M/S Kohinoor Granites & Marbles , ... vs Assessee

M/s.Kohinoor Granites & Marbles, # 21/1, Bannerghatta Main Road, Bangalore-560030. ... Appellant PAN:AAGTS 4396 D

Vs.

Asst. Commissioner of Income-tax, Circle 10(1), Bangalore. ... Respondent

Appellant by: Shri Suresh Muthukrishnan, CA. Respondent by: Shri P.Dhivahar, JCIT (DR).

Date of hearing : 24/02/2015. Date of pronouncement: 27/02/2015.

Per Smt. P.MADHAVI DEVI, JM:

This is an appeal filed by the assessee against the order of

the CIT(A)-V, Bangalore, dated 19/08/2013 upholding the

disallowance of Rs.30,70,650/- made u/s 40(a)(ia) of the Income-

tax Act, 1961 [hereinafter referred to as 'the Act' for short] in

respect of transportation charges paid by the assessee, for the

assessment year 2006-07.

ITA No.1368/Bang/2013

M/s.Kohinoor Granites & Marbles.

Page 2 of 5

2. According to the assessee, the transportation charges

were not liable for deduction of tax at source u/s 194C of the Act.

Without prejudice to this ground, the assessee has also raised a

ground that since these transportation charges were already paid

and there were no expenses payable at the end of the year, the

disallowance made u/s 40(a)(ia) of the Act was unwarranted and

is liable to be deleted. However, at the time of hearing, it was

noticed that the assessee had not raised such a ground of appeal

before the CIT(A) and therefore the same was sought to be raised

as an additional ground before the Tribunal. The assessee,

thereafter, filed it as an additional ground of appeal before this

Tribunal vide letter dated 12/02/2015

3. Brief facts of the case are that the assessee is a firm

engaged in the business of trading in granites and marbles. It

filed its return of income for the relevant assessment year

disclosing income of Rs.11,08,990/-. During the assessment

proceedings u/s 143(3) of the Act, the AO perused the books of

account of the assessee and found that the assessee had debited

several cash expenses under the head 'lorry freight charges' each

one exceeding Rs.20,000/- at a time. He observed that these

payments attracted the provisions of sec.194C of the Act as the

assessee had not deducted tax at source and therefore he made

disallowance u/s 40(a)(ia) of the Act.

ITA No.1368/Bang/2013

M/s.Kohinoor Granites & Marbles.

Page 3 of 5

4. Aggrieved, the assessee preferred an appeal before the

CIT(A) who confirmed the same and the assessee is in second

appeal before us.

5. The learned counsel for the assessee reiterated the

submissions made before the authorities below stating that these

transportation charges were, in fact, part of the purchase price but

they were shown separately in the bills and since there was no

privity of contract between the assessee and the transporter, the

provisions of sec.194C of the Act are not attracted. He further

placed reliance on the decision of this Tribunal in the case of

Anand Marakala in ITA No.1584/Bang/2012 for the proposition

that where payments are made before 31st March of every year,

the provisions of sec.194C are not attracted. Copy of the said

order is placed before us. As regards the CIT(A)'s observation at

para.7.2 that the assessee has claimed these transportation

expenses in the subsequent assessment year is concerned, the

learned counsel for the assessee submitted that this observation is

erroneous and in support of this contention, he placed before us

the copies of the acknowledgment of the return of income filed for

the assessment years 2006-07 to 2010-11 to demonstrate that

they were never claimed in the subsequent assessment years. The

learned counsel for the assessee, therefore, prayed that the

disallowance be deleted.

The learned Departmental Representative, on the other

hand, supported the orders of the authorities below. ITA No.1368/Bang/2013

M/s.Kohinoor Granites & Marbles.

Page 4 of 5

6. Having regard to the rival contentions and the material on

record, we admit the additional ground of appeal raised by the

assessee since it is a legal ground which can be raised at any

stage of the proceedings, as held by the Hon'ble Supreme Court in

the case of NTPC vs. CIT (229 ITR 383)(SC). . As regards merits

of the issue is concerned, we find that the CIT(A) has already

given a finding that transportation charges are not part of the

purchase price as claimed by the assessee. However, as regards

the additional ground raised by the assessee, we find that the

issue is covered in favour of the assessee by the decision of the

co-ordinate bench of this Tribunal in the case of Anand Marakala

(cited supra). Therefore, we deem it fit and proper to admit the

additional ground of appeal and remand the issue to the file of the

AO for verification as to whether the payments claimed by the

assessee are paid before 31st of March of the relevant previous

year and also whether the assessee had claimed these amounts in

the subsequent assessment years. The AO shall verify the records

of the assessee and if it is found that the assessee had made

payment before 31st of March of the relevant previous year and

has also not claimed the same in the subsequent assessment year,

then no disallowance u/s 40(a)(ia) shall be made. ITA No.1368/Bang/2013

M/s.Kohinoor Granites & Marbles.

Page 5 of 5

7. In the result, the assessee's appeal is treated as allowed

for statistical purposes.

Order pronounced in the open court on 27th February, 2015.

sd/- sd/- (Jason P Boaz) (Smt. P.Madhavi Devi) ACCOUNTANT MEMBER JUDICIAL MEMBER

eksrinivasulu

Copy to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore