Dayal Roadlines, Howrah V. ITO, Ward - 56(3), Kolkata, Kolkata

ITA 705/KOL/2011

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2947 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2011
• Court: TRIBUNAL
• Assessee Lawyers: N O N E
• Section: 143(3)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . . . . . . . , /AND ! ' ! , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] # # # # / I.T.A NO. 705/KOL/2011 '$% &' '$% &' '$% &' '$% &'/ // / ASSESSMENT YEAR: 2007-08 DAYAL ROADLINES VS. INCOME-TAX OFFICER, WD-56( 3), KOLKATA (PAN: AACFD4793K) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 18.03.2013 DATE OF PRONOUNCEMENT: 18.03.2013 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: SHRI SANJAY MUKHERJEE, SR. DR - / ORDER PER BENCH: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO. 1059/CIT(A)-XXXVI/KOL/WD.-56(3)/09-10 DATED 09. 03.2011. ASSESSMENT WAS FRAMED BY I.TO, WARD-56(3), KOLKATA U/S. 143(3) OF THE INCOME -TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORD ER DATED 31.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF HIRE CHARGES BY INVOKING THE PROVIS IONS OF SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS. FOR THIS, ASSESSEE HAS RAISED FO LLOWING GROUND NO.1: 1. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE LD. CIT(A)-XXXVI WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION UNDER THE HEAD HIRE CHARGES. 3. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT FIRST ISSUE RELATES TO DISALLOWANCE OF TR UCK HIRE CHARGES ON ACCOUNT OF NON-DEDUCTION OF TDS ON THE PAYMENTS MADE. IT IS ADMITTED FACT THAT AS ADMITTED IN THE ASSESSMENT ORDER AS WELL AS IN THE ORDER OF CIT(A) THAT HIRE CHARGES ARE PAI D DURING THE YEAR WITHOUT DEDUCTING TAX. THE AOS FINDING RECORDED READS AS UNDER: 2 ITA NO.705/K/2011 DAYAL ROADLINES. AY: 2007-08 HIRE CHARGES OF RS.61,16,418/- WAS PAID WITHOUT DE DUCTING TAX. AS SUCH PAYMENT OF HIRE CHARGE IS HIT BY THE PROVISIONS OF SEC. 40(A)( IA). THEREFORE, HIRE CHARGES OF RS.61,16,418/- IS DISALLOWED U/S. 40(A)(IA) AND ADD ED BACK TO TOTAL INCOME. ONCE THE AMOUNT IS PAID DURING THE YEAR AND NOTHING REMAINS PAYABLE IN THIS CASE, THE ISSUE IS COVERED BY THE DECISION OF SPECIAL BENCH OF THIS TR IBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (VISAKHAPATNAM) (SB) REPOR TED IN (2012) 136 ITD 23 (SB), WHEREIN IT IS HELD THAT THE TDS IS TO BE DEDUCTED ONLY IN R ELATION TO PAYMENTS WHICH REMAINS PAYABLE AT THE END OF THE YEAR I.E. 31 ST MARCH OF THE RELEVANT FINANCIAL YEAR. IT IS ALSO POINTED OUT THAT THE OPERATION OF THE ORDER OF SPECIAL BENCH OF THIS TRI BUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), IS STAYED BY HONBLE ANDHRA PR ADESH HIGH COURT IN I.T.T.A.M.P. NO.908 OF 2012 IN I.T.T.A. NO.384 OF 2012, WHEREIN HONBLE HIGH COURT OBSERVED, INTERIM SUSPENSION. NOTICE. VIDE DATED 8 TH OCTOBER, 2012. 4. ON THIS, IT IS ALSO POINTED OUT THAT EFFECT OF T HE ORDER STAYING A PENDING APPEAL BEFORE ANY HIGH COURT DOES NOT AMOUNT TO ANY DECLARATION OF LA W BUT IS ONLY BINDING UPON THE PARTIES TO THAT PROCEEDINGS AND SUCH INTERIM ORDER DOES NOT DE STROY THE BINDING EFFECT OF THE PRINCIPALS AS LAID DOWN IN THE ORDER AS A PRECEDENT BECAUSE THE I NTERIM ORDER HAD NO OCCASION TO LAY DOWN ANY PROPOSITION OF LAW. FOR THIS PROPOSITION, RELI ANCE IS PLACED ON THE CASE LAW OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF PIJUSH KANTI CHO WDHURY VS. STATE OF WEST BENGAL & ORS (2007) 2 CALLT 577 DATED 14 TH MAY, 2007 WHEREIN, AT PARA 10 AND 13, IT HAS BEEN HELD AS UNDER: 10. AFTER HEARING THE LEARNED COUNSEL FOR THE PART IES AND AFTER GOING THROUGH THE AFORESAID PROVISION WE FIND THAT THE SUPREME COURT BY THOSE INTERIM ORDERS HAS NO DOUBT STAYED THE OPERATION OF THE ORDER OF THE DIVISION B ENCH OF THIS COURT BY DIRECTING THE PARTIES TO MAINTAIN STATUS QUO AND AT THE SAME TIME , EVEN RESTRAINED THE STATE FROM INDUCTING THIRD PARTIES ON THE LANDS WHICH WERE THE SUBJECT-MATTERS BEFORE THE APEX COURT. SUCH INTERIM ORDER IS BINDING UPON THE PARTI ES TO THE PROCEEDINGS BUT THE LAW IS EQUALLY SETTLED THAT BY MERE PASSING OF AN INTERIM ORDER STAYING THE OPERATION OF A JUDGMENT WITH CERTAIN FURTHER CONDITIONS, THE EXIST ENCE OF THE SAID JUDGMENT IS NOT WIPED OUT AND AT THE SAME TIME, FOR SUCH INTERIM ORDERS I NTER PARTIES, THE AUTHORITY OF A DECISION AS A PRECEDENT IS NEVER UNDERMINED. UNLESS A DECISI ON IS SET ASIDE BY THE SUPERIOR COURT, THE SAID DECISION REMAINS BINDING AS A PRECEDENT TH OUGH MAY NOT BE BINDING UPON THE PARTIES TO THE PROCEEDINGS WHERE THE SUPERIOR COURT HAS GRANTED INTERIM ORDER. MOREOVER, ONCE A PROVISION HAS BEEN DECLARED ULTRA VIRES THE CONSTITUTION OF INDIA, THE STATE CANNOT INVOKE THE SAID ULTRA VIRES PROCEEDING AGAINST THE CITIZENS OF THE COUNTRY SIMPLY BECAUSE AN INTERIM ORDER OF STAY OF OPERATIO N ORDER DECLARING THE PROVISION AS ULTRA VIRES HAS BEEN PASSED IN AN APPEAL AGAINST SU CH ORDER. THE OBJECT OF GRANTING INTERIM ORDER I TO SEE THAT THE RELIEF CLAIMED IN THE APPEAL MAY NOT BECOME INAPPROPRIATE OR THE APPEAL DOES NOT BECOME INFRUCTUOUS FOR NOT G RANTING SUCH INTERIM ORDER; BUT BY MERE GRANT OF INTERIM STAY, THE EFFECT OF A BINDING PRECEDENT IS NOT DESTABILIZED. OVER AND ABOVE, THE INTERIM ORDERS OF THE STAY GRANTED BY TH E SUPREME COURT CLEARLY INDICATE THAT 3 ITA NO.705/K/2011 DAYAL ROADLINES. AY: 2007-08 THE SAID COURT NEVER INTENDED THAT NOTWITHSTANDING THE DECISION OF THE HIGH COURT DECLARING A PART OF THE PROVISIONS OF VESTING AS UL TRA VIRES THE STATE WOULD NEVERTHELESS BE FREE TO PROCEED WITH THE PROCESS OF VESTING DURING THE PENDENCY O THE PROCEEDINGS BEFORE THE SUPREME COURT AND THAT IS WHY STATUS QUO AS REG ARDS POSSESSION HAS BEEN MAINTAINED AND EVEN, THE STATE HAS BEEN RESTRAINED FROM CREATI NG ANY THIRD PARTY INTEREST IN THE LANDS IN QUESTION. 13. THEREFORE, THE EFFECT OF THE ORDER OF STAY IN A PENDING APPEAL BEFORE THE APEX COURT DOES NOT AMOUNT TO ANY DECLARATION OF LAW BUT IS ONLY BINDING UPON THE PARTIES TO THE SAID PROCEEDINGS AND AT THE SAME TIME, SUCH INT ERIM ORDER DOES NOT DESTROY THE BINDING EFFECT OF THE JUDGMENT OF THE HIGH COURT AS A PRECEDENT BECAUSE WHILE GRANTING THE INTERIM ORDER, THE APEX COURT HAD NO OCCASION T O LAY DOWN ANY PROPOSITION OF LAW INCONSISTENT WITH THE ONE DECLARED BY THE HIGH COUR T WHICH IS IMPUGNED. 5. EVEN, HONBLE SUPREME COURT IN THE CASE SHREE CH AMUND MOPEDS LTD. VS. CHURCH OF SOUTH INDIA TRUST ASSOCIATION, MADRAS AIR 1992 SC 1439, 1444 HAS ANALYSED THE DIFFERENCE BETWEEN STAY OF OPERATION OF AN ORDER AND QUASHINGOF AN ORDER AND HELD THAT STAY OF ORDER OF AN APPELLATE AUTHORITY / COURT BY A HIGHER COU RT MEANS THAT THE ORDER PASSED BY THE APPELLATE AUTHORITY / LOWER COURT STILL CONTINUES T O EXIST IN LAW INSPITE OF THE STAY AND ITS EXISTENCE IS NOT DESTROYED. BUT WHERE THE ORDER OF THE APPELLATE / LOWER COURT IS QUASHED AND THE MATTER IS REMANDED BACK, IT MEANS THAT THE APPEAL D ISPOSED OF BY THE SAID ORDER OF THE APPELLATE AUTHORITY/LOWER COURT WOULD BE RESTORED AND IT CAN BE SAID TO BE PENDING BEFORE THE SAID AUTHORITY/LOWER COURT. 6. IN VIEW OF THE ABOVE, PARTICULARLY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PIJUSH KANTI CHOWDHURY (SUPRA), AS A LSO IN OBEDIENCE TO DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHREE CHAMUND MOPEDS L TD. (SUPRA), WE ARE OF THE VIEW THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) STILL HOLDS GROUND AND ACCORDINGLY, TDS PRO VISIONS WILL APPLY, FOR THE PURPOSE OF INVOCATION OF THE PROVISIONS OF SECTION 40(A)(IA) O F THE ACT, ONLY ON THE AMOUNTS REMAINED PAYABLE AT THE END OF FINANCIAL YEAR AND NOT ON THE PAID AMOUNTS. HENCE, WE DIRECT THE AO TO RECOMPUTE THE DISALLOWANCE ACCORDINGLY. APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING 2% OF FUEL AND LUBRICANT EXPENSES AS AGAINST THE DISAL LOWANCE MADE BY AO AT 3%. THE AO MADE DISALLOWANCE ON AD HOC BASIS AT RS.5,87,032/- ON A CCOUNT OF FUEL AND LUBRICANT EXPENSES I.E. 3% OF TOTAL FUEL CHARGES. THE CIT(A) RESTRICTED TH E DISALLOWANCE AT 2% WHICH IS AGAIN AD HOC DISALLOWANCE. AS THE ASSESSEE HAS CLAIMED THESE EX PENSES ON SELF DRAWN VOUCHERS AND NO 4 ITA NO.705/K/2011 DAYAL ROADLINES. AY: 2007-08 BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO, WE A RE OF THE VIEW THAT A REASONABLE DISALLOWANCE OF 1% WILL MEET THE END OF JUSTICE. W E DIRECT ACCORDINGLY. THEREFORE, THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . . . . . . . , ! ! ! ! ' ! ' ! ' ! ' ! , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 18TH MARCH, 2013 /0 '$12 '3 JD.(SR.P.S.) 5 ITA NO.705/K/2011 DAYAL ROADLINES. AY: 2007-08 - 4 +''5 65&7- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DAYAL ROADLINES, 35, JAGAT BANERJEE GHA T ROAD, SHIBPUR, HOWRAH-711102. 2 +,)* / RESPONDENT ITO, WARD-56(3), KOLKATA. 3 . '-$ ( )/ THE CIT(A), KOLKATA 4. 5. '-$ / CIT KOLKATA 5<'= +'$ / DR, KOLKATA BENCHES, KOLKATA ,5 +'/ TRUE COPY, -$>/ BY ORDER, ! 2 /ASSTT. REGISTRAR .