TORRY Harris Sea Foods Ltd, Alappuzha V. The ACIT, Alappuzha

ITA 447/COCH/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7418 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: R SRINIVASAN
• Keywords: Transfer pricing; International transaction; Non-deduction of tax
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., JM I.T.(TP)A. NO.447/COCH/2016 ASSESSMENT YEAR : 2012 - 13 TORRY HARRIS SEA FOODS PVT. LTD., 9/572, THIRUMALA WARD, CHUNGAM, C.C.S.B. ROAD, ALAPPUZHA-688 010. [PAN: AAACT 7603H] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, ALAPPUZHA (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI R. SRINIVASAN, CA REVENUE BY SHRI A. DHANARAJ, SR. DR D ATE OF HEARING 03 / 0 7 /2018 DATE OF PRONOUNCEMENT 05 / 0 7 /2018 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 92CA(3) OF THE I.T. ACT D ATED 27/01/2016, CONSEQUENT TO THE DIRECTION OF THE DRP U/S. 144C(5) OF THE ACT DATED 25/08/2016. THE RELEVANT ASSESSMENT YEAR IS 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE DISPUTE RESOLUTION PANEL, BANGALORE IS NOT JUSTIFIED IN REJECTING THE CLAIM OF THE APPELLANT FOR THE GLAZING LOSS IN THE COMMODITY EXPORTED. I.T.(TP)A. NO./447C/2016 2 2. THE DISPUTE RESOLUTION PANEL, BANGALORE DID NOT PROPERLY APPRECIATED THE FACT THAT YOUR APPELLANT COMPANY IS MAINLY EXPO RTING THE PRODUCTS RANGING TO 25% GLAZE, WHEREAS THE RATE QUOTED BY MP EDA IS ONLY 10-20% GLAZE. 3. THE DISPUTE RESOLUTION PANEL, BANGALORE ALSO DID NOT CONSIDER THE SUBMISSIONS OF THE APPELLANT TO THE EFFECT THAT WIT H REGARD TO 25% GLAZE PRODUCTS THE WATER CONTENT WILL BE MORE THAN 10-20% GLAZE PRODUCTS. SO MUCH SO, THE NET YIELD WOULD BE LESS AND CONSIDERAB LE REDUCTION IN SELLING PRICE. 4. THE DISPUTE RESOLUTION PANEL, BANGALORE DID NOT ALSO RECOGNIZE THE ABOVE ASPECT WHICH HAS NOT BEEN CONSIDERED BY THE T RANSFER PRICING OFFICER, SO MUCH SO THE ISSUE SHOULD HAVE BEEN SEND BACK TO TPO FOR CONSIDERATION. 5. THE OFFICERS BELOW WERE ALSO NOT JUSTIFIED IN DI SALLOWING EIA MONITORING FEE PAID TO EXPORT INSPECTION AGENCY, FOR NON DEDUCT ION OF TAX. SINCE EIA IS AN ORGANIZATION ESTABLISHED BY THE CENTRAL GOVER NMENT UNDER THE EXPORT QUALITY CONTROL AND INSPECTION ACT OF 1963 AND THE PROVISIONS OF TDS ARE NOT APPLICABLE. 6. FOR THE ABOVE REASONS AND OTHER REASONS AS MAY BE ADDUCED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE ABOVE GROUNDS MAY BE CONSIDERED FOR ALLOWANCE. 3. THE FACTS OF THE CASE WITH REGARD TO GROUND NO S. 2 TO 4 ARE THAT THE ASSESSEE IN ITS TRANSFER PRICING STUDY HAD CONCLUDE D THAT CUP METHOD WAS THE MOST APPROPRIATE FOR BENCHMARKING INTERNATIONAL TR ANSACTIONS IN THE SEAFOOD INDUSTRY. ACCORDING TO THE TPO, THE ASSESSEE HAD US ED THE EXPORT RATES PUBLISHED BY MPEDA I.E. THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY AS A COMPARABLE IN ITS CUP ANALYSIS. ACCORDING TO THE TP O, THE MPEDA WAS CONSTITUTED UNDER THE MARINE PRODUCTS EXPORT DEVELOP MENT AUTHORITY ACT, 1992 AND MPEDA IS A QUASI-GOVERNMENT BODY MONITORING SEAF OOD EXPORTS AND ITS PRICES. MPEDA DATA RELEASED ON A BIWEEKLY BASIS GIVE S INPUT OF THE TYPES OF THE I.T.(TP)A. NO./447C/2016 3 PRODUCTS AND THIS WAS TAKEN AS PER BENCHMARK FOR AR RIVING AT ARM'S LENGTH PRICING. THE TPO OBSERVED THAT THE ASESSEE WAS REQ UIRED TO PRODUCE THE DETAILED COMPARISON UNDER CUP METHOD. ON VERIFICATI ON OF THE DETAILS PRODUCED, IT WAS SEEN THAT THERE WERE INSTANCES WHERE THE ASS ESSEE HAD EXPORTED THE PRODUCTS TO ITS AE AT A PRICE LOWER THAN THE ONE PUB LISHED BY MPEDA FOR THE CORRESPONDING PERIOD AND FOR SIMILAR PRODUCTS. ACCO RDING TO THE ASSESSEE, THE ADJUSTMENT AT 3% WAS MADE TO THE SALE PRICE IN EACH SALE MADE TO ITS AE SO AS TO BRING IT UNDER ARM'S LENGTH PRICE. HOWEVER, ACCO RDING TO THE TPO NO EVIDENCE WAS PRODUCED TO SUBSTANTIATE THIS ADJUSTMENT CLAIME D. HENCE, A SHOWCAUSE WAS ISSUED BY TPO TO THE ASSESSEE ON 10.12.2015 PROPOSI NG TO REJECT THE ARBITRARY WEIGHTAGE CLAIMED AND TO COMPUTE ARM'S LENGTH PRICE ACCORDINGLY. THE RELEVANT PORTION OF THE SHOWCAUSE NOTICE IS REPRODUCED BELOW :- 'AS PER THE TRANSFER PRICING (TP) DOCUMENT FURNISHE D FOR THE A. Y. 2012-13, THE TAXPAYER COMPANY HAS SOLD PRODUCTS TO ASSOCIATED ENTERPRISES (AESJ OF RS.79,50,26,341/-. WHILE GOING THROUGH THE TRANSFER PRICING STUDY SUBMITTED BY YOU FOR A. Y 2012-13, IT IS SEEN THAT YOU HAVE A DOPTED COMPARABLE UNCONTROLLED PRICE METHOD AS THE MOST APPROPRIATE M ETHOD WHILE BENCHMARKING THE INTERNATIONAL TRANSACTIONS UNDERTA KEN WITH ASSOCIATED ENTERPRISES. YOU HAVE COMPARED YOUR AE SALE PRICE WIT H THE RATES PUBLISHED BY THE MARINE PRODUCTS EXPORT DEVELOPMENT WEEKLY DAT A RELEASED BY MPEDA BASED ON THE TYPE OF THE PRODUCT IS SEEN TAKEN AS THE BENCHMARK FOR ARRIVING AT ARM'S LENGTH PRICE. HOWEVER, YOU HAVE CLAIMED ADJUSTMENTS @3% TO THE SA LE PRICE IN EACH SALE MADE TO AE SO AS TO BRING IT WITHIN THE ARM'S LENGT H PRICE. HOWEVER THIS IS NOT IN ACCORDANCE WITH THE TRANSFER PRICING PROVISI ONS. YOU HAVE CLAIMED UNIFORM ADJUSTMENTS @ 3% IN ALL CASES, WITHOUT PROV IDING ANY CLEAR RATIONALE FOR THE SAME. ADJUSTMENTS HAVE BEEN CLAIMED IN AN A RBITRARY MANNER WITHOUT ANY FACTUAL AND SCIENTIFIC BASIS BEING GIVEN. 'YOU HAVE NOT SUBMITTED THE QUANTIFICATION PROCESS ADOPTED BY YOU TO ARRIVE AT THE ADJUSTMENTS, CLAIMED. THE FACT IS THAT 3% ADJUSTMENT WAS CLAIMED ON ALL TRANSACTIONS, WITHOUT I.T.(TP)A. NO./447C/2016 4 SPECIFYING THE FACTORS THAT AFFECTED THE PRICE AS W ELL AS PROPER QUANTIFICATION OF ADJUSTMENT. IN THE ABOVE CIRCUMSTANCES, IT IS PROPOSED THAT THE ARBITRARY ADJUSTMENTS CLAIMED BY YOU WITHOUT SUPPORTING RATIONALE AND PRO OF BE REJECTED. HENCE TPO PROCEEDS TO COMPARE THE SALE PRICE TO AE WITH TH E MPEDA DATA FOR THE. CORRESPONDING PERIOD AND FOR THE CORRESPONDING PROD UCT AND COUNTRY, WITHOUT GRANTING ANY ADJUSTMENT. WHENEVER THE CORRE SPONDING MPEDA RATE IS HIGHER THAN THE RATE AT WHICH SALE IS MADE TO AS SOCIATED ENTERPRISE, MPEDA RATE WILL BE TAKEN AS ARM'S LENGTH PRICE AND B ASED ON THE SAME, UPWARD ADJUSTMENTS WILL BE MADE TO THE INCOME OF TH E ASSESSES. OBJECTIONS, IF ANY, MAY BE FURNISHED ON OR BEFORE 18.12.2015.' 3.1 BEFORE THE TPO, THE ASSESSEE VIDE LETTER DATED 22.12.2015 EXPLAINED THE REASON FOR ADOPTING THE 3 % WEIGHTAGE. THE ASSESSE E SUBMITTED THAT CERTAIN GRADES U/ 1 AND 1/2 OF CUTTLEFISH IS PROCESSED AND PACKED WITH 25% GLAZE (GLAZE INDICATES THE EXTENT OF WATER OR ICE PER KG OF PROD UCT), WHEREAS THE PRICE INDICATED IN MPEDA WEBSITE IS FOR PRODUCTS WITH 20 % GLAZE. HENCE, THE ASSESSEE HAD CLAIMED A WEIGHTAGE OF 3% TO ACCOUNT FOR SUCH D IFFERENCES. AFTER ANALYZING THE ASSESSEES CLAIM, THE TPO FOUND TO HAVE NO MERI T. THE ASSESSEE CLAIMED THAT CUTTLEFISH EXPORTED BY THEM TO THE AE WAS OF 25 % GL AZE. HOWEVER WHILE GOING THROUGH THE EXPORT INVOICES OF THE ASSESSEE, IT WAS SEEN THAT THE ASSESSEE WAS EXPORTING TO ITS AE CUTTLEFISH OF VARIOUS GLAZES RAN GING FROM 15 % TO 25%, THE 15 % GLAZE PRODUCT WAS HAVING LESSER WATER CONTENT AND HENCE SHOULD FETCH HIGHER PRICE THAN THE 20% GLAZED PRODUCT. HENCE, IT WAS S UBMITTED THAT ANY LOSS THAT THE ASSESSEE SUFFERS BY WAY OF COMPARISON OF THEIR 25 % GLAZE PRODUCT WITH PRICE OF 20 % GLAZED PRODUCT PUBLISHED BY MPEDA SHOULD BE DULY COMPENSATED. IT WAS ALSO FOUND THAT MANY OF THE INVOICES OF THE ASS ESSEE WAS NOT MENTIONING I.T.(TP)A. NO./447C/2016 5 ANY DETAILS OF THE GLAZE OF THE PRODUCT. ALSO, THE ASSESSEE HAD NOT PRODUCED ANY BASIS AS TO HOW THE DIFFERENCES IN GLAZE LEADS TO A UNIFORM 3 % ADJUSTMENT ON ALL INVOICES. HENCE, THE ASSESSEE'S ARBITRARY CLAIM FOR 3 % WEIGHTAGE ON THEIR EXPORT PRICE TO AE WAS REJECTED AND ALP WAS DETERMINED ACC ORDINGLY. 4. ON EXAMINATION OF THE CLAIMS OF THE ASSESSEE, THE PRIME RATE SHEETS AND OTHER DOCUMENTS PRODUCED BY THE ASSESSEE AND THE OR DER OF THE TPO, THE DRP OBSERVED THAT THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS OF THE TPO WITH EVIDENCE THAT IT IS EXPORTING TO ITS AE CUTTLEFISH O F VARIOUS GLAZES RANGING FROM 15% TO 25%. IT WAS ALSO OBSERVED THAT THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS OF THE TPO THAT ANY LOSS THAT THE ASSESSEE SUFFERS BY WAY OF COMPARISON OF THEIR 25% GLAZE PRODUCT (WITH PRICE OF 20% GLAZE D PRODUCT PUBLISHED BY MPEDA) WILL BE DULY COMPENSATED BY THE COMPARISON OF THEIR 15% GLAZE PRODUCE (WITH PRICE OF 20% GLAZED PRODUCT PUBLISHED BY MPEDA ). THE DRP OBSERVED THAT THE ASSESSEE COULD NOT GIVE REASONS WHY MANY OF THE INVOICES DO NOT MENTION ANY DETAILS OF THE GLAZE OF THE PRODUCT. ALSO, IT WAS OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED ANY BASIS AS TO HOW THE DIFFERENC ES IN GLAZE LEADS TO A UNIFORM 3% ADJUSTMENT ON ALL INVOICES. FURTHER, THE ASSESSEE COULD NOT GIVE EVIDENCE AS TO HIGHER GLAZING NECESSARILY MEANS LOW ER PRICE. ACCORDING TO THE DRP, TPO HAD MADE ADJUSTMENTS AS PER EACH INVOICE A ND THE ASSESSEE HAD NOT MADE ANY ARGUMENT ON HOW ADJUSTMENT ON ANY INVOICE IS INCORRECT. THE ASSESSEE DID NOT CONTROVERT THE ENTRY WISE ADJUSTME NT DETAILS AND ONLY LUMP SUM I.T.(TP)A. NO./447C/2016 6 ADJUSTMENT WAS SOUGHT BY THE ASSESSEE. IN VIEW OF THE ABOVE FINDINGS, THE DRP UPHELD THE ORDER OF THE TPO AND REJECTED THE OBJECT IONS OF THE ASSESSEE. 5. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR SUBMITTED THAT HAVING RELIED ON CUP METHOD AS THE MOST APPROPRIATE METHOD FOR BENCH MARKING INTERNATIONAL TRANSACTIONS, THEY HAVE RELIED ON EXP ORT RATES PUBLISHED BY MPEDA, WHICH IS A QUASI GOVT. BODY AND THE DATA RELEASED O N A WEEKLY BASIS GAVE INPUT OF THE TYPES OF PRODUCTS AND THIS WAS TAKEN AS BENC HMARK FOR ARRIVING AT ARMS LENGTH PRICING. ACCORDING TO THE LD. AR, THE MAIN P RODUCTS EXPORTED BY THE ASSESSEE ARE CUTTLEFISH, SQUIDS AND OCTOPUS OF VARI OUS SIZES/GRADES WITH DIFFERENT GLAZE PERCENTAGES. THE LD. AR SUBMITTED THAT GLAZE REPRESENTS THE PERCENTAGE OF WATER CONTENT IN THE PRODUCT. FOR INSTANCE 1KG OF C UTTLEFISH GRADE U/1 WITH 25% GLAZE, WILL EFFECTIVELY HAVE ONLY 750 GMS OF CUTTLE FISH AND 250 GMS OF WATER. SIMILARLY, IT WAS SUBMITTED THAT ONE KG OF SQUID U/ 5 WITH 15% GLAZE WILL HAVE 850 GMS OF SQUID AND 150 GMS OF WATER. THE GLAZES OF D IFFERENT PRODUCTS EXPORTED BY THE COMPANY TO ASSOCIATES ARE AS FOLLOWS: CUTTLEFISH: 1. 25% GLAZE OR 2. 20% GLAZE SQUID: 3. 20% 4. 15% 5. 10% OCTOPUS 6. 20% I.T.(TP)A. NO./447C/2016 7 7. 15% 5. IT WAS SUBMITTED THAT WHILE COMPARING CUTTLEFISH IN MPEDA DATA RELEASE, MPEDA DATA GAVE THE PRICE OF CUTTLEFISH WITH 10%, 20 % AND PRICE WITHOUT GLAZE. IT WAS SUBMITTED THAT MPEDA DID NOT LIST THE PRICE O F CUTTLEFISH WITH 25% GLAZE AND THIS PRODUCT WITH 25% GLAZE IS ONE OF THE MAIN GLAZED PRODUCTS WHICH THEY EXPORT WHICH MEANT THAT THE PRICE OF PRODUCT WITH 2 5% GLAZE NEEDS TO BE ADJUSTED BY 5% (I.E. 25% LESS 20%) IN ORDER TO HAVE A FAIR COMPARISON WITH A PRODUCT OF 20% GLAZE LISTED IN MPEDA DATA. IT WAS S UBMITTED THAT 25% GLAZED CUTTLEFISH PRODUCT WOULD BE CHEAPER BY 5% THAN THE SAME PRODUCT WITH 20% GLAZE. IT WAS SUBMITTED WHILE COMPARING SQUID PRICE IN MPEDA DATA,. MPEDA DATA GIVES THE PRICE OF SQUID WITHOUT GLAZE ONLY. I T WAS SUBMITTED THAT MPEDA DID NOT LIST THE PRICE OF SQUID WITH 10%, 15% AND 2 0% GLAZES. IT WAS SUBMITTED THAT THE ASSESSEE WAS EXPORTING SQUID PRODUCTS WITH 10% GLAZE, 15% GLAZE AND 20% GLAZE WHICH MEANT THAT THE PRICE OF SQUID PRODU CTS WITH 10%, 15% AND 20% GLAZE NEED TO BE ADJUSTED IN ORDER TO HAVE A FA IR COMPARISON WITH A SQUID PRODUCT LISTED IN MPEDA DATA WITHOUT ANY GLAZE. IT WAS SUBMITTED THAT THE SQUID PRODUCTS ON AN AVERAGE SHOULD BE PRICED MUCH LESSER DUE TO THE GLAZES AS COMPARED TO THE SQUID PRICE LISTED IN MPEDA WHICH DO NOT SHOW ANY GLAZE. TO SUM UP, IT WAS SUBMITTED THAT CUTTLEFISH AND SQUID PRODUCTS EXPORTED HAVE THIS REDUCTION IN PRICE DUE TO GLAZE VARYING BETWEEN 5% TO 20%. HENCE, ACCORDING TO THE LD. AR, IT WAS ONLY REASONABLE TO CLAIM AN A VERAGE REDUCTION IN PRICES, I.T.(TP)A. NO./447C/2016 8 THAT TOO AT A VERY NOMINAL PERCENTAGE OF 3% IN ORDE R TO COMPENSATE FOR THE GLAZE DIFFERENCE IN THE ASSESSEES PRODUCTS AND THO SE LISTED IN MPEDA DATA. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE OR DERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RECORD. THE TPO MADE ADJUSTMENT AFTER EXAMINING THE INVOICE PRODUCE D BY THE ASSESSEE THAT IT HAS EXPORTED PRODUCTS HAVING GLAZES RANGING FROM 15 % TO 25%. THE PRODUCT OF THE ASSESSEE IS HAVING VARIOUS GLAZES RANGING FROM 15% TO 25%, AS SUCH, THE ASSESSEES PRODUCT COULD BE COMPARED WITH THE PRICE LIST PUBLISHED BY MPEDA WHICH IS FOR 20% GLAZE AFTER MAKING SUITABLE ADJUST MENT WHICH THE TPO HAS DONE. FURTHER, THE ASSESSEE HAS NOT BROUGHT ON ANY EVIDENCE TO SHOW THAT THE ASSESSEES PRODUCT IS HAVING 25% GLAZES SO THAT IT CANNOT BE COMPARED WITH THE PRICE LIST PUBLISHED BY MPEDA. BEING SO, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. AR AND THE SAME IS REJECTED. THUS, GROUND NOS. 2 TO 4 OF THE ASSESSEE ARE DISMISSED. 8. THE NEXT GROUND, GROUND NO. 5 IS WITH REGARD T O DISALLOWANCE OF EIA MONITORING FEE PAID TO EXPORT INSPECTION AGENCY, FOR NON DEDUCTION OF TAX. 9. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PAID RS.18,02,939/- AS EIA MONITORING FEE TO EXPORT INSPECTION AGENCY. THE ASSE SSEE HAD NOT DEDUCTED TAX AT SOURCE ON THIS PAYMENT. SINCE THE EXPORT INSPECTI ON AGENCIES ARE AUTONOMOUS I.T.(TP)A. NO./447C/2016 9 BODIES ESTABLISHED BY THE CENTRAL GOVERNMENT UNDER THE (EXPORT QUALITY CONTROL &INSPECTION) ACT, 1963 (22 OF 1963), AS THE FIELD O RGANIZATIONS FOR IMPLEMENTING THE POLICIES OF THE CENTRAL GOVERNMENT WITH RESPECT TO QUALITY CONTROL AND/OR SHIPMENT AND INSPECTION OF EXPORT COMMODITIES FROM I NDIA AS SUCH TDS U/S 194] WILL BE ATTRACTED IN THIS CASE FOR THE PAYMENT PAID TO AUTONOMOUS BODIES AND NON-DEDUCTION OF TAX WILL ATTRACT PROVISIONS OF 40A(I)(A) OF THE INCOME TAX A CT, 1961. HENCE AN AMOUNT OF RS.18,02,930/- WAS DISALLO WED U/S 40A(I)(A). 10. THE ASSESSEE SUBMITTED A COPY OF THE E-MAIL (UNSIGN ED], THE RELEVANT POTION OF WHICH IS AS UNDER: 1. IT IS TRUE, AS MENTIONED BY MR. NORBERT KARIKKA SSERRY ON THE MATTER OF TDS DEDUCTION AND THE CORRESPONDING CREDITS IN THE EXPO RTER'S PASSBOOK ON GIA MONITORING FEES, HAS BEEN DISCUSSED WITH THE DIRECT OR, EIC DIVISION, DECISION ARRIVED AT BUT NOT IMPLEMENTED. THOUGH NOT PUT IN W RITING, THE MATTER HAS ALSO BEEN DISCUSSED WITH JT. SECRETARY, MOC. 2. HOWEVER, AS PER THE LAST DISCUSSION I HAD WITH T HE DIRECTOR, EIC ON 4TH MARCH, 2016 AT DELHI, 1 HAVE TO PLACE THE FOLLOWING POSITION, AS MENTIONED BY THE DIRECTOR, EIC. 1. A CIRCULAR IS BEING ISSUED BY THE MINISTRY OF FINANCE CLARIFYING THAT EIC AND EIA, BEING A PART OF THE GOVERNMENT ARE NOT TAXA BLE ENTITIES. THIS CIRCULAR WILL BE ISSUED BY THE REGIONAL TAX AUTHORITIES TO T HE REGIONAL EIA OFFICES. THIS PROCESS WILL TAKE ABOUT A FORTNIGHT. 2. TILL THE ISSUE OF THIS CIRCULAR, ALL THOSE EXPORTERS WHO HAVE DEDUCTED TDS FROM THE MONITORING FEES PAID TO EIA, WILL BE GIVEN CREDIT IN THEIR PASSBOOK BY THE RESPECTIVE REGIONAL EIA OFFICE, IMMEDIATELY ON R ECEIPT OF SUCH INFORMATION FROM THE INDIVIDUAL EXPORTER. I MENTIONED THAT THIS WAS PROMISED EARLIER, BUT THE DIRECTOR, EIC EMPHATICALLY SAID THAT THIS WILL B E COMPLIED WITH IMMEDIATE EFFECT. IMPLEMENTING THE ABOVE, I WOULD REQUEST I.T.(TP)A. NO./447C/2016 10 A) EACH MEMBER TO SUBMIT THE DETAILS OF TDS DEDU CTIONS MADE BY THEIR COMPANY ON SUCH MONITORING FEES TO ENABLE US TO FOL LOW UP WITH THE DIRECTOR, EIC AND HIS TEAM ON GIVING CREDITS, IN THE EIA PASS BOOKS WITH IMMEDIATE EFFECT, AS PROMISED. B) I WOULD ALSO REQUEST ALL THE MEMBERS TO INF ORM ABOUT ANY DISALLOWANCES HAVING TAKEN PLACE IN THEIR ASSESSMENT BY IT AUTHOR ITIES FOR NOT DEDUCTING SUCH TDS FROM THE EIA FEES. I HAD WRITTEN LETTERS PREVIOUSLY TO ALL THE MEMBERS ADVISING THEM TO DEDUCT TDS ON PAYMENT OF EIA MONITORING FEES. 1 GOT NO RES PONSE FROM ANY OF THE MEMBERS. THIS GIVES A FEELING THAT ALMOST ALL THE M EMBERS BARRING A FEW ARE HAVING NO ISSUE IN THEIR ASSESSMENT WITH THE IT AUT HORITIES FOR NOT DEDUCTING TDS FROM EIA FEES.. THIS MAY BE SO, BUT THE FACT REM AINS THAT THIS MATTER CAN BE BROUGHT UP BY IT AUTHORITIES, ANY TIME. HAVING SAID THIS. I REQUEST ALL THE REGIONAL PRESID ENTS TO PREVAIL ON THE RESPECTIVE MEMBERS TO SUBMIT THE DETAILS URGENTLY, FOR US TO TAKE THE APPROPRIATE ACTION WITHOUT ANY DELAY. THIS SUBMISSI ON MAY NOT HAVE PRIORITY WITH MAJORITY OF THE MEMBERS BUT I STILL MAINTAIN T HAT EVERY MEMBER SHOULD PAY SERIOUS ATTENTION TO THIS ISSUE AS SOME OF OUR MEMBERS HAVE BEEN DISALLOWED EIA FEE AS EXPENDITURE IN THEIR INCOME TA X ASSESSMENT. 11. ON APPEAL, THE DRP FOUND THAT FROM THE PAR A 1 OF THIS E-MAIL ALSO IT WAS CLEAR THAT EVEN AS LATE AS 7.3.2016 NO CIRCULAR HAS BEEN ISSUED BY THE GOVT. OF INDIA EXEMPTING EIC/ EIA FROM INCOME TAX. FURTHER, NO OTHER DOCUMENT WAS SUBMITTED BY THE ASSESSEE SHOWING THAT THE INCOME O F THE ASSESSEE IS EXEMPT. FURTHER, IT WAS FOUND THAT NO CERTIFICATE FOR NON-D EDUCTION OF TDS WAS PRODUCED BEFORE AO OR EVEN BEFORE THE DRP. THEREFORE, THE DR P UPHELD THE ACTION OF THE AO AND THE OBJECTION WAS REJECTED. I.T.(TP)A. NO./447C/2016 11 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RECORD. BEFORE US ALSO THE LD. AR WAS NOT ABLE TO SHOW THAT THE PAYME NT TO EXPORT INSPECTION AGENCY IS NOT LIABLE FOR DEDUCTION OF TDS SO AS TO ATTRACT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE LD. AR AND UPHOLD THE ORDER OF THE LOWER AUT HORITIES. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THI S 5 TH JULY, 2018. SD/- SD/- ( GEORGE GEORGE K.) (CHAN DRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: DATED: 5 TH JULY, 2018 GJ COPY TO: 1. TORRY HARRIS SEA FOODS PVT. LTD., 9/572, THIRUMA LA WARD, CHUNGAM, C.C.S.B. ROAD, ALAPPUZHA-688 010. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, ALAPPUZHA. 3. THE PR. COMMISSIONER OF INCOME-TAX, KOTTAYAM. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRA R) I.T.A.T. , COCHIN