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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
ORDER Per Shri M. Balaganesh, AM:
This appeal by assessee is arising out of order of CIT(A)-12, Kolkata vide Appeal No. 262/CIT(A)-12/Kol/Wd-4,Nadia/2014 dated 20.02.2015. Assessment was framed by ITO, Ward-4, Nadia u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2009-10 vide his order dated 29.12.2011.
2. The first issue to be decided in this appeal is as to whether the Ld. CIT(A) is justified in upholding the disallowance of Rs.12,57,984/- u/s. 40(a)(ia) of the Act for alleged non- deduction of income tax at source in terms of section 194C of the Act in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is a kerosene oil agent under Indian Oil Corporation at Karimpur, Dist. Nadia. She got the dealership from Indian Oil Corporation (in short IOC) under physically handicapped quota. She had engaged during the year under reference a transport contractor i.e. Rabindra Nath Biswas at Karimpur for supplying truck to transport kerosene oil from the depot of IOC at Mourigram, Howrah to Karimpur. The said transport contractor had given a letter to the assessee by quoting his Permanent Account No. that he was a regular tax payer and that he pays tax to the government on his own, submits regular income tax return and accordingly, no income tax be deducted at source u/s. 194C of the Act. On the strength of this declaration the assessee
2 Smt. Minakshi Biswas, AY 2009-10 made payments to the said party without deduction of tax at source. The AO disallowed the same u/s. 40(a)(ia) of the Act for violation of section 194C of the Act. Before the Ld. CIT(A), the assessee tried to explain that the concerned transporter had duly offered the subject mentioned receipts in his return and had paid taxes thereon and hence, in view of the amendment brought in by the Finance Act, 2012 u/s. 40(a)(ia) of the Act together with section 201(1) of the Act, he argued that the said amendment is to be considered as retrospective in operation, for which reliance was placed on the order of the Tribunal in the case of ITA No. 337/Agra/2013, Rajeev Kumar Agarwal Vs. Addl. CIT for AY 2006-07 dated 29.05.2013. Accordingly, it was pleaded that no disallowance u/s. 40(a)(ia) of the Act could be made in the hands of the assessee. The Ld. CIT(A), however, held that the amendment brought in by the Finance Act, 2012 is only prospective in nature and accordingly, dismissed the plea of the assessee and confirmed the addition made by the Ld. AO.
The Ld. AR took us to page no. 4 of the paper book containing the declaration given by the said transport contractor Rabindra Nath Biswas to the assessee for non-deduction tax t source. Apart from this, the Ld. AR took us to the following pages in the paper book:
IT return acknowledgement of Rabindra Nath Biswas for AY 2009-10 at page 5 of the paper book.
PAN of the party at page 6 of the paper book 3. Audited balance sheet and P&L Account for the year ended 31.03.2009 from pages 7 to 12. The Ld. AR also placed reliance on the circular issued by the CBDT reported in 379 ITR (St.) 83 wherein it has been stated that where a transporter owns only two trucks, then the payer need not deduct tax at source while making payments to the said contractor. He ultimately prayed for setting aside this issue to the file of the Ld. AO to decide the same in the light of the decision of the Hon’ble Delhi High court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd., & 161/Kol/2015. In response to this, the Ld. DR argued that the Circular relied on by the Ld. AR was never argued before the lower authorities and the accounts of transporter as presented now were never examined by the AO. Accordingly, he placed reliance on the orders of the lower authorities.
3 Smt. Minakshi Biswas, AY 2009-10 5. We have heard the rival submissions and perused the materials available on record. We find that the impugned issue needs to be addressed in the light of the decision of the Hon’ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd., supra. We also find that the Ld. CIT(A) was also well aware of the fact that the transporter had offered the subject mentioned receipts to tax and Ld. CIT(A) had even discussed about the prospective applicability of the amendment brought in by the Finance Act, 2012. But we find that the Hon’ble Delhi High Court had held that the said amendment to be retrospective in nature. Accordingly, we set aside this issue to the file of the AO to examine the accounts and returns of the transporter and if the said transporter had considered the subject mentioned receipts from the assessee herein in his returns, then the assessee should not be invited with the disallowance u/s. 40(a)(ia) of the Act. The AO is directed accordingly. This ground of appeal of assessee is allowed for statistical purposes.
6. The next ground to be decided in this appeal is as to whether the Ld. CIT(A) is justified in confirming the addition made towards meal charges paid to truck drivers amounting to Rs.78,000/- in the facts and circumstances of the case.
Brief facts of this issue is that the AO disallowed a sum of Rs.78,000/- paid to the drivers of the trucks @ about Rs.500/- per truck for two persons for their upward and downward journeys from Mourigram to Karimpur covering a distance of about 450 kms. It was pleaded that as per the accepted custom of the trade, whenever the drivers carry the materials from Indian Oil depot, they are paid meal charges for themselves and for their assistants. Moreover, the drivers would be asked to park their trucks for unloading at places which are at a distance from their destination point. Accordingly, it was pleaded that the same would be squarely allowable as a business expenditure. The AO, however, made disallowance of the same which were also confirmed by the Ld. CIT(A).
We have heard rival submissions and gone through facts and circumstances of the case. We find that the Ld. AR had provided a chart in page 3 of the paper book as below:
Sl. No. Financial Year Turnover Rs. Meal charges Lakhs Rs./Lakhs 1. 2008-09 167.78 0.78 From the aforesaid table of comparative figures for five years we find that the assessee has been incurring the meal charges to drivers and their assistants every year for the purpose of carrying out her business on the ground of commercial expediency. We also find that the expenditure incurred thereon taking into account the fact of travelling of huge distance of about 450 kms., is very reasonable. Hence, we hold that the same has to be allowed as an expenditure incurred wholly and exclusively for the purpose of business of the assessee. Accordingly, this ground of appeal of assessee is allowed.
In the result, the appeal of the assessee is partly allowed for statistical purposes.