ITO, CHENNAI V. M/s. Sarva Seva Dairy Federation Ltd., CHENNAI

ITA 97/CHNY/2011

• Counselvise Citation: 9721714 RSA 2011
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: QYADIR HOSEYN
• Section: 143(3); 115JB; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 97/MDS/2011 (ASSESSMENT YEAR : 2007-08 ) THE INCOME TAX OFFICER COMPANY WARD IV(1) CHENNAI VS M/S SARVA SEVA DAIRY FEDERATION LTD NO.279, AVVAI SHANMUGAM ROAD ROYAPETTAH CHENNAI 600 014 [PAN AADCS0243F ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, SR.DR RESPONDENT BY : SHRI QYADIR HOSEYN, ADVOCATE DATE OF HEARING : 05-09-2011 DATE OF PRONOUNCEMENT : 05-09-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YE AR 2007-08, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), DATED 3.11.2010. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE ORDER OF THE LEARNED CIT (A) IS CONTRARY T O LAW AND FACTS OF THE CASE. 2.1. THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF TRANSPORT CHARGES MADE U/S 40(A)(IA ) ITA 97/2011 :- 2 -: 2.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A S PER THE COPIES OF LETTERS OF THE TRANSPORTERS FILED BY THE ASSESSEE, THEY UNDER TOOK THE WORK OF TRANSPORTING MILK FOR T HE ASSESSEE AND HENCE IT IS COVERED BY SECTION 194C 2.3 THE LEARNED CIT(A) FAILED TO APPRECIATE TH AT THE ASSESSEE WAS NOT A TRANSPORT CONTRACTOR WHO SUB-CONTRACTED T HE WORK. 3.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF CONSULTANCY CHARGES MADE U/S 40(A) (IA) OF ` 21000. 3.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT WH ETHER THE DEDUCTEE'S RECEIPTS EXCEEDED THE MONETARY LIMITS PRESCRIBED U/S 4AB IS IMMATERIAL TO THE ASSESSE'S L IABILITY TO DEDUCT TAX AT SOURCE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDU CED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY WHICH IS ENGAGED IN THE BUSINESS OF PROCURING, PROCESSING AND MARKETING OF MILK AND DAIRY PRODUCTS AT POORIYAMBAKKAM. THE ASSESSEE COMPUTED ITS TOTAL IN COME UNDER REGULAR PROVISIONS AT A LOSS OF ` 4,54,678/-. SINCE THE INCOME WAS BELOW 30% OF THE BOOK PROFITS, THE ASSESSEE DECLAR ED INCOME U/S 115JB AT ` 1,00,420/-. THE ASSESSING OFFICER HAS DETERMINED THE ASSESSEES TOTAL INCOME AT ` 62,01,308/- U/S 143(3) VIDE ORDER DATED 31.12.2009 AFTER ADJUSTING THE CARRIED FORWARD LOSS OF ` 4.55 LAKHS. THE ASSESSING OFFICER HAS MADE THE FOLLOWING DISALL OWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT: ITA 97/2011 :- 3 -: (I) TRANSPORT CHARGES ` 63,11,529 (II) CONSULTANCY CHARGES ` 21,000 (III) CAR HIRE CHARGES ` 22,759 --------------- ` 65,55,288 -------------- 3. AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRED FIR ST APPEAL AND WAS SUCCESSFUL IN GETTING THE DESIRED RELIEF. NOW, THE REVENUE IS AGGRIEVED AND HAS DISPUTED THE DELETION OF DISALLOW ANCE OF TRANSPORT CHARGES MADE U/S 40(A)(IA) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT WAS FOUND THAT THE ASSESSEE MADE PAYMENTS TOWARDS TRANSPORT CHARGES, FOR THE PU RPOSE OF ITS BUSINESS. THE CONTENTION OF THE ASSESSEE IS THAT T HE VEHICLES SO HIRED WERE TAKEN IN POSSESSION TEMPORARILY FOR TRANSPORTI NG ITS OWN MILK FROM WOMEN SELF-HELP GROUPS(WSHG) SPREAD OVER IN RE MOTE VILLAGES IN THE VICINITY OF FACTORY AREA AT POORIYAMBAKKAM V ILLAGE AND THUS THESE PAYMENTS DO NOT FALL IN THE PURVIEW OF SECTIO N 194C OF THE ACT WARRANTING INVOCATION OF PROVISIONS OF SECTION 40(A )(IA) OF THE ACT BECAUSE THE WORK ELEMENT WAS ABSENT IN THE GIVEN TR ANSACTION AND IN THE ABSENCE OF ANY CONTRACT FOR THE WORK, THE QUEST ION OF TDS U/S 194C WOULD NOT ARISE. HENCE, THE DISALLOWANCE U/S 40(A)(IA) WAS TOTALLY UNSUSTAINABLE BOTH IN LAW AS WELL AS ON FAC TS. THE DEPARTMENT ITA 97/2011 :- 4 -: HAS DISPUTED THIS CLAIM AND CONTENTION OF THE ASSES SEE AND HAS TRIED TO CANVASS THAT THESE TRANSACTIONS ARE HIT BY THE PROV ISIONS OF SECTION 194C AND CONSEQUENTLY, BY SECTION 40(A)(IA) OF THE ACT. WHILE GOING THROUGH THE RECORDS, WE HAVE FOUND THAT COMPLETE FA CTS REGARDING THE NATURE OF TRANSACTION BETWEEN THE PARTIES HAVE NOT COME IN FULL WITH PROOF, THEREFORE, THE MATTER NEEDS TO BE RESTORED T O THE FILE OF THE ASSESSING OFFICER SO THAT HE CAN EXAMINE THESE TRAN SACTION FROM ALL ANGLES. THE ITAT BEING THE FINAL FACT FINDING BODY , IT BECOMES IMPERATIVE FOR US TO CULL OUT ENTIRE RELEVANT FACTS . SINCE SUCH FACTS ARE NOT AVAILABLE BEFORE US, WE HAVE TO RESTORE THE APP EAL TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE CO NTENTIOUS ISSUES AFRESH AFTER GIVING OPPORTUNITY OF HEARING TO THE A SSESSEE AS PER LAW. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 05-09-2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 5 TH SEPTEMBER, 2011 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR