ACIT, CHENNAI V. Sathya Tours & Travels, CHENNAI

ITA 706/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68640 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 08-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: R VISWANATHAN
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 ( IN ITA NO. 706/MDS/2013 ) ASSESSMENT YEAR 2008-09 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-V, ANNEXE BUILDING, 6 TH FLOOR, 121, NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034 VS M/S. SATHYA TOURS & TRAVELS, NO. 3/2, JEENIS ROAD, SAIDAPET, CHENNAI-600 015. [PAN: ABGFS 1923 B] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) REVENUE BY : SHRI GURU BHASHYAM, JCIT ASSESSEE BY : SHRI R. VISWANATHAN, C.A., DATE OF HEARING : 08-08-2013 DATE OF PRONOUNCEMENT : 08-08-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VIII, CH ENNAI DATED I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 :- 2 -: 14-12-2012 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 8-09. THE ASSESSEE HAS FILED CROSS-OBJECTIONS IN SUPPORT OF T HE ORDER OF THE CIT(APPEALS). 2. THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON T HE BUSINESS OF GIVING ON HIRE MOTOR VEHICLES. THE ASSESSEE FIL ED ITS RETURN OF INCOME FOR THE AY. 2008-09 ON 24-10-2008 DECLARING ITS TOTAL INCOME AS ` 5,32,690/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE INCOME T AX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 19-08-2009. THE ASSESSING OFFICER VIDE ASSESSME NT ORDER DATED 08-12-2010, MADE ADDITIONS IN THE INCOME RETU RNED BY THE ASSESSEE ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOUR CE U/S. 194C ON THE PAYMENT OF BROKERAGE AND COMMISSION ` 1,28,550/- AND PAYMENT OF HIRE CHARGES ` 49,02,337/-. AGGRIEVED AGAINST THE ASSESSMENT ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE C IT(APPEALS) VIDE ORDER DATED 14-12-2012, DELETED THE DIS-ALLOWA NCE OF ` 49,02,337/- ON ACCOUNT OF VEHICLE HIRE CHARGES. N OW, THE REVENUE HAS COME IN APPEAL BEFORE US ASSAILING THE ORDER OF THE I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 :- 3 -: CIT(APPEALS) WHEREBY HE HAS DELETED THE DIS-ALLOWAN CE MADE U/S. 40(A)(IA) IN RESPECT OF PAYMENT OF VEHICLE HIR E CHARGES WITHOUT DEDUCTING TAX AT SOURCE. 3. SHRI GURU BHASHYAM, APPEARING ON BEHALF OF THE R EVENUE SUBMITTED THAT THE CIT(APPEALS) HAS ERRED IN COMING TO THE CONCLUSION THAT THE WORD PAYABLE USED IN SECTION 40(A)(IA) MEANS OUTSTANDING AND THE AMOUNT OF DIS-ALLOWANCE S HOULD BE RESTRICTED TO AMOUNTS SHOWN BY THE ASSESSEE AS OUT STANDING. THE LD. DR SUBMITTED THAT THE DISTINCTION CREATED B Y THE ORDER OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., VS. ACIT REPORTED AS 136 ITD 23 (SB) HAS BEEN OVER-RULED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARKHAN N.TUNVAR & ORS. REPORTED AS 87 DTR (GUJ) 137 AND BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE DECIDED ON 03-04-2013. 4. ON THE OTHER HAND, SHRI R. VISWANATHAN, C.A., AP PEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(APPEALS) AND PRAYED THAT THE HONBLE ALLAHABAD HIGH COURT I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 :- 4 -: IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES P. LTD., HAS APPROVED THE DECISION OF THE TRIBUNAL IN THE CASE O F MERILYN SHIPPING AND TRANSPORT LTD., (SUPRA). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY GROUND RAISED BY T HE REVENUE BEFORE US IS THE DIS-ALLOWANCE MADE U/S. 40(A)(IA) IN RESPECT OF PAYMENT OF VEHICLE HIRE CHARGES WITHOUT DEDUCTING T AX AT SOURCE. THE CIT(APPEALS) HAS DELETED THE DIS-ALLOWANCE ON T HE GROUND THAT OUT OF TOTAL HIRE CHARGES OF ` 49,02,337/-, ` 16,06,243/- RELATES TO THE PAYMENTS WHERE THE AMOUNT PAID IS LESS THAN THE AMOUNT PRESCRIBED FOR DEDUCTION OF TAX AT SOURCES AND THUS THE PROVISIONS OF SECTION 194C WERE NOT ATTRACTED. AS REGARDS THE REMAINING AMOUNT OF ` 32,96,094/- IS CONCERNED, THE ENTIRE AMOUNT HAS BEE N PAID AND THERE IS NO OUTSTANDING BALANCE PAYABLE. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE ENTIRE MATTER BOILS DOWN TO PAID OR PAYABLE ISSUE. THE CONCEPT OF PAID OR PAYABLE WAS DEALT WITH IN DETAIL BY THE SPECIAL BENCH OF THE TR IBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., (SUPRA). THE I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 :- 5 -: TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT ARE APPLICABLE ONLY TO THE AMOUNTS OF EXPENDITURE WHICH ARE PAYABLE AS ON 31 ST MARCH EVERY YEAR AND IT CANNOT BE INVOKED TO DISAL LOW WHICH HAD BEEN ACTUALLY PAID DURING THE PREVIOUS YE AR, WITHOUT DEDUCTION OF TDS. THE LD. DR HAS RELIED ON THE JUD GEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIKANDARKHAN N.TUNVAR & ORS. (SUPRA) AND THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CRESCENT EXPORT SYNDICATE (SUPRA), WHEREIN THE HONBLE HIGH COURTS HAVE DIS-APPROVED T HE DECISION OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT LTD., (SUPRA). WHEREAS THE LD. AR FOR THE ASSESSEE HAS R ELIED ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S. VECTOR SHIPPING SERVICES P. LTD., (SUPRA) WHEREIN THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL HAS BEEN APPROVED. 6. BOTH THE SIDES HAVE SUBMITTED THAT TO THEIR KNOW LEDGE THERE IS NO DECISION OF THE HONBLE JURISDICTIONAL HIGH C OURT ON THIS ISSUE. WHEN TWO DIFFERENT DECISIONS OF THE DIFFERE NT JURISDICTIONAL HIGH COURTS ON THE ISSUE ARE AVAILABLE, THE DECISIO N IN FAVOUR OF THE ASSESSEE HAS TO BE FOLLOWED. THE HONBLE SUPRE ME COURT OF I.T.A. NO. 706/MDS/2013 & C.O. NO. 91/MDS/2013 :- 6 -: INDIA IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., REPORTED AS 88 ITR 192 (SC) HAS HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION W HICH FAVOURS THE ASSESSEE MUST BE ADOPTED . THIS IS A WELL ACCEPTED RULE OF CONSTRUCTION RECOGNIZED BY THIS COURT IN SEVERAL OF ITS DECISIONS. 7. IN THE PRESENT CASE, THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S. VECTOR SHIPPING SERVICES P. LTD., (SUPRA) IS IN FAVOUR OF THE ASSESSEE. WE RESPECTFU LLY FOLLOWING THE SAME, DISMISS THE APPEAL OF THE REVENUE AND CONFIRM THE FINDINGS OF THE CIT(APPEALS). 8. SINCE THE APPEAL OF THE REVENUE IS DISMISSED, TH E CROSS- OBJECTIONS HAVE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED AS SUCH. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 8 TH AUGUST, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 8 TH AUGUST, 2013 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR