TMI Blog2017 (5) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... D.K.Jain, DR ORDER Per N.S.Saini, AM This is an appeal filed by the revenue against the order of CIT(A)- Raipur, dated15.4.2014, for the assessment year 2010-2011. 2. The sole issue involved in this appeal is that the ld CIT(A) erred in deleting the disallowance made u/s.40(a)(ia) of the Act of ₹ 2,02,31,972/- out of freight expenses. 3. The brief facts of the case are that the assessee is a transport contractor. During the year under consideration, the assessee made payment of ₹ 4,04,63,944/- on account of freight expenses. The Assessing Officer observed that the assessee has not deducted TDS from the freight expenses. He observed that as per section 194C(b), the TDS on transport contract was done away w.e.f. 1.10.2009, meaning that TDS was only applicable for half of the period. Therefore, the Assessing Officer disallowed half of the freight payment made by the assessee during the entire year under section 40(a)(ia) of the Act and made addition of ₹ 2,02,31,972/-. 4. On appeal before the CIT(A), it was argued that the Assessing Officer has not pointed out even a single expenses of freight payment which necessitated an obligation on the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y considered the comments of the A.O in the Remand Report dated 06.08.2013, it is seen that the A.O has also not disputed the fact that the appellant is only deriving commission income. I do not find any merit in the comments of the A.O that the submission of the appellant denying his liability to make TDS is self contradictory. I am in agreement with the submissions of the appellant that it does not become obligatory on the part of the appellant to make TDS merely because he has collected Form No.15I from the truck owners and submitted Form No.15J before the Office of CIT, Raipur. In my considered view, the mere fact that the appellant accounted the freight collected from the consigner or the consignee as his turnover basically to match the gross receipts appearing in the TDS Certificates and shown corresponding payments made to the tuck owners as freight expenses, does not alter the fact that the appellant was entitled only for commission out of the freight income earned by the vehicle / truck owners. Thus, the freight payments made to lorry drivers nor the reimbursement of the freight charges from the customers / consigner / consignee constitutes any business expenses or turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch receipts were not its own receipts and it was not liable to get its accounts audited. In this view of the matter also, no penalty under s. 271B can be levied. There is no difference between the returned income and the finally assessed income. The AO has accepted the commission income declared by the assessee. Admittedly, there was no loss of revenue to the Government. As far as the levy of penalty under s. 271B is concerned, the provisions are very clear, the AO is vested with discretion either to impose or not to impose penalty depending upon the facts and the circumstances of the case. No doubt, it is true that the said discretion should be exercised judicially and not arbitrarily. It is well settled law that when there is a technical or venial breach of the provisions of law, the ends of justice require that discretion should not be exercised in favour of punishing a minor default. Taking into consideration the relevant facts of the case, the AO should not have imposed a penalty of under s. 271B. In view of the above also, no penalty under s. 271B can be imposed in this case.-Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) applied. 11. Similar view was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute to facilitate the collection of tax. It is not the intention of the legislature that the credit for a portion of tax deducted and paid is never granted. In the instant case, it is admitted by the Revenue that the amount of the TDS covered by TDS certificates in question could not be granted to truck operators/owners as the relevant TDS certificates stand in the name of the assessee and not in their name. Thus, credit against the above TDS can be granted to the assessee alone. Further, the said TDS relates to the business transactions of the assessee of the year under appeal and the assessee has duly disclosed her income relating to the transactions represented by the said certificates for the year under appeal. There is no material on record to show that the amount of TDS was not deducted from the assessee and it was borne by somebody else. The only dispute is that the assessee instead of showing receipt of full freight and then showing the freight paid to truck operators/owners, has shown only the difference between the aforesaid two amounts as her income as because the payments of freight were directly collected by the truck drivers. This is simply a matter of presentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the conduct of the assessee in executing the contract which has been supported by the case laws cited by the learned Counsel as mentioned above. The bill raised by the assessee charging service tax clinches the issue that the main contractor deducting tax at source on payments to the assessee by way of subcontract @1.12%. Therefore, This Court find no infirmity in the submission of the assessee that there could have been oral or written contract between the assessee and the payees or for that matter between Shri Sarat Chandra Nayak and the payees. The authorities below therefore, did not suggest that there ought to have been a contract either implied or otherwise to hold that the assessee was deducting tax at source u/s.194C. As has been pointed out by the learned Counsel the case laws directly involve the assessee's claiming of expenditure purely on the basis of executing the contract when he himself is a contractor leasing out its trucks for the purpose of its business by hiring it out. There was no requirement for the assessee to obtain the details of the payees to be subjected to deduction of tax at source as they were not sub- sub-contractors. The said part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue fund that the assessee claimed credit for TDS at ₹ 27,03,298/-, out of which TDS claim in respect of to pay system is ₹ 14,89,650/- and the said sum is found credited to the accounts. AO is of the opinion, that the said sum of ₹ 14,89,650/- should be deemed as income of the assessee in view of the provisions of Section 198 of the Act. Relevant discussion from the orders of the revenue extracted as under:- I have gone through the order of the AO and the detailed submission made by the appellant on this issue. That after going through the assessment order and submission of the appellant it is found that so far as practical aspect and accounting of transportations in to pay transportation work is concerned there exist no dispute between appellant and department. The A.O. has made addition only by invoking provision of section 198 but he has not made out any case to show that the TDS amount of ₹ 14,89,650/- can be deemed as income within the spirit of provisions of Section 198. That on other hand appellant has made out a case by correlating facts of the case with relevant provisions of I.T. Act and judicial pronouncements that in her case addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of assessment proceedings, the documents were lying in his possession, however, he could not provide the same to the counsel as his residence was shifted and lots of documents were misfiled in the process of relocation and that he was suffering from Jaundice in the month of February and March 2013. The written submissions along with copy of additional evidences and affidavit of the Accountant were forwarded to the A.O for his comments. The comments of the A.O dated 06.08.2013 were received on 07.08.2013. In his comments dated 06.08.2013, the A.O has relied upon the statement of Shri Saji Pillai recorded during the remand proceedings on 24.07.2013. The A.O has also relied upon the information collected from the Office of learned CIT, Raipur vide letter dated 05.08.2013 wherein the A.O was informed that there was no entry in the Receipt Register in the name of the appellant on 07.05.2010. I have carefully considered the counter comments of the appellant and also an affidavit of Shri Saji Pillai dated 19.09.2013. Having gone through the facts as emanating from all above, I have come to a conclusion that the additional evidence relied upon by the appellant deserves to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that Shri Saji Pillai, Accountant and authorized representative elaborately explained the provisions and the conditions under which Form No.15I were obtained from the truck owners, he accepted that he had appeared during the course of assessment proceedings and also the fact that Form No.15J along with its annexures was prepared by him only based on Form No.15I obtained from the truck owners by the appellant. I also find that Shri Saji Pillari stated that he had handed over Form No.15J and other related documents to the appellant for onward submission before the Office of CIT, Raipur and he did not see those documents or got them copied before 07.05.2010 as the same was submitted by the appellant or his staff on 07.05.2010. I have carefully gone though the question no.11, 12 and 13 and statements given by Shri Saji Pillai based on which the A.O came to the conclusion that the claim of the appellant is merely an afterthought. I find that Shri Saji pillai accepted having made the affidavit dated 14.05.2013 and thus, the answer to question no.11 does not seem to support the conclusion drawn by the A.O. I find no reason to disbelieve the affidavit dated 19.09.2013 wherein Shri Saji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Hon ble Bombay High Court reported in (2012) 340 ITR 333. Hence, the disallowance made by the A.O cannot be sustained even of this ground. 6. Ld D.R. relied on the order of the Assessing Officer. 7. Ld A.R. of the assessee relied on the order of the CIT(A). 8. We have heard the rival submissions and perused the orders of lower authorities and materials available on record. We find that ld D.R. during the course of hearing could not point out any specific error in the order of the CIT(A). We find that the CIT(A) has held that the assessee was not liable to deduct TDS from the freight payments as the assessee did not own any truck, which was necessary for transportation business. Thus, it remains undisputed fact that the assessee was deriving income only on commission basis as he does not own any trucks. Further, the CIT(A) observed that there was no liability of the assessee to deduct TDS from the payments made for transportation charges as Forms 15-I collected from the truck owners were filed with the office of the CIT, Raipur. No positive material was brought on record by the ld D.R. to controvert the above findings of the CIT(A). Hence, we do not find any goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
