The Assistant Commissioner of Income Tax, Circle-1 (1), Panaji., Panaji V. M/s Zephyr Biomedicals., Goa

ITA 299/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1348 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Assessee Lawyers: LORENCE J MALEKAR
• Section: 194C; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 298/PNJ/2015 : (A.Y 2011 - 12) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PANAJI, GOA. (APPELLANT) VS. M/S. ORCHID BIOMEDICAL SYSTEMS GROUND FLOOR, GEETANJALI BUILDING, DR. REGO BAGH ALTO, SANTACRUZ, BAMBOLIM, GOA PAN : AAAFO4304K (RESPONDENT) ITA NO. 299/PNJ/2015 : (A.Y 2011 - 12) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PANAJI, GOA. (APPELLANT) VS. M/S. ZEPHYR BIOMEDICALS PLOT NO. M46/47, PHASE IIIB, VERNA INDUSTRIAL ESTATE, VERNA, GOA (RESPONDENT) PAN : AAAFZ1800B ASSESSEES BY : PRAMOD Y. VAIDYA, ADV., MANJUNATH HEGDE, CA & LORENCE J. MALEKAR, CA REVENUE BY : SIDDAPPAJI R.N, DR DATE OF HEARING : 05/10/2015 DATE OF PRONOUNCEMENT : 05/10/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 298/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) , PANAJI - 1 IN THE CASE OF M/S. ORCHID BIOMEDICAL SYSTEMS IN ITA NO. 230/PNJ/2013 - 14 DT. 20.3.2015 FOR THE A.Y 2011 - 12 AND ITA NO. 2 ITA NO S . 2 98 & 299 /PNJ/2015 (A.Y : 20 11 - 1 2 ) 299/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), PANAJI - 1 IN THE CASE OF M/S. ZEPHYR BIOMEDICALS IN IT A NO. 348/PNJ/2013 - 14 DT. 20.3.2015 FOR THE A.Y 2011 - 12. SHRI PRAMOD Y. VAIDYA, ADVOCATE ALONGWITH SHRI MANJUNATH HEGDE, CA & SHRI LORENCE J. MALEKAR, CA REPRESENTED ON BEHALF OF THE ASSESSEE S AND SHRI SIDDAPPAJI R.N , LD. DR REPRESENTED ON BEHALF OF THE R EVENUE. 2. AS THE ISSUES IN BOTH THE APPEALS ARE IDENTICAL, SAME ARE DISPOSED OFF BY THIS COMMON ORDER. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CAS E. 2. THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS 1 ,74,34,8 3 6/ - IN RESPECT OF THE PAYMENT MADE BY THE ASSESSEE TOWARDS FREIGHT TO FORWARDING AND CLEARING AGENTS, WITHOUT DEDUCTION OF TDS U/S.4 0 (A)(IA) R.W.S. 194C OF I.T. ACT, 1961. 3. THE LD CIT(A) HAS ERRED IN NOT APPRECIATING CBDT CIRCULAR NO. 715, DATED 08.08.1995 WHEREIN IT IS CLARIFIED THAT ANY PAYMENT MADE TO FORWARDING AND CLEARING AGENTS WOULD BE LIABLE FOR DEDUCTION OF TAX AT SOURCE. 4. THE LD CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE JURISDICTIONAL PANAJI BENCH OF ITAT, IN THE ASSESSEE'S OWN CASE, HAS CONFIRMED THE ORDER OF THE AO AND SET ASIDE THE ORDER OF CIT(A) ON THE SAID ISSUE, VIDE ITS ORDER IN ITA NO. 1 22/PNJ/2 01 4, DATE D 16.01.2015, FOR A.Y. 2009 - 10. 5. THE LD CIT(A) HAS ERRED IN NOT FOLLOWING THE ORDER PASSED IN THIS CASE BY PANAJI BENCH OF ITAT FOR AN EARLIER A.Y. ON THE SAME ISSUE, EVEN THOUGH HE IS BOUND TO FOLLOW DECISIONS OF SUPERIOR LEGAL AUTHORITIES. 6. FOR THE SE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF THE HEARING, THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER RESTORED. 3 ITA NO S . 2 98 & 299 /PNJ/2015 (A.Y : 20 11 - 1 2 ) 4. IT WAS SUBMITTED BY THE LD. DR THAT THE ISSUE IN APPEAL WAS AGAINST THE ACTION OF LD . CIT(A) IN DELETING THE ADDITION MADE BY THE AO BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) R.W.S. 194C OF THE ACT IN RESPECT OF PAYMENT MADE BY THE ASSESSEE S TOWARDS FREIGHT TO THE FORWARDING AND CLEARING AGENTS WITHOUT DEDUCTING TDS. IT WAS THE SUBMIS SION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 122/PNJ/2014 IN THE CASE OF M/S. ORCHID BIOMEDICAL SYSTEMS AND IN ITA NOS. 121 & 309/PNJ/2014 IN THE CASE OF M/S. ZEPHY R BIOMEDICALS VIDE ORDER DT. 16.1.2015. IT WAS THE SUBMISSION THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAD REVERSED THE ORDER OF THE LD. CIT(A) AND HAD UPHELD THE DISALLOWANCE MADE BY THE AO. 5. IN REPLY, THE LD. AR SUBMITTED THAT IN THE DECISION REFE RRED TO BY THE LD. DR, THE ASSESSEE S HAD NOT BEEN ABLE TO PROVE THAT THE PAYMENTS MADE TO THE CLEARING AND FORWARDING AGENTS WERE REIMBURSEMENT. HE DREW OUR ATTENTION TO PAGES 69 TO 80 OF THE PAPER BOOK TO SUBMIT THAT THE PAYMENTS MADE BY THE ASSESSEE S TO THE VARIOUS FORWARDING AND CLEARING AGENTS WERE IN FACT REIMBURSEMENT OF THE EXPENSES INCURRED BY THE FORWARDING AND CLEARING AGENTS. IT WAS THE SUBMISSION THAT THE ISSUE WAS LIABLE TO BE GIVEN A FRESH LOOK. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS . THE CLAIM OF THE ASSESSEES THAT THE PAYMENTS TO THE CLEARING AND FORWARDING AGENTS WERE ONLY REIMBURSEMENT WOULD NOT HELP THE CASE OF THE ASSESSEES INSOFAR AS NONE OF THE BILLS OF THE CLEARING AND FORWARDING AGENTS SHOW THAT THE EXPENSES CLAIMED WERE CL EARING AND FORWARDING EXPENSES. IN FACT, THE BILLS RAISED ARE CLEAR - CUT BILLS RAISED ON THE ASSESSEES HEREIN AND THEY DO CONTAIN THE BREAK - UP OF THE VARIOUS HEADS BUT NOWHERE IS THERE A CLAIM OF REIMBURSEMENT. FURTHER, WHEN A BILL IS RAISED BY A CLEARING AND FORWARDING AGENT ON AN ASSESSEE, THE BILLS IS A CONSOLIDATED BILL. THE ASSESSEE CANNOT BREAK - UP THE SAID BILL INTO REIMBURSEMENT 4 ITA NO S . 2 98 & 299 /PNJ/2015 (A.Y : 20 11 - 1 2 ) AND CHARGES. THIS IS BECAUSE THE ASSESSEE IS NOT IN ANY WAY ENTITLED TO QUANTIFY THE INCOME OF THE CLEARING AND FORWARDIN G AGENT. WHAT IS THE COMMISSION OF THE CLEARING AND FORWARDING AGENT FROM THE AIRLINES IS NOT KNOWN TO THE ASSESSEE. SIMILAR IS THE CASE IN RESPECT OF OTHER EXPENSES ALSO. IN THESE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE THAT THE EXPENSES ARE REIMBURSE MENT AND CONSEQUENTLY ARE NOT LIABLE FOR TDS WOULD NOT BE A GROUND FOR NON - DEDUCTION OF TDS. FURTHER, IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR, ON IDENTICAL FACTS THE CO - ORDINATE BENCH OF THIS TRIUNAL HAD ALREADY TAKEN DECISION AND NO CH ANGE IN FACTS HAVE ALSO BEEN BROUGHT TO THE ATTENTION OF THE TRIBUNAL. IN FACT, BOTH THE LD. DR AND THE LD. AR ON BEHALF OF THE ASSESSEES ADMIT THAT THE FACTS REMAIN THE SAME. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE WHEREIN IT HAS BEEN HELD AS FOLLOWS : 15. IN VIEW OF THE AFORESAID DISCUSSION AND THE FACT THAT THE HON'BLE GUJARAT HIGH COURT AND HON'BLE CALCUTTA HIGH COURT HAD DECIDED THE ISSUE ON MERIT, WE DO NOT AGREE WITH THE ALTERNATE SUBMISSION OF THE ASSESSEE AND ARE OF THE VIEW THAT THE DECISION OF THE BOMBAY BENCH OF THE TRIBUNAL IN ITA NO. 1871/MUM/2013 IN THE CASE OF M/S. ARCADIA SHARE & STOCK BROKERS PVT. LTD. VS. DCIT WILL NOT ASSIST THE ASSESSEE AS THIS DECISION HAS SIMPLY TOOK THE VIEW THAT THE ISSUE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) WHILE THE FACTS ARE NOT SO. W E HAVE ALSO GONE THROUGH THE DECISION OF THE BANGALORE BENCH IN DCIT VS. ANANDA MARAKALA DT. 13.9.2013 (150 ITD 323). WE NOTED THAT IN THIS DECISION THE TRIBUNAL TOOK THE VIEW THAT THE DIFFERENT HIGH COURTS HAVE TAKEN DIVERGENT VIEWS ON THE IMPUGNED ISSUE AND THEREFORE THEY HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEE. WE HAVE ALREADY DISCUSSED THAT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) THE QUESTION BEFORE THE HON'BLE HIGH COURT DID NOT RELATE TO PAYABLE OR PAID AND THE HON'BLE HIGH COURT HAS NOT DECIDED THE QUESTION ON MERIT BUT HAS SIMPLY MADE OBSERVATION AS THE COUNSEL FOR THE DEPARTMENT DID NOT QUESTION THE LAW LAID DOWN BY THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT, 16 ITR (TRIB) 1 (SUPRA). EVEN THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT AS WELL AS THE HON'BLE GUJARAT HIGH COURT WHICH WERE PRIOR TO THE DECISION RENDERED BY THE HON'BLE 5 ITA NO S . 2 98 & 299 /PNJ/2015 (A.Y : 20 11 - 1 2 ) ALLAHABAD HIGH COURT WERE NOT CITED BEFORE THE HON'BLE ALLAHABAD HIGH COURT AS THE QUESTION INVOLVED DID NOT RELATE TO THIS ISSUE. WE, THEREFORE, ARE OF THE VIEW THAT THE DECISION IN THE CASE OF M/S. ARCADIA SHARE & STOCK BROKERS PVT. LTD. VS. DCIT (SUPRA) WILL NOT ASSIST THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) IN ALL THE CASES AND RESTORE THE ORDER OF AO BY ALLOWING THE APPEALS OF THE REVENUE. THE ORDER OF THE LD. CIT(A) STANDS REVERSED AND THAT OF THE AO RESTORED. 7 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/10/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 05/10/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENTS (I) M/S. ORCHID BIOMEDICAL SYSTEMS & (II) M/S. ZEPHYR BIOMEDICALS (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 6 ITA NO S . 2 98 & 299 /PNJ/2015 (A.Y : 20 11 - 1 2 ) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 05 / 1 0/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05/10/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05/10/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05/10/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05/10/2015 SR.PS 6. DATE OF PRONOUNCEMENT 05/10/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05/10/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER