The ITO, Ward-4(2), Baroda V. M/s. Prashant Hydrocarbons Pvt.Ltd., Baroda

ITA 744/AHD/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6867 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K VOHRA
• Section: 194C

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND B.P. JAIN, AM. INCOME-TAX OFFICER, WARD 4(2), BARODA. VS. PRASHANT HYDROCARBON (P) LTD., 906, GIDC RANOLL, BARODA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI R. K. VOHRA, DR RESPONDENT BY:- NONE DATE OF HEARING :7/12/2011 DATE OF PRONOUNCEMENT : 9/12/11. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 4.12.2008 RAISING FOLLOWING GROUND :- (1) THE CIT(A) ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS.21,80,960/- FOR DISALLOWANCE OF FREIGHT PAYMENT U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961, IGNORING THE FACT THAT THE ASSESSEE PAID FREIGHT ON A SINGLE DAY TO A SINGLE PERSON. MO REOVER THE CIT(A) ERRED IN INTERPRETING CIRCULAR NO.175 DTD.8. 8.1995. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE FACT THAT NOTICE WAS SERVED THROUGH THE LD. DR. THEREFORE, WE PROCEE D TO DECIDE THE APPEAL AFTER HEARING THE LD. DR AND PERUSING THE RE CORD. ITA NO.744/AHD/2009 ASST. YEAR :2005-06 ITA NO.744/AHD/2009 ASST. YEAR 2005-06 2 3. BRIEF FACTS OF THE CASE ARE THAT THE AO DURING T HE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE WAS E NGAGED IN THE BUSINESS OF TRANSPORTATION OF PETROLEUM PRODUCT AND AS PER PROVISIONS OF SECTION 194C IT WAS REQUIRED TO DEDUCT TAX AT SOURC E FROM THE PAYMENT PAYABLE TO SUB-CONTRACTORS. SINCE NO SUCH DEDUCTION OF TAX WAS MADE IN RESPECT OF RS.21,80,960/- DEDUCTION WAS NOT ALLOWED BY THE AO FOR THIS AMOUNT AS PER PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT. 4. IN APPEAL, LD. CIT(A) DELETED THE ADDITION BY OB SERVING AS UNDER :- 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNS EL AND FACTS OF THE CASE. THE AO MADE TWO DISALLOWANCES. FIRST DISALLOW ANCE RS.21,80,960/- ON WHICH NO TDS WAS DEDUCTED. THE APPELLANT SUBMITT ED DETAILED REASONS THAT PRIOR TO 1.10.2004 IT WAS NOT LIABLE TO DEDUCT TDS ON TRANSPORT CHARGES LESS THAN RS.20,000/- PER TRIP. WHEREVER TH E AMOUNT WAS MORE THAN RS.20,000/- PER TRIP TDS WAS DEDUCTED. THE APP ELLANT RELIED UPON CIRCULAR NO.715 IN WHICH EACH LORRY RECEIPT IS CONS IDERED TO BE A CONTRACT UNLESS THE CONTRACT IS FOR SPECIFIC PERIOD OR QUANT ITY. SINCE THE APPELLANT HIRED TRUCKS NOT FOR A SPECIFIC PERIOD OR QUANTITY OF GOODS, EACH TRIP OF THE APPELLANT IS A CONTRACT AND ACCORDINGLY WHEREVER TH E FREIGHT FOR EACH TRIP IS RS.20,000/- OR LESS, THAN THE ASSESSEE IS NOT LI ABLE TO DEDUCT TDS. PAYMENT IS NOT RELEVANT AS PER THIS CIRCULAR. IF CO NSOLIDATED PAYMENT OF FEW TRIPS ARE MADE WHICH EXCEEDS RS.20,000/- STILL THE LIABILITY TO DEDUCT TAX WILL NOT BE THERE, SINCE EACH GR WILL BE LESS R S.20,000/-. THE CIT(A)- VI, BARODA BY HIS ORDER DATED 5.2.2007 IN THE CASE OF THE APPELLANT IN ASST. YEAR 2003-04 HELD THAT SINCE THERE IS NO SPEC IFIC CONTRACT, THE AO IS NOT JUSTIFIED IN CLUBBING ALL SUB-CONTRACT RECEIPTS . SINCE NONE OF THE GR EXCEEDED RS.20,000/- WHERE TDS WAS NOT DEDUCTED, TH ERE WAS NO LIABILITY U/S 194C TILL 30.9.2004. PAYMENT EXCEEDING RS.20,00 0/- IS NOT RELEVANT SINCE WHAT IS MENTIONED IN SECTION 194C (3) IS A CO NTRACT AMOUNT EXCEEDING RS.20,000/-. CONTRACT AMOUNT IN THE CASE OF TRANSPORTER IS THE FREIGHT FOR EACH TRIP IN VIEW OF CBDT, CIRCULAR NO. 715. THEREFORE THERE WAS NO LIABILITY TO DEDUCT TDS. ACCORDINGLY, THE AD DITION MADE BY THE AO U/S 40(A)(IA) OF RS.21,80,960/- IS DELETED. ITA NO.744/AHD/2009 ASST. YEAR 2005-06 3 AS REGARDS, OTHER ADDITION OF RS.8,10,432/- THE AP PELLANT DEDUCTED TDS AND DEPOSITED THE SAME IN JULY, 2005. AS PER TH E AMENDED PROVISIONS, THE PAYMENT/CREDIT IN RESPECT OF MARCH IS NOT TO BE DISALLOWED IF TDS IS DEPOSITED BEFORE DUE DATE OF FILING OF RE TURN. THE AO IS THEREFORE DIRECTED TO VERIFY WHETHER RS.8,10,432/- RELATES TO MARCH, 2005. IF THE SAME WERE OF MARCH 2005, THEN NO DISALLOWANCE CAN B E MADE U/S 40(A)(IA) SINCE TAX IS DEPOSITED BEFORE DUE DATE OF FILING OF RETURN. IF THE EXPENSE IS OF EARLIER MONTHS, THE SAME IS NOT ALLOW ABLE SINCE THE TAX WAS NOT DEPOSITED WITHIN PRESCRIBED TIME. THE AO WILL P ROVIDE NECESSARY RELIEF AFTER VERIFICATION. 5. AFTER HEARING THE LD. DR AND GOING THROUGH THE C IRCULAR NO.715, DATED 8.8.1995, WHICH CLARIFIED VARIOUS PROVISIONS RELATING TO TAX DEDUCTED AT SOURCE, WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL HAS BEEN CLARIFIED BY THE CBDT AS UNDER :- QUESTION NO.9 IN CASE OF PAYMENTS TO TRANSPORTERS, CAN EACH GR BE SAID TO BE A SEPARATE CONTRACT, EVEN THOUGH PAYMENTS FOR SEVERAL GRS ARE MADE UNDER ONE BILL ? ANSWER : NORMALLY, EACH GR CAN BE SAID TO BE A SEPARATE C ONTRACT, IF THE GOODS ARE TRANSPORTED AT ONE TIME. BUT IF THE GOODS ARE TRANS PORTED CONTINUOUSLY IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD OR QUANTITY, EACH GR WILL NOT BE A SEPARATE CONTRACT AND ALL GRS RELATING TO THAT PERIOD OR QUANTITY WIL L BE AGGREGATED FOR THE PURPOSE OF THE TDS. SINCE IN THE CASE IN HAND, THERE IS NO FINDING OF T HE AO THAT GOODS WERE TRANSPORTED CONTINUOUSLY IN PURSUANCE OF A CONTRACT FOR A SPECIFIC PERIOD OR QUANTITY, EACH GR WILL BE CONSIDERED A SEPARATE CONTRACT. THE LD. CIT(A)S ORDER IS IN CONFORMITY WITH THIS CLARIFICA TION ON THE ISSUE, THEREFORE, NO INTERFERENCE IN HIS ORDER IS REQUIRED AND THE SAME IS HEREBY UPHELD. ITA NO.744/AHD/2009 ASST. YEAR 2005-06 4 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 9/12/11. SD/- SD/- (B.P. JAIN) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 7/12/2011. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER .OTHER MEMBER 7/12/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..