The ITO, Ward-9(4),, Ahmedabad v. Rajendra Madhubhai Gohil, Ahmedabad

ITA 683/AHD/2013 | 2008-2009
Pronouncement Date: 31-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 68320514 RSA 2013
Assessee PAN ABTPG6187G
Bench Ahmedabad
Appeal Number ITA 683/AHD/2013
Duration Of Justice 7 month(s) 20 day(s)
Appellant The ITO, Ward-9(4),, Ahmedabad
Respondent Rajendra Madhubhai Gohil, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 31-10-2013
Assessment Year 2008-2009
Appeal Filed On 11-03-2013
Judgment Text
ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D.K. TYAGI J.M. & SHRI ANIL CHATURVE DI A.M.) I.T. A. NO. 683 /AHD/2013 (ASSESSMENT YEAR: 2008-09) INCOME-TAX OFFICER WARD-9 (4) AHMEDABAD V/S SHRI RAJENDRA MADHUBHAI GOHIL 1/3 AYOJAN NAGAR NAVA SHAARDA MANDIR ROAD PALDI AHMEDABAD 3800076 (APPELLANT) (RESPONDENT) PAN: ABTPG 6187G APPELLANT BY : SHRI P.L. KUREEL SR. D.R. RESPONDENT BY : SHRI U.S. BHATI ( )/ ORDER DATE OF HEARING : 28-10-2013 DATE OF PRONOUNCEMENT : 31-10-2013 PER SHRI ANIL CHATURVEDI A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-XV AHMEDABAD DATED 04.12.2012 FOR A.Y. 2008-09. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS O F HIRING MOTOR CAR IN THE NAME OF SAI TRAVELS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08- 09 ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 3 64 140/-. THE CASE WAS ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 2 SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 30.12.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 53 53 480/-. AGGRIEVED BY THE OR DER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 4 TH DECEMBER 2012 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIE VED BY THE AFORESAID ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS. 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 28 35 053/- MADE ON ACCOUNT OF HIRING CHARGES U/S. 40(A)(IA) OF THE ACT. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XV AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 10 10 258/- MAD E ON ACCOUNT OF INTEREST PAYMENT TO PRIVATE FINANCE COMPANY. 3. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XV AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ADDITION UNDER PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT WOULD BE ATTRACTED ONLY IN RESPECT OF THE PAYABLE AMOUNT OF EXPENDITURE AS ON 31 ST MARCH OF THE RELEVANT PREVIOUS YEAR. 4. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XV AHM EDABAD HAS ERRED IN LAW ON FACTS DELETING THE DISALLOWANCE MADE ON ACCOUNT OF EXPENS ES NOT PROVED DURING THE REMAND PROCEEDING SUCH AS OFFICE EXPENSES OF RS. 21 640 S ERVICE TAX OF RS. 66 873/- AND TELEPHONE EXPENSES OF RS. 32 360/- WITHOUT ANY SPECIFIC FINDI NG FOR SUCH ALLOWANCE. GROUND NO. 1 IS WITH RESPECT TO ADDITION OF RS. 28 35 053/- ON ACCOUNT OF HIRING CHARGES 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VER IFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE A.O. NOTICED THA T ASSESSEE HAD SHOWN PAYMENT OF MOTOR HIRE CHARGES TO VARIOUS SUB-CONTRA CTORS AND CAR OWNERS AMOUNTING TO RS. 28 35 053/-. HE ALSO NOTED THAT TH E PAYMENTS WERE MADE EXCEEDING RS. 20 000/- IN SINGLE TRIP AND EXCE EDING RS. 50 000/- IN AGGREGATE DURING THE YEAR. HE FURTHER NOTICED THAT ASSESSEE HAS NOT DEDUCTED TDS BEFORE MAKING THE PAYMENT. THE ASSESS EE WAS THEREFORE ASKED TO SHOW AS TO WHY THE AMOUNT PAID BE NOT DISA LLOWED UNDER SECTION 40(A)(IA). IN THE ABSENCE OF ANY RESPONSE OF THE AS SESSEE A.O. ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 3 CONSIDERED THE HIRE CHARGES OF RS. 28 35 053/- ON W HICH THE ASSESSEE HAD NOT DEDUCTED TDS U/S 194C AS NOT ALLOWABLE UNDER TH E PROVISIONS OF SECTION 40(A)(IA) AND ACCORDINGLY DISALLOWED AND A DDED BACK THE AFORESAID SUM TO THE INCOME. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE DECIDED THE ISSUE IN FA VOUR OF ASSESSEE BY HOLDING AS UNDER:- 5.4 GROUND NO.3 IS IN RESPECT OF DISALLOWANCE U/S.40(A) (IA) OF THE ACT FOR AN AMOUNT OF RS.28 35 053 SINCE APPELLANT DID NOT COMPLY THE PR OVISIONS OF DEDUCTION OF TDS IN RESPECT OF PAYMENTS MADE FOR MOTOR HIRE CHARGES TO VARIOUS SUB -CONTRACTORS. THE A.O. MADE THE ADDITION SINCE APPELLANT HAS NOT GIVEN ANY EXPLANATION OR RE PLY IN THIS REGARD DURING ASSTT. PROCEEDINGS. THE APPELLANT DURING APPEAL PROCEEDINGS SUBMITTED T HAT HE IS HAVING BUSINESS OF MOTOR HIRE MAINLY FOR STATE GOVT. PSU(I.E.GUJARAT STATE PETROL EUM CORPORATION LTD. GANDHINAGAR (GSPL) GUJARAT STATE PETRONET LTD. GANDHINAGAR AND GSPC GAS CO. LTD. THE APPELLANT HAS TO DEPLOY THE VEHICLES LIKE TOYOTO QUALIS SCORPIO SAFARI ETC. FOR ITS STAFF. COPIES OF 'WORK ORDER' RECEIVED WERE ALSO ATTACHED BY APPELLANT WHI CH HAVE VARIOUS TERMS AND CONDITIONS. IT WAS CONVEYED THAT APPELLANT HAS HIS OWN VEHICLES (2 6 VEHICLES AS PER DETAILS SUBMITTED BEFORE A.O. VIDE WRITTEN SUBMISSION DATED 13.9.2010) TO CO MPLETE THE WORK CONTRACT. IT IS ONLY ON FEW OCCASION WHEN HE HAS TO HIRE VEHICLES TO COMPLETE THE SAID WORK CONTRACT AS PER TERMS & CONDITIONS. IT IS THEREFORE THERE IS NO SUB-CONTRA CT OR SUBLETTING OF WORK BUT APPELLANT FULFILL ALL THE TERMS AND CONDITIONS OF THE WORK CONTRACT. THE RISK AND RESPONSIBILITY TO FULFILL SUCH WORK CONTRACT AS WELL AS TERMS AND CONDITIONS ARE O N APPELLANT. THERE IS NO ASSIGNMENT OF SUCH WORK CONTRACT TO ANY OF SUCH TAXI/MOTOR OWNER. IT IS ONLY AS AND WHEN IN THE CASE OF EVENTUALITY OF BREAK-DOWN OF ANY APPELLANT'S VEHICL ES NON-AVAILABILITY OF EXTRA VEHICLE THE APPELLANT HIRE THE VEHICLE FROM OPEN MARKET AS PER THE SUITABILITY OF HIS WORK CONTRACT. THE APPELLANT HIRE SUCH VEHICLES IN A DISCRETE MANNER A ND NOT ON A REGULAR BASIS. THE TYPE OF VEHICLE PERIOD ETC. DIFFER FROM TIME TO TIME AS PE R THE NEED OF APPELLANT ON AN URGENT SITUATION AND ACCORDINGLY PAYMENT FOR SUCH HIRING IS MADE. TH ERE IS NO FIXED HIRE CHARGE. THE APPELLANT ON THESE FACTS RELIED ON VARIOUS CASE LAWS AS ALREA DY DISCUSSED WHERE IT HAS BEEN HELD THAT IN SUCH TYPE OF CASUAL AND NON-RECURRING HIRING OF VEH ICLE TO COMPLETE A CONTRACT CANNOT BE TAKEN AS SUB-CONTRACT. I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPEL LANT THAT IN THE FACTS AND CIRCUMSTANCES OF HIS CASE PAYMENT OF HIRING CHARGES TO VARIOUS MOTO R CAR /VEHICLE OWNERS OR PARTIES FOR OCCASIONAL ENGAGEMENT IN PURSUANT TO COMPLETE HIS C ONTRACT CANNOT BE HELD AS SUB-CONTRACT AND THEREFORE THE PROVISIONS FOR DEDUCTION OF TAX U /S.194C(2) IS NOT APPLICABLE. THE CRUCIAL ASPECT WHICH EMERGES OUT FROM THE FACTS OF THE APPE LLANT IS THE RISK AND RESPONSIBILITY OF FULFILLING VARIOUS TERMS AND CONDITIONS OF THE CONT RACT REMAINED WITH APPELLANT IN THE CASE OF SUCH OCCASIONAL AND NON-RECURRING HIRING OF VEHICL ES. THIS CANNOT BE ATTRIBUTED AS CONTRACT OF SERVICES AND THEREBY A SUB-CONTRACT. IT IS IN THIS REGARD SINCE THE PROVISIONS OF SECTION 194C(2) ARE NOT APPLICABLE THERE IS NO QUESTION OF APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT. APPELLANT'S OTHER CONTENTION THAT OUT OF SUCH CHARG ES NOTHING REMAINED PAYABLE AT THE END OF PREVIOUS YEAR IS ALSO HAVING FORCE CONSIDERING THE RATIO OF VARIOUS CASE LAWS. THE APPELLANT RELIED ON THE DECISION OF HON'BLE ITAT VISHAKHAPATT NAM SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT AND SUBMITTED AUDITE D BALANCE SHEET AND DETAILS TO EVIDENCE THAT NOTHING OUT OF SUCH HIRE CHARGES REMAINED PAYA BLE AS ON 31.7.2008. THE APPELLANT SUCCEED THEREFORE FOR THE GROUND RELATED TO DISALLO WANCE U/S.40(A)(IA) OF THE ACT FOLLOWING THE RATIO OF DECISION OF THIS CASE. ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 4 IT IS THEREFORE THE A.O. IS DIRECTED TO ALLOW HIRE CHARGES OF RS.28 35 053/- AND DELETE THE ADDITION SO MADE U/S.40(A)(IA) OF THE ACT. THE APPE LLANT GETS RELIEF ACCORDINGLY 5. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US THE LD. D.R. SUBMITTED BUT THE ASSESSEE FAILED TO SUBMIT THE DETAILS CALLED FOR BY THE A.O. AND THEREFORE THE A. O. WAS JUSTIFIED IN DISALLOWING THE EXPENDITURE BY INVOKING THE PROVISI ONS OF SECTION 40(A)(IA) OF THE ACT. HE FURTHER SUBMITTED THAT CI T(A) HAS GRANTED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF SPECIA L BENCH IN THE CASE OF MERLYN SHIPPING AND TRANSPORT VS. ACIT. HE FURTHER SUBMITTED THAT HON. GUJARAT HIGH COURT IN THE CASE OF SIKANDAR KHAN N. TUNVAR (2013) 33 TAXMAN. COM 133 (GUJ.) HAS HELD THAT THE DECISION O F SPECIAL BENCH IN THE CASE OF MERLYN SHIPPING AND TRANSPORT VS. A.C.I .T DOES NOT LAY DOWN CORRECT LAW. HE THEREFORE SUBMITTED THAT IN VIEW OF THE DECISION OF HON. GUJARAT HIGH COURT THE MATTER MAY BE SENT BACK TO THE FILE OF A.O. TO DECIDE THE ISSUE IN THE LIGHT OF THE AFORESAID DECI SION OF GUJARAT HIGH COURT. 7. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT ASSES SEE HAD ENTERED INTO CONTRACT WITH PSUS FOR SUPPLY OF VEHICLES. THE ASS ESSEE USED TO SUPPLY ITS OWN VEHICLES BUT ONLY ON FEW OCCASIONS WHEN IT HAD TO COMPLETE THE WORK CONTRACT AS PER THE TERMS AND CONDITIONS AND H IS OWN VEHICLES WERE NOT AVAILABLE IT HAD HIRED THE VEHICLES. IT WAS FU RTHER SUBMITTED THAT THE RISK AND RESPONSIBILITY TO FULFILL SUCH WORK CONTRA CT OF PSUS WAS ON THE ASSESSEE. THE VEHICLES WERE HIRED BY THE ASSESSEE O NLY WHEN REQUIRED AND THERE WAS NO FIXED HIRING CHARGES. HE FURTHER S UBMITTED THAT RATES ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 5 PAID TO THE TAXI OPERATORS/OWNERS VARIED DEPENDING UPON THE PREVAILING MARKET CONDITIONS AND ASSESSEE HAD NOT ENTERED INTO ANY CONTRACT EITHER WRITTEN OR ORAL WITH THE PERSONS FROM WHOM THE VEHI CLES WERE TAKEN BY ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ASSESSE E NEVER PASSED ITS RESPONSIBILITY AS A CONTRACTOR TO THE TAXI OWNER/OP ERATOR AND IN CASE OF ANY BREACH OF TERMS AND CONDITIONS THE ASSESSEE WA S ONLY RESPONSIBLE--- HE FURTHER PLACED RELIANCE ON THE DECISION IN THE C ASE OF KAVITA CHUG VS. ITO (2011) 44 SOT 95 (KOLKATA) DECISION OF BOMBAY TRIBUNAL IN THE CASE OF BHAIL BULK CARRIERS VS. ITO ITA NO. 3536/M UM/2011 AND THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF SHRE E DHAIN AUTO TRANSPORT CORPORATION IT(SS) NO. 124/AHD/2013 ORDE R DATED 19.07.2013. HE THUS SUPPORTED THE ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT A.O. MADE DISALLOWANCE UNDER SECTION 4 0(A)(IA) FOR THE REASON THAT NO DETAILS WERE SUBMITTED BEFORE HIM WI TH RESPECT TO CAR HIRING CHARGES AND THEREFORE HE WAS OF THE VIEW THA T THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS UNDER SECTION 194C WHICH ASSES SEE HAD NOT DEDUCTED AND THEREFORE DISALLOWED THE PAYMENT UNDER SECTION 40(A)(IA). WE FIND THAT CIT(A) WHILE DECIDING THE ISSUE IN FAV OUR OF THE ASSESSEE HAS GIVEN A FINDING THAT THE RISK AND RESPONSIBILIT Y OF FULFILLING OF VARIOUS TERMS AND CONDITIONS OF THE CONTRACT REMAINED WITH THE ASSESSEE WHERE THE ASSESSEE HAD TAKEN ON HIRE THE VEHICLES AND IT CANNOT BE ATTRIBUTED AS CONTRACT OF SERVICE AND THEREBY A SUB-CONTRACT AND THEREFORE THE PROVISIONS OF SECTION 194C(2) ARE NOT APPLICABLE. H E HAD FURTHER HELD THAT PROVISIONS OF SECTION 194C WERE NOT APPLICABLE TO T HE PAYMENTS MADE BY ASSESSEE FOR HIRING OF VEHICLES. BEFORE US THE REV ENUE COULD NOT ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 6 CONTROVERT THE FINDINGS OF CIT(A) BY BRINGING ANY C ONTRARY MATERIAL ON RECORD. IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. GROUND NO. 2 AND 3 ARE INTERCONNECTED AND THEREFORE WE CONSIDERED TOGETHER. IT IS WITH RESPECT TO DISALLOWANCE OF INT EREST PAYMENT OF RS. 10 10 258/-. 9. ON VERIFICATION OF THE DETAILS A.O. NOTICED THAT A SSESSEE HAD PAID INTEREST TO VARIOUS PRIVATE FINANCE COMPANIES TO TH E TUNE OF RS. 10 10 258/-. A.O. WAS OF THE VIEW THAT ASSESSEE SH OULD HAVE DEDUCTED TDS UNDER SECTION 194A BUT HAD FAILED TO DEDUCT TDS . THE ASSESSEE WAS THEREFORE ASKED TO SHOW CAUSE AS TO WHY THE INT EREST PAYMENT NOT BE DISALLOWED UNDER SECTION 40(A)(IA). IN THE ABSENCE OF RESPONSE FROM THE ASSESSEE A.O. CONCLUDED THAT ASSESSEE HAS FAILED T O DEDUCT TDS UNDER SECTION 194A BEFORE MAKING PAYMENT OF FINANCE CHARG ES OF RS. 10 10 258/- AND ACCORDINGLY DISALLOWED THE SAME UND ER SECTION 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O. ASSESSE E CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING AS UNDER:- 5.5 GROUND NO. 4 IS IN RESPECT OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT AND ADDITION OF RS. 10 10 258/- FOR THE INTEREST PAYMENT MADE TO TATA F INANCE FOR THE INFRINGEMENT OF TDS PROVISIONS. THE A.O. CONTENDED THAT APPELLANT PAID INTEREST OF RS. 10 10 258/- TO PRIVATE FINANCE COMPANIES WITHOUT DEDUCTION OF TDS U/S. 194A OF THE ACT. THE APPELLANT CONTENDED THAT IT IS TRUE THAT NO DEDUCTION OF TDS WAS MADE FROM SUCH INTEREST PAYMEN T TO PVT. COMPANIES LIKE KOTAK MAHINDRA PRIME LTD. G MAC FINANCIAL SERVICES TML FINANCIAL SERVICES LTD. AND TO TWO BANKS I.E. ICICI BANK AND HDFC BANK BECAUSE THE APPELLANT WAS IN NEE D OF FUND AND THE TERMS AND CONDITIONS OF SUCH FINANCE DICTATED THE APPELLANT. IT WAS FURTHER CONTENDED THAT DUE TO FOLLOWING OF POST DATED CHEQUE PROCEDURE BY ALL THESE COMPANIES NOTHING OU T OF SUCH INTEREST PAYMENT REMAINED PAYABLE AS ON 31.3.2008. IT WAS ALSO CONTENDED THAT INTERES T PAYMENT TO BANK I.E. ICICI BANK AS WELL AS HDFC BANK DOES NOT REQUIRE THE DEDUCTION OF TDS AS PER THE PROVISIONS. THE APPELLANT SUBMITTED DETAIL IN THE FORM OR REPAYMENT SCHEDULE FROM HDFC BANK (FOR SCORPIO GJ-1-AZ-9256) AND ICICI BANK (FOR VEHICLE NO.3488). I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPEL LANT THAT AS FAR AS INTEREST PAYMENT TO BANK VIZ. ICICI BANK AND HDFC BANK ARE CONCERNED PROVISIONS OF SECTION 194A OF THE ACT ARE NOT APPLICABLE HENCE THE INTEREST PAID TO SUCH BANK IS ALLOWABLE AND OUT OF THE PURVIEW OF SECTION ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 7 40(A)(IA) OF THE ACT LN RESPECT OF BALANCE PAYMENT IRRESPECTIVE OF THE FACT. THAT APPELLANT'S NEED OF FUND IS STRONGER AND THERE WERE TERMS AND CONDITION S DICTATED BY SUCH NON-BANKING FINANCE CO.(NBFC) OR PVT.FINANCE CO. TO REPAY THE LOAN/FINA NCE WITH INTEREST THROUGH POST DATED CHEQUES (PDC) PROVISIONS OF SECTION 194A OF THE ACT AS WEL L AS SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE. THE APPELLANT ADMITTED THE SAME ALSO. HOWEVER CONS IDERING THE RATIO OF HON'BLE ITAT VISHAKHAPATTNAM SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ACIT AND CONSIDERING THE FACT THAT NO INTEREST OUT OF SU CH PAYMENT REMAINED PAYABLE AS ON 31.3.2008 THERE CANNOT BE ANY DISALLOWANCES U/S.40(A)(IA) OF THE ACT. IT IS THEREFORE THE A.O. IS DIRECTED TO ALLOW SUC H INTEREST PAYMENT AND DELETE THE ADDITION MADE. THE APPELLANT GETS RELIEF ACCORDINGLY. 10. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NO W IN APPEAL BEFORE US. 11. BEFORE US THE LD. D.R. SUBMITTED THAT ASSESSEE WAS LIABLE TO DEDUCT TDS UNDER SECTION 194A BEFORE MAKING PAYMENT OF INTERES T WHICH THE ASSESSEE HAS FAILED TO DO AND THEREFORE THE A.O. W AS JUSTIFIED IN MAKING THE DISALLOWANCE. HE FURTHER SUBMITTED THAT CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF SPECIAL B ENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). HE FURTHER SUBMITTED THAT HON. GUJ. HIGH COURT IN THE CASE OF SIKANDAR KHAN N. TUN VAR (SUPRA) HAS HELD THAT THE SPECIAL BENCH DECISION IN THE CASE OF MERI LYN SHIPPING (SUPRA) DOES NOT LAY DOWN CORRECT LAW. IN VIEW OF THE AFORE SAID DECISION OF HON. GUJARAT HIGH COURT HE SUBMITTED THAT THE ORDER OF A .O. BE UPHELD. 12. THE LD. A.R. FAIRLY AGREED THAT THE MATTER MAY BE S ENT BACK TO THE A.O. TO ASCERTAIN THE PAYMENTS OF INTEREST MADE TO BANKS AN D OTHERS AND THEREAFTER DECIDE THE ISSUE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ASSESSEE HAD PAID INTEREST OF RS. 10 1 0 258/- TO PRIVATE FINANCE COMPANIES INCLUDING BANKS. THE AMOUNT PAID AS INTEREST TO ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 8 BANKS AND FINANCE COMPANIES WAS NOT SUBMITTED BY TH E ASSESSEE BEFORE A.O. NOR THE DETAILS ARE AVAILABLE BEFORE US. WE F URTHER FIND THAT CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF MERLYN SHIPPING(SUPRA) THE HON . GUJARAT HIGH COURT IN THE CASE OF SIKANDAR KHAN N. TUNVUR (SUPRA ) HAS HELD THAT THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SH IPPING (SUPRA) DOES NOT LAY DOWN CORRECT LAW. WE THEREFORE ARE OF THE VIEW THAT THE MATTER SHOULD GO BACK TO THE FILE OF A.O. SO THAT MATTER C AN BE DECIDED AFRESH BY HIM IN THE LIGHT OF THE AFORESAID DECISION OF HON. GUJARAT HIGH COURT. WE THEREFORE DIRECT ACCORDINGLY AND REMIT THE ISSUE TO THE FILE OF A.O. WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL THE REQUIRE D DETAILS CALLED FOR BY THE A.O. PROMPTLY SO AS TO ENABLE THE A.O. TO DECIDE TH E ISSUE. IN THE RESULT THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL P URPOSES. GROUND NO. 4 IS WITH RESPECT TO DISALLOWANCE OF VAR IOUS EXPENSES. 14. ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT A.O . NOTICED THAT ASSESSEE HAS CLAIMED VARIOUS EXPENSES AGGREGATING T O RS. 96 76 944/-. THE ASSESSEE WAS ASKED TO PRODUCE THE SUPPORTING EV IDENCE IN SUPPORT OF THE EXPENSES CLAIMED. DUE TO THE NON COMPLIANCE BY THE ASSESSEE A.O. DISALLOWED 20% OF BALANCE OF RS. 53 99 445/- (96 76 944 LESS DISALLOWANCE OF CAR HIRE CHARGES OF RS. 28 35 053/- AND INTEREST DISALLOWANCE OF RS. 10 10 258/-) AND ADDED TO THE I NCOME. AGGRIEVED BY THE ORDER OF A.O. ASSESSEE CARRIED THE MATTER BEFO RE CIT(A). CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING AS UNDER:- 5.5 GROUND NO.5 IS RELATED TO DISALLOWANCE OF RS. 10 79 889/- OUT OF DIESEL & PETROL EXPENSES. THE A.O. IN THE ASSTT. ORDER CONTENDED THAT AS AGAI NST THE TOTAL EXPENSES OF RS. 96 76 944/- FOR DIESEL & PETROL AND OTHER EXPENSES AS DEBITED AND C LAIMED IN P&L ACCOUNT BY APPELLANT NO ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 9 SINGLE EVIDENCE IN THE FORM OF BILL OR VOUCHER WAS PRODUCED DESPITE BEING ASKED AND THEREFORE HE DISALLOWED 20% OF THE BALANCE EXPENSES OF RS.53 99 445(96 76 944 - 28 35 053 - 10 10 258) SINCE THE DISALLOWANCE FOR MOTOR HIRE CH ARGES OF RS.28 35 053 AND INTEREST PAYMENT OF RS. 10 10 258 WERE SEPARATELY MADE BY A. O. OUT OF TOTAL EXPENSES. THE APPELLANT CONTENDED THAT HIS BOOKS OF ACCOUNTS ARE AUDITED AND NO-ADVERSE COMMENT IS GIVEN BY TAX AUDITOR IN HIS REPORT IN FORM 3CD & 3C B. ALL THE BILLS AND VOUCHERS WERE PRODUCED BEFORE A.O. AND BETTER RESULT IN THE FORM OF G.P. & N.P. WERE ACCEPTED BY A.O. FURTHER NO SINGLE DEFECT/DEFICIENCY IN THE BOOKS OF ACCOUNTS WAS MENTIONED BY A.O. AND THEREFORE THERE IS NO REASONING OR LOGIC FOR SUCH D ISALLOWANCE. AS DISCUSSED IN EARLIER PARAS THE DETAILS IN THIS REGARD WAS SUBJECTED TO REMAND PROCEEDINGS ON THE REQUEST OF APPELLANT AND THE A.O. IN THE REMAND REPORT AFTER TEST CHECKING T HE DETAILS VIZ. LEDGER BILLS VOUCHERS MADE A GENERAL COMMENT THAT SOME OF THE EXPENDITURE ARE NO T SUPPORTED BY EVIDENCES. THE APPELLANT IN REJOINDER OBJECTED SUCH GENERAL REMARKS AND SHOW N READINESS TO PRODUCE THE SUPPORTING EVIDENCES FOR PAYMENT OF SERVICE TAX OF RS.66 873 A ND TELEPHONE BILL OF RS.32 360. IN RESPECT OF OFFICE EXPENSES OF RS.21 640 IT IS CONTENDED TH AT SOME TEA COFFEE EXPENDITURE MAY NOT BE SUPPORTED BY BILL DUE TO NATURE OF SUCH EXPENSES BU T IN THE ABSENCE OF A.O. SPECIFYING THE AMOUNT APPELLANT'S BETTER RESULTS AND AUDITED BOOK S OF ACCOUNTS DOES NOT WARRANT ANY DISALLOWANCES OUT OF IT ON ESTIMATION BASIS. I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPEL LANT. THE A.O. IN THE ASSTT. ORDER ESTIMATED THE DISALLOWANCE WITHOUT ANY REASONING OR LOGIC IF NO EVIDENCES TO SUPPORT SUCH EXPENSES WERE SUBMITTED BY APPELLANT THEN ENTIRE EXPENDITU RE SHOULD HAVE BEEN DISALLOWED. OTHERWISE THE LOGIC AND REASONING FOR DISALLOWANCE OF 20% OF SUCH EXPENSES BE GIVEN BY A.O. IN THE REMAND REPORT APPELLANT ONCE AGAIN PRODUCED ALL DE TAILS BILLS AND VOUCHERS AND A.O. FAILED TO IDENTIFY ANY SINGLE MISTAKE OR DISCREPANCY AND H E MADE A GENERAL REMARK. IT IS THEREFORE CONSIDERING THE FACT THAT APPELLANT'S BOOKS OF ACCO UNTS ARE AUDITED THE APPELLANT HAS SHOWN- BETTER RESULT I.E. GROSS PROFIT OF 49.90% AND 23.30 % NET PROFIT DURING PREVIOUS YEAR AGAINST THE G.P. OF 28.10% AND N.P. OF 11.61% IN IMMEDIATEL Y PRECEDING PREVIOUS YEAR AND FAILURE ON THE PART OF A.O. TO IDENTITY ANY SINGLE DEFICIEN CY OR DISCREPANCY SUCH DISALLOWANCE AT THE RATE OF 20% IS NOT JUSTIFIED. THE A.O. IS DIRECTED TO DELETE THE DISALLOWANCE AND ADDITION SO MADE. THE APPELLANT GETS RELIEF ACCORDINGLY. 15. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS NO W IN APPEAL BEFORE US. 16. BEFORE US THE LD. D.R. SUBMITTED THAT THE ASSESSE E WAS ASKED TO PRODUCE THE EVIDENCE IN SUPPORT OF THE EXPENDITURE AND SINC E THE ASSESSEE DID NOT PRODUCE THE SAME THE A.O. WAS FULLY JUSTIFIED WAS ESTIMATING THE DISALLOWANCE. THE LD. A.R. ON THE OTHER HAND REITER ATED THE SUBMISSIONS MADE BEFORE CIT(A) AND THUS SUPPORTED THE ORDER OF CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT IN THE ITA NO 683/AHD/ 2013 . A.Y. 2008- 09 10 REMAND REPORT THE ASSESSEE HAD PRODUCED THE BILLS AND VOUCHERS AND A.O. HAD FAILED TO IDENTIFY ANY SINGLE DISCREPANCY. HE HAS FURTHER NOTED THAT ASSESSEE HAS SHOWN INCREASED GROSS PROFIT AND NET PROFIT AS COMPARED TO THE IMMEDIATE PRECEDING YEAR. THE A.O. HAS ALSO NOT POINTED OUT ANY DEFICIENCY IN THE BOOKS OF ACCOUNTS. BEFORE US THE REVENUE COULD NOT CONTROVERT THE FINDINGS OF CIT(A) BY BRIN GING ANY CONTRARY MATERIAL ON RECORD. IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GR OUND OF REVENUE IS DISMISSED. 18. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 31- 10 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T AHMEDABAD