M/s. Real Cargo Mumbai, Sabarkantha V. The Income Tax Officer, S.K. Ward-4, Modasa

ITA 986/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9091 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGADISH
• Assessee Lawyers: G.A. MEHTA
• Keywords: TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 40(a)(ia); 194C; 201(1); 201; 13

Judgement Text

ITA NO . 986 / AHD/20 1 5 A.Y. 20 10 - 11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO. 986 / AHD /201 5 ASSESSMENT YEAR : 20 10 - 11 M/S. REAL CARGO MUMBAI, VS. INCOME TAX OFFICER , AT & POST TINTOI WATER TANK, S.K. WARD - 4, MODASA . TAL: MODASA, DIST. SABARKANTA. [PAN A AKFR 2370 L ] (APPELLANT ) (RESPONDENT) A PPELLANT BY : SHRI G.A. MEHTA , A.R. RE SPONDENT BY : SHRI JAGADISH , CIT (D.R.) DATE OF HEARING : 13 .0 1 . 20 1 7 DATE OF PRONOUNCEMENT : 27 .02 .201 7 O R D E R PER S.S. GODARA , J.M. TH IS ASSESSEE S APPEAL FOR A SSESSMENT Y EAR 20 10 - 11 ARISE S AGAINST CIT(A) - 2 , AHMEDABAD S ORDER DATED 04.02.2015 PASSED IN CASE NO. C IT(A) - 2/IT O S.K. WD - 4/MODASA /58/13 - 14 UPHOLDING ASSESSING OFFICER S ACTION MAKING SECTION 40(A)(IA) DISALLOWANCE OF RS.8,29,90,5 9 0/ - ON ACCOUNT OF FAILURE IN DEDUCTING TDS THERE UPON IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. WE COME T O RELEVANT FACTS OF THE CASE. THERE DOES NOT APPEAR TO BE ANY DISPUTE. THIS ASSESSEE IS A FIRM ENGAGED IN TRANSPORT CARTING BUSINESS. IT FILED RETURN ON 13.10.2010 DECLARING TOTAL INCOME OF RS.24,410/ - . THE AS SESSING OFFICER NOTICED IN THE COURSE OF SC RUTINY THAT ASSESSEE RECEIVED CARTAGE RECEIPTS FROM ITS PAYE ES ALRE A DY SUBJECTED TO TDS DEDUCTION. HE HAD TAKEN VARIOUS TRUCKS OF PAYEES IN QUESTION. WHAT ASSESSEE WOULD DO WAS TO PAY THE SAID CARTAGE EXPENSES TO HI S PAYEES AS SHOWN IN HIS ITA NO . 986 / AHD/20 1 5 A.Y. 20 10 - 11 PAGE 2 OF 4 DULY AUDITED PROFIT & LOSS ACCOUNT. THE ASSESSEE S BOOKS WOULD DISCLOSE TOTAL CARTAGE RECEIPTS OF RS. 8,39,01,690/ - AS AGAINST TOTAL CARTAGE COST OF RS.8,29,90,590/ - . THERE IS FURTHER NO ISSUE THAT THE ASSESSEE S ABOVE STATED PAYMENTS EXCEEDED THE THRESHOLD LIMIT FOR TDS DEDUCTION OF RS.20,000/ - . THE ASSESSEE WHEN TRIED TO EMPHASISE THE POINT THAT HE HAD EARNED ONLY COMMISSION IN COME OF RS.300/ - PER TRIP, THE SAME FAILED TO CONVINCE THE ASSESSING AUTHORITY WHO DISALLOWED THE ENTIRE CARTAGE FREIGHT PAYMENT OF RS.8,29, 90, 590 / - FOR FAILURE ON ASSESSEE S PART TO DEDUCT TDS THERE UPON THEREBY INVOKING SECTION 40(A)(IA) OF THE ACT. 3. THE CIT(A) UPHOLDS THE ASSESSING O FFICER S ACTION BY OBSERVING A S FOLLOWS : - 3.3 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE AO HAS DISALLOWED THE PAYMENT MADE TO THE TRUCK OWNERS FOR TRANSPORTING THE GOODS AS THE TAX AS PER THE PROVISIONS OF SECTION 194C OF THE ACT HAS NOT BEEN DEDUCTED. IT HAS BEEN HEL D BY THE AO THAT ON ONE SIDE, THE APPELLANT HAS RECEIVED PAYMENT ON WHICH THE TAX HAS BEEN DEDUCTED. ON THE OTHER SIDE, THE APPELLANT HAD MADE THE PAYMENT TO THE TRUCK OWNERS WHICH WERE OF SIMILAR NATURE WITHOUT DEDUCTING THE TAX. IT HAS ALSO BEEN HELD BY THE AO THAT THE PROFIT AND LOSS ACCOUNT SHOW THE CARTAGE PAYMENT OF RS.8.29 CRORES AS COST OF CARTING WHICH SHOW THAT THE APPELLANT HAS SHOWN CERTAIN RECEIPTS AND CREDIT SITE AND HAD DEBITED THE COST OF CARTING. IT HAS BEEN HELD THAT THE APPELLANT HAD UND ERTAKEN THE WORK OF CARTAGE OF GOODS BY TRUCKS AND HAS FURTHER GOT THE WORK DONE BY TRUCK OWNERS TO WHOM EACH PAYMENT HAS BEEN MADE SO THE CARTAGE PAYMENT SHOULD HAVE BEEN SUBJECTED TO TAX DEDUCTED AT SOURCE. THE APPELLANT ON THE OTHER HAND HAS SUBMITTED THAT THE PROVISIONS OF SECTION 194C AND 40(A)(IA) WOULD NOT APPLICABLE IN THE CASE OF THE APPELLANT AS IT WAS ONLY ACTING AS A MIDDLEMAN FOR BOTH THE PARTIES AND WAS ONLY GETTING COMMISSION OF RS.300 / - FROM TRUCK OWNERS . IT HAS PASSED ON THE PAYMENT RECE IVED FROM THE PARTIES BOOKING THE TRUCK TO THE TRUCK OWNERS AND RECEIVED ONLY RS. 300/ - . THUS, THE AMOUNT OF RS.8.29 CRORES WAS NOT FREIGHT EXPENSES INCURRED BY THE APPELLANT BUT WAS INCURRED BY THE OTHER PARTIES WHOSE WORK WAS CARRIED OUT AND PAID TO THE TRUCK OWNERS. THERE WAS NO ORAL CONTRACT AS PRESUMED BY THE AO EITHER WITH THE TRUCK OWNER OR WITH THE PARTIES FROM WHOM THE CARTING WAS DONE. TH E BUSINESS OF THE APPELLANT WAS CARTING ON COMMISSION BASIS . THE APPELLANT HAS ALSO SUBMITTED SUBSEQUENTLY DU RING THE COURSE OF APPELLATE PROCEEDINGS THAT IT HAS OBTAINED PAN OF THE TRUCK OWNERS. THE APPELLANT HAS ALSO SUBMITTED COPIES OF FREIGHT MEMO IN WHICH THE TOTAL TRUCK FREIGHT, COMMISSION AMOUNT, TRUCK FREIGHT AND AMOUNT PAID HAS BEEN MENTIONE D . ON A CAREFUL CONSIDERATION OF ENTIRE FACTS OF THE CASE, IT IS NOTED THAT THE CLAIM OF THE APPELLANT THAT IT WAS ACTING AS A COMMISSION AGENT IS NOT SUPPORTED BY ITA NO . 986 / AHD/20 1 5 A.Y. 20 10 - 11 PAGE 3 OF 4 FACTS. ALL THE FREIGHT RECEIVED BY IT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS ON THE REC EIPT AND SUBSEQUENTLY THE PAYMENT HAS ALSO BEEN RECORDED ON THE PAYMENT SIDE. IT IS ALSO NOTED THAT MAJORITY OF THE TRANSPORTING WORK HAS BEEN DONE FROM FEW TRUCK OWNERS, AND IT IS NOTED FROM THE DETAILS SUBMITTED THAT THE APPELLANT HAS UTILISED THE SERVIC ES OF CERTAIN TRUCK OWNERS VERY FREQUENTLY. IT IS NOTED THAT THE APPELLANT HAS MADE P AYMENT OF RS. 1,08,06,980 / - TO TINTOI TRANSPORT COMPANY, BARODA. THE APPELLANT HAS MENTIONED PAN NUMBER OF THIS CONCERN. HOWEVER, IT IS ALSO BEEN MENTIONED THAT VARIOUS TR UCKS OF THIS CONCERN WERE USED BY THE APPELLANT. SIMILARLY THE APPELLANT HAS MADE A P AYMENT OF RS. 1,12,98,600 / - TO NATIONAL TRANSPORT COMPANY AND HERE ALSO THOUGH THE PAN NUMBER IS GIVEN, VARIOUS TRUCKS OF THE SAME COMPANY HAVE BEEN USED. THE LIST GIVEN BY THE APPELLANT ALSO SHOW THAT THE APPELLANT HAS MADE PAYMENT OF MORE THAN RS.9.00 LACS TO ABOUT 38 PERSONS. THIS PAYMENT CANNOT BE CONSIDERED AS MERELY FOR COMMISSION AS THE APPELLANT WAS DOING REGULAR BUSINESS WITH THESE PERSONS. THE FREIGHT PAID BY THE A PPELLANT TO THESE TRUCK OWNERS INDEED HAD A PROFIT ELEMENT AND IT IS NOT KNOWN WHETHER THESE PERSONS HAVE DECLARED THE SAME IN ITS RETURN OF INCOME. THE APPELLANT DID NOT FILE PAN BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, IT HAS N OW PRODUCED A DETAIL, WHICH IS OF NO USE AS NO CORRESPONDING DETAILS SUCH AS WHETHER THE RETURN OF INCOME HAS BEEN FILED OR NOT IS AVAILABLE. IN VIEW OF ABOVE DISCUSSION I'M INCLINED TO AGREE WITH THE FINDINGS GIVEN BY THE AO AND UPHOLD THE DISALLOWANCE M ADE BY HIM BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). THE RELATED GROUNDS OF APPEAL ARE ACCORDINGLY, DISMISSED. 4. HEARD BOTH THE SIDES REITERATING THEIR RESPECTIVE STAND AGAINST AND IN SUPPORT OF THE IMPUGNED DISALLOWANCE. LEARNED COUNSEL STRONG LY ARGUES THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN MAKING THE IMPUGNED SECTION 40(A ) (IA) DISALLOWANCE DESPITE THE FACT THAT THE ASSESSEE HAD PLACED ON RECORD ALL NECESSARY DETAILS OF HIS FREIGHT PAYEES IN QUESTION. HE INVITED OU R ATTENTION TO PAGE NO S. 7 TO 9 OF THE P APER BOOK IN THIS REGARD WHOSE CONTENTS ARE NOT DISPUTED EVEN AT REVENUE S BEHEST. LEARNED COUNSEL INTER ALIA PLEADS THEREAFTER THAT SECTION 40(A ) (IA) SECOND PROVISO INSERTED IN THE A CT VIDE FINANCE ACT 2012 W.E.F. 01.04.2013 ENVISAGING N ON - APPLICATION OF IMPUGNED DISALLOWANCE IN CASE THE ASSESSEE IS NOT THE ONE IN DEFAULT IN LIGHT OF SECTION 201(1) SQUARELY APPLIES IN FACTS OF THE INSTANT CASE. THE R EVENUE HOWEVER OPPOSES THIS CONTENTION BY SUBMITTING THAT THE SAID PROVISO IS MADE APPLIC ABLE W.E.F. 01.04.2013 ONLY. LEARNED COUNSEL REPRESENTI NG ASSESSEE AT THIS STAGE QUOTE S TRIBUNAL S DECISION IN RAJ EE V KUMAR AGARWAL VS . ADDL. CIT ITA NO . 986 / AHD/20 1 5 A.Y. 20 10 - 11 PAGE 4 OF 4 - ITA NO.337/AGRA/2013 - D ECIDED ON 29.05.2013 HOLDING ABOVE STATED PROVISO TO BE CURATIVE IN NATURE WITH RET ROSPECTIVE EFFECT FROM 01.04.2005 . H E FURTHER QUOTE HON BLE DELHI HIGH COURT S DECISION IN THE CASE OF IT VS. ANSAL LAND MARK TOWNSHIP (P) LTD IN TAX APPEAL NO. 160/2015 DECIDED ON 26.08.2015 UPHOLDING ABOVE STATED T RIBUNAL S DECISION. 5. LEARNED DEPARTM ENTAL REPRESENTATIVE FAILS TO REBUT THIS LEGAL POSITION. WE THUS ACCEPT ASSESSEE S LEGAL CONTENTION AND DIRECT THE ASSESSING O FFICER TO PASS A FRESH ORDER AFTER CONDUCTING NECESSARY VERIFICATION A S TO WHETHER ASSESSEE S PAYEES WHOSE DETAILS ARE ALREADY ON RECORD HAS BEEN ASSESSED QUA FREIGHT PAYMENT IN QUESTION OR NOT. NEEDLESS TO SAY THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF HEARING. IT IS MADE CLEAR THAT WE HAVE NOT ADJUDICATED UPON ASSESSEE S OTHER CONTENTION S OF NON - APPLICABILITY OF SECTI ON 194C OF THE ACT AS WELL ON VARIOUS LEGAL AND FACTUAL PLEAS. IT WOULD BE AT LIBERTY TO RE - AGITATE ALL SUCH FACTUAL AND LEGAL PLEA IN THE COURSE OF CONSEQUENTIAL PROCEEDINGS. 6 . IN THE RESULT, THIS ASSESSEE S APPEAL IS ACCEPTED FOR STATISTICAL PURP OSES. P RONOUNCED IN THE OPEN COURT TODAY ON THE 27 TH DAY OF FEBRUARY , 201 7 . SD/ - SD/ - PRA MOD KUMAR S.S. GODARA (ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) AHMEDABAD, THE 27 TH DAY OF FEBRUARY, 2017 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABA D