M/s. Ravi Cranes & Movers Ltd., Hyderabad V. ACIT, Circle-3(1)`, Hyderabad

ITA 701/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66297 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: V SIVA KUMAR
• Section: 143(3); 194C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.701/HYD/2012 ASSESSMENT YEAR : 2007-08 M/S. RAVI CRANES & MOVERS LTD., HYDERABAD. .... APPELLANT PAN:AABCR 8975 R VS. ACIT, CIR-3(1), HYDERABAD. RESPONDENT APPELLANT BY : SHRI V. SIVA KUMAR RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 29-08-2012 DATE OF PRONOUNCEMENT : 21-09-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 27-2-2012 OF CIT-III, HYDERABAD PASSED IN 263/CIT- III/2011-12 AND IT PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUND S BEFORE US:- 1. THE ORDER PASSED UNDER SECTION 263 OF THE IT ACT BY CIT-III IS AGAINST THE POSITION OF LAW AND AGAINST THE WEIGHT OF EVIDENCE AND THEREFORE, LIABLE TO BE SET ASIDE. 2 ITA NO. 701 OF 2012 M/S. RAVI CRANES & MOVERS LTD., HYD. 2. THE LD. CIT ERRED IN DIRECTING THE AO TO DISALLO W EXPENDITURE OF RS.6,87,658 AND RS.6,46,337 UNDER TRANSPORT CHARGES AND LEASE HIRE CHARGE RESPECT IVELY UNDER SECTION 40(A)(IA) OF IT ACT AS THE PROVISIONS OF THE SECTION IS NOT APPLICABLE TO THE APPELLANT. 3. BRIEFLY, THE FACTS ARE THE ASSESSEE IS ENGAGED I N THE BUSINESS OF HIRING OF CRANES AND CONTRACT WORKS. F OR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AS FILED ITS RETURN OF INCOME ON 13-11-2007 DECLARING TOTAL INCO ME OF RS.17,43,111. INITIALLY, THE RETURN WAS PROCESSED U/S 143(1). SUBSEQUENTLY HOWEVER THE RETURN WAS SELECTED FOR SC RUTINY BY ISSUING A NOTICE U/S 143(2) OF THE ACT. THE AO AFT ER EXAMINING THE BOOKS OF ACCOUNTS AND OTHER INFORMATION CALLED FOR FROM THE ASSESSEE COMPLETED THE ASSESSMENT VIDE HIS ORDER DA TED 29-12- 2009 BY MAKING AD HOC DISALLOWANCE OF 5% OF THE TOT AL EXPENDITURE CLAIMED WHICH AMOUNTED TO RS.17,59,100/ -. THE CIT IN EXERCISE OF HIS JURISDICTION U/S 263 ISSUED A NO TICE DIRECTING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORD ER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE SHALL NOT BE REVISED. THE CIT AFTER CONSIDERING THE ASSESSEES R EPLY TO THE SHOW CAUSE NOTICE PASSED AN ORDER ON 27-2-2012 U/S 263 OF THE ACT. THE CIT IN COURSE OF THE PROCEEDINGS U/S 263 ASKED THE ASSESSEE TO FURNISH STATEMENT OF TRANSPORTATION CHA RGES MADE DURING THE RELEVANT PREVIOUS YEAR TO DIFFERENT PERS ONS WHICH EXCEEDED RS.50,000/-. ON EXAMINING THE DETAILS FUR NISHED BY THE ASSESSEE, THE CIT FOUND THAT THE ASSESSEE HAD MADE PAYMENT TO 13 PARTIES AND THE TOTAL AMOUNT WAS RS.6,87,658 EXC EEDING RS.50,000/- EACH. THE CIT FINDING THAT THE ASSESSE E HAS NOT DEDUCTED TAX U/S 194C ON THE AFORESAID TRANSPORT CH ARGES DIRECTED THE AO TO DISALLOW THE AMOUNT U/S 40A(IA) OF THE ACT. 3 ITA NO. 701 OF 2012 M/S. RAVI CRANES & MOVERS LTD., HYD. SIMILARLY, THE CIT FOUND THAT PAYMENT TOWARDS VEHIC LE LEASE RENT EXCEEDING RS.50,000 WAS MADE TO 12 PARTIES DURING THE RELEVANT PREVIOUS YEAR AND THE TOTAL AMOUNT WORKED OUT TO RS .6,46,337 WITHOUT DEDUCTING TAX U/S 194I OF THE ACT. HE THER EFORE DIRECTED THE AO TO DISALLOW THE AFORESAID AMOUNT OF RS.6,46, 337/- U/S 40A(IA) OF THE ACT. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS EVIDENT F ROM THE ORDER OF THE CIT THAT HE ACCEPTS THE FACT THAT THE ASSESSEE HAS PAID THE AMOUNT TOWARDS TRANSPORTATION CHARGES AND VEHICLE H IRE CHARGES DURING THE RELEVANT FINANCIAL YEAR AND NOTHING REMA INED PAYABLE. CONSIDERING THE FACT THAT THE ASSESSEE HAS PAID THE EXPENDITURE CLAIMED DURING THE FINANCIAL YEAR, NO DISALLOWANCE COULD BE MADE U/S 40A(IA) IN VIEW OF DECISION OF ITAT, VISAKHAPAT NAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT S VS. ADDL. CIT (2012) 16 ITR (TRIB) 1 (VIZAG) (SB). THOUGH IT IS A FACT THAT THIS ASPECT HAS NOT BEEN CONSIDERED BY THE AO WHILE COMPLETING THE ASSESSMENT U/S 143(3) AND CIT MAY BE CORRECT IN ASSUMING JURISDICTION U/S 263 BUT THE FACT REMAINS THAT NO D ISALLOWANCE U/S 40A(IA) CAN BE MADE IN VIEW OF THE DECISION OF ITAT SPECIAL BENCH (SUPRA). WE THEREFORE MODIFY THE ORDER OF THE CIT B Y DIRECTING THE ASSESSING OFFICER TO AGAIN VERIFY THE DETAILS OF EX PENDITURE TOWARDS TRANSPORTATION CHARGES AND VEHICLE HIRE CHA RGES CLAIMED TO HAVE BEEN PAID BY THE ASSESSEE DURING THE RELEVA NT FINANCIAL YEAR. IF IT IS FOUND THAT THE ASSESSEE PAID THE AM OUNTS DURING THE FINANCIAL YEAR THEN THE ASSESSING OFFICER SHALL ALL OW THE EXPENDITURE CLAIMED IN VIEW OF THE DECISION OF THE ITAT SPECIAL BENCH IN CASE OF MERILYN SHIPPING AND TRANSPORTS (S UPRA). THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STAT ISTICAL PURPOSE. 4 ITA NO. 701 OF 2012 M/S. RAVI CRANES & MOVERS LTD., HYD. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 21 -9-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 21 ST SEPT. 2012. COPY TO:- 1) M/S. RAVI CRANES & MOVERS LTD., 6-16/5, KUKATPAL LY X ROAD, HYDERABAD. 2) DCIT, CIR-3(1), HYDERABAD. 4) THE CIT-III, HYDERABAD 4)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERA BAD. JMR* 5 ITA NO. 701 OF 2012 M/S. RAVI CRANES & MOVERS LTD., HYD.