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Income Tax Appellate Tribunal, KOLKATA BENCH “SMC” KOLKATA
Before: Shri S.S, Godara
आदेश /O R D E R This assessee’s appeal for assessment year 2011-12 arises against the Commissioner of Income-tax (Appeals)-14, Kolkata’s order dated 16.01.2018 passed in case No.36/CIT(A)-14/Wd-46(3)/2014-15, involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused. 2. The assessee’s first substantive grievance seeks to delete sec.194-I r.w.s 40(a)(ia) disallowance / addition of rent payment amounting to ₹2,40,644/-. Both the lower authorities have admittedly disallowed the impugned sum for non-deduction of TDS thereupon. The Revenue fails to dispute that the assessee had deposited the impugned sum to Rent Controller’s account regarding arrears starting from 1996 to 2000 and none of the corresponding assessment year would see the rent payment to have exceeded the threshold limit of ₹1,80,000/- u/s 194-I first proviso. I therefore Rakshit Chemicals Vs. ITO Wd-47(2), Kol. Page 2 direct the Assessing Officer to delete the impugned rent payment disallowance for this precise reason alone. The assessee’s latter argument based from hon'ble Bombay high court’s decision in Islamic Investment Co. vs. Union of India and Another (2004) 265 ITR 254 (Bom) that decreetal amount assumes the character of judgment debt does not invite TDS deduction is rendered infructuous.
Next comes the assessee’s second substantive grievance seeking to delete partner’s remuneration of ₹1,80,000/- paid to Smt. Srabani Rakshit as a working partner. It transpires during the course of hearing that the departmental authorities have not made any disallowance qua the second issue in earlier assessment year and also that the assessee has successfully proved form the material on record that Smt. Srabani Rakshi had very much performed duties of working partner in the relevant previous year. I therefore direct the Assessing Officer to delete the impugned addition in view of all these voluminous details.
The assessee’s next grievance that both the lower authorities’ have erred in disallowing VAT amount reconciliations difference indicating purchase of₹7,57,546/- in assessment year as upheld in lower appellate proceedings. Both learned representatives are fair enough that instant issue of VAT element of purchases is indeed a factual one requiring re-verification at the Assessing Officer’s end regarding the assessee’s plea that this is a revenue neutral case. I therefore restore the instant substantive ground back to the Assessing Officer for finalizing factual verification as per law.
Lastly comes assessee’s grievance seeking to delete sec. 194C r.w.s. 40(a)(ia) disallowance of ₹9,56,474/;- on account of transport charges. The CIT(A)’s detailed discussion to this effect reads as under:- “Ground NO.7 Vide this ground the appellant agitates the disallowance made by AO of an amount of Rs.956474 u/s. 40(a)(ia) on account of non-deduction of TDS in respect of Carriages Inwards payments made to three (3) transporters namely M/s K.B. Transport for Rs.7718880/-, M/s S.D. Road Curriers for Rs.184594 and M/s Maa Kali Transport for Rs.4374. The AO observes that in respect of M/s K.B. Transport only the assessee furnished copy of the PAN card. However, he further observes that as the AO has not furnished the requisite statements u/s. 194C(7), the responsibility as fixed under Section 194C(6) has not been fulfilled. He, therefore, proceeded to disallow the claim u/s. 40(a)(ia).
Rakshit Chemicals Vs. ITO Wd-47(2), Kol. Page 3 Appellant contends that Section 194C(7) is independent of the Section 194C(6) and relies on the judgment of Soma Rani Ghosh (ITA No.1420/Kol/2015) of jurisdictional ITAT. After giving a careful thought, it is observed that the PAN card submitted by appellant w.r.t. M/s K.B Transport is not of K.B. Transport but of one Shri VSR Mohan Rao alleged to be the proprietor of the said concern. However, the payment has been made to M/s K.B. Transport and not to Shri VSR Mohan Rao. The appellant ought to have produced the PAN card of M/s. K.B. Transport. Further in the bill relating to K.B. Transport, the signature of VSR Mohan Rao is not as a proprietor but as a representative. In respect of S.D. Road Carriers, the PAN card furnished is of Smt. Sushila Devi Bihani alleged to be proprietress of the concern. However, in the bill the proprietor’s signature is not the same as in the PAN card. Moreover, the furnished PAN card is not of S.D. road Carriers who is the recipient as per the bill. With regard to Maa Kali Transport no PAN is furnished. In view of the above, I observe that Appellant has not fulfilled the requirements of section 194C(6) itself. Even if Section 194C(7) is considered independently, as Section 194C(6) itself is not complied with, the undersigned is unable to accede to appellant’s request to grant relief. This ground, therefore, fails.”
I have given my thoughtful consideration to rival contentions. It is clear from the perusal of the lower appellate discussion that the assessee had already filed its payees’ PAN details u/s 194C(6) of the Act. This tribunal’s co-ordinate bench’s order in in Soma Rani Ghosh vs. DCIT decided on 09.09.2016 holds that such disallowance is not sustainable as follows:- “34. From our above discussion it follows that,- i) in the context of Section 194C(1), person undertaking to do the work is the Contractor and the person so engaging the contractor is the contactee; ii) that by virtue of the Amendment introduced by Finance Act (No.2) 2009, the distinction between a contractor and a sub-contractor has been done away with and Cl.(iii) of explanation under 194C(7) now clarifies that “contract” shall include sub-contract; iii) subject to compliance with the provision of Section 194C(6), immunity from TDS under sec. 194C(1) in relation to payments to transporters, applies transporter and non-transporter contractees alike; iv) under Sec. 194C(6), as it stood prior to the amendment in 2015, in order to get immunity from the obligation of TDS, filing of PAN of the Payee. Transporter alone is sufficient and no confirmation letter as required by the earned CIT is required; v) section 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s. 40(a)(ia) read with Section 194C of the Act; and