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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]
Date of hearing: 04.02.2016 Date of pronouncement: 19.02.2016 For the Appellant: Shri A. P. Roy, JCIT For the Respondent: Shri Subash Agarwal, Advocate ORDER
Per Shri Mahavir Singh, JM:
This appeal by revenue is arising out of order of CIT(A)-VI, Kolkata vide Appeal No. 298/CIT(A)-VI,Cir-5/11-12/Kol dated 26.11.2012. Assessment was framed by JCIT(OSD), Circle-5, Kolkata u/s. 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2005-06 vide his order dated 29.12.2011.
The only issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of transportation charges received/receivable from Rungta Sons Pvt. Ltd. amounting to Rs.4,25,90,226/-.
Briefly stated facts are that the assessee is in the business of mining of iron ore, Manganese ore, Dolomite and Lime Stone, etc. Crushing, Screening and processing and manufacturing of sponge iron. The AO during the course of assessment proceedings noticed from the books of account of the assessee that it booked a sum of Rs.20.90 cr. as transport charges received from Rungta Sons Pvt. Ltd. (RSPL). Whereas as per the books of RSPL the charges paid are at Rs.24.35 cr. during the year under consideration. The assessee explained that transportation charges of Rs.20.09 cr. were expended on behalf of RSPL and accordingly, this entry was passed and the receipt of the same was shown under the head Income from Other sources. Whereas the transportation charges of Rungta Mines Limited, AY 2005-06 Rs.4,25,90,226/- incurred on behalf of RSPL was reimbursed in due course but the amount was not shown under the head transportation charges received. But entry was made debiting RSPL and crediting the transportation charges for this amount. The AO has not believed this explanation and made addition of unexplained income on account of transportation charges received at Rs.4,25,90,226/-. Aggrieved, assessee preferred appeal before CIT(A), who after considering the submissions of the assessee allowed the claim of the assessee by observing as under: “20. The appellant has filed the copies of ledger accounts of the persons on whose behalf the payments were made by the appellant and directly credited to the transpiration charges account since this amount was not directly spent by it by using its own transport vehicles. The services were availed from M/s. Jagannath transport, M/s. Bothra Shipping Service and M/s Basukinath & Company and the ledger account of transport charges was credited with Rs.4,25,90,226/-. The documents filed by the appellant show the amount of Rs.4,25,90,226/- has been duly accounted by it in the books of accounts and there is no income escaped from assessment. Therefore, it is held the appellant has accounted for an amount of Rs.4,25,90,226/- received from M/s Rungta sons Pvt. Ltd. in its accounts by showing the said amount as credit in the transportation charges account.
While making the arrangement for transportation on behalf of M/s. Rungta Sons Pvt. Ltd., the assessee had passed-the entries by debiting Transportation Charges A/c and crediting to Parties A/c. On Payment to the parties the entries were passed by debiting Parties A/c and crediting to Bank A/c & TDS A/c.
Out of receipt of Rs.24,35,23,476/- the appellant has shown receipt of Rs.20,09,33,250/- in the profit and Loss Account. The transport charges account was credited by Rs.4,25,90,226/- thereby reducing the claim of expenditure under the head of expenses on account of Transportation Charges. Therefore, both the amounts have been accounted one by crediting the P&L account and the other by reducing the expenditure because of which the profit was not disturbed. The explanation of the appellant is reasonable although may not be appropriate for doing the entry directly into the transportation charges account by crediting the same. However, the receipts have been accounted in the books and duly accounted as income in the return filed by it. Therefore, the addition of Rs.4,25,90,226/- is hereby deleted. This ground of appeal is allowed.”
Aggrieved, assessee preferred second appeal before Tribunal.
Rungta Mines Limited, AY 2005-06 4. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee before the lower authorities filed complete reconciliation i.e. amount credited in transportation charges and debited to RSPL i.e. the amount reimbursed by Rungta Mines Ltd. for payment made on behalf of RSPL towards transportation charges from following parties: “Jagannath Transport Rs.1,75,99,413.00 Bothra Shipping Service Rs.1,82,74,166.00 Basukinath & Co. Rs. 67,16,647.00 Rs.4,25,90,226.00”
Once this is the factual position, as explained by the assessee, there is no discrepancy in the transportation charges received by assessee but this fact is not examined by the AO and this being a purely factual aspect, the facts need verification at the level of the AO. Accordingly, we remand this issue back to the file of the AO for verification of the above facts and decide the issue accordingly. This issue of revenue’s appeal is allowed for statistical purposes.
In the result, appeal of revenue is allowed for statistical purposes. Order pronounced in the open court on 19.02.2016