Income Tax Appellate Tribunal - Kolkata
Associated Transport Agency, Kolkata vs Assessee on 3 January, 2012
आयकर अपीलीय अधीकरण, Ûयायपीठ - " ऐ" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH: KOLKATA
(सम¢)Before ौी महावीर िसंह, Ûयायीक सदःय एवं/and ौी, ौी लेखा सी.डȣ.राव सदःय)
[Before Hon'ble Sri Mahavir Singh, JM & Hon'ble Shri C. D. Rao, AM]
आयकर अपील संÉया / I.T.A No. 663/Kol/2011
िनधॉरण वषॅ/Assessment Year : 2007-08
Associated Transport Agency Vs. Income-tax Officer, Wd-1(3), Durgapur
(PAN: AAMFA 0882 A)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing: 03.01.2012
Date of pronouncement: 03.01.2012
For the Appellant: Shri V. N. Purohit
For the Respondent: Shri Ranjit Kr. Saha
आदे श/ORDER
Per Mahavir Singh, JM ( महावीर िसंह, Ûयायीक सदःय)
सदःय This appeal by assessee is arising out of order of CIT(A), Durgapur in Appeal No.79/CIT(A)/DGP/09-10 dated 28.02.2011. Assessment was framed by ITO, Ward-1(3), Durgapur u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2007-08 vide his order dated 21.12.2009.
2. The sole issue in this appeal of assessee is against the order of CIT(A) confirming the action of Assessing Officer in making the addition u/s. 40(a)(ia) of the Act read with section 194C of the Act and also u/s. 194I of the Act. For this, assessee has raised following grounds of appeal:
"1.(i) That the CIT(A) has erred in rejecting the assessee's ground that A.O. has made addition u/s. 194C of I. T. Act which section is not applicable to the facts of this case on the plea that no such imputation is observable in the assessment order which plea is prima facie wrong.
(ii) That on the facts and under the circumstances of the case CIT(A) ought to have held that it was a case of simple machine hire not covered u/s. 194C and addition made by ITO u/s. 40(a)(ia) read with section 194C is bad in law.
2. That without any prejudice to ground no.1 the CIT(A) has further erred in ignoring the fact that explanation to Section 194-I was amended with effect from 13.07.2006 only and hence assessee was obliged to deduct tax only on machine hire relevant to the period on or after 13.07.2006."
2 ITA 663/K/2011 Associated Transport Agency A.Y.07-08
3. We have heard rival submissions and gone through facts and circumstances of the case. Briefly stated facts of the case are that assessee paid a sum of Rs.8,04,436/- to N. C. Paul & Co. and Rs.5,4,198/- to Rita Transport on account of machinery hiring charges on verbal contract basis but no tax was deducted at source while making payment of the said sum to the parties. As it was a violation of Section 40(a)(ia) of the Act, assessee was asked that why the entire amount will not be disallowed. In reply, before Assessing Officer assessee stated that there was no liability for deducting tax at source as the gross turnover of the assessee during the previous year 2006-07 relevant to AY 2007-08 was below Rs.40 lacs. But, according to Assessing Officer, this explanation was not at all convincing as the consideration of monetary limits, as specified under clause (a) or clause (b) of section 44AB, for the FY immediately preceding the financial year in which sum is credited or paid, for determining the existence of the liability for making TDS is applicable in the case of individual & HUF only, and in case of the firm there was no such rider and any firm is bound to make TDS as applicable while crediting/making payment, irrespective of the gross turnover/sales during the financial year immediately preceding the financial year in which such sum is credited or paid. According to Assessing Officer, it is a clear case of violation of section 40(a)(ia) of the Act. Hence, the entire sum of Rs.13,08,634/- claimed as expenditure under the head of machinery hire charges was disallowed by Assessing Officer and added back to the income of the assessee. In appeal, the CIT(A) dismissed the assessee's ground of appeal by observing s under:
"The facts of the case are clear. It is not in doubt that TDS has not been made by the appellant while paying machinery hire charges. However, it is to be mentioned that the amendment of section 194I to include machinery hire charges has come into effect by Taxation Laws (Amendment) Act, 2006, w.e.f. 13.07.2006. What has come into effect from 01.06.2007 is the present rate of deduction at source which is 2% as against the 10% which existed prior to 01.06.2007. It is, therefore, found that the provisions of section 194I were very much applicable for the A.Yr. 2007-08. It should also be mentioned that the appellant has claimed that the A.O. has made the disallowance u/s. 194C. However, no such imputation is observable in the assessment order. Accordingly, this ground of appeal is dismissed."
Aggrieved, assessee is in appeal before us.
4. We find that there is no dispute that the assessee did not deduct TDS on the amount of Rs.13,08,634/- on account of machinery hire charges. But before the CIT(A) a specific ground was raised whether the assessee falls u/s. 194C or not on payments of hire charges or not. The CIT(A) has not decided this issue. However, CIT(A) observed, "It should also be mentioned that the appellant has claimed that the A.O. has made the disallowance u/s. 194C. However, no such imputation is observable in the assessment order. Accordingly, this ground of appeal is 3 ITA 663/K/2011 Associated Transport Agency A.Y.07-08 dismissed." The AO has never considered the issue of deduction of TDS u/s. 194I and that issue cannot be the subject matter of appeal. Since CIT(A) has not adjudicated this issue whether the assessee's payments contractual payments falling u/s. 194C or not, we set aside the same to the file of CIT(A) to decide afresh after allowing reasonable opportunity of being heard to the assessee. However, Ld. Counsel for the assessee before us could not substantiate the claim that assessee's payments falls u/s. 194I of the Act as he is failed to provide any evidence that machinery hire charges were in the nature of rent. Hence, in respect to the issue of assessee's payment falling u/s. 194I of the Act, Ld. Counsel for the assessee conceded the position and he agreed that the issue in respect to sec. 194C of the Act can be set aside to the file of the CIT(A) for fresh adjudication.
5. In the result, appeal of assessee is allowed for statistical purposes.
6. Order pronounced in open court.
Sd/- Sd/-
सी.डȣ
सी डȣ.राव
डȣ राव लेखा सदःय महावीर िसंह, Ûयायीक सदःय
(C. D. Rao) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated : 3rd January, 2012
(तारȣख
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - Associated Transport Agency, Diamond Chambers, Unit -III, Suite No. 4G, 4th floor, 4 Chowringhe Lane , Kolkata-700 016. 2 ू×यथȸ/ Respondent, ITO, Ward-1(3), Durgapur
3. आयकर किमशनर (अपील)/ The CIT(A), Durgapur
4. आयकर किमशनर/CIT, Durgapur
5. वभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar.