The Assistant Commissioner of Income Tax, Jammu V. M/s. The Jammu Cooperative Supply & Marketing, Jammu

ITA 66/ASR/2014

• Counselvise Citation: 6620914 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 66 (ASR)/2014 ASSESSMENT YEAR: 2007-08 PAN: AAAAT088IB THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, JAMMU VS. M/S THE JAMMU COOPERATIVE SUPPLY AND MARKETING FEDERATION LTD., B.C. ROAD, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. RATINDER KAUR, DR RESPONDENT BY: NONE DATE OF HEARING: 10.03.2015 DATE OF PRONOUNCEMENT: 11.03.2015 ORDER PER A.D. JAIN, J.M. 1. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2007-08, AGAINST THE ORDER DATED 18.11.2013, PASSED BY THE LEARNED CIT(A ), JAMMU. 2. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUND S OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LEAR NED CIT(A) WAS RIGHT IN ALLOWING THE RELIEF ON ACCOUNT OF NON ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 2 DEDUCTION OF TDS ON FREIGHT CHARGED AS PER THE PROV ISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT,1961. 2.ON THE FACTS AND CIRCUMSTANCES WHETHER THE LEARNE D CIT(A) WAS RIGHT IN ALLOWING THE RELIEF ON ACCOUNT OF NON DEDUCTION OF TDS ON FREIGHT CHARGED AS PER THE PROV ISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT,1961 AS THE AGG REGATED AMOUNT PAID TO THE CONTRACTORS AS FREIGHT DURING TH E YEAR UNDER CONSIDERATION EXCEEDS RS.50,000/- AND TAX WAS REQUIRED TO BE DEDUCTED AS PER THE PROVISO OF SECTI ON 194C OF THE I.T. ACT,1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES WHETHER T HE LEARNED CIT(A) WAS RIGHT IN NOT CONSIDERING THAT SUCH SUM ON WHICH TAX WAS REQUIRED TO BE DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PRE VIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-S ECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDU CTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 3. THE FACTS AS PER THE RECORD ARE THAT THE ASSESS EE SOCIETY HAS PAID FREIGHT ON ACCOUNT OF TRANSPORTATION OF FERTIL IZER ON BEHALF OF THE GOVT. OF INDIA TO DIFFERENT LOCATIONS IN JAMMU & KASHMIR. THE RACKS OF FERTILIZERS UNLOADED AT RAILWAY STATIO N IS TO BE TRANSPORTED TO DIFFERENT LOCATIONS WITHIN THE STIPU LATED PERIOD OF TIME. FOR TRANSPORTATION OF THE SAME, THE ASSESSEE SOCIETY ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 3 ARRANGES INDIVIDUAL TRUCKS AS PER ITS REQUIREMENT, KEEPING IN VIEW THE LOAD TO BE TRANSPORTED TO DIFFERENT DESTIN ATIONS. SINCE THE SOCIETY, ENGAGED IN THE TRANSPORTATION BUSINESS OF FERTILIZER, DOES NOT OWN ANY TRUCK, IT HAS TO HIRE THE TRUCKS F ROM THE LOCAL MARKET EVERY TIME, AS AND WHEN THERE IS REQUIREMENT FOR THE SAME. THE FREIGHT PAID TO THE TRUCK DRIVERS/OWNERS VARIES FROM TIME TO TIME, WHICH FLUCTUATES DUE TO DEMAND AND SU PPLY, AS THE SOCIETY HAS NOT ENTERED INTO IN ANY SPECIFIC CONTRA CT, FOR ANY SPECIFIC PERIOD, WITH ANY OF THE TRUCK OWNERS/DRIVE RS. NO CONTRACT, EITHER ORAL OR WRITTEN, HAS BEEN EXECUTED BY THE SOCIETY WITH ANY TRANSPORT COMPANY OR TRANSPORT CONTRACTOR, FOR ANY SPECIFIED PERIOD, OR FOR ANY SPECIFIED QUANTITY, OR AT ANY PRE- AGREED SPECIFIED RATE. 4. THE AO MADE A DISALLOWANCE OF RS.70,98,738/-, BY OBSERVING AS FOLLOWS: AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF O F THE ASSESSEE SOCIETY WITH REFERENCE TO THE FACTS OF THE CASE I HOLD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT THE I NCOME TAX AT SOURCE WHERE THE PAYMENTS IN EXCESS OF RS.50 ,000/- MADE TO EACH TRUCK OWNERS AND DEPOSIT THE SAME IN T HE CENTRAL GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED PE RIOD. ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 4 OUT OF THESE PAYMENTS OF FREIGHT IN RESPECT OF FERT ILIZER AN AMOUNT OF RS.70,98,738/- HAS BEEN WORKED AS PER DET AILS GIVEN IN ANNEXURE-A FORMING PART OF THE ASSESSMEN T ORDER, ON WHICH TAX WAS REQUIRED TO BE DEDUCTED UND ER SECTION 194C OF THE INCOME TAX ACT, 1961 BUT ASSESS EE HAS NEITHER DEDUCTED THE TAX NOR DEPOSITED THE SAME IN THE CENTRAL GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED PE RIOD OF TIME. THE CASES ON WHICH THE REPRESENTATIVE OF THE ASSESSEE TRIED TO RELY ARE QUITE DIFFERENT THAN THE FACTS OF THE ASSESSEE SOCIETY AND AS SUCH, SAME ARE DISTINGUISHA BLE. THEREFORE, THE PAYMENT OF RS.70,98,738/- MADE BY TH E ASSESSEE SOCIETY IN CONTRAVENTION OF THE PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT, 1961 DOES NOT Q UALITY FOR DEDUCTION AND AS SUCH, SAME IS DISALLOWED KEEPI NG IN VIEW THE PROVISIONS OF SECTION 40(A)(IA) OF THE INC OME TAX ACT, 1961. THIS WOULD RESULT DISALLOWANCE OF RS.70,98,738/- UNDER THIS HEAD. 5. THEREFORE, THE AO HELD THAT THE ASSESSEE WAS REQU IRED TO MAKE TDS QUA PAYMENTS IN EXCESS OF RS.50,000/- MADE TO EACH TRUCK OWNER. 6. BY VIRTUE OF THE IMPUGNED ORDER, THE LEARNED CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO. 7. THE NOTICE ISSUED TO THE ASSESSEE ON 19.01.2015 HAS NOT BEEN RECEIVED BACK UNSERVED. AS SUCH, NONE HAS PUT IN AP PEARANCE ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 5 BEFORE US ON BEHALF OF THE ASSESSEE. HOWEVER, FINDI NG THAT THE MATTER CAN BE PROCEEDED WITH EVEN IN THE ABSENC E OF THE ASSESSEE, WE ARE DOING SO. 8. CHALLENGING THE IMPUGNED ORDER, THE LEARNED DR HAS CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN DELE TING THE DISALLOWANCE CORRECTLY MADE BY THE AO. IT HAS BEEN CONTENDED THAT WHILE DOING SO, THE LEARNED CIT(A) H AS FAILED TO APPRECIATE THAT THE AGGREGATE AMOUNT PAID TO THE CONTRACTOR BY THE ASSESSEE AS FREIGHT EXCEEDED RS.5 0,000/-, DUE TO WHICH, TAX WAS REQUIRED TO BE TAX DEDUCTED, WHICH WAS NOT DONE. IT HAS FURTHER BEEN SUBMITTED THAT THE LE ARNED CIT(A) FAILED TO CONSIDER THAT THE AMOUNT ON WHICH TAX WAS REQUIRED TO BE DEDUCTED IN ANY SUBSEQUENT YEARS OR ON WHICH TAX HAS BEEN DEDUCTED DURING THE YEAR, BUT PAID AFT ER THE DUE DATE SPECIFIED IN SECTION 139(1) OF THE I.T. ACT, S HALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF T HE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 9. WE HAVE HEARD THE LEARNED DR AND HAVE PERUSED THE M ATERIAL ON RECORD. IT REMAINS UNDISPUTED THAT THE PAYMENT O F FREIGHT WAS MADE BY THE ASSESSEE SOCIETY TO THE HIRED INDIV IDUAL ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 6 TRUCK DRIVERS, WITH WHOM, NO SPECIFIC CONTRACT WAS ENTERED INTO BY THE ASSESSEE FOR ANY SPECIFIED PERIOD. THE PAYMENT VARIED FROM TIME TO TIME. THIS FLUCTUATION WAS DUE TO DEMAND AND SUPPLY. THERE WAS NO PRE-AGREED SPECIFIED RATE OF PAYMENT OF FREIGHT. EACH TRIP WAS, HENCE, A SEPARAT E CONTRACT. FOR EVERY SINGLE TRIP, A FREIGHT RATE WOULD BE NEGO TIATED, DEPENDING ON THE PREVAILING MARKET CONDITIONS. EACH JOB UNDERTAKEN BY EACH TRUCK OWNER WAS, THUS, A SEPARAT E JOB FOR THE SAME PERSON, I.E., THE ASSESSEE, AT DIFFERENT R ATES AND TERMS. THEREFORE, THE DIFFERENT JOBS COULD NOT BE T ERMED AS BEING COVERED UNDER ONE SINGLE CONTRACT. THIS POSIT ION STANDS ACCEPTED IN ITO VS. INDIAN ROAD LINES, ITA NO.80/ASR/2010, REPORTED IN 45 DTR (ASR) (TRIB) 49. THE CONTRACTORS WERE ARRANGED BY THE ASSESSEE SOCIETY A S PER ITS REQUIREMENT, CONSIDERING THE LOAD OF FERTILIZERS TO BE TRANSPORTED. FOR ALL THE DIFFERENT TRIPS, EVEN THE DESTINATIONS ALSO VARIED. CBDT CIRCULAR NO.715 DATED 08.08.1995( UNDER Q. NO.9) IS ALSO IN FAVOUR OF THE ASSESSEE IN THIS REGARD. THE LEARNED CIT(A), IT IS SEEN, DULY TOOK INTO CONSIDER ATION ALL THE ABOVE FACTS WHILE HOLDING THAT NO TDS WAS DEDUC TIBLE, AS ITA NO.66 (ASR)/2014 A SST. YEAR 2007-08 7 EACH CONTRACT WAS BELOW RS.20,000/- AND THEREFORE, THERE WAS NO APPLICATION OF SECTION 40(A)(IA) R.W.S 194(C) OF THE I.T. ACT. 10. THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS, IN VIEW OF THE ABOVE, FOUND TO BE SHORN OF MERIT. IT I S, THEREFORE, REJECTED. THE ORDER UNDER APPEAL IS HERE BY CONFIRMED. 11. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2015 . SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.03.2015 /PK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S THE JAMMU COOPERATIVE SUPPLY AND MARKETING FEDERATION LTD. B. C. ROAD, JAMMU. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, JAMMU. 3 THE CIT(A), 4 THE CIT, 5 THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.