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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri A.T. Varkey & Shri Waseem Ahmed
I.T.A. No. 1210/KOL./2016 Assessment Year: 2010-2011 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA ‘A’ BENCH, KOLKATA
Before Shri A.T. Varkey, Judicial Member and Shri Waseem Ahmed, Accountant Member
I.T.A. No. 1210/KOL/ 2016 Assessment Year: 2010-2011 Sri Narottam Goyal,.........................................................Appellant Santi Bazar, Super Market Complex, Barrackpore, Kolkata-700 120 [PAN: AGPPG 7667 L] -Vs.- Income Tax Officer,........................................................Respondent Ward-51(1), Kolkata, 54/1, Rafi Ahmed Kidwai Road, 2n d Floor, Kolkata-700 016
Appearances by: Shri Anikesh Banerjee, A.R. & Smt. Saswati Mitra Dutta, A.R., for the assessee Shri Pinaki Mukherjee, JCIT, Sr. D.R., for the Department Date of concluding the hearing : December 08, 2016 Date of pronouncing the order : December 15, 2016
O R D E R Per Shri A.T. Varkey, J.M.: This is an appeal preferred by the assessee against the order of ld. Commissioner of Income Tax (Appeals)-15, Kolkata dated 17.02.2016 for the assessment year 2010-11.
At the outset itself, the ld. A.R. took our attention to the grounds of appeal and submitted that he is not pressing Grounds No. 2, 3 & 4. So Grounds No. 2, 3 & 4 stand dismissed as not pressed.
Coming to the sole ground of appeal preferred by the assessee is against the addition of Rs.5,15,184/- paid to the transporters as disallowed under section 40(a)(ia) of the Act. Brief facts of the case are that the assessee filed his return of income showing total income of Rs.2,17,560/-. Later on, the case was selected for scrutiny. The Assessing Officer observed that the assessee is a re-seller of Mustard seeds,
I.T.A. No. 1210/KOL./2016 Assessment Year: 2010-2011 Page 2 of 5 Mustard Oil, etc. under the trade name of his proprietorship business concern M/s. Shiv Sankar Traders. The Assessing Officer observed that while he was perusing the record, he found that the assessee has debited in his Trading and Profit & Loss Account towards transport charges amounting to Rs.5,88,259/-. The Assessing Officer asked the assessee to furnish the details of transport charges paid along with evidence for making TDS on it since according to the Assessing Officer, the assessee was liable to deduct tax at source on such expenditure towards transport charges, which attracts the provision under section 194C of the Act. The assessee filed all the transport details and after perusing the same, the Assessing Officer observed that the assessee has not deducted any TDS and has paid towards transport charges to different transporters in cash. The Assessing Officer found that the amount of Rs.5,15,184/- (Rs.3,50,617/- + Rs.1,64,567/- was paid by the asseessee as transport charges without deducting the TDS and asked the assessee why this amount should not be disallowed under section 40(a)(ia). Without finding any answer from the assessee, the Assessing Officer disallowed the said amount under section 40(a)(ia) of the Act and added to the total income of the assessee. Being aggrieved, the assessee preferred appeal before the ld. CIT(Appeals), who was pleased to dismiss the same. Aggrieved, the assessee is in appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. First we take note that the assessee is running a proprietorship concern known as M/s. Shiv Sankar Traders, which is engaged in the business of re-selling of Mustard Seeds, Mustard Oil, etc. During the course of assessment proceedings, the Assessing Officer noted that the assessee has debited in his Profit & Loss Account transport charges to the tune of Rs.5,88,259/-, so he asked the assessee to give details of the transport charges paid by the assessee and to show to him the TDS deducted for such payment, which crossed the threshold limit as specified under section 194C, for which the assessee gave all the details. After perusing the details, the Assessing Officer found that the
I.T.A. No. 1210/KOL./2016 Assessment Year: 2010-2011 Page 3 of 5 amount of Rs.5,15,184/- has been paid without deducting TDS so he disallowed the amount under section 40(a)(ia) and added it to the total income of the assessee. On appeal, the ld. CIT(Appeals) has simply stated that the assessee was liable to deduct tax at source on the payment of transport charges under section 194C and, therefore, the Assessing Officer has rightly invoked the provision of section 40(a)(ia) and he confirmed the disallowance. Before us, the ld A.R. took our attention to a similar disallowance made by the Department, which was deleted by the Tribunal in ITA No. 617/KOL/2014 for A.Y. 2007-08 in the case of M/s. Dhirendra Nath Mondal Pvt. Limited –vs.- ITO decided on 23.02.2015, wherein also the issue was relating to the disallowance made by the Assessing Officer by invoking the provisions of section 40(a)(ia) of the Act on account of non-deduction of TDS in respect of payment made to the transporters. In that case, the assessee was a dealer of iron-sheets and the assessee had made purchases from Chattrishgarh and payments had been made to M/s. Deepak Transport Agency at Bhanpuri, Raipur, Chattrishgarh towards transportation of the goods. The Assessing Officer disallowed the transporting charges on the ground that TDS was not deducted invoking the provisions of section 40(a)(ia) of the Act, which was later confirmed by the ld. CIT(Appeals). The Tribunal negated the action of the Revenue and held in its order as under:- “5. I have considered the submissions as also the assessment order and the order of the ld. CIT(Appeals). A perusal of the order of ld. CIT(Appeals) more specifically the grounds raised before the ld. CIT(Appeals) shows that the assessee has specifically mentioned that the transporter is not a contractor appointed by the assessee but a contractor appointed by the supplier company for carrying goods at the owners (suppliers) risk and insurance terms to the destination at Kolkata. The supplier is a consignor who is sending his goods through his lorry contractor to the assessee-company, the consignee. The assessee-company is no way connected to this whole operation and the assessee came to the picture when the goods were delivered to him and thereafter he became the owner of the goods. Once this submission of the assessee is considered, then it becomes quite evident that the payment of the transport cost becomes part of the cost of purchases of the assessee. This is in view of the decision of the Hon’ble Supreme Court in
I.T.A. No. 1210/KOL./2016 Assessment Year: 2010-2011 Page 4 of 5 the case of India Meters Limited –vs.- State of Tamilnadu in Civil Appeal No. 1032-33 of 2003 dated 07.09.2010 wherein the Hon’ble Supreme Court has held that “if the ownership in the goods gets transferred at the premises of the buyer and the supplier has the obligation of transporting the goods to the premises of the buyer, then notwithstanding the fact that the freight charges were recovered separately from the buyer, the transportation charges shall form part of turnover of the supplier, i.e. cost of purchases for the buyer”. Once this is so, then admittedly the provisions of TDS in respect of the same would not apply. In these circumstances, respectfully applying the principles laid down by the Hon’ble Supreme Court in the case of India Meters limited, the disallowance as made by the Assessing Officer and as confirmed by the ld. CIT(Appeals) by invoking the provisions of section 40(a)(ia) of the Act stands deleted”.
We find that the issue before us is identical to the facts of that case and relying on the aforesaid precedent of the Coordinate Bench order which is in view of the ratio of the Hon’ble Supreme Court in the case of India Meters Limited –vs.- State of Tamilnadu in Civil Appeal No. 1032-33 of 2003 dated 07.09.2010, we are of the opinion that the provisions of TDS would not apply in the similar transaction and, therefore, the disallowance made under section 40(a)(ia) of the Act could not have been invoked by the Assessing Officer and, therefore, we direct to delete the addition made by the authorities below.
In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open Court on December 15, 2016. Sd/- Sd/- (Waseem Ahmed) (A.T. Varkey) Accountant Member Judicial Member Kolkata, the 15th day of December, 2016 Copies to : (1) Sri Narottam Goyal, Santi Bazar, Super Market Complex, Barrackpore, Kolkata-700 120 (2) Income Tax Officer, Ward-51(1), Kolkata, 54/1, Rafi Ahmed Kidwai Road, 2n d Floor, Kolkata-700 016
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(3) Commissioner of Income Tax(Appeals)-15, Kolkata, (4) Commissioner of Income Tax- ,Kolkata; (5) The Departmental Representative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.