JT CIT RG 24(2), MUMBAI V. SHAZAD RUSTUMJI, MUMBAI

ITA 368/MUM/2011

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5547 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.368/M/2011 ASSESSMENT YEAR: 2007-08 DY. CIT 24(2), ROOM NO.601, C-13, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (EAST), MUMBAI - 51 VS. SHRI SHAZAD RUSTOMJI, 4, ORBIT INDL. ESTATE, CHINCHOLI BUNDER ROAD, OFF MALAD LINK ROAD, MALAD (W), MUMBAI 64 PAN: AACPR 9139D (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI V. JUSTIN, D.R. DATE OF HEARING : 28.06.2018 DATE OF PRONOUNCEMENT : 24.07.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 12.11.2010 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE VARIOUS GROUNDS RAISED BY THE REVENUE ARE AS UNDER: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ENTIRE ADDITION MADE O N ACCOUNT OF CLEARING & FORWARDING CHARGES OF RS.9,62,846/- U/S 40(A)(IA), WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON AGENCY CH ARGES I.E. PROFIT ELEMENT OF PERSON WHO CARRIED OUT THE WORK OF CLEARING & FORWA RDING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.33,81,6 58/- MADE BY THE AO ON ACCOUNT OF TRANSPORT CHARGES U/S 40(A)(IA), WITHOUT APPRECI ATING THAT THE LAW IS NOT YET ITA NO.368/M/2011 SHRI SHAZAD RUSTOMJI 2 SETTLED ON THIS ISSUE, HENCE THE ASSESSEE SHOULD HA VE DEDUCTED TDS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 194C OF T HE I. T. ACT, 1961. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUND BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. T HE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHIC H MAY BE NECESSARY' 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE D ELETION OF ADDITION OF RS.9,62,846/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF NON DEDUCTION OF TDS AND CLEARING AND FO RWARDING CHARGES AND HELD TO BE NOT ALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT. 4. NONE ATTENDED ON BEHALF OF THE ASSESSEE. WE PROC EED TO DECIDE THE APPEAL ON MERIT. 5. THE FACTS IN BRIEF ARE THAT DURING THE ASSESSMEN T PROCEEDINGS THE AO CALLED FOR THE DETAILS OF TDS DE DUCTED IN RESPECT OF CLEARING AND FORWARDING CHARGES OF RS.9,62 ,846/- AND TRANSPORTATION CHARGES OF RS.33,81,658/- AND FOUN D THAT NO TDS HAS BEEN DEDUCTED AND ACCORDINGLY ISSUED A S HOW CAUSE NOTICE ON THE ASSESSEE AS TO WHY THE SAID EXP ENSES SHOULD NOT BE DISALLOWED IN TERMS OF PROVISION OF S ECTION 40(A)(IA) OF THE ACT. 6. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A), AFT ER CONSIDERING THE CONTENTIONS AND ARGUMENTS OF THE AS SESSEE, ALLOWED THE APPEAL BY OBSERVING AND HOLDING AS UNDE R: 2.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER AS WELL AS ARGUMENTS & SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE OF THE APPELLANT ALONG WITH MATERIAL AVAILABLE ON RECORD. I FIND THAT THE APPELLANT IS NOT DISPUTING THE RS.6 8,129/- OF TRAVELING CHARGES AND RS.1,07,160/- OF SECURITY CHARGES RESPE CTIVELY ON ACCOUNT OF NON- DEDUCTION OF TAX AT SOURCE (NON-TDS). HENCE , THE ADDITION ON ACCOUNT OF NON-TDS W.R.T. SECURITY CHARGES AND TRAV ELING CHARGES IS ITA NO.368/M/2011 SHRI SHAZAD RUSTOMJI 3 UPHELD. AS FAR AS THE ADDITION OF RS.9,62,846/- ON ACCOUNT OF NON TDS W.R.T. CLEARING AND FORWARDING CHARGES IS CONCERNED , I FIND THAT THIS ADDITION IS NOT JUSTIFIED IN THE FACTS AND CIRCUMST ANCES OF THIS INSTANT CASE AS THESE EXPENSES ARE IN THE FORM OF REIMBURSE MENT OF ACTUAL PAYMENTS DONE BY THE CLEARING AGENTS, NAMELY M/S NT COMPANY CLEARING & FORWARDING PVT. LTD. HAVING PAN NO. AAAC N1613P ON BEHALF OF THE APPELLANT TO THE PARTIES AND THE CLEA RING AGENT HAD ALREADY DONE TDS THEREON. ACCORDINGLY, THE IMPUGNED ADDITIO N OF RS.9,62,846/- IS DELETED. SIMILARLY, I FIND FORCE I N THE ARGUMENTS AND SUBMISSIONS OF LD. AUTHORIZED REPRESENTATIVE W.R.T. THE ADDITIONS OF RS.24,43.801/- ON ACCOUNT OF NON TDS ON TRANSPORT C HARGES, TRANSPORTATION. EXPORT / IMPORT RS.4,53,357/ - AND TRANSPORT CHARGES RELATED TO MANESAR UNIT 4.84,500!- WOULD TANTAMOUNT TO BE DOUB LE TAXATION AS THE RECIPIENTS HAVE DEDUCTED TDS ON THE PAYMENTS MADE B Y THE APPELLANT W.R.T. RS.4,53,357/- AND REST OF THE TRANSPORT CHAR GES ARE PAID TO THE TRANSPORTERS TAKEN ON HIRE FROM THE OPEN MARKET AS AND WHEN REQUIRED AND NO WRITTEN OR ORAL CONTRACT IS MADE WITH ANY OF SUCH TRANSPORTERS OR VENDORS. THUS, THE EXPENSES UNDER THE HEAD TRANSPOR T CHARGES ARE NOT ATTRACTED BY THE PROVISIONS OF SECTION 194C OF THE I.T. ACT. I FIND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD TO SUGGEST THAT ANY OF THE PARTY TO WHOM THE TRANSPORT CHARGES ARE PAID, IS A REGULAR P ARTY DOING THE TRANSPORTATION FOR THE APPELLANT REGULARLY AND EXCLUSIVELY, EVEN T HOUGH THERE IS NO WRITTEN CONTRACT WITH IT. THUS, I FIND THAT IN THE FACTS AN D CIRCUMSTANCES OF THE INSTANT CASE AS DISCUSSED ABOVE, THE TDS PROVISIONS ARE NOT ATTR ACTED FOR THE TRANSPORT CHARGES AS THESE PAYMENTS ARE NOT MADE FOR CARRYING OUT ANY WORK IN PURSUANCE OF THE CONTRACT BETWEEN THE CONTRACTOR AND ANY SPECIFI ED PERSON (APPELLANT) WITHIN THE MEANING OF 194C OF THE I.T. ACT, 1961. H ENCE, IN VIEW OF THE ABOVE THE IMPUGNED ADDITION OF RS. 53,357/- AS WELL AS RS.24.43,801/- AND RS.4,84,500/- ARE DELETED. 7. AFTER HEARING THE LD. D.R. AND PERUSING THE MATE RIAL ON RECORD, WE FIND THAT THE CLEARING AND FORWARDING CHA RGES OF RS.9,62,846/- WERE INCURRED IN THE FORM OF REIMBURSE MENT OF ACTUAL PAYMENTS DONE BY CLEARING AGENTS NAMELY M/S. NT COMPANY CLEARING & FORWARDING PVT. LTD. WITH PAN NO.AAACN1613P ON BEHALF OF THE ASSESSEE TO VARIOUS PARTIES AND CLEARING AGENTS HAVE ALREADY DEDUCTED THE TDSS AND DEPOSITED THE SAME ACCORDINGLY. THEREFORE, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) ON THI S ISSUE AND ACCORDINGLY UPHOLD THE ORDER OF LD. CIT(A) ON TH IS ISSUE. RESULTANTLY, THE GROUND RAISED BY THE REVENUE IS DI SMISSED. ITA NO.368/M/2011 SHRI SHAZAD RUSTOMJI 4 8. THE ISSUE RAISED IN SECOND GROUND OF APPEAL IS A GAINST THE DELETION OF ADDITION OF RS.33,81,658/- BY THE LD. CIT (A) AS MADE BY THE AO ON ACCOUNT OF TRANSPORTATION CHARGES MADE UNDER SECTION 40(A)(IA) OF THE ACT PAID TO THE CONT RACTORS. 9. THE FACTS OF THE CASE AND THE FINDING OF THE LD. CIT(A) ALLOWING THE RELIEF OF THIS AMOUNT STAND GIVEN HERE INABOVE WHILE DEALING WITH THE GROUND NO.1. THEREFORE, THE SAME ARE NOT REITERATED HERE TO AVOID REPETITION. 10. THE LD. D.R. SUBMITTED BEFORE THE BENCH THAT TH E LD. CIT(A) WRONGLY ALLOWED THE RELIEF TO THE TUNE OF RS.33,81,658/- BY HOLDING THAT THE SAID CHARGES PAI D TO THE TRANSPORTER IN THE OPEN MARKET AS AND WHEN THE VEHI CLE WAS HIRED AND THEREFORE THERE IS NO WRITTEN OR ORAL CON TRACT BETWEEN THE ASSESSEE AND THE TRANSPORTER AND THUS T HE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLI CABLE. THE LD. D.R. PLACED A SERIES OF DECISIONS AND CIRCULAR NA MELY; I. DURGESH SHUKLA, INDORE VS. DIT IN ITA NO.383/IND/2010 A.Y. 2007-08 II. ITO VS. RAJESH A. BORICHA (2013) 38 TAXMANN.COM 435 (RAJKOKT TRIIB.) III. CIRCULAR NO.681 DATED 08.03.1994 11. SINCE THERE IS NO MATERIAL BEFORE US TO SUPPORT THE FINDING OF THE LD. CIT(A) ON THIS ISSUE, WHEREAS THE DEPARTMENT HAS BROUGHT ON RECORD THE DECISIONS AND CIRCULAR IN WHICH IT HAS BEEN HELD/PROVIDED THAT TDS IS LIAB LE TO BE DEDUCTED ON THE TRANSPORTATION CHARGES, WE, KEEPING IN VIEW OF THE FACT THAT THERE IS NONE TO REPRESENT BEFORE US, RESTORE THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION T O DECIDE THE ITA NO.368/M/2011 SHRI SHAZAD RUSTOMJI 5 ISSUE AFTER CONSIDERING THE AFORESAID DECISIONS/CIR CULAR AND ALSO AFTER AFFORDING A REASONABLE OPPORTUNITY OF HE ARING TO THE ASSESSEE. 12. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.07.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.07.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.