AVON WEIGHING SYSTEM LTD (NOW AVON CORPORATION LTD), MUMBAI V. ACIT 8(1), MUMBAI

ITA 1675/MUM/2011

• Counselvise Citation: 167519914 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Section: 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M AND SHRI SANJAY GARG, J M ITA NO. 1 675 / MUM/20 1 1 ( ASSESSMENT YEAR : 200 7 - 0 8 ) M/S AVON WEIGHING SYSTEM LIMITED (NOW AVON CORPORATION LTD.), 15 B, KAMAL KUNJ, S.V.ROAD, ANDHERI (W), MUMBAI - 400 058 VS. ACIT - 8(1), MUMBAI PAN/GIR NO. : A A C CA 0545 M ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI O.P.SINGH /ASSESSEE BY : SHRI KIRAN MEHTA DATE OF HEARING : 8 TH JANUARY , 201 4 DATE OF PRONOUNCEMENT : 8 TH JANUARY , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 15 - 12 - 2010 , FOR THE ASSESSMENT YEAR 2007 - 08, IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT . 2 . FOLLOWING TWO G ROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 14,31,680/ - MADE BY THE ASSESSING OFFICER UNDER THE HEAD COMMISSION EXPENSES. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DIS ALLOWANCE OF RS. 34,43,660/ - MADE BY THE ASSESSING OFFICER UNDER THE HEAD CONSULTANCY CHARGES. ITA NO. 1675 /20 1 1 2 3 . AT THE OUTSET, IT WAS CONTENDED BY THE LEARNED AR THAT THERE WAS A SEARCH AT THE ASSESSEES BUSINESS PREMISES ON 4 - 2 - 2011 AND THEREAFTER ASSESSMENTS WERE FRA MED UNDER SECTION 153A, WHEREIN BOTH THESE ADDITIONS WERE MADE BY THE AO VIDE HIS ORDER DATED 30 - 10 - 2013. 4 . WE FOUND THAT BOTH THESE ADDITIONS WERE MADE BY THE AO IN THE REGULAR ASSESSMENT FRAMED FOR THE ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 18 - 12 - 20 09 AND THE SAME HAVE BEEN CONFIRMED BY THE CIT(A) AND FOR THAT, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5 . THE CIT(A) HAS CONFIRMED THE DISALLOWANCE ON ACCOUNT OF COMMISSION EXPENSES AFTER HAVING THE FOLLOWING OBSERVATIONS : - 2.3.1 I HAVE CAREFULLY C ONSIDERED THE CONTENTION OF THE APPELLANT COMPANY AS WELL AS CAREFULLY GONE THROUGH THE AVAILABLE DOCUMENTS ON RECORD. I FIND THAT THE APPELLANT HAD PAID COMMISSION OF RS. 14,31,680/ - TO BUNGE AGRINUNES SINGAPORE PTE. LTD. THE APPELLANT DID NOT GIVE ANY DE TAIL AS TO WHY THE TDS WAS NOT DEDUCTED ON THE SAID AMOUNT. THE PROVISIONS OF SECTION 40(A)(IA) CLEARLY PROVIDES THAT IN CASE, ANY PAYMENT, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB AND NO TAX HAS BEEN DEDUCTED OR AFTER DEDUCTION, NO TAX HAS BEEN PAID DURING THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF TIME PRESCRIBED UNDER SUB SECTION 1 OF SECTION 200, SUCH SUM SHALL BE DISALLOWED AS A DEDUCTION IN COMPUTING THE DEDUCTION IN WHICH SUCH TAX HAS BEEN PAID. SINCE, THE APPELL ANT HAS NOT DEDUCTED THE TDS IN THE YEAR UNDER CONSIDERATION, J FIND THAT THE ADDITION MADE BY LD. AO IS BASED ON THE CORRECT APPRECIATION OF THE LAW IN THIS REGARD. THEREFORE, THE ADDITION MADE BY THE LD. AO IS CONFIRMED AND THIS GROUND OF APPEAL IS ACCOR DINGLY DISMISSED. 6 . THE EXPENDITURE CLAIMED ON ACCOUNT OF CONSULTANCY CHARGES WERE CONFIRMED BY THE CIT(A) AFTER HAVING THE FOLLOWING OBSERVATIONS : - 3.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT COMPANY AS WELL AS CAREFULLY GONE THROUGH THE AVAILABLE DOCUMENTS ON RECORD. I FIND THAT THE APPELLANT HAD PAID CONSULTANCY CHARGES OF RS.43,98,240 TO M/ S. GRAINS & INDUSTRIAL PRODUCTS TRADING PTE. LTD. IT IS FOUND THAT THESE CONSULTANCY CHARGES ARE NOTHING BUT THE ITA NO. 1675 /20 1 1 3 COMMISSION PAID BY THE APPELLANT TO THIS PARTY FOR THE PURPOSES OF ARRANGING INTERNATIONAL SELLER WHO WILL SELL ELECTRONICS PRODUCTS TO THE APPELLANT ON QUARTERLY BASIS. THE LD. AO OBSERVED THAT THE SAID PAYMENT WAS ACCRUED TO THE APPELLANT IN THE YEAR 2005 - 06 ITSELF. HOWEVER, A PPELLANT HAD NOT PAID IT IN THAT ASSESSMENT YEAR AND HAD CLAIMED TO MAKE THE PAYMENT IN THE YEAR UNDER CONSIDERATION. THE LD. AO DISALLOWED THIS PAYMENT AS BEING RELATABLE TO THE EARLIER YEAR. THE APPELLANT DID NOT FILE ANY DETAILS BEFORE THE LD AO OR BEFO RE ME. IN THE ABSENCE OF WHICH, IT CANNOT BE ASCERTAINED AS TO WHEN THE AMOUNT GOT CRYSTALLIZED. THE FACT OF THE MATTER AS REPORTED BY THE LD. AO IN HIS ASSESSMENT ORDER CLEARLY REVELED THAT AS PER THE SPECIFIC AGREEMENT ENTERED INTO BY THE APPELLANT WITH THIS PARTY, THE PAYMENT ACCRUES WITHIN 7 DAYS OF THE AGREEMENT. THEREFORE, PRIMA - FACIE, IT CAN BE SAID THAT THE AMOUNT CRYSTALLIZED FOR PAYMENT IN THE PREVIOUS ASSESSMENT YEAR AND NOT IN THIS ASSESSMENT YEAR. MOREOVER, I ALSO FIND THAT THE SAID PAYMENT IS RELATABLE TO THE SERVICES RENDERED AS PER THE CONTRACT WHICH MORE OR LESS ARE IN THE NATURE OF COMMISSION. THE APPELLANT SHOULD HAVE DEDUCTED THE TDS WHICH APPARENTLY HAD NOT BEEN DONE. THEREFORE, THE ADDITION MADE BY THE LD. AO IS CONFIRMED AND THIS GROUN D OF APPEAL IS ACCORDINGLY DISMISSED . 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM RECORD THAT ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF COMMISSION EXPENSES AS WELL AS CONSULTANCY CH ARGES BEFORE THE AO. EVEN BEFORE THE CIT(A) THE ASSESSEE COULD NOT ADVANCE ANY REASON FOR NON - DEDUCTION OF TAX AT SOURCE, THEREFORE, AFTER GIVING DETAILED FINDING AT PARAS 2.3.1 & 3.3.1, THE CIT(A) HAS CONFIRMED THE DISALLOWANCE. NOTHING WAS BROUGHT TO OUR NOTICE BY LEARNED AR SO AS TO PURSUE IT US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LOWER AUTHORITIES. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LOWER AUTHORITIES FOR DISALLOWANCE OF AFOREMENTIONED EXPENSES. 8 . NOW, COMING TO THE PLEA OF THE ASSESSEE THAT SAME DISALLOWANCE HAS BEEN MADE BY THE AO IN THE ORDER FRAMED UNDER SECTION 153A, DATED 30 - 10 - 2013, IN THIS REGARD, WE FOUND THAT BOTH ITA NO. 1675 /20 1 1 4 THESE EXPENSES HAVE ALREADY BEEN CONSIDERED BY THE AO IN THE REGULAR ASSESSMENT WHICH W AS FRAMED ON 18 - 12 - 2009, WHICH IS MUCH PRIOR TO THE DATE OF SEARCH ON 4 - 2 - 2011. THUS, THE CONTENTION OF THE LEARNED AR TO THE EFFECT THAT SINCE ADDITIONS HAVE BEEN MADE IN THE ORDER FRAMED UNDER SECTION 153A, DATED 30 - 10 - 2013, THE SAME SHOULD BE DELETED IN THE REGULAR ASSESSMENT SO FRAMED ON 18.12.2009, IS HAVING NO MERIT . WE DO NOT FIND ANY FAVOUR IN TH IS CONTENTION OF THE LEARNED AR. THE ASSESSEE IS AT A LIBERTY TO PLEAD THE DISALLOWANCE OF BOTH THESE EXPENSES WHILE CHALLENGING THE ORDER OF THE AO UNDER S ECTION 153A , BEFORE THE APPELLATE AUTHORITY, INSOFAR AS THESE EXPENSES HAVE ALREADY BEEN CONFIRMED IN THE REGULAR ASSESSMENT FRAMED ON 18 - 12 - 2009 WHICH WAS CONFIRMED BY THE CIT(A) IN THE ORDER PASSED ON 15 - 12 - 2010. WE DIRECT ACCORDINGLY . 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH JANUARY. 201 4 . 8 TH JAN,2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 08 /01/2014 /PKM , PS ITA NO. 1675 /20 1 1 5 COP Y OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMB AI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//