Sri. Zameer Ahmed Khan, Bangalore V. CIT, Bangalore

ITA 687/BANG/2011

• Counselvise Citation: 68721114 RSA 2011
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 27-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H GURUSWAMY ITP
• Section: 194C; 63; 2

Judgement Text

ITA.687/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A NO.687/BANG/2011 (ASSESSMENT YEAR : 2006-07) SHRI. ZAMEER AHMED KHAN, M/S. TIMBER HOUSE, M/S. SOUTH INDIAN TIMBERS, NO.161, 100 FT ROAD, BANGALORE 560 081 .. APPELLANT PAN : AJNPK2426N V. COMMISSIONER OF INCOME-TAX, BANGALORE-IV, BANGALORE .. RESPONDENT APPELLANT BY : SHRI. H. GURUSWAMY, ITP RESPONDENT BY : SHRI. FARAHAT HUSSAIN QURESHI, CIT -II HEARD ON : 11.06.2012 PRONOUNCED ON : 29.06.2012 O R D E R PER N. V. VASUDEVAN, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED.28.03.2011, OF THE CIT, BANGALORE-IV, BANGALO RE, PASSED U/S.263 OF THE ACT. THE ASSESSEE IS AN INDIVIDUAL WHO IS A TIMBER MERCHANT. FOR THE AY 2006-07, HE FILED RETURN OF I NCOME DECLARING TOTAL INCOME OF RS.5,81,663/-. THE ASSESSING OFFIC ER COMPLETED THE ITA.687/BANG/2011 PAGE - 2 ASSESSMENT U/S.143(3) OF THE ACT ON 31.12.2008 DETE RMINING TOTAL INCOME OF THE ASSESSEE AT RS.6,11,663/-. 02. THE CIT IN EXERCISE OF HIS POWERS U/S.263 OF TH E ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE ASSESSING OFFI CER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE C IT ON SCRUTINY OF THE RECORDS NOTICED THAT THE ASSESSEE HAD DEBITED IN TH E PROFIT AND LOSS ACCOUNT A SUM OF RS.10,27,614/- TOWARDS TRANSPORTAT ION CHARGES. HE WAS OF THE VIEW THAT THE AMOUNT PAID BY THE ASSESSE E AS TRANSPORTATION CHARGES WAS IN THE NATURE OF A PAYMENT TO CONTRACTO R FOR CARRYING OUT OF WORK WITHIN THE MEANING OF SECTION 193C OF THE I NCOME-TAX ACT, 1961 (THE 'ACT'), AND THEREFORE, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE AT THE TIME OF MAKING PAYMENT. THE CIT W AS OF THE VIEW THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE AS REQUIRED BY THE PROVISIONS OF SECTION 194C OF THE ACT AND THEREFORE THE ASSESSING OFFICER OUGHT TO HAVE DISALLOWED THE CLAIM OF THE A SSESSEE FOR DEDUCTION ON ACCOUNT OF EXPENDITURE OF THE TRANSPOR TATION CHARGES IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 03. IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED BY THE CIT PROPOSING TO REVISE THE ORDER OF THE ASSESSING OFFICER, U/S.2 63 OF THE ACT, THE ASSESSEE SUBMITTED THAT THE PAYMENT IN QUESTION WAS NOT A PAYMENT FOR CARRYING OUT ANY WORK AND PROVISIONS OF SECTION 194 C WERE NOT APPLICABLE TO INDIVIDUALS FOR THE AY 2006-07. ITA.687/BANG/2011 PAGE - 3 04. IN THIS REGARD IT MAY BE USEFUL TO MENTION THAT SECTION 194C(1) IMPOSES A DUTY ON THE PERSON PAYING TO ANOTHER FOR CARRYING OUT ANY WORK, THE DUTY TO DEDUCT TAX AT SOURCE AT THE TIME OF MAKING THE PAYMENT, WHEN PAYMENT IS MADE BY A SPECIFIED PERSON . EXPLANATION TO SECTION 194C DEFINES SPECIFIED PERSON. FOR AY 2 006-07, THE DEFINITION OF SPECIFIED PERSON DOES NOT INCLUDE AN INDIVIDUAL. WHERE AN INDIVIDUAL MAKES A PAYMENT TO CONTRACTOR, THE OB LIGATION TO DEDUCT TAX AT SOURCE HAS BEEN IMPOSED ONLY BY THE FINANCE ACT NO.2(2009) W.E.F.1.10.2009, WHEREBY CLAUSE (L) WAS ADDED TO EX PLANATION TO SECTION 194C OF THE ACT. PRIOR TO SUCH AMENDMENT, INDIVIDUALS WHILE MAKING PAYMENT TO A CONTRACTOR FOR CARRYING OUT ANY WORK NEED NOT DEDUCT TAX AT SOURCE. 05. THE CIT, HOWEVER, HELD THAT THE PAYMENT IN QUES TION BY THE ASSESSEE, WAS FOR THE PURPOSE OF CARRYING OUT WORK AND, THEREFORE, THE ASSESSEE WAS BOUND TO DEDUCT TAX AT SOURCE. ACCORD INGLY, THE CIT SET ASIDE THE ASSESSMENT ORDER U/S.143(3) OF THE ACT, D ATED.31.12.2008. THE ORDER U/S.263 IS NOT CLEAR AS TO WHETHER IT IS AN ORDER REVISING THE ORDER OF ASSESSMENT OR DIRECTING THE ASSESSING OFFI CER TO MAKE ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS CONTAI NED IN THE ORDER U/S.263 OF THE ACT. AGGRIEVED BY THE ORDER U/S.263 , THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA.687/BANG/2011 PAGE - 4 06. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS WE HAV E ALREADY NOTICED, THE PROVISIONS OF SECTIO.194C WERE NOT APP LICABLE TO INDIVIDUALS FOR AY 2006-07 AND, THEREFORE, THE ASSE SSEE WAS NOT UNDER ANY OBLIGATION TO DEDUCT TAX AT SOURCE WHILE MAKING PAYMENT TO A CONTRACTOR FOR CARRYING OUT ANY WORK. ON THE ABOVE ASPECT, THE ORDER U/S.263 IS SILENT. THE LEARNED DR WHILE RELYING ON THE ORDER OF THE CIT COULD NOT CONTROVERT THE PROVISIONS OF LAW WHIC H WE HAVE ALREADY REFERRED. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE ORDER U/S.263 CANNOT BE SUSTAINED. WE, ACCORDINGLY, QUAS H THE ORDER U/S.263 AND ALLOW THE APPEAL OF THE ASSESSEE. 07. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.06.2012. SD/- SD/- (JASON P BOAZ) (N. V. VASUDE VAN) ACCOUNTANT MEMBER JUDICIAL MEMBER