VIJAY S POOJARY, MUMBAI V. I.T.O.22(2)(4), MUMBAI

ITA 1756/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93191 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Keywords: Depreciation
• Section: 143(3); 194C

Judgement Text

VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI . . , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBERITA ITA NO. : 1756 /MUM/20 1 1 (ASSESSMENT YEAR: 200 7 - 0 8 ) VIJAY S POOJARY , PROP. SRINIVAS CLEARING & SHIPPING \ AGENCY, CHANDRA HOUSE, 3 RD FLOOR, PERIN, NARIMAN STREET, FORT, MUMBAI - 400 0 01 .: PAN : AFIPP 9807 M VS IT O - 2 2 ( 2 ) ( 4 ) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBODH L RATNAPARKHI RESPONDENT BY : SHRI PAWAN KUMAR BEERLA ITA NO. : 2300 /MUM/20 11 (ASSESSMENT YEAR: 200 7 - 0 8 ) ITO - 22 (2)( 4 ), MUMBAI VS VIJAY S POOJARY , MUMBAI - 400 0 01 .: PAN : AFIPP 9807 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PAWAN KUMAR BEERLA RESPONDENT BY : SHRI SUBODH L RATNAPARKHI /DAT E OF HEARING : 02 - 05 - 2015 / DATE OF PRONOUNCEMENT : 24 - 07 - 2015 ORDER PER AMIT SHUKLA , J.M. : TH E AFORESAID CROSS APPEAL S HA VE BEEN FILED BY THE EITHER PARTY AGAINST IMPUGNED ORDER DATED 27 .01.201 1 , PASSED BY CIT(A) - 3 3 , MUMBA I , FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 200 7 - 0 8. 2. IN T HE ASSES S EE S APPEAL, THE ASSESSEE HAS CHALLENGED THREE ISSUES ; (I) DISALLOWANCE U/S 40(A)(IA) OF RS. 1,28,09,141/ - CANNOT BE MADE ON THE GROUND THAT THER E WAS NO DEFAULT U/S 194C , BECAUSE IN THE EARLIER YEAR ASSESSEES RECEIPTS WERE BELOW AUDIT LIMIT U/S VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 2 44AB ; (II) AD - HOC DISALLOWANCE OF RS. 5,80,456/ - ON ACCOUNT OF SALARY AND VARIOUS OTHER EXPENSES, AND (III) DISALLOWANCE OF DEPRECIATION OF RS. 28,056/ - . 3. THE BRIEF FACTS ARE THAT THE ASSES S E E IS A PROPRIETOR OF M/S SRINIVAS CLEARING & SHIPPING AGENCY AND IS ENGAGED IN THE BUSINESS OF UNDERTAKING CLEARING AND FORWARDING AGENT PROVIDING SERVICES TO CUSTOMERS FOR FACILITATING IMPORT/EXPORT OF GOODS BY SEA AS WELL AS FOR RELATED SERVICES. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT DEDUCTED TAX ON THE PAYMENTS SHOWN UNDER THE HEAD COMMISSION AND FREIGHT INCOME , WHICH THE ASSESSEE WAS LIABLE TO DEDUCT U/S 194C. THE ASSESSEES CASE WAS THAT IT HAS RECEIVED TOTAL AMOUNT OF RS. 4,98,78,202/ - OUT OF WHICH RS. 4,60,21,743/ - WAS RECEIVED TOWARDS EXPENSES INCURRED ON BEHALF OF CUSTOMERS, WHICH HAS BEEN CONSIDERED AS REIMBURSEMENT OF EXPENDITURE . THE ASSESSEE HAD SHOWN A PROFIT OF R S. 35,25,576/ - AS AGENCY CHARGES (SALE) ALONG WITH RS. 3,30,883/ - AS FREIGHT CHARGES. HOWEVER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 194C AND, THEREFORE, HE DISALL OWED THE PAYMENT U/S 40 (A)(IA). SIMILARLY , HE MADE DISALLOWANCE ON ACCOUNT OF AMO UNT PAID AND CLAIMED AS EXPENDITURE UNDER THE HEAD FREIGHT CHARGES TERMINATION AND HANDLING AND DOCUMENTATION EXPENSES , WHICH WE RE ACTUALLY REIMBURSEMENT OF EXPENSES . T HE LD. CIT(A) HAS PAR T LY ALLOWED THE SAID EXPENSES AFTER DETAILED DISCUSSION. 4. HO WEVER, BEFORE US, THE MAIN PLEA OF THE LD. COUNSEL IS THAT THE PROVISIONS OF SECTION 194C IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE , THE ASSES S EES RECEIPTS IN THE EARLIER YEAR WAS BELOW THE AUDIT REPORT AS PRESCRIBED UNDER SECTION 44AB AND, TH EREFORE, THERE WAS NO LIABILITY TO DEDUCT TDS AND CONSEQUENTLY NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 40(A)(IA). FURTHER IN CASE OF ASSESSEE IN THE EARLIER YEAR TRIBUNAL WHILE DEALING WITH THE ISSUE OF PENALTY U/S 271B IN IT A NO. 2427/MUM/2013, DATED 02.12.2014 HAVE ANALYSED THIS ISSUE VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 3 AND HELD THAT AMOUNT OF REIMBURSEMENT RECEIVED BY THE ASSESSEE IS NOT PART OF THE TOTAL TURNOVER. SIMILAR IS THE POSITION IN THIS YEAR ALSO. 5. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE PRELIMINARY ARGUMENT RAISED BY THE LD. COUNSEL APPEARS TO BE CORRECT , BECAUSE THE PROVISIONS OF SECTION 194C AS IT STOOD PRIOR TO 01.06.2008 PROVIDED THAT IN CASE OF INDIVIDUAL OR HUF WHOSE TOTAL SALES, GROSS RECEIPTS OR TURNOVER FROM BUSINESS OR PROFESSI ON DOE S NOT EXIST MONETARY LIMITS SPECIFIED UNDER SECTION 44AB DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE FINANCIAL YEAR IN WHICH SUCH SUMS IS CRE DI TED OR PAID THEN HE HAS NO LIAB I L ITY TO DEDUCT INCOME TAX UNDER SECTION 194C(2) . IN THIS CASE, IT IS HAS NOT BEEN REBUTTED THAT ASSESSEES TURNOVER IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR HAD NOT EXCEEDED MONETARY LIMIT SPECIFIED U/S 4 4 AB AND THIS FACT ALSO GETS STRENGTHEN BY THE ORDER OF THE TRIBUNAL AS RELIED BY THE LD. COUNSEL. A CCORDINGLY, THE AS SESSEE WAS NOT LIABLE TO DEDUCT TDS, THEREFORE , NO DISALLOWANCE U/S 40(A)(IA) CAN BE MADE. THUS GROUND NO. 1, AS RAISED BY THE ASSESSEE IS ALLOWED. 6. AS REGARD AD - HOC DISALLOWANCE OF RS. 5,80,456/ - ON ACCOUNT OF SALARY AND VARIOUS OTHER EXPENSES, IT IS SEEN THAT THE ASSESSING OFFICER HAD MADE AD - HOC DISALLOWANCE WHICH HA S CONFIRMED BY CIT(A) ALSO ON ACCOUNT OF SALARY OF RS. 3,13,814/ - @ 50% AND VARIOUS OTHER EXPENSES OF RS. 2,62,264/ - @ 20% ON THE GROUND THAT PERSONAL ELEMENT CANNOT BE RULED OUT. 7. B EFORE US, THE LD. COUNSEL SUBMITTED THAT SO FAR AS SALARY EXPENSES ARE CONCERNED, NO AD - HOC ALLOWANCE SHOULD BE MADE AS ALL THE DETAILS WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER ALONG WITH THE DETAILS OF EMPLOYEES , DESIGNATION AND THEIR ADDRESSES. O N THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE CIT(A). VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 4 8. AFTER CONSIDERING THE MATERIAL PLACED ON RECORD AND ALSO THE FINDING OF THE AUTHORITIES BELOW, WE FIND THAT DISALLOWANCE S HAS BEEN MADE ON AD - HOC BASIS WHEREBY 50% OF THE S ALARY HAS BEEN DIS ALLOWED. THE ASSES S EE IN THE PAPER BOOK HAS FILED DETAILS OF EMPLOYEES GIVING THEIR DESIGNATIONS AND ADDRESSES TO WHOM THE SALARY WAS PAID DURING THE YEAR. IF SUCH DETAILS ARE ON RECORD WHICH HAS NOT BEEN REBUTTED, THEN NO AD - HOC DISALLOWANCE ON ACCOUNT OF SALARY CAN BE MADE. ACCORDINGLY, THE DISALLOWANCE OF RS. 3,17,184/ - UNDER THE HEAD SALARY STANDS DELETED. 9. SO FAR AS AD - HOC DISALLOWANCE ON VARIOUS EXPENSES ARE CONCERNED , WE ARE OF THE OPINION THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND C ONFIRMED BY THE CIT(A) ARE SLIGHTLY EXCESSIVE LOOKING TO THE NATURE OF EXPENSES , THEREFORE, WE RE STRI CT THE DISALLOWANCE AT 10%. THE ASSESSEE WILL GET PART RELIEF ON THIS SCORE. 10. REGARDING DISALLOWANCE ON DEPRECIATION ON COMPUTERS , WE FIND THAT THE SAM E WAS MADE ON THE GROUND THAT COMPUTER S W ERE PUT TO USE AFTER SEPTEMBER, 2006 THEREFORE, DISALLOWANCE HAVE BEEN MADE FOR HALF OF THE YEAR INSTEAD AND FULL YEAR AS CLAIMED BY THE ASSESSEE . THIS FINDING OF FACT A S RECORDED BY LD. CIT(A) AND ASSESSING OFFICER HAS NOT BEEN REBUTTED BECAUSE, THEREFORE , SUCH A FINDING OF THE CIT(A) CONFIRMING THE SAID DISALLOWANCE IS AFFIRMED. ACCORDINGLY, THE GROUND ON THIS SCORE IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 1 2 . IN REVENUES APPEA L, FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,15,37,602/ - OUT OF RS. 4,60,21,743/ - FOR NON - DEDUCTION OF TDS U/S 194C BY HOLDING THAT THE SAME WERE C OVERED BY THE PROVISIONS OF SECTION 172 OF THE IT ACT. VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 5 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,1675,000/ - OUT OF RS. 4,60,21,743/ - FOR NON - DEDUCTION OF TDS U/S 194C BY HOLDING THAT TH ESE PAYMENTS WERE OF THE NATURE OF REIMBURSEMENTS OF EXPENSES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING THE ABOVE RELIEFS ON THE BASIS OF NEW ADVANCES FILED BEFORE HER IN FORM OF INVOICES AND LEDGER ACCOUNT S OF THE ASSESSEES CLIENTS WERE NOT AVAILABLE WITH THE AO. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,21,550/ - BEING 25% OF THE PURCHASES MADE FAILING TO APPRECIATE THE FACT THE A.O. CO ULD NOT HAVE WORKED OUT THE QUANTITATIVE DETAILS OF THE PURCHASES, AS HELD BY THE LD. CIT(A), IN THE ABSENCE OF ANY DOCUMENTS WITH THE A.O. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GIVING THE ABOVE RELIEFS WITHOUT C ALLING FOR REMAND REPORT OF THE A.O. SINCE FRESH EVIDENCES WERE FILED BEFORE CIT(A) WHICH IS IN CONTRAVENTION TO PROVISION LAID IN RULE 46A OF THE ACT. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY . 1 3 . SO FAR AS GROUND NO. 1, 2 & 3 ARE CONCERNED, THE SAME ARE COVERED BY OUR FINDING IN ASSESSEES APPEAL THAT ASSESSE E WAS NOT LIABLE TO DEDUCT TDS U/S 194C AND THEREFORE SUCH A DISALLOWANCE CANNOT BE MADE U/S 40(A)(IA) , ACCORDINGLY , G ROUND NOS. 1, 2 & 3 ARE DISMISSED. VIJAY S POOJARY ITA 1756 /M/20 1 1 ITA 2300/M/2011 6 1 4 . REGARDING GROUND NO. 4, IT H AS BEEN ADMITTED BY BOTH THE PARTIES THAT THE SAID GROUND IS NOT ARISIN G OUT OF THE ORDER OF CIT(A) , THEREFORE, SAME IS TREATED AS DISMISSED. GROUND NOS. 6 & 7 ARE GENERAL, THEREFORE NO SEPARATE ADJUDICATION IS REQUIRED. 1 5 . IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. ORDE R PRONOUNCED IN THE OPEN COURT ON 24 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 24 TH JU LY , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 33 , MUMBAI 4 ) THE CIT 22 , MUMBAI . 5 ) , , / THE D.R. F BE NCH, MUMBAI. 6 ) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS