LAXMIKANT SHARMA, MUMBAI V. ITO 30(2)(2), MUMBAI

CO 151/MUM/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4115 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Assessee Lawyers: A K SHARMA
• Keywords: Tax effect
• Section: 194C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4102/M/2017 ASSESSMENT YEAR: 2009-10 ITO-30(2)(2), R. NO.606, C-13, 6TH FLOOR, B.K.C., BANDRA (E), MUMBAI 400 097 VS. SHRI LAXMIKANT SHARMA, SOLICITOR BUNGLOW, QUARY ROAD, RANI SATI MARG, OPP. GINNI APT., MALAD (E), MUMBAI 400 097 PAN: ANRPS4379Q (APPELLANT) (RE SPONDENT) CO NO.151/M/2018 (ITA NO.4102/M/2017) ASSESSMENT YEAR: 2009-10 SHRI LAXMIKANT SHARMA, SOLICITOR BUNGLOW, QUARY ROAD, RANI SATI MARG, OPP. GINNI APT., MALAD (E), MUMBAI 400 097 PAN: ANRPS4379Q VS. ITO-30(2)(2), ROOM NO.606, 6TH FLOOR, C-13, B.K.C., BANDRA (E), MUMBAI 400 097 (APPELLANT) ( RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI A.K. SHARMA, A.R. REVENUE BY : SHRI SATISHCHANDRA RAJORE, D.R. DATE OF HEARING : 13.08.2018 DATE OF PRONOUNCEMENT : 27.08.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEAL BY THE REVENUE AND THE CRO SS OBJECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAIN ST THE ITA NO.4102/M/2017 & CO NO.151/M/2018 SHRI LAXMIKANT SHARMA 2 ORDER DATED 02.03.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. ITA NO.4102/M/2017 (REVENUES APPEAL) 2. THE TAX EFFECT IN THIS APPEAL IS NOT EXCEEDING R S.20 LAKHS AND THEREFORE THE SAME IS DISMISSED AS NOT MAINTAIN ABLE IN TERMS OF BOARDS CIRCULAR NO.3/2018 (F.NO.279/MISC.142/2007-ITJ (PT)] DATED 11.07.2018. CO NO.151/M/2018 3. IN THE GROUND NOS.1, 2 & 3 THE ASSESSEE HAS CHALLE NGED THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITIONS ON ACCOUNT OF WAREHOUSING CHARGES RS.5,50,000/-, RENT PAID RS.2,40,000/- AND TRANSPORTATION CHARGES RS.8,69,942/ - ON THE GROUND THAT NO TDS HAS BEEN DEDUCTED AS PROVIDE D UNDER THE ACT AND THEREFORE THE SAID EXPENSES WERE NOT AD MISSIBLE AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE FOR THE SAME WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 12.12.2 011 WHEREIN IT WAS SUBMITTED THAT WAREHOUSING CHARGES H AVE BEEN PAID TO PERSONS WHO ARRANGED GOODS FOR THE ASSESSEE AND IS IN THE NATURE OF REIMBURSEMENT OF EXPENSES AND NOT LIA BLE FOR TDS. IT WAS ALSO SUBMITTED THAT THE RENT OF RS.2,40 ,000/- WAS PAID TO TWO PERSONS NAMELY SHRI SUNIL SHARMA AND SH RI ABHISHEK SHARMA WHO WERE CO-OWNERS OF THE ASSESSEE AND THE PAYMENT HAS NOT EXCEEDED RS.1,20,000/- AND THUS N OT LIABLE FOR TDS. AS REGARDS TRANSPORTATION CHARGES, T HE ASSESSEE SUBMITTED THAT THERE WAS NO CONTRACT OF THE ASSESSE E WITH THE ITA NO.4102/M/2017 & CO NO.151/M/2018 SHRI LAXMIKANT SHARMA 3 TRANSPORTER AND IT WAS SIMPLY POINTED OUT THAT THEY SIMPLY ARRANGED THE TRUCKS ON WHICH ALSO NO TDS IS REQUIRE D TO BE DEDUCTED. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DISM ISSED THE APPEAL OF THE ASSESSEE UPHOLDING THE DISALLOWAN CE BY HOLDING THAT ASSESSEE HAS NOT FURNISHED DETAILS AND BREAK UP OF THE WAREHOUSING EXPENSES OF RS.5,50,000/-. AS REGAR DS TRANSPORTING CHARGES, THE LD. CIT(A) OBSERVED THAT TH E TRANSPORTATION CHARGES TO VARIOUS PARTIES ARE COVER ED UNDER SECTION 194C OF THE ACT AND LIABLE TO TDS. SIMILAR LY, THE LD. CIT(A) UPHELD THE ADDITION OF RS.2,40,000/- ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY PROOF OF FACT O F PAYMENT NOT EXCEEDING RS.1,20,000/- TO EACH PERSON. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF WAREHOUSING C HARGES THE SAME ARE IN THE NATURE OF REIMBURSEMENT OF EXPENSES BY THE ASSESSEE TO THE THIRD PARTY WHO HAS INCURRED EXPENS ES ON BEHALF OF THE ASSESSEE. IT IS A SETTLED LAW THAT AN Y REIMBURSEMENT OF EXPENSES INVOLVING NO PROFIT ELEME NT IS NOT LIABLE FOR TDS AND THEREFORE WE ARE NOT IN AGREEMEN T WITH THE CONCLUSION OF THE LD. CIT(A) ON THIS ISSUE AND THE SAME IS ORDERED TO BE DELETED. 6. AS REGARDS PAYMENT OF RENT OF RS.2,40,000/-, WE FI ND THAT THE ASSESSEE HAS MADE PAYMENT TO TWO PERSONS N AMELY SHRI SUNIL SHARMA AND SHRI ABHISHEK SHARMA WHO WERE CO- OWNERS OF THE PROPERTY AND THE PAYMENT TO EACH ONE OF THEM ITA NO.4102/M/2017 & CO NO.151/M/2018 SHRI LAXMIKANT SHARMA 4 DID NOT EXCEED RS.1,20,000/- AS IS APPARENT FROM TH E AGREEMENT OF LEASE RENT FURNISHED BEFORE THE BENCH DURING THE COURSE OF HEARING. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT SAME IS ALSO NOT COVERED BY THE PROVISION OF S ECTION 194I OF THE ACT AND CAN NOT BE SUBJECTED TO DISALLOWANCE UNDER SECTION 40(A)(IA) AND HAS TO BE DELETED. SIMILARLY, THE TRANSPORTATION CHARGES WERE PAID TO VARIOUS PARTIES WHO WERE TRUCK AGENTS FOR TRANSPORTATION FOR THE ASSESSEE AN D ADMITTEDLY NO TDS WAS DEDUCTED UNDER SECTION 194C O F THE ACT. THE ALTERNATIVE PLEA OF THE ASSESSEE THAT WHER E THE INCOME OF THE ASSESSEE IS ESTIMATED BY REJECTING TH E BOOKS OF ACCOUNTS, THE OTHER DISALLOWANCES SUCH AS THE DISAL LOWANCES FOR NON DEDUCTION OF TDS AT SOURCE CAN NOT BE MADE. IN THE CASE OF TEJA CONSTRUCTIONS VS. ACIT (2010) 036 DTR 0220 IT HAS BEEN HELD BY THE CO-ORDINATE BENCH OF THE TRIBU NAL THAT WHEREAS THE BOOKS OF ACCOUNTS ARE REJECTED BY THE A O AND THE INCOME IS ESTIMATED, THEN AO IS PRECLUDED FROM I NVOKING ANY OTHER PROVISIONS OF THE ACT TO MAKE FURTHER ADD ITIONS. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH OF THE TRIBUNAL, ARE INCLINED TO SET ASIDE TH E ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE TH E ADDITIONS AS MADE UNDER SECTION 40(A)(IA) OF THE ACT. 7. THE ISSUE RAISED IN GROUND NO.4 IS AS REGARDS TH E CONFIRMATION OF ADDITION OF RS.2,00,900/- BY THE LD. CIT(A) AS MADE BY THE AO BY TREATING THE INVESTMENT AS UNEXPL AINED INVESTMENT UNDER SECTION 69 OF THE ACT. ITA NO.4102/M/2017 & CO NO.151/M/2018 SHRI LAXMIKANT SHARMA 5 8. WE OBSERVE FROM THE ORDER OF LOWER AUTHORITIES T HAT THE AMOUNT HAS BEEN SUSTAINED ON ACCOUNT OF INVESTMENTS IN THE SHARES ON THE BASIS OF AIR INFORMATION QUA WHICH TH E ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE AUTHORITIES BE LOW. HOWEVER, BEFORE US THE LD. A.R. FILED THE COPY OF D-M AT ACCOUNT AND SUBMITTED THAT ASSESSEE HAS BEEN ALLOTT ED 170 SHARES @ RS.70/- WHICH WAS ALSO APPEARING IN THE D-M AT ACCOUNT OF THE ASSESSEE. THE LD. A.R. ARGUED THAT TH E ASSESSEE HAS NOT MADE ANY INVESTMENTS AS HAS BEEN O BSERVED BY THE AUTHORITIES BELOW. AFTER PERUSING THE RECOR DS BEFORE US CAREFULLY, WE ARE OF THE VIEW THAT THE ISSUE IS REQU IRED TO BE EXAMINED AFRESH AT THE LEVEL OF AO AFTER APPRECIATI NG THE EVIDENCES AS FILED BY THE ASSESSEE AS SUCH AS D-MAT ACCOUNT AND OTHER RECORDS. THEREFORE, WE RESTORE THE ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION THAT THE SAME SHO ULD BE DECIDED ON THE BASIS OF EVIDENCES WHICH THE ASSESSE E MAY FILE BEFORE THE AO. WE WOULD LIKE TO DIRECT THE ASSESSEE TO CO- OPERATE IN FURNISHING THE NECESSARY EVIDENCES BEFOR E THE AO SO THAT ISSUE COULD BE DECIDED ACCORDINGLY. THE ISS UE IS SET ASIDE. 9. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.08.2018. * KISHORE, SR. P.S. ITA NO.4102/M/2017 & CO NO.151/M/2018 SHRI LAXMIKANT SHARMA 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.