THE DY. CIT, CIRCLE - 2(1), VIJAYAWADA vs. M/S SRI SAI ENGINEERING & DRILLING, VIJAYAWADA

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.

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:

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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.

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.

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

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.

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.,

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