Income Tax Appellate Tribunal - Pune
Avdhoot Sarvottam Kulkarni, Pune vs Department Of Income Tax on 9 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI SHAILENDRA KUMAR YADAV,
JUDICIAL MEMBER, AND
SHRI R.K. PANDA, ACCOUNTANT MEMBER
ITA No.1850/PN/2012
(A.Y. 2008-09)
Dy. CIT, Circle-3, Pune Appellant
Vs.
Shri Avdhoot Sarvottam Kulkarni
Prop. Marketing Multipliers
1206/B-1, Bute Patil Chambers,
J.M. Road, Pune - 411004
PAN: ABEPK3975H Respondent
CO No.60/PN/2013
(Arising out of ITA No.1850/PN/2012)
(A.Y. 2008-09)
Shri Avdhoot Sarvottam Kulkarni
Prop. Marketing Multipliers
1206/B-1, Bute Patil Chambers,
J.M. Road, Pune - 411004
PAN: ABEPK3975H Cross Objector
Vs.
Dy. CIT, Circle-3, Pune Appellant
Assessee by : Shri M.K. Kulkarni
Department by : Shri S.P. Walimbe
Date of Hearing : 09.01.2014
Date of order : 21.01.2014
ORDER
2
PER SHAILENDRA KUMAR YADAV, J.M:
This appeal filed by revenue and Cross Objection filed by assessee are arising from the order of CIT(A)-II, Pune dated 24-05- 2012 for the A.Y. 2008-09, so both are being disposed off together. The Revenue has taken the following grounds in its appeal.
2. In ITA No.1850/PN/2012, the revenue raised the following grounds:
1. Whether on facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance u/s.40(a)(ia) amounting to Rs.20,05,830/- by holding that such disallowance applies only to amounts 'payable' as on 31st March and not to amounts already paid during the year?
2. The appellant craves leave to add, alter or amend any or all the grounds of appeal.
3. In cross objection, the assessee has raised the following grounds:
1) On the facts and circumstances of the case and in law the Ld. CIT(A) allowed the appeal of the assessee mainly relying on the special Bench Judgment in the case of Merilyn Shipping and Transport v. Addl. CIT (2012) 70 DTR 81 (SB) (Vishakha) and deleted the addition made u/s 40(a)(i-a) of the Act and in the process the merits of the case were not considered. The applicability of S.194C(2) is not considered since there is no contract of whatsoever kind with the labour for payment of loading and unloading charges as the work as entrusted to one also is available on the site. With a view to consider this aspect and in the interest of justice the order of the CIT(A) be restored to his file.
2) On the facts and circumstances of the case and in law the assessee submits in the absence of any contract with the labour the provisions of S.194C(2) become inapplicable and assessee is under no obligation to deduct any tax from the payments made to such labour for loading and unloading.
Since this point was not considered the assessee be given an opportunity to place his case properly before the 1st appellate authority. It be held accordingly.
33) The appellant craves to leave, add/amend or alter any of the above grounds of appeal.
4. At the outset of hearing, the learned Authorized Representative submitted that the CIT(A) has allowed the appeal on relying on special bench decision in the case of Merilyn Shipping and Transports Vs. Addl. CIT (2012) 70 DTR 81 (Visakha) (SB)(Tribunal) and deleted the addition made u/s.40(a)(ia) of I.T. Act. In this process the merits of the case were not considered. The applicability of section 194C(2) was not considered since there was no contract whatsoever kind with labour for payment of loading and unloading charges as work has entrusted to one also is available on the site. With a view to consider this aspect and in the interest of justice the order of the CIT(A) be restored to him. The learned Authorized Representative has also submitted that in the absence of contract with labour, the provisions of sec.194C(2) become inapplicable and the assessee is under no obligation to deduct any tax from payment made to such labour for loading and unloading. Since this legal aspect was not considered, the assessee should be given an opportunity to place his case properly before the first appellate authority. It was also pointed out that the assessee has also raised an additional ground before the CIT(A) and the same was not adjudicated, which is read as under:
"The Additional Ground of Appeal : [Before CIT(A)] (Without Prejudice to each other)
1) On the facts and circumstances of the case and in law that only when claim of assessee for deduction is under Ss. 32 to 38, provisions of S. 40 (a)(i-a) can be pressed into service to disallow such claims of deduction. The facts of the case show that the expenditure disallowed is covered by Ss. 28 and 29 of the Act. The disallowance made invoking the provisions of S. 40 (a)(i-a) is bad in law and without jurisdiction. The disallowance be deleted.4
2) On the facts and circumstances of the case and in law the reliance is placed for the proposition on Hon'ble I.T.A.T. Delhi Bench decision in the case of I.T.O. Ward 1 (2) Vs. Ahaar Consumer Products (P.) Ltd. (2011) 10 Taxmann.com 181 (Delhi- ITAT). Since this is legal issue and hence this additional ground of appeal.
3) The appellant craves leave to add/amend or alter any of the above grounds of appeal.
So, requested to set aside the order of CIT(A).
5. On the other hand, the learned Departmental Representative could not dispute the fact that the appeal has simply been decided on the basis of Special Bench decision in the case of Merilyn Shipping and Transports (supra) and issue at merit raised by the assessee was not addressed.
6. In view of above discussion, we find that CIT(A) has granted relief to the assessee while relying the ratio of special bench in Merilyn Shipping and Transports, but it is a fact that the applicability of section 194C(2) has not been considered as contested by the assessee before first appellate authority. The assessee was not given any opportunity to establish his case on merit as raised by him. Even the issue raised by the assessee by way of an additional ground before the CIT(A) is not finding place in the order of CIT(A) which is not justified. In view of above, we are of the view that the above issues raised on behalf of the assessee needs to be re- addressed to decide the issue on merit while ratio of Merilyn Shipping and Transports (supra) has been reversed by the Hon'ble Calcutta and Gujarat High Courts. In the interest of justice and in view of above discussion, we set aside the order of CIT(A) and restore the matter to him with a direction to decide the same as per fact and law after providing due opportunity of hearing to both the parties. As a result the appeal filed by the revenue is allowed for statistical purposes. Since we are restoring the issue on technical issue raised 5 by way of cross objection as discussed above, we are refraining to comment on the merit of the issue at hand. This takes care of issue raised by way of cross objection.
7. In the result, the revenue's appeal as well as cross objection by the assessee are allowed for statistical purposes.
Pronounced in the open Court on this the 21st day of January, 2014.
Sd/- Sd/-
(R.K. PANDA) (SHAILENDRA KUMAR YADAV)
Accountant Member Judicial Member
Pune, Dated: 21st January, 2014
GCVSR
Copy to:-
1. Department
2. Assessee
3. The CIT(A)-II, Pune
4. The CIT-II, Pune
5. The DR, "B" Bench, I.T.A.T., Pune.
6. Guard File
By Order
//True Copy//
Senior Private Secretary,
I.T.A.T., Pune