RENU M. TILWANI, MUMBAI V. ACIT 19(3)), MUMBAI

ITA 396/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8287 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 02-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2012
• Court: TRIBUNAL
• Keywords: Depreciation; Corroborative evidences
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 RENU M. TILWANI 21, VEENA BEENA, GR. FLOOR, OPP. BANDRA RLY. STN. BANDRA (W) VS.` ASSISTANT COMMISSIONER OF INCOME TAX, WARD 19 (3), MUMBAI. PAN:- AADPT6152H APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17.10.2011 OF CIT(A) FOR THE A.Y. 2008-09. 2. THE GROUND NO. 1 IS REGARDING DISALLOWANCE U/S 4 0(A)(IA) OF THE INCOME TAX ACT FOR NON DEDUCTION OF TDS. 3. THE ASSESSEE HAS CLAIMED RS. 3,57,945/- AS AN EXP ENDITURE UNDER THE HEAD CLEARING CHARGES. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF TDS DED UCTED. IN RESPONSE, THE ASSESSEE REPLIED THAT SHE HAS NOT DEDUCTED TDS AGAI NST CLEARING CHARGES. THE ASSESSING OFFICER ACCORDINGLY, DISALLOWED A SUM OF RS. 3,57,945/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME T AX ACT. ASSESSEE BY SHRI M.V. SUBRAMANIAM REVENUE BY SHRI LOVE KUMAR DATE OF HEARING 02.12.2014 DATE OF PRONOUNCEMENT 10.12.2014 ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 2 | P A G E 4. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFICER BEFORE CIT(A) AND SUBMITTED THAT THE PAYMENTS WERE MADE FOR INCUR RING VARIOUS EXPENSES TO VARIOUS PARTIES AND ENTIRE SUM IS NOT PAID TO THE C LEARING AND FORWARDING AGENT. IT WAS ALSO EXPLAINED THAT THE CLEARING AND FORWARDING AGENT WAS PAID NOMINAL AMOUNT ONLY AND REST OF THE AMOUNT IS REIMB URSEMENT OF EXPENSES. SINCE THE PAYMENT IS MADE TO VARIOUS PARTIES AND TH E ASSESSEE HAD MADE THE REIMBURSEMENT, THEREFORE, IT WAS NOT SUBJECTED TO T DS. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE ON THE SAID AMOUNT WHICH SH E HAS NOT DONE, ACCORDINGLY THE DISALLOWANCE MADE BY ASSESSING OFFI CER U/S 40(A)(IA) WAS CONFIRMED. 5. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS REFERRED THE DETAILS OF THE AMOUNT PAID TO ITS AGEN T NAMELY PARESH CHAMPAKLAL SHAH, WHO IS A CUSTOM HOUSE AGENT AND SUBMITTED THA T OUT OF THE TOTAL AMOUNT OF RS. 3,57,945/- A SUM OF RS. 2,93,664/-WAS PAID IN CONNECTION WITH OCTRO, CUSTOM DUTY AND OTHER CHARGES AND NOT AS A FEE TO T HE CLEARING AGENT. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THA T THE SAID AMOUNT WAS IN THE NATURE OF REIMBURSEMENT OF EXPENSES ON ACCOUNT OF OCTROI, CUSTOM DUTY AND OTHER CHARGES AND DOES NOT REQUIRED ANY TDS TO BE DEDUCTED. AS FAR AS THE REMAINING PAYMENT OF RS. 64,281/- IS CONCERNED, TH E LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THIS PAYMENT WAS AGENCY CHARGES TO THE CLEARING AGENT, MR. PARESH CHAMPAKLAL SHAH AGAINST EACH BILL /TRANSACTION. HE HAS FURTHER SUBMITTED THAT THE AMOUNT PAID FOR E ACH TRANSACTION IS LESS THAN THE STATUTORY LIMIT, THEREFORE, THE SAME DOES NOT REQUIRE DEDUCTION OF TDS. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS AS WELL AS RELATED DOCUMENT T O SHOW THAT THE AMOUNT ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 3 | P A G E PAID BY THE ASSESSEE TO THE CLEARING AGENT IS FOR R EIMBURSEMENT OF THE EXPENSES INCURRED ON BEHALF OF THE ASSESSEE. FURTHE R THE PAYMENT WAS MADE TO THE CLEARING AGENT HAS TO BE CONSIDERED AS A WHOLE AND NOT ONE BY ONE AS PER THE PROVISIONS OF INCOME TAX ACT. THUS THE LD. DR H AS SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ANY DETAIL, EXPLANATION OR SUPPORTING EVIDENCE BEFORE THE AUTHORITIES BELOW. HE HAS RELIED UPON THE ORDER S OF AUTHORITIES BELOW. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS. 3,57,945/- TO ITS CLEARING AGENT MR. PARESH CHAMPAKLAL SHAH. THER E IS NO DISPUTE THAT THE ASSESSEE DID NOT DEDUCT ANY TDS ON THE SAID AMOUNT. BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS NOT GIVEN THE CONVINCING E XPLANATION FOR NON DEDUCTION OF TDS. HOWEVER, BEFORE THE CIT(A), THE A SSESSEE HAS SUBMITTED THAT THE MAJOR PART OF THIS AMOUNT IS FOR REIMBURSE MENT OF EXPENSES INCURRED BY THE CLEARING AGENT REGARDING PAYMENT OF OCTOR, C USTOM DUTY AND OTHER CHARGES. WE FIND THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAS EXAMINED OR VERIFIED THE NATURE OF ACTUAL PAYMENT M ADE BY THE ASSESSEE. THE ASSESSEE HAS FILED THE DETAILS OF THE EXPENSES AT P AGE 30 AND 31 OF THE PAPER BOOK, WHEREIN, THE TOTAL EXPENDITURE OF RS. 3,57,94 5/- HAS BEEN BIFURCATED INTO TWO CATEGORIES I.E. THE REIMBURSEMENT OF EXPENSES TO THE TUNE OF RS. 2,93,664/- AND AGENCY CHARGES OF RS. 64,281/-. SINC E THE AUTHORITIES BELOW HAVE NOT EXAMINED THE ISSUE FROM THE ANGLE OF REIMB URSEMENT OF EXPENSES AS CLAIMED BY THE ASSESSEE AND DETAILS FURNISHED AT PA GE NO. 30 AND 31 OF THE PAPER BOOK, THEREFORE, IN THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO THE RECORD OF ASSESSING OFFICER FOR PROPER VERIFICATION REGARDING THE NATURE OF THE PAYMENT MADE BY THE ASSESSEE AND THEN DECIDE THE ISSUE AFRESH AS PER LA W. 8. THE SECOND ADDITION IS REGARDING LOSS ON CAR AND FURNITURE. ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 4 | P A G E 9. THE ASSESSEE DEBITED A SUM OF RS. 1,64,720/- IN T HE P&L ACCOUNT UNDER THE HEAD LOSS ON CAR AND FURNITURE. THE ASSESSING OFFICER HELD THAT THE LOSS CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE AS BUSINES S EXPENSES. ACCORDINGLY, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 1,64, 270/- CLAIMED AS LOSS ON CAR & FURNITURE. 10. ON APPEAL BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOLD THE OLD CAR AND, THEREAFTER, PURCHASES ANOTHER CAR. HENCE IT IS NOT A CASE OF BLOCK OF ASSET CEASED TO EXIST. SINCE THE ASSESSEE HAS SUFFERED THE LOSS ON SALE OF CAR, ACCORDINGLY IT WAS CONTENDED THAT THE SAME IS ALLOWABLE. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONF IRMED THE DISALLOWANCE MADE BY ASSESSING OFFICER ON THIS ACCOUNT. 11. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT OUT OF 1,64,720/- DEBITED TO THE P&L ACCOUNT, THE LOSS ON ACCOUNT OF SALE OF CAR IS RS. 1,45,872 AND LOSS ON A CCOUNT OF SALE OF FURNITURE IS RS. 10,779/-. FURTHER THE LOSS ON ACCOUNT OF CELLULAR PHONE AND LOSS ON ACCOUNT OF WATER FILTER IS RS. 1,843/- AND ,6226/- RESPECTI VELY. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT SINCE THE ASSESSE E PURCHASED A NEW CAR DURING THE YEAR, THEREFORE, THE LOSS ON ACCOUNT OF SALE OF CAR HAS TO BE ADJUSTED AS PER THE PROVISIONS OF SECTION 32. AS REGARDS THE OTHER LOSSES ON ACCOUNT OF SALE OF FURNITURE AND CELLULAR PHONE AND WATER FILT ER, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE BLOCK OF ASSS ETS IN RESPECT OF FURNITURE, CELLULAR PHONE AND WATER FILTER CEASED TO EXIST. TH US THE LD. AUTHORIZED REPRESENTATIVE HAS PLEADED THAT LOSS ON ACCOUNT OF SALE OF CAR IS AN ALLOWABLE CLAIM U/S 32 WHICH WAS WRONGLY DENIED BY THE AUTHOR ITIES BELOW. 12. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE AS IT IS N OT ALLOWABLE AS BUSINESS ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 5 | P A G E EXPENDITURE AND FURTHER THE ASSESSEE HAS FAILED TO SHOW THAT THESE ARE BUSINESS ASSETS. 13. IN REBUTTAL, THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE CAR SOLD BY THE ASSESSEE WAS A BUSINESS ASSET AND T HE DEPRECIATION ON THE SAME WAS ALLOWED BY THE ASSESSING OFFICER IN THE EARLIER YEARS. 14. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE CAR WAS A BUSIN ESS ASSET AND DEPRECIATION WAS ALLOWED IN THE EARLIER YEARS THEN ANY LOSS ON A CCOUNT OF SALE OF THE SAID ASSET HAS TO BE ADJUSTED AS PER PROVISIONS OF SECTI ON 32 BECAUSE THE BLOCK OF ASSETS DID NOT CEASE TO EXIST WHEN THE ASSESSEE PUR CHASED A NEW CAR DURING THE YEAR. ACCORDINGLY, WE SET ASIDE THIS ISSUE FOR LIMI TED PURPOSE FOR ALLOWING THE CLAIM U/S 32 ON ACCOUNT OF LOSS ON SALE OF CAR. 15. AS REGARDS THE LOSS ON ACCOUNT OF FURNITURE, CE LLULAR PHONE AND WATER FILTER, SINCE THE BLOCK OF ASSETS CEASED TO EXIST, THEREFORE, THE SAME IS NOT ALLOWABLE AS PER PROVISIONS OF SECTION 32. ACCORDIN GLY, THIS GROUND OF THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF DECEMBER 2014. SD/- SD/- (N.K.BILLAIYA) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 10 -12-2014 SKS SR. P.S, ITA NO.396/MUM/2012 ASSESSMENT YEAR: - 2008-09 6 | P A G E COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI