Satyendra Jhunjhunwalla, Howrah V. ITO, Ward - 46(4), Kolkata

ITA 1988/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54649 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Section: 143(3); 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1988/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2005-06 SATYENDRA JHUNJHUNWALLA VS. INCOME-TAX OFFICER, WD-46(4), KOL. (PAN: ACPPJ 8789 C) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 28.10.2011 DATE OF PRONOUNCEMENT: 11.11.2011 FOR THE APPELLANT: SHRI SUBASH AGARWAL FOR THE RESPONDENT: SHRI S. K. ROY . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXX, KOLKATA IN APPEAL NO. 421/CIT(A)-XXX/WARD-46(4)/2007-08 DATED 02.09.2 009. ASSESSMENT WAS FRAMED BY ITO, WD-46(4), KOLKATA U/S. 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE DATE D 28.12.2007. 2. THE FIRST TWO ISSUES IN THIS APPEAL OF ASSESSEE ARE AGAINST THE ORDER OF CIT(A) CONFIRMING DISALLOWANCE OF FREIGHT CHARGES AND CLEA RING CHARGES BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DED UCTION OF TDS. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 1 AND 2: 2. FOR THAT THE LD. C.I.T(A) WAS NOT JUSTIFIED IN NOT DELETING THE DISALLOWANCE OF FREIGHT CHARGES OF RS.62,285/- U/S. 40(A)(IA) ON AC COUNT OF NON-DEDUCTION OF TDS WHERE THE FREIGHT CHARGES INCLUDES OCTROI TAX PAID TO MAHARASTRA GOVERNMENT BY THE TRANSPORTERS AND REIMBURSED BY THE ASSESSEE AND THE BALANCE AMOUNT PAID TO M/S. INLAND ROAD TRANSPORT (P) LTD. AS FREIGHT CHARGES O N WHICH TDS WAS NOT DEDUCTIBLE. 2. FOR THAT THE LD. C.I.T(A) WAS NOT JUSTIFIED IN N OT DELETING THE DISALLOWANCE OF CLEARING CHARGES OF RS.6,71,261/- U/S. 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS PAID TO M/S. J.S. CLEARING SERVICES WHERE THE CLEAR ING CHARGES INCLUDES CUSTOM DUTY, STAMP DUTY, SERVICE TAX, PORT CHARGES WHICH WAS COL LECTED BY THE AGENT AND PAID TO THE GOVERNMENT & OTHER AUTHORITIES ON WHICH TDS WAS NOT DEDUCTIBLE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE HAS PAID FREIGHT CHARGES AT RS.62,285/- AND CLEARING CHARGES AT RS.6,71,261/ - TO M/S. INLAND ROAD TRANSPORT PVT. LTD. AND M/S. J. S. CLEARING SERVICES RESPECTIVELY. ACCORDING TO ASSESSING OFFICER, THE 2 ITA 1988/K/2000 SATYENDRA JHUNJHUNWALA, A.Y.2005-06 ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 194C OF THE A CT BUT HE HAS NOT DEDUCTED TDS AND HENCE, HE INVOKED THE PROVISIONS OF SECTION 40(A)(I A) OF THE ACT. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED IN RESPECT OF OCTROI CHARGES THAT FREIGHT IS LESS THAN RS.12,622/- AND IT DOES N OT ATTRACT TDS IN ANY CASE. FOR THIS HE REFERRED TO ASSESSEES PAPER BOOK WHEREIN DETAILS O F OCTROI CHARGES AND OTHER CHARGES PAID TO M/S. INLAND TRANSPORT PVT. LTD. ARE DETAILED OUT AS UNDER: DATE FREIGHT CH. OCT. CH. OS. CH. DEL. CH. MISC CHGS INCL UNLOADING CHGS. E. CESS TOTAL 23/7/2004 6/8/2004 19/8/2004 20/8/2004 20/8/2004 1/10/2004 10/11/2004 2/12/2004 25/12/2004 2/2/2005 15/2/2005 24/2/2005 31/03/2005 31/03/2005 28/3/2005 11/1/2005 523.00 573.00 978.00 388.00 1,285.00 812.00 523.00 1,078.00 1,111.00 843.00 599.00 1,111.00 - - 1,361.00 1,437.00 12,622.00 597.00 1,265.00 2,705.00 806.00 3,300.00 2,640.00 1,518.00 2,200.00 2,846.00 2,200.00 1,595.00 2,035.00 - - 2,640.00 3,685.00 30,032.00 30.00 67.00 137.00 41.00 165.00 133.00 74.00 112.00 143.00 112.00 83.00 102.00 1,254.00 641.00 135.00 191.00 3,420.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 60.00 29.00 5.00 5.00 159.00 30.00 1,537.00 1,538.00 2,030.00 30.00 2,823.00 30.00 30.00 3,030.00 30.00 30.00 30.00 2,315.00 2,168.00 30.00 30.00 15,711.00 - - - - - - - - - 25.00 18.00 31.80 123.00 62.50 39.00 42.40 341.70 1,185.00 3,447.00 5,363.00 3,270.00 4,785.00 6,413.00 2,150.00 3,425.00 7,135.00 3,215.00 2,330.00 3,314.80 3,752.00 2,900.50 4,210.00 5,390.40 62,285.70 SIMILARLY, LD. COUNSEL FOR THE ASSESSEE STATED THAT SERVICE CHARGES PAID TO J. S. CLEARING SERVICES INCLUDES CUSTOM DUTY, PORT CHARGES, STAMP DUTY CHARGES, BONDAGE CHARGES, OCT. CHARGES APART FROM PAYMENT OF RENT AND REMOVAL DOCU MENTATION FEE AND DOCUMENT PROCESSING FEE. LD. COUNSEL FOR THE ASSESSEE STATE D THAT THIS CAN BE VERIFIED FROM COPIES OF BILLS OF FREIGHT CHARGES AND COPIES OF BILLS OF CLE ARING SERVICE CHARGES. LD. COUNSEL FOR THE ASSESSEE STATED THAT REIMBURSEMENT EXPENSES AND CUS TOM DUTY PAYMENTS BY AGENT FOR AND ON BEHALF OF THE ASSESSEE CANNOT BE COVERED UNDER T HE TDS PROVISIONS. HENCE, THESE EXPENSES ARE NOT LIABLE TO TDS AND THE PROVISIONS O F SECTION 40(A)(IA) OF THE ACT AND NOT APPLICABLE. FOR THIS, HE RELIED ON THE DECISION IN THE CASE OF ACIT V. GRANDPRIX FAB. (P) LTD,. (2010) 128 TTJ 60 (DEL.), WHEREIN THE TRIBUNA L VIDE PARA 16 HAS HELD AS UNDER: 16. IN RESPECT OF THE PAYMENT TOWARDS AGENCY CHARG ES AMOUNTING TO RS.1,01,219, THE ASSESEE HAS DEDUCTED TAX AMOUNTING TO RS.2,094 AT SOURCE, AND THE SAID PAYMENT HAS NOT BEEN DISALLOWED BY THE A.O. THE OTH ER TWO PAYMENTS ARE TOWARDS PAYMENT OF CUSTOMS DUTY, AND OTHER EXPENSES PAID BY THE AGENT FOR/ON BEHALF OF THE ASSESSEE. THESE REIMBURSEMENT EXPENSES WERE NOT MA DE TOWARDS ANY SERVICES RENDERED BY THE AGENT, BUT HAVE BEEN MADE TO SET OF F OF THE EXPENSES INCURRED BY THE AGENT WHILE CLEARING THE IMPORTED GOODS FROM TH E CUSTOMS FOR/ON BEHALF OF THE ASSESSEE. SINCE NO ELEMENT OF INCOME IS EMBEDDED IN REIMBURSEMENT OF EXPENSES INCURRED BY AGENCY FOR/ON BEHALF OF THE ASSESSEE, T HE ASSESSEE WAS NOT OBLIGED TO DEDUCT TAX AT SOURCE, AND, THEREFORE, THE CIT(A) HA S RIGHTLY DELETED THE ADDITION. 3 ITA 1988/K/2000 SATYENDRA JHUNJHUNWALA, A.Y.2005-06 HE ALSO RELIED ON IN THE CASE OF ITAT, KOLKATA B BENCH IN ITA NO.1580/K/2008, DCIT VS. M/S. M. B. ISPAT CORPORATION LTD. ASSESSMENT YE AR 2005-06 DATED 03.04.2009, WHEREIN IT HAS BEEN HELD AS UNDER: WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E LD. REPRESENTATIVES OF BOTH THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE COPY OF CONSIGNMENT OF SALE AGREEMENT E NTERED INTO BY THE ASSESSEE AND M/S. BEHARILAL & CO. IT IS A FACT THA T IF THE ASSESSEE REIMBURSED THE EXPENSES TOWARDS FREIGHT INCURRED O N ITS BEHALF UNDER AN AGREEMENT FOR WHICH SEPARATE BILL IS RAISED, AND TO SUCH PAYMENTS THE PROVISION OF SECTION 194 OF THE I. T. ACT IS NOT AT TRACTED. THE ABOVE ISSUE HAS BEEN CONSIDERED BY THE ITAT DELHI BENCH IN THE CASE OF WILLMAR SCHWABE INDIA (P) LTD. (SUPRA), WHEREIN IT HAS BEEN HELD THAT IF THERE IS REIMBURSEMENT OF EXPENSES ON ACCOUNT OF BILLS RAISE D, NO TDS IS TO BE DEDUCTED THEREFROM. SECTION 194C OF THE ACT IS APPL ICABLE, WHERE PAYMENTS IS MADE TO A CONTRACTOR/SUB-CONTRACTOR, WHERE CONTR ACT IS EITHER A WORK CONTRACT OF A CONTRACT FOR SUPPLY OF LABOUR FOR WOR KS CONTRACT. IN THE CASE BEFORE US, WE OBSERVE THAT THE ASSESSEE HAS REIMBUR SED THE EXPENSES TO ITS CONSIGNMENT AGENT AND IT WAS NOT A DIRECT PAYMENT F OR FREIGHT BY THE ASSESSEE TO THE TRANSPORTER. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A ). ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT. HE ALSO RELIED ON THE DECISION OF ITAT, MUMBAI F BENCH IN THE CASE OF M/S. UTILITY POWERTECH LTD. VS. ACIT, ITA NO.2561/MUM/2009, A.Y. 2005-06 DATED 19.04.2010, WHEREIN THE TRIBUNAL VIDE PARA 5 HAS HELD AS UNDER: 5) WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SE IMENS AKTIONGESELLSCHAFT (SUPRA) HAS HELD THAT REIMBURSEMENT OF EXPENSES CAN NOT BE REGARDED AS REVENUE IN THE HANDS OF THE PAYEE. WHILE DECIDING T HE ISSUE, THE HONBLE HIGH COURT HAS FOLLOWED THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS. INDUSTRIAL ENGG. PROJECTS P. LTD. (202 ITR 1014). IT IS A SETTLED PROPOSITION OF LAW FROM THE VARIOUS DECISIONS OF HI GH COURTS AND PARTICULARLY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT ( SUPRA) THAT WHEN THERE IS NO ELEMENT OF INCOME AND THE PAYMENT IS ONLY AS A REI MBURSEMENT OF EXPENSES INCURRED BY THE PAYEE, THEN NO DISALLOWANCE CAN BE MADE U/S. 40(A)(IA). IN THE CASE IN HAND, THE A.O. HAS NOT GIVEN A FINDING THAT THE EXPENSES WERE FOR OFFICE UPKEEPING AS REVENUE RECEIPT IN THE HANDS OF RELIA NCE ENERGY LTD. AND NOT A PURE REIMBURSEMENT OF EXPENSES. RESPECTFULLY FOLLOW ING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE DECID E THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE FIND THAT THE ISSUE OF REIMBURSEMENT OF CUSTOMS DUTY CHARGES AND OTHER CHARGES WHICH ARE INCURRED BY AGENTS ON BEHALF OF ASSESSEE CANNOT BE SUBJECT MATTER OF TDS IN VIEW OF ABOVE CITED CASE LAWS. RESPECTFULLY FOLLOW ING THESE CASE LAWS, WE ALLOW THE CLAIM OF ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS AL LOWED. 4 ITA 1988/K/2000 SATYENDRA JHUNJHUNWALA, A.Y.2005-06 5. GROUND NOS. 3, 4 AND 5 ARE AGAINST THE ORDER OF CIT(A) RELATING TO PART RELIEF OF RS.6,327/- AS AGAINST DISALLOWANCE OF RS.12,327/- O N ACCOUNT OF BUSINESS PROMOTION EXPENSES, CONFIRMING THE DISALLOWANCE OF RS.8,388/- IN RESPECT OF COOLIE & CARTAGE EXPENSES AND CONFIRMING THE DISALLOWANCE OF RS.2,91 8/- IN RESPECT OF GENERAL EXPENSES RESPECTIVELY. 6. WE HAVE HEARD RIVAL SUBMISSIONS ON THE ABOVE ISS UE AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN ABSENCE OF PROPER EVIDENCE ASSESSING OFFICER MADE ESTIMATED DISALLOWANCES ON ACCOUNT OF BUSINESS PROMOTION EXPENSES, COOLIE AND CARTAGE EXPENSES AND GENERAL EXPENSES. IN APPEAL, CIT(A) GAVE PART RELIEF ON ACCOUNT OF BUSINESS PROMOTION EXPENSES I.E. 20% OF THE EXPENSE S AMOUNTING TO RS.12,327/- I.E. SUSTAINED THE DISALLOWANCE OF RS.6,000/- , SUSTAINE D THE DISALLOWANCE OF RS.8,388/- OUT OF COOLIE AND CARTAGE EXPENSES AND SUSTAINED THE DISAL LOWANCE AS MADE BY ASSESSING OFFICER IN RESPECT OF GENERAL EXPENSES I.E. RS.2,918/-. SI NCE LOWER AUTHORITIES HAVE MADE THE DISALLOWANCES IN ABSENCE OF PROPER EVIDENCE, WE FIN D NO NEED TO INTERFERE WITH THE SAME AND THE SAME IS HEREBY UPHELD. THESE GROUNDS OF AS SESSEES APPEAL ARE DISMISSED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. 8. ORDER PRONOUNCED IN OPEN COURT ON 11.11.11 SD/- SD/- . '# '#'# '# . ! , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( #! #! #! #!) )) ) DATED : 11TH NOVEMBER, 2011 /0 %12 3 JD.(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SHRI SATYENDRA JHUNJHUNWALLA, 23/04, N. S. ROAD, LILUAH, HOWRAH-711204. 2 ,-*+ / RESPONDENT, ITO, WD-46(4), KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .