ITO, New Delhi V. M/s. Interserve Travels Pvt. Ltd., New Delhi

ITA 1461/DEL/2013

• Counselvise Citation: 146120114 RSA 2013
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: RAJESH JHALANICA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 1461/DEL/ 2013 (ASSESSMENT YEAR: 2008-09 ) ITO VS. INTERSERVE TRAVELS PVT. LTD. WARD-11(4), A-7, NIZAMUDDIN EAST NEW DELHI. NEW DELHI. PAN: AAAC134231 (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI RAJESH JHALANI,CA, REVENUE BY : SHRI SATPAL SINGH, SR..DR. ORDER PER T. S. KAPOOR, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI DATED 29.01.2013 FOR THE ASSESSMENT YEAR 2008-09. THE GROUNDS TAKEN BY THE REVENUE ARE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, LD. CIT (A) HAS ERRED IN DELETING THE A DDITION OF RS.1,21,84,199/- IGNORING THE PROVISION OF SECTION 40(A) (IA) OF THE IT ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. ITA NO.1461 /DEL/2013 2 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENG AGED IN THE BUSINESS OF TRAVEL AGENTS AND RETURN OF INCOME WAS FILED ON 29. 09.2008. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. 3. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER OBSERVED THAT ASSESSEE HAD MADE PAYMENTS OF RS.1,21,84,199/- TO V ARIOUS COMPANIES ON WHICH TDS WAS NOT DEDUCTED. THEREFORE, HE MADE ADDI TION U/S 40(A)(IA) OF THE ACT. 4. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A) AND CIT (A) CONFIRMED THE ADDITION MADE BY ASSE SSING OFFICER. ON APPEAL BEFORE ITAT THE CASE WAS REMITTED BACK TO CI T (A) FOR RE- ADJUDICATION. THE LD. CIT (A) ON THE BASIS OF ASSES SEES OWN CASE FOR ASSESSMENT YEAR 2006-07 DECIDED BY HONBLE ITAT ALL OWED THE APPEAL OF THE ASSESSEE. 5. THE REVENUE IS IN APPEAL BEFORE US AGAINST THIS ORDER OF CIT (A). AT THE OUTSET, THE LD. AR SUBMITTED THAT THE APPEAL IS CLE ARLY COVERED IN FAVOUR OF ASSESSEE BY EARLIER ORDER OF TRIBUNAL IN CASE OF AS SESSEE ITSELF AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 15 WHERE T HE RELEVANT FINDINGS OF TRIBUNAL WERE PLACED. THE LD. DEPARTMENTAL REPRESEN TATIVE THOUGH FAIRLY CONCEDED THAT MATTER IS COVERED STILL RELIED UPON T HE ORDER OF ASSESSING OFFICER. ITA NO.1461 /DEL/2013 3 6. WE HAVE HEARD THE RIVAL SUBMISSION AND HAVE PERU SED THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ONLY ISSUE INVOL VED IN THIS CASE IS REGARDING NON DEDUCTION OF TAX AT SOURCE ON PAYMENT MADE TO OTHER PARTIES. A SIMILAR MATTER HAD COME UP BEFORE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF IN ASSESSMENT YEAR 2006-07, WHEREIN THE HONBLE TRI BUNAL HAS DECIDED IN FAVOUR OF THE ASSESSEE. 7. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UND ER: WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH TH E FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPO N BY BOTH THE SIDES. AT THE OUTSET, THE PLEA OF THE LD. AR REGARD ING APPLICABILITY OF PRINCIPLES OF MUTUALITY IN HIS CAS E IS NOT TENABLE, NO SUCH PLEA HAVING BEEN TAKEN BEFORE THE LOWER AUT HORITIES. CONSEQUENTLY, THE ASSESSING OFFICER OR THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) DID NOT HAVE ANY OCCASION T O EXAMINE THE APPLICABILITY OF SAID PRINCIPLES OF MUTUALITY N OR THE LD. AR DEMONSTRATED BEFORE US AS TO HOW THE SAID PRINCIPLE S ARE APPLICABLE IN THIS CASE . IN THE ABSENCE OF ANY FIN DING ON THAT ASPECT EMERGING FROM THE IMPUGNED ORDER, WE REFRAIN FROM EXPRESSING ANY OPINION ON THAT ASPECT OR THE APPLIC ABILITY OF DECISIONS RELIED UPON BY THE LD. AR ESPECIALLY WHEN THE LD. AR DID NOT DEMONSTRATE BEFORE US AS TO HOW THESE DE CISIONS ARE APPLICABLE IN FACTS AND CIRCUMSTANCES BEFORE US. AT THIS STAGE WE MAY ALSO CLARIFY THAT IT IS A SETTLED POSITION T HAT CREDIT FOR TDS IS TO BE GIVEN IN THE CASE OF THE PERSON IN WHO SE HANDS INCOME IS TAXABLE AND THAT TOO IN THE YEAR IN WHICH THE CORRESPONDING INCOME IS TAXED. NOW ADVERTING TO THE FACTS NARRATED BEFORE US, THE ASSESSEE ENTERED INTO A CON SORTIUM AGREEMENT WITH 12 OTHER MEMBERS WHO ARE TRAVEL AGEN TS FOR BOOKING AIR TICKETS THROUGH THE PLATFORM PROVIDED B Y M/S AMADEUS PVT. LTD. IN TERMS OF THE SAID AGREEMENT DA TED ITA NO.1461 /DEL/2013 4 01.04.2003 ALL THE MEMBER TRAVEL AGENTS EXCEPT THE ASSESSEE RENDERED SERVICES OF BOOKING AIR LINE TICKETS & UTI LIZED THE COMPUTERIZED ELECTRONIC RESERVATION SYSTEM PLATFORM PROVIDED BY AMADEUS WHO OFFERED PREFERENTIAL RATES SUBJECT TO BULK BUSINESS BEING OFFERED BY ALL THE TRAVEL AGENTS AS ONE ENTITY. THE AMADEUS MAINTAINED ONE ACCOUNT OF ALL THE BOOKINGS EFFECTED BY THE CONSORTIUM MEMBERS AND PAID A QUARTERLY SE GMENT FEE ALONG WITH A STATEMENT, GIVING DETAILS OF SEGMENTS GENERATED BY EACH CONSORTIUM MEMBER AND AMOUNT PAID TO THE ASSES SEE AS REPRESENTATIVE OF THE CONSORTIUM TRAVEL AGENT. THE CONSORTIUM MEMBERS ALSO AGREED THAT THE ASSESSEE WOULD ACT AS A LEAD MEMBER & AUTHORIZED IT TO ENTER INTO CONTRACTS WITH AMADEUS TO MAKE COLLECTIONS AND DISTRIBUTE THE MONIES TO EA CH OF THE CONSORTIUM TRAVEL AGENTS IN PROPORTION TO THE SEGME NT BOOKINGS EFFECTED BY EACH OF THE TRAVEL AGENTS. THE TRAVEL AGENTS AGREED TO PROPORTIONATELY CONTRIBUTE TOWARDS THE EXPENDITURE OF THE ASSESSSEE WHILE THE ASSESSEE WAS AUTHORIZED TO RETAIN THE MONEY OUT OF THE REVENUES OF THE CONS ORTIUM TRAVEL AGENTS COLLECTED FROM AMADEUS. INTER ALIA, IT WAS A GREED THAT IF THE AMADEUS INDIA PVT. LTD. DEDUCTED INCOME TAX AT SOURCE IN RESPECT OF PAYMENTS MADE TO THE ASSESSESE IN THE RE PRESENTATIVE CAPACITY OUT OF INCOME OF THE CONSORTIUM TRAVEL AGE NTS, THEN THE CREDIT FOR SUCH TAX DEDUCTED AT SOURCE SHALL BE CLA IMED BY THE ASSESSEE ALONE IN ITS RETURN OF INCOME AND NO OTHER MEMBER WOULD HAVE ANY RIGHT OR CLAIM ON SUCH AMOUNT. IN TH E EVENT OF ANY LOSS OR DAMAGE ON ACCOUNT OF ANY BREACH IN THE STIPULATION OF THE AGREEMENT, ALL THE MEMBERS WERE JOINTLY AND SEVERALLY LIABLE. IN TERMS OF THE SAID AGREEMENT ALL THE MEMB ERS WERE JOINTLY AND SEVERALLY LIABLE. IN TERMS OF THE SAID AGREEMENT THE LEAD MEMBER I.E. THE ASSESSEE IS REQUIRED TO COLLEC T THE COMMISSION FOR SERVICES RENDERED BY OTHER MEMBERS A ND DISTRIBUTE THE SAID COMMISSION AMONGST THE MEMBERS ON PRIORITY BASIS. THOUGH THE TDS CERTIFICATE ISSUED B Y AMADEUS REFLECTED COMMISSION OF RS.65,71,690/- THE ASSESSEE DISTRIBUTED THE AMOUNT OF RS.52,22,326/- AMONGST THE MEMBERS FO R SERVICES RENDERED BY THEM IN BOOKING TICKETS ETC. AND AMOUNT OF RS.13,49,364/- ALONE WAS REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. SINCE THE AMOUNT OF RS.52,22,326/- WAS NO T RECEIVED FOR ANY SERVICES RENDERED BY THE ASSESSEE TO AMADEU S WHILE TAX WAS ALSO DEDUCTED AT ASSESSEE. THE LD. CIT (A) CONC LUDED THAT ITA NO.1461 /DEL/2013 5 THE AMOUNT COULD NOT BE TREATED AS INCOME OF THE AS SESSEE. MOREOVER, SINCE THE ASSESSESE DID NOT CLAIM THE SAI D AMOUNT AS EXPENDITURE IN ITS ACCOUNTS, NO TAX WAS DEDUCTED AT SOURCE BY THE ASSESSSEE. CONSEQUENTLY, THE LD. CIT (A) CONCLU DED THAT NO DISALLOWANCE COULD BE MADE IN TERMS OF PROVISIONS O F SEC.40(A) (IA) OF THE ACT. AS IS EVIDENT FROM THE TERMS AND C ONDITIONS OF THE CONSORTIUM AGREEMENT, THE PAYMENT BY THE ASSESS EE TO OTHER CONSORTIUM MEMBERS IS NOT VOLUNTARY. THE ASSESSEE I S UNDER A LEGAL OBLIGATION IN TERMS OF THE AGREEMENT TO PAY T HE AMOUNT TO OTHER CONSORTIUM MEMBERS IN ACCORDANCE WITH SETTLED TERMS. THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE RENDE RED ANY SERVICE TO AMADEUS. IT IS THE SETTLED LEGAL POSITIO N THAT INCOME ACCRUES WHEN AN ENFORCEABLE DEBT IS CREATED IN FAVO UR OF AN ASSESSEE. IN OTHER WORDS, INCOME ACCRUES WHEN THE A SSESSEE ACQUIRES THE RIGHT TO RECEIVE THE SAME. THE TERMS O F THE CONSORTIUM AGREEMENT DO NOT REVEAL ANY SUCH RIGHT I N FAVOUR OF THE ASSESSEE. INCOME OF 52,22.326/- RIGHTFULLY BELO NGED TO THE OTHER CONSORTIUM MEMBER TO WHOM THE AMOUNT WAS DIST RIBUTED BY THE ASSESSEE. THUS THE LD. CIT (A) RIGHTLY CONCL UDED THAT THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSE SSEE. SINCE THE ASSESSEE ONLY DISTRIBUTED THE INCOME IN TERMS O F THE AGREEMENT AND THIS DID NOT AMOUNT TO INCURRING OF A N EXPENDITURE NOR THE ASSESSEE CLAIMED ANY, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT (A) IN DEL ETING THE DISALLOWANCE U/S 40A (IA) OF THE ACT. IN VIEW THER EOF, ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US TO TAKE A DIFFERENT VIEW OF THE MATTER, WE ARE NOT INCLINED TO INTERFER E. THEREFORE, GROUND NOS.2 AND 3 IN THE APPEAL ARE DISMISSED. 8. WE FIND THAT FACTS AND CIRCUMSTANCES OF THE PRES ENT APPEAL ARE SAME AS THAT OF ASSESSMENT YEAR 2006-07. THEREFORE, RESP ECTFULLY FOLLOWING ABOVE ORDER OF TRIBUNAL, WE HOLD THAT TDS WAS NOT L IABLE TO BE DEDUCTED. ITA NO.1461 /DEL/2013 6 THEREFORE, PROVISIONS OF SECTION 40(A) (IA) WERE NO T APPLICABLE. IN VIEW OF THE ABOVE APPEAL FILED BY REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH /09/ 2013 SD/- SD/- (R. P. TOLANI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER, 2013 S.SINHA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DELHI.