Ita/78/2015 Of The Commissioner Of Income Tax v. M/S.kerala Transport Company Ktc Building Ymca Road

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNESDAY, THE 19TH DAY OF AUGUST 2015/28TH SRAVANA, 1937 ITA.No. 78 of 2015 () ---------------------- AGAINST THE ORDER IN ITA 262/COCH/2014 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 30.10.2014 APPELLANT(S)/APPELLANT/RESPONDENT/REVENUE: ----------------------------------------------------------------------------- THE COMMISSIONER OF INCOME TAX, KOZHIKODE. BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEP SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT(S)/RESPONDENT/APPELLANT/ASSESSEE: ----------------------------------------------------------------------------------- M/S.KERALA TRANSPORT COMPANY, KTC BUILDING, YMCA ROAD, KOZHIKODE-673002. R1 BY ADV. SRI.T.M.SREEDHARAN (SR.) R1 BY ADV. SRI.V.P.NARAYANAN R1 BY ADV. SMT.DIVYA RAVINDRAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19-08-2015,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN ITA.78/15 APPELLANT'S EXHIBITS: ANNEXURE A: COPY OF ASST.ORDER DATED 30.3.2013. ANNEXURE B: COPY OF CIT(A)'S ORDER DATED 5.3.2014. ANNEXURE C: ORDER OF THE ITAT, KOCHI DATED 30.12.2014. /TRUE COPY/ PS TO JUDGE ANTONY DOMINIC & SHAJI P. CHALY, JJ. -----------------------------------I.T.A.No.78 of 2015----------------------------------- Dated this the 19[th] day of August, 2015JUDGMENT Antony Dominic, J. 1.This appeal is filed by the Revenue challenging theorder passed by the Income Tax Appellate Tribunal,Cochin Bench in ITA.262/14. 2.By Annexure A, the Assessing Officer completed theassessment for the year 2007-08, disallowing`61,32,54,820/- under section 40(a)(ia)of the IncomeTax Act. The assessee filed an appeal, which wasdisposed of by the first appellate authority as perAnnexure B order, in which, after making reference tothe remand report, the first appellate authority heldthat the assessee could furnish 15-I forms in respectof lorry hire charges paid to the extent of`28,28,38,187/- out of the total amount of`28,89,12,411/-, leaving a balance of `60,74,224/-.A perusal of this order shows that the figure`28,89,12,411/- is taken by the first appellateauthority from the remand report of the Assessing Officer dated 17.2.2014, which is also extracted inthat order. Proceeding further, the first appellateauthority disposed of the appeal deleting thedisallowance except for the amount of `60,74,224/-. 3. The Revenue filed appeal before the Tribunal asITA.262/14 against the order of the first appellateauthority. The appeal was heard along withITA.261/14 filed by the assessee and both the appealswere disposed of by Annexure C order, where, in sofar as it is relevant, the Tribunal held thus: “12. We have considered the rival submissions oneither side and also perused the material availableon record. The total disallowance wasRs.61,32,54,820 out of which the assessingofficer himself admitted that the claim of theassessee to the extent of Rs.30,71,97,689. Theonly dispute is with regard to Rs.28,28,38,187. Itis an admitted fact that the assessee has filedform 15-I to the extent of Rs.27,67,63,963.Section 40(a)(ia) provides for disallowance of theexpenditure which is otherwise allowable in casetax which is deductible at source under ChapterXVIIB was deducted or after deduction it was notpaid. Therefore, it is for the revenue to show “12. We have considered the rival submissions oneither side and also perused the material availableon record. The total disallowance wasRs.61,32,54,820 out of which the assessingofficer himself admitted that the claim of theassessee to the extent of Rs.30,71,97,689. Theonly dispute is with regard to Rs.28,28,38,187. Itis an admitted fact that the assessee has filedform 15-I to the extent of Rs.27,67,63,963.Section 40(a)(ia) provides for disallowance of theexpenditure which is otherwise allowable in casetax which is deductible at source under ChapterXVIIB was deducted or after deduction it was notpaid. Therefore, it is for the revenue to show that the amount to the extent of Rs. 28,28,38,187is liable for taxation and hence the assessee isliable to deduct tax. When the assessee receivedform 15-I/15-J from the recipient saying thattheir taxable income is below the taxable limit,then the liability to deduct tax would not arise.Therefore, to that extent the assessee isjustified in not deducting tax. It is for theCommissioner before whom form 15-I/15-J wasfiled to verify the same and inform the assesseethat the claim made in form 15-I or 15-J is notcorrect. Simply receiving the form 15-I and 15-Jand keeping the same on file without acting upon,the assessing officer cannot blame the assesseefor non deduction of tax. Therefore, this Tribunalis of the considered opinion that to the extent ofRs.27,67,63,963/- for which the assessee hasfiled form 15-I, there cannot be any disallowanceu/s 40(a)(ia) of the Act. 13. Now what remains is only disallowance ofRs.60,74,224. Admittedly, the assessee has notfiled form 15-I. The ld. Senior counsel now claimsthat the assessee could not collect form 15-I forlapse of time. It is not for the assessee to collectfrom 15-I; it is for the receipt of the amount tofurnish form 15-I to the assessee if the amountreceived is not taxable in their hands. Therefore,form 15-I has to be furnished before making thepayment. The assessee now cannot collect form15-I from the recipients of the amounts.Therefore, the claim of the assessee that due to lapse of time they could not collect form 15-I isnot justified. Unless and until it is shown to thesatisfaction of the assessing officer that theamounts in the hands of the recipients are nottaxable, this Tribunal is of the considered opinionthat the assessee is liable to deduct tax.Therefore, failure to deduct tax would attractdisallowance u/s 40(a)(ia) of the Act. Hence, theCIT(A) has rightly restricted the disallowance tothe extent of Rs.60,74,224. This Tribunal do notfind any infirmity in the order of the lowerauthority. Accordingly, the same is confirmed. “ The Tribunal thus dismissed the appeal filed by theRevenue. 4.In this appeal, the Revenue challenges the orderpassed by the Tribunal and the question of law framedis whether, in the facts and circumstances of thecase, the Tribunal was right in law in confirming thedecision of the Commissioner of Income Tax (Appeals)deleting disallowance except to the extent of`60,74,224/-.passed by the Tribunal and the question of law framedis whether, in the facts and circumstances of thecase, the Tribunal was right in law in confirming thedecision of the Commissioner of Income Tax (Appeals)deleting disallowance except to the extent of`60,74,224/-. ITA.78/15 5.We heard learned standing counsel for the Revenue andthe learned senior counsel appearing for the assesseeand considered the submissions made. We have alsogone through the assessment order, the firstappellate order and the order of the Tribunal.the learned senior counsel appearing for the assesseeand considered the submissions made. We have alsogone through the assessment order, the firstappellate order and the order of the Tribunal. ITA.78/15 5.We heard learned standing counsel for the Revenue andthe learned senior counsel appearing for the assesseeand considered the submissions made. We have alsogone through the assessment order, the firstappellate order and the order of the Tribunal.the learned senior counsel appearing for the assesseeand considered the submissions made. We have alsogone through the assessment order, the firstappellate order and the order of the Tribunal. 6.Reading of paragraph 12 of the order of the Tribunalshows that the Tribunal has proceeded on the basisthat the total disallowance was `61,32,54,820/-. Itthereafter states that out of this amount, theAssessing Officer himself admitted the claim of theassessee to the extent of `30,71,97,689/-. Thisitself is factually erroneous because paragraph 7 ofthe first appellate authority's order states that inthe report dated 13.11.2013, what is stated by theAssessing Officer was that, out of the totaldisallowance of `61,32,54,820/-, only an amount of`30,71,97,689/- is sustainable, as the assessee couldsatisfactorily explain with evidence the balanceamount. This does not mean that by making suchobservation, the Assessing Officer had admitted theclaim of the assessee to the extent as mentioned by the Tribunal. Thereafter, the Tribunal, without anyexplanation, proceeded to hold that the dispute wasonly with regard to `28,28,38,187/-. Even if thelast two figures are added, the total amount wouldnot be the amount of total disallowance as mentionedby the Tribunal. This itself shows that there iserror in the figures shown. Secondly, the Tribunalsays that it is an admitted fact that the assesseehas filed form 15-I to the extent of `27,67,63,963/-and it is on that basis, the Tribunal confirmed thefinding of the first appellate authority sustainingthe disallowance of `60,74,224/-. 7.Having seen the figures in the Tribunal's order andalso on comparison of the same with the figures asavailable in the remand report extracted in the firstappellate authority's order, we are inclined to thinkthat there are factual mistakes committed by theTribunal, requiring re-examination of the issuesraised by the Revenue in its appeal. For thatreason, we set aside the order in ITA.262/14 andremit the matter back to the Tribunal with direction ITA.78/15 to dispose of the same afresh with notice and afterhearing both sides. Appeal is disposed of accordingly. Sd/- ANTONY DOMINIC, Judge. Sd/- SHAJI P. CHALY, Judge. kkb.