Rotomotive Powerdrives India Ltd., Anand V. The Dy.CIT.,Anand Circle, Anand

CO 225/AHD/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3837 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHAILESH J SHAH C A
• Keywords: Retrospective amendment; Reasonable cause; Tax effect
• Section: 194C

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD OLHE VGEN] YS[KK OLHE VGEN] YS[KK OLHE VGEN] YS[KK OLHE VGEN] YS[KK LNL; LNL; LNL; LNL; , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.3195/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) DCIT, ANAND CIRCLE, 3 RD FLOOR, S. P. PATEL COMPLEX, NR. OLD C. K. HALL, MAYFAIR ROAD, ANAND 388 001 / VS. M/S. ROTOMOTIVE POWERDRIVES INDIA LTD., 2101.4, GIDC ESTATE, VITHAL UDHYOG NAGAR, ANAND 388 121. CROSS OBJECTION NO.225/AHD/2015 (IN ITA NO.3195/AHD/2015) ( / ASSESSMENT YEAR : 2011-12) M/S. ROTOMOTIVE POWERDRIVES INDIA LTD., 2101.4, GIDC ESTATE, VITHAL UDHYOG NAGAR, ANAND 388 121. / VS. DCIT, ANAND CIRCLE, 3 RD FLOOR, S. P. PATEL COMPLEX, NR. OLD C. K. HALL, MAYFAIR ROAD, ANAND 388 001 ./ ./ PAN/GIR NO. : AADCR 3368 J ( / APPELLANT ) .. ( !' / RESPONDENT ) REVENUE BY : SHRI PRASOON KABRA, SR. D.R. ASSESSEE BY : SHRI SHAILESH J. SHAH, C.A. # $% & '( / DATE OF HEARING 28/05/2018 )*+, & '( / DATE OF PRONOUNCEMENT 08/06/2018 ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 2 - - / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL ALONG WITH CROSS OBJECTION HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AND ASSESSEE AGAINST THE AP PELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-4, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/4-261/14-15 DATED 23/07/2015 ARI SING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 05/03 /2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12. 2. FIRST, WE TAKE UP THE GROUNDS OF APPEAL RAISED B Y THE REVENUE IN ITA NO.3195/AHD/2015 FOR A.Y. 2011-12, WHICH ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ENTIRE AD DITION OF RS.58.03 LACS, WITHOUT APPRECIATING THAT AS PER THE ASSESSEE'S SUBMISSION DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, (PARA 04 OF ASSESSMENT ORDER), IT HAD ADMITTED THAT OUT O F PAYMENT OF RS. 86.52 LAKHS, PAYMENT OF RS.67.98 LAKHS (PAYMENT OF RS.28.49 LACS ON WHICH TAX WAS DEDUCTED + PAYMENT WITHOUT DE DUCTION OF TAX FOR A REASONABLE CAUSE OF RS.39.49 LACS),WAS A ALLOWABLE DEDUCTION, MEANING THEREBY THAT THE BALANCE PAYMENT OF RS. 18.54 LACS ON WHICH NO TAX WAS DEDUCTED (RS. 86.52 LACS MINUS RS. 67.98 LACS) WAS NOT A ALLOWABLE DEDUCTION, AND THE SAME WAS DESERVED TO BE UPHELD BY THE C.I.T.(A). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E DISALLOWANCE OF RS.58,03,774/-MADE BY THE A.O. U/S 40(A)(IA) OF THE ACT WITHOUT CONSIDERING THE BOARD'S CIRCULAR NO. 715 DA TED 08.08.1995 WHEREIN IT HAD BEEN CLARIFIED THAT CLEAR ING AND FORWARDING AGENTS ACT AS INDEPENDENT CONTRACTORS AN D ANY PAYMENT MADE TO THEM WOULD BE LIABLE FOR DEDUCTION OF TAX AT ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 3 - SOURCE, AND WITHOUT CONSIDERING THE FACT THAT THE E XPRESSION 'ANY PAYMENT' USED IN THE BOARD'S CIRCULAR NO.715 DT. 08 -08-1995, WOULD ALSO INCLUDE THE TERM TT REIMBURSEMENT OF EXPENSES' 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E DISALLOWANCE OF RS.58,03,774/- MADE BY THE A.O. U/S.40(A)(IA) OF THE ACT WITHOUT CONSIDERING THE FACT THAT EXEMPTION FOR NON DEDUCTION OF TDS IN RESPECT OF PAYMENT REPRESENTING REIMBURSEMEN T OF EXPENSES TO CLEARING AND FORWARDING AGENT, IS NOT P ROVIDED FOR IN SECTION 194-C OF THE IT. ACT. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN THE AFORESAID GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER BE RESTORED. 3. THE INTERCONNECTED ISSUE RAISED BY THE REVENUE IN I TS ALL GROUNDS OF APPEAL IS THAT LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 58,03,774/- ON ACCOUNT OF NON-DEDUCT ION OF TDS U/S 194C R.W.S. 40(A)(IA) OF THE ACT. 4. THE BRIEFLY STATED FACTS ARE THAT THE ASSESSEE I S A LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING BUSINESS OF AC MOT ORS AND GEAR BOX SPARES ETC. THE ASSESSEE DURING THE YEAR HAS INCURR ED AN EXPENSE OF RS.86.52 LACS TOWARDS CLEARING AND FORWARDING CHARG ES IN THE NAME OF M/S. S. K. AGENCY. THE AO DURING THE ASSESSMENT PRO CEEDINGS OBSERVED THAT THE ASSESSEE FAILED TO DEDUCT TDS ON CERTAIN E XPENSES INCURRED BY M/S. S. K. AGENCY IS AMOUNTING TO RS. 58,03,774/- O NLY. ACCORDINGLY, THE AO CALLED UPON THE ASSESSEE FOR ITS EXPLANATION FOR NON-DEDUCTION OF TDS. THE ASSESSEE IN COMPLIANCE WITH IT SUBMITTED T HAT SIMILAR ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 4 - DISALLOWANCE WAS MADE IN THE A.Y. 2008-09 BY THE AO BUT THE SAME WAS DELETED BY THE LEARNED CIT(A) VIDE HIS ORDER DATED 25-07-2012. THE ASSESSEE ALSO CLAIMED THAT THE ABOVE EXPENSES ARE R EPRESENTING THE REIMBURSEMENT OF THE EXPENSES TO M/S S.K. AGENCY. T HEREFORE THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TDS U/S 194 -C OF THE ACT. HOWEVER, THE AO DISREGARDED THE CONTENTION OF THE A SSESSEE AND HELD THAT THE ASSESSEE WAS LIABLE FOR DEDUCTION OF TDS EVEN O N THE REIMBURSEMENT OF EXPENSES. ACCORDINGLY, THE AO DISALLOWED THE SUM OF RS.58,03,774/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT(A). THE ASSESSEE BEFORE THE LEARNED CIT(A) SUBMITTED THAT M /S. S. K. AGENCY HAS INCURRED CERTAIN EXPENSES IN CONNECTION WITH THE IM PORT OF GOODS MADE BY AND ON BEHALF OF THE ASSESSEE. BESIDES THE REIMB URSEMENT OF EXPENSES, M/S S.K. AGENCY WAS ALSO PAID PROFESSIONAL CHARGES BY THE ASSESSEE AFTER THE DEDUCTION OF TDS. THE ASSESSEE ALSO SUBMITTED T HAT SIMILAR DISALLOWANCE WAS DELETED BY THE LEARNED CIT(A) PERT AINING TO THE A.Y. 2008-09, 2009-10 AND 2010-11. THE LEARNED CIT(A) AF TER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION MAD E BY THE AO BY OBSERVING AS UNDER: 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFIC ER. I AGREE WITH THE AUTHORIZED REPRESENTATIVE THAT THE MATTER IS COVERE D IN FAVOUR OF THE APPELLANT BY THE DECISION OF THE JURISDICTIONAL HIG H COURT OF GUJARAT IN CASE OF CIT VS GUJARAT NARMADA VALLEY FERTILIZERS C O. LTD. [2013] 35 TAXMANN.COM 638 (GUJARAT) WHEREIN IT HAS BEEN HELD THAT NO PART OF AMOUNT REIMBURSED WAS TO BE DISALLOWED IN RESPECT O F EXPENSES WHICH ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 5 - WERE INCURRED BY AGENT ON BEHALF OF ASSESSEE-PRINCI PAL FOR TRANSPORTATION AND OTHER CHARGES, WHICH HAD BEEN SP ELT OUT IN BILL ITSELF BUT NO TAX WAS DEDUCTED FROM THE SAME. LD. AUTHORIZ ED REPRESENTATIVE HAS ALSO BROUGHT TO MY NOTICE THAT THE SLP OF THE D EPARTMENT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT ON 17.01.201 4 IN ITA NO.315/2013 (CC 175/2014) WHICH IS CORRECT. IT IS A LSO SEEN THAT ON IDENTICAL FACTS LD.CIT(A) HAS ALLOWED ASSESSEE'S AP PEAL FOR A.Y. 2010- 11 IN APPEAL NO.CAB/IV-A-76/2013-14 VIDE HIS ORDER DATED 21.10.2014. COPY OF THE SAID ORDER IS PLACED BEFORE ME AND I FIND NO REASON TO DIFFER FROM MY PREDECESSOR. AFTER CONSIDE RING THE FACTS OF THE CASE AND JUDICIAL DECISIONS ON THE SUBJECT INCLUDIN G ASSESSEE'S OWN APPEAL ORDER FOR A.Y. 2010-11, ADDITION OF RS.58,03 ,774/- IS DIRECTED TO BE DELETED ARID THIS GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. BEING AGGRIEVED BY ORDER OF LEARNED CIT(A) REVENUE IS IN APPEAL BEFORE US. THE LEARNED DR BEFORE US SUBMITTED THAT APPEAL OF T HE LAST YEAR WAS DISMISSED DUE TO LAW TAX EFFECT. THEREFORE NO SUPPO RT FROM SUCH DECISION CAN BE DRAWN. MOREOVER, THERE WAS NO EVIDENCE FILED BY THE ASSESSEE SUGGESTING THAT THE ABOVE EXPENSES ARE REPRESENTING THE REIMBURSEMENT OF THE EXPENSES. THE LEARNED DR VEHEMENTLY SUPPORTED T HE ORDER OF AO. ON THE OTHER HAND, LEARNED AR BEFORE US FILED A WRI TTEN SUBMISSION, WHICH IS REPRODUCED AS UNDER: THE APPELLANT IS ENGAGED IN MANUFACTURING AC MOTOR S AND THEY HAVE IMPORTED PART OF ELECTRIC MOTORS AND GEAR BOXES THR OUGH M/S. S.K.AGENCIES(C&F AGENT) AND PAID FREIGHT CHARGES AS WELL AS REIMBURSEMENT OF CUSTOM DUTY, AIR HANDLING CHARGES, CMC CHARGES, STEAMER AGENT CHARGES ETC. THE APPLICANT HAS DEDUCTED TDS WHILE MAKING PAYMENT OF FREIGHT CHARGES TO M/S. S.K. AGENCIES. ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 6 - WHILE SUBMITTING BILLS BY M/S. S.K. AGENCIES TO THE APPLICANT THEY ARE SHOWING ACTUAL AND REIMBURSEMENT EXPENSES SEPARATEL Y IN THE BILLS AND ALSO AGENCY AND OTHER CHARGES SEPARATELY IN THE BILLS. THESE EXPENSES WERE INCURRED BY C&F AGENTS ON BEHALF OF T HE APPLICANT, THAT THE CLAIMS WERE MADE BY M/S. S.K. AGENCIES IN THEIR BILLS ON THE ACTUAL BASIS AND THE REIMBURSEMENT AMOUNT WERE SHOWN SEPAR ATELY AND SUPPORTED BY NECESSARY EVIDENCE. THE ASSESSING OFFICER DID NOT DISPUTE THE FACT THAT THE PAYMENT IN QUESTION WERE REIMBURSEMENT OF EXPENSES. DETAILED WORKING IN REGARD TO THE SUBMISSION PARA-1 DATED 19/02/2014 IS MENTIONED HERE UNDER. A. TOTAL C&F EXPENDITURE INCURRED BY M/S. S.K. AGE NCY TOWARDS C&F EXPENSES WAS RS. 86.52 LAKHS. B. OUT OF THE SAME TDS MADE ON IMPORTATION CHARGES OF RS. 28.49 LAKHS C. OUT OF THE SAME REIMBURSEMENT OF EXPENSES OF RS .58.03 LAKHS. D. A= B+C DETAILED WORKING IN REGARD TO THE SUBMISSION PARA-2 DATED 19/02/2014 IS MENTIONED HERE UNDER. A. TOTAL C&F EXPENDITURE INCURRED RS. 88.11 LAKHS. B. OUT OF THAT S.K. AGENCY HAS INCURRED C&F EXPEND ITURE OF RS.48.62 LAKHS. C. OUT OF THAT OTHER PARTIES HAVE INCURRED C&F EXP ENDITURE OF RS.39.49 LAKHS. WE HAVE NOT DEDUCTED TDS ON SOME OF TRANSPORT AGENCY WHO HAS FURNISHED PAN AND PAYMENT MADE WHICH IS LESS THEN THRESHOLD LIMIT. D. A=B+C IT IS PERTINENT TO NOTE THAT AMOUNT OF RS. 48.61 LA KHS PAID TO S.K.AGENCY IS ALREADY INCLUDED IN THE FIGURE OF REI MBURSEMENT OF EXPENSES OF RS. 58.03 LAKHS. E.G. STATEMENT NO. 1 DATED 30/4/2010 VOUCHER NO. AP RIL-74/10-11 GROSS AMOUNT 38762/- LESS SERVICE TAX RS. 2187/- = RS.365 75/- WHICH IS APPEARED IN STATEMENT NO.6, SR. NO.1 DATED 7/4/2010 AND RS. 38762/- APPEARED IN STATEMENT NO.3. ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 7 - BOTH THE FIGURES THAT IS RS.86.53 LAKHS AND RS.88.1 1 LAKHS ARE DIFFERENT AND IT HAS GOT NO CONNECTION WITH RS.86.53 LAKHS. R EASON FOR THE SAME IS THAT RS. 86.53 LAKHS C&F EXPENSES EXCLUSIVELY PE RTAINING TO M/S. S. K. AGENCY. WHEREAS, RS.88.11 LAKHS IS A TOTAL C&F EXPENSES WHI CH INCLUDES RS.48.61 LAKHS IS PERTAINING TO M/S. S. K. AGENCY A ND BALANCE RS. 39.49 LAKHS IS PERTAINING TO OTHER PARTIES. MOREOVE R IT IS TO BE SPECIFICALLY NOTED THAT RS. 48.61 LAKHS FORMING PAR T OF RS. 88.11 LAKHS IS NOTHING BUT A PART OF RS. 58.03 LAKHS REIMBURSEM ENT OF EXPENSES. THEREFORE, GROUND NO.1 TAKEN BY THE DEPARTMENT BEIN G RS. 18.54 LAKHS ON WHICH NO TAX WAS DEDUCTED WAS NOT A ALLOWABLE DE DUCTION IS CONTRARY TO THE FACT OF THE CASE. IT IS ALSO WORTHWHILE TO NOTE THAT INSTITUTE OF CHA RTERED ACCOUNTANTS OF INDIA DEFINES 'GROSS RECEIPTS' OF BU SINESS IN TERMS OF WHAT IS TO BE INCLUDED AND WHAT IS TO BE E XCLUDED PARA 5.11 OF THE GUIDANCE NOTE ON TAX AUDIT SAYS THAT IN CASE OF THE CLEARING AGENT REIMBURSEMENT OF CUSTOM DUTIES AND OTHER CHARGES CO LLECTED BY A CLEARING AGENT' WOULD NOT FORM PART OF HIS GROSS RE CEIPT IN BUSINESS. IN ITEMS OF SUB-SECTION (2) OF SECTION-4 OF THE ACT WHICH IS THE CHARGING SECTION, IT IS CLEAR THAT INCOME TAX IS DEDUCTIBLE AT SOURCE, IN RESPECT OF INCOME CHARGEABLE TO TAX U/S.4(1) OF THE ACT,. IN O THER WORDS, IT IS QUITE CLEAR THAT TAX IS DEDUCTIBLE AT SOURCE, IN RESPECT OF INCOME WHICH IS CHARGEABLE TO TAX UNDER THE ACT. RELIANCE IS ALSO PLACED ON THE DECISION OF CIT V. G UJARAT NARMADA VALLEY FERTILIZER CO. LTD. THE ITAT OBSERVED THAT T HE RELATIONSHIP BETWEEN THE TAX PAYER AND THE C &F / CONSIGNMENT AG ENT WAS THAT OF A PRINCIPAL AND AN AGENT AND THAT THE EXPENSES BEING REIMBURSED BY THE TAX PAYER WERE INCURRED BY THE AGENT ON BEHALF OF T HE TAX PAYER AND HENCE NOT SUBJECT TO APPLICABILITY OF DEDUCTION OF TAX AT SOURCE. CBDT CIRCULAR NO. 715 DATED 8/8/1995 IS APPLICABLE ONLY IN CASES WHERE THE GROSS AMOUNT OF THE BILLS INCLUDES REIMBU RSEMENT OF THE EXPENSES AND THE SAME CANNOT BE SEPARATELY IDENTIFI ED IN THE BILLS AND DOES NOT APPLY IN RESPECT OF REIMBURSEMENT OF ACTUA L EXPENSES. ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 8 - THE CIRCULAR IS APPLICABLE ONLY TO PAYMENT MADE ON PRINCIPAL TO PRINCIPAL BASIS AND NOT IN THE CASE WHERE PAYMENT W AS ON PRINCIPAL TO AGENT BASIS. THERE IS NO ELEMENT OF INCOME IN THE REIMBURSEMENT OF THE EXPENSES IN THE HAND OF PAYEE AND THEREFORE IT CANNOT BE REGARD ED AS A REVENUE RECEIPT SO THAT IT IS NOT TAXABLE. THESE EXPENSES DO NOT HAVE ANY NEXUS WITH THE COMMI SSION OR FREIGHT CHARGES HE IS SUPPOSED TO EARN FOR HIS WORK. THE APPELLANT SUBMIT THAT THE ISSUE UNDER REFERENCE IS COVERED IN FAOVUR OF THE ASSESSEE BY THE DECISION OF HONORABLE JURISD ICTIONAL HIGH COURT/TRIBUNAL AS UNDER. [1] CIT VS. GUJARAT NARMADA VALLEY FERTILIZER CO. L TD. 2013 35 TAXMAN 638 (GUJ-HC). [2] M/S. DHAANYA SEEDS PVT. LTD. VS. DY. COMMISSI ONER OF INCOME TAX, BENGALORE. CO.NO.55/BANG/2013 [3] CIT VS. INDUSTRIAL ENGINEERING PROJECT PVT. LT D. (1993) 202 ITR 1014 (DEL) [4] CIT VS. FOURTIS HEALTHCARE LTD. (2009) 181 TAXMAN 2 57 (DEL). [5] CIT VS. DLF COMMERCIAL PROJECT CORPORATION (201 5) 379 ITR 538 (DEL). [6] CIT VS. INFORMATION ARCHITECTS (2010) 33 (I) 1TCL327 (BOM.H C). [7] CIT VS. HARBANSLAL MALHOTRA & SONS (P) LTD (20 13) 217 TAXMAN 112 (CAL) [8] CIT VS. GRANDPRIX FAB (P) LTD. (2010) 33 (II) ITCL 90 (DEL 'D' TRIB) [9] ASST.CIT VS. MINPRO INDUSTRIES (2012) 43 (II) ITCL 218 (JOD- TRIB) [10] BOMBAY HIGH COURT CIT VS. SIEMENS AKTIONAGE-SE LLSCHAFT (2009) 310 ITR 320 (2009) 177 TAXMAN 81 (BOM) [11] CIT VS. DUNLOP RUBBER CO. LTD. (1983) 142 I TR 493 (CAL). [12] MAHINDARA & MAHINDRA LTD. VS. DY. CIT (2009) 28 (II) ITCL 421 (MUM-TRIB) (SB) [13] CAIRN ENERGY INDIA PVT.LTD. (2010) 31 (II) IT CL 210 (CHEN- TIRB). [14] NATHPA JHAKRI JOINT VENTURE VS. ACIT (2010) 5 ITR (TRIB) 75 (MUM) [15] FAGUAR ENTERPRISE VS. DY. CIT (2015) 116 DTR (TRIB) 82 (DEL). ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 9 - [16] DY. CIT VS. MARTIN & HARRIS LABORATORIES LTD. (2016) 48 ITR (TRIB) 641 (MUM). PRAYER IT IS THEREFORE, MOST RESPECTFULLY PRAYED THAT, CON SIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, REIMBURSEMENT OF EXPENSES DOES NOT PARTAKE THE NATURE OF INCOME IN THE HAND OF PAY EE / RECIPIENT OF SUCH EXPENSES AND THERE IS NO ELEMENT OF INCOME IN THE R EIMBURSEMENT OF THE EXPENSES THE APPEAL OF THE APPELLANT BE DECIDED ON MERITS. THE LD. AR FOR THE ASSESSEE VEHEMENTLY SUPPORTED TH E ORDER OF THE LD. CIT-A. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSU E IN THE PRESENT CASE RELATES TO THE DISALLOWANCE MADE BY THE AO ON ACCOU NT OF NON-DEDUCTION OF TDS U/S 194-C R.W.S. 40(A)(IA) OF THE ACT. THE A SSESSEE CLAIMS THAT THE EXPENSES OF RS.58,03,774/- REPRESENT THE REIMBURSEM ENT CHARGES INCURRED BY M/S S. K. AGENCY. THEREFORE, THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS U/S 194C OF THE ACT. HOWEVER, THE AO HELD THAT THE ASSESSEE IS LIABLE TO DEDUCT TDS EVEN ON THE REIMBURSEMENT CHAR GES INCURRED BY THE M/S. S. K. AGENCY. HOWEVER, THE VIEW TAKEN BY THE A O WAS SUBSEQUENTLY REVERSED BY THE LEARNED CIT(A) ON THE GROUND THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS ON THE REI MBURSEMENT OF EXPENSES. NOW THE ISSUE BEFORE US ARISES FOR OUR ADJUDICATION TO WHETHER THE ASSESSEE IS LIABLE TO DEDUCT THE TDS ON THE REIMBUR SEMENT OF THE EXPENSES. REGARDING THIS ISSUE A QUERY WAS RAISED B Y THE BENCH TO THE ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 10 - COUNSEL FOR THE ASSESSEE FOR THE PRODUCTION OF AGRE EMENT BETWEEN THE ASSESSEE AND M/S. S. K. AGENCY BUT COUNSEL FOR THE ASSESSEE FAILED TO PROVIDE THE SAME. IN OUR CONSIDERED VIEW, IT IS NEC ESSARY TO OBSERVE THE FACT WHETHER M/S. S. K. AGENCY HAS INCURRED COST ON BEHALF OF THE ASSESSEE AND FOR THIS PURPOSE THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. S. K. AGENCY WAS REQUIRED TO BE REFERRED. IN T HE ABSENCE OF SPECIFIC DOCUMENTS, A QUERY WAS AGAIN RAISED TO THE COUNSEL FOR THE ASSESSEE FOR RESTORING THE MATTER TO THE FILE OF AO FOR FRESH AD JUDICATION IN THE LIGHT OF THE AGREEMENT AS DISCUSSED ABOVE AND IN ACCORDANCE TO THE PROVISIONS OF LAW, THE LD. COUNSEL FOR THE ASSESSEE DID NOT OBJEC T. THEREFORE WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS PER LAW AFTER VERIFICATION OF THE AGREEMENT BETWEEN THE ASSESSEE AND M/S. S. K. AGENCY. LEARNED DR ALSO DID NOT OBJECT, IF TH E MATTER IS RESTORED BACK FOR FRESH ADJUDICATION TO THE FILE OF THE AO B Y THE PROVISION OF LAW. GIVEN THIS, WE RESTORE THIS ISSUE TO THE FILE OF TH E AO FOR FRESH ADJUDICATION BY THE LAW. HENCE, THE GROUND OF APPEA L OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 7. NOW WE TAKE UP THE GROUNDS OF APPEAL OF THE ASSE SSEE IN CROSS OBJECTION NO.225/AHD/2015 (IN ITA NO.3195/AHD/2015) FOR A.Y. 2011- 12, WHICH ARE AS UNDER: 1. THAT THE LEARNED C.I.T.(A)-4, BARODA HAS ALLOW ED THE GROUND NO.(1) OF THE APPELLANT FOLLOWING THE DECISION OF H ON'BLE GUJARAT HIGH COURT IN THE CASE OF C1T VS. GUJARAT NARMADA V ALLEY FERTILIZERS CO. LTD. (2013) 35, TAXMAN COM.638 AGAI NST, WHICH NO GROUND WAS RAISED IN APPEAL BY THE DEPARTMENT. ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 11 - 2. THAT THE REIMBURSEMENT OF EXPENSES TO THE CONSI GNMENT AGENT, WHICH WAS IN FACT INCURRED ON BEHALF OF THE APPELLA NT AND THERE WAS NO ELEMENT OF PROFIT AND HENCE THERE IS NO LIAB ILITY OF T.D.S. U/S.200(1) AND AS SUCH SECTION 40(A)(IA) IS NOT ATTRACTED. 3. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCE OF THE CASE OF THE RESPONDENT, THE APPEAL FILED BY THE REVENUE BE DISMISSED. WITHOUT PREJUDICE 4. THAT THE CLEARING AND FORWARDING AGENT S.K. AGE NCY 101, DESAI CHAMBERS, 1 ST FLOOR, 129 MODY STREET, FORT, MUMBAI-400001 PAN/NO.AANFS5040D HAS ACCOUNTED FOR ALL THE PAYMENT MADE BY RESPONDENT, IN HIS BOOKS OF ACCOUNT AND CONSIDER ING RETROSPECTIVE AMENDMENT UNDER IIND PROVISO TO SEC.4 0(A)(IA) OF THE I. T. ACT 1961, THE DISALLOWANCE OF RS.58,03,77 4/- REQUIRES TO BE DELETED . 8. AT THE OUTSET, WE FIND THAT THE ASSESSEE IN ITS CROSS OBJECTION HAS SUPPORTED THE ORDER OF LEARNED CIT(A). AS WE HAVE D ECIDED THE ISSUE RAISED BY THE REVENUE FOR FRESH ADJUDICATION BY RES TORING THE FILE TO THE AO, THEREFORE, FOLLOWING THE SAME ANALOGY WE RESTOR E BACK THE CROSS OBJECTION FILED BY THE ASSESSEE. HENCE, THE GROUNDS OF CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THE APPEAL BY THE REVENUE AND CRO SS OBJECTION BY THE ASSESSEE, BOTH ARE ALLOWED FOR STATISTICAL P URPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 08/06/2018 SD/- SD /- JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 08/06/2018 ITA NO.3195/AHD/2015 & CO NO.225/AHD/15 M/S. ROTOMOTIVE POWERDRIVES INDIA LTD. ASST.YEAR 2011-12 - 12 - PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ./0' # 1' / CONCERNED CIT 4. # 1' ( ) / THE CIT(A)-4, VADODARA. 5. 456 !'$/0 , ( /0, , 7 . / DR, ITAT, AHMEDABAD 6. 68 9% / GUARD FILE. % & / BY ORDER, ' 4' !' //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD