The DCIT, Circle-1(1), Guntur V. M/s Abdul Sattar Khasim, Guntur

ITA 161/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2846 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: T TIRUMALA RAO
• Keywords: TDS; Set aside
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.161/VIZAG/2010 ASSESSMENT YEAR : 2006-07 DCIT, CIRCLE-1(1) GUNTUR M/S. ABDUL SATTAR KHASIM GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AADFA 6850D APPELLANT BY: SHRI SUBRATA SARKAR, DR RESPONDENT BY: SHRI T. TIRUMALA RAO, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUND BUT THEY ALL RELATE TO THE ADDITION OF RS.18,30,308/-. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE THAT DURING THE COURSE OF VERIFICATION OF TRANSACTIONS ENTERED BY THE ASSESSE E FIRM WITH ITS PRINCIPALS M/S. SYNGENTA INDIA LIMITED, MUMBAI AND M/S. SYNGEN TA CROP PROTECTION PVT. LTD., MUMBAI. THE A.O. NOTICED THAT ASSESSEE FIRM HAS RECEIVED VARIOUS CREDIT FUNDS FROM THE PRINCIPALS IN ADDITION TO THE PAYMENTS RECEIVED AS COMMISSION AND CREDIT NOTES FOR DISCOUNT. DURING T HE IMPUGNED ASSESSMENT YEAR, THE DETAILS OF RECEIPTS ARE AS UNDER:- 1) SYNGENTA CROP PROTECTION PVT. LTD., MUMBAI - R S. 3,38,438/- 2) SYNGENTA INDIA LIMITED, MUMBAI - RS.66,05,266/- IT WAS ALSO NOTICED THAT ON THESE PAYMENTS, THE PRI NCIPAL HAS DEDUCTED THE TAX U/S 194C OF THE INCOME TAX ACT AND THE ASSE SSEE FIRM HAS NOWHERE ACCOUNTED THESE AMOUNTS. ACCORDINGLY, COMPLETE DET AILS WERE ASKED FOR THESE AMOUNTS. IN RESPONSE THERETO, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE INCURRED THE EXPENDITUR E ON BEHALF OF THE PRINCIPALS AND THE RECEIPTS IS THE REIMBURSEMENT OF THE EXPENSES. THEREFORE, 2 IT WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE A.O. WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES. HE ACCORDINGLY TREATED THE NET AMOUNT OF RS.58,30,308/- AS AN INCOME OF THE AS SESSEES. 2. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AND CIT(A) BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES DE LETED THE ENTIRE ADDITIONS. NOW THE REVENUE IS BEFORE US WITH THE SUBMISSION TH AT NOTHING IS PLACED ON RECORD TO ESTABLISH THAT THESE EXPENSES WERE INCURR ED BY THE ASSESSEES ON BEHALF OF THE PRINCIPAL AND IT WAS A MERE REIMBURSE MENT OF THE EXPENSES. IT WAS FURTHER CONTENDED ON BEHALF OF THE REVENUE THAT IF IT IS A REIMBURSEMENT OF THE EXPENSES, AS TO WHY THE PRINCIPAL HAS DEDUCT ED TDS U/S 194C OF THE ACT? 3. DURING THE COURSE OF HEARING, A SPECIFIC QUERY W AS RAISED FROM THE LD. COUNSEL FOR THE ASSESSEES, AS TO WHETHER THE ASSESS EE HAS DEBITED THE EXPENDITURE IN ITS P&L ACCOUNT OR THE IMPUGNED RECE IPTS ARE THE MERE REIMBURSEMENTS OF EXPENSES AND IF IT IS A REIMBURSE MENT OF EXPENSES, WHY TDS WAS DEDUCTED U/S 194C OF THE ACT? THE LD. COUN SEL FOR THE ASSESSEE MADE A REQUEST THAT LET THE MATTER BE SENT BACK TO THE A.O. FOR VERIFICATION OF THESE FACTS, TO WHICH THE REVENUE HAS NO OBJECTION. WE THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO T HE FILE OF THE A.O. WITH THE DIRECTION TO RE-EXAMINE THE ISSUE AFRESH IN DETAIL WHETHER THE IMPUGNED RECEIPT IS IN FACT IS A REIMBURSEMENT OF EXPENSES? IF YES, THEN VERIFY THE EXPENSES INCURRED BY THE ASSESSEES. THE A.O. SHOUL D ALSO EXAMINE WHETHER THESE EXPENSES WERE ALREADY BOOKED IN ITS P&L ACCOU NT. WE ALSO DIRECT THE ASSESSEE TO PRODUCE ALL RELEVANT RECORDS BEFORE THE ASSESSING OFFICER AND TO EXPLAIN AS TO WHY AND HOW THE TDS WAS DEDUCTED BY T HE PRINCIPAL U/S 194C OF THE ACT WHEN IT WAS A REIMBURSEMENT OF EXPENSES. WITH THIS DIRECTION, WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR RE-ADJUDICATION OF THE IMPUGNED ISSUE AFRESH. 3 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 8.9.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 8 TH SEPTEMBER, 2010 COPY TO 1 THE DCIT, CIRCLE-1(1), GUNTUR 2 M/S. ABDUL SATTAR KHASIM, D.NO.24-11-127, YAMARTH IVARI STREET, PATNAM BAZAR, GUNTUR 3 THE CIT, GUNTUR 4 THE CIT(A), GUNTUR 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM