ATLANTIC BAY SHIPPING CO., MUMBAI V. DCIT TDS 1(1), MUMBAI

ITA 2777/MUM/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2798 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Rectification of order
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA N O. 2777/MUM./2015 & 3440/MUM/2015 (ASSESSMENT YEAR: 2011 - 1 2 & 2012 - 13 ) M/S. ATLANTIC BAY SHIPPING COMPANY 315, INDIAN SURVEYORS HOUSE 317 - A, 2 ND FLOOR, S.B.S. ROAD FORT, MUMBAI 400 001 PAN NO: AAJFA8327R . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX TDS 1(1) K.G. MITTAL AYURVEDIC HOSPITAL BUILDING CHARNIROAD, MUMBAI 400 002 . RESPONDENT APPELLANT BY : SHRI PIYUSH CHATURVEDI RESPONDENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING 29/10/2018 DATE OF ORDER - 06 / 11 /2018 O R D E R PER: SHAMIM YAHYA THESE ARE THE APPEALS FILED BY ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) IN THE A.Y.2011 - 12 & 2012 - 13. SINCE ISSUES ARE COMMON AND THE APPEALS WERE HEARD TOGETHER, THESE HAVE BEEN DISPOSED OF BY THIS COMMON ORDER. 2. COMMON GROUNDS READ AS UNDER: - ITA NO.2777/MUM/2015 & 3440/MUM/2015 M/S. ATLANTIC BAY SHIPPING CO., 2 1. THE LD. CIT(A) HAS ERRED IN HOLDING THE APPELLANT AS A ASSESSEE IN DEFAULT U/S 201(1) AND 201 (LA) OF THE I.TAX ACT 1964 FOR NOT DEDUCTING THE TAX U/S 194J OF I.T.ACT 1961 ON PAYMENT MADE BY APPELLANT TO THE SEAFARERS . 2. THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT IT IS THE SHIPPING COMPANY WHO ARE TAKING THE BENEFIT OF THE SERVICES THE SEAFARERS, THEY ARE THE ONLY PARTY WHO HAS ENGAGED THE SEAFARERS AND THE APPELLANT DOES NOT COME IN THE PICTURE AT ALL. 3 . THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT AS PER THE REQUIREMENT OF MANPOWER OF SCI, THE APPELLANT ENGAGES THE MANPOWER FOR WHICH TRIPARTITE AGREEMENT IS ENTERED BETWEEN SCI, THE CONCERNED PERSON AND THE APPELLANT AND AS SUCH IN SUCH A SITUATION PROVISIONS OF SECTION 1 94C ARE APPLICABLE FOR THE PURPOSE OF DEDUCTING THE TAX AT SOURCE AND NOT U/S 194J OF THE I.T.ACT . 4. THE APPELLANT CRAVES TO ALTER, AMEND, ADD, DELETE OR MODIFY ANY OF THE ABOVE GROUNDS AS AND WHEN ADVISED. 3. SINCE THE FACTS ARE IDENTICAL, WE ARE REFERRING TO THE FACTS AN D FIGURES FROM A.Y.2011 - 12. ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND WHICH READS AS UNDER: - 'THE LD AO / LD CIT (A) HAS FAILED TO APPRECIATE THAT FOLLOWING JUDGEMENT OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. V/S CIT 293 ITR 226, THE APPELLANT CANNOT BE CALLED ON TO PAY THE TAX WHEN THE TAX HAS DIRECTLY PAID BY THE DEDICATEES (SEA FARERS) AND THEY HAVE FILED THEIR RESPECTIVE RETURN OF INCOME, ACCORDINGLY UP - TO THAT EXTENT THE APPELLANT SHOULD NOT BE TREATED AS ASSESSEE IN DEFAULT WITHIN THE MEANING OF SEC 201(1) & 201(1A) OF THE INCOME TAX ACT 1961. THE APPELLANT PRAY TO THE HON'BLE BENCH TO ISSUE NECESSARY DIRECTION TO THE AO IN RESPECT THEREOF.' 4. BRIEF FACTS OF THE CASE ARE THAT A ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROVIDING S HIPPING CREWS PRIMARILY TO THE SHIPPING CORPORATION OF INDIA I.E. SCI WHICH INVOLVES(I) SUPPLYING OF SHIPPING CREWS ACCORDING TO THE REQUIREMENT OF THE SHIPPING COMPANIES,(II) BILLING THEM FOR ITA NO.2777/MUM/2015 & 3440/MUM/2015 M/S. ATLANTIC BAY SHIPPING CO., 3 THE CREWS WAGES AND ASSESSEE'S SERVICE CHARGES, (III) COLLECT T HE SAME FROM THE SHIPPING COMPANY AND (IV) PAY THE WAGES TO THE CREW RECRUITED AND APPOINTED IN SHIPPING COMPANY WHICH IS FAR LESS THAN THE AMOUNT BILLED TO THE PRINCIPALS SCI. ON GOING THROUGH THE RETURN, A.O. NOTICED THAT ASSESSEE DEDUCTED TAX AT THE RAT E OF 1% FROM THE WAGES PAID TO THE CREW . IN ORDER TO VERIFY THE CORRECTNESS OF TAX DEDUCTION PAYMENT THEREOF A SURVEY U/S.133 OF INCOME TAX ACT WAS CONDUCTED. CONSEQUENT UPON SURVEY IN THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT THE ASSESSEE IS LIABLE TO DEDUCT TAX U/S.192 FROM THE WAGES. HE OBSERVED THAT A LLOWANCES AND BONUS PAID OF RS.11,49,60,003/ - TO THE EMPLOYEES RECRUITED, APPOINTED AND DEPUTED TO PERFORM DUTIES OF THE RESPECTIVE POST IN THE VESSELS OF THE SHIPPING CORPORATION OF INDIA E FFECTED BY THE ASSESSEE FIRM IS NOT CORRECT AS THEY ARE THE WAGES, ALLOWANCES AND BONUS PAID TO EMPLOYEES AND THERE EXISTS EMPLOYER - EMPLOYEE RELATION AS STATED ABOVE. SINCE, THE ASSESSEE HAS NOT DONE SO, THE ASSESSEE WA S THEREFORE HELD TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT . 5. AGAINST THE ABOVE ORDER, ASSESSEE APPEALED BEFORE THE LEARNED CIT(A). LEARNED CIT(A) HELD THAT FROM THE FACTS OF THE RECORD IT WAS FOUND THAT THE SERVICES RENDERED BY THE PARTIES TO THE ASSESSEE TO BE QUALIFYING IN THE NA TURE OF FEES FOR PROFESSI ONAL SERVICES AND PAYMENT MADE WA S LIABLE FOR TAX DEDUCTION U/S.194J. HOWEVER, LEARNED CIT(A) ACCEPTED ASSESSEES ARGUMENT ITA NO.2777/MUM/2015 & 3440/MUM/2015 M/S. ATLANTIC BAY SHIPPING CO., 4 THAT IF THE DEDUCTEES HAVE PAID THE TAXES, THE ASSESSEE CANNOT BE CONSIDERED AS ASSESSEE IN DEFAULT. HENCE , LEARNED CIT(A) DIRECTED THE AO TO MAKE THE COMPUTATIONS APPLYING THE RATIO OF THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF M/S. HINDUSTAN COCA COLA BEVERAGE PRIVATE LIMITED. 6. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HE ARD BOTH THE COUNSEL AND PERUSED THE RECORD. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE TRIBUNAL VIDE ORDER DATED 05/12/2016 HAS CONSIDERED THE SAME ISSUE FOR A.Y.2011 - 12 IN ITA NO. 381/MUM/2015 IN THE CASE OF M/S. DOEHLE DAUNTIC INDIA PVT. LTD. VS . DY. CIT WHEREIN THE TRIBUNAL HELD AS UNDER: - 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAS ACTED AS MANPOWER (MANNING) AGENCY AND IT HAS SELECTED/SUPPLIED EMPLOYEES (SEAFARERS) AS PER THE REQUIREMENT OF SHIPPING COMPANIES. WE NOTICE THAT THE APPOINTMENT LETTER HAS BEEN ISSUED BY THE SHIPPING COMPANY TO THE ASSESSEE HEREIN. A PERUSAL OF TERMS AND CONDITIONS OF THE APPOINTMENT LETTER WOULD SHOW THAT THE RESPONSIBILITY TO COMPLY WITH THE INCOME TAX PROVISIONS IS PLACED UPON THE ASSESSEE. THE ARTICLES OF AGREEMENT FOR EMPLOYMENT OF SEAFARERS HAVE BEEN ISSUED BY THE SHIPPING COMPANY DIRECTLY TO THE EMPLOYEES. 5. IN OUR VIEW, THE NATURE OF RELATIONSHIP BETWEEN THE ASSESSEE AND SHIPPING COMPANY, BETWEEN THE SHIPPING COMPANY AND SEAF ARERS AND BETWEEN THE ASSESSEE AND SEAFARERS HAVE TO BE DETERMINED FIRST, WHICH WILL IN TURN WOULD HELP IN DETERMINING THE NATURE OF LIABILITY UNDER THE INCOME TAX ACT. THE NATURE OF RELATIONSHIP COULD BE DETERMINED BY EXAMINING WHOLE GAMUT OF ACTIVITIES A LONG WITH THE AGREEMENTS AND OTHER DOCUMENTS. A PERUSAL OF THE ORDERS PASSED BY THE TAX AUTHORITIES WOULD SHOW THAT THEY HAVE NOT DETERMINED THE NATURE OF RELATIONSHIP/CONTRACT, AS STATED ABOVE. HENCE THE VIEW OF THE TAX AUTHORITIES THAT THE PROVISIONS OF SEC. 194J WOULD APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, IS NOT SUBSTANTIATED. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND REST ORE THE ISSUE TO THE FILE OF THE AO FOR EXAMINING THE SAME AFRESH. WE ALSO DIRECT THE AO TO GIVE THE BENEFIT OF 3RD PROVISO TO SEC. 201(1) OF THE ACT TO THE ASSESSEE. ITA NO.2777/MUM/2015 & 3440/MUM/2015 M/S. ATLANTIC BAY SHIPPING CO., 5 7. FURTHERMORE, HE HAS SUBMITTED THAT IN THE SIMILAR ISSUE IN THE CASE OF DOEH L E DAUNTIC INDIA PVT. LTD., IN ITA NO.4277/MUM/20 15 VIDE ORDER DATED 24/07/2017 FOR A.Y. 2012 - 13, THE TRIBUNAL HAD FOUND THAT SERVICES WERE COVERED U/S.194J IN AN EXPARTE ORDER WHEREIN THE ABOVE ORDER OF THE TRIBUNAL WAS NO T BROUGHT T O THE NOT IC E OF THE TRIBUNAL. 8. UPON CAREFUL CONSIDERATION, W E FIND THAT THIS DECISION IN THE CASE OF DOEHLE DAUNTIC INDIA PVT. LTD. FOR A.Y. 2012 - 13 WAS RENDERED EXPARTE AND THE ABOVE EARLIER DECISION OF THE TRIBUNAL IN THAT ASSESSEES OWN CASE WAS NOT REFERRED BEFORE IT . A S HELD BY THE HONBLE APEX COURT THE N ON - CONSIDERATION OF CO - ORDINATE BENCH DECISION CAN RENDER THE ORDER OF TRIBUNAL LIABLE TO RECTIFICATION OF MISTAKE APPARENT FROM RECORD . A CCORDINGLY ADHERING TO THE DOCTORINE OF STARE DECISIS , WE FOLLOW THE TRIBUNAL S DECISION IN SIMILAR CASE FOR THE A.Y.2011 - 12 . H ENCE, ACCORDINGLY, WE REMAND THE MATTER TO THE FILE OF THE AUTHORITIES BELOW WITH SAME DIRECTIONS AS IN THE AFORESAID ORDER TO EXAMINE THE APPLICABILITY OF SECTION 194J. BOTH THE COUNSEL FAIRLY AGREED WITH TH IS PROPOSI TION. 9 . NOW, WE DEAL WITH THE ADDITIONAL GROUND RAISED BY LEARNED COUNSEL OF ASSESSEE. IN THE ADDITIONAL GROUND, LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT JUDGEMENT OF M/S. HINDUSTAN COCA COLA BEVERAGE PRIVATE LIMITED SHOULD BE FOLLOWED AND ASSESSEE SHOULD BE GRANTED RELIEF A S TAXES HAVE BEEN PAID BY THE DEDUCTEES , IF NECESSARY . IN THIS REGARD, WE NOTE THAT ITA NO.2777/MUM/2015 & 3440/MUM/2015 M/S. ATLANTIC BAY SHIPPING CO., 6 TH IS DIRECTION BY THE LD. CIT(A) TO THIS VERY EFFECT I S BEING ENFORCED BY THE A.O. AS SUBMITTED BY THE COUNSEL HIMSELF . NO SEPARATE DIRE CTION IN THIS REGARD IS REQUIRED. MOREOV ER, IT IS SETTLED LAW THAT THE HONBLE APEX COURT D ECISION HAS TO BE FOLLOWED BY LOWER AUTHORITIES AND THE TRIBUNAL. 10 . IN THE RESULT, IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , THESE APPEALS FILED BY THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 / 1 1 /2018 S D / - S D / - RAVISH SOOD SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 6 / 1 1 /2018 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI