The ACIT, 4(1), Indore v. M/s Khandelwal Agencies Pvt. Ltd., Indore

ITA 548/IND/2010 | 2007-2008
Pronouncement Date: 24-11-2011 | Result: Allowed

Appeal Details

RSA Number 54822714 RSA 2010
Assessee PAN AABCK7095H
Bench Indore
Appeal Number ITA 548/IND/2010
Duration Of Justice 1 year(s) 3 month(s) 5 day(s)
Appellant The ACIT, 4(1), Indore
Respondent M/s Khandelwal Agencies Pvt. Ltd., Indore
Appeal Type Income Tax Appeal
Pronouncement Date 24-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 24-11-2011
Date Of Final Hearing 24-08-2011
Next Hearing Date 24-08-2011
Assessment Year 2007-2008
Appeal Filed On 19-08-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.548/IND/2010 A.Y. 2007-08 ACIT-4(1) INDORE ... APPELLANT VS M/S. KHANDELWAL AGENCIES PVT. LTD. INDORE PAN AABCK 7095 H ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN SR. DR RESPONDENT BY : SHRI S.S. DESHPANDE CA DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 24.11.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 31.5.2010 ON THE GROUND THAT ON THE FACTS AND IN TH E 2 CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELLATE AUTHORITY ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.15 06 874/- MADE ON ACCOUNT OF VIOLATION OF THE PROVISIONS OF SECTION 194C(2) OF THE ACT BY FURTHER HOLDING TH AT THE PROVISIONS OF SECTION 194C AND SECTION 40(A)(IA) AR E NOT ATTRACTED AS NO CONTRACT WRITTEN OR ORAL EXISTED AS THE IMPLICIT CONTRACT WAS EXISTING FOR TRANSPORTATION OF GOODS A T AGREED RATES. 2. DURING HEARING OF THIS APPEAL THE LEARNED SR. D R ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE G ROUND RAISED. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. WE HAVE CONS IDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAI LABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN TRADING OF STEEL TUBES PIPES SOCKETS A ND FITTINGS ETC. DECLARED INCOME OF RS. 2 81 030/- IN ITS RETUR N FILED ON 31.10.2007. THE ASSESSING OFFICER EXAMINED THE ISSU E OF CLAIM OF DEDUCTION OF FREIGHT PAYMENT AND NON-DEDUCTION O F TDS. THE STATEMENT OF SHRI SANTOSH KHANDELWAL PRINCIPAL OFF ICER OF THE 3 ASSESSEE COMPANY WAS ALSO RECORDED U/S 131 OF THE ACT AND A CONCLUSION WAS DRAWN AS CONTAINED IN PARA 4.9 AND 4 .10 OF THE ASSESSMENT ORDER. THE WHOLE THRUST OF THE ASSESSING OFFICER IS THAT THE ASSESSEE MADE ATTEMPT TO AVOID THE LIABILI TY OF TDS BOTH IN THE HANDS OF THE ASSESSEE AS WELL AS OF THE SUPPLIER. ON 30.11.2009 THE ASSESSEE FILED A LETTER FROM M/S RAJ ESH METAL CRAFTS LIMITED THE SUPPLIER ADMITTING THAT THE AD VANCE PAYMENT WAS MADE BY HIM TO THE TRANSPORTERS. 3. WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DREW HIS CONCLUSION MERELY ON THE GROUND THAT THERE WAS NO WRITTEN CONTRACT BETWEEN THE ASSESSEE/TRUCK OWNERS/DRIVERS AND OPERATORS TO WHOM SUCH TRANSPORT ATION CHARGES WERE PAID. THE RELEVANT PORTION AS CONTAINE D IN PARA 4.3 AND 4.3.1 IS REPRODUCED HEREUNDER :- 4.3 COMING TO THE ISSUE RAISED IN GROUND NO. 2 REGARDING DISALLOWANCE OFRS. 36 84 384/- THE ISSUE INVOLVED IS BROADLY LEGAL I.E. WHETHER IN FACTS OF THE APPELLANTS CASE THE PROVISIONS OF SECTION 194C(2) READ WITH RELEVANT RULES WOULD BE ATTRACTED FOR TRANSPOR TATION CHARGES PAID BY THE APPELLANT TO VARIOUS TRUCK OWNE RS. THE A.O.S CASE IS BASED ON HIS READING OF THE PROV ISION OF SECTION 194C(2) READ WITH RULE 29D IS THAT THE APPELLANT WAS LIABLE FOR DEDUCTION OF TAX U/S 194C( 2) FOR THE TRANSPORTATION CHARGES PAID TO VARIOUS TRUCK OW NERS 4 AND HE HAS EMPHASIZED THAT SUCH PROVISIONS ARE WIDE ENOUGH TO COVER NOT ONLY THE WRITTEN CONTRACTS BUT ALSO ORAL CONTRACTS. 4.3.1 THE APPELLANTS CONTENTION REMAIN THAT IN THE FACTS OF THE APPELLANTS CASE THERE BEING NO WRITT EN CONTRACT BETWEEN THE APPELLANT AND THE VARIOUS TRUC K OWNERS/DRIVERS/OPERATORS TO WHOM SUCH TRANSPORTATIO N CHARGES WERE BEING PAID AND FURTHER THAT PAYMENTS W ERE MADE DIRECTLY TO TRUCK DRIVERS OR TRUCK OPERATORS A ND THE PAYMENT HAS NOT BEEN MADE DIRECTLY TO ANY TRUCK OWN ERS PROVISIONS OF SECTION 194C(2) IN NO WAY WAS ATTRACT ED. FURTHER THE A.O. HAS TOTALLY FAILED TO ESTABLISH AN Y INGREDIENT OF CONTRACT OF THE APPELLANT WITH ANY TR UCK OWNERS AND PAYMENTS MADE TO INDIVIDUAL DRIVER OR OPERATOR DO NOT EXCEED RS. 50 000/- DURING THE RELE VANT YEAR. IT HAS BEEN MENTIONED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS) THAT THE ASSESSING OFFICER FAILED TO ESTA BLISH ANY INGREDIENT OF THE CONTRACT WITH SUCH TRUCK OWNERS THEREFORE SECTION 194C(2) OF THE ACT IS NOT ATTRACTED. WE AR E NOT AGREEING WITH THIS PROPOSITION OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) BECAUSE AS PER OUR CONSIDERED VIEW SENDING OF GOODS THROUGH TRANSPORTER ACCEPTANCE OF PAYMENT BY HIM AND CARRYING OF GOODS AT THE DESTINATION AS PER THE DIRECTION OF THE ASSESSEE ITSELF AMOUNTS TO AN AGRE EMENT WHICH NEED NOT ALWAYS BE IN WRITING. THE TRADE PRACTICE I N TRANSPORTATION BUSINESS IS NORMALLY DONE ON ORAL AG REEMENT 5 AND EVERY TIME MAY NOT BE NECESSARY IN WRITING. IT IS FURTHER SEEN THAT THE CONCLUSION DRAWN IN THE IMPUGNED ORDE R IS BROADLY BASED UPON THE DECISION IN THE CASE OF SHRI DURGESH SHUKLA [IT APPEAL NO.188/09-10 DATED 27.3.2010 PAS SED BY THE LD. CIT(A)]. HOWEVER IT IS PERTINENT TO MENTIO N HERE THAT THAT ORDER/OBSERVATION FOLLOWED BY THE LD. CIT(A) W AS REVERSED BY THE TRIBUNAL VIDE ORDER DATED 10.10.2011 IN ITA NOS.383 488/IND/2010 (AY:2007-08) THEREFORE IN PRINCIPLE THE OBSERVATION OF LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) IS REVERSED. 4. FROM THE RECORD WE FIND THAT INDIVIDUAL PAYMENT MADE TO THE TRANSPORTER BY THE ASSESSEE AS PER ANNEXURE-A A NNEXED WITH THE ASSESSMENT ORDER DOES NOT EXCEED RS. 50 00 0/-. IT APPEARS THAT PAYMENT MADE BY THE CONSIGNEE OF GOODS HAS ALSO BEEN ADDED BY THE ASSESSING OFFICER WHILE CONS IDERING TOTAL AMOUNT OF TRANSPORTATION CHARGES. THE PART OF TRANSPORTATION CHARGES WHICH HAS BEEN PAID BY THE C ONSIGNOR OF GOODS CANNOT BE TREATED AS TRANSPORTATION CHARGES PAID/INCURRED BY THE ASSESSEE. FOR THE APPLICABILI TY OF SECTION 6 194C OF THE ACT WE HAVE TO SEE THE AMOUNT OF EXPEN DITURE PAID AND CLAIMED BY THE ASSESSEE. IF PART OF THE T RANSPORTATION CHARGES HAS BEEN PAID BY THE CONSIGNOR ON HIS OWN A CCOUNT THE SAME CANNOT BE TREATED AS PART OF THE ASSESSEE S EXPENDITURE WHILE CONSIDERING DISALLOWANCE OF THE S AME U/S 40(A)(IA) OF THE ACT. THE FACTUAL POSITION REGARDI NG PAYMENT OF PART OF THE TRANSPORTATION CHARGES BY THE CONSIGNOR HAS NOT BEEN DISPUTED BY THE LEARNED SR. DR BEFORE US. ACC ORDINGLY WE DO NOT FIND ANY JUSTIFICATION FOR DISALLOWANCE O F TRANSPORTATION CHARGES ON THE PLEA OF NON DEDUCTION OF TAX AT SOURCE INSOFAR AS INDIVIDUAL PAYMENT DID NOT EXCEED RS. 50 000/- IN A YEAR. AS PER THE PROVISIONS OF SECTIO N 194C(1) OF THE ACT ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT FOR CARRYING OUT ANY WORK AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT O R BY ANY OTHER MODE IS TO DEDUCT AN AMOUNT EQUAL TO 1% WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO AN INDIVI DUAL OR A HINDU DIVIDED FAMILY AND 2% WHERE THE PAYMENT IS MA DE TO OTHER THAN AN INDIVIDUAL OR HUF. AS PER SUB-SECTIO N (5) TO 7 SECTION 194C NO DEDUCTION SHALL BE MADE FROM THE AM OUNT OF ANY SUM CREDITED OR PAID OR LIKELY TO BE CREDITED O R PAID TO THE ACCOUNTS OF OR TO THE CONTRACTOR IF SUCH SUM DOE S NOT EXCEED THE SPECIFIED LIMIT. EVEN THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 4.3.1 HAS MENTIONED THAT THE PAYMENTS DO NOT EXCEED RS. 50 000/-. HOWEVER FOR BETTER APP RECIATION WE ARE REPRODUCING HEREUNDER ANNEXURE-A ATTACHED W ITH THE ASSESSMENT ORDER: COL.1 COL.2 COL.3 COL.4 COL.5 S.NO. TRANSPORT AGENCY TOTAL AMOUNT (RS.) AS PER ASSESSEES SUBMISSION (RS.) ADVANCE AMOUNT (RS.) 1 JANTA ROAD CARRIER 74770 47295 27475 2 OM TRANSPORT AGENCY 93035 42855 50180 3 ABC INDIA LTD. 144010 48510 95500 4 AMAR TRANSPORT CO. 53375 43435 9940 5 RAJASTHAN ASSAM ROAD LINES 74830 46980 27850 6 SAHARA TRANSPORT CO. 65054 48114 16940 7 KAILASH TRANSPORT 59969 49969 10000 8 GREWAL ROADLINES 64672 49672 15000 9 GOVINDGARN BHAVNAGAR 58940 46940 12000 10 NAVEEN ROAD CARRIERS 74485 43985 30500 11 NEW PATIALA 64841 49841 15000 12 SAI ROAD LINES 59871 49871 10000 13 SANDHU ROAD CARRIER 52679 44679 8000 14 SRC 56206 44226 11980 15 BOMBAY GOVINDGARH ROADWAYS 64490 45190 19300 16 ALL INDIA TRANSPORT CO. 70685 42875 27810 17 AMRIT TRANSPORT CO. 87910 46815 41095 18 NEW BHADSON 67740 47740 20000 19 SHYAM TRANSPORT 52401 42781 9620 20 SHREE DURGA 55834 42229 13605 21 TRUCK OPERATOR UNION 53745 43655 10090 22 RAJ TRANSPORT 57332 47332 10000 23 AMLOH GOLDEN ROAD WAYS 46478 46478 0 24 BHATINDA EXPRESS GOODS CARRIER 49465 49465 0 25 GOODWILL ROADLINES 46495 46495 0 26 CHOPRA TRANSPORT CO. 41740 41740 0 27 J.K.ROADLINES 46363 46363 0 28 GREAT EASTERN CARRIERS LTD. 46914 46914 0 29 B.R.ROADLINES 43841 43841 0 30 LAMBA ROADLINES 48649 48649 0 31 MTI LOGISTICKS PVT.LTD. 42436 42436 0 8 32 PARNAMI GOODS CARRIER 46250 46250 0 33 RAJENDRA ROADWAYS 47309 47309 0 34 SSB FREIGHT CARRIER 46568 46568 0 35 SARCO ROADLINES 49241 49241 0 36 THE HIND RATTAN TRANSPORT ORG. 43677 43677 0 TOTAL 2152300 1660415 491885 IF THE AFORESAID TABLE IS ANALYSED WE FIND THAT FO R EXAMPLE IN THE CASE OF JANTA ROAD CARRIER (SL.NO.1) IN COL.NO. 3 THE TOTAL AMOUNT HAS BEEN MENTIONED AT RS.74 770/- WHICH IS M ORE THAN THE PRESCRIBED LIMIT OF RS.50 000/-. HOWEVER AS PE R THE CLAIM OF THE ASSESSEE (COL.NO.4) THE AMOUNT WAS CLAIMED TO BE PAID AS RS.47 295/- AND ADVANCE AMOUNT OF RS.27 475/- WAS M ADE. AS PER THE ASSESSEE THE SUPPLIER SENDS THE GOODS TO T HE ASSESSEE AND THE PURCHASER I.E. THE ASSESSEE HAS IS NOT LIABLE TO DEDUCT TAX U/S 194C OF THE ACT FROM THE PAYMENT MADE TO THE CONTRACTOR. MOST OF THE AMOUNTS SO PAID ARE IDENT ICAL AND SOME OF THEM ARE ABOVE THE PRESCRIBED MONETARY LIMI T. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO EXA MINE THE ISSUE AFRESH AND IF HE FINDS FROM THE ACCOUNTS OF T HE ASSESSEE THAT THE AMOUNT SO PAID IS BELOW PRESCRIBED LIMIT THEN THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS U/S 194C OF TH E ACT AND IF 9 FINDS OTHERWISE HE MAY DECIDE IN ACCORDANCE WITH L AW THEREFORE THIS APPEAL OF THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES ONLY. ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE O F LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.11.2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE