ACIT CIR 13(3), MUMBAI V. BAFNA TRANSPORT INDIA, MUMBAI

ITA 7848/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71103 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: N C KHANDELWAL
• Keywords: Capital expenditure
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SRI H.L. KARWA, PRESIDENT, AND SHRI N.K.BILL AIYA, AM ./ I.T.A. NO. 7848/MUM/2010 ( / ASSESSMENT YEAR : 2007-08) ACIT CIR13(3), ROOM NO.430, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, NEW MARINE LINES MUMBAI-400020 / VS. M/S. BAFNA TRANSPORT INDIA, 53, SARDAR VALLABHAI PATEL ROAD, OPP. DONGRI PETROL PUMP, DONGRI, MUMBAI-400009 !' $ ./ PAN : AAAFB1199D ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( ) / APPELLANT BY : SRI SURENDRA KUMAR &''% ( ) / RESPONDENT BY : SHRI N.C.KHANDELWAL ( *$ / DATE OF HEARING : 10-09-2013 +, ( *$ / DATE OF PRONOUNCEMENT : 10 -09-2013 -. / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-24, MUMBAI, DATED 31.08.2010, PERTAINING TO A.Y. 2007-08. REVENUE HAS RAISED FIVE SUSTENTATIVE GROUND OF APPE AL 2. GROUND NO.1 RELATES TO THE DELETION OF THE DISA LLOWANCE OF RS.1,61,97,954/- MADE U/S 40(A)(IA) OF THE ACT, BY THE AO ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194C OF THE ACT. 3. THIS ISSUE HAS BEEN DISCUSSED BY THE AO AT PARA 10 ON PAGE 5 OF HIS ORDER. DURING THE COURSE OF THE SCRUTINY ASSES SMENT PROCEEDING THE AO OBSERVED THAT THE ASSESSE HAS NOT DEDUCTED TDS O N THE FREIGHT 2 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA COLLECTION TRANSFERRED/PAID BY ASSESSEE FIRM TO ITS SISTER CONCERN. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PAYMEN TS MADE TO SISTER CONCERNS AND THE TDS ON THE SAME. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN IF TDS IS NOT MADE THEN WHY THE AMOUNT SHOU LD NOT BE DISALLOWED. 4. ASSESSEE FILED A DETAILED REPLY EXPLAINING THAT IT HAS MADE PAYMENTS TO SISTER CONCERN FOR CARRYING GOODS FOR C LIENTS. IT WAS EXPLAINED THAT THE ASSESSEE HAS ONLY CLAIMED DEL-C REDERE COMMISSION ON THE FREIGHT PAID TO ITS SISTER CONCERNS THEREFOR E PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. AS THE ASSESSEE HAS NOT C LAIMED THE PAYMENTS TO THE SISTER CONCERN AS EXPENDITURE ON THE CONTRAR Y, THE ASSESSEE CLAIMED THAT IT HAS SHOWN COMMISSION INCOME OUT OF SUCH TRANSACTIONS. 5. THE SUBMISSIONS MADE BY THE ASSESSEE DID NOT FIN D ANY FAVOUR FROM THE AO WHO WENT ON TO DISALLOW THE SUM OF RS.1 ,61,97,954/- U/S 40A(IA) OF THE ACT. 6. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A), A ND EXPLAINED THE NATURE OF TRANSACTION WITH ITS SISTER CONCERNS. IT WAS EXPLAINED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS TRANSPORTATION AND TRANSPORT AGENT FOR MORE THAN LAST 40 YEARS. THE ASSESSEE ONCE AGA IN SUBMITTED THAT IT IS A DEL-CREDERE AGENT OF THE SISTER CONCERN AND THAT THE FREIGHT COLLECTED AND PAID TO ITS SISTER CONCERNS IS NOT ITS EXPENDIT URE AND THAT ONLY THE COMMISSION EARNED ON THE FREIGHT PAID TO ITS SISTER CONCERNS IS ITS INCOME. IT WAS ALSO EXPLAINED THAT A SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 1984-85, WHEREIN THE IS SUE WAS DECIDED IN THE FAVOUR OF THE ASSESSEE AND THE APPEAL FILED BY THE DEPARTMENT WAS DISMISSED BY THE HONBLE BOMBAY HIGH COURT. 3 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA 7. AFTER CONSIDERING THE FACTS AND SUBMISSIONS OF T HE ASSESSEE, THE CIT(A) DISCUSSED THE ISSUE AT LENGTH AT PARA 2.2 ON PAGE 8 OF HIS ORDER AND AFTER CONSIDERING THE PAST HISTORY OF THE ASSES SEE AND FURTHER RELYING UPON THE DECISION OF THE TRIBUNAL VISHAKHAPATNAM BE NCH IN THE CASE MYTHRI TRANSPORT CORPORATION 124 TTJ 970, THE CIT(A ) DELETED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED BY THIS REV ENUE IS BEFORE US. THE LD. DR SUPPORTED THE FINDING OF THE AO. THE LD . COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES, WE FIND THAT THE AO HAS GROSSLY ERRED IN NOT UNDERSTAN DING THE TRANSACTION IN ITS RIGHT PERSPECTIVE. THE CIT(A) HAS VERY CATE GORICALLY GIVEN A FINDING THAT THE ASSESSEE IS A DEL-CREDERE AGENT AND THEREF ORE IS RIGHTLY SHOWING COMMISSION INCOME OUT OF THIS TRANSACTION. WE ALSO FIND THAT THE FINDINGS OF THE CIT(A) ARE BASED ON THE PAST HISTOR Y OF THE ASSESSEE WHEREIN HE HAS FOLLOWED THE EARLIER ORDER OF THE TR IBUNAL. CONSIDERING ALL THESE FACTS IN TOTALITY, WE DO NOT FIND ANY REASON TO INTERFERE WITH FINDINGS OF THE CIT(A). GROUND NO.1 IS ACCORDINGLY DISMISSE D. 9. GROUND NO.2 RELATES TO THE RESTRICTION OF TH E DISALLOWANCE OF RS.7,78,897/- TO 5% OUT OF HAMALI CHARGES. THE AO HAS DISCUSSED THIS ADDITION AT PARA 6 ON PAGE 2 OF HIS ORDER. THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.15,57,794/- TO WARDS HAMALI CHARGES. ASSESSEE WAS ASKED TO SUBMIT THE TRUCK WI SE DETAILS OF HAMALI CHARGES. THE ASSESSEE EXPLAINED THAT FOR LOADING A ND UNLOADING OF GOODS AT CUSTOMERS PREMISES, ASSESSEE HAS TAKEN THE HELP OF OUTSIDE OF HAMAL. THE AO OBSERVED THAT THE EXPENSES ARE MERELY SUPPOR TED BY ONLY SELF MADE VOUCHERS AND NO THIRD PARTY EVIDENCE IS AVAILA BLE. THE AO WENT ON TO DISALLOW 50% OF THE EXPENDITURE AND MADE AN ADDIT ION OF RS.7,78,897. 4 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA THE ASSESSEE STRONGLY AGITATED THIS ISSUE BEFORE TH E CIT(A) AND EXPLAINED THAT ALL THE DETAILS WERE PROVIDED BY THE ASSESSEE TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING. IT WAS EXPLAINED THAT THE ASSESSEE HAS TO INCUR HAMALI EXPENSES FOR LOADING AND UNLOADING OF ITS GOODS THAT ARE TRANSPORTED BY IT. 10. AFTER CONSIDERING THE FACTS AND SUBMISSIONS M ADE BY THE ASSESSEE, THE CIT(A) WAS OF THE OPINION THAT THE DI SALLOWANCE MADE BY THE AO IS EXCESSIVE AND DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO 5%. AGGRIEVED BY THIS REVENUE IS BEFORE US. 11. THE LD. DR SUPPORTED THE ASSESSMENT ORDER, COUN SEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 12. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE LOWER AUTHORITIES, IT IS NOT IN DISPUTE THAT IN THE LINE ON TRANSPORTATIO N BUSINESS, THE TRANSPORTER NEEDS THE HELP OF HAMAL FOR LOADING AND UNLOADING OF ITS GOODS. THIS FACT HAS NOT BEEN DENIED BY THE AO, IT IS ALSO NOT IN DISPUTE THAT PAYMENT MADE TO HAMALIS ARE SUPPORTED BY INTER NAL VOUCHERS, BECAUSE LABOURS DONT ISSUE BILLS/CASH RECEIPTS. C ONSIDERING ALL THESE FACTS IN THE LIGHT OF THE NATURE OF THE BUSINESS OF THE ASSESSEE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF T HE CIT(A). GROUND NO.2 IS ACCORDINGLY DISMISSED. 13. GROUND NO.3 RELATES TO DELETION OF THE ADDITION OF RS.4,80,742/- ON ACCOUNT OF PAYMENT OF INSURANCE AND RTO TAX. THE A O HAS DISALLOWED THESE EXPENSES TREATING THEM AS CAPITAL EXPENDITURE . BEFORE THE CIT(A), ASSESSEE CLAIMED THAT THESE EXPENSES WERE INCURRED ON OLD TRUCKS. BEING CONVINCED BY THE SUBMISSIONS, THE CIT(A) DELETED TH E ADDITIONS. 5 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA 14. BEFORE US, THE LD. DR COULD NOT BRING ANY EVIDE NCE TO CONTROVERT THE FINDING OF THE CIT(A). THEREFORE, WE DO NOT FIND A NY REASON TO DISTURB THE FINDINGS OF THE CIT(A). GROUND NO. 3 IS ACCORDINGL Y DISMISSED. 15. GROUND NO. 4 RELATES TO RESTRICTING THE DISALLO WANCE OF RS.21,40,485/- 1/3 RD TO 5% OF TRIP EXPENSES. THE AO HAS DISCUSSED THIS ISSUE AT PARA 8 ON PAGE 3 OF ITS ORDER. THE AO FOU ND THAT THE ASSESSEE HAS DEBITED TRIP EXPENSES AT RS.64,21,456/-. THE A SSESSEE WAS ASKED TO FILE DETAILS OF TRIP EXPENSES, IT WAS EXPLAINED THA T TRUCK TRIP REPORT (TTR) ARE SIGNED BY THE DRIVER AND SUBMITTED TO THE ASSES SEE TOWARDS THE CLAIM FOR EXPENSES. SAMPLE TRUCK TRIP REPORTS WERE SUBMI TTED FOR EXAMINATION. AFTER CONSIDERING THE SUBMISSIONS AN D THE DETAILS FILED BY THE ASSESSEE, THE AO DISALLOWED 1/3 RD OF THE EXPENDITURE. WHEN THE MATTER WAS AGITATED BEFORE THE CIT(A), IT WAS EXPLA INED THAT WHEN THE TRUCKS ARE IN TRANSIT SOMETIMES THE DIESEL EXPENSES ARE BORNE BY THE DRIVER AND ALSO OTHER RELATED MISCELLANEOUS EXPENSE S WHEN THE DRIVER RETURN FROM THE TRIP. HE SUBMITS TTR AND ON THE BA SIS OF TTR , THE ASSESSEE DEBTS THE EXPENSES IN ITS BOOKS. THE CIT( A) CAREFULLY CONSIDERED THE SUBMISSIONS AND RESTRICTED THE DISAL LOWANCE TO 5%. 16. BEFORE US, THE LD. DR COULD NOT BRING ANY NEW C OGENT MATERIAL WHICH COULD JUSTIFY 1/3 RD DISALLOWANCE MADE BY THE AO. 17. WE THEREFORE, DO NOT FIND ANY REASON TO INTERFE RE WITH THE FINDINGS OF THE CIT(A). GROUND NO.4 IS ACCORDINGLY DISMISSE D. 18. GROUND NO.5 RELATES TO THE DELETION OF THE DISA LLOWANCE OF RS.14,03,070/- ADDED BY THE AO. THIS ISSUE HAS BEE N CONSIDERED BY THE AO AT PARA 9 OF ITS ORDER. THE AO FOUND THAT THE A SSESSEE HAS CLAIMED 6 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA DIESEL EXPENSES UNDER TWO HEADS, ONE UNDER OPERATIN G COSTS OF HIRED/OWNED VEHICLES AND ONE AS DIESEL EXPENSES. A CCORDING TO THE AO, THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM ON DI ESELS EXPENSES AND WENT ON TO DISALLOW 25% OF THE EXPENSES CLAIM AND M ADE AN ADDITION OF RS.14,03,070/-. THE CIT(A) HAS CONSIDERED THE GRIE VANCE OF THE ASSESSEE AT PARA 7 ON PAGE 21OF ITS ORDER AND AT PARA 7.2 ON PAGE 23, THE CIT(A) OBSERVED THAT THE AO HAS DISALLOWED 25% BY REFERRIN G TO CERTAIN TRUCK TRIP REPORT(TTR) WHEREAS THE ASSESSEE HAS SUBMITTED THAT ENTIRE EXPENSES ARE FULLY SUPPORTED BY BILLS. THE CIT(A) FURTHER OBSERVED THAT SINCE THE TOTAL EXPENSES ARE FULLY VOUCHED, THEREFORE, THERE IS NO ROOM FOR ANY DISALLOWANCE AND DELETED THE ADDITION MADE BY THE A O. 19. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE FI NDINGS OF THE AO, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON WHAT HAS B EEN SUBMITTED BEFORE THE CIT(A). 20. WE FIND THAT THE CIT(A) HAS GIVEN A VERY CATEG ORICAL FINDING THAT ALL THE EXPENSES ARE FULLY SUPPORTED BY BILLS/VOUCHERS NO DISTINGUISHING FACT HAS BEEN BROUGHT BEFORE US BY THE DR. THEREFORE, F INDINGS OF THE CIT(A) ARE CONFIRMED. APPEAL FILED BY THE REVENUE IS DISM ISSED. 21. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/09/2013 -. ( +, $ /- 10/09/2013 , , ( 0 SD/- (H.L.KARWA) SD/- (N.K.BILLAIYA) HONBLE PRESIDENT ACCOUNTANT MEMBER 7 ITA NO.7848/MUM/2010 M/S BAFNA TRANSPORT INDIA MUMBAI; /- /DATED : 10 TH SEPTEMBER, 2013. SHEKHAR. P.S. -. -. -. -. ( (( ( &*12 &*12 &*12 &*12 32 * 32 * 32 * 32 * / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 4 ( ) / THE CIT- , MUMBAI. 4. 4 / CIT(A)- , MUMBAI 5. 250 &* , , / DR, ITAT, MUMBAI 6. 06 7 / GUARD FILE. -. -. -. -. / BY ORDER, '2* &* //TRUE COPY// 8 88 8 / 9 9 9 9 : : : : (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI