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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
आदेश /O R D E R PER D.S. SUNDER SINGH, Accountant Member:
This appeal is filed by the revenue against the order of the
Commissioner of Income Tax (Appeals) [CIT(A)], Vijayawada vide
AppealNo.275/CIT(A)/VJA/2011-12 dated 30.11.2012 and cross objections
by the assessee for the Assessment Year (A.Y.) 2009-10.
In this case, the assessee filed the appeal, which was decided by this
Tribunal vide order in ITA No. 39/VIZ/2013, dated 06.01.2017. In the
order dated 06.01.2017, the coordinate bench of ITAT has decided the
issue with regard to the disallowance u/s 40(a)(ia), following the decision
of special bench in the case of Merilyn Shipping & Transporters Vs. ACIT
[2012] 20 taxmann.com 244 (Visakhapatnam). Subsequently, the revenue
has filed Miscellaneous Application No.14/Viz/2018 stating that in view of
the Hon’ble Supreme Court judgment in the case of Palam Gas Service vs.
CIT (81 taxmann.com 43) requested to recall the order for re-adjudication.
Accordingly Ground No.9, 10 and 11 which are related the issue of
disallowance u/s 40(a)(ia) are recalled to decide the issue afresh on merits.
Ground Nos.9,10,11 of revenue’s appeal reads as under :
Grounds 9,10 and 11:
The Ld.CIT(A) erred in deleting the disallowance made u/s 40(a)(ia)
3 I.T.A. No.39/Viz/2013 and CO No.58/Viz/2013 M/s Sri Sai Engineering & Drilling, Vijayawada
towards transportation charges and fit filling charges basing on ITAT’s decision in the case of Merilyn Shipping & Transports, which was stayed by the Hon’ble A.P.High Court. 10. The Ld.CIT(A) erred in confirming that no TDS is required even though the payment to each vehicle exceeds Rs.50,000/- and also in respect of payment made to a person exceeding Rs.50,000/- in a year. 11. Reliance is also placed on the following decisions : a. Shree Choudhary Transport Company Vs. ITO [225 CTR (Raj)] 125 2009] b. Dey’s Medical (U.0.) (P) Ltd. Vs. Union of India & Ors.[(2009) 316 ITR 445] c. Marc. Signage Vs. ITO 2010-TIOL-KOL d. Matrix Glass & Structures Pvt. Ltd. Vs. ITO 2011-TIOL-181-ITAT-KOL e. M/s Parnika Construction Pvt. Ltd. Vs. Dy.Commissioner of Income Tax, Circle-116(3), Hyderabad ITAT ‘B’ Bench, Hyderabad in ITA No.1081/Hyd/09, dt.16.07.2010.
Ground No.9, 10 and 11 are related to the addition made by the AO in
respect of transportation charges Rs.74,97,500/- and Pit filling charges of
Rs.20,41,800/-. Above payments were made in excess of Rs.50,000/- in
each case, though the assessee tax required to deduct the tax at source u/s
194C of the Act, the assessee failed to deduct the same, hence, the AO
disallowed the sum of Rs.74,97,500/- representing transportation charges
and Rs.20,41,800/- relating to Pit filling charges u/s 40(a)(ia) of the Act.
On appeal, the Ld.CIT(A) following the decision of Hon’ble ITAT,
special bench in the case of Merilyn Shipping and Transport Services Pvt.
Ltd. Vs. ACIT[2012] 20 taxmann.com 244 (Visakhapatnam) allowed the
appeal of the assessee.
4 I.T.A. No.39/Viz/2013 and CO No.58/Viz/2013 M/s Sri Sai Engineering & Drilling, Vijayawada
Against the order of the Ld.CIT(A) , the revenue filed appeal before
the Tribunal and the ITAT also allowed the appeal of the assessee following
the decision of Merilyn Shipping and Transport Services Ltd. since no part
of expenditure was outstanding as at the end of the year.
Against the order of the ITAT, the revenue filed miscellaneous
application in view of the Hon’ble Supreme Court’s decision in the case of
Palam Gas Services, wherein, Hon’ble Supreme Court has reversed the
order of the Merilyn Shipping and Transport Services Ltd.,
We have heard both the parties and perused the material placed on
record. We observed that a sum of Rs.74,97,500/- was outstanding as at
the end of the year in respect of transportation charges and a sum of
Rs.20,41,800/- in respect of Pit filling charges. According to the assessee,
the payments were made to more number of operators through their group
leader in lump sum ,so, the amount payable/paid by them to individual
operators does not exceed Rs.50000/-. Thus, the assessee argued that the
there is no case for making deduction u/s 194C of the act and consequent
disallowance u/s 40(a)(ia) does not arise. Similarly in respect of pit filling
charges also the assessee’s argued that the payment was made to mestry
towards the labour payments and there is no application of 194C of the Act.
Ld.CIT(A) did not examine the issue with regard to application of
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provisions of TDS to the payments made, since, there was no outstanding as at the end of year in view of the special bench judgment. Therefore, in the interest of justice, we are of the considered opinion that the issue should be remitted back to the file of the CIT(A) to examine whether the payments in question attract the provisions of TDS and consequent application of disallowance u/s 40(a)(ia) of the Act and decide the issue afresh on merits keeping in view of the decision of Hon’ble Supreme Court in the case of Palam Gas Service Ltd. Both the parties have conceded to remit the matter back to the file of the Ld.CIT(A). The ld. CIT(A) should allow reasonable opportunity to the assessee to present its case. Accordingly, appeal of the revenue is allowed for statistical purpose. 8. In the result, appeal of the revenue and the cross objections of the assessee are allowed for statistical purpose. Pronounced in the open Court on this 6th day of Feb., 2019 Sd/- sd/- (िी.दुगााराि) (डड.एस. सुन्दरससंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याययकसदस्य/JUDICIAL MEMBERऱेखासदस्य/ACCOUNTANT MEMBER ववशधखधपटणम /Visakhapatnam दििधंक /Dated : 06.02.2019 L.Rama, SPS
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आदेशकीप्रतितितिअग्रेतिि/Copy of the order forwarded to:- 1. निर्धाररती/ TheAssessee-M/s Sri Sai Engineering & Drilling, #54-18-26, 2nd Line, LIC Colony, Vijayawada 2. रधजस्व/The Revenue –(i) Dy.Commissioner of Income-Tax, Circle-2(1) Vijayawada 3. The Pr.Commissioner of Income Tax, Vijayawada 4. Commissioner of Income-Tax (Appeals),Vijayawada 5. तिभागीयप्रतितिति, आयकरअिीिीयअतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 6.गार्डफ़ाईि / Guard file
आदेशािुसार / BY ORDER // True Copy //
Sr. Private Secretary ITAT, Visakhapatnam