AI Insights
M/s. Airlink International, engaged in providing cargo handling services, appealed against the order of the CIT(A) which confirmed the adjustments made by the AO CPC in the assessment year 2017-18. The primary contention was regarding the treatment of certain receipts as income from other sources and the application of TDS under sections 194H and 194C of the IT Act. The Tribunal examined the nature of the receipts, the TDS deductions made by various parties, and the corresponding entries in Form 26AS. The Tribunal found that while the addition of Rs. 1,26,459/- was justified, the assessee was entitled to deductions for expenditures related to the receipt of Rs. 12,95,311/-.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 132314 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-02-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
SMC
Next Hearing Date
03-01-2023
Assessment Year
2017-2018
Appeal Filed On
08-11-2022
Judgement Text
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 401/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2017-18. M/s. Airlink International B-6, Shaktesh Apartment, Moti Doongri Road, Jaipur. cuke Vs. CPC Bangalore/ ITO, Ward 5(2), Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAJFA 8768 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj l s@ Assessee by : Shri P.C. Parwal, C.A. jktLo dh vksj ls@ Revenue by : Shri Chandra Prakash Meena, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 04/01/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 07/02/2023 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 13.09.2022 for the assessment year 2017-18. The assessee has raised the following grounds of appeal :- 1. The ld. CIT (A), NFAC has erred on facts and in law in upholding the adjustment made by AO (CPC) in processing the return u/s 143(1)/154 of the Act. 2. The ld. CIT (A), NFAC has erred on facts and in law in confirming the adjustment of Rs. 1,26,459/- made by AO (CPC) by applying n.p. rate of 8.16% on the differential receipt of Rs. 15,48,902/- (30,33,776-14,48,874) reflected in Form 26AS. 3. The ld. CIT (A), NFAC has erred on facts and in law in confirming the adjustment of Rs. 12,95,311/- made by AO (CPC) for commission receipt reflected in Form 26AS without allowing any deduction of expenditure 2 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. incurred for earning such receipt and without considering that the nature of such receipt is also the same as mentioned in Ground No. 2 above. 4. The appellant craves to alter, amend and modify any ground of appeal. 2. The brief facts of the case are that the assessee is engaged in providing cargo handling services both through air and ocean to various parties. In consideration they received the reimbursement of the freight charges paid to the shipping/airline companies and the commission. These companies deducted tax at source under section 194H/194C on the total amount paid to appellant. The assessee has maintained day to day books of accounts. The freight receipt is Rs. 1,05,33,700/- and the expenditure incurred there against is Rs. 90,52,139/- and accordingly the net freight charges of Rs. 14,81,570/- is credited in the Profit & Loss account. After considering the expenditure debited to Profit & Loss account, the net profit is Rs. 83,770/- but the income computed under normal provisions after disallowing the income tax debited to Profit & Loss account is Rs. 1,21,231/-. Accordingly, assessee filed return under section 44AD declaring total income of Rs. 1,21,231/- which is more than the deemed profit of Rs. 1,18,790/- under section 44AD of the Act. The AO CPC processed the return under section 143(1) on 21.03.2019 and determined the total income at Rs. 15,43,000/- comprising of income under the head profit & gains from business at Rs. 2,47,690/- and income from other sources at Rs. 12,95,311/-. The appellant filed rectification application under section 154 of the Act. The same was rejected stating that the assessee has not correctly filled schedules in the return like BP/DEP/DOA/P&L/PART A-01 of the Income tax Return-ITR-4. Being aggrieved by the order of AO CPC, the assessee preferred appeal before NFAC Delhi but the same was rejected stating that assessee has not submitted any documentary 3 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. evidence as to why the payer would deduct tax u/s 194H when the amount paid is against the freight charges. Now the assessee has come in appeal before the Tribunal. 3. Ground No. 1 raised by the assessee has not been pressed, therefore, the same is dismissed as not pressed. Ground No. 2 & 3 are inter-connected and inter-related challenging the adjustment of Rs. 12,95,311/- made by the AO CPC and confirmed by ld. CIT (A). 4. Before us, the ld. A/R of the assessee has submitted written submissions as under :- “ It is submitted that assessee is providing cargo handling services to its customers. In the bills raised assessee charges the customers for air/ocean freight, custom clearing, terminal handling charges, local transportation, loading/unloading, etc. on case to case basis. The same is credited to freight charges account. Against this the expenditure incurred is debited to freight charges account and the net amount is credited to P & L A/c. Thus, the nature of services provided to all the customers is same. However, from Form No. 26AS it can be noted that 3 parties namely CP Worldlines Pvt. Ltd., Total Transport System Pvt. Ltd. and Tulsidas Khemji Pvt. Ltd. who made payment of Rs. 12,95,311/- have deducted TDS u/s194H (PB 8, 10 & 11). All other parties have deducted TDS u/s 194C. Even Tulsidas Khemji Pvt. Ltd., has deducted TDS u/s 194C on some amount and u/s 194H on some amount. From the copy of ledger account of Total Transport System Pvt. Ltd. along with sample invoice (PB 35-37, Tulsidas Khemji Pvt. Ltd. along with sample invoice (PB 38-40) and CP Worldlines Pvt. Ltd. along with sample 4 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. invoice (PB 41-44) it can be noted that the invoices raised is only for freight charges. Hence, only because these 3 parties have deducted TDS on the amount of Rs. 12,95,311/- u/s 194H instead of U/s 194C, the same cannot be assessed as income from other sources. From the sample copy of invoice raised on other parties (PB 45-70), it can be noted that the services rendered to other parties is same as provided to the above 3 parties. Therefore, simply because these 3 parties have deducted TDS u/s 194H, the receipt from them cannot be assessed as income from other sources. Even if the above receipts are assessed as income from other sources, deduction of expenditure incurred against such receipt ought to have been allowed by ld. CIT (A). Hence, the addition of Rs. 12,95,311/- confirmed by ld. CIT (A) is apparently incorrect and be directed to be deleted. It may also be noted that the receipt of assessee is only Rs. 14,81,570/- and, therefore, taking such receipt on the basis of Form 26AS at Rs. 30,33,776/- and making addition of Rs. 1,26,459/- by applying rate of 8.16% on the difference is incorrect and, therefore, the addition confirmed to this extent by ld. CIT (A) be deleted. In view of above, addition confirmed by ld. CIT (A) be directed to be deleted.” 5. On the other hand, the ld. D/R supported the orders of the Revenue Authorities. 6. We have heard the ld. Counsels for both the parties, perused the material available on record and gone through the orders of the revenue authorities. As per 5 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. the facts of the present case, the assessee is engaged in the business of arranging transportation from which it receives reimbursement of the freight charges paid to the shipping/airline companies and the commission. As per record, the assessee has shown gross receipt of Rs. 14,84,874/- whereas gross receipt as per Form 26AS is Rs.43,29,087/-. Out of this amount, TDS under section 194C has been deducted by the parties on Rs. 30,33,776/- and TDS under section 194H has also been deducted on Rs. 12,95,311/-. Therefore, considering these circumstances, AO made addition of Rs. 1,26,459/- being 8.16% of Rs. 15,48,902/- on the receipts on which TDS was deducted under section 194C of the IT Act. However, an addition of entire amount of Rs. 12,95,311/- was made in respect of this amount as TDS under section 194H of the IT Act as per details contained in Form 26AS. 6.1 Since during the appellate proceedings, the assessee himself has suggested before ld. CIT (A) to restrict the addition to Rs. 1,26,459/- on account of receipt of Rs. 15,48,902/- being 8.16% of the receipts, therefore, addition was sustained by ld. CIT (A). Even before us, the ld. A/R could not controvert the findings so recorded by the ld. CIT (A) except submitting the arguments as mentioned in his written submissions. 6.2 Now as far as addition of Rs. 12,95,311/- is concerned, in this regard the facts are undisputed to the extent that the assessee has not shown the receipt of Rs. 12,95,311/- on which TDS under section 194H has been deducted. Since assessee himself submitted that it is engaged in the activities of transportation which includes commission. Although the ld. A/R has stressed upon the fact that the amount paid to the assessee is reimbursement of freight charges paid by it, but in this regard the ld. A/R has not been able to substantiate his arguments. It is an 6 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. undisputed fact that the payer companies had deducted TDS under section 194H on the payment of Rs. 12,95,311/- which has not so far been corrected by the assessee. Since the assessee was very much aware regarding deduction of TDS under section 194H on payment of Rs. 12,95,311/- by the parties/companies, even then no effort was made to get the same corrected from the said companies. Therefore, at this stage assessee cannot point out the defects in the orders passed by the revenue authorities. The other arguments of the ld. A/R that at the most the addition could have been restricted to Rs. 1,05,698/- being profit earned @ 8.16% in respect of these receipts. However, this argument of the ld. A/R could not be upheld because of the simple reason that as per the provisions of section 44AD(6) of the IT Act, the provisions of this section are not applicable on a person earning income in the nature of commission. Thus the said argument of the ld. A/R is not tenable. Since the revenue authorities have rightly appreciated the facts and considered the said receipts as income from other sources but still in these circumstances assessee was entitled to deduction of expenditure incurred against such receipts. Therefore, the AO is at liberty to verify the expenditure, if so claimed by the assessee within 30 days from the date of receipt of this order. With these observations, we partly allow the grounds raised by the assessee. 7. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 7/02/2023. Sd/- ¼lanhi xkslkbZ½ Tk;iqj@Jaipur (SANDEEP GOSAIN) fnukad@ Dated:- 07/02/2023. U;kf;d lnL;@Judicial Member 7 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. Das/ vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant-M/s. Airlink International, Jaipur. 2. izR;FkhZ@ The Respondent- The CPC Bangalore/ITO Ward 5(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {ITA No. 401/JP/2022} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar
Mehul