Income Tax Appellate Tribunal - Ahmedabad
M/S. Om Construction Co.,, Bhavnagar vs The Acit., Circle-2,, Bhavnagar on 13 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" BENCH, AHMEDABAD
BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT &
Ms. MADHUMITA ROY, JUDICIAL MEMBER
I.T.A. No.525/Ahd/2017
(Assessment Year : 2012-13)
Om Construction Co., Vs. ACIT,
303, Surabhi Mall, Circle - 2,
Waghawadi Road, Bhavnagar.
Bhavnagar - 364 001.
[PAN No. AAJFA 2779 D]
(Appellant) .. (Respondent)
Appellant by : Shri Nemish J. Shah, A.R.
Respondent by : Shri Lalit P. Jain, Sr. D.R.
Date of Hearing 13/11/2018
Date of P ronouncement 13/12/2018
ORDER
PER Ms. MADHUMITA ROY - JM:
The instant appeal filed by the assessee is against the order dated 30.12.2016 passed by the Commissioner of Income Tax (Appeals)-6, Ahmedabad arising out of the order dated 23.05.2015 passed under section 143(3) of the Income Tax Act, 1961 (The Act) for the Assessment Year 2012-13 with the following grounds:
"GROUND I: Disallowance of labour contract charges of Rs. 1,06,8007-for not deducting TDS
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance u/s 40a(ia) of the Act of Rs. 1,06,800/- for failure to deduct TDS on contract charges paid.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the contractor did not file return of income since his taxable income was below the exempt threshold limit. Hence, the appellant satisfied the conditions mentioned in the second proviso to Section 40(a)(ia) of the Act.-2- ITA No.525/Ahd/2017
Om Construction Co. vs. ACIT Asst.Year - 2012-13
3. The appellant prays that the disallowance u/s 40(a)(ia) of the Act of Rs.
1,06,800/- be deleted.
GROUND II: Disallowance of transport expenses of Rs. 1,00,000/- on lump sum basis
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the disallowance of Rs. 1,00,000/- for transport expenses on lump sum basis.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that:
a. There are more than one working sites during the year under consideration;
b. The working sites are far from the base of the appellant; and c. There is considerable movement of employees for the management of the works.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the percentage of transportation expense to the turnover has decreased by 1.50% as compared to the previous year.
4. The appellant prays that the lump sum disallowance of Rs. 1,00,000/- be deleted by allowing it as business expenditure.
GROUND III:
1. The appellant craves leave to add, alter or amend any ground of appeal at the time of hearing or before."
2. The first ground relates to the disallowance of Rs.1,06,800/- u/s 40a(ia) of the Act for non deduction of TDS on contract charges paid.
3. During the assessment proceedings, it appeared that the assessee has made labour payment to the tune of Rs.3,05,300/- to one Shri Ramsubhai C. Mavi. The assessee had deducted tax for payment of Rs.1,98,500/- whereas no tax was deducted on the balance payment of Rs.1,06,800/-. The said payment of Rs.1,06,800/- made to Mr. Ramsubhai C. Mavi though on which tax was deductible but since not deducted by the assessee -3- ITA No.525/Ahd/2017 Om Construction Co. vs. ACIT Asst.Year - 2012-13 explanation was called for by the Learned Assessing Officer as to why such payment should not be disallowed. In the absence of any explanation for such failure on the part of the assessee the amount of labour payment of Rs.1,06,800/- on which TDS was deductible was disallowed and added to the total income of the assessee.
4. In appeal, the assessee submitted before the Learned CIT(A) that the party though informed that Certificate of non-deduction of tax at sources would be provided to the assessee failed to provide the same and thus the assessee has failed to deduct tax at source. Further that the assessee was provided with Form No.26AS by the said party and was told that he has not filed return of income. In support of his contention, the assessee submitted the certified ledger account of the party along with said Form No.26AS and also the Affidavit for non-filing of return of income tax by the said party. However, the Learned CIT(A) confirmed the order passed by the Learned Assessing Officer in the absence of lower deduction of tax certificate submitted by the appellant. The disallowance made u/s 40(a)(ia) of the Act to the tune of Rs.1,06,800/- was confirmed. Hence, the instant appeal.
5. At the time of hearing of the appeal, the Learned Counsel submitted before us that the party upon whom the payment has been made is not liable for income tax therefore he has not filed the return of income. He further contented that the assessee has discharged its tax liability which is evident from the explanation given by him before the First Appellate Authority. On the other hand, Learned Departmental Representative relied upon the order passed by the Authorities below.
6. We find no merit in the submissions made by the Learned AR. Neither the assessee produced the tax certificate nor the return of income of the party. We are unable to come to a conclusion that the party is not liable for income tax and therefore the assessee has discharged it's liability to deduct tax at source while making such lablour -4- ITA No.525/Ahd/2017 Om Construction Co. vs. ACIT Asst.Year - 2012-13 payment. Therefore, in the absence of cogent document in support of the argument made by the Learned AR we find no infirmity in the order passed by the Authorities below. Hence, ground of appeal of the assessee is dismissed.
7. The second issue relates to the lump sum disallowance of Rs.1,00,000/- regarding transport expenditure incurred by the assessee during the year under assessment.
8. The assessee engaged in Government contract work incurred transportation expenses to the tune of Rs.18,50,792/- during the year under assessment. Such expenses is inevitable part of such business as claimed by the assessee. Further that the site of construction work located at Okha, Dwarka, Rajkot and Surendranagar are far away from the place of the assessee company. There was considerable movement of employees for management of the works for which expenses was incurred by the assessee. Taking into consideration the welfare to the employees the same is an allowable expenditure under the Act as also argued by the Learned Representative of the assessee before us at the time of the hearing of the appeal. It was further argued by the Learned AR that the AO has disallowed the expenditure only because, some of the bills/vouchers do not bear the truck number, name of the drivers, or goods transported which made vouchers doubtful. The Learned AR further argued that only because the bills do not contain truck number or the name of the drivers, the transport expenses cannot be said to be ingenuine and/or not incurred by the assessee. He, thus, prayed for deletion of such addition of lump sum amount of Rs.1,00,000/- made by the Learned AO, confirmed by the Learned CIT(A). On the contrary the Learned DR relied upon the order passed by the authorities below.
9. We have heard the respective parties, perused the materials available on record. We find that the Learned AO in his order observed that many of the bills do not bear truck number or name of drivers whereas the First Appellate Authority in the order impugned observed that no proper bills or vouchers were presented by the assessee from -5- ITA No.525/Ahd/2017 Om Construction Co. vs. ACIT Asst.Year - 2012-13 which the details of truck number or the driver's name or goods transported was evident. It also appears from the records that the transportations expense for the year under assessment has decreased @ 1.50% in comparison with the preceding assessment year fact of which was also brought to the notice of the First Appellate Authority by the assessee as it appear from the order impugned as already been argued by the Learned Representative of the assessee before us. We find that merely because some of the vouchers do not bear the truck number or driver's name the expenses cannot be termed as ingenuine in the present facts and circumstances of the case. Furthermore, the details whereof as given before the Learned CIT(A) or the necessity as explained for such expenses incurred by the assessee totally cannot be brushed aside. We, therefore, taking into consideration the expenses being really small amount we restrict the disallowance to the tune of Rs. 40,000/- only.
10. The 3rd ground relied by the assessee is general in nature. Thus no order need passed. Thus, the appeal preferred by the assessee is partly allowed.
11. In the result, appeal of the assessee is partly allowed.
This Order pronounced in Open Court on 13/12/2018
Sd/- Sd/-
( PRAMOD KUMAR ) ( Ms. MADHUMITA ROY )
VICE PRESIDENT JUDICIAL MEMBER
Ahmedabad; Dated 13/12/2018
Priti Yadav, Sr.PS
-6-
ITA No.525/Ahd/2017
Om Construction Co. vs. ACIT
Asst.Year - 2012-13
आदे श क त ल
प अ े
षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2.
यथ / The Respondent.
3. संबं धत आयकर आयु त / Concerned CIT
4. आयकर आयु त(अपील) / The CIT(A)-6, Ahmedabad.
5. वभागीय
त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड' फाईल / Guard file.
आदे शानुसार/ BY ORDER, स या पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad