ACIT, Faridabad V. M/s. Arjun Vilas (Exim) International PVt. Ltd, Faridabad

ITA 3414/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0838 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 03-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C GUPTA
• Keywords: Non-deduction of tax; TDS
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.3414/DEL./2009 (ASSESSMENT YEAR : 2005-06) ACIT, CIRCLE II, VS. M/S ARJUN VILAS (EXIM) INTER NATIONAL P. LTD., FARIDABAD. PLOT NO.36, SECTOR 25, FARIDABAD. (PAN/GIR NO.AAACH8149N) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI P.C. GUPTA. SR.DR ORDER PER K.D. RANJAN: AM THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 2 005-06 ARISES OUT OF ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS), FARIDABAD. T HE ONLY ISSUE FOR CONSIDERATION RELATES TO DELETING THE ADDITION OF RS.3,14,167/- A ND RS.13,22,440 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON-DEDUCTION OF TAX ON PAYME NT MADE TO M/S ALBATROSS SHIPPING (P) LTD. AND CMA, CGM GLOBAL RESPECTIVELY. 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT T HE ASSESSING OFFICER DISALLOWED FREIGHT AND CARTAGE EXPENSES ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE AND, THEREFORE, THE PAYMENT WAS NOT ALLOWABL E AS DEDUCTION U/S 40(A)(IA) OF THE ACT. 3. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), IT WAS SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON-FERROUS METAL SCRAP. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD PAID RS.1,13,25,194/- TO VARIOUS TRANS PORTERS AND SHIPPING AGENCIES. WHILE TDS HAD BEEN MADE IN RESPECT OF PAYMENTS OF RS.16,6 3,509/-, BUT NO TDS WAS MADE OUT OF THE BALANCE PAYMENT OF RS.96,61,685/-. THE PAYM ENTS WORTH RS.4,15,065/- HAD BEEN MADE IN RESPECT OF PETTY ITEMS WHICH WERE DEBITED U NDER FREIGHT AND CARRIAGE INWARD ACCOUNT. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED B Y THE ASSESSING OFFICER, THE ASSESSEE I.T.A. NO.3414/DEL./2009 (A.Y. : 2005-06) 2 CONTENDED THAT CIRCULAR NO.723 DATED 19.9.1995 ISSU ED BY THE CBDT CLEARLY MENTIONED THAT NO TAX WAS TO BE DEDUCTED FORM PAYMENT TO FORE IGN SHIPPING LINES OR TO THEIR LOCAL AGENT ON ACCOUNT OF CARRIAGE OF GOODS AND PASSENGER S AS THE FOREIGN SHIPPING LINES WERE TAXED UNDER SUB-PROVISO TO SECTION 172 OF THE ACT. THE ASSESSING OFFICER EXAMINED THE CONTENTION OF THE ASSESSEE AND AFTER ELABORATING TH E DISCUSSION, HE FINALLY CAME TO THE CONCLUSION THAT THE TDS WAS ESSENTIALLY TO BE MADE BY THE ASSESSEE OUT OF THE PAYMENTS TO THE TRANSPORTERS EXCEPT FOR PAYMENTS (RS.20,42,2 52/-) TO MSC AGENCY (INDIA) PVT. LTD. SINCE NO PAYMENT WAS MADE ON AMOUNT OF RS.70,04,368 /-, THE AMOUNT WAS NOT ALLOWABLE AS DEDUCTION. 4. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), THE ASSESSEE FILED APPLICATION U/S 46A(1)(C) IN CASE OF ALBATROSS SHIPPING (P) LTD . TO WHICH PAYMENT OF RS.3,14,167/- WAS MADE. IT WAS SUBMITTED THAT A LETTER ISSUED BY ADIT (INTERNATIONAL. TAXATION)- XXXII, MUMBAI IN WHICH 100% RELIEF WAS GRANTED WAS FILED BEFORE THE ASSESSING OFFICER. HOWEVER, THIS LETTER WAS REJECTED BY THE ASSESSING OFFICER BECAUSE THERE WAS OVER WRITING BY WHICH FINANCIAL YEAR 2005-06 WAS CH ANGED TO 2004-05. IN THIS MATTER, IT WAS SUBMITTED THAT IT WAS TRUE THAT THE OVER WRITIN G WAS MADE, BUT IT WAS FURTHER CORRECTED BY PUTTING THE FINANCIAL YEAR 2004-05, OPPOSITE THE LINE MENTIONING THE FINANCIAL YEAR. FURTHER OVER WRITING IN THE LETTER WAS AUTHENTICATE D BY PUTTING IS SIGNATURE BY THE ISSUING AUTHORITY. AS SUCH, IT WAS DULY AUTHENTICATED. HE NCE, THIS DOCUMENT WAS TO BE ACCEPTED AND ADDITION OF RS.3,14,167/- WAS NOT JUSTIFIED. A S REGARDS THE AMOUNT PAID TO CMA CGM GLOBAL, THE ASSESSEE IN SUPPORT OF THE CLAIM SU BMITTED THAT PROVISIONS OF SECTION 172 OF THE ACT WERE APPLICABLE. THE LETTER FURNISH ED BY THE PARTY TO THE ASSESSEE DECLARING THAT SECTION 172 OF THE I.T. ACT, 1961 AP PLIED TO IT WAS FILED UNDER RULE 46A. THE ASSESSING OFFICER OBSERVED THAT THE DATE WAS CH ANGED IN THE LETTER. IN ORDER TO CONFIRM THE FACTS, THE ASSESSEE FILED ANOTHER LETTE R WHICH HAD THE SAME CONTENTS IN THE ORIGINAL ONE AND IT WAS DATED 01.04.2004. IN THIS LETTER THERE WAS NO OVER WRITING WHICH WAS ACKNOWLEDGED BY HER, BUT IT WAS REJECTED ON THE BASIS THAT IT WAS DATED 1.4.2009. THE ASSESSEE RELIED ON THE DECLARATION MADE BY THE PART Y U/S 172 WHICH WAS NOT FOUND TO BE FALSE. SIMILAR DECLARATION WAS ACCEPTED BY THE ASS ESSING OFFICER IN THE CASE OF M/S MERIDIAN SHIPPING AGENCY P. LTD. IT WAS SUBMITTED THAT ADDITION OF RS.13,22,440/- MAY BE DELETED. I.T.A. NO.3414/DEL./2009 (A.Y. : 2005-06) 3 5. THE LD.COMMISSIONER OF INCOME-TAX (APPEALS) CONS IDERED THE SUBMISSIONS MADE BY THE ASSESSEE. HE EXAMINED THE MATERIAL FILED BE FORE HIM. AS REGARDS THE PAYMENT MADE TO ALBATROSS SHIPPING P. LTD., THE LD.COMMISSI ONER OF INCOME-TAX (APPEALS) WAS OF THE VIEW THAT CLAIM OF THE ASSESSEE WAS REJECTED ON FLIMSY GROUND. THE ADIT (INTL. TAXATION) HAS ISSUED CERTIFICATE WHICH HAS TO BE BE LIEVED UNLESS PROVED OTHERWISE. HE ACCORDINGLY DELETED THE ADDITION OF RS.3,14,167/-. AS REGARDS THE AMOUNT OF RS.13,22,440/- PAID TO CMA, CGM GLOBAL, THE LD.COMM ISSIONER OF INCOME-TAX (APPEALS) FOUND THAT SECOND LETTER WAS AUTHENTICATE D BY THE SIGNATURE ON THE OVER WRITING WHICH WAS VERIFIABLE FROM THE DOCUMENTS SUBMITTED D URING THE REMAND REPORT PROCEEDINGS. THE EVIDENCE WAS RELEVANT AS DECLARAT ION BY M/S MERIDIAN SHIPPING AGENCY P LTD. HAS BEEN ACCEPTED BY THE ASSESSING OF FICER. THEREFORE, THERE WAS NO REASON AT ALL AS TO WHY THE DOCUMENT SHOULD NOT BE ACCEPTED IN THIS CASE. HE ACCORDINGLY DELETED THE ADDITION. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDER OF LD.COMMISSIONER OF INCOME-TAX (AP PEALS), WE FIND THAT HE HAS EXAMINED THE ISSUE IN DETAIL AND HAS COME TO A FIND ING THAT NO DISALLOWANCE COULD BE MADE IN THE CASE OF ASSESSEE. THE ASSESSING OFFICE R HAS REJECTED THE CLAIM OF THE ASSESSEE MERELY ON FLIMSY GROUND. THE LD.COMMISSIO NER OF INCOME-TAX (APPEALS) HAS GIVEN POSITIVE FINDING THAT DISALLOWANCE WOULD NOT BE MADE. THE FINDINGS GIVEN BY THE LD.COMMISSIONER OF INCOME-TAX (APPEALS) HAVE NOT BE EN CONTROVERTED BY THE LD.SR.DR DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE U S. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.COMMISSIONER OF IN COME-TAX (APPEALS) DELETING THE ADDITION. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 8. ORDER PRONOUNCED IN OPEN COURT AFTER CONCLUSION OF THE HEARING ON 05.10.2009. SD/- SD/- [A.D. JAIN ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : OCT. 05, 2009. *SKB* COPY OF THE ORDER FORWARDED TO : - I.T.A. NO.3414/DEL./2009 (A.Y. : 2005-06) 4 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS)-II,FARIDABAD. 5. CIT(DR), ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.