Shri Rajesh A. Sompura, Ahmedabad V. The Dy.CIT, Central Circle-2(2), Ahmedabad

ITA 39/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9369 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S CHAUDHARY
• Section: 143(3); 194C; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S.S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO. 39/AHD/2014 ASST. YEAR: 2011-12 SHRI RAJESH A.SOMPURA, G-3, BALESHVER AVENUE, OPP. RAJPATH CLUB, S.G. HIGHWAY, BODAKDEV, AHMEDABAD VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2), AHMEDABAD APPELLANT RESPONDENT PAN AKUPS3814Q APPELLANT BY SHRI GAURAV NAHTA, AR RESPONDENT BY SHRI P.S. CHAUDHARY, SR.DR DATE OF HEARING: 16 /01/2017 DATE OF PRONOUNCEMENT: 20 /01/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2011-12 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-III, AHMEDABAD, DAT ED 10/10/2013 VIDE APPEAL NO.CIT(A)-III/127/DCIT-CC-2(2)/13-14 ARISIN G OUT OF ORDER U/S 143(3) OF THE IT ACT, 1961 (HEREIN AFTER REFERRED TO AS ACT) FRAMED ON 19/03/2013 BY DCIT, CENTRAL CIRCLE-2(2), AHMEDABAD. ITA NO. 39/AHD/2014 ASST. YEAR 2011-12 2 ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1. THE LD. CIT APPEALS III AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 10/10/2013 FOR A.Y.20 11-12 IN THE CASE OF APPELLANT BY CONFIRMING THE DISALLOWANCE MADE OF RS .56689/- INVOKING THE PROVISION OF SECTION 40(A)(IA). 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL ON OR BEFORE OF THE FINAL HEARING OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL. SEARCH ACTION U/S. 132 OF THE INCOME TA X ACT, 1961, CARRIED OUT IN THE GROUP CASES OF TRIVEDI-SOMPURA O N 21/04/2010. SEARCH WARRANT WAS ISSUED U/S.132 OF THE ACT, IN TH E NAME OF THE ASSESSEE. ASSESSEE FILED ITS ORIGINAL RETURN OF IN COME ON 01/10/2011 DECLARING TOTAL INCOME AT RS.7,35,600/- 3. CASE WAS SELECTED FOR SCRUTINY, NECESSARY INFORM ATION CALLED AND DULY SUPPLIED DURING THE COURSE OF ASSESSMENT P ROCEEDINGS LEARNED ASSESSING OFFICER (IN SHORT LD. AO) OBSERVE D THAT REIMBURSEMENT OF RS.56,689/- WAS MADE TO CLEARING A ND FORWARDING AGENT M/S. S.M. ENTERPRISE, TOWARDS PAYMENT TO CON COR (TOWARDS RAILWAY FREIGHT CHARGES) AND ALSO RS.11,097/- TOWAR DS AGENCY AND OTHER CHARGES INCLUDING FUMIGATION. LD. AO WAS OF T HE VIEW THAT ASSESSEE HAS NOT DEDUCTED TDS U/S. 194 C OF THE ACT , ON THE PAYMENT OF RS.56,689/- AND ACCORDINGLY, DISALLOWE D THE SAME U/S 40(A)(IA) OF THE ACT. ASSESSMENT WAS COMPLETED BY A SSESSING INCOME AT RS.7,92,289/- ITA NO. 39/AHD/2014 ASST. YEAR 2011-12 3 4. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE CIT(A) BUT THE APPEAL WAS DISMISSED BY LD. CIT(A) BY OBSERVING AS FOLLOWS:- 7. FACTS OF THE CASE AND ARGUMENTS OF THE APPELLAN T HAVE BEEN CAREFULLY CONSIDERED. AO HAS GIVEN DETAILED REASONS FOR MAKIN G DISALLOWANCE U/S. 40(A)(IA). THE MAJOR REASONS GIVEN BY AO FOR MAKING DISALLOWANCES ARE AS FOLLOWS: . . - (A) APPELLANT HAS MADE PAYMENT TO (CONCOR) CONTAINER CO RPORATION OF INDIA WHICH IS A CORPORATION ESTABLISHED BY A CENTRAL ACT . IT IS A LISTED COMPANY WHICH IS NOT EXEMPT FROM PAYMENT OF INCOME TAX ON I TS INCOME (B) THE APPELLANT HAS MADE PAYMENT THROUGH HIS CLEARING AND FORWARDING AGENT. THEREFORE HIS CLAIM THAT HE MADE PAYMENT TO GOVERNM ENT AGENCY AND THEREFORE TAX WAS NOT DEDUCTIBLE AT SOURCE ON THE S AME IS NOT JUSTIFIED. (C) THERE EXISTS CONTRACTOR-CONTRACTEE RELATIONSHIP BETWEEN THE ASSESSEE AND THE CONCOR. (D) CBDT CIRCULAR NO.723 OF 19-091995 IS IN RESPECT OF PAYMENT MADE TO C&F AGENT ON ACCOUNT OF OCEAN FREIGHT. APPELLANT HAS IN CURRED EXPENSES IN RESPECT OF RAIL FREIGHT AND ROAD FREIGHT AND THEREFORE THE ABO VE MENTIONED CIRCULAR IS NOT APPLICABLE IN THE CASE OF APPELLANT. 8. RELIANCE PLACED BY APPELLANT ON VARIOUS JUDGMEN TS IS OF NO HELP BECAUSE THEY ARE IN RELATION TO PAYMENTS MADE TO SHIPPING A GENTS OF NON RESIDENTS. HOWEVER, IN THE CASE OF APPELLANT THE MAJORITY PAYM ENTS ARE MADE TO CONCOR FOR RAILWAY FREIGHT. I THEREFORE HOLD THAT AO HAS R IGHTLY MADE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. THE DISALLOWANCE MADE BY AO I S 'CONFIRMED. GROUNDS NO.2&3 OF THE APPEAL ARE THUS DISMISSED. 5. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LEARNED COUNSEL SUBMITTED THAT AMOUNT OF RS.5668 9/- INCLUDED PAYMENT TO CONCOR ( TOWARDS RAILWAY FREIGHT) AT RS. 45,592/- AND PAYMENT OF RS.11,097/- TOWARDS AGENCY CHARGES AND INCLUDING FUMIGATION EXPENSES. THIS SUM OF RS.56,689/- WAS ME RE REIMBURSEMENT OF EXPENSES INCURRED BY C&F AGENT. ITA NO. 39/AHD/2014 ASST. YEAR 2011-12 4 7. LEARNED COUNSEL REFERRED TO THE DECISION OF CO- ORDINATE BENCH NEW DELHI IN ITA NO.4522/DEL/2012 DATED 28/01/2013 IN THE CASE OF M/S.NATURE BIO FOODS LTD., V/S ACTIT CENTRAL CIRCLE -19 WHEREIN IT WAS HELD THAT PAYMENT TO CONCOR TOWARDS RAILWAY FRE IGHT CHARGES IS NOT COVERED UNDER THE PROVISION OF TAX DEDUCTED AT SOURCE U/S. 194C OF THE ACT AS THE PAYMENT OF FREIGHT IS TO THE GOVERNMENT ORGANIZATION. FURTHER LEARNED COUNSEL SUBMITTE D THAT AMOUNT OF RS.11,097/- WAS PAID TOWARDS REIMBURSEMENT OF FUM IGATION EXPENSES AND ARE NOT SUBJECT TO DEDUCTION OF TAX A T SOURCE U/S.194C OF THE ACT, BEING BELOW THE CUMULATIVE THRESHOLD LIMIT OF RS.75,000/- AS PROVIDED IN PROVISO TO SECTION 194C(5) OF THE AC T. 8. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS BEFORE US. ASSESSEE IS AGGRIEVED WITH THE DISALLO WANCE U/S.40(A)(IA) OF THE ACT, AT RS.56,689/- PAID TO M/S.S.M. ENTERP RISE ON ACCOUNT OF FOLLOWINGS:- 1. REIMBURSEMENT OF AMOUNT PAID TO CONTAINER CORPORATION OF INDIA (CONCOR) TOWARDS RAILWAY FREIGHT - 45,592/- 2. AGENCY AND FUMIGATION CHARGES - 11,097/- 56,689/- ITA NO. 39/AHD/2014 ASST. YEAR 2011-12 5 10. WE OBSERVE THAT THERE IS NO DISPUTE TO THE FACT THAT PAYMENT TO CONCOR (CORPORATION ESTABLISHED BY CENT RAL ACT) OF RS.45,592/- IS ON ACCOUNT OF RAILWAY FREIGHT CHARGE S AND RS.11,097/- IS PAID TOWARDS REIMBURSEMENT OF FUMIGA TION AND MISC. EXPENSES. FURTHER WE ALSO OBSERVE THAT CO-OR DINATE BENCH, DELHI, IN THE CASE OF M/S.NATURE BIO FOODS LTD.,(SU PRA) HAS ADJUDICATED SIMILAR FACTS INVOLVING PAYMENT TO CON COR TOWARDS RAILWAY FREIGHT AND HAS HELD IT TO BE OUT OF THE P URVIEW OF THE PROVISION U/S.194C OF THE ACT, FOR DEDUCTION OF TAX AT SOURCE, AS PAYMENT IS MADE TO THE GOVERNMENT ORGANIZATION. 11. WE ALSO FIND FROM PAPER BOOKS AT PAGE 7 TO 10 T HAT PAYMENT OF RS.11,097/- MADE TOWARDS FUMIGATIONS EXP ENSES ARE BELOW THE INDIVIDUAL TRANSACTION LIMIT OF RS.30,000 /- AS PROVIDED IN PROVISO TO U/S. 194C(5) OF THE ACT. 12. RESPECTFULLY, FOLLOWING THE DECISION OF CO-ORDI NATE BENCH, DELHI, AS DISCUSSED ABOVE, APPLYING THE PROVISION O F U/S.194C OF THE ACT, ON THE FACTS OF THE CASE AND OBSERVING AB OVE DISCUSSIONS, WE ARE OF THE VIEW THAT ASSESSEE WAS NOT LIABLE TO TAX AT SOURCE U/S. 194C OF THE ACT, ON THE IMPUGNED PA YMENT OF RS.56,689/- AND THEREFORE NO DISALLOWANCE WAS CALLE D FOR U/S.40(A)(IA) OF THE ACT. WE DELETE THE SAME. ITA NO. 39/AHD/2014 ASST. YEAR 2011-12 6 13. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2017 SD/ - (S.S. GODARA) JUDICIAL MEMBER SD/ - (MANISH BORAD) ACCOUNTANT MEMBER TRUE COPY DATED 20/01/2017 MANISH/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD