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Income Tax Appellate Tribunal, Kolkata Bench, Kolkata
Before: SHRI ABY. T. VARKEY & SHRI M. BALAGANESH
This appeal is preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) – XXXVI, Kolkata (in short the ‘CIT(A)’) vide Appeal No.312/CIT(A)-XXXVI/Kol/ITO-Jangipur, MSD/11-12 dated 29.01.2014. Assessment year framed u/s 143(3) of the Income Tax Act 1961 (hereinafter as the said ‘Act’) dated 23.08.2011 for the A.Y 2009-10 by the Income Tax Officer, Jangipur, Murshidabad (in short the Ld. A.O).
Assessment Year 2009-10 Rokia Khatun 2. The Ground No.1, 5 & 6 raised by the assessee are general in nature and does not require any specific adjudication.
The Ground No.4 raised by the assessee has been stated to be not pressed by the Ld. AR during the course of hearing. The same is reckoned as a statement from the bar and accordingly the ground no.4 raised by the assessee is dismissed as not pressed.
The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in upholding disallowance made by the Ld. A.O. u/s 40(a)(ia) of the Act in the sum of Rs.9,36,000/- and 3,16,607/-, in the facts and circumstances of the case.
The brief facts of the assessee are that the assessee is engaged in the business of trading of Bidi Leaves & Tobacco. The Ld. A.O. observed from the carriage inward bills received during the course of hearing amounting to Rs.20,47,677/-, that the assessee has paid Rs.17,31,070/- for carriage to bring bidi leaves purchased from outside. He observed from the bills paid to the trucks that assessee has paid 12 times exceeding Rs.20,000/- as single payment as carriage and paid 6 times exceeding Rs.50,000/- to same truck as carriage, both totalling Rs.9,36,000/. The Ld. A.O. invoked the provisions of Section 194(3) of the Act read with Section 40(a)(ia) and disallowed the same in the assessment.
Similarly, the Ld. A.O observed that the assessee has made payment of Rs.3,16,607/- to Kajal Roadways, Chikhodra, Gujarat without deduction of tax at source. The Ld. A.O disallowed the same u/s 40(a)(ia) of the Act.
Assessment Year 2009-10 Rokia Khatun 7. The Ld. CIT(A) upheld the disallowance made by the Ld. A.O by observing as under:
3.7 Admittedly, the payment in the case to the truck owners for transportation was more than Rs.20,000/- in each trip, for which tax deduction at source u/s 194C ought to have been done. As has been held in the cited decision, and on plain reading of the section and circulars, payment even though not made apparently as per any written agreement are contractual in nature as per section 194C(1) of the I.T. Act, for carrying out a work (i.e. carriage of goods by any mode of transport).
3.8 As the appellant had made the freight payment to the transporters, where the payment for each trip exceeded Rs.20,000/- in each case, without tax deduction at source, the A.O. had rightly disallowed the claim u/s 40(a)(ia) of the I.T. Act. In view of the above, the addition made by the A.O on this ground is confirmed.
Aggrieved the assessee is in appeal before us on the following grounds:
2. For that on the facts and in the circumstances of the case, Ld. C.I.T.(Appeals) was not at all justified in confirming the addition of Rs.9,36,000.00 & 3,16,607.00 totalling 12,52,607.00 & he ought to have considered the written submission and the explanation offered by the appellant at the appellate stage.
3. For that on the facts and circumstances of the case the reasons adduced by the Ld. C.I.T.(A) in rejecting the explanation without considering the reasons for non-deduction of TDS from the payments to the carriage contractors and in confirming the addition of Rs.12,52,607.00 are not at all proper and justified and as such the addition is liable to be deleted in full.
At the time of hearing, the Ld. A/R stated that this issue is squarely covered by the decision of this Tribunal in the case of Arsh Iron & Steel Ltd. –vs- A.C.I.T in dated 12.05.2017. In response to this, the Ld. DR vehemently relied on the order of the lower authorities.
Assessment Year 2009-10 Rokia Khatun
We have heard the rival submissions. We find that the issue under dispute is squarely covered by the decision of this Tribunal in Arsh Iron & Steel Ltd. vs. ACIT supra, wherein it was held that:-
We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that the assessee hired the lorries from outside for the transportation of goods and there was not contract between the assessee and the lorry owners. The Revenue could not establish that these lorry owners were fastened with any of the liabilities for the said carrier of the goods. In the similar facts and circumstances, the Hon’ble jurisdictional High Court has decided this issue in favour of assessee in the case of CIT vs. M/s Stumm India in of 2009 and relevant extract is reproduced below:
It is urged before us that the learned Tribunal ought not to have accepted the judgment and order of the CIT(Appeal) who has quashed the disallowance of deduction of Rs.41,33,710/- and on account of tax deduction at source. The learned Tribunal has recorded the fact that the department has not been able to bring any material on record to show that the assessee has made the payment to the transporters in pursuance of contract for carriage of goods of the assessee and the question of deduction at source under section 194C does not and cannot arise.
In the absence of evidence of payment made by the assessee to the transporters, the assessee cannot be saddled with the liability of deducting tax at source. Before us no other point has been urged nor it is said that the aforesaid fact finding is truthful without any basis whatsoever. Hence, we dismiss the appeal having found no point of law having been involved.
In view of above, we find that there was no contract between the assessee and lorry owners. The role of the lorry owners was very limited to the extent of carriage of goods without any other liability. Therefore, their payment cannot be considered as in pursuance of contract as envisaged under section 194C of the Act. Considering the facts and circumstances and cited case law, we reverse the orders of authorities below. The ground raised by assessee is allowed. Accordingly, AO is directed.
Assessment Year 2009-10 Rokia Khatun 11. Respectfully following the aforesaid decision, we allow the grounds raised by the assessee.
In the result the appeal of the assessee is allowed.