Sushil Kumar Agarwal, Burdwan vs Assessee

I .T.A . N o. 24 80 / KOL ./ 20 1 3 Ass es sm e nt ye a r: 2 00 8- 2 00 9 Page 1 of 5

IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'SM C' BENCH, KOLKATA

Before Shri Mahavir S ingh, Judicia l M ember

I.T .A. No . 248 0 /KOL/ 2 01 3 Assess ment year : 2008 -2 00 9

Sh ri Su shil Kuma r A ga rwal,. ........ ..............................A pp ella nt Prop . Ja g a nna th Bisse sa ria l, 51, R.R. Roa d, P.O. Ra niga nj, Dist. Bu rd wa n-713 347 [PA N : A CGPA 1496 G]

-Vs.-

Income Ta x Offic er,........ .............................. ............Resp ond e nt Wa rd -1(1), A sa nsol, Sa ha na A p a rtme nt, Lowe r Ch elida nga , PO. A sa nsol-713 3 04, Dist. Bu rd wa n.

Appeara nces by : Shri V. N. Purohit, FCA, f or the as s es see Shri Rajindra Prasad JCIT, for the Dep art ment

Dat e of concluding t he hearin g : July 16, 2015 Dat e of pr onouncing th e order : July 30, 2015

This appeal has been filed by the asses see a gain st the o rder o f ld. Commissioner of Inco me T ax (App eal s), As an so l in Appeal No. 148/CIT(A) /A SL /Wd-1(1) /A sl/1 0-11 dated 29 .08.2013 for the as se ssm ent yea r 20 08-09 .

2. The only issue in this app eal of as se sse e is in regard to disallowance o f Rs.737,713 /- under sect ion 40(a)(i a) of th e Act.

3. Brief fact s o f the case a re that the asses ese is en gag ed in the business of tradin g o f Van asp ati, refin e Oil, Soya Refin e, Musta rd Oil etc. The a ss ess ee p aid variou s amount s on dif ferent d ates to m any I .T.A . N o. 24 80 / KOL ./ 20 1 3 Ass es sm e nt ye a r: 2 00 8- 2 00 9 Page 2 of 5

transpo rters to tallin g to Rs.737,713/-. The p ayment of R s. 737,713/- was mad e to the followin g t ran sporters:-

Sl. No. Name of the t ranspo rter Amount paid

1. Bhagat Enterp ri se 1, 08,000/-

2. Gud du Transpo rt 1, 37,150/-

3. Hind Enterp rise 1, 32,400/-

4. Rajesh T ranspo rt 2, 70,937/-

5. S ri R am Road ways 89,226/-

Total amount paid Rs.7,37,713/-

As p e r the a ss ess men t ord er pas sed by the A ss es sin g Of ficer, the a sse ss ee has st ated that th e p aymen t of Rs.737,7 13/- was m ade to various transpo rters du rin g th e ye ar and TD S under section 194C(2) was duly ded ucted and paid. TDS of Rs.15,342 /- (2% of Rs.7 37,713/-) was paid on 19.05.2008. The Ass essin g Off icer h as also mentio n ed in his ass ess men t order that the asses see has p roduced the proof of payment /challan of Rs. 15,342/- made on 1 9.05.2008. The Asse ssin g Off icer di s allowed the pay ment to t ra nspo rters of R s.7,37,713/- un der section 40( a)(i a) of the Act with the follo wing rea son s:-

"It is al s o cl ear f r om the bal ance sheet that had he d ed ucted the ab ove amo unt of tax, the s am e amo unt mus t h ave b een r ef l ected in the balance s heet. It m eans the tax was d ed ucted not withi n the f inancial year u nder cons ideration but the tax was ded ucted in the subs eq uent year ( i. e. af ter the date

31. 03. 200 8) and paid the t ax am ount i n the ce ntral Govt. Account o n 19. 05. 2008 a nd thus the ab ove amo unt of R s . 7, 37, 713/ - sh al l not be al l owed f or ded ucti on in computing t he incom e char ge abl e u nder the hea d "pr ofits and Gains of busines s or prof es sion» U/s 49(a)(ia) of the I. T. Act, 1961. The dis crepancy as detected ab ove was br oug ht to the notice of the A/R of the ass ess ee and he was as ked for expl anation of the s am e. No satisf actor y expl anatio n f or the s ame coul d be of f er ed by the as sess ee. Hence) the entir e amo unt of payme nt f or trans por t co ntract which com es to R s. 7, 37,713/- is d isall owed u/s 4 0(a)(ia ) of the I. T. Act) 1961. f or com putation pur pos e, 100% of tr ans port ation b eing R s. 7, 37, 713/- is ad ded b ack to the incom e of the ass es s ee this year .

Initiate Penal ty proceeding u/s : 271C of the I. T. A ct"

1961 has been initiated separ atel y".

I .T.A . N o. 24 80 / KOL ./ 20 1 3 Ass es sm e nt ye a r: 2 00 8- 2 00 9 Page 3 of 5

Being ag grieved, the ass es see p referred ap peal befo re the ld. CIT(App eals) on the same ground. The main re ason for dis allowance of Rs. 737,713/- by th e Assessi ng Officer was th at the a ss ess ee ha s no t ded ucted the TD S of R s.15,342/- durin g the yea r at the ti me of pay ment /c redit as req uired under section 19 4C(2) o f th e Act a nd the Assessing Offi cer did not give cogni zanc e to th e f act that the a ssess ee h as paid the TDS amo unt in the n ext fin anci al year on 19.05.20 08.

4. Ld. CIT(Appeal s) confi rmed the view ta ken by the Assessi ng Of ficer with the fo llo win g findin g in his o rder:-

"7. The forego ing discussion amplifies the fact that app ellant o nly had liability to pa y transporter. I t is app ellant who recorded the payment in his books of accou nts. Th e bill for transporta tion cha rges raised by tran spo rt er a cco mpanied the g oods. Th e payer to tran spo rt er is app ellant himself. When payment to tran spo rt er exceed s amo unt specified in section 194C, liability for tax deduction at sour ce arises. In this cas e, tax has not been ded u ct ed under s ectio n 194C even thoug h ther e was liability to deduct. Th e Assessing Officer was right in effecting the disallo wan ce of Rs.73 7,713/-. Accordingly I u phold the addition made by Asses sin g Officer overruling the cont ention of the appellant that the sum pa id is cost o f purchase. Ground s 1 and 2 stands dismissed".

5. Being aggrieved, the as sessee i s in appe al before th e Tribunal.

6. I hav e heard the rival submis sion s and carefully considered the same along with the o rd ers of tax a uthorities below. A t th e ti me of hea rin g, L d. counsel for the as se sse e h as st ated before the T ribunal that the transpo rtation charges p aid duri ng the year are part o f cost of purcha ses. In a purchase t ran sa ction reg ard in g t ransp o rt ation of go ods either the pu rch as er or th e selle r has to b ear the co st. In the ca se of the as se sse e, the purchas er here the appellant spent tran sport ation cha rges and the payment of transpo rtation charges was reco rded under the h ead of pu rchase s, and the seller has not rais ed any bill fo r transpo rtation ch arg es. Th erefo re, no sum was pay able to th e selle r. However, the I .T.A . N o. 24 80 / KOL ./ 20 1 3 Ass es sm e nt ye a r: 2 00 8- 2 00 9 Page 4 of 5

as se sse e has d eposit ed the TDS a moun t calculated at the rate of 2% on the t ran sp ortation charges of Rs.7 ,37,713/- at Rs.15,3 42/- which was paid on 1 9.05.2008, which is duly verifi able and accepted by the order of the As ses sin g Offi ce r. It i s a fa ct that th e amount of TDS was depo sited on 19.05.2008 i.e. before the du e d ate of filing of return unde r section 139(1) of th e Act. This i ssu e i s cov ere d by the decision of the Hon'ble Calcutta Hi gh Court in the c ase of CIT -vs. - Virgin Creation s in ITAT No.302 of 2011, GA No. 3200/2011 dated 23.11.2011, wherein even amendment made by the Finance Act 2010 in section 40(a)(ia) of the Act is held to be retrospective. Hon'ble High Court held as under:

"We have heard Mr. Nizamuddin and gone through the impugned judgment and order. We have also examined the point formulated for which the present appeal is sought to be admitted.

It is argued by Mr. Nizamuddin that this court needs to take decision as to whether section 40(a)(ia) is having retrospective operation or not.

The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e. well before the due date of filing of the return of income for the year under consideration. This factual position was undisputed.

Moreover, the Supreme Court, as has been recorded by the learned Tribunal, in the case of Allied Motors Pvt. Ltd. and also in the case of Alom Extusions Ltd., has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well.

In view of the authoritative pronouncement of the Supreme Court, this court cannot decide otherwise. Hence we dismiss the appeal without any order as to costs."

As the is sue is co vered by the decision of th e Hon'ble Calcutta Hi gh Court in fav our o f th e assessee, the app eal of t he a ss ess ee is allowed.

7. In the result, the appeal filed by the a ssessee stands allowed.

Orde r p ronounced in th e open Co urt on July 3 0, 2015.

Sd/ -

M ahavir Singh (Judicia l M ember) Kolkata, th e 30 t h day of July, 2015 I .T.A . N o. 24 80 / KOL ./ 20 1 3 Ass es sm e nt ye a r: 2 00 8- 2 00 9 Page 5 of 5

Co pies to : (1) Sh ri Su shil Kuma r A ga rwal, Prop . Ja g a nna th Bisse sa ria l, 51, R.R. Roa d, P.O. Ra niga nj, Dist. Bu rd wa n-713 347

(2) Income Ta x Office r, Wa rd -1(1), A sa nsol, Sa ha na A p a rtme nt, Lowe r Ch elida nga , PO. A sa nsol-713 3 04, Dist. Bu rd wa n.

(3) Comm iss ioner of Income-tax (Appeal s) (4) Com mis sioner of Incom e Tax (5) The Depar tmental R epr es entative (6) Guard Fil e

B y order

Assistant Registrar Inco me Tax Appellate Tribunal Kolkata Ben ch es, Kolkata Laha/Sr. P.S.