VINAY CARGO MOVERS LTD., MUMBAI V. DCIT, Cir. 7(3), MUMBAI

ITA 8416/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78953 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reassessment proceedings
• Section: 143(3); 194C; 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F B ENCH, MUMBAI . . , , !'#$ , % & BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.8416/MUM/2011 ( ' ' ' ' / ASSESSMENT YEAR :2005-06 M/S. VINAY CARGO MOVERS LTD., 19, SARASWATI SADAN, 115, K.N. ROAD, CHINCH BUNDER, MUMBAI-400 009 / VS. THE DCIT, CIR-7(3), MUMBAI ( % ./ )* ./ PAN/GIR NO. : AABCV 2487L ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI NISHIT GANDHI ,-(+ / . / RESPONDENT BY: SHRI RAVI PRAKASH / 01% / DATE OF HEARING :16.05.2014 23' / 01% / DATE OF PRONOUNCEMENT :21.05.2014 4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-13, MUMBAI DT.7.7.2011 PERTAINING TO A.Y. 20 05-06. 2. THE ASSESSEE IS A ROAD TRANSPORT CONTRACTOR. TH E ORIGINAL RETURN OF INCOME WAS FILED ON 31.10.2005. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DT. 24.12.2007. THE RE TURNED INCOME OF RS. 69,66,260/- WAS ASSESSED AT RS. 72,01,950/-. SUBS EQUENTLY, THE CASE WAS ITA NO. 8416/M/2011 2 REOPENED BY ISSUE OF NOTICE U/S. 147 DT. 8.3.2010. THE REASONS FOR REOPENING THE ASSESSMENT WERE CONVEYED TO THE ASSE SSEE. THE SOLE REASON FOR REOPENING THE ASSESSMENT WAS THAT THE AS SESSEE HAS NOT DEDUCTED TAX AT SOURCE ON TRANSPORT CHARGES AT RS. 95,07,935/-. 2.1. DURING THE COURSE OF THE REASSESSMENT PROCEEDI NGS, THE ASSESSEE WAS ASKED TO FURNISH THE COPIES OF FORM NO. 15-1 SU BMITTED BY THE CLIENTS. HOWEVER, NO SUCH CERTIFICATE WAS FURNIS HED, THE AO PROCEEDED TO DISALLOW RS. 95,07,935/- U/S. 40(A)(IA) OF THE ACT. THE AO FURTHER DISALLOWED BROKERAGE AND COMMISSION OF RS. 40,030/- AND BOOKING COMMISSION OF RS. 22,800/- FOR NON DEDUCTION OF TAX AT SOURCE. THE REASSESSMENT PROCEEDINGS WERE COMPLETED AT AN ASSES SED FIGURE OF RS. 1,67,72,720/-. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) ON TWO COUNTS. FIRSTLY THE ASSESSEE CHALLENGED THE VALIDI TY OF THE REOPENING OF THE ASSESSMENT AND SECONDLY ON THE MERITS OF THE DI SALLOWANCE OF TRANSPORT CHARGES ON ACCOUNT OF NON DEDUCTION TAX A T SOURCE. 4. THE ASSESSEE FAILED ON BOTH THE COUNTS AND IS BE FORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT DUR ING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE H AD FILED ALL THE NECESSARY DETAILS ALONGWITH AUDITED STATEMENT OF AC COUNTS WHICH WERE DULY CONSIDERED BY THE AO. THEREFORE, THE REOPENIN G OF THE ASSESSMENT COMPLETED U/S. 143(3) OF THE ACT IS BAD IN LAW. ON MERIT, IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE ITSELF IS A CONTR ACTOR WHO ENTERED INTO A CONTRACT WITH THE PRINCIPAL FOR TRANSPORT OF MATERI AL FROM ONE DESTINATION TO ANOTHER. IT WAS FURTHER EXPLAINED THAT FOR CARR YING ON THIS BUSINESS, THE ITA NO. 8416/M/2011 3 ASSESSEE HIRED TRUCK OWNERS IN ORDER TO FULFILL HIS CONTRACT. THEREFORE, THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE U/S. 194C OF THE ACT AS THERE WAS NO SUB-CONTRACT WITH THE TRUCK OWNERS. THE LD. COUNSEL CONCLUDED BY SAYING THAT SINCE THERE WAS NO LIABILITY FOR D EDUCTION OF TAX AT SOURCE U/S. 194C OF THE ACT, THE DISALLOWANCE MADE U/S. 40 (A)(IA) IN RESPECT OF TRANSPORT CHARGES DESERVE TO BE DELETED. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEES BUSINESS IS OF T RANSPORTATION AND TO CARRY ON ITS BUSINESS, THE ASSESSEE WAS HIRING TRUCKS FRO M OUTSIDE TRUCK OWNERS FOR WHICH THE ASSESSEE HAS MADE PAYMENTS TO TRUCK O WNERS. CONTRACT FOR CARRYING OUT THE WORK WAS BETWEEN THE ASSESSEE AND ITS PRINCIPAL. THE ASSESSEE ALONE HAD RISK AND RESPONSIBILITY FOR CARR YING OUT THE CONTRACT WORK AS PER THE AGREEMENT ENTERED INTO BY IT WITH I TS PRINCIPAL. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THERE WAS ANY CONTRACT OR SUB- CONTRACT WHETHER WRITTEN OR ORAL WITH THE OUTSIDE TANK OWNERS AND THE ASSESSEE WHEREBY THE RISK AND RESPONSIBILITY ASSO CIATED WITH CONTRACT WERE ALSO BEEN PASSED TO ON TO THESE OUTSIDE TRUCK OWNERS. THE LOWER AUTHORITIES COULD NOT REBUT THE FACT THAT OUTSIDE T RUCK OWNERS DO NOT HAVE ANY RESPONSIBILITY OR LIABILITY TOWARDS THE PRINCIP AL, THEN IT CANNOT BE SAID THAT THESE OUTSIDE TRUCK OWNERS WERE PRIVITY TO TH E CONTRACT BETWEEN THE ASSESSEE AND ITS PRINCIPAL. THAT BEING THE FACT OF THE MATTER, IN OUR UNDERSTANDING OF THE LAW, PAYMENTS MADE BY THE ASSE SSEE TO THE OUTSIDE TRUCK OWNERS DO NOT COME OR FALL WITHIN THE PURVIEW OF SEC. 194C OF THE ACT. DISALLOWANCE MADE U/S. 40A(IA) ON THESE ACCOU NT IS DIRECTED TO BE DELETED. ITA NO. 8416/M/2011 4 8. SINCE WE HAVE DIRECTED TO DELETE THE ADDITION MA DE ON ACCOUNT OF TRANSPORT CHARGES AT RS. 95,07,935/-, WE DO NOT FIN D IT NECESSARY TO DECIDE THE ISSUE OF REOPENING OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 21.5.2014 . 4 / 3' % 5 67 21.5.2014 3 / 8 SD/- SD/- (I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 6 DATED 21.5.2014 . . ./ RJ , SR. PS 4 4 4 4 / // / ,0! ,0! ,0! ,0! 9!'0 9!'0 9!'0 9!'0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. !;8 ,0 , , / DR, ITAT, MUMBAI 6. 8< / GUARD FILE. 4 4 4 4 / BY ORDER, -!0 ,0 //TRUE COPY// = == = / > > > > ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI