DCIT, CHENNAI V. M/s. Dart Global Logistics Pvt. Ltd., CHENNAI

ITA 3157/CHNY/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2955 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT
• Assessee Lawyers: G SEETHARAMAN
• Keywords: TDS
• Section: 40(a)(ia); 194C; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI , . , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NO.3157/CHNY/2016 /ASSESSMENT YEAR: 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1(1), CHENNAI-600 034. VS M/S.DART GLOBAL LOGISTICS P.LTD, 31, VELACHERY ROAD, LITTLE MOUNT, SAIDAPET, CHENNAI-600 015. PAN:AAACD3181G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. B.SAGADEVAN,JCIT /RESPONDENT BY : MR.G.SEETHARAMAN, C.A /DATE OF HEARING : 06.03.2019 /DATE OF PRONOUNCEMENT : 06.03.2019 / O R D E R PER S.JAYARAMAN, AM: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, IN ITA NO.80/CIT(A)-1/2015-16 DATED 08.08.2016 FOR THE AS SESSMENT YEAR 2012-13. 2. M/S. DART GLOBAL LOGISTICS P.LTD., THE ASSES SEE, IS IN THE BUSINESS OF INTERNATIONAL FREIGHT FORWARDING I.E., IT SHIPS GOODS FROM THE LOCAL CUSTOMER AND FORWARDS IT TO VARIOUS COUNTRIES IN THE WORLD. SIMILARLY, IT GETS GOODS FROM FOREIGN SHIPPERS / AIRLINES. WHILE MAKING THE 2 ITANO.3157/CHNY/2016 ASSESSMENT FOR THE ASSESSMENT YEAR 2012-13, THE AS SESSING OFFICER DISALLOWED VARIOUS EXPENSES UNDER SECTION 40(A)(I A) FOR THE REASON THAT SUCH EXPENDITURES DID NOT SUFFER TDS. AGGRIEVED, TH E ASSESSEE FILED AN APPEAL BEFORE CIT(A). THE LD. CIT(A) ALLOWED THE AP PEAL. AGGRIEVED AGAINST THAT ORDER, THE REVENUE FILED THIS APPEAL W ITH THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON MADE U/S.40(A)(IA) OF THE IT ACT, WITHOUT APPRECIATING T HE FACT THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE IN T HIS CASE, AS ASSESSEE IS NEITHER A CONSIGNMENT AGENT NOR A CLEAR ING AND FORWARDING AGENT IN ORDER TO TERM THE PAYMENTS OF T HE ASSESSEE COMPANY TO VARIOUS PARTIES AS REIMBURSEMENTS, AND F URTHER THE INVOICES RAISED BY THE COMPANY DOES NOT INDICATE TH AT THE PAYMENTS ARE REIMBURSEMENTS?. 2.2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HE FACT THAT, THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE PAYEE S IS NOT PRINCIPAL- AGENT RELATION IN ORDER TO RECOGNIZE THE PAYMENTS AS REIMBURSEMENTS, AND FURTHER SUCH PAYMENTS ARE NOT S UPPORTED BY WRITTEN AGREEMENTS OR CONTRACTS, INDICATIVE OF REI MBURSEMENTS, AND THEREFORE LIABLE FOR TAX DEDUCTION AT SOURCE. 2.3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT, IF THE RELATIONSHIP BETWEEN THE ASSESSEE (DEDUCTOR) AND TH E PAYEE (DEDUCTEE) IS PRINCIPAL- AGENT RELATION, THERE OUGH T TO BE COMMISSION PAYMENTS FOR THE SERVICES RENDERED BY TH E AGENTS, WHEREAS IN THIS PARTICULAR CASE, THERE IS NO SUCH C OMMISSION PAYMENTS , WHICH MEANS THE PARTIES ARE NOT HAVING P RINCIPAL - AGENT RELATION AND THEREFORE THE PAYMENTS ARE NOT REIMBURSEMENTS AND LIABLE FOR TAX DEDUCTION AT SO URCE. 3. THE LD. DR PRESENTED THE CASE ON THE LINES I N WHICH THE ASSESSMENT WAS MADE BY THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE IS NEITHER A CONSIGNMENT AGENT NOR A CIF AGENT, IT HAS NOT 3 ITANO.3157/CHNY/2016 FILED ANY PROOF IN CONNECTION WITH REIMBURSEMENT O F EXPENDITURE, AGENT AND PRINCIPAL RELATIONSHIP IS NOT ESTABLISHED , THE INVOICES DID NOT SHOW ANY AGENT AND PRINCIPAL RELATIONSHIP AND THERE WAS NO WRITTEN CONTRACT. IN THE CIRCUMSTANCES, THE CLAIM OF REIMBURSEMENT OF CHARGES DID NOT ARISE AND HENCE, HE PLEADED THAT THE ORDER OF T HE ASSESSING OFFICER MAY BE RESTORED. 4. PER CONTRA, THE LD. AR INVITED OUR ATTENTION TO THE ORDER OF THE LD CIT(A) AND SUBMITTED AS UNDER : IN RESPECT OF FREIGHT CHARGES TO SHIPPING LINES AN D AIRLINES AT 19,35,79,659/-, THE LD. AR INVITED OUR ATTENTION TO THE ORDER PASSED BY THE ASSESSING OFFICER DATED 29.10.2015 UNDER SECTIO N 154 , WHEREIN THE ASSESSING OFFICER HAD ACCEPTED THE PLEA THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS IN RESPECT OF THE EXEMPTED PARTIES C OVERED U/S.197. THEREFORE, THIS ISSUE IS SETTLED AND DOES NOT SUR VIVE. IN RESPECT OF AIRPORT / PORT CHARGES OF 20,93,644/-, CUSTOMS CLEARANCE CHARGES, SHIPPING LINE CHARGES, DOCUMENTATION CHARG ES AT 2,95,95,144/- AND HANDLING CHARGES, RENT PAID FOR STORAGE OF GOODS, COST OF CONSUMABLES OF 74,71,127/-, THE LD. AR SUBMITTED THAT TDS IS NOT REQUIRED TO BE DEDUCTED FOR REIMBURSEMENT OF A CTUAL EXPENDITURE INCURRED ON BEHALF OF THE CUSTOMER AS : 4 ITANO.3157/CHNY/2016 A. THE ASSESSEE ACTED ON BEHALF OF ITS CUSTOMERS- F OR THE GOODS TRANSPORTED BELONGED TO THE CUSTOMERS. B. THE ASSESSEE IS NEVER THE OWNER OF THE GOODS KEP T IN THE WAREHOUSE. C. IN CASE OF DAMAGES TO THE CARGO WHILE BEING KEPT IN THE PREMISES OF THE AFORESAID CONCERNS, THE CLAIM CAN B E MADE ONLY BY THE OWNER OF THE GOODS. D. DUTIES AND TAXES IN RESPECT OF THE GOODS IS THE LIABILITY OF THE OWNERS AND NOT OF THE ASSESSEE. 4.1 THUS, THE LD AR PLEADED THAT THE ASSESSEE ACT ED AS PURE AGENT OF THE CUSTOMER (EXPORTER/IMPORTER OF THE GO ODS), WHILE INCURRING EXPENSES IN CONNECTION WITH TRANSPORTATION, STORAGE OF GOODS-IN-TRANSIT, COMPLIES WITH DOCUMENTATION AND SHIPPING REQUIREMEN TS, CLEARS THE GOODS WITH CUSTOMS, ETC. FURTHER, HE SUBMITTED T HAT THE LD. CIT(A) AFTER EXAMINING THE BOOKS OF ACCOUNTS HAS GIVEN A C LEAR FINDING THAT (A) PAYMENTS AGGREGATING TO 308,42,639 ( 295,95,144 (PARA 11) AND 12,47,495 (PARA 12) OF THE CIT(A)S ORDER) DID NOT EXCEED THE THRESHOLD LIMITS U/S 194C AND THAT THE AO IN HIS ORDER HAS AL SO NOT STATED THAT THE PAYMENTS WERE IN EXCESS OF THE THRESHOLD LIMITS; (B) FOR PAYMENTS AGGREGATING TO 29,52,952, TDS HAS BEEN DEDUCTED; AND (C) FOR THE BALANCE OF 53,64,324 TDS IS NOT APPLICABLE AS THEY ARE REBATES, DISCOUNTS AND REIMBURSEMENT OF EXPENSES. 5 ITANO.3157/CHNY/2016 THEREFORE, THE LD. AR SUBMITTED THAT THE ORDER OF THE LD CIT(A) MAY BE CONFIRMED. 5. THE LD. DR REBUTTED THE ARGUMENTS STATING THAT ASSESSEE FURNISHED DETAILS RELATING TO CUSTOMS CLEARANCE CH ARGES, SHIPPING LINE CHARGES , DOCUMENTATION CHARGES ETC. DURING THE C OURSE OF PROCEEDING U/S.154 I.E AFTER THE COMPLETION OF THE ASSESSMENT . SINCE THE ASSESSING OFFICER HAS ALREADY COMPLETED THE ASSESSMENT, H E REFUSED TO ENTERTAIN THE CLAIM U/S.154 BUT FOR THE PRIMA FACIE CASE. THE LD. CIT(A) HAS NOT GIVEN AN OPPORTUNITY TO THE ASSESSING OFFIC ER TO EXAMINE THESE ISSUES. HOWEVER, BASED ON THE ASSESSEES PLEA, TH E LD.CIT(A) ALLOWED THE APPEAL. THEREFORE, LD. DR PLEADED THAT THE REVE NUES APPEAL MAY BE ALLOWED. 6. WE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH THE RELEVANT MATERIAL. AS RIGHTLY PLEADED BY THE LD. AR , THE ISSUE IN CONNECTION WITH THE FREIGHT CHARGES TO SHIPPING LINES & AIRL INES DOES NOT SURVIVE, SINCE THE ASSESSING OFFICER HAS ACCEPTED THE ASSE SSEES STAND IN HIS SUBSEQUENT ORDER PASSED U/S.154. IN RESPECT OF AIR PORT/PORT CHARGES, SINCE THESE WERE REIMBURSED BY THE CLIENTS OF THE A SSESSEE TO THE ASSESSEE TOWARDS THE MONIES DEFRAYED BY THE ASSESSE E TOWARDS THESE AUTHORITIES, THE CIT(A) HAS RIGHTLY DELETED THE ADD ITION. THEREFORE, THIS ISSUE ALSO DOES NOT SURVIVE. 6 ITANO.3157/CHNY/2016 6.1 IN RESPECT OF OTHER TWO ISSUES, VIZ., C USTOM CLEARANCE CHARGES, SHIPPING LINE CHARGES, DOCUMENTATION CHARGES AT 2,89,27,057 AND OTHER PAYMENTS VIZ, HANDLING CHARGES, RENT ETC AT 74,71,127/-. SINCE THE ASSESSEE HAS NOT LAID PROPER MATERIALS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT, THESE ISSUES ARE R EMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH EXAMINATI ON. THE ASSESSEE SHALL PLACE ALL THE MATERIALS IN SUPPORT OF ITS CON TENTIONS AND COMPLY TO THE REQUIREMENTS OF ASSESSING OFFICER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER AFTER AFFORDING ADEQUATE OPPORT UNITY TO THE ASSESSEE SHALL PASS A SPEAKING ORDER. THE CORRESPONDING GR OUNDS ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MARCH, 2019 AT CHENNAI SD/- SD/- ( ) ( . ) (GEORGE MATHAN) (S.JAYARAMAN) ( ! / JUDICIAL MEMBER) ( ! / ACCOUNTANT MEMBER) /CHENNAI, # /DATED 06 TH MARCH, 2019 SOMU '( )( /COPY TO: 1. APPELLANT 2. RESPONDENT 3. * ( ) /CIT(A) 4. * /CIT 5. ( . /DR 6. 1 /GF