M/s. Ajit Impex, Ahmedabad V. The Income tax Officer,Ward-11(4), Ahmedabad

ITA 1414/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1595 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Unexplained expenditure; Opportunity of being heard; Principle of natural justice; Services rendered outside India; Permanent establishment; Corroborative evidences
• Section: 69C; 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHM EDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 1414/AHD/2012 (ASSESSM ENT YEAR: 2008-09) M/S. AJIT IMPEX 21, NEW CLOTH MARKET, O/S, RAIPUR GATE, RAIPUR, AHMEDABAD VS. ITO, WARD-11(4), AHMEDABAD PAN NO. AAFFA9651C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. URVASHI SODHAN, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. DATE OF HEARING : 10 -03 -2016 DATE OF PRONOUNCEMENT : 18 -05-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-XVI, AHMEDABAD, DATED APRIL 26, 2012 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGA GED IN THE BUSINESS OF TRADING OF CLOTH. ASSESSEE FILED ITS RETURN OF INCO ME FOR A.Y. 2008-09 ON 30.08.2008 DECLARING TOTAL INCOME AT RS.8,27,998/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT VIDE ORDER DATED 21.12.2010 AND THE TOTAL INCOME WAS DETERMINE D AT RS.23,60,530/-. ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 2 AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 26.04.2012 (IN APPEAL NO. CIT( A) XVI/ITO/WD.11(4)/604/10-11) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPE AL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: 1 LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRM ING ADDITION MADE BY AO OF RS. 6,71,860/- ERRONEOUSLY INVOKING PROVISIONS OF SECTI ON 69C OF THE ACT. BOTH THE LOWER AUTHORITIES ERRED IN NOT APPRECIATING THE FAC T THAT THE PURCHASES OF CLOTH FROM THE PARTY WERE GENUINE AND DULY ACCOUNTED FOR IN THE BOOKS THAT WERE DULY AUDITED. LD. CIT (A) ERRED IN CONFIRMING APPLICATIO N OF SECTION 69C OF THE ACT TO A SITUATION WHERE THE SOURCE OF PAYMENT WAS EXPLAIN ED AND RECORDED IN THE BOOKS DULY SUPPORTED BY BILLS. THIS ACTION OF LD. C IT (A) BEING WITHOUT ANY MERITS OR JUSTIFICATION AND AGAINST PRINCIPLES OF NATURAL JUSTICE DESERVES TO BE QUASHED. 2 LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIR MING DISALLOWANCE MADE BY AO OF RS.3,93,553/- ON ACCOUNT OF COMMISSION EXPENSES U/S 40(A)(IA) OF THE ACT. LD. CIT (A) DESPITE CLEAR LEGAL POSITION ENUMERATED BY APEX COURT AS WELL TRIBUNAL THAT UNLESS THE INCOME IS CHARGEABLE TO TAX IN INDI A, NO TAX IS REQUIRED TO BE DEDUCTED IN RESPECT OF PAYMENTS MADE TO NON RESIDEN T AGENT ERRED IN FOLLOWING APPELLATE ORDER OF PREVIOUS YEAR TO CONFIRM THE DIS ALLOWANCE. THIS ACTION OF LD. CIT (A) CLEARLY IN BREACH OF JUDICIAL DISCIPLINE OU GHT TO BE QUASHED AND DISALLOWANCE BE DELETED. 3 LD. CIT (A) ERRED IN LAW AND ON FACTS IN NOT ADJ UDICATING GROUND # 5 CHALLENGING ACTION OF AO IN NOT ALLOWING AMOUNT OF RS. 96, 200/ - THAT WAS DISALLOWED U/S 40(A)(IA) OF THE ACT IN A.Y. 2007/08 FOR WHICH TDS WAS DEPOSITED ON 30/10/2007. THE LD. CIT (A) OUGHT TO HAVE DIRECTED AO TO GRANT DEDUCTION OF ALLOWABLE EXPENSES AS PER THE PROVISIONS OF LAW. 4. GROUND NO.1 IS WITH RESPECT TO DISALLOWANCE MADE U/S.69C OF THE ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE DETAILS FURNISHED BY THE ASSESSEE, A.O. NOTICED THAT ASSESS EE HAS SHOWN PURCHASE OF 16796.50 MTRS. OF CLOTH AMOUNTING TO RS.6,71,860/- FROM GANPATI TEXTILES. HE ALSO NOTICED THAT THE NATURE OF BUSINESS OF THE ASS ESSEE IS TO PURCHASE FINISHED CLOTHS AND AFTER CONVERTING THEM INTO FINISHED APPA RELS, EXPORT THEM THROUGH FOREIGN AGENTS. ON VERIFICATION OF STITCHING CHARG ES ACCOUNT, A.O. NOTICED THAT ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 3 ASSESSEE HAD PAID THE LAST STITCHING CHARGES ON 29. 01.2008 AMOUNTING TO RS.32,507/- TO KARAN ENTERPRISES, BUT THE PURCHASES OF CLOTHS WERE MADE IN FEBRUARY 2008. THE ASSESSEE WAS ASKED TO JUSTIFY T HE PURCHASES OF FEBRUARY AND WHETHER THE PURCHASES WERE IN FACT MADE THEN WHETHE R THE GOODS WERE SHOWN IN CLOSING STOCK. A.O. NOTICED THAT ASSESSEE DID NOT FURNISH ANY REPLY. HE THEREFORE, CONSIDERED THE PURCHASES OF CLOTH MADE FROM THE GAN PATI TEXTILES OF RS.6,71,860/- AS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT AND ADDED TO THE INCOME OF ASSESSEE. 6. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO UPHELD THE ADDITION BY HOLDING AS UNDER: 3.2 BEFORE PROCEEDING FURTHER, IT IS PERTINENT TO POINT OUT THAT IN THIS CASE THE APPELLANT HAD SOUGHT TO INTRODUCE ADDITIONAL EVIDEN CE COMPRISING DETAILS OF STITCHING CHARGES, DETAILS OF SALE OF THESE ITEMS, ETC. DURIN G THE APPELLATE PROCEEDINGS WITH THE SUBMISSIONS THAT THE A.O. HAS NOT PROVIDED HIM ADEQ UATE OPPORTUNITIES OF BEING HEARD. VIDE HIS REMAND REPORT BEARING NO ITO/WD.11(4)/REMA ND REPORT/AI/2011-12 DT 9-01- 2012, THE A.O. HAS OBJECTED TO FILING OF THE ADDITI ONAL EVIDENCES. PRINCIPALS OF NATURAL JUSTICE REQUIRED THAT ADEQUATE OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE GIVEN IN ALL CASES AND CONSEQUENTLY THE DETAILS FILED BY THE APP ELLANT DURING THE APPELLATE PROCEEDINGS WERE ADMITTED. 3.3 THUS, THE APPELLANT HAS SUBMITTED THAT M/S. KARAN ENTERPRISES IS A REGULAR PARTY FROM WHOM THE APPELLANT HAS BEEN GETTING JOB WORK D ONE. ACCORDING TO A.OS. SINCE STITCHING CHARGES OF RS. 32.507/ WERE PAID BY THE A PPELLANT ON 29-01-2008, THE PURCHASES OF RS. 1,44714/- AND 5,27,120/- AGGREGATI NG TO RS. 6,71,860/- IN RESPECT OF THE BILLS DATED 11-02-2008 AND 22-02-2008 FROM M/S. GAN PATI TEXTILES ARE UNEXPLAINED U/S. 69C. THE APPELLANT HAS SUBMITTED THAT A.OS. OBSERVA TION ARE ERRONEOUS AS M/S. KARAN ENTERPRISES HAD ONLY RAISED AN ADVANCE BILL ON 29-0 1-2008. 3.4 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISS ION OF THE APPELLANTS CASE ALONGWITH MATERIAL AVAILABLE ON RECORD AS WELL AS DETAILS SUB MITTED DURING THE APPELLATE PROCEEDINGS. BEFORE ANALYSING THE ARGUMENTS OF APPE LLANT, IT IS CONSIDERED NECESSARY TO EXAMINE THE INFORMATION AS AVAILABLE IN THE DETAILS OF SALES INVOICES RAISED BY THE APPELLANT DURING F Y 2007-08 AND THE STITCHING CHAR GES BILLS OF KARAN ENTERPRISES. THESE DETAILS WERE FILED BY THE APPELLANT DURING TH E APPELLATE PROCEEDINGS. DETAILS OF SALES INVOICES RAISED BY THE APPELLANT D URING F Y 2007-08 RELEVANT TO A.Y. 2008-09. ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 4 SR NO INVOICE NO DATE OF INVOICE NO. OF PRINTED BED SHEETS SOLD SIZE 72'X120' NO. OF PILLOW CASE SOLD SIZE 19'X29' 1 AI/02/07-08 30-07-2007 6540 1500 2 AI/04/07-08 16-09-2007 1320 5900 3 AI/06/07-08 29-12-2007 3200 1000 4 AI/07/07-08 27-02-2008 2320 4940 3200 18320 11600 DETAILS OF STITCHING WORK DONE BY M/S. KARAN ENTERP RISE DURING F Y 2007-08 RELEVANT TO A.Y. 2008-09. SR NO INVOICE NO DATE OF INVOICE NO. OF PRINTED BED SHEETS STITCHED SIZE 120'X72' NO. OF PILLOW CASE STITCHED SIZE 1 9' X 29' 1 KE/017 01-08-2007 6540 1500 2 KE/021 18-09-2007 1380 5600 3 KE/032 31-12-2007 3200 1000 4 KE/033 29-01-2008 7260 3200 18380 11300 THE ARGUMENTS FORWARDED BY THE APPELLANT HAVE BEEN FOUND TO BE BEREFT OF ANY MERITORIOUS CONSIDERATION WHEN COMPARED IN THE TOTA LITY OF FACTS OF THE CASE, EVIDENCES PRODUCED AND SUBMISSIONS MADE. THIS VIEW IS BEING T AKEN TAKING INTO CONSIDERATION THE FOLLOWING :- I) THE ARGUMENT OF THE APPELLANT THAT THE BILL DATE D 29-01-208 OF KARAN ENTERPRISES WAS AN ADVANCE BILL ONLY APPARENTLY MEA NS THAT KARAN ENTERPRISES WAS POSSIBLY IN NEED OF SOME MONEY AND HENCE HAD RA ISED THE BILL WITH THE ASSURANCE OF RENDERING SERVICES IN FUTURE. THIS POS ITION IS ALSO ADMITTED BY THE APPELLANT AS EVIDENCED FROM HIS SUBMISSION DATED 10 -10-2011 THAT 'THE LD AO HAS VIOLATED PRINCIPLES OF NATURAL JUSTICE AS THE C ONFIRMATION OF STITCHERS WAS SOUGHT TO BE FURNISHED WHEREIN HE CONFIRMED THAT AD VANCE STITCHING BILL WAS RAISED AS THEY REQUIRED FINANCE AND ACTUAL STITCHIN G WAS CARRIED OUT IN THE MONTH OF FEBRUARY, 2008.' THE POSITION ADMITTED HERE IS M/S. KARAN ENTERPRISES WAS IN THE NEED OF SOME MONEY AND THIS ADVANCE BILL WAS RAISED. IT IS HOWEVER SEEN THAT THE APPELLANT HAS GIVEN A DIAMETR ICALLY OPPOSITE VIEW IN ITS SUBMISSIONS DATED 23-03-2012 WHERE IT WAS SUBMITTED THAT' THOUGH THE STITCHER RAISED THE IMPUGNED ADVANCE BILL, THE PAYMENT WAS R ELEASED ONLY FAIRLY AFTER STITCHING DONE IN FEB/ MARCH. ' THIS ASPECT IS SQUARELY CONFIRMED BY THE FACT THAT ON THE BILL NO KE/033 DATED 29-01-2008, FOR RS . 32.507/- IT HAS BEEN CLEARLY INDICATED THAT A PAYMENT OF RS. 31,837/- WAS MADE T O THE STITCHER AFTER DEDUCTING NECESSARY IDS. THUS THE APPELLANT HAS PRESENTED A V ERY CONFUSING ARGUMENT. IF ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 5 THE THEORY OF KARAN ENTERPRISES RAISING THE ADVANCE BILL DATED 29-01-2008 IS CORRECT THEN WHERE IS THE QUESTION OF MAKING THEM P AYMENT IN THE MONTH OF MARCH, 2008. NATURALLY, THE APPELLANT CANNOT CLAIM TO HAVE PAID KARAN ENTERPRISE TWICE. THUS, THE ARGUEMENTS OF APPELLANT JUSTIFYING GENUINENESS OF PURCHASES FROM M/S. GANPATI TEXTILE VIS A VIS TRANS ACTIONS WITH M/S. KARAN ENTERPRISES FAILS. II) WITHOUT PREJUDICE TO ABOVE, IT IS IMPORTANT TO NOTE THAT THE RAW MATERIAL COMPRISING GREY CLOTH ALLEGEDLY PURCHASED FROM M/S. GANPATI ENTERPRISES VIDE ITS BILL FOR RS. 1,44,714/- AND 5,27,120/- AGGREGAT ING TO RS. 6,71,860/- IN RESPECT OF THE BILLS DATED 11-02-2008 AND 22-02-2008, AFTER STITCHING BY M/S. KARAN ENTERPRISES, HAVE BEEN EXPORTED BY THE APPELLANT WI TH RESPECT TO ITS SALES INVOICE BEARING NO A1/07 DATED 27-02-2008 TO A PARTY NAMED SALAH UNIFORMS & SAFETY PROD. THE QUANTITY OF CLOTH PURCHASED BY BILL DATED 22-02-2008 IS ALMOST 75% OF THE TOTAL CLOTH PURCHASED THROUGH THE TWIN BILLS. N OW, THE QUESTION IS WHEN THE RAW MATERIAL WAS PURCHASED ON 22-02-2008, HOW WOULD IT BE POSSIBLE TO CONVERT THE SAME INTO FINISHED PRODUCT AND THEN EXPORT IT W ITHIN A SHORT SPAN OF JUST 5 DAYS. AGAIN THE ITEMS EXPORTED IN THIS LAST INVOICE DATED 27-02-2008 IDENTICALLY MATCHES WITH THE ITEMS STITCHED BY M/S. KARAN ENTER PRISE VIDE ITS ALLEGED ADVANCE BILL DATED 29-01-2008. THE ISSUE IS HOW COU LD THE APPELLANT PRECISELY KNOW ON 29-01-2008 THAT IT WILL BE REQUIRING THE QU ANTITY AND QUALITY OF PRODUCTS WHICH ARE TO BE EXPORTED BY ITS BILL DATED 27-02-20 08. ASSUMING WITHOUT CONCEEDING THAT THE ASSESSEE HAD THE INFORMATION, T HEN WHY WAS THE PURCHASE FROM M/S. GANPATI TEXTILE MADE ON 22-02-2008. III) WITHOUT PREJUDICE TO ABOVE, IT IS SEEN THAT TH E DETAILS OF ALL THE SALES INVOICES RAISED BY APPELLANT IN F Y 2007-08, BILLS OF M/S. K ARAN ENTERPRISES PRESENT AN EQUALLY CONFUSING PICTURE. IN THE BILL 29-01-2008 M /S. KARAN ENTERPRISES HAS STITCHED TWO ITEMS OF I.E. BED SHEETS OF 72' X 120' ( 7260 UNITS) AND PILLOW COVER OF 19' X 29'(, 3200 UNITS). AS PER DETAILS PROVIDE D VIDE ITS EXPORT INVOICE DATED 27-02-2008, MENTIONED SUPRA, THE APPELLANT HAS EXPO RTED THE SAME PRODUCTS. AS PER ALL THE EIGHT SALES INVOICES OF THE APPELLANT I T HAS ALTOGETHER EXPORTED 18,320 UNITS OF BED SHEETS 72' X 120' AND 11600 UNITS OF P ILLOW COVERS OF 19' X 29' DURING THE YEAR. CONTRARY TO THIS, THE TOTAL BED SH EETS OF 72' X 120' AND PILLOW COVER OF 19' X 29' STITCHED BY KARAN ENTERPRISES DU RING THE YEAR COMES TO 18380 AND 11300 RESPECTIVELY. THUS, THE BED SHEETS STITCH ED BY KARAN ENTERPRISES OF 72' X 120' ARE MORE THAN BED SHEETS EXPORTED. SIMIL ARLY, THE PILLOW COVERS STITCHED BY KARAN ENTERPRISES OF 19' X 29' ARE LESS THEN THE PILLOW COVERS EXPORTED BY THE APPELLANT. THE APPELLANT HAS NEITHE R SHOWN ANY LOCAL SALES NOR ANY CLOSING STOCK AND NEITHER HAS CLAIMED ANY SHORT AGES / WASTAGES. THE QUESTION IS WHY HAS THE SURPLUS / SHORTAGES ARISEN. THE ABOVE DEFECTS / ANOMALIES FURTHER STRENGTHEN THE ARGUMENT TAKEN BY THE A.O. T HAT THE BOOK RESULTS OF THE APPELLANT ARE NOT RELIABLE. IV) AS REGARDS, APPELLANTS OBJECTION REGARDING NON APPLICABILITY OF PROVISIONS OF SECTION 69C IN ITS CASE, IT IS SEEN T HAT THE SAME ARE INCORRECT. THE STATUTORY PROVISION OF SEC. 69C PROVIDES THAT IF IN ANY FINANCIAL YEAR AN ASSESSEE ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 6 HAS INCURRED ANY UNEXPLAINED EXPENDITURE, THE AMOUN TS COVERED BY SUCH EXPENDITURE WILL BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. DISCUSSIONS ABOVE SQUARELY PROVE THAT THE APP ELLANT HAS NOT BEEN ABLE TO ESTABLISH WITH COGENT DEMONSTRATIVE EVIDENCE THE GE NUINENESS OF PURCHASES MADE FROM M/S. GANPATI TEXTILES AND CONSEQUENTLY THE PRO VISIONS OF SECTION 69C ARE ATTRACTED. IN VIEW OF THE FOREGOING DISCUSSION THE ADDITION OF RS. 6,71,860/- MADE BY THE A.O. U/S. 69C IS HEREBY CONFIRMED. THE FIRST AND SECOND GROUND OF APPEAL ARE ACCORDINGLY DISMISSED. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US 7.1 BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE PROVISION OF SECTION 69C APPLIES ONLY WHEN THERE IS EXPENDITURE ACTUALLY INCURRED BUT ITS SOURCES ARE NOT EXPLAINED. SHE SUBMITTED THAT SINCE THE SUPPLY OF CLOTHS MADE FROM GANPATI TEXTILES ARE DULY SUPPORTED BY BILLS AND OTHER EVIDENCES AND THE SOUR CE OF PAYMENTS ARE BEING EXPLAINED AS RECORDED IN THE BOOKS OF ACCOUNT, NO A DDITION U/S.69C OF THE ACT COULD HAVE BEEN MADE. SHE POINTED TO THE COPY OF E XPORT INVOICES AND THE CONFIRMATION OF M/S. KARAN ENTERPIRSE JOB WORK WHE REIN HE HAS CONFIRMED TO HAVE BEEN MADE THE PAYMENT IN MARCH 2008 AND THAT T HE BILL WAS RAISED EARLIER AS IT DESIRED TO OBTAIN ADVANCES TOWARDS JOB WORK. SH E THEREFORE POINTED TO THE STATEMENT OF PURCHASE, CONSUMPTION OF GOODS, ITS PR ODUCTION AND THE EXPORT INVOICES WHICH WERE PLACED AT PAGE 15 OF THE PAPER BOOK. SHE FURTHER SUBMITTED THAT THERE WAS NO QUESTION OF MAKING DISALLOWANCE U /S.69C OF THE ACT. LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDER OF ASSESSING OFFICER AND LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO AD DITION MADE U/S.69C OF THE ACT. BEFORE US, ASSESSEE HAS SUBMITTED THAT THE CLOTH PU RCHASES AND WHICH WERE STITCHED BY M/S. KARAN ENTERPRISE HAVE BEEN EXPORTE D AND ALSO PLACED ON RECORD ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 7 THE COPY OF SALES INVOICES. WE FIND THAT LD. CIT(A) WHILE DECIDING THE APPEAL HAS DOUBTED THE SALES INVOICES MAINLY FOR THE REASON TH AT IT WAS NOT POSSIBLE WHEN THE RAW MATERIALS WERE PURCHASED ON 22.02.2008 AND THE ASSESSEE CONVERTED THE GOODS INTO FINISHED GOODS WITHIN A SHORT PERIOD OF FIVE D AYS. WE FIND THAT IN SUPPORT OF THE AFORESAID DOUBT, NO MATERIAL IS AVAILABLE ON RE CORD WHICH COULD SHOW THAT THE GOODS HAVE NOT BEEN CONVERTED INTO FINISHED GOODS. FURTHER IT IS ALSO A FACT THAT THE AFORESAID GOODS HAVE BEEN EXPORTED BY THE ASSES SEE AND AT THE TIME OF EXPORT, NECESSARY VERIFICATION OF GOODS ETC. IS ALSO UNDERT AKEN BY THE CUSTOMS AUTHORITY. BEFORE US, NO MATERIAL IS ON RECORD TO SHOW THAT TH E EXPORT OF GOODS HAVE BEEN TREATED AS NON GENUINE BY THE CUSTOM AUTHORITIES. FURTHER, THE ASSESSEE HAS ALSO PLACED ON RECORD THE CONFIRMATION FROM KARAN ENTERP RISES WHEREIN IT HAS BEEN CONFIRMED ABOUT THE RECEIPT OF ADVANCE FROM ASSESSE E. THE AFORESAID CONFIRMATION HAS NOT BEEN FOUND TO BE UNTRUE. FURTHER THE ADDIT ION HAS BEEN MADE U/S.69C OF THE ACT WHICH IS A DEEMING PROVISION. IT IS SETTLE D LAW THAT WHILE MAKING ADDITION UNDER DEEMING PROVISION, THE REVENUE CANNOT MAKE AD DITION SIMPLY ON THE BASIS OF INTERFERENCE BASED UPON SUSPICION OR DOUBT BUT O N THE OTHER HAND HAS TO BE SUPPORTED BY EVIDENCE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT NO ADDITION IS CALLED FOR IN THE PRES ENT CASE AND THUS WE ALLOW THE PRESENT GROUND OF ASSESSEE. 9. SECOND GROUND IS WITH RESPECT TO DISALLOWANCE ON ACCOUNT OF COMMISSION EXPENSES U/S.40(A)(IA) OF THE ACT. 9.1 A.O. NOTICED THAT ASSESSEE HAD PAID COMMISSION OF RS.3,93,553/- AND FREIGHT & SHIPMENT CHARGES OF RS.2,95,606/- AGGREGA TING TO RS.6,89,159/-. ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF EXPENS ES AND PROOF OF PAYMENT OF TDS. A.O. NOTED THAT NO DETAILS WERE FURNISHED BY THE ASSESSEE. A.O. THEREAFTER ON PERUSING THE DETAILS NOTED THAT THE COMMISSION W AS PAID TO M/S. PETS NEWS ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 8 AGENCIES WITHOUT DEDUCTION OF TDS U/S.194H OF THE A CT. HE NOTED THAT SIMILAR ADDITION WAS MADE IN A.Y. 2007-08. HE WAS FURTHER OF THE VIEW THAT THE CIRCULAR REGARDING NON DEDUCTION OF TDS ON THE EXPORT COMMIS SION PAYABLE TO NON- RESIDENTS HAS BEEN WITHDRAWN BY THE CBDT AND THEREF ORE THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE AND HE ACCORDINGLY DISALLOWED THE COMMISSION OF RS.3,93,553/-. WITH RESPECT TO THE FREIGHT AND SHIPMENT CHARGES, A.O. WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S.194H OF THE ACT. IN THE ABSENCE OF ANY DETAILS, A.O. DISALLOWE D THE AMOUNT OF RS.2,95,606/-. HE THUS DISALLOWED AGGREGATE AMOUNT OF RS.6,89,159/ -. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO GRANTED PARTIAL RELIEF TO ASSESSEE BY HOLDING AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE. THE A.O. HAS MADE THE ADDITION RELYING UPON THE DECISION MADE IN THE CASE OF VAN O ORDZ ACZ LTD 323 ITR 130. THE A.O. HAS OBSERVED THAT A SIMILAR ADDITION IN APPELL ANT OWN CASE WAS MADE IN THE A.Y. 2007-08 WHICH WAS CONFIRMED BY CIT(A)-XVI PLACING R ELIANCE ON CASE OF VAN OORDZ ACZ LTD 323 ITR 130 PRONOUNCED BY HON'BLE DELHI HIG H COURT. THE APPELLANT CONTENDS THAT ITS CASE IS COVERED BY THE DECISION IN THE CAS E OF G E TECHNOLOGIES. THE DECISION PRONOUNCED BY HON'BLE APEX COURT, PRONOUNCED SUBSEQ UENT TO PASSAGE OF VAN OORDZ ACZ LTD 323 ITR 130., HAS BEEN EXAMINED. IT IS HOWE VER SEEN THAT THE HON'BLE APEX COURT HAS NOT CONSIDERED /REVERSED THE RATIO LAID D OWN IN THE CASE OF VAN OORDZ ACZ LTD 323 ITR 130. CONSEQUENTLY, RESPECTFULLY FOLLOWI NG THE VIEW TAKEN BY MY PREDECESSOR IN APPELLANTS OWN CASE FOR A Y 2007-08, THE ACTION OF THE A.O. IS UPHELD. THE DISALLOWANCE SO MADE FOR RS. 3,93,553 /- IS HEREBY CONFIRMED . THE THIRD GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 5.2 THE A.O. VIDE HIS REMAND REPORT DATED 9-01-2012 HAS SUBMITTED THAT 'REGARDING DEFAULT OF NON DEDUCTION OF TDS U/S. 194C OF RS. 2, 95,606, AS PER SUBMISSION FILED BY THE ASSESSEE AND A COPY OF FORM NO 26Q, IT IS NOTICED T HAT THE AMOUNT OF RS. 2,52,250/- IS VERIFIED ON WHICH TDS WAS DEDUCTED. HOWEVER IT IS N OT PROVIDED ANY DETAILS BY THE ASSESSEE ON THE PAYMENT TO M/S. NARANJI DESAR & CO. OF RS. 7281/- AND W S A SHIPPING (BOM.) PVT LTD. OF RS. 36,255/-.' I HAVE CAREFULLY CONSIDERED THE MATTER UNDER DISPUT E. THE A.O. HAS MADE TOTAL ADDITION OF RS. 2,95,606/- U/S. 194C OUT OF WHICH RS. 252,25 0/- STANDS VERIFIED. THIS LEAVES US TO AMOUNT OF RS. 2,95,606/- MINUS RS. 252,250/- = RS. 43,536/-. ACCORDINGLY, THE ADDITION OF RS. 2,52,250/- IS DELETED AND BALANCE ADDITION O F RS. 43,536/- IS CONFIRMED THE FOURTH AND FIFTH GROUND OF APPEAL IS PARTLY ALLOWED . ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 9 10. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US 10.1 BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND LD. CIT(A) AND FURTHER SUBMITTED THAT AGAINST THE ADDI TION OF SIMILAR AMOUNT IN A.Y. 2007-08 IN ASSESSEES OWN CASE, ASSESSEE HAD PREFER RED THE APPEAL BEFORE THE HONBLE TRIBUNAL. THE TRIBUNAL IN ITA NO.2890/AHD/ 2010, ORDER DATED 29.04.2014 HAS DECIDED THE ISSUE WITH RESPECT TO TH E PAYMENT OF COMMISSION WITHOUT DEDUCTION OF TDS TO THE SAME PARTY IN ASSES SEES FAVOUR. SHE THEREFORE SUBMITTED THAT FOLLOWING THE ORDER OF CO-ORDINATE B ENCH, THE GROUND BE ALLOWED. 11. LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDE R OF ASSESSING OFFICER AND LD. CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE OF COMMISSION PAID TO A NON RESIDENT ON ACCOUNT OF NON DEDUCTION OF TDS. WE FIND THAT A.O. WHILE MAKING THE DISALLOWANCE HAS FOLLOWED THE ORDE R PASSED IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND AT THAT TIME IT WAS CONFI RMED BY LD. CIT(A). WE FIND THAT AGAINST THE ORDER OF LD. CIT(A), MATTER WAS CA RRIED BY THE ASSESSEE BEFORE TRIBUNAL. THE CO-ORDINATE BENCH OF TRIBUNAL DECIDE D THE ISSUE IN FAVOUR OF ASSESSEE IN ITA NO.2890/AHD/2010 FOR A.Y. 2007-08 B Y HOLDING AS UNDER: 3. THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPO NDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 18.12.2009 WERE THAT THE ASSESSEE IS A REGISTERED FIRM AND IN THE BUSINESS OF EXPORTING CLOTHES. IT WAS NOTED THAT THE ASSESSE E HAD CLAIMED COMMISSION OF RS 8,13,456/- ON EXPORT SALES. A QUERY WAS RAISED THAT COMMISSION WAS PAID TO M/S PETS NEWS AGENCIES (FOREIGN AGENT) WITHOUT DEDUCTION OF TAX. THE EXPLANATION OF THE ASSESSEE WAS AS UNDER: 'M/S. PETS NEWS AGENCIES, OUR FOREIGN AGENT, DURING THE YEAR UNDER ASSESSMENT WAS PAID RS 8,13,456/- BY WAY OF COMMISSION, IN LIE U OF HIS SECURING ORDERS IN VARIOUS COUNTRIES ALL OVER THE WORLD. WE HAVE ALREA DY IN OUR EARLIER SUBMISSIONS PRODUCED SUPPORTING EVIDENCE OF SUCH PAYMENTS. DURI NG THE YEAR UNDER ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 10 CONSIDERATION OUT OF HISS COMMISSION WE HAVE NOT DE DUCTED TAX, SINCE CIRCULAR NO. 786 DATED 07.02.2000, PHOTO COPY OF SAME IS ENC LOSED HEREWITH FOR YOUR REFERENCE, CLARIFIES ALLOWABILITY OF SUCH EXPENDITU RE EVEN IF TDS IS NOT MADE AS PROVIDED UNDER S. 195 OF THE ACT. OUR THIS AGENT HAS BEEN PAID SUCH COMMISSION SINCE F.Y. 2004-05 AND TILL F.Y. 2008-09 EVERY YEAR. SINCE A.Y. 2001-02 TO A.Y. 2007-08, ALL THE CASES HAVE BEEN SELECTED FOR SCRUTINY AND THIS COMMISSION PAYMENT IS EXAMINED AN D FOUND CORRECT.' 3.1 THE ASSESSING OFFICER HAS NOTED THAT THE CIRCUL AR AS INTIMATED WAS WITHDRAWN IN THE MONTH OF NOVEMBER' 2009. HE HAS HELD THAT THE PROVI SIONS OF SECTION 195 WERE APPLICABLE ON THE PAYMENT OF COMMISSION AND SINCE N O TAX WAS DEDUCTED, THEREFORE ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF SEC TION 40(A)(IA) OF THE I.T. ACT. AGAINST, THE SAID DISALLOWANCE OF RS 8,13,456/- THE ASSESSEE HAS GONE IN APPEAL. IT IS ALSO WORTH TO MENTION THAT THE ASSESSEE HAD ALSO CLAIMED PAYME NT OF INTEREST OF RS 11,559/- TO M/S PETS NEWS AGENCIES FOR DELAYED PAYMENT. ON THE SAME REASONING, THE ASSESSING OFFICER HAD ALSO DISALLOWED THE INTEREST PAYMENT BY INVOKIN G THE PROVISIONS OF SECTION 40(A)(IA). 4. BEFORE THE LD. CIT(A), IT WAS REITERATED THAT IN THE LIGHT OF CIRCULAR NO. 786 DATED 07.02.2000, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX BECAUSE THE DEDUCTEES WERE THE FOREIGN AGENT AND THE PAYMENT OF COMMISSION WAS FOR THE PURPOSE OF SECURING ORDERS IN VARIOUS COUNTRIES. FURTHER, A DECISION OF HON'BL E DELHI HIGH COURT HAS ALSO BEEN CITED, PRONOUNCED IN THE CASE OF VAN OORD ACZ INDIA PRIVATE LTD., 323 ITR 130 (DELHI). HOWEVER, LD. CIT(A) WAS NOT CONVINCED AND HELD THAT THE ASSESSEE WAS REQUIRED TO FILE AN APPLICATION BEFORE THE ASSESSING OFFICER U/S 195 (2) OF I.T. ACT IF THE ASSESSEE WAS NOT LIABLE TO DEDUCT THE TAX AT SOURCE. IN THE ABSENCE OF SUCH AN APPLICATION, THE LD. CIT(A) HAS UPHELD THE DISALLOWANCE. 5. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE PARTIES. AS FAR AS THE CASE OF THE ASSESSING OFFICER IS CONCERNED, WE HAVE NOTE D THAT IN THE 'FINDINGS', THE ASSESSING OFFICER HAS NOT DISALLOWED THE CLAIM ON THE GROUND OF GENUINENESS, BUT IT WAS DISALLOWED ON THE GROUND THAT THE SAID CBDT CIRCULAR WAS WITHD RAWN IN NOVEMBER' 2009. ACCORDING TO ASSESSING OFFICER, SINCE THE CBDT CIRC ULAR WAS WITHDRAWN BEFORE THE COMPLETION OF THE ASSESSMENT, THEREFORE, THE BENEFI T GRANTED IN THE SAID CIRCULAR COULD NOT BE ALLOWED. THE LD. AR HAS FURTHER DRAWN OUR AT TENTION ON OBSERVATION OF THE ASSESSING OFFICER THAT AT THE TIME OF ASSESSMENT, R EST OF THE QUERIES WERE COMPLIED WITH BUT THE DISALLOWANCE WAS MADE MERELY ASSIGNING THE REASON THAT THE SAID CBDT CIRCULAR WAS WITHDRAWN. NOW BEFORE US, CBDT CIRCULAR NO. 786 [F NO. 500/108/98-FTD] DATED 07.02.2000 [WITHDRAWN BY CIRCULAR NO. 7/2009 [F. NO . 500/135/2007-FTD-I] DATED 22.10.2009 IS PLACED ON RECORD. THIS CIRCULAR WAS I N RESPECT OF SECTION 9 OF I.T. ACT TO CLARIFY REGARDING THE TAXABILITY OF EXPORT COMMISSI ON PAYABLE TO A NON-RESIDENT AGENT FOR RENDERING SERVICES ABROAD. THIS CIRCULAR SAYS: 'THE DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 W OULD ARISE IF THE PAYMENT OF COMMISSION TO THE NONRESIDENT AGENT IS CHARGEABLE T O TAX IN INDIA. IN THIS REGARD ATTENTION TO CBDT CIRCULAR NO. 23 DATED 23 RD JULY, 1969 IS DRAWN WHERE THE TAXABILITY OF 'FOREIGN AGENTS OF INDIAN EXPORTERS' WAS CONSIDERED ALONG WITH ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 11 CERTAIN OTHER SPECIFIC SITUATIONS. IT HAD BEEN CLAR IFIED THEN THAT WHERE THE NON- RESIDENT AGENT OPERATES OUTSIDE THE COUNTRY, NO PAR T OF HIS INCOME ARISES IN INDIA. FURTHER, SINCE THE PAYMENT IS USUALLY REMITT ED DIRECTLY ABROAD IT CANNOT BE HELD TO HAVE BEEN RECEIVED BY OR ON BEHALF OF THE A GENT IN INDIA. SUCH PAYMENTS WERE THEREFORE HELD TO BE NOT TAXABLE IN INDIA. THE RELEVANT SECTIONS, NAMELY SECTION 5 (2) AND SECTION 9 OF THE INCOME TAX ACT, 1961 NOT HAVING UNDERGONE ANY CHANGE IN THIS REGARD, THE CLARIFICATION IN CIR CULAR NO. 23 STILL PREVAILS. NO TAX IS THEREFORE DEDUCTIBLE UNDER SECTION 195 AND C ONSEQUENTLY, THE EXPENDITURE ON EXPORT COMMISSION AND OTHER RELATED CHARGES PAYA BLE TO A NON-RESIDENT FOR SERVICES RENDERED OUTSIDE INDIA BECOMES ALLOWABLE E XPENDITURE. ON BEING APPRISED OF THIS POSITION, THE COMPTROLLER AND AUDI TOR GENERAL HAVE AGREED TO DROP THE OBJECTION REFERRED TO ABOVE.' FURTHER, RELIANCE HAS ALSO BEEN PLACED ON THE DECIS ION OF HON'BLE DELHI HIGH COURT IN THE CASE OF VAN OORD ACZ INDIA PRIVATE LTD (SUPRA). FURTHER, RELIANCE HAS ALSO BEEN PLACED ON A DECISION OF HON'BLE SUPREME COURT PRONO UNCED IN THE CASE OF GE INDIA TECHNOLOGY CENTRE (P) LTD. 327 ITR 456 (SC). IN THE SE CASES, IT WAS HELD THAT A PERSON PAYING INTEREST OR ANY OTHER SUM TO A NONRESIDENT I S LIABLE TO DEDUCT TAX U/S 195 ONLY IF SUCH SUM IS CHARGEABLE TO TAX IN INDIA AND NOT OTHE RWISE. APPLICATION TO DEDUCT TAX AT SOURCE U/S 196 IS ATTRACTED ONLY WHEN THE PAYMENT I S CHARGEABLE TO TAX IN INDIA. IN A SITUATION WHEN THE IT AUTHORITIES HAVE ACCEPTED THA T THE NON-RESIDENT RECIPIENT IS NOT LIABLE TO PAY ANY TAX IN INDIA, THE ASSESSEE PAYER HELD AS NOT LIABLE TO DEDUCT TAX AT SOURCE U/S 195 OF I.T. ACT TO THE SAID NON-RESIDENT COMPANY. OUR ATTENTION HAS ALSO BEEN DRAWN ON A DECISION OF ITAT, LUCKNOW BENCH PRONOUNC ED IN THE CASE OF DCIT VS. SANJIV GUPTA (2012) 19 TAXMANN.COM 341 (LUCK.) WHER EIN IT WAS HELD AS UNDER: 'HELD THAT AS PER THE CBDT CIRCULAR NO. 23, DATED 2 3.07.1969 AND CIRCULAR NO. 786 DATED 7.2.2000, THE ASSESSEE WAS NOT REQUIRED T O DEDUCT THE TAX AT SOURCE UNDER SECTION 95 WITH REGARD TO PAYMENT OF COMMISSI ON TO FOREIGN AGENT. IT WAS WORTH MENTIONING THAT THE PREVIOUS YEAR INVOLVED WA S 2006-07 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. AT THE RELEVAN T TIMT, IN VIEW OF THE CBDT CIRCULAR NO. 23, DATED 23.07.1969 AND CIRCULAR NO. 786, DATED 7.2.2000, THE ASSESSEE WAS NOT OBLIGED TO DEDUCT THE TAX UNDER SE CTION 195 AND CIRCULAR NO. 786 OF 2000 WILL BE OPERATIVE ONLY FROM 22-10-2009 AND NOT PRIOR TO THAT DATE. HENCE, DISALLOWANCE MADE BY THE ASSESSING OFFICER W AS TO E CANCELLED.' FURTHER, OUR ATTENTION HAS ALSO BEEN DRAWN ON A DEC ISION OF HON'BLE ALLAHABAD HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. MODEL EXIMS , KANPUR 38 TAXMANN.COM 319 (AID.), WHEREIN IT WAS HELD ON THE SAME LINES AS NA RRATED HEREINABOVE THAT THE CIRCULAR WAS OPERATIVE UPON THE REVENUE DEPARTMENT AND THE A SSESSING OFFICER DID NOT HAVE THE RIGHT TO IGNORE THE CIRCULAR. THE OBSERVATION OF TH E COURT IS WORTH REPRODUCTION AS FOLLOWS: 'SO LONG AS THE CIRCULARS WERE IN FORCE, IT AIDED I N UNIFORM AND PROPER ADMINISTRATION AND APPLICATION OF THE PROVISIONS OF THE ACT. READ IN THIS MANNER, THE RESPONDENT-ASSESSEE WAS NOT IN DEFAULT AND HAD NOT FAIELD TO DEDUCT AT SOURCE THOUGH IT WAS MANDATED AND REQUIRED. THE RESPONDENT WAS ENTITLED TO RELY UPON ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 12 THE CIRCULARS. IN LIGHT OF THE JUDGMENTS OF THE SUPREME COURT IN CIT VS. ELI LILLY CO. (INDIA) (P.) LTD., [2009] 312 ITR 225/178 TAXMA N 505, 234/7 TAXMANN.COM 18(SC), ONCE THE INCOME WAS NOT EXIGIBLE OR CHARGEA BLE TO TAX, TDS WAS NOT REQUIRED TO BE DEDUCTED. MONEY PAID TO THE THIRD PA RTIES, WHO DID NOT HAVE ANY OFFICE OR PERMANENT ESTABLISHMENT IN INDIA, WAS EXE MPT AND NOT CHARGEABLE TO TAX. THUS, ON THE SAID PAYMENTS OR INCOME, TDS WAS NOT REQUIRED TO BE DEDUCTED. IT IS ALSO NOT THAT THE PAYMENTS WERE MADE PRIOR TO CIRCULAR O. 7/2009. ON THIS ASPECT, THERE IS NO DISPUTE. THEREFORE, THERE IS NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE TRIBUNAL DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I).' RESPECTFULLY FOLLOWING THE ABOVE DECISIONS IN A SIT UATION WHEN THE ASSESSEE'S STATUS OF NON-RESIDENT WAS NOT IN DISPUTE AND THAT THE ASSESS EE HAD GIVEN THE COPY OF THE AGREEMENT, DETAILS OF THE SERVICES RENDERED, CORRES PONDENCE FOR SERVICES AVAILED ALONGWITH SUPPORTING EVIDENCE, AND MOREOVER AT THAT RELEVANT TIME WHEN THE TDS WAS REQUIRED TO BE DEDUCTED, THE SAID CBDT CIRCULAR WAS IN OPERATION, WE HEREBY HOLD THAT THE INVOCATION OF THE PROVISIONS OF SECTION 40(A)(I A) READ WITH SECTION 195(2) WAS INCORRECT. THE FINDINGS OF THE AUTHORITIES BELOW AR E HEREBY REVERSED AND THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 12.1 SINCE, IN A.Y. 2007-08, THE ISSUE HAS BEEN DEC IDED IN FAVOUR OF ASSESSEE BY THE CO-ORDINATE BENCH OF TRIBUNAL AND IN THE ABSENC E OF ANY CHANGE IN FACTS BETWEEN A.Y. 2007-08 AND THE IMPUGNED ASSESSMENT YE AR, WE ARE OF THE VIEW THAT NO ADDITION IS CALLED FOR. THUS, THIS GROUND IS AL LOWED. 13. THIRD GROUND IS WITH RESPECT TO DISALLOWANCE OF RS.96,200/- U/S.40(A)(IA) OF THE ACT. 14. BEFORE US, LD. A.R. SUBMITTED THAT WHILE FRAMIN G THE ASSESSMENT FOR A.Y. 2007-08 AGGREGATE DISALLOWANCE OF RS.96,200/- WAS M ADE U/S.40(A)(IA) OF THE ACT (ON ACCOUNT OF PAYMENT OF RS.58,200/- FOR FREIGHT A ND SHIPMENT CHARGES AND RS.38,000/- BEING PROFESSIONAL FEES) FOR THE REASON THAT THE TDS WAS NOT DEDUCTED. SHE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERAT ION, ASSESSEE HAD DEPOSITED THE TDS AND, THEREFORE, THE DISALLOWANCE MADE U/S.40(A) (IA) OF THE ACT IN A.Y. 2007- 08 SHOULD HAVE BEEN ALLOWED BY A.O. IN THE IMPUGNED YEAR. LD. A.R. SUBMITTED THAT THOUGH ASSESSEE HAD RAISED THE PLEA IN GROUND NO.5 BEFORE THE LD. CIT(A), THE ITA NO.1414/AHD/12 A.Y. 2008-09 (M/S. AJIT IMPEX VS. ITO) 13 GROUND WAS NOT ADJUDICATED BY LD. CIT(A). SHE, THE REFORE, SUBMITTED THAT THE GROUND MAY BE REMITTED TO FILE OF LD. CIT(A) FOR AD JUDICATION. LD. D.R. DID NOT CONTROVERT THE AFORESAID SUBMISSION OF LD. A.R. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE COPY OF FORM 35 PLACED ON RECORD, IT IS SE EN THAT BEFORE LD. CIT(A), ASSESSEE VIDE GROUND NO.5 HAS RAISED THE ISSUE ABOU T ALLOWING DEDUCTION U/S.40(A)(IA) OF THE ACT THAT WAS DISALLOWED WHILE FRAMING THE ASSESSMENT IN A.Y. 2007-08. WE FIND THAT AFORESAID GROUND HAS NOT BEE N ADJUDICATED BY LD. CIT(A). WE, THEREFORE, REMIT THIS GROUND TO THE FILE OF LD. CIT(A) TO DECIDE IT IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 05 - 20 16. SD/ SD/ (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 18/05/2016 S K SINHA COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER //TRUE COPY// DEPUTY/ASSTT.REGISTRAR