M/s. Anil International, Ahmedabad V. The Income tax Officer,Ward-9(4), Ahmedabad

ITA 694/AHD/2013

• Counselvise Citation: 69420514 RSA 2013
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: A P SANDESARA A R
• Keywords: Opportunity of being heard
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD , , , , BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ' ! ' ! ' ! ' ITA NO. 694/AHD/2013 ASSESSMENT YEAR : 2008-09 M/S. ANIL INTERNATIONAL NR. BHARAT PETROL PUMP, OPP. SHRINATH TRANSPORT NAGAR, ASLALI ROAD, AHMADABAD 382427 V/S . INCOME TAX OFFICER WARD-9(4), PRATYAKSH KAR BHAVAN, AHMEDABAD PAN NO. A AKFA8446J (APPELLANT) .. (RESPONDENT) #$ % & / BY APPELLANT SHRI A. P. SANDESARA, A.R. '(#$ % & /BY RESPONDENT SHRI K. C. MATHEWS, SR. D.R. )* % /DATE OF HEARING 03.03.2014 +,- % /DATE OF PRONOUNCEMENT 07.03.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF ASSESSEE WHICH H AS EMANATED FROM THE ORDER OF CIT(A)-XV, AHMEDABAD, DATED 31 ST JANUARY, 2013 FOR ASSESSMENT YEAR 2008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: ITA NO. 694/AHD/2013, ANIL INTERNATIONAL VS. ITO A.Y. 08-09 PAGE 2 GROUND NO.1 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW, LEARNED CIT (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 5,85,582 UNDER SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT APPELLANT WAS LIABLE TO DEDUCT THE TAX AT SOURCE UN DER SECTION 194 A AND IT FAILED TO DO SO. 1.2 THAT LEARNED CIT (APPEALS) WAS OUGHT TO HAVE CO NSIDER THE FACT THAT APPELLANT HAD PAID THE FINANCE CHARGES / INTER EST TO THE NON- BANKING FINANCE COMPANIES AND AT THE END OF THE YEA R THERE WAS NO AMOUNT REMAINED OUTSTANDING TOWARDS FINANCE CHARGES / INTEREST. HENCE, PROVISIONS OF SECTION 40(A)(IA) WAS NOT APPL ICABLE AS PER RATIO LAID DOWN BY HONOURABLE ITAT. SPECIAL BENCH O F VISHAKHAPATTNAM IN THE CASE OF M/S. MERILYN SHIPPIN G & TRANSPORT VS. ACIT, ITA NO. 477/VIJ/2008. HENCE, DISALLOWANCE OF RS. 5,85,582 UNDER SECTION 40(A)(IA) IS NOT SUSTAINABLE AS PER LAW AND SAME IS REQUESTED TO BE DELETED. GROUND NO. 2 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, LEARNED CIT (APPEALS) ERRED IN SUSTAINING DISA LLOWANCE OF RS. 57,000 UNDER SECTION 40(A)(IA) ON THE GROUND THAT A PPELLANT WAS LIABLE TO DEDUCT THE TAX AT SOURCE UNDER SECTION 19 4C OF THE ACT AND IT FAILED TO DEDUCT THE SAME. 2.2 THAT LEARNED CIT (APPEALS) WAS OUGHT TO HAVE CO NSIDER THE FACT THAT APPELLANT HAD PAID THE TRANSPORTATION CHARGES OF RS. 57,000 DURING THE YEAR AND AT THE END OF THE YEAR THERE WA S NO AMOUNT REMAINED OUTSTANDING. HENCE, PROVISIONS OF SECTION 40(A)(IA) WAS NOT APPLICABLE AS PER RATIO LAID DOWN BY HONOURABLE IT AT, SPECIAL BENCH OF VISHAKHAPATTNAM IN THE CASE OF M/S. MERILY N SHIPPING & TRANSPORT VS. ACIT, IT A, NO. 477/VIZ/2008. HENCE, DISALLOWANCE ITA NO. 694/AHD/2013, ANIL INTERNATIONAL VS. ITO A.Y. 08-09 PAGE 3 OF RS. 57,000 UNDER SECTION 40(A)(IA) IS NOT SUSTAI NABLE AS PER LAW AND SAME IS REQUESTED TO BE DELETED. 2. THE ASSESSEE IS IN TRANSPORTATION BUSINESS. IT HAS PAID INTEREST TO G.E.MONEY, RELIANCE CAPITAL AND BHW HOME FINANCE OF RS.5,85,582/- ON WHICH ASSESSEE FIRM HAD NOT DEDUCTED TDS U/S. 194A OF THE ACT THOUGH THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S.194A OF THE I T ACT. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE , WHICH WAS NOT AFFORDED BY THE ASSESSEE. AS PER SECTION 40(A)(IA), ON ANY PAYMENT OF INTEREST, THE ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 194A OF THE I T ACT. IF NOT DEDUCTED THE EXPENDITURE IS NOT ALLOWABLE U/S. 40(A)(IA) OF THE IT ACT. THEREFORE, THE A.O. MADE ADDITION OF RS.5,85,582/- IN ABSENCE OF ANY RE PLY, THE A.O. MADE ADDITION OF RS.5,85,582/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAD CONFIRMED THE ORDER OF THE LD. A.O. BY FOLLOWING THE VARIOUS DECISION. IT WAS SUBMITTED B Y THE ASSESSEE BEFORE LD. CIT(A) THAT INTEREST OF PAYMENT WAS MADE TO NON BAN KING FINANCE COMPANY AND HE ALSO CLAIMED THAT BHW HOME FINANCE IS REGIST ERED WITH NATIONAL HOUSING BANK ACT, 1987 U/S. 29A. HENCE, AS PER SEC TION 194A(3)(III), THE APPELLANT WAS NOT REQUIRED TO DEDUCT TDS BUT NO EVI DENCE WAS FILED BEFORE THE LD. CIT(A) THAT BHW HOME FINANCE IS REGISTERED UNDE R NATIONAL HOUSING BANKING ACT, 1987. AFTER CONSIDERING THE DECISION OF SPECIAL BENCH IN CASE OF M/S. MERILYN SHIPPING & TRANSPORT VS. ACIT, IT A, N O. 477/VIZ/2008, ITAT, ITA NO. 694/AHD/2013, ANIL INTERNATIONAL VS. ITO A.Y. 08-09 PAGE 4 AHMEDABAD DECISION IN N.K.JEWELLERS & NITINKUMAR RA MESCHANDRA MEHTA, LD. CIT(A) CONFIRMED THE ADDITION. 4. NOW, THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ASSESSEE HAD PAID THE INTEREST TO G. E.MONEY FROM RELIANCE CAPITAL AND BHW HOME FINANCE THROUGH PARTNER AS THI S LOAN WAS TAKEN BY THE PARTNER WHICH HAS BEEN FINALLY CREDITED IN THE ACCO UNTS OF ASSESSEE FIRM. AS PER SECTION 40(A)(IA), INTEREST PAID TO THE PARTNER IS NOT SUBJECT TO THE DEDUCTION OF TDS. THEREFORE, IT IS ALLOWABLE DEDUC TION. AT THE OUTSET, LD. SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(A) A ND ARGUED THAT THE FIRM HAS DIRECTLY PAID THE INTEREST TO THESE PARTIES AND LOAN HAS BEEN TAKEN DIRECTLY FROM THE PARTIES BY THE FIRM. THEREFORE, IT IS A C LEAR CUT VIOLATION OF SECTION 40(A)(IA) OF THE IT ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LOAN HAS BEEN SHOWN BY THE FIRM IN TH E BOOKS OF ACCOUNT OF THE FIRM AND INTEREST HAS BEEN DEBITED IN P&L ACCOUNT B UT NO TDS HAS BEEN DEDUCTED BY THE ASSESSEE. THE ARGUMENT OF LD. A.R. OF THE ASSESSEE IS NOT FOUND SUPPORTING WITH ANY EVIDENCE THAT THE PARTNER S HAD INTRODUCED PERSONAL LOAN TO THE FIRM AFTER BORROWING FROM THE FINANCIAL INSTITUTIONS. THEREFORE, WE DO NOT HESITATE TO CONFIRM THE ORDER OF CIT(A). TH IS GROUND OF APPEAL IS DISMISSED. 6. THE SECOND GROUND IS AGAINST NOT DEDUCTING TDS O N RS.57,000/- PAYMENT FOR FREIGHT CHARGES TO SMT. SHAKUNTALA. TH E A.O. FOUND THAT ASSESSEE HAS PAID TRUCK FREIGHT TO SMT. SHAKUNTLA O F RS.57,000/- ON WHICH ITA NO. 694/AHD/2013, ANIL INTERNATIONAL VS. ITO A.Y. 08-09 PAGE 5 ASSESSEE HAD NOT DEDUCTED TDS U/S. 194C OF THE ACT. FOR WHICH, HE GAVE REASONABLE OPPORTUNITY OF BEING HEARD BUT ASSESSEE FAILED TO SUBMIT ANY EXPLANATION. AFTER CONSIDERING THE VARIOUS CASE LA WS AS WELL AS FACTS OF THE CASE, THE A.O. DISALLOWED RS.57,000/- U/S. 40(A)(IA ) OF THE IT ACT. 7. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDI TION BY GIVING SIMILAR FINDING AS GIVEN IN THE GROUND NO.1. 8. NOW THE ASSESSEE IS BEFORE US. LD. A.R. ARGUED THAT FREIGHT OF RS.57,000/- WAS PAID TO SMT. SHAKUNTLADEVI B. GUPTA BEING PARTNER OF THE FIRM. PAYMENT WAS IN FACT IN THE NATURE OF RENT AS FIXED AMOUNT OF RS.3000/- HAS BEEN PAID FOR UTILIZATION OF VEHICLE OWNED BY M RS. SHAKUNTLADEVI B. GUPTA, BEING PARTNER OF THE FIRM. HENCE, PROVISIONS OF SE CTION 194I IS NOT APPLICABLE. SINCE, THE PAYMENT DOES NOT EXCEED THE MONETARY LIM IT PRESCRIBED U/S. 194I OF THE ACT. THEREFORE, APPELLANT IS NOT LIABLE TO DED UCT TDS. AT THE OUTSET, LD. SR. D.R. SUPPORTED THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE THE LD. CIT(A), THE APPELLANT HAD T AKEN DIFFERENT ARGUMENT AS AMOUNT WAS NOT PAYABLE AS ON 31.03.2008. THEREFORE , BY RELYING ON SPECIAL BENCH DECISION OF M/S. MERILYN SHIPPING & TRANSPORT VS. ACIT, ITA, NO . 477/VIZ/2008, NO DISALLOWANCE WAS CALLED FOR. THE PRESCRIBED LIM IT ARGUMENT HAS NOT BEEN GIVEN AT THE TIME OF EITHER BEFORE THE A.O. NOR THE CIT(A) AND ALSO NO COPY OF ACCOUNT HAS BEEN ENCLOSED ALONGWITH PAPER BOOK. THEREFORE, IN ABSENCE OF ANY DETAIL, WE HAVE CONSIDERED VIEW T HAT ASSESSEE DOES NOT ITA NO. 694/AHD/2013, ANIL INTERNATIONAL VS. ITO A.Y. 08-09 PAGE 6 HAVE ANY CASE AND HE CHANGED HIS STAND AT EVERY LEV EL. THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A). 10. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 07/03/2014 SD/- SD/- ( MUKUL KR. SHRAWAT) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA . . . . % %% % '/ '/ '/ '/ 0/- 0/- 0/- 0/- / COPY OF ORDER FORWARDED TO:- 1. #$ / APPELLANT 2. '(#$ / RESPONDENT 3. 44 5 / CONCERNED CIT 4. 5- / CIT (A) 5. /9: ') , , / DR, ITAT, AHMEDABAD 6. :< => / GUARD FILE. BY ORDER/ . , ?/ 4A , '