M/s. Gujarat Borosil Ltd., Bharuch V. The Dy.CIT., Bharuch Circle, Bharuch

ITA 1068/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9676 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-12-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Services rendered outside India

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER 1. ./ I.T.A. NO.1068/AHD/2011 FOR A.Y. 1998-99 2. ./ I.T.A. NO.1069/AHD/2011 FOR A.Y. 1999-00 3. ./ I.T.A. NO.1070/AHD/2011 FOR A.Y. 2001-02 M/S GUJARAT BOROSIL LIMITED VILLAGE-GOVALI TALUKA JHAGADIA, DIST-BHARUCH BHARUCH / VS. DCIT BHARUCH CICLE, BHARUCH ./ ./ PAN/GIR NO. : AAACG 8440 M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR.D.R. / DATE OF HEARING 15/12/2016 / DATE OF PRONOUNCEMENT 23/12/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE THREE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA, DATED 24/02/2011 FOR THE ASSESSMENT YEAR (AY) 1998-99, 1999-00 & 2001-2002. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.1068/AHD/2011 FOR THE A.Y.1998-99. THE ASSESSEE HAS TAKEN FOLLOWING GROUND OF APPEAL:- (I) THIS HONBLE CIT(A) AS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPORT COMMISSIONER OF RS.2737525/- ON THE GROUND THAT ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 2 - SUPPORTING DOCUMENTARY EVIDENCE ABOUT SERVICE RENDERED BY THE AGENT IS NOT FILED ON RECORD. YOUR APPELLANT SUBMITS THAT NECESSARY DETAILS WITH VOUCHERS/BILLS WITH NAMES OF PARTIES TO WHOM THE COMMISSION WAS PAID FOR A.Y.1998-99 SHOWING THE INVOICES ON WHICH COMMISSION WAS FILED BEFORE THE AO. HENCE THERE IS NO JUSTIFICATION FOR THE DISALLOWANCE. 3. NOW WE TAKE UP THE REVENUS APPEAL IN ITA NO. 1069/AHD/2011 FOR ASSESSMENT YEAR 1999-2000. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND:- (I) THE HONBLE CIT(A) AS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPORT COMMISSION OF RS.772142/- ON THE GROUND THAT SUPPORTING DOCUMENTARY EVIDENCE ABOUT SERVICES RENDERED BY THE AGENT IS NOT FILED ON RECORD. YOUR APPELLANT SUBMITS THAT NECESSARY DETAILS WITH VOUCHERS/BILLS WITH NAMES OF PARTIES TO WHOM THE COMMISSION WAS PAID FOR A.Y. 1999-2000 SHOWING THE INVOICES ON WHICH COMMISSION WAS FILED BEFORE THE A.O. HENCE THERE IS NO JUSTIFICATION FOR THE DISALLOWANCE. 4. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1070/AHD/2011 FOR ASSESSMENT YEAR 2001-02. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS. (I) THE HONBLE CIT(A) AS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPORT COMMISSION OF RS.322102/- ON THE GROUND THAT SUPPORTING DOCUMENTARY EVIDENCE ABOUT SERVICES RENDERED BY THE AGENT IS NOT FILED ON RECORD. YOUR APPELLANT SUBMITS THAT NECESSARY DETAILS WITH VOUCHERS/BILLS WITH NAMES OF PARTIES TO WHOM THE COMMISSION WAS PAID SHOWING THE INVOICES ON WHICH COMMISSION WAS FILED BEFORE THE AO. HENCE THERE IS NO JUSTIFICATION FOR THE DISALLOWANCE. (II) THE HONBLE CIT(A) AS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.98505/- ON THE GROUND THAT THE APPELLANT DID NOT FURNISH THE PURPOSE AND REASON FOR THE FOREIGN TOUR UNDERTAKEN BY THE DIRECTOR OF THE COMPANY. YOUR APPELLANT SUBMITS THAT NECESSARY DETAILS CALLED FOR BY THE AO WERE FURNISHED DURING THE COURSE OF HEARING ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 3 - AND HENCE THERE IS NO JUSTIFICATION TO DISALLOWANCE SUCH EXPENSES. IT BE HELD SO NOW . 5. THE FACTS OF THE CASE ARE - THIS IS THE SECOND ROUND BEFORE US, IN THE APPEAL BEFORE THE COORDINATED BENCH OF HONBLE ITAT VIDE ORDER ITA NO.2343/AHD/2002 DATED 9/10/2007 HAS SET ASIDE THE ISSUES AND DIRECTED THE A.O. TO RE-DECIDE AFTER GIVING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE ACCORDINGLY THE NOTICE U/S.142(1) OF THE IT ACT WAS ISSUED AND SAME WERE DULY COMPLIED BY THE ASSESSEE. 6. THE HONBLE ITAT ALSO DIRECTED THAT AO TO VERIFY, IF THE SERVICES ARE RENDERED OUTSIDE INDIA, AND THE PAYMENT IS MADE OUTSIDE INDIA, PROVISIONS OF TDS U/S. 195 WILL NOT BE APPLICABLE, AND ON VERIFICATION, IF THIS EVENTUALLY IS RIGHT, THEN DELETION OF DISALLOWANCES BY THE CIT(A) WILL BE SUSTAINED. 7. THE AO STATED THAT ASSESSEE MERELY STATED COPY OF LEDGER ACCOUNT ETC AND DETAILS OF THE FOREIGN ENTITIES TO WHOM EXPORT COMMISSION WAS PAID WITH DETAILS OF VOUCHER NO., DATE, AMOUNT, AMOUNT IN FOREIGN CURRENCY, EXCHANGE RATE, PAID TO WHOM & ADDRESS AND INVOICE NO. ETC. BUT DID NOT FILED ANY COPY OF THE AGREEMENT WITH THE FOREIGN ENTITY TO WHOM THIS EXPORT COMMISSION WAS PAID AND ASSESSEE ALSO FAILED TO PROVIDE SEPARATIVE DETAILS WITH REGARD TO TRAVELLING ALLOWANCE OF RS.98,505/- AND LD.AO WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE THUS THE TOTAL INCOME OF RS.7,62,64,139 WAS ASSESSED. ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 4 - 8. AGAINST THE SAID ORDER FOR A.Y. 1998-99. ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A), WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AND FOR A.Y. 1999-00 LD.AO ASSESSED TOTAL INCOME OF RS.10,50,09,587/- AGAINST WHICH ASSESSEE MADE STATUTORY APPEAL AND SAME WAS ALSO PARTLY ALLOWED BY THE LD.CIT(A) AND FOR A.Y.2001-02 LD.AO ASSESSED TOTAL INCOME OF RS.93,08,261/- AGAINST SUCH ORDER ASSESSEE ALSO PREFERRED STATUTORY APPEAL SAME WAS ALSO PARTLY ALLOWED BY THE LD.CIT(A). 9. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND PAPER BOOK FILED BY THE LD.AR, WHO STATED THAT LD.AO HAS TRAVELLED BEYOND THE DIRECTION OF THE ITAT IN WHICH HONBLE ITAT DIRECTED AO TO VERIFY THE DETAILS OF THE ASSESSEE AND ALSO STATED THAT IN THE A.Y.1998- 99 ASSESSEE PAID COMMISSION TO FOREIGN PARTIES ONLY. THEREAFTER, LD.CIT(A) ALLOWED THE APPEAL AND DELETED THE DISALLOWANCE OF FOREIGN COMMISSION PAID BASED ON THE BASIS OF CIRCULAR NO.786 DATED 07/02/2000 BUT LD. AO AGAIN DISALLOWED THE FOREIGN COMMISSION, THOUGH ASSESSEE SUPPLIED THE DETAILS AND PROOF OF SERVICES RENDERED OUTSIDE INDIA AND PAYMENTS MADE OUTSIDE INDIA AND STATED THAT ASSESSEE HAS NOT PROVIDED DETAILS OF MODE OF PAYMENTS AND PLACE OF PAYMENT. (PAGE 3 PARA 5 OF THE ORDER) 10. LD.CIT(A) IN HIS ORDER CONFIRMED THE FACT THAT ASSESSEE HAS FILED SUPPORTING DOCUMENTS LIKE BANK VOUCHERS, BANK ADVICES, REMITTANCE IN FOREIGN CURRENCY THROUGH BANKING CHANNELS AND OTHER EVIDENCES. ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 5 - HOWEVER, CIT(A) THIS TIME CONFIRMED THE DISALLOWANCE ON THE GROUND OF EVIDENCE TO SERVICES RENDERED BY THE FOREIGN AGENT HAVE NOT BEEN FILED. 11. ON THE OTHER HAND LD.AR SUBMITS THAT COMPLETE DETAILS OF SALES MODE, COUNTRIES, GOODS SOLD, FOREIGN EXCHANGE RECEIVED ON SALES MODE WERE FILED BEFORE THE AO AND CIT(A) AS PER PAGE NO.1 TO 8 OF PAPER BOOK BUT TO NO AVAIL AND EVEN IN REMAND REPORT- PAGE NO.20, A.O. MENTIONED THAT ASSESSEE HAS NOT FURNISHED COPY OF THE AGREEMENT AND DETAILS OF THE SERVICES RENDERED WHICH IS NOT CORRECT AS ALL SUCH DETAILS WERE FILED BY THE ASSESSEE AND ITS EVIDENCE FROM THE REPLY TO REMAND REPORT PAGE NO.31 OF PAPERBOOK. 12. LD.AR FURTHER SUBMITTED THAT EXPORTING ITS GOODS FOR NUMBER OF YEARS IN PAST AS WELL AS EVEN NOW. FOR SUCH SALES NO FORMAL AGREEMENT WERE EXECUTED. THE FOREIGN AGENTS ARE CONTACTED BY PHONE, E-MAILS OR DURING FOREIGN VISITS. SUCH FOREIGN AGENTS PROCURE THE ORDERS IN VARIOUS FOREIGN COUNTRIES AND SALES ARE AFFECTED THROUGH THEM, THE COMPLETE DETAILS OF WHICH ARE FILED THROUGH PAPER BOOK PAGE 3 TO 8. 13. THE ASSESSEE COMPANY IS HAVING HUGE TURNOVER AND IS IN THE BUSINESS OF MANUFACTURING OF SPECIAL SHEET GLASSES AND FLOAT GLASSES AND IS REGULARLY DOING EXPORTS WHICH ARE SHOWN IN PUBLISHED ACCOUNTS INCLUDING EARNINGS IN FOREIGN EXCHANGE. IDENTICAL DISALLOWANCE HAVE BEEN ALLOWED BY THE ASSESSING OFFICER IN A.Y.2006-07 AND A.Y.2007-08 ON THE BASIS OF DIRECTION BY THE HONBLE ITAT (PAGE 34-50) ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 6 - 14. HONBLE ITAT IN A.Y.2008-09 ALLOWED THE ENTIRE FOREIGN COMMISSION WITHOUT SETTING ASIDE THE MATTER. (PAGE NO.51-57) 15. SO FAR TRAVELLING ALLOWANCE OF RS.98505/- IS CONCERNED, WHICH INCURRED BY THE DIRECTOR OF THE COMPANY. IN SUPPORT OF ITS CONTENTION, ASSESSEE/APPELLANT COULD NOT FILE ANY DOCUMENTARY PROOF. 16. IN THE RESULT, APPEALS BEARING ITA NOS.1068 & 1069/AHD/2011 ARE ALLOWED. 17. THE APPEAL BEARING ITA NO.1070/AHD/2011 IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/12/2016 SD/- SD/- . . ( ) ( ) (N.K. BILLAIYA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/12/2016 TRUE COPY ITA NO.1068, 1069 & 1070 M/S GUJARAT BOROSIL LTD. VS. DCIT ASST.YEAR 1998-99, 1999-00 &2001-02 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-VI, BARODA 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD