The ACIT(OSD),Range-1, Ahmedabad V. M/s. Dutron Plastics Ltd., Ahmedabad

ITA 2446/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94715 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGENDRA SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER , AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 2446/AHD/2011 ASSESSMENT YEAR :2008-09 ACIT (OSD), RANGE-1, AHMEDABAD V/S . DUTRON PLASTICS LTD. 1, DUTRON HOUSE, NR. MITHAKHALI UNDERBRIDGE, NAVRANGPURA, AHMEDABAD - 380009 PAN NO. AA B C D1495N (APPELLANT) .. (RESPONDENT) / BY REVENUE SHRI NAGENDRA SINGH, SR. D.R. /BY ASSESSEE NONE /DATE OF HEARING 16.11.2015 /DATE OF PRONOUNCEMENT 16.11.2015 O R D E R PER : SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT(A)-VI, AHMEDABAD, DATED 08.07.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF MANUFACTURING OF PLASTICS HOSE-PIPES AND FITTINGS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 ON 30.06.2009 DECLARING TOT AL INCOME OF RS.2,50,60,660/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.143(3) VIDE ORDER DATED 1 9.11.2010 AND TOTAL INCOME WAS DETERMINED AT RS.3,32,72,585/-. AGGRIEV ED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO VIDE ORDER DATED 08.07.2011 GRANTED SUBSTANTIAL RELIEF T O THE ASSESSEE. AGGRIEVED ITA NO.2446/AHD/2011 (ACIT (OSD) VS. DUTRON PLASTIC S LTD.) A.Y. 2008-09 - 2 - BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEA L BEFORE US AND RAISED FOLLOWING GROUND: 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.76,78,030/- OUT OF TOTAL ADDITION OF RS.82,11,92 5/- ON ACCOUNT OF DISALLOWANCE U/S.40(A)(IA). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER TO THE EXTENT MENTIONED ABOVE, SINCE THE ASSESSEE HAS FAILED TO D ISCLOSE HIS TRUE INCOME. 4. ON THE DATE OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED ON BEHALF OF ASSE SSEE. WE, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA ASSES SEE, ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. DURING COURSE OF ASSESSMENT PROCEEDINGS, ASSESSI NG OFFICER NOTICED THAT ASSESSEE PAID RS.80,89,525/- TO M/S. MAFFICK L OGISTICS ITS C & F AGENT AND RS.1,22,400/- AS SALE PROMOTION EXPENSES TO AK AR INFOMEDIA PVT. LTD. AND ON THESE PAYMENTS, NO TDS WAS DEDUCTED BY THE A SSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE WAS LIABLE TO DEDUCT TDS U/S.194C AND SINCE THE ASSESSEE HAS NOT DEDUCTED TD S, THE EXPENDITURE WAS NOT ALLOWABLE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HE ACCORDINGLY DISALLOWED RS.82,11,925/-. 6. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO DELETED THE ADDITION T O THE EXTENT OF RS.76,78,030/- BY HOLDING AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASS ESSMENT ORDER AND APPELLANT'S SUBMISSION. FROM THE AFORESAID SUBMISSI ON OF THE APPELLANT IT IS CLEAR THAT APPELLANT PRESSED DISALLOWANCE TO THE EX TENT OF REIMBURSEMENTS AMOUNTING TO RS.76,78,030 OUT OF TOTAL DISALLOWANCE OF RS.82,11,925. ACCORDINGLY THE BALANCE DISALLOWANCE NOT PRESSED DU RING APPEAL IS CONFIRMED. APPELLANT DID NOT DEDUCT TDS ON REIMBURSEMENTS MADE TO C& F AGENT ON SEPARATE BILLS OF REIMBURSEMENT ON ACCOUNT OF FR EIGHT AND OTHER PAYMENTS ITA NO.2446/AHD/2011 (ACIT (OSD) VS. DUTRON PLASTIC S LTD.) A.Y. 2008-09 - 3 - MADE ON BEHALF OF APPELLANT. APPELLANT RELIED UPON THE RECENT DECISION OF ITAT AHMEDABAD IN THE CASE OF M/S OM SATYA EXIM PRIVATE LTD, ITA NUMBER 1335/AHD/2010 DATED 13-05-2011. THE RELEVANT PART O F THE DECISION IS QUOTED BELOW- 'WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD AND GOING THROUGH THE ORDERS OF THE AUTHORIT IES BELOW AND THE JUDGMENT CITED BY THE ID COUNSEL OF THE ASSESSEE. WE HAVE AL SO CONSIDERED BOARD CIRCULAR DATED 8-8-1995, COPY OF WHICH HAS BEEN SUB MITTED BY DR OF THE REVENUE. IN THE PRESENT CASE, IT HAS BEEN SUBMITTED BEFORE US BY AR THAT THE COMMISSION AGENT HAS RAISED SEPARATE BILLS FOR REIM BURSEMENT OF THE EXPENSES. WITH ALL THESE FACTS, WHEN WE CONSIDER TH E BOARD CIRCULAR NUMBER 715 DATED 8-8-1975, WE FIND THAT THIS BOARD CIRCULA R CANNOT BE MADE APPLICABLE TO THE PRESENT CASE BECAUSE IN THE PRESE NT CASE, THERE IS NO COMPOSITE BILL RAISED BY THE COMMISSION AGENT AND A S PER THE AR OF THE ASSESSEE SEPARATE BILLS WERE RAISED BY THE COMMISSI ON AGENT FOR REIMBURSEMENT OF EXPENSES AND THE DR COULD NOT CONT RADICT THE SUBMISSION OF THE AR OF THE ASSESSEE. WE ALSO FIND THAT TRIBUN AL HAS ALSO CONSIDERED THE BOARD CIRCULAR NUMBER 715 DATED 8-8-1995 IN THE CAS E OF DR WILLMAR SCHWABE INDIA PRIVATE LTD AND IT WAS HELD THAT WHEN THE BIL L FOR REIMBURSEMENT OF EXPENSES HAS BEEN SEPARATELY RAISED BY THE CONSULTA NT, SECTION 194J IS NOT APPLICABLE. HENCE BY RESPECTFULLY FOLLOWING THIS TR IBUNAL DECISION, WE HOLD THAT IN THE PRESENT CASE ALSO, SINCE BILLS FOR REIMBURSE MENT OF EXPENDITURE HAVE BEEN RAISED BY THE COMMISSION AGENT SEPARATELY, TDS WAS NOT REQUIRED TO BE DEDUCTED FROM SUCH REIMBURSEMENT OF EXPENSES AND AS A CONSEQUENCE, SECTION 40 (A) (IA) IS NOT APPLICABLE WITH REGARD T O SUCH PAYMENTS. THE TRIBUNAL DECISION CITED BY THE AR OF THE ASSESSEE RENDERED I N THE CASE OF MODICON NETWORK PRIVATE LTD AND GRANDPRICKS FAB PRIVATE LTD ALSO SUPPORT THE CASE OF THE ASSESSEE AND HENCE, BY RESPECTFULLY FOLLOWING A LL THE ABOVE TRIBUNAL DECISIONS, WE HOLD THAT NO TDS IS REQUIRED TO BE DE DUCTED IN THE PRESENT CASE FOR REIMBURSEMENT OF EXPENSES FOR WHICH SEPARATE BI LLS WERE RAISED BY THE COMMISSION AGENT AND HENCE, THE PROVISIONS OF SECTI ON 40 (A) (IA) IS NOT APPLICABLE TO SUCH PAYMENTS. THEREFORE, DISALLOWANC E MADE BY THE ASSESSING OFFICER IS TO BE DELETED.' FROM THE ABOVE IT IS CLEAR THAT THE JURISDICTIONAL TRIBUNAL IN THE CASE OF PAYMENT TO CUSTOMHOUSE AGENT HELD THAT NO TDS IS RE QUIRED TO BE DEDUCTED IN THE CASE WHERE REIMBURSEMENT BILLS WERE SEPARATE LY RAISED. APPELLANT HAS ALSO MADE PAYMENT TO CLEARING AND FORWARDING AGENTS AND SEPARATE BILLS WERE RAISED IN RESPECT OF REIMBURSEMENT OF EXPENSES INCU RRED BY THE AGENT ON BEHALF OF APPELLANT. THE FACT THAT SEPARATE BILLS W ERE ISSUED FOR SERVICES AND FOR REIMBURSEMENTS IS NOT IN DISPUTE AS PER ASSESSM ENT ORDER. SINCE FACTS OF THE APPELLANT'S CASE ARE IDENTICAL TO THE CASE IN W HICH JURISDICTIONAL TRIBUNAL DECIDED THIS ISSUE IN FAVOUR OF APPELLANT, RESPECTF ULLY FOLLOWING THE DECISION OF JURISDICTIONAL TRIBUNAL, IT IS HELD THAT APPELLANT WAS NOT LIABLE TO DEDUCT TDS ON REIMBURSEMENT OF EXPENSES INCURRED BY THE AGENT ON ITS BEHALF. CONSEQUENTLY THE DISALLOWANCE IN RESPECT OF THESE CLAIMS UNDER S ECTION 40 (A) (IA) CANNOT BE MADE. THE ADDITION MADE BY THE ASSESSING OFFICER IS THEREFORE DELETED TO THE EXTENT OF RS.76,78,030. ITA NO.2446/AHD/2011 (ACIT (OSD) VS. DUTRON PLASTIC S LTD.) A.Y. 2008-09 - 4 - 7. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7.1 BEFORE US, LD. D.R. POINTED TO THE VARIOUS OBSE RVATIONS OF ASSESSING OFFICER AND SUPPORTED THE ORDER OF ASSESSING OFFICE R. 8. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTING RELIEF TO THE ASSES SEE HAS GIVEN A FINDING THAT SEPARATE BILLS WERE RAISED BY THE AGENTS TOWARDS TH E EXPENSES WHICH WERE REIMBURSABLE AND THAT THE FACTS OF THE PRESENT CASE WERE IDENTICAL TO THAT IN CASE OF M/S. OM SATYA EXIM PRIVATE LTD., WHICH WAS DECIDED BY THE CO- ORDINATE BENCH OF AHMEDABAD IN ITA NO.1335/AHD/2010 , ORDER DATED 13.05.2011 AND RELYING ON THE AFORESAID ORDER OF TR IBUNAL, HELD THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON THE REIMBURSEMENT O F EXPENSES INCURRED BY THE AGENT ON ASSESSEES BEHALF. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE AS TO HOW THE DEC ISION IN CASE OF M/S. OM SATYA EXIM PRIVATE LTD.(SUPRA) THAT HAS BEEN RELIED UPON BY LD. CIT(A) WOULD NOT BE APPLICABLE TO THE FACTS IN THE PRESENT CASE OR THAT THE AFORESAID DECISION OF THE AHMEDABAD TRIBUNAL HAS BEEN SET ASIDE BY HIG HER JUDICIAL FORUM. BEFORE US, REVENUE HAS ALSO NOT PLACED ON RECORD AN Y CONTRARY BINDING DECISION. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A). THUS, THIS GROUND OF REVENUE IS D ISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 16 TH NOV. 2015 SD/- SD/- (S. S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD: DATED 16/11/2015 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT ITA NO.2446/AHD/2011 (ACIT (OSD) VS. DUTRON PLASTIC S LTD.) A.Y. 2008-09 - 5 - 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0