The ACIT, Central Circle-2,, Baroda v. Dhain Auto Transport Corporation, Baroda

ITSSA 4/AHD/2013 | 2009-2010
Pronouncement Date: 19-07-2013 | Result: Dismissed

Appeal Details

RSA Number 420516 RSA 2013
Assessee PAN AALFS0662B
Bench Ahmedabad
Appeal Number ITSSA 4/AHD/2013
Duration Of Justice 6 month(s) 18 day(s)
Appellant The ACIT, Central Circle-2,, Baroda
Respondent Dhain Auto Transport Corporation, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 19-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 19-07-2013
Date Of Final Hearing 30-05-2013
Next Hearing Date 30-05-2013
Assessment Year 2009-2010
Appeal Filed On 01-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI A. MOHAN ALANKAMONY AM AND SHRI KUL B HARAT JM) IT (SS) A NO.1 2 3 AND 4/ AHD/2013 ( A. Y.: 2005-06 2007-08 2008-09 AND 2009-10 THE A. C. I. T. CENTRAL CIRCLE-2 AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA VS SHREE DHAIN AUTO TRANSPORT CORPORATION OPP. CHETNA KENDRA GOLDEN CHOKDI BARODA 3900 022 P. A. NO. AALFS 0662 B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI D. S. KALYAN CIT DR RESPONDENT BY SHRI MUKUND BAKSHI AR DATE OF HEARING: 30-05-2013 DATE OF PRONOUNCEMENT: 19-07-2013 O R D E R PER A. MOHAN ALANKAMONY: ALL THESE APPEALS ARE PREFERRED BY THE REVENUE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED CIT(A)- IV AHMEDABAD DATED 25-10-2012 FOR THE ASSESSMENT YEARS 2005-06 2007-08 2008-09 AND 2009-10 RESPECTIVELY IN APPEAL NO. (I) CIT(A)- IV/171B/CC-2/11-12 (II) CIT(A)IV/257B/CC-2/11-12 (IV) CIT(A)- IV/258B/CC-2/11-12 AND (IV) CIT(A)-IV/259B/CC-2/11- 12 PASSED U/S 153A READ WITH SECTION 143(3) OF THE INCOME TAX ACT 1961 CHALLENGING THE DELETION OF (I) DELETION OF THE AUDITION MADE D UE TO DISALLOWANCE OF EXPENSES AMOUNTING TO RS.9 23 100/- INVOKING THE PR OVISIONS OF SECTION 40(A) (IA) OF THE ACT FOR THE ASSESSMENT YEAR 2005- 06 (II) DELETION OF THE ADDITION MADE FOR RS.RS.47 60 000/- FOR THE ASSESS MENT YEAR 2007-08 IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 2 (III) RS.21 33 000/- FOR THE ASSESSMENT YEAR 2008-0 9 AND (IV) RS.15 00 600/- FOR THE ASSESSMENT YEAR 2009-10 MADE DUE TO DISALLOWANCE OF EXPENSES FOR PROVISIONS MADE FOR IN CENTIVES TO DRIVERS. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A FIRM ENGAGED IN THE BUSINESS OF TRANSPORTATION AND TRANS PORT BOOKING CONTRACTOR. A SEARCH U/S 132 OF THE ACT WAS CONDUCT ED IN THE PREMISES OF DHAIN GROUP OF CASES ON 11-02-2010 INCLUDING THE PR EMISES OF THE ASSESSEE. ACCORDINGLY THE LEARNED AO ISSUED NOTICE U/S 153A OF THE ACT REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPON SE TO WHICH THE ASSESSEE FILED ITS RETURN OF INCOME U/S 153A ON 03- 03-2011 AND FINALLY ASSESSMENT WAS COMPLETED BY MAKING THE ABOVE MENTIO NED ADDITIONS. 3. SINCE ALL THESE APPEALS ARE RELATED TO THE SAME ASSESSEE AND ON IDENTICAL FACTS; THESE CASES WERE HEARD TOGETHER FO R PASSING CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IT (SS) A NO.1/AHD/2013 (REVENUES APPEAL FOR AY 2005-06) 4. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUND:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE DUE TO DISALLOWANCE OF EXPENSES OF RS .9 23 100/- WHICH WAS DISALLOWED U/S. 40(A) (IA) OF THE I T ACT ON ACCOUNT OF NON-COMPLIANCE OF PROVISIONS OF SECTION 194C OF THE I T ACT. 5. DURING THE COURSE OF PROCEEDINGS U/S 153A READ W ITH SECTION 143(3) OF THE ACT THE LEARNED AO ON VERIFICATION O F THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS TO THE FOLLOWING TRU CK OWNERS/PARTIES EXCEEDING RS.50 000/- IN AGGREGATE OR AFTER 01-10-2 004 WITHOUT DEDUCTING TDS U/S 194C OF THE ACT:- IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 3 CASH PAYMENTS MADE DURING 01.10.2004 TO 31.03.2005 S. NO. TRUCK NO. TOTAL AMOUNT PAID 1 GJ6X-8850 167800 2 GJ6X-8940 85300 3 GJ6Y-7483 70600 4 HR38K-7580 94300 5 HR38K-7581 118000 6 HR 38K-7585 70700 7 HR55B-4875 87500 8 HR55B-4880 71400 9 HR55C-2395 92700 10 HR55C-3978 64800 TOTAL 923100 FOR THE ABOVE SAID REASON THE LEARNED AO DISALLOWE D THE TOTAL EXPENDITURE OF RS.9 23 100/- INVOKING SECTION 40 (A ) (IA) OF THE ACT. 6. ON APPEAL THE LEARNED CIT(A) DELETED THE ADDITI ON FOLLOWING THE DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPO RT VS. ACIT IN ITA NO.477/VIZ/2008 DATED 29-03-2012 AND OBSERVED AS UN DER: 8. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT AND HAVE GONE THROUGH THE VARIOUS JUDICIA L DECISIONS RELIED UPON BY THE APPELLANT. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. 8.1 THE AO A PER THE PROVISIONS OF SECTION 40 (A)( IA) OF THE IT ACT 1961 HAS DISALLOWED THE EXPENSES CLAIMED BY THE AS SESSEE OF RS.9 23 100/- TOWARDS FREIGHT EXPENSES ATTRACTING T DS U/S 194C OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. I T IS CLAIMED BY THE APPELLANT THAT ALL THE INTEREST PAYMENTS HAVE BEEN FULLY PAID BY THE END IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 4 OF THE RELEVANT YEAR UNDER CONSIDERATION AND NO PAR T IS OUTSTANDING AS PAYABLE ON THE LAST DAY OF THE PREVIOUS YEAR. THERE FORE THE PROVISIONS OF SECTION 40 (A) (IA) OF THE IT ACT 1961 DO NOT A PPLY TO THE AMOUNT WHICH IS ACTUALLY PAID DURING THE PREVIOUS YEAR IN VIEW OF THE DECISION OF THE HONBLE ITAT VISAKHAPATNAM BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT VS. ACIT IN ITA NO.477/VIZ/20 08 DATED 29-03- 2012 WHEREIN IT HAS BEEN HELD THAT THE PROVISION OF SECTION 40(A) (IA) OF THE IT ACT IS APPLICABLE ONLY TO THE EXPENDITURE WH ICH IS PAYABLE AS ON 31 ST OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW TH E AMOUNTS WHICH HAVE ALREADY BEEN PAID IN THE PREVIOUS YEAR WITHOUT DEDUCTION OF TAX AT SOURCE. THE ABOVE DECISION HAS BEEN FOLLOWED BY ITA T AHMEDABAD IN THE CASE OF GLOBE HIGHWAYS VS. ITO IN ITA NO.1157/A HD/2009 DATED 02-05-2012 AND MAYUR ROADWAYS IN ITA NO.3357/AHD/20 09 DATED 29-06-2012. 8.2 CONSIDERING THE ABOVE DECISIONS THERE IS NO CA SE OF ANY DISALLOWANCE U/S 40(A) (IA) OF THE IT ACT 1961 ONC E IT IS PROVED THAT ENTIRE PAYMENTS HAVE BEEN MADE IN THE PREVIOUS YEAR ITSELF AND NO AMOUNT IS OUTSTANDING WHICH IS PAYABLE ON THE LAST DAY OF THE PREVIOUS YEAR WITHOUT DEDUCTION OF TAX AT SOURCE. ACCORDINGL 8Y DISALLOWANCE MADE BY THE AO U/S 40 (A) (IA) OF THE IT ACT 1961 IS HEREBY DELETED SUBJECT TO VERIFICATION BY THE AO THAT THE ABOVE AM OUNT OF RS.9 23 100/- HAS BEEN ACTUALLY PAID BY THE APPELLANT DURING THE PREVIOUS YEAR ITSELF. THIS GROUND OF APPEAL IS ALLOWED SUBJECT TO VERIFIC ATION BY THE AO. AGAINST THIS ORDER OF THE LEARNED CIT(A) THE REVEN UE IS NOW IN APPEAL BEFORE US. 7. THE LEARNED DR ARGUED STATING THAT THE DECISION RELIED UPON BY THE LEARNED CIT(A) IS NOT MORE A GOOD LAW SINCE THE HO NBLE ANDHRA PRADESH HIGH COURT HAD SUSPENDED THE ORDER OF THE T RIBUNAL AND THE DECISION OF THE JURISDICTIONAL HIGH COURT WAS IN FA VOUR OF THE REVENUE. HE FURTHER RELIED ON THE ORDER OF THE LEARNED AO AND P LEADED THAT THE SAME MAY BE CONFIRMED. THE LEARNED AR ARGUED IN SUPPORT OF THE ASSESSEE STATING THAT ON MERITS THE PROVISION OF SECTION 194 C OF THE ACT WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE SINCE THERE WAS NO CONTRACT BETWEEN THE ASSESSEE AND THE TRUCK OWNER FOR CARRYI NG OUT ANY WORK OF TRANSPORTATION. IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 5 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE MATERIALS ON RECORD. FROM THE FACTS BEFORE US IT A PPEARS THAT THE ASSESSEE HAD MADE PAYMENT IN AGGREGATE OF RS.50 000 /- TO VARIOUS TRUCK OWNERS. THE REVENUE HAS NOT BROUGHT BEFORE US ANY COGENT MATERIALS TO ESTABLISH THAT THE ASSESSEE HAD MADE P AYMENT TO THE TRUCK OWNERS PURSUANT TO A CONTRACT FOR CARRYING OUT THE WORK OF TRANSPORTATION. IN THESE CIRCUMSTANCES THE REVENUE HAS NOT ESTABLI SHED THAT THE PROVISIONS OF SECTION 194C OF THE ACT ARE APPLICABL E IN THE ASSESSEES CASE CONSEQUENTLY ATTRACTING THE PROVISIONS OF SECT ION 40 (A) (IA) OF THE ACT. THEREFORE ON MERITS WE HOLD THIS ISSUE AGAIN ST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. RESULTANTLY THE REVENUES APPEAL IS DISMISSED. IT (SS)A NO.2 3 AND 4/AHD/2013 (REVENUES APPEAL FOR AY 2007-08 2008 AND 209-10 9. IN THESE APPEALS THE REVENUE HAS RAISED TWO IDE NTICAL GROUNDS WHEREIN GROUND NO.2 IS GENERAL IN NATURE AND DOES N OT SURVIVE FOR ADJUDICATION. THE OTHER IDENTICAL SOLE EFFECTIVE GR OUND WHICH READ IS REPRODUCED HEREIN BELOW FOR ADJUDICATION:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE DUE TO DISALLOWANCE OF EXPENSES OF RS.47 60 000/-FOR AY 2007-08 RS.21 33 000/- FOR AY 2008-09 AND RS.15 00 000/- FOR AY 2009-10 RESPECTIVELY WHI CH IS A PROVISION MADE FOR INCENTIVES TO THE DRIVERS. 10. THE LEARNED AO HAD DISALLOWED THE ACCRUED EXPEN SE DEBITED TO THE PROFIT & LOSS ACCOUNT BEING THE INCENTIVE DUE T O THE TRUCK DRIVERS FOR ALL THE ABOVE STATED RELEVANT ASSESSMENT YEARS FOR THE RESPECTIVE AMOUNTS. THE ASSESSEE HAD CONTENDED THAT IT HAD REC EIVED PAYMENTS FROM ITS CLIENTS FOR REIMBURSEMENT OF INCENTIVE PAY MENTS TO THE TRUCK DRIVERS AND THE ASSESSEE HAD ONLY DISBURSED SUCH PA YMENTS SHOWING IT IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 6 AS EXPENSE AND CORRESPONDINGLY THE AMOUNT RECEIVED FROM ITS CLIENTS WERE SHOWN AS INCOME. HOWEVER THE REASON CITED BY THE LEARNED AO FOR MAKING SUCH ADDITIONS WAS THAT THIS EXPENDITURE WAS CONTINGENT IN NATURE BECAUSE THE DRIVERS WILL BE ENTITLED FOR SUC H PAYMENT IF THEY REMAIN WITH THE ASSESSEE FOR A SPECIFIC PERIOD AND WHEN THE PAYMENT WAS MADE TO THE ENTITLED PERSONS. ON APPEAL THE LE ARNED CIT(A) FOLLOWING THE ORDER OF THE ITAT AHMEDABAD BENCH IN ASSESSEES OWN CASE IN ITA NO.3289/AHD/2010 FOR AY 2007-08 DATED 3 1-07-2012 VIDE HIS ORDER DATED 25 TH OCTOBER 2012 ALLOWED PART RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER IN PARA 14.1 TO 15 OF HIS ORDER AS UNDER:- 14.1 AS POINTED OUT BY THE APPELLANT THAT THIS IS SUE FOR AY 2007- 08 HAS ALREADY BEEN DECIDED BY HONBLE ITAT AHMEDAB AD VIDE ORDER ITA NO.3289/AHD/2010 DTD 31-07-2012. THE RELEVANT P ORTION OF TH4E DECISION GIVEN BY THE HONBLE ITAT IS REPRODUCED AS UNDER:- WE ARE THEREFORE OF THE OPINION THAT THE LIABILITY OF PAYMENT OF INCENTIVE HAD DEFINITELY ARISEN DURING T HE ACCOUNTING PERIOD UNDER CONSIDERATION AND THAT LIABILITY WAS UNDISPUTEDLY DISCHARGED AT A FUTURE DATE . THE INCURRING OF THE LIABILITY WAS ASCERTAINABLE FOR TH E YEAR UNDER APPEAL THEREFORE WE ARE SATISFIED THAT IT WA S NOT A CONTINGENT LIABILITY. IN THE RESULT WE HEREBY REVE RSE THE FINDINGS OF THE AUTHORITIES BELOW AND DIRECT TO ALL OW THE CLAIM. 14.2 IT IS AN UNDISPUTED FACT THAT THE AO HAS MADE THE DISALLOWANCE MAINLY ON TH4E GROUND THAT SAID EXPEND ITURE OF INCENTIVES TO DRIVERS IS A CONTINGENT LIABILITY AND NOT ASCERT AINED LIABILITY. THE GENUINENESS OF SUCH PAYMENT MADE IN SUBSEQUENT YEAR HAS NOT BEEN DOUBTED BY THE AO. CONSIDERING THE DECISION OF THE HONBLE ITAT IN THE APPELLANTS OWN CASE IT IS HELD THAT THE LIABI LITY OF PAYMENT OF INCENTIVES TO DRIVERS IS NOT A CONTINGENT LIABIL ITY EVEN THOUGH IT IS DISCHARGED AT A FUTURE DATE AND THEREFORE D ISALLOWANCE MADE BY THE AO IN RESPECT OF INCENTIVES PAID TO DRI VERS IS HEREBY DELETED SUBJECT TO VERIFICATION BY THE AO THAT PAYM ENT OF SUCH INCENTIVES HAS ACTUALLY BEEN MADE IN THE SUBSEQUENT YEARS. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED FOR ALL TH E ABOVE YEARS SUBJECT TO VERIFICATION BY THE AO. IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 7 AGAINST THESE FINDINGS OF THE LEARNED CIT(A) THE R EVENUE IS NOW IN APPEAL BEFORE US. 11. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARN ED AO AND PLEADED THAT HIS ORDER MAY BE SUSTAINED WHILE AS TH E LEARNED AR RELIED ON THE ORDER OF THE LEARNED CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 31-07-2012 IN ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2007-08 AGAINST THE ORDER OF THE LE ARNED CIT(A) BARODA U/S 143(3) OF THE ACT DATED 16-09-2010 WHICH HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 21- 03-2013. THE LEARNED CIT(A) IN HIS ORDER U/S 153A R EAD WITH SECTION 143(3) DATED 25-10-2012 HAS FOLLOWED THE DECISION O F THE TRIBUNAL DATED 31-07-2012. THEREFORE WE SUSTAIN THE ORDER OF THE LEARNED CIT(A) WITH RESPECT TO THE ASSESSMENT YEAR 2007-08 AND ALSO FOR THE OTHER RELEVANT ASSESSMENT YEARS UNDER APPEAL AND FURTHER CAUTION T HE LEARNED AO TO MAKE SUCH VERIFICATION AS DIRECTED BY THE LEARNED C IT(A) IN PARA 14.2 OF HIS ORDER CITED SUPRA. 13. IN THE RESULT ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/07/2013 SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - IT(SS)A NO.1TO 4/AHD/2013(AY-2005-06 2007-08 2008- 09 AND 2009-10 ) ACIT CIR-2 BARODA VS DHAIN AUTO TRANSPORT CORPOR ATION 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 18-07-20 13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 18-07-2013 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: