ITO 17(2)(4), MUMBAI V. K.M VARGHESE & CO, MUMBAI

ITA 4091/MUM/2010

• Counselvise Citation: 409119914 RSA 2010
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Assessee Lawyers: RAJESH B GUPTE
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 4091/MUM./2010 (ASSESSMENT YEAR : 2007-08 ) DATE OF HEARING: 14.6.2011 INCOME TAX OFFICER, WARD-17(2)(4) PIRAMAL CHAMBERS, LALBAUG MUMBAI .. APPELLANT V/S M/S. K.M. VARGHESE & CO. 104, HIND RAJASTHAN BUILDING DADASAHEB PHALKE ROAD DADAR, MUMBAI 400 014 PAN AAEFK3065H .... RESPONDENT REVENUE BY : MR. ALEXANDER CHANDY ASSESSEE BY : MR. RAJESH B. GUPTE O R D E R PER J. SUDHAKAR REDDY, A.M. THE APPEAL PREFERRED BY REVENUE, IS DIRECTED AGAINS T THE IMPUGNED ORDER DATED 15 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-X XIX, MUMBAI, FOR ASSESSMENT YEAR 2007-08, ON THE FOLLOWI NG GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING AIR FREIGHT CH ARGES AND CLEARING CHARGES OF ` 8,52,834 WITHOUT APPRECIATING THE FACT THAT ASSESS EES CASE IS CLEARLY COVERED BY THE PROVISIONS OF SECTIO N 194C AND IT IS LIABLE TO DEDUCT TDS ON THE ENTIRE AMOUNT OF AIR FREIGHT C HARGES AN CLEARING CHARGES. M/S. K.M. VARGHESE & CO. ITA NO.4091/MUM./2010 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING FREIGHT REIMBU RSEMENT CHARGES OF ` 2,53,568 PAID TO M/S. GEO LOGISTIC PVT. LTD. WITHO UT APPRECIATING THE FACT THAT ASSESSEES CASE IS CLEARLY COVERED BY THE PROVISIONS OF SECTION 194C AND IT IS LIABLE TOO DEDUCT TDS ON THE ENTIRE AMOUNT OF FREIGHT REIMBURSEMENT CHARGES. 2. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE, MR. ALEXANDER CHANDY, ON BEHALF OF REVENUE AND THE LEARNED COUNSE L, MR. RAJESH B. GUPTE, ON BEHALF OF THE ASSESSEE. 3. THE COMMISSIONER (APPEALS) IN HIS ORDER HELD THAT T HE PAYMENTS MADE BY THE ASSESSEE TO OM FREIGHT FORWARDERS PVT. LTD. AND GEO LOGISTICS FREIGHT PVT. LTD. HAS TWO COMPONENTS. THE FIRST COMPONENT I S TOWARDS FRIEIGHT REIMBURSEMENT TO OVERSEAS CARRIERS, AND THE SECOND COMPONENT IS AGENCY COMMISSION PAID IN PURSUANCE OF CONTRACT. THE FIRST APPELLATE AUTHORITY HELD THAT THE PAYMENT MADE TO A NON-RESIDENT TOWARDS FRE IGHT REIMBURSEMENT DOES NOT ATTRACT THE PROVISIONS OF SECTION 194C OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). HE HELD THAT, AS FAR AS FREIGHT REIMBURSEMENT IS CONCERNED, THE EXPENDITURES HAVE BEEN MADE ON BEHAL F OF THE ASSESSEE AND THE ASSESSEE ONLY REIMBURSED THE EXPENSES AND IN SU CH CIRCUMSTANCES, NO DEDUCTION OF TAX COULD BE MADE AT SOURCE UNDER SECT ION 194C OF THE ACT. 4. MUMBAI G BENCH OF TRIBUNAL IN ITA NO.4652/MUM./20 09, ORDER DATED 25 TH FEBRUARY 2011, IN ASSESSEES OWN CASE FOR ASSESSME NT YEAR 2006-07, ON SIMILAR FACTS UPHELD THE COMMISSIONER (APPEALS)S O RDER AND DELETED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE AC T. 5. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE COMM ISSIONER (APPEALS)S ORDER AND HOLD THAT NO DEDUCTION OF TAX AT SOURCE NEED BE DONE UNDER SECTION 194C OF THE ACT, WHERE THE ASSESSEE W AS REIMBURSING THE COST INCURRED BY THIRD PARTY ON ITS BEHALF. M/S. K.M. VARGHESE & CO. ITA NO.4091/MUM./2010 3 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE 2011. SD/- R.V. EASWAR PRESIDENT SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH JUNE 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, A BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI