ADDL CIT 24(3), MUMBAI V. AACASH EXPORTS, MUMBAI

ITA 105/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5830 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERJA PRADHAN
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 105/MUM/2013 ASSESSMENT YEAR: 2009-10 ACIT-24(3) R. NO. 701, C-11, 7 TH FLOOR B.K.C. BANDRA (E) MUMBAI-400 051 VS. M/S. AACASH EXPORTS B-14, KRISHNA LEELA CHS LTD. BANGUR NAGAR, GOREGAON (W) MUMBAI- 400 090 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :AAEFA 7369 J ASSESSEE BY : MR. FIROZE B. ANDHYARUJINA REVENUE BY : SMT. NEERJA PRADHAN DATE OF HEARING : 19.03.2014 DATE OF PRONOUNCEMENT : 28.03.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD.CIT(A)-34, MUMBAI DATED 29.10.2012 FOR THE ASSES SMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE HAS AGITATED THE ACT ION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS.21,04,074/- MADE BY THE AO U/S 40(A)(IA) OF THE INCOME- TAX ACT ON ACCOUNT OF NON DEDUCTION OF TAX BY THE A SSESSEE ON THE PAYMENTS MADE TO VARIOUS PARTIES. 3. BRIEFLY STATED, THE ASSESSEE, A FIRM, ENGAGED IN THE BUSINESS OF EXPORT OF CHEMICALS, DURING THE YEAR UNDER CONSIDERATION, HAD PAID RS.29,08,740/- TOWARDS FREIGHT AND FORWARDING CHARGES ETC TO VARIOUS PARTI ES. HOWEVER, THE AO MADE AN ADDITION OF RS.21,04,074/- PERTAINING TO THE PAYMEN TS MADE BY THE ASSESSEE TO SIX VARIOUS PARTIES. THE DETAILS OF THE PAYMENTS ARE (I ) RS.10,27,164/- PAID TO M/S. AFFORD LOGISTICS PVT. LTD, (II) RS.2,21,224/- PAID TO M/S. B.R. FREIGHT SYSTEM, (III) RS.63,240/- PAID TO MS/. S.K. INTERNATIONAL (IV) RS .1,23,402/- PAID TO M/S. SAMSARA SHIPPING PVT. LTD. (V) RS.4,75,155/- PAID TO M/S. S EACON LOGISTICAL SERVICES AND (VI) RS.3,92,729/- PAID TO M/S. SEA ROUTES LOGISTICS (P) LTD. ON APPEAL, THE LD.CIT(A), ITA NO. 105/MUM/2013 M/S. AACASH EXPORTS ASSESSMENT YEAR: 2009-10 2 EXCEPT RS.60,100/- PAID IN RESPECT OF PACKING OF EX PORT GARMENTS, DELETED THE REMAINING ADDITIONS MADE IN RESPECT PAYMENT TO THE SAID PARTIES ON THE REASON THAT THE SAID PAYMENTS WERE MADE IN RESPECT OF FREIGHT C HARGES, TERMINAL HANDLING CHARGES PAID TO THE PARTIES AND THE SAME WERE REIMB URSED BY THE ASSESSEE AND HENCE THE PAYMENTS THAT NOT REQUIRED FOR THE DEDUCT ION OF TDS U/S 194(C) OF THE ACT. SOME OF THE OTHER ADDITIONS WERE DELETED BY TH E LD.CIT(A) ON THE REASON THAT THE PAYMENTS WERE BELOW RS.20,000/- AND HENCE THE A SSESSEE WAS NOT LIABLE TO DEDUCT TDS. AGGRIEVED BY THE IMPUGNED ORDER, THE RE VENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE TOTAL PAYMENT MADE TO M/S. AFFORD LOGISTICS PVT. LTD AMOUNTING TO RS.10,27,164/- IS TOWARDS OCEAN FREIGH T, AGENCY CHARGES AND PALLETISATION CHARGES. OUT OF THE TOTAL PAYMENT OF RS.10,27,164/-, PALLETISATION CHARGES PAID IS RS.2,17,799/-. OUT OF THE BALANCE R S.8,23,324/-, A SUM OF RS.19,029/- AND RS.8,09,295/- HAVE BEEN PAID TOWARD S AGENCY CHARGES AND OCEAN FREIGHT RESPECTIVELY. AS FAR AS THE AGENCY CHARGES ARE CONCERNED SINCE THE PAYMENT IS BELOW RS.20,000/- THE PROVISIONS FOR TDS ARE NOT ATTRACTED AND THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON THE SAME. REGARDING THE PAY MENT ON ACCOUNT OF PALLETISATION CHARGES OF RS.2,17,799/- THE SAID AMOUNT INVOLVES T HE PAYMENT FOR PACKING OF EXPORT CONSIGNMENT AND THE LD.CIT(A) HAS FOUND THAT ONLY I N RESPECT OF TWO PARTIES PAYMENT MADE IS ABOVE 20,000/- AND SINCE THE ASSESS EE HAS NOT DEDUCTED TDS ON THE TWO PAYMENTS OF RS.30,550/-, RS.29,550/-, THE A DDITION MADE BY THE AO TO THE EXTENT OF RS.60,100/- HAS BEEN SUSTAINED BY THE LD. CIT(A). IT IS NOTED THAT THE LD.CIT(A), BY RELYING ON THE CBDT CIRCULAR NO. 723 DATED 19.09.1995, HAS DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF OCEAN FRE IGHT CHARGES. AS REGARDS THE ADDITION OF RS.2,21,224/- MADE BY THE AO IN RESPECT OF THE PAYMENT MADE TO M/S B.R. FREIGHT SYSTEM, THE AGENCY CHARGES OF RS.5450/ - WHICH HAS BEEN PAID BY THE ASSESSEE DOES NOT ATTRACT THE PROVISIONS OF TDS AS THE AMOUNT IS BELOW RS.20,000/-. AS FAR AS PAYMENT TOWARDS AIR FREIGHT OF RS.2,16,69 0/-, THE LD.CIT(A) HAS NOTED THAT THE AIR FREIGHT CHARGES ARE REIMBURSED BY THE ASSES SEE AND HENCE HELD THAT THE PAYMENT MADE IN THE NATURE OF REIMBURSEMENT FOR WHI CH THE PROVISIONS OF TDS ARE NOT APPLICABLE. REGARDING THE ADDITION OF RS.63240/ - MADE BY THE AO IN RESPECT OF ITA NO. 105/MUM/2013 M/S. AACASH EXPORTS ASSESSMENT YEAR: 2009-10 3 M/S. S.K. INTERNATIONAL, THE LD.CIT(A) HAS BROUGHT ON RECORD THAT THE ASSESSEE HAS DEDUCTED TDS OF RS.558/- IN RESPECT OF PAYMENT OF R S.26,900/- PAID TOWARDS AGENCY CHARGES AND HENCE THE LD.CIT(A) HAS DELETED THE SAI D ADDITION. WITH REGARD TO THE BALANCE OF RS.36,340/- PAID TOWARDS FREIGHT CHARGES AGAIN THIS AMOUNT IS REIMBURSEMENT OF EXPENDITURE AND HENCE THE ASSESSEE IS NOT REQUIRED TO DEDUCT TDS ON THIS PAYMENT. IN RESPECT OF THE ADDITION OF RS.1 ,23,402/- MADE IN RESPECT OF PAYMENT TO M/S. SAMSARA SHIPPING PVT. LTD, THE LD.C IT(A) HAS DELETED THE SAID ADDITION BY RELYING ON THE CIRCULAR OF THE CBDT NO. 723 DATED 19.09.1995. THE LD.CIT(A) FURTHER DELETED THE ADDITION OF RS.4,75,1 55/- IN RESPECT OF THE PAYMENTS MADE TO SEACON LOGISTICAL SERVICES SINCE THE SAME I NVOLVES OCEAN FREIGHT AND INLAND CHARGES. SAME IS THE CASE IN RESPECT OF THE PAYMENT OF RS.3,92,729/- MADE BY THE ASSESSEE TO M/S. SEA ROUTES LOGISTICS (P) LTD. 4.1 CONSIDERING THE FACTS OF THE CASE, OCEAN FREIGH T CHARGES, AIR FREIGHT CHARGES AND IN LAND CHARGES ARE COVERED BY THE CIRCULAR OF THE CBDT BEARING NO. 723 DATED 19.09.1995, ACCORDING TO WHICH NO TDS IS TO BE DEDU CTED ON SUCH PAYMENTS. THE SAME VIEW HAS BEEN REITERATED BY THE TRIBUNAL IN TH E CASE OF ITO VS. FREIGHT SYSTEM (INDIA) (P) LTD. [2006 (6) SOT 473 (DEL)] WHEREIN IT HAS BEEN HELD THAT PAYMENT OF OCEAN FREIGHT IS NOT LIABLE FOR TAX DEDUCTION AT SO URCE U/S 194(C) IN VIEW OF PROVISIONS OF SECTION 172. THE SAME IS THE CASE WITH THE INLAN D CHARGES WHICH IS COVERED UNDER SUBSECTION 8 OF SECTION 172. THE TRIBUNAL IN THE CA SE OF DCIT VS. HASMUKH J. PATEL [2012 (49) SOT 197 (AHD)] HAS HELD THAT THE PAYMENT S MADE TO SHIPPING AGENTS OF NON RESIDENTS IS NOTHING BUT REIMBURSEMENT OF CHARG ES WHICH HAS BEEN CLARIFIED BY THE CBDT CIRCULAR NO. 723 (SUPRA) WHICH STATES THAT THE PROVISIONS OF SECTION 172 WOULD APPLY IN SUCH CASES AND NO DEDUCTION OF TAXES REQUIRED AS PER SECTION 194(C). SOME OF THE OTHER ADDITIONS WERE DELETED BY THE LD. CIT(A) ON THE REASON THAT THE PAYMENTS WERE BELOW RS.20,000/- AND HENCE THE ASSES SEE WAS NOT LIABLE TO DEDUCT TDS. SINCE THE LD.CIT(A) HAS CORRECTLY APPRECIATED THE FACTS AND POSITION OF LAW IN DELETING THE ADDITIONS MADE BY THE AO, WE DO NOT FI ND ANY INFIRMITY IN THE SAID ORDER OF THE LD.CIT(A). 4.2 ON THE ISSUE RAISED BY THE REVENUE THAT THE LD. CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME-TAX RULES, WE ARE NOT ITA NO. 105/MUM/2013 M/S. AACASH EXPORTS ASSESSMENT YEAR: 2009-10 4 INCLINED TO ACCEPT THE SAID CONTENTION AS THE LD.DR COULD NOT SPECIFICALLY POINT OUT THE ADDITIONAL EVIDENCES RELIED BY THE LD.CIT(A) AS AGAINST THE CLAIM OF THE LD.AR THAT ALL THE DOCUMENTS PRODUCED BEFORE THE LD.CIT(A ) HAVE BEEN MADE AVAILABLE BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. IN VIEW OF THAT MATTER, WE UPHOLD THE ORDER OF THE LD.CIT(A). 5. IN THE RESULT THE APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 8 TH DAY OF MARCH, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.03.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR A BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.