DCIT, BHUBANESWAR vs. RUTU RAJA ROUT, BHUBANESWAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER ITA No.216/CTK/2015 Assessment Year :2009-2010 C.O.No.22/CTK/2015 (arising out of ITA No.216/CTK/2015)

DCIT, Circle -5(1), Vs. Sri Rutu Raj Rout, 4706, Bhubaneswar. Shop No.BR-36, RCMC Market Complex, Press Chhak, Mancheswar Railway Colony, Bhubaneswar. PAN/GIR No. AHVPR 6568 G (Appellant) .. ( Respondent)

Assessee by : Shri P.R.Mohanty AR Revenue by : Shri Asit Kumar Mohapatra, CIT DR/Shri D.K.Pradhan, JCIT, DR Date of Hearing : 16 /02/ 2017 Date of Pronouncement : 17 /02/ 2017

O R D E R Per Bench

The appeal filed by the revenue and the cross objection filed by the

assessee are directed against the order of CIT(A)-2, Bhubaneswar, dated

27.2.2015, for the assessment year 2009-2010.

“1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in law as well as on facts by deleting addition of Rs.80,14,600/- made by the AO u/s 40(a)(ia).

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that the assessee has debited in the P&L account an amount of

Rs.81,21,300/- under the head “Machine hiring charges”. The details of

which are as under:

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seen that except in case of Ram Lakhan Transport, in all other cases

provision contained in section 194-I is attracted and the total sum comes

to Rs.80,14,600/-. The Assessing officer further observed that in response

to show cause notice as to how the disallowance u/s.40(a)(ia) for

Rs.80,14,600/- should not be made for non-deduction of TDS u/s.194-I of

the Act, the assessee submitted that this Bench of the Tribunal in the case

of ACIT vs. Vinod Transport (2011) has held that the disallowance

u/s.40(a)(ia) can be made if the expenses are outstanding and payable at

the year end and cannot be invoked where expenses were paid before the

year end despite TDS either not deducted or remains payable. Further,

relying on the decision of the Hyderabad Bench of the Tribunal in the case

of Teja Construction (2010) 5 taxmann.com 61 (Hyd), it was submitted

that the provisions of section 194C would not apply in relation to payments

made for hiring of renting of equipment’s, etc., as per the Circular No.681

dated 8.3.1994. The Assessing Officer observed that as per the provisions

of section 194-I of the I.T.Act, 1961, tax is deductible at source from hiring

charges. As the assessee has not deducted TDS, therefore, he disallowed

deduction for Rs.80,14,600/- by invoking the provisions of section 40(a)(ia)

of the Act.

the case of Hindustan Coca Cola Beverages Ltd vs CIT (2007) 293 ITR 226

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(SC) has held that no demand visualised u/s.201(1) should be enforced

after the tax deductor has satisfied the officer-in-charge of TDS that taxes

due had been paid by the deductee-assessee. The Hon’ble Supreme Court

has further observed that “Be that as it may, the Circular No. 275/201/95-

IT(B), dt. 29th Jan., 1997 issued by the CBDT, in our considered opinion,

should put an end to the controversy. The circular declares "no demand

visualized under s. 201(1) of the IT Act should be enforced after the tax

deductor has satisfied the officer-in-charge of TDS, that taxes due have

been paid by the deductee-assessee”. Therefore, he held that the

Assessing Officer is directed to verify from the departmental records or

through the assessee or through the issue of notice u/s.133A(6) to the 8

parties being organisers/arrangers of the machineries as to whether the

amount of Rs.80,14,600/- has been reported by the said parties as taxable

income for the assessment year 2008-09 and whether taxes as above have

been paid on the said amount. If yes, the expense debited by the assessee

on the said count of Rs.80,14,600/- will be held as allowable.

the ld A.R. supported the order of the CIT(A).

pointed out by the ld D.R. We find that the CIT(A) has directed the

Assessing Officer to allow deduction of Rs.80,14,600/- under the head

“machinery hiring charges” paid to 8 parties after verifying whether said 8

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parties to whom the payments have been made by the assessee has shown

the amount receipt in the return of income and paid due tax thereon by

following the decision of Hon’ble Supreme Court in the case of Hindustan

Coca Cola Beverages Ltd(supra) and the CBDT Circular No.275/201/95-

IT(B) dated 29.1.1997. We find no good reason to interfere with the order

of the CIT(A), which is hereby confirmed and grounds of the revenue are

dismissed.

the CIT(A). Since, we have upheld the order of the CIT(A), the cross

objection filed by the assessee is rendered infructuous and hence,

dismissed.

the assessee are dismissed.

Order pronounced in the open court on 17 /02/2017 in the presence of parties.

Sd/- sd/- ( Aby T. Varkey) (N.S Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER

Cuttack; Dated 17 /02/2017 B.K.Parida, SPS

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Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle -5(1), Bhubaneswar. 2. The Respondent. Sri Rutu Raj Rout, 4706, Shop No.BR-36, RCMC Market Complex, Press Chhak, Mancheswar Railway Colony, Bhubaneswar 3. The CIT(A)-2, Bhubaneswar 4. CIT,, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack