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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri S. S. Viswanethra Ravi, JM]
ORDER Per Shri M. Balaganesh, AM:
This appeal by revenue is arising out of order of CIT(A)-XIV, Kolkata vide appeal No. 125/CIT(A)-XIV/11-12 dated 28.03.2013. Assessment was framed by DCIT, Circle-28, Kolkata u/s. 144 of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2006-07 vide his order dated 10.11.2008.
The only issue to be decided in this appeal of revenue is as to whether the Ld. CIT(A) is justified in deleting the addition made in the sum of Rs.39,12,411/- u/s. 40(a)(ia) of the Act in the facts and circumstances of the case.
The brief facts of this issue are that the assessee owns a Trailer in the name of the firm Prestige Trading Company together with one Crane. The assessee runs the business in two names which are Prestige Trading Company and Singh Trading Company. The Ld. AO observed that the assessee paid transportation charge of Rs.39,12,411/- which is actually the payment made to sub-contractor against his income earned from contract entered into with various parties. He also observed that the assessee received income as contractor from various parties which is evident from the TDS Certificate filed by the assessee and AIS information. Therefore, the assessee is liable to deduct tax from the payment of Rs.39,92,411/- made to sub- contractor under the head “Transportation Charges”. But the assessee did not deduct any tax
2 Shri Ran Vijay Singh, AY 2006-07 which is evident from the column 27(a) of Form 3CD filed along with the return. Accordingly, Rs.39,12,411/- is disallowed and added to total income u/s. 40(a)(ia) of the I. T. Act. On appeal, the Ld. CIT(A) held that assessee had income of Rs.1,11,71,269/- towards Trailer hire charges and other services. The Ld. CIT(A) on verification of the P&L Account of the assessee found that the Transportation Charges includes expenses relating to running of vehicles and cranes like fuel expenses, tyre expenses, trip expenses and driver’s salary which admittedly does not require deduction of tax at source. It was also contended before the ld. CIT(A) that no disallowance was made by the Ld. AO in AY 2005-06 under the similar set of facts and circumstances. The Ld. CIT(A) observed that there was no contract with any transporter for hiring of trucks entered into by the assessee because the assessee owned sufficient number of trucks which is evident from the depreciation schedule of the assessee. The Ld. CIT(A) thereafter placed reliance on the decision of the Hon’ble Kolkata High Court in the case of CIT Vs. M/s. Stumm India in ITA No. 127 of 2009 dated 16.08.2010 wherein it was held that unless the department brings into record any evidence that the expenditure was incurred against a verbal or written contract between the assessee and the contractor, the assessee cannot be fastened with the liability to deduct tax at source. Accordingly, he deleted the disallowance made by the Ld. AO.
Aggrieved, the revenue is in appeal before us on the following ground: “1. That the Ld. C.I.T.(A) has erred both in the question of Law as well as in fact by deleting the disallowance u/s 40(a)(ia) of Rs. 39,12,411/-, on account of Prestige trading Co., on the premise that in the instant case "Transportation Charges" included only expenses like fuel expenses, tyre expenses, trip expenses, Drivers Salary etc., which did not attract the provisions of deduction of tax as per I. T. law, as no break-up or any bills/vouchers, in respect of the said expenses were either produced at the assessment stage or at the appellate stage as apparent from the appeal order and only a general explanation was offered by the AIR on the Related issue and the same was accepted by the Ld. CIT(A).”
The Ld. DR argued that the assessee had not submitted any evidence before the ld. AO in support of his claim of deduction and the assessment was admittedly framed u/s. 144 of the Act during the non-appearance on the part of the assessee and for non-furnishing of any details including the books of account by the assessee. The Balance Sheet, P&L Account were examined by the Ld. CIT(A) on his own and no remand report was called for by the Ld.
In response to this, Ld. AR argued that no fresh evidence were filed before the Ld. CIT(A) by the assessee. The Ld. CIT(A) simply verifying the P&L Account of the assessee found that the “Transportation Charges” included fuel expenses, tyre expenses, trip expenses and driver’s salary. In fact, the Ld. CIT(A) carried out the duty of the Ld. AO who ought to have framed the assessment based on the material available on record and in the form of P&L Account and Balance Sheet filed along with the return of income even in the case of best judgment assessment u/s. 144 of the Act. He further argued that the Ld. AO had made disallowance u/s. 40(a)(ia) of the Act in the instant case. He argued that in order to make disallowance u/s. 40(a)(ia) of the Act, the Ld. AO should be fully satisfied with reference to the books of account that certain payments were indeed made beyond Rs.20,000/- warranting deducting of tax at source towards hire charges in terms of section 194C of the Act. Admittedly, no books of account were produced before the AO by the assessee and in such an event the Ld. AO ought to have only resorted to estimated disallowance of “Transportation Charges” but could not make any disallowance u/s. 40(a)(ia) of the Act without carrying out the specific duty cast on him by bringing materials on record that there was indeed valuation of section 194C of the Act. He further argued that in any case, there was no verbal or written contract entered into by the assessee in respect of hiring charges paid by the assessee to the contractor warranting deduction of tax at source and hence, he argued that the Ld. CIT(A) has rightly deleted the addition by following the decision of the Hon’ble High Court in the case of M/s. Stumm India, supra.
We have heard rival submissions and gone through facts and circumstances of the case. We find that the Ld. CIT(A) had categorically given a finding that the assessee sufficiently owned number of trucks and depreciation has been granted to the assessee by the AO on the same. We find that the Ld. CIT(A) had verified the P&L Account of the assessee and had come to a conclusion that the “Transportation Charges” includes only fuel expenses, tyre expenses, trip expenses and driver’s salary. We find that the Ld. AO had not brought any material on record to suggest that there was indeed any contract or sub-contract in existence
4 Shri Ran Vijay Singh, AY 2006-07 entered into by the assessee. Under these circumstances, we find that the decision of Hon’ble jurisdictional High Court in the case of M/s. Stumm India, Supra clearly supports the case of the assessee wherein it was held as under: “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 not it is said that the aforesaid fact finding is truthful without any basis whatsoever.”
In view of the aforesaid facts and circumstances of the case and respectfully following the decision of the Hon’ble jurisdictional High Court in the case of M/s. Stumm India, supra, we find no infirmity in the order of Ld. CIT(A) and accordingly, we dismiss the ground of appeal of the revenue.
In the result, the appeal of the revenue is dismissed.