UPS JETAIR EXPRESS P. LTD, MUMBAI V. DCIT 11(1)(2), MUMBAI

ITA 2221/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV KESARWANI
• Keywords: Depreciation; Transfer pricing
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2221/M/2017 ASSESSMENT YEAR: 2012-13 M/S. UPS JETAIR EXPRESS P. LTD., PLOT NO.6A, SHYAM NAGAR, OFF. JOGESHWARI VIKHROLI LINK ROAD, MAJAS VILLAGE, JOGESHWARI (EAST), MUMBAI 400 096 PAN: AAACU4322N VS. DEPUTY COMMISSIONER OF INCOME TAX-11(1)(2), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NITESH JOSHI, A.R. REVENUE BY : SHRI RAJEEV KESARWANI, SR. D.R. DATE OF HEARING : 24.10.2018 DATE OF PRONOUNCEMENT : 28.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 02.12.2016 OF THE DISPUTES RESOLUTION PANEL (DRP) RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE REPRODUCE D AS BELOW: GROUND NO.1 REIMBURSEMENTS OF RS.12,18,465/- AT COST TO UPS WORLDWIDE FORWARDING INC, USA, (UPSWWF), TOWARDS LEGAL SERVIC ES FROM DT EXIM PRIVATE LIMITED (DT EXIM) GROUND NO.2 DISALLOWANCE OF DEPRECIATION OF RS.79 ,691/- UNDER SECTION32 OF THE ACT ON THE FIXED ASSETS PURCHASED FROM UPSWWF IN AS SESSMENT YEAR 2008-09 ITA NO.2221/M/2017 M/S. UPS JETAIR EXPRESS P. LTD. 2 3. THE ASSESSEE IS A COMPANY FORMED UNDER THE COMPA NYS ACT, 1956 AND IS ENGAGED IN THE BUSINESS OF INTERNA TIONAL INTEGRATED TRANSPORTATION SERVICES. THE ASSESSEE I S A JOINT VENTURE ENTITY OF UPS-WORLDWIDE FORWARDING INC, USA (IN SHORT UPS WWF) AND JET AIRWAYS LTD. INDIA. THE ACTIVITIE S OF THE ASSESSEE INVOLVED DELIVERY OF DOCUMENTS, PARCELS AN D OTHER ITEMS FROM ONE COUNTRY TO ANOTHER. DURING THE YEAR, THE A SSESSEE FILED THE RETURN OF INCOME ON 29.11.2012 DECLARING INCOME OF RS.23,98,16,547/-. THE CASE OF THE ASSESSEE SELECT ED FOR SCRUTINY UNDER CASS AND THE INCOME WAS ASSESSED AT RS.52,59,75,870/- BY MAKING DISALLOWANCE WHICH INTE R ALIA INCLUDED DISALLOWANCE OF RS.12,18,465/- ON ACCOUNT OF PAYMENT TO UPS-WWF INC, USA TOWARDS LEGAL SERVICES FROM D.T . EXIM PVT. LTD./TITUS AND DEPRECIATION DISALLOWANCE OF RS.79,6 91/- RESPECTIVELY. 4. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.12,18,465/- AS MADE BY THE A O UNDER SECTION 40(A)(IA) OF THE ACT. THE SAID AMOUNT REPR ESENTS THE AMOUNT REIMBURSED TO ITS ASSOCIATED ENTERPRISE UPS- WWF INC, USA WITH RESPECT TO SUMS PAYABLE TO D.T. EXIM PVT. LTD./TITUS FOR THEIR LEGAL SERVICES PROVIDED TO THE ASSESSEE. ACCORDING TO THE REVENUE, SUCH LEGAL SERVICES PROVIDED BY THE RE CIPIENT TO THE ASSESSEE COMPANY WERE FOR USE IN THE CONDUCT OF ITS BUSINESS AND THEREFORE SUCH PAYMENTS ARE IN THE NATURE OF F EES INCLUDING SERVICES IN TERMS OF ARTICLE 12(4) OF INDIA US TREA TY AND ACCORDINGLY SUCH SUM WAS CHARGEABLE TO TAX IN INDIA . THE AO DISALLOWED THE SAME ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON SUCH PAYMENT MADE TO ITS AE UPS- WWF INC, USA AND THEREFORE SUCH EXPENSES ARE NOT AL LOWABLE ITA NO.2221/M/2017 M/S. UPS JETAIR EXPRESS P. LTD. 3 UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE A CT. THE STAND OF THE REVENUE WAS ALSO AFFIRMED BY THE DRP IN THE APP ELLATE PROCEEDING DISMISSING THE OBJECTION OF THE ASSESSEE . 5. THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT THE ISSUE INVOLVED IN THE PRESENT GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH O F THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2008-09 AND 2009-10 AND THEREFORE FOLLOWING THE SAID DECISIONS OF THE CO-OR DINATE BENCHES OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLI ER YEARS, THE GROUND OF THE ASSESSEE SHOULD BE ALLOWED. 6. THE LD. D.R. APPEARED TO BE FAIRLY AGREED TO THE CONTENTION OF THE LD. A.R. OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE OR DERS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL FOR BOTH THE YE ARS AND FIND THAT THE ISSUE HAS BEEN REMANDED BACK TO THE FILE O F THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF SECOND PROVI SO TO SECTION 40(A)(IA) OF THE ACT WHICH PROVIDES THAT IF THE REC IPIENT OF THE INCOME HAS SHOWN THE PAYMENT RECEIVED IN THE RETURN OF INCOME AND OFFERED THE DUE TAXES THEREON THEN NO DISALLOWA NCE UNDER SECTION 40(A)(IA) SHOULD BE MADE AS THE RECIPIENTS ARE INDIAN TAX ASSESSEES. THE RELEVANT FINDING OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.3311/M/2013 A.Y. 2008-09 ARE AS UNDER: 15. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT INVOICES RAISED BY UPSWWF ON ASSESSEE CAN BE MATCHED BACK-TO-BACK WITH THE INVOICES RAISED BY TITUS, THE PAYMENT SO MADE WAS IN THE NATURE OF REI MBURSEMENT. HOWEVER, SINCE PAYMENT WAS MADE TO RESIDENT LEGAL FIRM, SAME WAS S UBJECT TO TDS AND LIABLE FOR DISALLOWANCE U/S.40(A)(I). HOWEVER, KEEPING IN VIEW THE PURPOSE BEHIND INSERTION OF SECOND PROVISO BY FINANCE ACT, 2012 IN SECTION 40(A )(IA), IT CAN BE SAID TO BE DECLARATORY AND CURATIVE IN NATURE AND THEREFORE, I T SHOULD BE GIVEN RETROSPECTIVE ITA NO.2221/M/2017 M/S. UPS JETAIR EXPRESS P. LTD. 4 EFFECT FROM 1-4-2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY FINANCE (NO.1) ACT, 2004. THIS VIEW IS PROPOUNDED BY VARIOUS BENCHES OF THE TRIBUNAL WHICH ARE AS UNDER :- I) DR. ADI R.NAZIR VS. ACIT, ITA NO.10556/MUM/2011 , DATED 26-11- 2014; II) DCIT VS. ANANDA MARAKALA, (2014) 48 TAXMANN.CO M402(BANG), AND III) RAJEEV KUMAR AGARWAL VS. ACIT (2014) 45 TAXMA NN.COM 555(AGRA) 8. THE SAID DECISION HAS BEEN FOLLOWED IN THE A.Y. 2009-10 ALSO. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DE CISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL RESTORE THE ISSUE BA CK TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME IN TERMS OF THE ABOVE DECISION. 9. THE ISSUE RAISED IN SECOND GROUND OF APPEAL IS A GAINST THE DISALLOWANCE OF DEPRECIATION BY THE AO ON THE FIXED ASSETS PURCHASED FROM UPS WWF IN ASSESSMENT YEAR 2008-09. THE LD. A.R., AT THE OUTSET, POINTED OUT THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CA SE IN A.Y. 2008-09 WHEREIN THE DEPRECIATION HAS BEEN ALLOWED T O THE ASSESSEE. THE LD. A.R. REFERRED TO PARA 17 & 18 IN A.Y. 2008-09 AND PARA 4 FOR THE A.Y. 2009-10 AND SUBMITTED THAT THE ISSUE SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL. 10. LD. D.R. FAIRLY AGREED WITH THE CONTENTION OF T HE LD. A.R. 11. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE IDENTICAL ISSUE HAS BEEN D ECIDED BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN FAVOUR OF TH E ASSESSEE IN A.Y. 2008-09 & 2009-10. THE OPERATIVE PART OF THE DECISION IN ITA NO.3311/M/2013 & ORS. IS REPRODUCED AS UNDER: ITA NO.2221/M/2017 M/S. UPS JETAIR EXPRESS P. LTD. 5 17. WITH REGARD TO DISALLOWANCE OF DEPRECIATION ON ASSETS IMPORTED BY ASSESSEE IN THE FORM OF COMPUTERS, SCANNERS, PRINTERS FROM UPSW WF OF RS.42,98,029/-, THE AO DISALLOWED ASSESSEES CLAIM OF DEPRECIATION BY OBSE RVING THAT ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN THE FORM OF CUSTOMS CLEAR ANCE CERTIFICATE, BILL OF ENTRY ETC. AS PER AO IT IS NOT VERIFIABLE AS TO WHETHER T HE GOODS HAVE BEEN ACTUALLY IMPORTED BY ASSESSEE AND PAYMENT HAS BEEN MADE TO U PSWWF. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO, A GAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 18. LD. AR DREW OUR ATTENTION TO THE STATEMENT OF F ACTS EVIDENCING FURNISHING OF DOCUMENTS DISCUSSED BY THE AO. WE FOUND THAT PAYMEN T HAS BEEN MADE BY ASSESSEE TO THE CUSTOM AUTHORITY WHILE IMPORTING TH E ASSETS. THE PAYMENT FOR PURCHASE OF COMPUTERS SO MADE HAS BEEN ACCEPTED BY TPO. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR DECLINING THE CLAIM OF DEPRECIATION ON THE ASSETS SO IMPORTED. 12. THE ITAT HAS ALSO DECIDED THE CASE OF ASSESSEE IN A.Y. 2009-10 IN ASSESSEES FAVOUR BY FOLLOWING THE SAID ORDER. THEREFORE, RESPECTFULLY FOLLOWING THE SAID ORDER, W E DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.11.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.