ITO, Dhule v. Shree Dadasaheb Rawal ShindkhedaTaluka Dudh Utpadak Sangh Ltd., Dhule

ITA 1420/PUN/2008 | 2005-2006
Pronouncement Date: 31-08-2010 | Result: Dismissed

Appeal Details

RSA Number 142024514 RSA 2008
Assessee PAN AAAAS1044D
Bench Pune
Appeal Number ITA 1420/PUN/2008
Duration Of Justice 1 year(s) 9 month(s) 25 day(s)
Appellant ITO, Dhule
Respondent Shree Dadasaheb Rawal ShindkhedaTaluka Dudh Utpadak Sangh Ltd., Dhule
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-08-2010
Assessment Year 2005-2006
Appeal Filed On 05-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR JM AND SHRI R.C. SHARMA AM I.T.A. NO. 1420/PN/2008 : A.Y. 2005-06 I.T.O. WARD 3(3) DHULE APPELLANT VS. SHREE DADASAHEB RAWAL SHINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. DONDAICHA TAL. SHINDKHEDA PAN AAAAS 1044 D RESPONDENT C.O. 12/PN/2010 ARISING OUT OF I.T.A. NO. 1420/PN/2008 : A.Y. 2005 -06 SHREE DADASAHEB RAWAL SHINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. DONDAICHA TAL. SHINDKHEDA PAN AAAAS 1044 D CROSS OBJECTOR VS. I.T.O. WARD 3(3) DHULE APPELLANT IN APPEAL ASSESSEE BY : SHRI SUNIL GANOO DEPARTMENT BY: SMT. MANJU AJWANI ORDER PER I.C. SUDHIR JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER O N THE GROUNDS THAT THE LEARNED CIT(A) HAS ERRED IN DELETI NG; (1) VARIOUS EXPENSES OF RS. 25 000/- SHOWN IN PROFIT AN D LOSS ACCOUNT; AND (2) THE ADDITION ON ACCOUNT OF TANKER AND MILK ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 2 FREIGHT CHARGES ON WHICH TDS IS NOT MADE U/S 40(A)( IA) AT RS 69 31 009/-. 2. ASSESSEE ON THE OTHER HAND HAS OBJECTED THE FI RST APPELLATE ORDER ON THE BASIS THAT THE LEARNED CIT(A ) HAS ERRED IN (I) HOLDING THAT PAYMENTS MADE BY THE ASSESSEE T O VARIOUS TRANSPORTERS FOR AND ON BEHALF OF MAHANANDA DAIRY BOMBAY WAS HIT BY THE PROVISIONS OF SECTION 40(A)(IA); AND (II) HOLDING THAT THE ASSESSEE IS LIABLE TO PAY INTEREST U/S 234 B OF THE ACT. BESIDES THE ASSESSEE HAS ALSO SOUGHT PERMISSION TO ALLOW TWO PROPOSED ADDITIONAL CROSS OBJECTIONS . 3. HAVING GONE THROUGH THE SAID PROPOSED ADDITIONAL CROSS OBJECTIONS IN VIEW OF THE ARGUMENTS ADVANCED BY THE PARTIES WE FIND THAT THE PROPOSED ADDITIONAL CROSS OBJECTIO N NO. 1 IS NOTHING BUT AN AMENDED CROSS OBJECTION NO. (I) PUTT ING THEREIN THE AMOUNT OF TRANSPORT CHARGES WHICH COULD BE TAKE N CARE OF WHILE ADJUDICATING UPON THE ISSUE RAISED IN OBJECTI ON NO. (I) IN THE PROPOSED ADDITIONAL CROSS OBJECTION NO. 2 HAS B EEN RAISED WITHOUT PREJUDICE TO THE ORIGINAL CROSS OBJECTION A ND PROPOSED ADDITIONAL CROSS OBJECTION NO. 1. IN THIS PROPOSED ADDITIONAL CROSS OBJECTION NO. 2 THE ISSUE HAS BEEN RAISED AS TO WHETHER THE TRANSPORT CHARGES PAID DURING THE YEAR ARE OUTS IDE THE PURVIEW OF PROVISIONS OF SECTION 40(A)(IA) OF THE A CT SINCE THE ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 3 SAID SECTION IS APPLICABLE ONLY IN RESPECT OF EXPEN DITURE PAYABLE AND NOT IN RESPECT OF EXPENDITURE ACTUALLY PAID DURING THE YEAR. IN THIS PROPOSED ADDITIONAL CROSS OBJECT ION NO. 2 THE ASSESSEE HAS ALSO MADE A REQUEST THAT DISALLOWANCE OF RS. 1 52 393/- U/S 40(A)(IA) BY THE ASSESSEE IN ITS RET URN OF INCOME OUT OF TRANSPORT CHARGES MAY PLEASE BE RESTR ICTED TO AN AMOUNT OF RS. 1 39 803/- BEING THE AMOUNT PAYABLE A S ON 31- 3-2005 TOWARDS TRANSPORT CHARGES. SO FAR AS THE IS SUE AS DISCUSSED ABOVE RAISED IN THE PROPOSED ADDITIONAL CROSS OBJECTION NO. 2 IS CONCERNED IT IS LEGAL IN NATURE FOR ADJUDICATION OF WHICH NO MATERIAL OUTSIDE THE RECOR D IS REQUIRED TO BE CONSIDERED THE SAID ISSUE IS THUS A LLOWED FOR OUR ADJUDICATION. WE ALSO FEEL IT APPROPRIATE TO M ENTION HERE THAT THE ISSUE RAISED IN ADDITIONAL CROSS OBJECTION NO. 2 IS CONNECTED TO THE ISSUE RAISED IN OBJECTION NO. (I) AND GROUND NO. 2 RAISED BY THE REVENUE IN ITS APPEAL WE WILL DEAL WITH THE SAME WHILE ADJUDICATING GROUND NO. 2 OF THE APPEAL PREFERRED BY THE REVENUE. 4. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF THE ORDERS OF THE LOWER A UTHORITIES MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELI ED UPON. ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 4 5. THE RELEVANT FACTS ARE THAT THE ASSESSEE A CO-O PERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PURCHASE/COLLECT ION OF MILK FROM THE MEMBERS OF THE SOCIETY AND SELLING THE SAM E TO GOVERNMENT MILK SCHEME DHULE AND MAHARASHTRA STATE CO- OP. SANGH (MAHANANDA) MUMBAI HAD PAID FREIGHT CHA RGES OF RS. 70 83 402/- FOR TRANSPORTING GOODS TO MAHANANDA AND RECOVERED THE SAME FROM MAHANANDA TO THE EXTENT OF RS. 69 39 009/- AT THE RATE FIXED BY THE COMMISSIONER OF DAIRY DEVELOPMENT OF MAHARASHTRA STATE MUMBAI. THE SOCI ETY HAD INCURRED THE FREIGHT EXPENSES ON ITS OWN ACCOUNT TO THE EXTENT OF RS. 1 52 393/- AND OFFERED THE SAME TO TAX U/S 4 0(A)(IA) IN THE RETURN OF INCOME AS TAX AT SOURCE WAS NOT DEDUC TED AND PAID IN THE PRESCRIBED TIME. THE A.O MADE ADDITIO NS ON ACCOUNT OF ADHOC DISALLOWANCE OUT OF VARIOUS EXPENS ES AND DISALLOWANCE ON ACCOUNT OF TANKER AND MILK FREIGHT CHARGES U/S 40(A)(IA). RS. 25 000/- OUT OF CLAIMED EXPENSE S OF RS. 6 9 31 009/- WAS ALSO DISALLOWED U/S 40(A)(IA). TH E CIT(A) HAS DELETED THE ABOVE ADDITIONS AGAINST WHICH REVENUE I S IN APPEAL BEFORE US. GROUND NO. 1 6. THE A.O MADE ADHOC DISALLOWANCE OF RS. 25 000/- OUT OF CLAIMED EXPENSES ON VEHICLE AT RS. 1 25 000/- ON T ANKER DIESEL AND OIL EXPENSES OF RS. 4 49 635/- AND POLYT HENE BAGS EXPENSES OF RS. 4 12 066/- ON THE BASIS THAT THE SA ME ARE NOT ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 5 FULLY VERIFIABLE. THE LEARNED CIT(A) HAS DELETED TH IS DISALLOWANCE OF RS. 25 000/- ON THE BASIS THAT THE A.O HAS MADE THE SAID DISALLOWANCE OF RS. 25 000/- WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN SPECIFIC VOUCHERS OR BIL LS FOR EXPENDITURE. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REGULARLY MAINTAINED AND AUDITED. SINCE THERE IS N O IMPROVEMENT IN THE CASE OF REVENUE ON THIS ISSUE W E ARE NOT INCLINED TO INTERFERE WITH THE FIRST APPELLATE ORDE R IN THIS REGARD. THE SAME IS UPHELD. GROUND NO. 1 IS ACCOR DINGLY REJECTED. GROUND NO. 2 AND C.O. NO. (I) AND ADDITIONAL CROSS OBJECTION NO. 2. 7. THE A.O HAS MADE DISALLOWANCE OF RS. 69 31 009/- U/S 40(A)(IA) ON THE BASIS THAT THE AMOUNT PAID TO NINE TANKER OWNERS WAS BETWEEN RS. 5 15 887/- TO RS. 34 68 572/ -. AS PER THE PROVISIONS OF SECTION 194-C THE ASSESSEE WA S LIABLE TO MAKE TDS IMMEDIATELY ON PAYMENT TO TANKER OWNERS IRRESPECTIVE OF THE FACT THAT THE AMOUNT WAS REIMBU RSED BY MAHANANDA DAIRY AND THE FREIGHT CHARGES PAID BY THE ASSESSEE ARE DEBITED TO P & L A/C. THE CONTENTION OF THE AS SESSEE AGAINST DISALLOWANCE REMAINED THAT THE AMOUNT OF RS . 69 31 009/- WAS FREIGHT REIMBURSED BY MAHANANDA DAI RY BOMBAY. THE ASSESSEE HAD INADVERTENTLY ROUTED GROS S FIGURE OF EXPENDITURE INCURRED AT RS. 70 83 402/- AND EXPE NDITURE ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 6 REIMBURSED OF RS. 69 31 009/- THROUGH P & L A/C. IN STEAD OF NET FIGURE OF RS. 1 52 393/- THE ASSESSEE HAS NOT CLAIMED DEDUCTION OF RS. 69 31 009/- IN VIEW OF CONTRA ENTR Y PASSED APPEARING ON BOTH SIDES OF P & L A/C WHEN THERE WAS NO SUB- CONTRACT BETWEEN THE ASSESSEE AND THE TANKER OWNERS THE REIMBURSEMENT OF FREIGHT EXPENDITURE WAS INCURRED ON BEHALF OF MAHANANDA DAIRY BOMBAY AND THERE WAS NO CONTRAC T BETWEEN THE OWNERS OF THE TANKER AND ASSESSEE SOCIE TY. RELIANCE WAS PLACED ON CBDT CIRCULAR NO. 715 DATED 8-8-195 AND ON THE FOLLOWING DECISIONS. (A) ACIT VS. MODICON NETWORK (P) LTD. (2007) 14 SOT 407 (DEL) (B) A.P. LTD. & OTHERS VS. CIT (1999) 239 ITR 287 ( SC) (C) GOVERNMENT MILK SCHEME VS. ACIT (2006) 98 ITD 3 06 (PUNE) (D) DATTA DIGAMBAR SAHAKARI KAMGAR SANSTHA LTD. VS. ACIT (2002) 83 ITD 148 (PUNE). 8. REITERATING THE ABOVE SUBMISSIONS AND RELYING ON THE ABOVE DECISIONS BEFORE US THE LEARNED AR ALSO PLAC ED RELIANCE ON THE FOLLOWING DECISIONS. (A) MRS. SHAH CHARULATA MILIND ITA NO. 1318/PN/20 08 FOR A.Y. 2005-06 ORDER DATED 31 ST MAY 2010 (B) JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DY. CIT IN (2009) 26 DTR 79 (JPR) (C) CIT VS. INDUSTRIAL ENGINEERING PROJECTS (P) LTD . (1993) 202 ITR 1014 (DEL) (D) CIT VS. INDIA DISCOUNT CO. LTD. (1970) 75 ITR 1 91 (SC) ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 7 9. THE LEARNED DR ON THE OTHER HAND TRIED TO JUST IFY THE ASSESSMENT ORDER ON THE ISSUE AND SUBMITTED THAT UNDISPUTEDLY THE AMOUNT IN QUESTION HAS BEEN PAID B Y THE ASSESSEE AS TRANSPORT CHARGES ON WHICH IT WAS DUTY BOUND TO MAKE TDS. SHE FURTHER SUBMITTED THAT THE LEARNED CIT(A) AT PAGES 10 AND 11 IN PARA 6.5 OF HIS ORDER HAS THOUG H HELD THAT THE ASSESSEE-SOCIETY WAS LIABLE TO DEDUCT TAX AT SO URCE FROM THE FREIGHT CHARGES PAID TO TRANSPORTERS BUT IN PA RA 6.10 AT PAGE 12 OF THE FIRST APPELLATE ORDER THE LEARNED C IT(A) HAS HELD THAT THE ASSESSEE HAS NOT CLAIMED EXPENDITURE OF RS . 69 31 009/- AS DEDUCTIBLE AND HENCE THE DISALLOWAN CE OF SAID FREIGHT CHARGES U/S 40(A)(IA) CANNOT BE MADE. 10. HAVING GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES WE FIND THAT THE LEARNED CIT(A) WHILE ADJUDICATING UPON THE ISSUE HAS DEALT WITH THE BASIS ON WHICH THE A.O HAS MADE DISALLOWANCE U/S 40(A)(IA) OF RS. 69 31 009/- AND H AS ALSO DISCUSSED THE SUBMISSIONS MADE BY THE ASSESSEE OPPO SING TO DISALLOWANCE. THE LEARNED CIT(A) WHILE DEALING WIT H THE ISSUE HAS FRAMED TWO QUESTIONS. FIRSTLY AS TO WHETHER T HE ASSESSEE- SOCIETY WAS LIABLE TO DEDUCT TAX ON THE PAYMENT MAD E TO THE TANKER OWNERS TOWARDS FREIGHT CHARGES FOR TRANSPORT ING THE MILK TO MANAHANDA BOMBAY WHICH WAS REIMBURSED BY MAHANANDA DAIRY BOMBAY AT THE RATE FIXED BY THE ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 8 COMMISSIONER DAIRY DEVELOPMENT MAHARASHTRA STATE. SECONDLY AS TO WHETHER THE TOTAL FREIGHT CHARGES P AID AND DEBITED TO P & L ACCOUNT WITHOUT DEDUCTION OF TAX A RE TO BE DISALLOWED U/S 40(A)(IA) WITHOUT CONSIDERING/REDUCI NG THE REIMBURSEMENT OF THE FREIGHT CHARGES CREDITED TO P & L ACCOUNT. THE LEARNED CIT(A) HAS DECIDED THE FIRST ISSUE IN FAVOUR OF THE REVENUE WHICH HAS BEEN OBJECTED BY T HE ASSESSEE IN CROSS OBJECTION NO. (I). THE LEARNED CI T(A) HAS HOWEVER DECIDED THE SECOND ISSUE IN FAVOUR OF THE ASSESSEE WHICH HAS BEEN QUESTIONED BY THE REVENUE IN GROUND NO. 2 OF THE APPEAL. THE LEARNED CIT(A) HAS DECIDED THE FIR ST ISSUE IN FAVOUR OF THE REVENUE ON THE BASIS THAT AS PER THE PROVISIONS OF SECTION 194-C THE EXPRESSION WORK SHALL ALSO INCL UDE CARRIAGE OF GOODS BY ANY MODE OF TRANSPORT. IN THIS REGARD THE LEARNED CIT(A) HAS ALSO TAKEN SUPPORT OF CBDT CIRCULAR NO. 715 DATED 8-8-1995 WHEREIN THE CBDT HAS ANSWERED THAT THE PRO VISIONS OF TAX DEDUCTION AT SOURCE ARE APPLICABLE IRRESPECT IVE OF THE ACTUAL PAYMENT. 11. THE FIRST QUESTION FRAMED BY THE LEARNED CIT(A) AS TO WHETHER THE ASSESSEE-SOCIETY WAS LIABLE TO DEDUCT T AX ON THE PAYMENT MADE TO THE TANKER OWNERS TOWARDS FREIGHT C HARGES FOR TRANSPORTING THE MILK TO MAHANANDA DAIRY BOMBA Y WHICH WAS REIMBURSED BY MAHANANDA DAIRY BOMBAY AT THE RA TES ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 9 FIXED BY THE COMMISSIONER DAIRY DEVELOPMENT OF MAH ARASHTRA STATE IS FULLY COVERED BY THE DECISION OF JAIPUR VI DYUT VITRAN NIGAM LTD. VS. DY. CIT (SUPRA). IN THAT CASE BEFOR E THE JAIPUR BENCH THE ASSESSEE AN ELECTRICITY DISTRIBUTION CO MPANY ENTERED INTO TRANSMISSION SERVICE AGREEMENT WITH TH E TRANSMISSION COMPANY RVPN IN TERMS OF MANDATE OF TH E ELECTRICITY ACT 2003. THE OPERATION AND MAINTENANC E OF TRANSMISSION LINE BY RVPN AND THE USER OF THIS LINE BY THE ASSESSEE FOR TRANSMITTING ENERGY WAS AGAINST THE P AYMENT OF CHARGES BY THE ASSESSEE. THE ASSESSEE RAISED AN AL TERNATIVE ARGUMENT THAT THE PAYMENT OF TRANSMISSION/WHEELING/ SLDC CHARGES BY THE ASSESSEE IS REIMBURSEMENT OF THE COS T. THE TARIFF FIXED BY AN INDIVIDUAL REGULATORY BODY I.E. RAJASTHAN ELECTRICITY REGULATORY COMMISSION AND THE SAME IS D ETERMINED ON NO PROFIT AND NO LOSS BASIS. HENCE THE PROVISIO NS OF DEDUCTION OF TAX AT SOURCE DO NOT APPLY ON ACTUAL REIMBURSEMENT. THEREFORE THERE IS NO LIABILITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF TRANSMISSION/WHEELING/SLDC CHA RGES U/S 194-J OR FOR THAT MATTER U/S 194-C. THE TRIBUN AL ACCEPTED THE CONTENTION OF THE ASSESSEE AND HELD AC CORDINGLY. FOLLOWING THE DECISION OF THE JAIPUR BENCH OF THE T RIBUNAL IN JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT (SUPRA) WH ICH IS ALSO FOLLOWED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MRS. SHAH CHARULALA MILIND VS. ITO (SUPRA) WE ARE O F THE VIEW ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 10 THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN HOLDIN G THAT THE ASSESSEE-SOCIETY WAS LIABLE TO DEDUCT TAX AT SOURCE FROM THE FREIGHT CHARGES PAID TO TRANSPORTERS ESPECIALLY WHE N THE LEARNED CIT(A) HAS DECIDED THE SECOND ISSUE FRAMED BY HIM IN FAVOUR OF THE ASSESSEE WITH THIS FINDING THAT THE T OTAL FREIGHT CHARGES PAID AND DEBITED TO THE P & L A/C WITHOUT D EDUCTION OF TAX ARE NOT TO BE DISALLOWED U/S 40(A)(IA) WITHO UT CONSIDERING OR REDUCING THE REIMBURSEMENT OF FREIGH T CHARGES CREDITED TO THE P & L A/C. AS TO WHETHER THE ASSES SEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE FREIGHT PAYME NT MADE BY IT TO THE TRANSPORTER IS THE MAIN ISSUE WHICH SHOUL D HAVE BEEN ADJUDICATED UPON IN THE TOTALITY OF THE FACTS AND C IRCUMSTANCES OF THE PRESENT CASE. WE THUS WHILE SETTING ASIDE T HE FINDING OF THE LEARNED CIT(A) REGARDING APPLICABILITY OF THE P ROVISIONS OF SECTION 194-C OF THE ACT IN THE PRESENT CASE HOLD THAT THERE IS NO LIABILITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF FREIGHT CHARGES U/S 194-C OF THE ACT. HENCE THE CROSS OBJE CTION NO. (I) IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 12. LIKEWISE THE LEARNED DR COULD NOT REBUT THE FI NDING OF THE LEARNED CIT(A) ON THE SECOND ISSUE. THE LEARNE D CIT(A) HAS CATEGORICALLY DELETED THE DISALLOWANCE OF RS. 6 9 31 009/- MADE U/S 40(A)(IA) ON THE BASIS THAT THE SAID AMOUN T WAS NOT CLAIMED BY THE ASSESSEE AS DEDUCTIBLE EXPENDITURE W HILE ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 11 COMPUTING TOTAL INCOME. THE HEAD OF SECTION 40 IS TITLED AMOUNT NOT DEDUCTIBLE. SECTION 40 PROVIDES DISALL OWANCE OF VARIOUS TYPES OF EXPENDITURES CLAIMED IN CERTAIN SI TUATION OR ON NOT COMPLYING WITH CERTAIN CONDITIONS. THUS TH E DISALLOWANCE U/S 40 IS OF AN EXPENDITURE ACTUALLY C LAIMED AS DEDUCTIBLE. IN THE PRESENT CASE BEFORE US THE ASS ESSEE HAS DEBITED AN AMOUNT OF RS. 70 83 402/- TOWARDS FREIGH T CHARGES AND ALSO CREDITED AN AMOUNT OF RS. 69 31 009/- TO T HE P & L A/C TOWARDS REIMBURSEMENT OF THE SAME FREIGHT CHARG ES DEBITED TO P & L A/C. IN FACT THE ASSESSEE SOCIET Y HAD CLAIMED AN EXPENDITURE ON ACCOUNT OF FREIGHT CHARGES ONLY T O THE EXTENT OF RS. 1 52 393/- (RS. 70 83 402/- MINUS RS. 69 31 009/-) AS DEDUCTIBLE WHILE COMPUTING THE TOTAL INCOME. IN TH IS REGARD WE ALSO FIND STRENGTH FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. INDIA DISCOUNT CO. LTD . (SUPRA) WHEREIN THE HONBLE SUPREME COURT HAS BEEN PLEASED TO HOLD THAT A RECEIPT WHICH IN LAW CANNOT BE REGARDED AS INCOME CANNOT BECOME SO MERELY BECAUSE THE ASSESSEE ERRONE OUSLY CREDITED IT TO THE P & L A/C. 13 IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. V S. DY. CIT (SUPRA) THE ASSESSEE THEREIN AN ELECTRICITY DI STRIBUTION COMPANY ENTERED INTO TRANSMISSION AGREEMENT WITH THE TRANSMISSION COMPANY RVPN IN TERMS OF THE MANDATE OF ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 12 ELECTRICITY ACT 2003. THE OPERATION AND MAINTENAN CE OF TRANSMISSION LINE BY RVPN AND THE USER OF THIS LINE BY THE ASSESSEE FOR TRANSMITTING ENERGY WAS HELD AS NOT RE SULTING IN ANY TECHNICAL SERVICES BEING RENDERED TO THE ASSESS EE SINCE NO SCIENTIFIC KNOWLEDGE EXPERIENCE OR SKILL WAS MADE AVAILABLE BY RVPN TO THE ASSESSEE IN STATUTORY FUNCTION OF TRANS MISSION OF ELECTRICITY. THE SAID TRANSMISSION SYSTEM WAS ALSO ENTRUSTED TO RVPN. THE JAIPUR BENCH OF THE TRIBUNAL ALSO ACC EPTED THE ALTERNATIVE ARGUMENT OF THE ASSESSEE THAT THE PAYME NT OF TRANSMISSION/WHEELING/SLDC CHARGES AS REIMBURSEMENT OF THE COST. THE TARIFF IS FIXED BY AN INDEPENDENT RE GULATORY BODY I.E. RAJASTHAN ELECTRICITY REGULATORY COMMISSION WH ICH IS DETERMINED ON THE PRINCIPLE OF NO PROFIT NO LOSS. IN CASE ON THE BASIS OF SUCH TARIFF ANY SURPLUS IS LEFT WITH RVPN IT GIVES CREDIT OF THE SAME TO THE ASSESSEE. IT WAS HELD TH AT THE PROVISIONS OF DEDUCTION OF TAX AT SOURCE DOES NOT A PPLY ON ACTUAL REIMBURSEMENT THEREFORE THERE IS NO LIABIL ITY TO DEDUCT TAX AT SOURCE ON PAYMENT OF TRANSMISSION/WHEELING/S LDC CHARGES U/S 194-J OR FOR THAT MATTER U/S 194-C. IT WAS HELD FURTHER THAT SECTION 40(A)(IA) APPLIES ONLY WHEN TH E AMOUNT IS PAYABLE AND NOT WHETHER THE EXPENDITURE IS PAID. T HE WORD PAYABLE IS NOT DEFINED BUT THE WORD PAID IS DEF INED IN SECTION 43(2) TO MEAN ACTUALLY PAID OR INCURRED. H ENCE BY IMPLICATION THE WORD PAYABLE DOES NOT INCLUDE PA ID. IN ANY ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 13 CASE SINCE THE ASSESSEE HAS MADE ACTUAL PAYMENT OF WHEELING/SLDC CHARGES PROVISIONS OF SECTION 4-0(A)( IA) ARE NOT APPLICABLE HELD THE TRIBUNAL. THE ISSUE RAISED IN GROUND NO. 1 AND ADDITIONAL CROSS OBJECTION NO. 2 THUS FINDS S UPPORT FROM THE DECISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD VS. DY. CIT (SUPRA) IN FAVOUR OF THE ASSESSEE. 14. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. INDUSTRIAL ENGINEERING PROJECTS (P) LTD. (SUPRA) HAS BEEN PLEA SED TO UPHOLD THE DECISION OF THE TRIBUNAL THAT RECEIPT OF REIMBURSEMENT OF EXPENSES CANNOT BE REGARDED AS REV ENUE RECEIPT. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN DELETING THE DISALLOWANCE IN QUESTION. GROUND NO. 2 OF THE APPE AL PREFERRED BY THE REVENUE IS ACCORDINGLY REJECTED. 15. THE ADDITIONAL CROSS OBJECTION NO. 2 HAS BEEN RAISED WITHOUT PREJUDICE TO CROSS OBJECTION NO. (I) AND AD DITIONAL CROSS OBJECTION NO. 1. THE GRIEVANCE OF THE LEARNED AR R EMAINED THAT DISALLOWANCE OF RS. 1 52 393/- OFFERED U/S 40( A)(IA) BY THE ASSESSEE IN ITS RETURN OF INCOME OUT OF TRANSPORT C HARGES BE RESTRICTED TO AN AMOUNT OF RS. 1 39 803/- BEING AMO UNT PAYABLE AS ON 31-3-2005 TOWARDS TRANSPORT CHARGES A ND IT BE ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 14 FURTHER HELD THAT THE TRANSPORT CHARGES OF RS. 69 3 1 009/- PAID DURING THE YEAR ARE OUTSIDE THE SCOPE AND PURV IEW OF THE PROVISIONS OF SECTION 4-(A)(IA) OF THE I.T. ACT 19 61 BECAUSE THE SAID SECTION IS APPLICABLE ONLY IN RESPECT OF EXPEN DITURE PAYABLE AND NOT IN RESPECT OF EXPENDITURE ACTUALLY PAID DURING THE YEAR. THE ISSUE RAISED IN THIS ADDITIONAL CROS S OBJECTION NO. 2 IS SQUARELY COVERED BY THE ABOVE STATED DECIS ION IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LD. VS. DCIT (SU PRA) HOLDING THEREIN AFTER DETAILED DISCUSSION THAT SEC. 40(A)(IA) APPLIES ONLY WHEN THE AMOUNT IS PAYABLE AND NOT WHE RE THE EXPENDITURE IS PAID. IT WAS HELD HAT THE WORD PA YABLE IS NOT DEFINED BUT THE WORD PAID IS DEFINED IN SEC. 43(2 ) TO MEAN ACTUALLY PAID OR INCURRED HENCE BY IMPLICATION THE WORD PAYABLE DOES NOT INCLUDE PAID. WE FOLLOWING THE DECISION ON THE ISSUE IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LD. VS. DCIT (SUPRA) DECIDE THE ADDITIONAL CROSS OBJECTION NO. 2 IN FAVOUR OF THE ASSESSEE. IT IS WITHOUT PREJUDICE TO OUR DECISION GIVEN HEREINABOVE ON THE ISSUES RAISED IN GROUND NO . 2 AND CROSS OBJECTION NO. (I). CROSS OBJECTION NO. (II) 16. IT IS AGAINST CHARGING OF INTEREST U/S 234B OF THE ACT. NO ARGUMENTS HAVE BEEN ADVANCED BY THE LEARNED AR IN S UPPORT OF THIS CROSS OBJECTION DURING THE COURSE OF HEARIN G BEFORE THE TRIBUNAL. EVEN OTHERWISE UNDISPUTEDLY CHARGING OF INTEREST ITA NO. 1420/PN/2008 AND CO 12/PN/2010 SHRI DADASAHEB RAWAL SINDKHEDA TALUKA DUDH UTPADAK SANGH LTD. A.Y. 2005-06 15 U/S 234B IS MANDATORY AND CONSEQUENTIAL IN NATURE HENCE IT DOES NOT NEED SEPARATE ADJUDICATION. 17. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST 2010. SD/- SD/- (R.C. SHARMA) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 31 ST AUGUST 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- (A) I PUNE (4) CIT I PUNE (5) THE D.R. B BENCH PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE