ITO Ward 3 , Tuticorin V. P.Manickavasagam , Tuticorin

ITA 1738/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5947 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: N DEVANATHAN
• Keywords: Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , !, # $% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ./ ITA NO.1738/MDS/2017 & C.O. NO.134/MDS/2017 (IN I.T.A. NO.1738/MDS/2017) ( )( / ASSESSMENT YEAR : 2014-15 THE INCOME TAX OFFICER, WARD 3, TUTICORIN. V. SHRI P. MANICKAVASAGAN, NO.11-33-P/1-A, STATE BANK COLONY, POLEPETTAI, TUTICORIN 628 002. PAN : ACPPM 5907 P (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) +, - . / APPELLANT BY : SHRI N. MADHAVAN, JCIT /0+, - . / RESPONDENT BY : SH. N. DEVANATHAN, ADVOCATE 1 - 2# / DATE OF HEARING : 05.10.2017 3 ) - 2# / DATE OF PRONOUNCEMENT : 16.10.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, MADURA I, DATED 20.04.2017. THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST THE SAME ORDER OF THE CIT(APPEALS). THEREFORE, WE HEAR D BOTH THE 2 I.T.A. NO.1738/MDS/17 C.O. NO.134/MDS/17 APPEAL AND THE CROSS-OBJECTION TOGETHER AND DISPOSI NG OF THE SAME BY THIS COMMON ORDER. 2. SHRI N. MADHAVAN, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT FOR THE ASSESSMENT YEAR 2014-15, THE ASSESSEE CLAIMED ` 60,55,980/- AS PAYMENT SAID TO BE MADE TO C&F CHARG ES. ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FO UND THAT THE ASSESSEE HAS NOT DEDUCTED TAX WHILE MAKING PAYMENT TOWARDS C&F CHARGES, THEREFORE, HE DISALLOWED THE SAME UNDER SE CTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED BEFORE THE CIT(APPEALS) THAT C&F EXPENSES ARE IN THE NATURE OF REIMBURSEMENT OF THE EXPENDITURE INCURRED BY THE C&F AGENTS ON BEHALF OF THE ASSESSE E. THE CIT(APPEALS) WITHOUT VERIFYING THE INVOICES, ALLOWE D THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. D.R., THE EXPENDITU RE INCURRED BY THE ASSESSEE BY MAKING PAYMENT TO C&F AGENTS IS LIA BLE FOR TDS, THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALL OWING THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUNS EL FOR THE ASSESSEE, SUBMITTED THAT ADMITTEDLY THE PAYMENT WAS MADE BY THE ASSESSEE TO C&F AGENTS. ACCORDING TO THE LD. COUNS EL, THE MAIN 3 I.T.A. NO.1738/MDS/17 C.O. NO.134/MDS/17 OBJECT OF THE ASSESSING OFFICER WAS THAT THERE WAS NO SEPARATE INVOICE FOR CLEARING AND FORWARDING CHARGES AND REI MBURSABLE EXPENSES. THE ASSESSEE PRODUCED SAMPLE BILLS BEFOR E THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS). THE SAMPLE BILLS PRODUCED BEFORE THE ASSESSING OFFICER WERE NOT CONS IDERED BY HIM. HOWEVER, ACCORDING TO THE LD. COUNSEL, THE CIT(APPE ALS), AFTER CONSIDERING THE SAMPLE BILLS PRODUCED BY THE ASSESS EE, FOUND THAT THE REIMBURSABLE ITEMS WERE SHOWN SEPARATELY. AFTE R CONSIDERING THE BILLS AND BREAK-UP OF DETAILS FURNISHED BY THE ASSESSEE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) FOUN D THAT AN AMOUNT OF ` 2,16,147/- WAS PAID TO C&F AGENTS TOWARDS SERVICE CHARGES. THE BALANCE AMOUNT WAS ONLY REIMBURSABLE EXPENDITURE. ACCORDINGLY, OUT OF TOTAL DISALLOWANCE OF ` 59,55,139/-, HE RESTRICTED THE DISALLOWANCE TO ` 2,16,147/-. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED ` 59,55,139/- FOR NON-DEDUCTION OF TAX AT SOURCE UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER, AFTER EXAMINING THE BILLS AND INVOICES PRODUCED BY THE AS SESSEE, FOUND THAT THE C&F AGENTS RAISED INVOICE FOR THE ENTIRE E XPENSES INCLUSIVE 4 I.T.A. NO.1738/MDS/17 C.O. NO.134/MDS/17 OF SERVICE CHARGES CLAIMED BY THEM. IN THE ABSENCE OF ANY SEPARATE INVOICES FOR C&F CHARGES AND SERVICE CHARG ES AS CLAIMED, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASS ESSEE. THE CIT(APPEALS) FOUND THAT A SUM OF ` 2,16,147/- RELATES TO SERVICE CHARGES AND THE BALANCE AMOUNT WAS ONLY REIMBURSEME NT OF EXPENDITURE. IT IS NOT IN DISPUTE THAT THE SERVICE CHARGES ARE ONLY TO THE EXTENT OF ` 2,16,147/-. WHEN THE REVENUE HAS NOT DISPUTED THE BIFURCATION MADE BY THE CIT(APPEALS) WITH REGARD TO SERVICE CHARGES AND REIMBURSABLE EXPENDITURE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT REIMBURSABLE EXPENDITURE CANNOT BE DIS ALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. IN OTHER WORDS, THE EXPENDITURE INCURRED BY THE C&F AGENTS ON BEHALF OF THE ASSESSE E WAS REIMBURSED BY THE ASSESSEE. THEREFORE, THERE IS NO QUESTION OF ANY DEDUCTION OF TAX AT SOURCE, HENCE, THERE CANNOT BE ANY DISALLOWANCE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY RESTRICTED THE DISALLOWANC E TO ` 2,16,147/- OUT OF TOTAL DISALLOWANCE OF ` 59,55,139/- MADE BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 5 I.T.A. NO.1738/MDS/17 C.O. NO.134/MDS/17 5. NOW COMING TO C.O. NO.134/MDS/2017, THE ASSESSEE HAS FILED CROSS-OBJECTION ONLY TO SUPPORT THE ORDER OF THE CIT(APPEALS). THEREFORE, THE CROSS-OBJECTION BECOMES INFRUCTUOUS. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D THE CROSS- OBJECTION OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 16 TH OCTOBER, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (SANJAY ARORA) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 16 TH OCTOBER, 2017. KRI. - /267 87)2 /COPY TO: 1. +, /APPELLANT 2. /0+, /RESPONDENT 3. 1 92 () /CIT(A)-1, MADURAI 4. PRINCIPAL CIT-1, MADURAI 5. 7: /2 /DR 6. ;( < /GF.