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Income Tax Appellate Tribunal - Cochin

Smt.Prasanna Radhakrishnanan Dawson, ... vs Assessee on 14 September, 2012

           IN THE INCOME TAX APPELLATE TRIBUNAL
                  COCHIN BENCH, COCHIN
   BEFORE S/SHRI N.R.S.GANESAN, JM and B.R.BASKARAN, AM

                       I.T.A. No. 29/Coch/2013
                      Assessment Year : 2009-10

 The I.T.O.,                       Vs.    Smt. Prasanna Radhakrishnan
 Ward-1(2), Kozhikode.                    Dawson,
                                          Proprietrix,
                                          M/s. R.K. Gas Agency,
                                          English Church Cross Road,
                                          Nadakkavu, Kozhikode-673 011.
                                          [PAN: AAIPR 5278H]
    (Revenue -Appellant)                        (Assessee-Respondent)

                         C.O. No. 01/Coch/2013
                  (Arsg. out of I.T.A. No. 29/Coch/2013)
                      Assessment Year : 2009-10

 Smt. Prasanna Radhakrishnan Vs.          The I.T.O.,
 Dawson,                                  Ward-1(2), Kozhikode.
 Proprietrix,
 M/s. R.K. Gas Agency,
 English Church Cross Road,
 Nadakkavu, Kozhikode-673 011.
 [PAN: AAIPR 5278H]
     (Assessee-Appellant)                       (Revenue-Respondent)

             Revenue by         Smt. Susan George Varghese, Sr.
                                DR and Shri M. Anil Kumar, CIT(DR)
             Assessee by        Shri C.B.M. Warrier, CA

                Date of hearing               05/06/2013
                Date of pronouncement         07/06/2013


                           ORDER
Per B.R.BASKARAN, Accountant Member:

The appeal filed by the revenue and the Cross Objection filed by the assessee are directed against the order passed by the Ld. CIT(A)-I, Kozhikode and they relate to the assessment year 2009-10.

2. The solitary issue urged in the appeal filed by the revenue is whether the Ld. CIT(A) was justified in deleting the disallowance made u/s. 40(a)(ia) of the Act.

3. The facts relating to the issue are stated in brief. The assessee is a dealer of LPG gas supplied by M/s HPCL. During the course of scrutiny proceedings, the Assessing Officer noticed that the assessee has paid transportation charges to the tune of Rs.1,29,84,892/- without deducting tax at source. The Assessing Officer noticed that the said amount was paid to a person named Mr. Suresh. The assessee submitted before the Assessing Officer that Mr. Suresh cited above, is her employee and the work of transportation of gas cylinders was carried out through him. However, the Assessing Officer did not accept the said claim and accordingly, treated the payments made to Mr. Suresh as the payments made to a contractor. Since the assessee did not deduct tax at source as per the provisions of sec. 194C of the Act, the Assessing Officer disallowed the entire amount of Rs.1,29,84,892/- by invoking the provisions of sec. 40(a)(ia) of the Act. In the appeal filed by the assessee, the Ld. CIT(A) deleted the addition by placing reliance on the decision rendered by the Cochin Bench of ITAT in the case of M/s. Cee Pee Granites Pvt. Ltd. vs. ACIT in I.T.A. Nos. 400 & 401/coch/2011 dated 14/09/2012. Aggrieved by the order passed by the Ld. CIT(A), the revenue has filed this appeal before us.

4. The Ld. DR submitted that the Tribunal had decided an identical issue in the case of M/s. Cee Pee Granites Pvt. Ltd., referred supra, by following the decision rendered by the Special Bench in the case of Merilyn Shipping & Transports (136 ITD 23). The Ld. DR submitted that the Hon'ble High Court of Andhra Pradesh has granted interim suspension of the decision rendered in the case of Merilyn Shipping & Transports. The Ld. DR further submitted that the decision rendered by the Special Bench in the case of Merilyn Shipping & Transports was not accepted by Hon'ble High Courts of Calcutta and Gujarat.

5. On the contrary, the Ld. AR submitted that the Assessing Officer has made the impugned addition on the ground that the assessee has carried out the work of transportation of gas cylinders through a person named Mr. Suresh. The Ld. AR submitted that Mr. Suresh is an employee of the assessee and for the sake of accounting convenience, the work of transportation was carried out through him. Accordingly, the Ld. AR submitted that there is no contract between the assessee and Mr. Suresh and hence the provisions of sec. 194C are not applicable in this case. The Ld A.R submitted that there is a contract between the assessee and M/S HPCL and hence M/s HPCL is deducting tax at source on the payments made to the assessee. He further submitted that the assessee is getting only reimbursement of the transport charges from M/s HPCL and hence the assessee is not under an obligation to deduct tax at source on the payments made on behalf of the said company.

6. We have heard the rival contentions and carefully perused the record. As submitted by the Ld. DR, the Ld. CIT(A) has decided the issue in favour of the assessee by following the decision rendered by the Tribunal in the case of M/s. Cee Pee Granites Pvt. Ltd.(referred supra), which in turn was rendered by following the decision of the Special Bench in the case of Merilyn Shipping & Transports (referred supra). We notice that the Hon'ble High Court of Calcutta, vide its order dated 28-03-2013 in the case of CIT vs. Crescent Export Syndicate in ITAT No. 20/2013, has held that the decision rendered by the Special Bench in the case of Merilyn Shipping & Transports is not acceptable. We also notice that the Hon'ble High Court of Gujarat vide its order dated 02-05-2013 in the case of CIT vs. Sikandarkhan N. Tunvar (Tax Appeal No. 905/2012 & Ors.) has held that the Special Bench in the case of Merilyn Shipping & Transports does not lay down the correct law. Accordingly, both the High Courts did not approve the decision rendered by the Special Bench in the above said case.

7. In the case of Kanel Oil & Export Inds. Ltd (121 ITD 596) (Ahd)(TM), the Hon'ble Third member considered the issue, viz., Which of the decision is required to be followed when the decisions rendered by the Special bench of the Tribunal and by any 4 I.T.A. No. 29/Coch/2013 & C.O. No. 01/Coch/2013 of High Court contradicts with each other. In this regard, the Hon'ble Third member observed as under:-

"One is of a Special Bench of the Tribunal, Ahmedabad and the other is of a High Court, though not the jurisdictional High Court. A simple answer would be that the judgment of a High Court, though not of the jurisdictional High Court, prevails over an order of the Special Bench even though it is from the jurisdictional Bench (of the Tribunal) on the basis of the view that the High Court is above the Tribunal in the judicial hierarchy. But this simple view is subject to some exceptions. It can work efficiently when there is only one judgment of a High Court on the issue and no contrary view has been expressed by any other High Court. But when there are several decisions of non-jurisdictional High Courts expressing contrary views, it has been recognised that the Tribunal is free to choose to adopt that view which appeals to it.."

We have already noticed that the Hon'ble High Court of Calcutta and the Hon'ble High Court of Gujarat have not approved the decision rendered by the Special Bench in the case of Merilyn Shipping and Transports and no other contrary decision rendered by any of the High Court was brought to our notice. Hence, we are inclined to follow the decisions rendered by the Hon'ble High Courts of Calcutta and Gujarat.

7. The Ld. CIT(A) has decided the impugned issue by following the decision rendered by this bench of Tribunal, which in turn placed reliance on the decision rendered by the Special bench in the case of Merilyn Shipping & Transports on a legal issue. In view of the decisions rendered by the Hon'ble High Courts of Calcutta and Gujarat, the decision rendered by this bench of the Tribunal in the case of Cee Pee Granites (P) Ltd (supra) is no more a good law. Hence, the order of Ld CIT(A) is liable to be set aside and we order accordingly.

8. In the cross objection, the assessee has also raised many new legal grounds, which appear to have not been urged before the Ld CIT(A). Further, the Ld CIT(A) has disposed of the appeal by considering only a legal issue and he has not considered the impugned issue on merits. Hence, we are of the view that this issue needs to be adjudicated afresh at the end of the Ld. CIT(A) and accordingly, we restore all the matters to his file.

9. In the result, the appeal filed by the revenue and the cross objection filed by the assessee are treated as allowed for statistical purposes.

Pronounced accordingly on 07-06-2013.

                  sd/-                                     sd/-
           (N.R.S.GANESAN)                             (B.R.BASKARAN)
           JUDICIAL MEMBER                         ACCOUNTANT MEMBER

Place: Kochi
Dated: 7th June, 2013
GJ
Copy to:

1. Smt. Prasanna Radhakrishnan Dawson, Proprietrix, M/s. R.K. Gas Agency, English Church Cross Road, Nadakkavu, Kozhikode-673 011.

2. The Income Tax Officer,Ward-1(2), Kozhikode.

3. The Commissioner of Income-tax(Appeals)-I, Kozhikode.

4.The Commissioner of Income-tax, Kozhikode

5. D.R., I.T.A.T., Cochin Bench, Cochin.

6. Guard File.

By Order (ASSISTANT REGISTRAR) I.T.A.T, COCHIN