Asst.C.I.T., Mangalore V. Shri. K.B. Balakrishna Rai, Mangalore

ITA 93/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9423 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

ITA.93/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.93/BANG/2015 (ASSESSMENT YEAR : 2011-12) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -2(1), MANGALURU .. APPELLANT V. SHRI. K. B. BALAKRISHNA RAI, TRANSPORT OPERATOR, SRI NAVADURGA PRASAD, M. B. ROAD, MANGALURU .. RESPONDENT PAN : ADRPR9587P ASSESSEE BY : SMT. SOUMYA, ADVOCATE REVENUE BY : SMT. SWAPNA DAS, JCIT HEARD ON : 22.06.2016 PRONOUNCED ON : 26.08.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE ITS GRIEVANCE IS T HAT CIT (A) DELETED ADDITION MADE BY THE AO U/S.40(A)(IA) OF THE INCOME -TAX ACT, 1961 (THE ACT IN SHORT). ITA.93/BANG/2015 PAGE - 2 02. FACTS APROPOS ARE THAT ASSESSEE, A TRANSPORT OP ERATOR, HAD FILED HIS RETURN FOR IMPUGNED ASSESSMENT YEAR DECLARING INCOM E OF RS.5,99,130/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ED THAT ASSESSEE HAD CLAIMED THE FOLLOWING COMMISSION EXPENDITURE : SL.NO. PARTICULARS AMOUNT RS. 1. DRIVERS 21,08,761 2. CONDUCTORS 12,67,550 3. CLEANERS 2,79,824 4. CHECKING INSPECTORS 1,26,191 TOTAL 37,82,326 AO WAS OF THE OPINION THAT THE COMMISSION PAYMENT E XCEEDED RS.5,000/- IN EACH CASE AND THEREFORE ASSESSEE OUGHT TO HAVE D EDUCTED TAX AT SOURCE U/S.194H OF THE ACT. SINCE NO DEDUCTION WAS MADE A O INVOKED SECTION 40(A)(IA) AGAINST THE TOTAL CLAIM OF EXPENDITURE OF RS.37,82,326/-. DISALLOWANCE OF RS.37,57,464/- WAS MADE. 03. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). CONTENTION OF ASSESSEE WAS THAT THE DRIVERS, CONDUCTORS, CLEAN ERS, CHECKING INSPECTORS WERE WORKING AS SALARIED PERSONS. AS PER THE ASSES SEE, THE PAYMENT WAS SHOWN AS COMMISSION. THESE WERE NOTHING BUT SALARY PAID TO DRIVERS, CONDUCTORS, CLEANERS AND CHECKING INSPECTORS. ITA.93/BANG/2015 PAGE - 3 04. CIT (A) WAS APPRECIATIVE OF THESE CONTENTIONS. ACCORDING TO HIM ASSESSEE HAD PAID FIXED DAILY AMOUNT OF RS.300/- TO DRIVERS, RS.200 TO CONDUCTORS, RS.150/- TO CLEANERS AND MONTHLY REMUNE RATION OF RS.4000/- TO RS.6000/- TO CHECKING INSPECTORS. AC PER THE CIT ( A), WHAT WAS PAID AS COMMISSION WAS A PERCENTAGE OF THE COLLECTIONS AT T HE END OF THE MONTH AND INCENTIVES. CIT (A) ALSO NOTED THAT ASSESSEE PRODU CED TRIP SHEETS AND VOUCHERS TO PROVE THE ABOVE. HE THUS HELD THAT PAY MENTS WERE MADE BY ASSESSEE IN HIS CAPACITY AS AN EMPLOYER AND THEREFO RE DEDUCTION U/S.194H OF THE ACT WAS NOT NECESSARY. HE DELETED THE DISAL LOWANCE. 05. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE OR DERS OF THE LOWER AUTHORITIES SUBMITTED THAT ASSESSEE COULD NOT SHOW THAT IT WAS NOT LIABLE FOR DEDUCTING TAX U/S.194H OF THE ACT. AS PER THE LD. DR THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE ASSESSEE AND CONDUCTORS, DRIVERS, CLEANERS AND CHECKING INSPECTORS. THUS LD . DR ARGUED THAT CIT (A) FELL IN ERROR IN DELETING THE ADDITION. 06. PER CONTRA LD. AR SUPPORTED THE ORDER OF THE CI T (A). 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. FINDING OF THE CIT (A) IS THAT THE COMMISSION WAS P AID AS AN INCENTIVE TO ITA.93/BANG/2015 PAGE - 4 THE DRIVERS, CONDUCTORS, CLEANERS AND CHECKING INSP ECTORS AT THE END OF THE MONTH BASED ON PERCENTAGE OF COLLECTIONS. IT IS NO T DISPUTED THAT DRIVERS, CONDUCTORS, CLEANERS AND CHECKING INSPECTORS WERE A LSO GETTING DAILY WAGES FROM THE ASSESSEE. THUS ANY ADDITIONAL AMOUNT RECE IVED BY SUCH PERSONS, WORKING AS EMPLOYEES OR WORKERS OF THE ASSESSEE COU LD ONLY BE CONSIDERED AS A PART OF REMUNERATION. JUST BECAUSE ASSESSEE H AD DEBITED THE AMOUNT AS COMMISSION, WOULD NOT CHANGE THE COMPLEXION OF THE PAYMENT WHICH SQUARELY FELL WITHIN THE MEANING OF THE TERM REMUN ERATION. CIT (A) HAS CLEARLY GIVEN A FINDING THAT THERE EXISTED A MASTER -SERVANT RELATIONSHIP BETWEEN THE ASSESSEE AND DRIVERS, CONDUCTORS, CLEAN ERS AND CHECKING INSPECTORS WHICH HAS NOT BEEN REBUTTED BY THE REVEN UE. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE ORDER OF CIT (A). 08. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH DAY OF A UGUST, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN ITA.93/BANG/2015 PAGE - 5 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR