Shri Pritesh D.Shah(HUF), Ahmedabad V. The Income tax Officer,Ward-10(4), Ahmedabad

CO 50/AHD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9004 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: A C SHAH
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 175/AHD/2013 ASSESSMENT YEAR :2009-10 & C.O. NO. 50/AHD/2013 ASSESSMENT YEAR :2009-10 I.T.O., WARD-10(4), AHMEDABAD PRITESH D. SHAH (HUF) 14, KALINDI COMPLEX, NR. HIGH COURT, NAVRANGPURA, AHMEDABD V/S . V/S . PRITESH D. SHAH (HUF) 14, KALINDI COMPLEX, NR. HIGH COURT, NAVRANGPURA, AHMEDABD I.T.O., WARD-10(4), AHMEDABAD PAN NO. A A NHS6430F (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI P. L. KUREEL, SR.D.R. /BY ASSESSEE SHRI A. C. SHAH, A.R. /DATE OF HEARING 16.09.2013 /DATE OF PRONOUNCEMENT 04.10.2013 O R D E R PER : SHRI G. C. GUPTA, VICE PRESIDENT THIS APPEAL FILED BY THE REVENUE AND C.O. FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 AGAINST THE ORDER OF CIT(A) -XVI, AHMADABAD, DATED NOVEMBER 20 TH , 2012. THESE ARE BEING DECIDED IN THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 175 AHD 2013 & C.O. NO. 50/AHD/2013 A.Y. 09 -10 PAGE 2 2. ITA NO. 175/AHD/2013 (REVENUES APPEAL) THE ONLY GROUND OF REVENUES APPEAL IS AS UNDER: (1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,69,11,269/-, RS.23,01,424/- AND RS .26,76,785/- MADE U/S.40(A)(IA) OF THE ACT WITHOUT CONSIDERING T HE FACT THAT THE PROVISIONS OF SEC.40(A)(IA) R.W.S. 194C & & 194I OF THE ACT ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AND THE DISALLOWANCE HAVE CORRECTLY BEEN MADE BY THE AO. 3. LD. SR. D.R. SUBMITTED THAT CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE U/S.40(A)(IA) OF THE ACT ALTHOUGH, IN THIS CAS E, THERE IS A VIOLATION OF PROVISION OF SECTION 194 C AND 194 I OF THE ACT AND THE ASSESSEE HAS FAILED TO MAKE THE TDS ON THE PAYMENTS. HE PREFERRED TO THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVE NUE AND RELIED UPON THE ORDER OF THE A.O. 4. LD. COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUB MISSION OF THE LD. SR. D.R. HE SUBMITTED THAT THE ASSESSEE IS C&F AGENT O NLY AND THE PROVISION OF TDS U/S. 194 C AND 194 I ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE AND THEREFORE, THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT WAS NOT JUSTIFIED. HE SUBMITTED THAT THE PROVISION OF SECTION 194C IS APPLICABLE WHEN PAYMENT IS MADE FOR ANY WORK IN PURSUANCE OF A CONTRACT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON. HE SUBMITTED TH AT THE ASSESSEE HAD PAID ON BEHALF OF HIS CLIENTS AND THE RECEIPTS WERE ISSU ED IN THE NAME OF THE CLIENT ONLY AND THEREFORE THE ASSESSEE HAD NOT MADE ANY PA YMENT ATTRACTING TDS PROVISION. HE SUBMITTED THAT THE ASSESSEE IS MEREL Y FACILITATOR IN THE EXPORT ITA NO. 175 AHD 2013 & C.O. NO. 50/AHD/2013 A.Y. 09 -10 PAGE 3 BUSINESS OF HIS CLIENTS. HE REFERRED THE P&L ACCOU NT OF THE ASSESSEE, COPY OF WHICH HAS BEEN FILED IN THE COMPILATION, WHEREIN ON LY AGENCY CHARGES WERE CREDITED AS INCOME BY THE ASSESSEE AND ALL THE EXPE NSES INCURRED BY THE ASSESSEE ON BEHALF OF ITS CLIENTS HAVE BEEN REIMBUR SED TO THE ASSESSEE. HE RELIED UPON THE ORDER OF THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDER OF THE A.O. AND CIT(A) AND COPIES OF VARIOUS DOCUMENTS AND DETAILS FILED IN THE COMPILATION BEFORE US. WE FIND THAT THE ASSESSEE I S ONLY A CLEARING & FORWARDING AGENT AND HAS CHARGED ITS SERVICE CHARGE S KNOWN AS AGENCY CHARGES FROM ITS CLIENTS WHOSE GOODS ARE EXPORTED T HROUGH VARIOUS PORTS MAINLY IN GUJARAT & MAHARASHTRA. THE ASSESSEE HAS RECEIVED THE RAILWAY FREIGHT, SHIPPING FREIGHT, ICD CHARGES ETC. FROM IT S CLIENTS BY WAY OF REIMBURSEMENT OF EXPENSES. ACCORDINGLY, THE ASSESS EE IS MERELY A FACILITATOR IN THE EXPORT BUSINESS OF ITS CLIENTS AND HAS RECEI VED THE REIMBURSEMENT OF EXPENSES INCURRED AND SERVICE CHARGES IN THE NAME O F AGENCY CHARGES FROM ITS CLIENTS. THESE FACTS COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE BEFORE US. WE FIND THAT THE RECEIPTS WERE ISSUED B Y THE VARIOUS PARTIES IN THE NAME OF CLIENTS OF THE ASSESSEE AND NOT IN THE NAME OF THE ASSESSEE. ON THE PERUSAL OF THE COPY OF THE AUDITED ACCOUNTS, IT SHO WS THAT THE ASSESSEE HAS RECEIVED AND CREDITED TO ITS P&L ACCOUNT AGENCY CHA RGES APART FROM THE REIMBURSEMENT OF EXPENSES INCURRED ON BEHALF OF ITS CLIENTS. WE FIND THAT THE ASSESSEE FACILITATES TO AND FRO MOVEMENT OF CLIENT S GOODS BOTH IN LAND AND OVERSEAS, USING ROAD, RAIL, AIR AND SEA ROUTES INCL UDING TEMPORARY STORAGE OF ITA NO. 175 AHD 2013 & C.O. NO. 50/AHD/2013 A.Y. 09 -10 PAGE 4 THE GOODS IN CUSTOM BOUNDING WAREHOUSES FOR LEGAL A ND PROCEDURAL PURPOSES ETC. FOR THE APPLICABILITY OF PROVISION OF SECTION 194C & 194I, THE RELATIONSHIP OF CONTRACTOR AND PAYEE PURSUANT TO CONTRACT BETWEE N THE PARTIES IS ESSENTIAL. IN THE CASE BEFORE US, NO SUCH RELATIONSHIP HAS BEE N FOUND. THE CIT(A) HAS GIVEN THE FINDING THAT THE CLIENTS OF THE ASSESSEE ARE REIMBURSING AMOUNT OF MONIES PAID BY THE ASSESSEE TO SUCH AGENCIES ALONGW ITH THE ASSESSEES COMMISSION OR HANDLING CHARGES. THE CIT(A) HAS REF ERRED TO NUMBER OF DECISIONS WHEREIN THE HONBLE COURTS HELD THAT TDS PROVISIONS ARE NOT ATTRACTED IN CASES INVOLVING REIMBURSEMENT OF EXPEN SES. IN THESE FACTS OF THE CASE, WE FIND THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN HOLDING THAT THE ADDITION ON ACCOUNT OF PAYMENTS, MADE TO VARIOU S PARTIES ON BEHALF OF ITS CLIENTS BY THE ASSESSEE COULD NOT BE SUSTAINED AND DESERVES TO BE DELETED. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED A ND GROUND OF THE REVENUES APPEAL IS DISMISSED. 6. C.O. NO. 50 / AHD / 2013 (ASSESSEES C.O.) LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN CAS E, THE REVENUES APPEAL IS DISMISSED, THE C.O. OF THE ASSESSEE MAY A LSO BE DISMISSED AS NOT PRESSED. IN VIEW OF OUR DECISION IN THE FORGOING P ARA OF THIS ORDER DISMISSING THE REVENUES APPEAL, THE C.O. OF THE ASSESSEE IS D ISMISSED AS NOT PRESSED. ITA NO. 175 AHD 2013 & C.O. NO. 50/AHD/2013 A.Y. 09 -10 PAGE 5 7. IN THE RESULT, BOTH THE REVENUES APPEAL AND ASS ESSEES C.O. ARE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 04.10.2013 SD/- SD/- (T.R. MEENA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. $%$& ' '( / CONCERNED CIT 4. ' '(- + / CIT (A) 5. -.+' &, ' ++' &, 01 % / DR, ITAT, AHMEDABAD 6. .34 56 / GUARD FILE. BY ORDER/ , 7/0' $+ ' ++' &, 01 % 9