Income Tax Appellate Tribunal - Delhi
Sunil Vaid, Delhi vs Ito, Gurgaon on 13 April, 2018
1 ITA No. 5343/Del/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'G' NEW DELHI
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
AND
SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 5343/DEL/2014 ( A.Y 2009-10)
Sunil Vaid Vs ITO
C/o. Kapil Goel Adv. Ward-II (3)
F-26/124, Sector-7, Rohini Gurgaon
Delhi
ADVPV9650R
(APPELLANT) (RESPONDENT)
Appellant by Sh. Kapil Goel, Adv
Respondent by Sh. Kaushlendra Tiwari, SR.
DR
Date of Hearing 05.03.2018
Date of Pronouncement 13.04.2018
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 22/07/2014 passed by CIT(A)-II, Faridabad.
2. The grounds of appeal are as under:-
1. "That on the facts and in the circumstances of case and in law, the Ld CIT-
A erred in not deleting the unlawful and wrongful addition made by Ld. Assessing Officer/AO amounting to Rs. 103,09,809/- u/s 40(a)(ia) of the Act for alleged violation of applicable TDS provisions.
2. That on the facts and in the circumstances of case and in law, the Ld CIT- A erred in not deleting the unlawful and wrongful addition made by Ld. Assessing Officer/AO amounting to Rs 102,74,788 being hire charges without 2 ITA No. 5343/Del/2014 appreciating following uncontroverted facts:
a. Assessee is not owning any cab in its own name and services are taken from outside cab owners for giving to client (para 3.2) b. Assessee is merely an intermediary and interface between cab owner and ultimate customer;
c. Book entries (audited or non audited) are not sacrosanct and are not conclusive to taxation (para 3.8);
d. No person can even earn Rs. 1.07 crores (app) from receipts of Rs 2.21 crores in assessee's line of trade which in turn defies ultimately only income can be taxed and not receipts;
e. There is marginal or nil taxability in hands of payee (cab owners) listed at page 2 to 7 of impugned assessment order, which goes to root of the matter as per second proviso to section 40(a)(ia) held to be retrospective in operation; f. Hire charges constitute overriding and direct costs falling outside section 40(a)(ia);
3. That on the facts and in the circumstances of case and in law, the Ld CIT- A erred in not deleting the unlawful and wrongful addition made by Ld. Assessing Officer/AO amounting to Rs 45,021 on payment to Reliance Capital dehors second proviso to section 40(a)(ia) of the Act;
4. That on the facts and in the circumstances of the case and in law, learned CIT-A erred in sustaining the order of Ld AO in making disallowance u/s 40(a) (ia) of the Act without appreciating that after stated disallowance assessee's taxable profits will become astronomical and magical which will reach near to taxing gross receipts.
That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal.
3. During the year, the assessee was carrying on the business of Cab Service. The total turnover during the year was declared at Rs.2,21,88,937/- against which net profit of Rs.4,67,859/- was shown by the assessee. The assessee debited the hire charges of Rs.1,44,52,463/-. The Assessing Officer observed that under the provisions of Section 194C. The assessee was liable to deduct tax at source on the hire charges payment made by the assessee. A Notice u/s 143(2) was issued on 19/24.08.2010, in response to the notice the 3 ITA No. 5343/Del/2014 advocate of the assessee appeared before the Assessing Officer. Fresh notices u/s 143(2)/142(1) along with questionnaire were issued. The Assessing Officer made total disallowances of Rs.1,02,64,788/- u/s 40 (a) (ia) of the Income Tax Act, 1961. The interest amount of Rs.45,21,000/- was also disallowed u/s 40(a)(ia) of the Income Tax Act, 1961.
4. Aggrieved by the same, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that the amount being direct cost u/s 28 (i) cannot come under the purview of Section 40(a)(ia). There is a difference between word 'payable' and 'paid' for the purpose of Section 40(a)(ia) in so far as hire charges are concerned. There is mere facilitation between car owner and car hired by the assessee. Hence, the Assessing Officer as well as the CIT(A) failed to look into these aspects of the matter. The Ld. AR submitted that assessee is an aggregator and he has not paid any sum to the taxi drivers. The Ld. AR further submitted that expenses incurred are hit by Section 40(a)(ia) are only expenses covered under Section 30 to 38 of the Act. These payments are falling u/s 28 of the Act. The Ld. AR submitted that no tax is required to be deducted as the amounts were not subject to provisions u/s 40(a)(ia) of the Act for previous year 194C(4) of the Act. The Ld. AR further submitted Section 201 is not applicable at all. The Ld. AR relied upon the decision of the Delhi High Court in case of CIT Vs. Hardarshan Singh 350 ITR 427 and the Hon'ble Supreme Court decision in case of CIT(A) Vs. M/s Modi Pon Ltd. The Ld. AR also relied upon the decision passed in assessee's own case for the Assessment Year 2011-12 being ITA No. 2414/Del/2016.
6. The Ld. DR relied upon the order of the Assessing Officer and the CIT(A).
7. The Ld. AR was also confronted with the decision of the Hon'ble Delhi High Court in case of CIT vs. Ansal Land Mark Township (P) Ltd. [2015] 377 ITR 635 (Del).
4 ITA No. 5343/Del/20148. We have heard both the parties and perused the material available on record. As regards the disallowance made by the Assessing Officer in respect of the receipts whether paid to the assessee or not has not been verified properly by the Assessing Officer. We reject the argument of the assessee that even if the assesssee is an aggregator provision of Section 194C of the Act applies. As the provision stands with the words 'any person responsible for making payments' is covered under the ambit of Section 194C of the Act. In this case, we do not agree that aggregator is also responsible for paying sum to a contractor. We also reject the contention of the assessee that the assessee should be considered as 'assessee in default' before making any disallowance u/s 40(a)(ia) of the Act. It is pertinent to note that order to be passed u/s 201(1) as with reference to various provisions of enhancement, shortfall and penalty etc. with respect to non deduction of tax at source. Thus Section does not relate to computation of total income under the head business and profession. The Ld. AR also submitted that A.O should have rejected the tax amounts of the assessee and therefore the disallowance u/s 40(a)(ia) should not have been made. We do not agree with the conclusion of the Ld. AR for the specific reason that merely as of certain expenditure if tax is not deducted cannot make the books of accounts defective. In the present case, the AO has stated that expenditure is otherwise allowable but for non deduction of the same on it is allowed. Coming to the issue whether the assessee is 'a specified person' who is required to deduct tax at source, it was submitted that according to explanation (i) (l), the books of accounts were not attributable for previous year, therefore, he is not required to deduct tax at source. Before us, no such details were produced to show that assessee is out of the purview of specified person. Therefore, we set aside the argument of the assessee to the file of AO to refer first whether assessee is a specified person u/s 194C or not. Even if the assesssee is a specified person it is held by Hon'ble Delhi High Court in case of Ansal Landmark P Ltd. that the second proviso to Section 201 of the Act applies retrospectively, therefore, before making any disallowance the assessee has to satisfy the criteria as per the provisions and accordingly, 5 ITA No. 5343/Del/2014 the benefit may be granted to assessee. For this assessee is directed to produce relevant documents before the Assessing Officer. Thus, the order of the CIT(A) is set aside and the matter is remanded back to the file of the Assessing Officer. Needless to say that the assessee be given opportunity of hearing by following principals of natural justice.
9. In result, the appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the Open Court on 13th April, 2018.
Sd/- Sd/-
(PRASHANT MAHARISHI) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 13/04/2018
R.N*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
6 ITA No. 5343/Del/2014
Date
1. Draft dictated on 06/03/2018 PS
2. Draft placed before author 07/03/2018 PS
3. Draft proposed & placed before .2018 JM/AM
the second member
4. Draft discussed/approved by JM/AM
Second Member.
5. Approved Draft comes to the PS/PS
Sr.PS/PS 13.04.2018
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk 13.04.2018 PS
8. Date on which file goes to the AR
9. Date on which file goes to the
Head Clerk.
10. Date of dispatch of Order.
7 ITA No. 5343/Del/2014