITTEN. IT IS THUS THE CASE OF THE ASSESSEE THAT UNLESS THERE IS A CONTRACT ORAL OR WR ITTEN, THERE WAS NO OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE AS INDIVIDUAL PAYMENT IN RE SPECT OF EACH OF GR DID NOT EXCEED RS. 50,000/-. THE ASSESSEE IN ITS STATEMENT OF FACTS HA S ALSO REFERRED TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. UNITED RICE LAND LTD. ( 322 ITR 594), WHEREIN IT HAS BEEN HELD THAT THERE BEING NEITHER O RAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRANSPORTER FOR CARRIAGE OF GOODS NOR IT IS PROVED THAT ANY CHARGES WERE PAID TO THEM IN PURSUANCE OF A CONTRACT FOR A SPECIFIC P ERIOD, QUANTITY OR PRICE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX U/S 194C FROM THE PAYMENTS MAD E TO THE TRANSPORTER. 7. AGAINST SUCH SUBMISSION OF THE ASSESSEE, IT IS T HE CASE OF THE LD. DR THAT THESE PAYMENTS HAVE TO BE CONSIDERED AS MADE UNDER A CONT RACT AND WHEN SUCH PAYMENTS ARE MADE UNDER A CONTRACT WHETHER WRITTEN OR ORAL, THE ASSES SEE IS LIABLE TO DEDUCT TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C. THEREFORE, LD. DR PLEAD ED THAT LD. CIT(A) HAS RIGHTLY UPHELD THAT THESE PAYMENTS ARE DISALLOWABLE. 8. WE HAVE HEARD LD. DR AND WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE ORDER PASSED BY LD. CIT(A). VIDE LETTE R DATED 27 TH NOV. 2008, FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS THE FIRST CONTENTION OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 194C REQUIRE THAT THOSE PAYMENTS SHOULD BE MADE IN PURSUANCE OF A CONTRACT. IT WAS THE CONTENTION OF THE ASSESSEE THAT HE HAS NEVER EN TERED INTO ANY CONTRACT WITH TRANSPORTER AND AS PER AFOREMENTIONED DECISION OF HONBLE HIGH COUR T OF PUNJAB & HARYANA IN THE CASE OF CIT VS. UNITED RICE LAND LTD. (SUPRA) , THE ASSESSEE WAS NOT UNDER AN OBLIGATION TO DEDUC T TAX AT SOURCE, THEREFORE, THE DISALLOWANCE COULD NOT BE MADE. SIMILAR STATEMENTS WERE MADE BEFORE CIT(A). HOWEVER, NEITHER AO NOR CIT(A) HAS PROPERLY APPRECIATED THIS CONTENTION OF THE ASSESSEE IN THE LIGHT OF AFOREMENTIONED DECISION OF HONBLE HIGH COURT OF PUNJAB & HARYANA HIGH COURT. ONCE IT IS SO CONTENDED BY THE ASSESSEE AND IF DEPARTMENT STILL WANTS TO PROCEED WITH THE ISSUE THEN SOME MATERIAL WAS REQUIRED TO B E BROUGHT ON RECORD TO SUGGEST THAT THERE WAS SOME ORAL OR WRITTEN CONTRACT BETWEEN THE ASSES SEE AND THE TRANSPORTER. WHEN A PARTICULAR POINT IS RAISED BEFORE THE AUTHORITY THEN THE SAID POINT HAS TO BE DECIDED. MERE OBSERVATION THAT - 4 - THERE WAS NO NECESSITY OF WRITTEN OR ORAL CONTRACT IS NOT SUFFICIENT AND CANNOT SUPPORT THE CASE OF THE REVENUE. THERE BEING NO MATERIAL ON RECORD T O SHOW THAT THERE WAS ANY WRITTEN OR ORAL CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTER, WE ARE OF THE OPINION THAT ACCORDING TO AFOREMENTIONED DECISION OF PUNJAB & HARYANA HIGH CO URT, THE DISALLOWANCE COULD NOT BE MADE UNDER THE PROVISION OF SECTION 40(A)(IA) AS TH E ASSESSEE DID NOT HAVE ANY LIABILITY TO DEDUCT TAX AT SOURCE FROM THE IMPUGNED PAYMENTS. WE DELETE THE DISALLOWANCE AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 -12-2 013. SD/- SD/- (N.K. BILLAIYA) (I.P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER SKS SR. P.S, MUMBAI DATED 18-12-2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI