Choksi Exports, Ahmedabad V. The ACIT, Circle-10, Ahmedabad

ITA 1920/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9720 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 1920/AHD/2013 (ASSESSMENT YEAR: 2009-10) CHOKSI EXPORTS, NIRAV COMPLEX, 1 ST FLOOR, NAVRANGPURA, AHMEDABAD - 380009 APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDABAD RESPONDENT PAN: AABFC9162G / BY ASSESSEE : SHRI KARAN SHAH, A.R. / BY REVENUE : SHRI JAMES KURIAN, SR.D.R. /DATE OF HEARING : 26.12.2016 /DATE OF PRONOUNCEMENT : 27.12.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST THE CIT(A)-XVI, AHMEDABADS ORDER DATED 09.05.2013, IN APPEAL NO. CIT(A) XVI/ACIT/CIR.10/534/11-12, IN PROCEEDINGS UNDER SEC TION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND CHALLENGE S BOTH THE LOWER AUTHORITIES ACTION IN DISALLOWING ITS PAYMENTS MAD E FOR C&F AGENTS AND ITA NO.1920/AHD/2013 [CHOKSI EXPORTS VS. ACIT] A.Y. 2009-10 - 2 - OTHER CHARGES OF RS.7,89,655/- U/S.40(A)(IA) FOR NO N DEDUCTION OF TDS THEREUPON. 3. FACTS OF THE CASE APPEAR TO BE IN A NARROW COMPA SS. THERE IS NO DISPUTE THAT THIS ASSESSEE HAS OTHERWISE PAID THE I MPUGNED SUM TO ITS C&F AGENTS OF RS.7,89,655/- WITHOUT DEDUCTING TDS. THE ASSESSEES CASE WAS THAT THE SAME WERE RATHER IN THE NATURE OF REIMBURSEMENT OF EXPENSES INCURRED BY ITS AGENTS FOR EXAMPLE THC CHARGES, BL CHARGES, DOC UMENTATION CHARGES, REPO CHARGES ETC. IT FURTHER PLEADED THAT THESE CH ARGES DID NOT REPRESENT INCOME OF ITS AGENT PAYEES SO AS TO ATTRACT TDS DED UCTION. THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT ON 21.11.2011 I NTER ALIA QUOTING SECTION 194C OF THE ACT IN LIGHT OF CBDTS CIRCULAR NO.715 DATED 08.08.1995 TO CONCLUDE THAT ASSESSEES FAILURE IN NON DEDUCTION O F TDS WOULD ATTRACT SECTION 40(A)(IA) DISALLOWANCE. HE ACTED ACCORDING LY. THE CIT(A) CONFIRMS THE SAME AFTER CONCLUDING THAT THE ASSESSEE HAS NOW HERE PROVED THE IMPUGNED PAYMENT TO BE REIMBURSEMENT AS PER THE EVIDENCE AVA ILABLE IN THE CASE RECORDS. 4. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUS ED. LEARNED COUNSEL FIRSTLY SUBMITS THAT SECTION 40(A)(IA) (2 ND PROVISO) IS ATTRACTED IN FACT OF THE INSTANT CASE PROVIDING THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR PART OF THE TAX IN ACCORDANCE WITH CHAPTER XVIIB OF ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT U/S.201(1) (FIR ST PROVISO), THEN, FOR THE PURPOSE OF THIS SUB CLAUSE [SECTION 40(A)(IA)], IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO; IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE. HE QUOTE S THIS TRIBUNALS AGRA BENCH DECISION IN RAJIV KUMAR AGARWAL VS. ACIT ITA NO.337/AGRA/2013 DECIDED ON 29.05.2013 HOLDING THE SAID PROVISO TO B E RETROSPECTIVELY APPLICABLE SINCE CURATIVE IN NATURE AS UPHELD IN HO NBLE DELHI HIGH COURTS ITA NO.1920/AHD/2013 [CHOKSI EXPORTS VS. ACIT] A.Y. 2009-10 - 3 - JUDGMENT IN ITA NO.160/2015 CIT VS. ANSAL TOWNSHIPS DECIDED ON 26.08.2015. LD. DEPARTMENTAL REPRESENTATIVE STRON GLY SUPPORTS CIT(A)S ORDER. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. IT APPEARS THAT THERE IS NO DISPUTE ABOUT ABOVE LEGAL POSITION SO FAR AS RETROSPECTIVE OPERATION OF SECTION 40(A)(IA) (2 ND PROVISO) HEREINABOVE IS CONCERNED THAT THE SAME DOES NOT APPLY IN CASE THE ASSESSEE IS NOT AN ASSESSEE IN DEFAULT U/S.201(1) (1 ST PROVISO). WE HOWEVER NOTICE THAT THIS ASSESSEES CONTENTION REQUIRES TO BE VERIFIED SINCE IT IS NOT CLEAR AS TO WHETHER ITS PAYEES STAND ASSESSED QUA THE IMPUGNED EXPENSES/REIMBURSEM ENT OR NOT. WE THUS RESTORE THE INSTANT ISSUE BACK TO THE FILE OF ASSES SING OFFICER TO CONDUCT FURTHER VERIFICATION AFTER AFFORDING THE ASSESSEE A DEQUATE OPPORTUNITY OF HEARING WHO SHALL ALSO BE AT LIBERTY TO PLACE ON RE CORD ALL OF ITS EVIDENCE PROVING THE IMPUGNED PAYMENTS TO BE REIMBURSEMENTS OF ITS EXPENSES AS UNDERTAKEN BY THE PAYEE AGENTS. THE ASSESSEES SOL E SUBSTANTIVE GROUND IS ACCEPTED FOR STATISTICAL PURPOSES. 6. THIS ASSESSEES APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. [PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF DECEMBER, 2016.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 27/12/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ITA NO.1920/AHD/2013 [CHOKSI EXPORTS VS. ACIT] A.Y. 2009-10 - 4 - ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0