Yem Q Cargo, CHENNAI V. DCIT Non Corporate Circle 6, CHENNAI

ITA 2356/CHNY/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2802 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice; Retrospective amendment; TDS; Set aside
• Section: 40(a)(ia); 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , $ BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.2356 & 2357/CHNY/2017 ( / ASSESSMENT YEAR: 2013-14 & 2014-15) M/S. YEM Q CARGO 10/17D, ANAIKAR COMPLEX, M.V.BADRAN STREET, PERIAMET, CHENNAI-600 003. VS THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-6 CHENNAI. PAN: AAAFY 3261F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. G.JOHNSON, ADDL.CIT /DATE OF HEARING : 15.06.2021 /DATE OF PRONOUNCEMENT : 21.06.2021 / O R D E R PER G.MANJUNATHA, AM: THESE TWO APPEALS FILED BY THE ASSESSEE ARE D IRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE LEARN ED CIT(A)-5, CHENNAI DATED 03.07.2017 AND PERTAIN TO ASSESSMENT YEARS 2013-14 & 2014-15. SINCE, FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GRO UNDS OF APPEAL FOR BOTH ASSESSMENT YEARS, THEREFORE, F OR THE SAKE OF 2 ITA NOS.2356 & 2357/CHNY/2017 BREVITY, GROUNDS OF APPEAL FILED FOR THE ASSESSMENT YEAR 2013- 14 IN ITA NO.2356/CHNY/2017 ARE REPRODUCED AS UNDER :- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) 5, CHENNAI DATED 03.07.2017 IN I.T.A.NO.67/CIT(A)-5/20 16-17 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF DIREC T EXPENSES/CLEARING AND FORWARDING CHARGES TO THE EXT ENT OF RS.3,58,19,809/- FOR WANT OF TDS ON THE APPLICATION OF SECTION 40(A)(IA) OF THE ACT AND CONSEQUENTLY ERRED IN ADDI NG BACK SUCH SUM IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE PROVISIONS PRESCRIBING DEDUCTION OF TAX AT SOURCE HAD NO APPLI CATION FOR THE SAID PAYMENTS AND OUGHT TO HAVE APPRECIATED THA T CONSEQUENTLY APPLYING THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT FOR ADDING BACK THE SAID SUM IN THE COMPUTA TION OF TAXABLE TOTAL INCOME WAS WHOLLY UNJUSTIFIED AND ERR ONEOUS. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE COLLECTION OF FREIGHT CHARGES FROM THE CUSTOMERS/EXPORTERS AND TH E CONSEQUENTIAL PAYMENT OF SUCH SUM TO THE RESPECTIVE AIRLINES HAVING BEEN NOT DISPUTED, THE PRESUMPTION OF THE AP PLICABILITY OF THE TDS PROVISIONS WAS WHOLLY UNJUSTIFIED ON THE FACTUAL MATRIX OF THE CASE. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THE SECON D PROVISO TO SECTION 40(A)(IA) OF THE ACT IN PROPER PERSPECTI VE AND FURTHER OUGHT TO HAVE APPRECIATED THE BINDING JUDGMENTS CIT ED IN THAT REGARD THUS VITIATING HIS ACTION IN CONFIRMING THE DISALLOWANCE. 6. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARA 7 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3 ITA NOS.2356 & 2357/CHNY/2017 7. THE CIT (APPEALS) ERRED IN CONFIRMING THE DISALL OWANCE OF RS.2,27,876/- BEING THE RENT PAYMENTS FOR WANT OF T DS ON THE APPLICATION OF SECTION 40(A)(IA) OF THE ACT IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASO NS AND JUSTIFICATION. 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPU GNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTICE WOULD BE NULLITY IN LAW. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CLEARI NG AND FORWARDING AGENTS FOR SEA AND AIR IMPORTS & EXPORT S FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 30. 09.2013 DECLARING TOTAL INCOME OF RS.20,12,800/-.THE CASE W AS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS PA ID CLEARING & FORWARDING CHARGES TO VARIOUS PARTIES WITHOUT DED UCTION TAX AT SOURCE, AS REQUIRED UNDER THE LAW AND HENCE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY EXPENDITURE INCURRED UNDER THE HEAD CLEARING AND FORWARDING CHARGES CANNOT BE DISA LLOWED U/S. 40(A)(IA) OF THE ACT. IN RESPONSE, THE ASSESSEE SU BMITTED THAT IT HAS INCURRED CLEARING AND FORWARDING EXPENDITURE AS INTERMEDIARY ON BEHALF OF IMPORTERS & EXPORTERS, WH ICH IS 4 ITA NOS.2356 & 2357/CHNY/2017 NOTHING BUT REIMBURSEMENT OF EXPENSES INCURRED BY VARIOUS COMPANIES AND HENCE, QUESTION OF DEDUCTION OF TDS ON THE SAID PAYMENT DOES NOT ARISE. THE ASSESSING OFFICER , HOWEVER, NOT CONVINCED WITH EXPLANATION FURNISHED BY THE ASS ESSEE AND ACCORDING TO HIM, THE ASSESSEE OUGHT TO HAVE DEDU CTED TDS AS REQUIRED UNDER THE LAW ON CLEARING AND FORWARDIN G CHARGES AND HENCE, MADE DISALLOWANCE OF A SUM OF RS.3,58,19 ,809/- U/S. 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS . 4. THE ASSESSEE CARRIED MATTER IN APPEAL BEFORE LEA RNED CIT(A), BUT COULD NOT SUCCEED. THE LEARNED CIT(A) H AS DISMISSED APPEAL FILED BY THE ASSESSEE AND UPHELD A DDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF CLEARING AND FORWARDING CHARGES U/S.40(A)(IA) OF T HE ACT BY HOLDING THAT WORD PAYABLE OCCURRING IN SECTION 40 (A)(IA) NOT ONLY COVERS CASES WHERE AMOUNT IS YET TO BE PAID , BUT ALSO THOSE CASES WHERE AMOUNT HAS ACTUALLY BEEN PAID. AG GRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APP EAL BEFORE US. 5. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITIONS MA DE BY THE 5 ITA NOS.2356 & 2357/CHNY/2017 ASSESSING OFFICER TOWARDS DISALLOWANCE OF CLEARING AND FORWARDING CHARGES U/S.40(A)(IA) ON THE ISSUE OF PA ID AND PAYABLE WITHOUT CONSIDERING ALTERNATIVE SUBMISSIONS MADE BY THE ASSESSEE IN LIGHT OF SECOND PROVISO TO SECTION U/S.40(A)(IA) OF THE ACT, THAT IF THE PAYEE HAS INCLUDED RECEIPTS IN RETURN OF INCOME, THEN IT SHALL BE DEEMED THAT ASSESSEE HAS D EDUCTED AND PAID TAXES UNDER THE LAW ON THE DATE OF FURNISH ING OF RETURN BY THE PAYEE REFERRED TO IN THE SAID PROVISO. HOWE VER, THE LEARNED CIT(A), WITHOUT CONSIDERING ALTERNATIVE ARG UMENTS OF THE ASSESSEE HAS DISMISSED APPEAL FILED BY THE ASSESSE E. THEREFORE, ISSUE MAY BE SET ASIDE TO THE FILE OF TH E ASSESSING OFFICER TO GIVE ANOTHER OPPORTUNITY TO THE ASSESSEE TO FILE NECESSARY EVIDENCE TO PROVE THAT PAYEES HAVE INCLU DED SUM PAID BY THE ASSESSEE IN THEIR RETURN OF INCOME AND PAID TAXES AND HENCE, SAME CANNOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT. 6. THE LEARNED DR, ON THE OTHER HAND, FAIRLY AGREED THAT ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO FILE N ECESSARY EVIDENCES. 6 ITA NOS.2356 & 2357/CHNY/2017 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER HAS DISALLOWED CLEARI NG AND FORWARDING CHARGES PAID U/S.40(A)(IA) OF THE ACT FO R NON- DEDUCTION OF TDS. IT WAS CLAIM OF THE ASSESSEE BEF ORE THE LOWER AUTHORITIES THAT PAYEES HAVE INCLUDED SUM PAI D BY THE ASSESSEE IN THEIR RETURN OF INCOME AND PAID TAXES A ND AS PER SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, IF PAYEES PAID TAXES ON THE SUM PAID BY THE ASSESSEE, THEN ASSESS EE SHALL NOT BE DEEMED TO BE IN DEFAULT AND CONSEQUENTLY, SU M CANNOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT. WE FIND TH AT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP P.LTD. 289 CTR 384( DEL) HAD CONSIDERED SE COND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND HELD T HAT IT IS DECLARATORY AND CURATIVE AND IT HAS RETROSPECTIVE EFFECT FROM THE DATE OF PROVISIONS OF SECTION 40(A)(IA) WAS INS ERTED TO THE STATUTE. AS PER SECOND PROVISO WHERE ASSESSEE IS DE EMED NOT TO BE AN ASSESSEE IN DEFAULT IN TERMS OF FIRST PROV ISO TO SUB- SECTION (1) OF SECTION 201 OF THE ACT, THEN IN SUC H EVENT IT SHALL BE DEEMED THAT ASSESSEE HAS DEDUCTED AND PAID TAXE S ON 7 ITA NOS.2356 & 2357/CHNY/2017 SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF IN COME BY THE RESIDENT PAYEE AS REFERRED TO IN THE SAID PROVISO. IN THIS CASE, THE ASSESSEE CLAIMS THAT IT HAS PAID CLEARING & FOR WARDING CHARGES TO VARIOUS ENTITIES, WHICH HAVE INCLUDED SU M PAID BY THE ASSESSEE IN THE RETURN OF INCOME . THE ASSESSEE FURTHER CLAIMED THAT IT CAN FURNISH NECESSARY EVIDENCE/CERT IFICATES TO PROVE THAT SUM PAID BY THE ASSESSEE WAS SUFFERED TO TAX IN THE HANDS OF PAYEES. THEREFORE, CONSIDERING FACT THAT T HE LEARNED CIT(A) HAS NOT CONSIDERED ALTERNATIVE PLEA MADE BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT ISS UE NEEDS TO GO BACK TO THE FILE OF THE ASSESSING OFFICER TO G IVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO FILE NECESSARY EVIDE NCES. HENCE, WE SET ASIDE APPEAL TO THE FILE OF THE ASSESSING O FFICER AND DIRECT HIM TO RECONSIDER ISSUE IN LIGHT OF SECOND P ROVISO TO SECTION 40(A)(IA) OF THE ACT, IN ACCORDANCE WITH L AW. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NOS.2356 & 2357/CHNY/2017 ITA NO.2357/CHNY/2017(A.Y.2014-15): 9. THE FACTS AND ISSUES INVOLVED IN ITA NO. 2357/CH NY/2017 ARE IDENTICAL TO THE FACTS AND ISSUES WHICH WE HAV E ALREADY CONSIDERED IN ITA NO.2356/CHNY/2017 FOR THE ASSES SMENT YEAR 2013-14. THE REASONS GIVEN BY US IN THE PRECE DING PARAGRAPHS OF ITA NO.2356/CHNY/2017 SHALL EQUALLY APPLY TO THIS APPEAL AS WELL. THEREFORE, FOR SIMILAR REASON S, WE SET ASIDE THIS APPEAL ALSO TO THE FILE OF THE ASSESSING OFFI CER AND DIRECT HIM TO RECONSIDER ISSUE IN LIGHT OF SECOND PROVISO OF SECTION 40(A)(IA) OF THE ACT, IN ACCORDANCE WITH LAW. 10. AS A RESULT, BOTH APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( / DATED 21 ST JUNE, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .