DCIT (TDS) 1(3), MUMBAI V. MANILAL PATEL CLEARING FORWARDING P.LTD, MUMBAI

ITA 3470/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7732 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAN
• Assessee Lawyers: HIRAL SHAH
• Section: 133A; 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ./ I. T.A. NO 3470 / MUM/ 201 5 ( / ASSESSMENT YEAR : 20 11 - 12 ) DY. COMMISSIONER OF INCOME TAX TDS1(3), ROOM NO.70 3 , 7 TH FLOOR, K.G.MITTAL HOSPITAL BUILDING, CHARNI ROAD, MUMBAI - 400002 / VS. M/S MANILAL PA T EL CLEARING FORWARDING PVT.LTD, KAMER B UILDING, 3 RD FLOOR, 38, KAWASJI PATEL STREET, FORT, MUMBAI - 400001 / APPLICANT BY : SHRI M C OMI NINGSHAN /RESPONDENT BY : MS.HIRAL SHAH / DATE OF HEARING : 23.3.2017 / DATE OF PRONOUNCEMENT : 29. 3 .2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A), MUMBAI, DATED 13.3. 201 5 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2 . GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS UNDER NO LIABILITY TO DEDUCT TAX U/S 1941 OF INCOME TAX ACT 1961, FROM THE PAYMENTS 2 3470 / MUM/ 201 5 MADE ON ACCOUNT OF 'DOCK F EES AND AIRPORT TERMINAL CHARGES' DETERMINED BY THE AO U/S 201(1) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE DEFINITION OF RENT STANDS AMENDED WITH EFFECT FROM. 13.07.2006. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS UNDER NO LIABILITY TO DEDUCT TAX U/S 194J OF INCOME TAX ACT 1961 AND DELETING THE NON/SHORT DEDUCTION UNDER THE HEAD 'CARGO HANDLING CHARGES', WITHOUT APPRECIATING THE FACT THAT CARGO HANDLING REQUIRES HIGHLY MECHANIZED MACHINES AND SKILLED AND TECHNICALLY COMPETENT MANPOWER. HI) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DE LETING THE DEMAND ON ACCOUNT OF SHORT DEDUCTION OF TAX ON PAYMENTS OF DOCK FEES AND A IRPORT TERMINAL CHARGES AND CARGO HANDLING CHARGES, HOLDING THAT T'IL.EY DO NOT FALL WITHIN THE PURVIEW OF SECTION U/S. 1941 & 194J RESPECTIVE LY OF THE I. T. ACT., WITHOUT APPRECIATING THE FACTUAL AND LEGAL MATRIX OF THE CASE, AS CLEARLY BROUGHT OUT BY TH E A.O. IN HIS ORDER U/S. 201(1) / 201(1A) OF THE INCOME - TAX ACT, 1961. IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE INTEREST U/S 201(1A) OF THE IT ACT, 1961 ON THE SHORT DEDUCTION OF TAX D ETERMINED BY THE A.O. IN RESPECT OF DOCK FEES, AIRPORT TERMINAL CHARGES AND CARGO HANDLING CHARGES, AS THE TAX DETERMINED HAS ALREADY BEEN DELETED BY HIM AND INTEREST DELETION IS CONSEQUENTIAL TO THE QUANTUM DELETION FOR WHICH FURTHER APPEAL HAS BEEN RECO MMENDED VIDE GROUND NOS. I TO III 3. AT THE OUTSET , THE LD.AR SUBMITTED THAT THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE IN ITA NO.4856 TO 4858/MUM/2013 (AY - 2008 - 0 9 TO 2010 - 11) AND 4950/MUM/2013 (AY - 2009 - 10) ORDER DATED 6.11.2015 WHEREIN AUTHOR OF THIS ORDER IS CO - AUTHOR. 4. THE LD.DR VERY FAIRLY AGREED TO THE CONTENTIONS OF THE LD.AR. 3 3470 / MUM/ 201 5 5 . AFTER HEARIN G BOTH THE PARTIES AND ON PERUSAL OF THE RECORD INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW RELIED UPON BY THE LD.AR, WE FIND THAT THE TAX DEDUCTION AT SOURCE WHETHER UNDER SECTION 194 - I OR 194 - J HAS BEEN DECIDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE TRIBUNAL ORDER AS REFERRED ABOVE, WHEREIN THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THAT THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194 - I AND THEREFORE CANNOT BE TREATED AS ASSESSEE IS IN DEFAULT FOR NON DEDUCTIO N OF TAX AT SOURCE. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE RELEVANT PART OF THE TRIBUNAL ORDER AS UNDER : 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS CUS TOM HOUSE AGENTS FILED TDS RETURNS. SURVEY U/S 133A OF THE ACT WAS CARRIED OUT ON 24/02/2011. THE ASSESSEE DISCLOSED THE MATERIAL FACTS/DOCUMENTS DURING SURVEY AND ALSO DURING SUBSEQUENT SUBMISSION DATED 18/03/2011 AND 23/03/2011 MADE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER PASSED ORDER U/S 194C, 194 I AND 194J OF THE ACT, RAISING THE DEMAND U/S 201(1), AMOUNTING TO RS.24,18,860/ - AND INTEREST THEREUPON U/S 201(1A) AMOUNTING TO RS.10,15,921/ - , THUS, THE TOTAL DEMAND WAS RAISED TO THE TUNE OF RS. 34,34,881/ - . THE AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY CHALLENGING THE ORDER PASSED U/S 201(1) AND 201(1A) OF THE ACT. THE EXPLANATION OF THE ASSESSEE IS THAT THE ASSESSEE DULY ASSESSED TO TAX AND HAD BEEN FILING RETURN O F INCOME BY INCLUDING THE IMPUGNED AMOUNTS IN THE RETURN BY CLAIMING THAT TAX HAS ALREADY BEEN PAID BY THE PAYEES, WHICH CANNOT BE RECOVERED AGAIN FROM THE ASSESSEE, THEREBY NO DEFAULT HAS BEEN COMMITTED, AS HAS BEEN ALLEGED BY THE LD. ASSESSING OFFICER. W E NOTE THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DULY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, VARIOUS CASE LAWS AS MENTIONED IN VARIOUS PARAS OF THE IMPUGNED ORDERS AND THE CHARGES SEPARATELY. THE SUBMISSIONS OF THE ASSESSEE HAS BEEN REPRODUCED IN THE IMPUGNED ORDER AS IS EVIDENT FROM PARA 3.8 ONWARDS. WE HAVE GONE THROUGH THE FACTS AND THE CASE LAWS SUCH AS HAH LOGISTICS VS DCIT (ITA NO.1864/DEL./2011) ORDER DATED 04/11/2011 AND DCIT VS JAY KAY FREIGHTERS PVT. LTD. (ITA NO.3407/DEL./2011) ORDER DATED 4 3470 / MUM/ 201 5 08/08/2012, WITH RESPECT TO SECTION 194C, WHEREIN, THE DECISION FROM HONBLE DELHI HIGH COURT IN THE CASE OF CARGO LINKERS (218 CTR 295) (DEL.) WAS RELIED UPON. WE NOTE THAT THE ASSESSEE WAS ACTING ONLY AS AN INTERMEDIATERY BETWEEN THE IMPORTERS/EXP ORTERS AND THE PORT AUTHORITIES. THE ASSESSEE MERELY COLLECTED PAYMENTS FROM ITS CUSTOMERS AND DISBURSED THE SAME TO THEM. THE GROUND RENT, TERMINAL HANDLING AND DEMURRAGE WERE ALSO THE SOLE LIABILITY OF THE CLIENTS. THUS, IN THE ABSENCE OF ANY PRIVITY OF CONTRACT BETWEEN THE PORT AUTHORITIES AND THE ASSESSEE, IT CAN BE SAID THAT THE ASSESSEE IS NOT A PERSON RESPONSIBLE FOR DEDUCTING TAX U/S 194 I OF THE ACT, CONSEQUENTLY, IT CAN BE CONCLUDED THE ASSESSEE CANNOT BE SAID TO BE ASSESSEE IN DEFAULT IN RESPECT OF PAYMENTS MADE TO AAI/BPT AND THE DEMAND RAISED U/S 201(1)/201(1A) OF THE ACT. THE REGULATIONS PRESCRIBE THE RESPONSIBILITIES OF THE CUSTODIANS, WHO ARE ALLOWED TO OPERATE IN THE CUSTOM AREA TO HANDLE THE GOODS. SUCH PERSONS ARE CALLED CUSTOM CARGO SERVI CE PROVIDERS (CCSP) AND THEIR OBLIGATIONS AND RESPONSIBILITIES HAVE BEEN ELABORATELY SET OUT IN CLAUSE - 6 OF THE SAID REGULATIONS. CLAUSE - 5 OF THE REGULATIONS SETS OUT VARIOUS CONDITIONS WHICH AN APPLICANT IS REQUIRED TO FULFILL TO GET RECOGNITION FROM THE AUTHORITIES/CUSTOM AUTHORITIES TO FUNCTION AS CCSPS. THE STAND OF THE REVENUE/ASSESSING OFFICER IS THAT THE TERM RENT DEFINED IN EXPLANATION (1) TO SECTION 194 I IS VERY WIDE IN ITS AMBIT AND INCLUDES EVERY KIND OF PAYMENT BY WHATEVER NAME THEY CALLED, W HICH IS PAID PURSUANT TO ANY AGREEMENT OR ARRANGEMENT. ADMITTEDLY, SUCH CCSPS ARE PROVIDING VARIOUS RANGES OF SERVICES, ENABLING THE IMPORTER/EXPORTER, TO COMPLY WITH CUSTOM REGULATIONS TILL CLEARANCE IS OBTAINED, THUS, CHARGES PAID TO CCSPS ARE NOT IN THE NATURE OF RENT SIMPLICITOR BUT THEY WERE IN THE NATURE OF STATUTORY CHARGES OR LEVIES, PAID FOR COMPLYING WITH THE NOTIFIED PROCEDURE. THE ASSESSEE IS MERELY WORKING AS INTERMEDIATERY AND THEIR FUNCTIONS ARE GOVERNED/REGULATED BY THE CUSTOM HOUSE AGENTS L ICENSING REGULATIONS 2004. REGULATION 13 EXHAUSTIVELY LIST OUT THE OBLIGATIONS AND RESPONSIBILITIES OF CUSTOM HOUSE AGENTS. AS PER THE CUSTOM REGULATIONS, THE OBLIGATION TO MAKE THE PAYMENTS OF SUCH CHARGES IS UPON THE IMPORTER/EXPORTER, WHOSE GOODS ARE HA NDLED BY THEM. THE ASSESSEE IS MERELY PROVIDING SERVICES TO THE EXPORTERS/IMPORTERS. VIEWED FROM THIS ANGLE, WE FIND MERIT IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE IS NOT A PERSON RESPONSIBLE AS DEFINED U/S 194 I, THEREFORE, REGARDED IN DEFAULT FOR NON - DEDUCTION OF TAX. THEREFORE, IMPOSITION OF SECTION 201(1) AND CONSEQUENT INTEREST 201(1A), AS ALLEGED BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. IDENTICAL IS THE SITUATION FOR CARGO HANDLING CHARGES. SO FAR AS , FEE FOR TECHNICAL SERVICES IS CONCERNED, IT HAS BEEN CLARIFIED IN MERCHAN SHIPPING SERVICES PVT. LTD. (2011) 9 5 3470 / MUM/ 201 5 TAXMAN.COM 17 (MUM.) AND HCL INFOTEL LD. VS ITO 99 TTJ 440 (CHANDIGARH) IN WHICH THE DECISION FROM HONBLE MADRAS HIGH COURT WAS RELIED UPON. T HE STAND OF THE REVENUE IS THAT THESE PAYMENTS REPRESENTS FEE FOR TECHNICAL SERVICES, REQUIRING DEDUCTION OF TAX U/S 194J OF THE ACT. THE ASSESSEE FURTHER FIND SUPPORT FROM THE DECISION IN SKYCELL COMMUNICATIONS LTD. VS DCIT AND HCL INFOTEL LTD. VS ITO (SU PRA), THUS, NO DEFAULT WAS COMMITTED BY THE ASSESSEE U/S 194J OF THE ACT. WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). WE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE UNDER IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE ARE INCLINED TO UPHOLD THE ORDER OF LD.CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE . 6 . IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH , 2017 SD SD ( /MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 29 . 3 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI