ACIT,Circle-53, Kolkata, Kolkata V. Lal Behari Shaw, South 24 Parganas

ITA 992/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0513 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS ROY
• Assessee Lawyers: R CHANDRA
• Section: 69C; 194C

Judgement Text

I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 992 / KOL / 20 1 2 ASSESSMENT YEAR : 200 8 - 200 9 ASSISTANT COMMISSIONER OF INCOME TAX, .. .... ... .... ......... ... .. .APP ELL ANT CIRCLE - 53 , KOLKATA, AAYAKAR BHAWAN (DAKSHIN) 2, GARIAHAT ROAD (SOUTH), 2 ND FLOOR, KOLKATA - 700 06 8 - VS. - LAL BEHARI SHAW,................................................. ..... . RESPONDENT 113/2, M.G. ROAD, BUDGE - BUDGE, 24 - PARGANAS (SOUTH), PIN - 700 137 [PAN : A KLPS 7769 M ] APPEARANCES BY: SHRI D EBASHIS ROY , SR. D.R., FOR THE DEPARTMENT S MT. R. CHANDRA , FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : APRIL 13 , 2 01 5 DATE OF PRONOUNCING THE ORDER : MAY 15 , 20 1 5 O R D E R PER P.K. BANSAL : THIS APPEAL HA S BEEN FILED BY THE REVENU E AGAINST THE ORDER OF THE LD. C OMMISSIONER OF I NCOME T AX (APPEALS) - XXXII I, KOLKATA DATED 12 .0 3 .201 2 FOR THE ASSESSMENT YEAR 200 8 - 0 9. 2. THE ONLY GROUND TAKEN BY THE REVENUE READ S AS UNDER: - THE LD. CIT(A) ERRED IN HOLDING THAT PAYMENTS FOR INDIVIDUAL TRIP ARE LIABLE TO TDS IN CASE THEIR AMOUNT EXCEEDS RS.20,000/ - IS CONTRARY TO THE PROVISIONS OF SECTION 194C WHICH PROVIDES THAT TAX IS TO BE DEDUCTED AT SOURCE WHERE THE AGGREGATE AMOUNT OF SUCH SUM CREDITED OR PAID DURING THE FY EXCEEDS RS.50,000/ - . 3. THIS APPEAL HAS BEEN FILED BELATEDLY BY 10 DAYS. THE CONDONATION APPLICATION HAS DULY BEEN FILED. AFTER LOOKING INTO THE CONDONATION APPLICATION AND HEARING THE LD. A .R., WE FIND THAT THE REVENUE WAS I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 2 OF 7 PREVENTED BY SUFFICIENT CAUSE TO FILE THE APPEAL WITHIN THE PERMITTED TIME. WE, THEREFORE, CONDONE THE DELAY AND THE APPEAL IS ADMITTED. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.89,37,395/ - UNDER THE HEAD TRANSPORTATION CHARGES , WHICH WERE PAID TO VARIOUS PERSONS FOR HIRING THE GOODS CARRIED VEHICLES. THE AGGREGATE OF SUCH EXPENDITURE WAS RS.1,19,09,918/ - . THE ASSESSING OFFICER, THEREFORE, DISALLOWED A SUM OF RS.89,37, 395/ - UNDER SECTION 40(A)(IA) AND ADDED THE SUM OF RS.29,72,523/ - UNDER SECTION 69C OF THE INCOME TAX ACT, 1961. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(APPEALS). 5. LD. CIT(APPEALS) SEPARATELY ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER : - 4.11. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT WHILE THE TRANSPORTATION CH A RGES PAID TO VARIOUS TRUCK OWNERS COULD NOT BE CONSIDERED TO BE IN PURSUANCE OF SUB - CONTRACT OR A SINGLE CONTRACT AS SUCH, THEY ARE STILL IN NATURE OF CONTRACTUAL PAYME NTS WITH EACH TRIP CONSTITUTING A SEPARATE CONTRACT. THEREFORE, THE PAYMENTS FOR INDIVIDUAL TRIPS ARE LIABLE TO TDS IN CASE THEIR AMOUNT EXCEEDS RS.20,000/ - . THE DETAILS OF TRANSPORTATION CHARGES SHOW SEVERAL SUCH PAYMENTS. ADMITTEDLY, NO TAX HAS BEEN DEDU CTED ON THE SAME AND THE SAME ARE ACCORDINGLY DISALLOWABLE UNDER SECTION 40(A)(IA) OF I.T. ACT, 1961. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO THE PAYMENTS WHERE AMOUNT OF RS.20,000/ - HAS BEEN PAID FOR SINGLE TRIP . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. THE PROVISIONS OF SECTION 40(A)(IA) ARE VERY CLEAR IF THE ASSESSEE FAILS TO DEDUCT THE TAX AT SOURCE OR AFTER DEDUCTION HAS NOT PAID BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139, THE SAME WILL NOT BE ALLOWED IN COMPUTING THE INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION . THE CONTENTION OF THE ASSESSEE, HOWEVER, IS THAT THE PROVISIONS OF SECTION 1 94C ARE NOT APPLICABLE ON THE FACTS AS THERE IS NO AGREEMENT OR CONTRACT I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 3 OF 7 BETWEEN THE ASSESSEE AND THE PERSONS FROM WHOM THE TRUCKS HAVE BEEN HIRED. THE PROVISION OF SECTION 194C LAYS DOWN AS UNDER: - 194C - PAYMENTS TO CONTRACTORS. (1) ANY PERSON RESPONSIB LE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO (I)ONE PER CENT WHERE THE PAYMENT IS BEIN G MADE OR CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II)TWO PER CENT WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME - TAX ON INCOME C OMPRISED THEREIN. (2) WHERE ANY SUM REFERRED TO IN SUB - SECTION (1) IS CREDITED TO ANY ACCOUNT, WHETHER CALLED SUSPENSE ACCOUNT OR BY ANY OTHER NAME, IN THE BOOKS OF ACCOUNT OF THE PERSON LIABLE TO PAY SUCH INCOME, SUCH CREDITING SHALL BE DEEMED TO BE CR EDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE AND THE PROVISIONS OF THIS SECTION SHALL APPLY ACCORDINGLY. (3) WHERE ANY SUM IS PAID OR CREDITED FOR CARRYING OUT ANY WORK MENTIONED IN SUB - CLAUSE (E) OF CLAUSE (IV) OF THE EXPLANATION, TAX SHALL BE DEDUCTE D AT SOURCE (I) ON THE INVOICE VALUE EXCLUDING THE VALUE OF MATERIAL, IF SUCH VALUE IS MENTIONED SEPARATELY IN THE INVOICE; OR (II) ON THE WHOLE OF THE INVOICE VALUE, IF THE VALUE OF MATERIAL IS NOT MENTIONED SEPARATELY IN THE INVOICE. (4) NO INDIVIDUAL OR HINDU UNDIVIDED FAMILY SHALL BE LIABLE TO DEDUCT INCOME - TAX ON THE SUM CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR WHERE SUCH SUM IS CREDITED OR PAID EXCLUSIVELY FOR PERSONAL PURPOSES OF SUCH INDIVIDUAL OR ANY MEMBER OF HINDU UNDIVIDED FAMILY. ( 5) NO DEDUCTION SHALL BE MADE FROM THE AMOUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR, IF SUCH SUM DOES NOT EXCEED 17 [THIRTY] THOUSAND RUPEES : PROVIDED THAT WHERE THE AGGREGATE OF THE AMOUNTS OF SUCH SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE FINANCIAL YEAR EXCEEDS 18 [SEVENTY - FIVE] THOUSAND RUPEES, THE PERSON RESPONSIBLE FOR PAYING SUCH SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE LIABLE TO DEDUCT INCOME - TAX UNDER THIS SECTION. I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 4 OF 7 (6) NO DEDUCTION SHALL BE MADE FROM ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE PREVIOUS YEAR TO THE ACCOUNT OF A CONTRACTOR DURING THE COURSE OF BUSIN ESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES, ON FURNISHING OF HIS PERMANENT ACCOUNT NUMBER, TO THE PERSON PAYING OR CREDITING SUCH SUM. (7) THE PERSON RESPONSIBLE FOR PAYING OR CREDITING ANY SUM TO THE PERSON REFERRED TO IN SUB - SECTION (6) SHALL FURN ISH, TO THE PRESCRIBED INCOME - TAX AUTHORITY OR THE PERSON AUTHORISED BY IT, SUCH PARTICULARS, IN SUCH FORM AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, (I) SPECIFIED PERSON SHALL MEAN, (A) THE CENTRAL GOVER NMENT OR ANY STATE GOVERNMENT; OR (B) ANY LOCAL AUTHORITY; OR (C) ANY CORPORATION ESTABLISHED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT; OR (D) ANY COMPANY; OR (E) ANY CO - OPERATIVE SOCIETY; OR (F) ANY AUTHORITY, CONSTITUTED IN INDIA BY OR UNDER A NY LAW, ENGAGED EITHER FOR THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGES, OR FOR BOTH; OR (G) ANY SOCIETY REGISTERED UNDER THE SOCIETI ES REGISTRATION ACT, 1860 (21 OF 1860) OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA; OR (H) ANY TRUST; OR (I) ANY UNIVERSITY ESTABLISHED OR INCORPORATED BY OR UNDER A CENTRAL, STATE OR PROVINCIAL ACT AND AN INSTITUTION DECLARE D TO BE A UNIVERSITY UNDER SECTION 3 OF THE UNIVERSITY GRANTS COMMISSION ACT, 1956 (3 OF 1956); OR (J) ANY GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE OR ANY ASSOCIATION OR BODY ESTABLISHED OUTSIDE INDIA; OR (K) ANY FIRM; OR (L) ANY PERSON, BE ING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY OR AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS, IF SUCH PERSON, (A) DOES NOT FALL UNDER ANY OF THE PRECEDING SUB - CLAUSES; AND (B) IS LIABLE TO AUDIT OF ACCOUNTS UNDER CLAUSE (A) OR CLAUSE (B) OF SECTI ON 44AB DURING THE FINANCIAL YEAR I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 5 OF 7 IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUM IS CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR; (II) GOODS CARRIAGE SHALL HAVE THE MEANING ASSIGNED TO IT IN THE EXPLANATION TO SUB - SECTION (7) OF SECTION 44AE; (III) CONTRACT SHALL INCLUDE SUB - CONTRACT; (IV) WORK SHALL INCLUDE (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTION OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING; (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF T RANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUSTOMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER. ] 7 . A PLAIN READING OF THIS SECTION MAKES IT CLEAR THAT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT (HEREAFTE R IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON IS REQUIRED TO DEDUCT TAX AT SOURCE UNDER SECTION FR OM THE AMOUNTS SO PAID OR PAYABLE. THERE IS NO D OUBT THAT THE ASSESSEE IN THIS CASE HAS MADE THE PAYMENTS AS TRANSPORTATION CHARGES IN THE NATURE OF HIRING CHARGES FOR GOODS CARRIED VEHICLES. THE MAIN CONTENTION OF THE ASSESSEE IS, HOWEVER, THAT THE PAYME NTS HAVE NOT BEEN MADE IN PURSUANCE OF A CONTRACT BETWEEN THE ASSESSEE AND THE TRANSPORTERS. NOW THE QUESTION ARISES BEFORE US, WHETHER THERE IS CONTRACTUAL RELATIONSHIP BETWEEN THE ASSESSEE AND THE PERSONS TO WHOM THE ASSESSEE HAD MADE THE PAYMENTS IN THE NATURE OF HIRING CHARGES FOR GOODS CARRIED VEHICLES. IN OUR OPINION, A CONTRACT NEED NOT BE IN WRITING; EVEN AN ORAL CONTRACT IS GOOD ENOUGH TO INVOKE THE PROVISIONS OF SECTION 194 C. AS HON BLE KARNATAKA HIGH COURT HAS OBSERVED IN THE CASE OF SMT J RAMA VS CIT (236 CTR 105), LAW DOES I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 6 OF 7 NOT STIPULATE THE EXISTENCE OF A WRITTEN CONTRACT AS A CONDITION PRECEDENT FOR ( INVOKING THE PROVISIONS OF SECTION 194 C WITH RESPECT TO) PAYMENT OF TDS . THE TRANSPORTER S HA VE RECEIVED THE PAYMENT S FROM THE ASSESSEE TOWARD S THE TRANSPORT ATION CHARGES, THEREFORE, THE PRESUMPTION NORMALLY BE THAT ONE WOULD PROCEED ON THE BASIS THAT THERE WAS A CONTRACT FOR HIRING OF GOODS CARRIED VEHICLES. THEREFORE, IF THE ASSESSEE HAS MADE THE PAYMENT FOR HIRING THE GOODS CARRIED VEHICLES, THE PROVISIONS OF SECTION 194C ARE CLEARLY APPLICABLE. IN OUR OPINION, THE LD. CIT(APPEALS) WAS NOT CORRECT IN LAW THAT THE ASSESSEE WILL BE LIABLE TO DEDUCT THE TDS IF THE AMOUNT OF A SINGLE CONTRACT EXCEEDS RS.20,000/ - . THE CONTRACT HAS TO BE LOOKED INTO PARTY - WISE NOT ON THE BASIS OF THE INDIVIDUAL GR. IN OUR OPINION, ALL THE PAYMENTS MADE TO A TRUCK OWNER THROUGHOUT THE YEAR ARE TO BE AGGREGAT ED TO ASCERTAIN THE APPLICABILITY OF THE TDS PROVISION AS ALL THE PAYMENTS PERTAIN TO A CONTRACT. CONTRACT NEED NOT BE IN WRITING. IT MAY INF E R FROM THE CONDUCT OF THE PARTIES. IT MAY BE ORAL ALSO. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF ITAT, A BENCH, KOLKATA IN THE CASE OF DCIT VS. - KAMAL KR. MUKHERJEE & CO. IN ITA NO. 199/KOL/2010. WE ALSO NOTED THAT UNDER SECTION 194C, SUB - SECTION (5) PROVISO THERETO, THE AGGREGATE AMOUNT OF ALL THE PAYMENTS OR CREDITED SHOULD EXCEED ONLY RS.50,000/ - , THEN THE ASSESSEE SHALL BE LIABLE TO DEDUCT INCOME - TAX AT SOURCE. NO DOUBT, WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE BY WORKING OUT THAT THE ASSESSEE SHALL BE LIABLE TO DEDUCT TDS UNDER SECTION 194C IN RESPECT OF THE EACH PARTY IF THE TOTAL PAYMENT MADE OR CREDITED TO EACH OF THE PARTIES EXCEEDS RS.50,000/ - DURING THE IMPUGNED YEAR. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MAY , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BANSAL ( J UDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 15 TH D AY OF MAY , 201 5 I.T.A. NO . 992 / KOL ./20 1 2 ASSESSMENT YEAR S 200 8 - 200 9 PAGE 7 OF 7 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 53, KOLKATA, AAYAKAR BHAWAN (DAKSHIN) 2, GARIAHAT ROAD (SOUTH), 2 ND FLOOR, KOLKATA - 700 068 (2) LAL BEHARI SHAW, 113/2, M.G. ROAD, BUDGE - BUDGE, 24 - PARGANAS (SOUTH), PIN - 700 137 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .