The ITO,TDS, Valsad V. M/s. Metro Motors, Navsari

ITA 72/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2095 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

I.T.A. NO.: 72/AHD/2013 ASSESSMENT YEAR: 2008-09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD B BENCH, AHMEDABAD [CORAM: SHRI PRAMOD KUMAR AM AND SHRI KUL BHARAT JM ] I.T.A. NO. 72/AHD/2013 & C.O. NO.84/AHD/2013 [ASSESSMENT YEAR: 2008-09] INCOME TAX OFFICER [TDS], VALSAD ..APPELLANT VS. M/S. METRO MOTORS RESPONDENT ADARSH NAGAR SOCIETY, KABILPORE ROAD, KALIAWADI, NAVSARI [PAN AAEFM2430N] APPEARANCES BY: Y P VERMA, FOR THE APPELLANT DATE OF CONCLUDING THE HEARING : MAY 01, 2013 DATE OF PRONOUNCING THE ORDER : MAY 10, 2013 ORDER PER PRAMOD KUMAR: 1. THE SHORT SCENE THAT WE ARE REQUIRED TO ADJUDICATE IN THIS APPEAL IS WHETHER OR NOT LEARNED CIT(A) WAS JUSTIFI ED IN DELETING THE IMPUGNED TAX WITHHOLDING DEMAND UNDER SECTION 201 READ WITH SECTION 194 C OF THE INCOME TAX ACT, 1961, IN RESPECT OF ELEMENT OF FREIGHT CHARGES IN THE PURCHA SE PRICE OF VEHICLES. THE ASSESSMENT YEAR INVOLVED IS 2008-09 A ND THE I.T.A. NO.: 72/AHD/2013 ASSESSMENT YEAR: 2008-09 PAGE 2 OF 5 IMPUGNED ORDER WAS PASSED BY THE LEARNED CIT(A) ON 24 TH SEPTEMBER, 2012. 2. THE MATERIAL FACTS ARE NOT IN DISPUTE. THE ASSESSEE BEFORE US IS A DEALER OF HERO HONDA MOTORS LTD. AND DEALS IN TWO WHEELERS. THE ASSESSEE PURCHASES THE VEHICLES FROM HERO HONDA LTD. ON CIF BASIS BUT THE TRANSPORT CHARGES O F RS.543/- PER VEHICLE WAS COMPUTED BY THE ASSESSEE AND THE AS SESSEE HAS, IN SOME CASES, PAID THE SAID AMOUNT TO TRANSPO RTER AS THE FREIGHT WAS ON TO PAY BASIS. ON THESE FACTS, AND EVEN WITHOUT CATEGORICAL FINDING TO THE EFFECT THAT TRAN SPORT CHARGES ARE SEPARATELY STATED IN THE INVOICE ITSELF, THE AS SESSING OFFICER WAS OF THE VIEW THAT SINCE ASSESSEE HAS PAI D FREIGHT CHARGES TO HERO HONDA MOTORS LTD., THE ASSESSEE OUG HT TO HAVE DEDUCTED AT SOURCE FROM THE SAME. THE ASSESSEE S PLEA THAT THESE PAYMENTS TO TRANSPORTERS ARE REIMBURSED BY HERO HONDA MOTORS LTD. AND THE TAX IS DULY DEDUCTED AT S OURCE BY HERO HONDA MOTORS LTD. WAS SIMPLY BRUSHED ASIDE. TH E ASSESSING OFFICER PROCEEDED TO HOLD THAT THE ASSESS EE OUGHT TO HAVE DEDUCTED AT SOURCE FROM THESE PAYMENTS UNDER S ECTION 194C. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE CIT(A) ALSO REVERSED THE ACTION OF THE ASSESSIN G OFFICER AND OBSERVED AS FOLLOWS:- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE AO OBSERVE D THAT SINCE THE ASSESSEE PAID TRANSPORTATION CHARGES TO THE TUNE OF RS. 31,49,521/- TO HERO HONDA MOTORS PV T. LTD. FOR DELIVERY OF THE VEHICLES, THE TDS PROVISIO NS I.T.A. NO.: 72/AHD/2013 ASSESSMENT YEAR: 2008-09 PAGE 3 OF 5 ARE CLEARLY APPLICATION. BECAUSE THE APPELLANT HAD NOT DEDUCTED TDS ON PAYMENT TO HERO HONDA MOTORS, THE ENTIRE AMOUNT WAS LIABLE FOR DEDUCTION OF TDS U/S. 194C OF THE ACT. ON THE OTHER HAND, THE LAR CONTENDED THAT THE TRANSPORTATION CHARGE WAS INCLUS IVE OF THE PURCHASE PRICE OF THE VEHICLES AND THE ENTIR E TRANSPORTATION CHARGE WAS MET BY HERO HONDA COMPANY AND WHILE DOING SO, THE SAID COMPANY HAD DEDUCTED THE TDS ON THE TRANSPORTATION CHARGE. THE LAR ALSO FURNISHED A LETTER FROM HERO HONDA COMPANY WHEREIN IT WAS STATED THAT THE TRANSPORTATI ON CHARGE WAS PAID ON BEHALF OF THE DEALERS/STOCKISTS/SERVICE POINTS AND TDS DULY DEDUCTED HAS BEEN DEPOSITED IN THE CENTRAL GOVT. A/ C. THEREFORE, WHAT THE APPELLANT PAID TO HERO HONDA COMPANY WAS RE-IMBURSEMENT AND TDS PROVISIONS ON SUCH REIMBURSEMENT IS NOT APPLICABLE. IF THE TDS MA DE ON THE RE-IMBURSEMENT AMOUNT PAID TO HERO HONDA COMPANY, DEFINITELY THAT AMOUNT TO DOUBLE DEDUCTION , WHICH IS NOT PERMISSIBLE UNDER THE ACT. IN VIEW OF THIS, I AM CONSTRAINED TO AGREE WITH THE CONTENTION OF THE LAR THAT THE SUPPLIER HERO HONDA COMPANY HAS PAID THE TRANSPORTATION CHARGE ON BEHALF OF THE DEA LERS AND TDS HAS BEEN MADE AND DULY CREDITED INTO THE A/C. OF THE CENTRAL GOVT. THE PAYMENT TO HERO HONDA COMPANY IS ONLY THE RE-IMBURSEMENT AND TDS PROVISIONS ARE NOT APPLICABLE ON SUCH RE-IMBURSEMEN T. THUS, THE AO IS DIRECTED TO DELETE THE DEMAND RAISE D IN RESPECT OF TAX AND INTEREST CHARGED U/S. 194C OF TH E ACT FOR TRANSPORTATION CHARGES. THE GROUND RAISED H ERE IS ALLOWED. IN THE RESULT, THE APPELLANTS APPEAL IS ALLOWED. 3. AGGRIEVED BY THE RELIEF SO GRANTED BY THE CIT(A), T HE ASSESSEE IS IN APPEAL BEFORE US. I.T.A. NO.: 72/AHD/2013 ASSESSMENT YEAR: 2008-09 PAGE 4 OF 5 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MA TERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT, AS CATEGORICALLY HELD BY LEARNE D CIT(A), THE ASSESSEE HAS MADE PAYMENTS TO HERO HONDA MOTORS LTD. TOWARDS PURCHASE PRICE OF VEHICLES AND IT INCLUDES THE ELEMENT OF FREIGHT CHARGES BORNE BY HERO HONDA MOTORS LTD. IT IS ALSO NOT IN DISPUTE THAT HERO HONDA MOTORS LTD., WHILE S ETTLING ACCOUNTS WITH TRANSPORTERS HAVE DULY DEDUCTED TAX A T SOURCE. THESE FACTUAL FINDINGS REMAIN UNCONTROVERTED BEFORE US. IN THIS FACTUAL BACKDROP THE MERE FACT THAT IN SOME CA SES THE ASSESSEE HAS PAID FREIGHT IN TO PAY BASIS, WHICH IS SUBSEQUENTLY REIMBURSED BY HERO HONDA MOTORS LTD. C ANNOT LEAD TO THE CONCLUSION THAT ASSESSEE HAS MADE PAYME NT FOR FREIGHT CHARGES IN HIS OWN RIGHT, AND, UNLESS THAT HAPPENS, PROVISIONS OF SECTION 194-C DO NOT COME INTO PLAY. IN ANY CASES, TAXES ARE DULY DEDUCTED AT SOURCE BY HERO HO NDA MOTORS LTD. AND THERE IS NO LOSS TO THE REVENUE. KE EPING IN VIEW ALL THESE FACTORS, AS ALSO ENTIRETY OF THE CAS E, WE APPROVE THE WELL REASONED CONCLUSIONS ARRIVED AT BY LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. THE APPEAL FAILS. 6. THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION BUT, AS LEARNED COUNSEL FAIRLY AGREES , IT DOES NOT HAVE ANY GROUNDS REQUIRING ADJUDICATION ON MERITS. ACCORDINGLY, IT IS DISMISSE D AS INFRUCTUOUS. I.T.A. NO.: 72/AHD/2013 ASSESSMENT YEAR: 2008-09 PAGE 5 OF 5 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS ALSO CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. IT WAS SO PRONOUNCED IN THE OPEN COURT IMMEDIATELY UPON CONCLUSION OF HEARING. SD/- SD/- KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER ) AHMEDABAD, THE 10TH DAY OF MAY, 2013 TRUE COPY COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD