Rajeev Daga , Kolkata V. ITO, Ward - 30(3), , Kolkata

ITA 2042/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2647 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD ALTAF HUSSAIN
• Keywords: TDS
• Section: 40A(3); 40(a)(ia)

Judgement Text

1 ITA NO.2042/KOL/2018 RAJEEV DAGA, AY:2009-10 , A (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL A(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 2042/KOL/2018 ASSESSMENT YEAR: 2009-10 RAJEEV DAGA (PAN: ADOPD5686N) VS. INCOME-TAX OFFICER, WARD-30(3), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 28.01.2019 DATE OF PRONOUNCEMENT 08.03.2019 FOR THE APPELLANT SHRI SANJAY JAIN, AR FOR THE RESPONDENT MD. ALTAF HUSSAIN, ADDL. CIT, SR . DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF LD. CIT(A)-5, KOLKATA DATED 04.06.2018 FOR AY 2009-10. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.2,49,007/- U/S. 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. AT THE OUTSET ITSELF, THE LD. AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE TOTAL DISALLOWANCE MADE BY THE AO IS RS.2,49,007/- ON THE BASIS THAT THE ASSESSEE FAILED TO DEDUCT TDS ON THE FOLLOWING AMOUNTS WHICH ASSESSEE PAID T O THE C&F AGENT: I) PORT CHARGES - RS.92,285/-, II) SERVICE TAX AND CESS- RS. 6,305/- III) CMC WITH SERVICE TAX - RS. 1,763/- IV) LOADING & UNLOADING RS.49,305/- ACCORDING TO ASSESSEE, THE AFORESAID AMOUNTS WERE PAID BY THE ASSESSEE TO THE C&F AGENT WAS THE REIMBURSEMENT OF EXPENDITURE INCURRED BY C &F AGENT ON BEHALF OF THE ASSESSEE 2 ITA NO.2042/KOL/2018 RAJEEV DAGA, AY:2009-10 AND THERE IS NO ELEMENT OF INCOME EMBEDDED IN THE S AID PAYMENTS MADE TO C&F AGENTS AND SO NO TAX NEED TO BE DEDUCTED FOR THE SAID PAYMENT. COMING TO THE OTHER TWO EXPENSES INCURRED BY THE ASSESSEE WAS ON ACCOUNT OF (I) SERVICE CHARGES TO THE TUNE OF RS.51,850/- AND (II) TRANSPORT CHARGES TO THE TUNE OF RS.47,500/-. THE LD. AR FAIRLY CONCEDED THAT FOR THESE EXPENSES, INCOME OF C&F AGENT IS EMBEDDED IN IT AND, THEREFORE, TDS WAS ATTRACTED. HOWEVER, THE LD. AR POINTED OUT THAT IN RESPECT TO THE REIMBURSEMENT OF TRANSPORT CHARGES OF RS.47,500/- H E DREW OUR ATTENTION TO PAGES 98 AND 99 OF THE PAPER BOOK (BREAK-UP OF THE SAID AMOUNT) FRO M WHICH IT IS EVIDENT THAT AT A TIME ON A SINGLE DAY IT DOES NOT EXCEED RS. 20,000/- AND THE AGGREGATE PAYMENT IN THE FY DID NOT EXCEED RS.50,000/- AND AS SUCH NO TAX IS DEDUCTIBLE AS PROVIDED IN SUB-SECTION 3A AND PROVISO THERETO U/S. 40A(3) OF THE ACT. THEREFORE, ACCORDING TO LD AR NO DISALLOWANCE ON THIS ACCOUNT IS CALLED FOR. 4. COMING TO THE PAYMENT OF SERVICE CHARGES OF RS.5 1,850/- IS CONCERNED, ACCORDING TO LD. AR SINCE THE PAYEE HAS ALREADY REFLECTED IN THE IR RETURN OF INCOME THIS AMOUNT, AND HAS PAID TAX ON IT AND THE CERTIFICATE AS REQUIRED BY L AW IN FORM 26A OF THE CHARTERED ACCOUNTANT FOR THIS AMOUNT HAS BEEN SUBMITTED, THIS EXPENDITURE SHOULD NOT BE DISALLOWED. ON THE OTHER HAND, THE LD. DR POINTED OUT THAT THES E ARE FACTS NEEDS TO BE VERIFIED BY THE AO AND CANNOT BE ALLOWED WITHOUT THE AO VERIFYING T HE SAME. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND GONE THRO UGH THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FACTS STATED ABOVE ARE NOT REPEATED F OR THE SAKE OF BREVITY. IT IS NOTED THAT THE ASSESSEE IS AN INDIVIDUAL WHO MADE CERTAIN PAYMENTS TO ITS C&F AGENT NAMELY, PORT CHARGES, SERVICE TAX AND CESS, CMC WITH SERVICE TAX ETC. AS AFORESAID WHICH ARE NOTHING BUT REIMBURSEMENT OF THE STATUTORY CHARGES MADE BY THE C&F AGENT ON BEHALF OF THE ASSESSEE. THEREFORE, THERE IS NO REQUIREMENT OF TDS BEING DED UCTED BY THE ASSESSEE WHEN REIMBURSING THE STATUTORY CHARGES/EXPENSES MADE BY THE C&F AGEN T ON BEHALF OF THE ASSESSEE, SINCE THERE IS NO INCOME EMBEDDED IN THE HANDS OF C&F AGE NT ON THIS PAYMENT, SO NO TDS NEED 3 ITA NO.2042/KOL/2018 RAJEEV DAGA, AY:2009-10 TO BE DEDUCTED TO THE ASSESSEE ON THESE PAYMENTS, S O NO DISALLOWANCE OF EXPENDITURE IS LEGALLY TENABLE AND IS ORDERED TO BE DELETED. 6. COMING TO THE OTHER EXPENSES NAMELY, TRANSPORT C HARGES OF RS.47,500/- IS CONCERNED, HAVING GONE THROUGH THE BREAK-UP OF THE EXPENSES WH ICH IS REFLECTED AT PAGES 98 AND 99 OF THE PAPER BOOK IT IS TAKEN NOTE THAT THE PAYMENT ON A SINGLE DAY DOES NOT EXCEED RS.20,000/- AND THE AGGREGATE PAYMENT IN THE FY DID NOT EXCEED RS.50,000/-. THEREFORE, NO TAX NEEDS TO BE DEDUCTED BY THE ASSESSEE WHILE INCURRING THE EXP ENDITURE AS PER THE LAW WHICH STOOD ON THAT DATE AND, THEREFORE, NO DISALLOWANCE IS WARRAN TED AND IT IS ORDERED TO BE DELETED. 7. COMING TO THE PAYMENT OF SERVICE CHARGES OF RS.5 1,850/- IS CONCERNED, IT WAS BROUGHT TO OUR NOTICE THAT THE PAYEE HAS ALREADY RE FLECTED THIS AMOUNT IN ITS RETURN OF INCOME AND HAS PAID THE TAX ON IT. THE CERTIFICATE AS STI PULATED BY THE STATUTE I.E. FORM 26A OF THE CHARTERED ACCOUNTANT IS ALSO PRODUCED BEFORE US. I N THE LIGHT OF THE SAME, NO DISALLOWANCE IS WARRANTED. HOWEVER, IT WAS POINTED OUT BY THE L D. DR THAT THE AO DID NOT GET ANY OCCASION TO VERIFY THE VERACITY OF CERTIFICATE OF T HE CHARTERED ACCOUNTANT AND SO THE ORDER OF LD. CIT(A) IS SET ASIDE ON THIS ISSUE AND THIS ISSU E IS REMANDED BACK TO AO TO VERIFY AS TO WHETHER THE PAYEE HAS INCLUDED THE AMOUNT IN ITS RE TURN OF INCOME AND PAID THE TAX ON IT. IF SO, NO DISALLOWANCE IS WARRANTED. WITH THE AFORESA ID DIRECTION THIS LIMITED ISSUE IS REMITTED BACK TO THE FILE OF THE AO. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2019. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 8TH MARCH, 2019 JD. (SR.P.S.) 4 ITA NO.2042/KOL/2018 RAJEEV DAGA, AY:2009-10 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI RAJEEV DAGA, 47/1C, HAZRA ROAD, KOLKATA-700 019. 2 RESPONDENT ITO, WARD-30(3), KOLKATA. 3. 4. CIT(A)-5, KOLKATA (SENT THROUGH E-MAIL) CIT, KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR