Nature Bio Foods Ltd., New Delhi V. ACIT, New Delhi

ITA 4522/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1214 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR DR HEARING ON
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I NEW DELHI BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER AND SHRI I.C. SUDHIR, JUDICIAL MEMBER I.T.A. NO. 4522/DEL/2012 ASSESSMENT YEAR: 2007-08 NATURE BIO FOODS LTD. VS. ACIT UNIT NO.134, 1 ST FLOOR, RECTANGLE-I CENTRAL CIRCLE-19 SAKET DISTRICT CENTRE SAKET NEW DELHI. NEW DELHI-110017 PAN: AACCN2624G (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VIKAS JAIN & ANKIT GUPTA, ADV. REVENUE BY : SH. Y.S. KAKKAR, .DR. HEARING ON : 26/10/2012 ORDER PRONOUNCED ON THE DATE : ORDER PER I.C.SUDHIR, JM : THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) HAS ERRED IN UPHOLDING THE ADDITIO NS / DISALLOWANCES MADE BY THE ASSESSING OFFICER. 2. THAT THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN H OLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS IN RESPE CT OF PAYMENT OF RS.46,419/- MADE TO ALBATROSS CFS PVT. L TD. 3. THAT THE ADDITION / DISALLOWANCE MADE ARE ILLEGAL, UNJUST AND BAD IN LAW AND ARE BASED ON MERE SURMISES AND ITA NO. 4522/DEL/2012 2 CONJUNCTURES AND THE SAME CANNOT BE JUSTIFIED BY AN Y MATERIAL ON RECORD. 4. THAT THE EVIDENCE AND SUBMISSIONS FILED AND MATERIA LS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUE D AND JUDICIOUSLY INTERPRETED, HENCE THE ADDITION/ DISALL OWANCE MADE IS UNCALLED FOR. 2. WE FIND THAT THE ISSUE INVOLVED IN THE AFORESAID GR OUNDS IS AS TO WHETHER ASSESSEE WAS LIABLE TO DEDUCT TDS IN RESPEC T OF PAYMENT OF RS.46,419/- MADE TO ALBATROSS CFS PVT. LTD. 3. THE RELEVANT FACTS ARE THAT A PAYMENT OF RS.46,419/ - WAS MADE BY THE ASSESSEE IN TWO PARTS, THE FIRST PAYMENT OF RS.3509 4/- WAS MADE AS BEING REIMBURSEMENT OF RAIL FREIGHT CHARGES CHARGED BY CO NCOR I.E. CONTAINER CORPORATION OF INDIA AND PAID BY PAYEE ON BEHALF OF ASSESSEE. THE ASSESSEE CLAIMED THAT THIS PAYMENT WAS MADE BY IT TO THE PAY EE WAS IN THE NATURE OF REIMBURSEMENT AND THUS WAS NOT TAXABLE UNDER THE IN COME TAX ACT. THE SECOND PAYMENT WAS OF RS.11,325/- MADE BY THE ASSES SEE TO PAYEE. IT WAS CLAIMED BY THE ASSESSEE THAT SINCE IT WAS BELOW THE LIMIT OF RS.20,000/- HENCE THE SAME WAS NOT LIABLE TO TDS UNDER THE ACT. THE AO DID NOT AGREE WITH THE ASSESSEE AND MADE DISALLOWANCE OF RS.46,41 9/- U/S 40 (A) (IA) OF THE ACT ON THE BASIS THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THOSE PAYMENTS. THE LD CIT (A) HAS UPHELD THE ACTION OF THE AO. AGA INST THIS THE ASSESSEE HAS PREFERRED PRESENT APPEAL. ITA NO. 4522/DEL/2012 3 4. IN SUPPORT OF THE GROUNDS AND THE ISSUE INVOLVED TH EREIN, THE LD. AR HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTH ORITIES BELOW. HE SUBMITTED THAT RS.35,094/- WAS PAID AS REIMBURSEMEN T OF RAIL FREIGHT CHARGES CHARGED BY CONTAINER CORPORATION OF INDIA AND PAID BY ALBATROSS CFS PVT. LTD. (HEREINAFTER TO BE REFERRED AS PAYEE) ON BEH ALF OF THE ASSESSEE. THE VOUCHER DATED 7.3.2007 RAISED BY THE PAYEE WAS FURN ISHED BEFORE THE AUTHORITIES BELOW TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT PAYMENT MADE BY THE ASSESSEE TO THE PAYEE WAS IN THE NATURE OF REIMBURSEMENT AND THUS IS NOT TAXABLE UNDER THE INCOME TAX ACT. HE RE FERRED CBDT CIRCULAR NO. 715 DATED 8.8.1995 WHICH PROVIDES CLARIFICATIONS ON VARIOUS PROVISIONS RELATING TO TAX DEDUCTION AT SOURCE. HE REFERRED QU ESTION NO. 30 AND REPLY THERETO. IN REPLY TO QUESTION NO. 30, THE CBDT HAS CLARIFIED THAT REIMBURSEMENT CANNOT BE DEDUCTED OUT OF THE BILL AM OUNT FOR THE PURPOSE OF TAX DEDUCTION AT SOURCE. HE SUBMITTED THAT QUESTION NO. 30 WAS RAISED WITH REGARD TO SUBMISSION OF GROSS AMOUNT OF THE BILL IN CLUDING REIMBURSEMENT. THE SAID CLARIFICATION OF CBDT APPLIES ONLY IF THER E IS A COMPOSITE BILL WHICH DOES NOT DEFERENTIATE BETWEEN THE REIMBURSEME NT AND OTHER SUM. HOWEVER, WHERE THERE IS SEPARATE BILL FOR REIMBURSE MENT THEN TDS PROVISION IS NOT APPLICABLE TO SAID PAYMENT. HE ALSO REFERRED CBDT CIRCULAR NO. 714 DATED 3.8.1995 WHEREIN IN PARA NO. 2 OF THE CIRCULA R IT WAS CLARIFIED THAT ITA NO. 4522/DEL/2012 4 SECTION 194J PRESCRIBED DEDUCTION OF TAX AT SOURCE AT RATE OF 5 PER CENT OF THE SUM AS INCOME TAX ON INCOME COMPRISED THEREIN. HE S UBMITTED THAT FOR APPLICATION OF SECTION 194C OR 194J THERE MUST BE A N ELEMENT OF INCOME IN THE PAYMENT MADE BY THE PERSON TO A RESIDENT. IN SU PPORT HE ALSO PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIB UNAL IN THE CASE OF ITO VS. DR. WILLIAM SCHWABE (INDIA) P. LTD. (2005) 3 SO T 71 (DEL.). THE LD. AR POINTED OUT THAT RECENTLY IN THE CASE OF ITO VS. ON S CREATIONS PVT. LTD., ITA NO. 3981/DEL/2010, THE DELHI BENCH OF THE TRIBU NAL HAS RELIED UPON THE CASE OF DR. WILLIAM SCHWABE (INDIA) P. LTD WHICH HA S BEEN UPHELD BY THE HONBLE HIGH COURT IN ITA NO. 1279/2011. 5. REGARDING SECOND PAYMENT OF RS.11,325/- MADE BY THE ASSESSEE TO THE PAYEE. THE LD. AR SUBMITTED THAT IT IS BELOW THE LI MIT OF RS.20,000/- WHICH WAS PREVALENT WHEN THE PAYMENT WAS MADE ON 8.3.2007 , HENCE IT WAS NOT LIABLE TO TDS UNDER THE IT ACT. THE LD. AR ALSO REF ERRED PAGE NOS. 4 TO 6 OF THE PAPER BOOK FILED ON 25.5.2012. THESE ARE THE CO PIES OF LEDGER ACCOUNT OF INLAND HAULAGE/THC, JOURNAL VOUCHER DATED 8.3.2007 ISSUED BY NATURE BIO FOODS LTD, AND DEBIT NOTE DATED 7.3.2007 IN THE ACC OUNT OF ALBATROSS CFS PVT. LTD. 6. THE LD. DR ON THE OTHER HAND TRIED TO JUSTIFY THE O RDERS OF THE AUTHORITIES BELOW. ITA NO. 4522/DEL/2012 5 7. HE ALSO REFERRED PAGE NOS. 3, 8, 18 & 35 OF THE PAP ER BOOK FILED ON BEHALF OF DEPARTMENT. THESE ARE COPIES OF LEDGER AC COUNT OF INLAND HAULAGE/THC OF THE PERIOD, REPLY BY ASSESSEE FURNIS HED DURING THE COURSE OF ASSESSMENT ALONG WITH COPIES OF DOCUMENTS LIKE ACCO UNT OF INLAND HAULAGE PAYEE/THC AND DETAIL THEREOF, ACCOUNT OF FREIGHT OU TWARD, AND DETAILS THEREOF, ACCOUNT OF BUSINESS PROMOTION AND DETAILS THEREOF, ACCOUNT OF PORT LIFT EXPENSES AND DETAILS THEREOF, AND ACCOUNT OF T DS PAYABLE AND TDS RETURN WITH ANNEXURE THEREOF. THE LD. DR ALSO PLACE D RELIANCE ON THE FOLLOWING DECISIONS: 1. BHARTI SHIPPING YARD LTD. VS. DCIT (2011) 11 ITR (T RIB) 599 2. MILK SPECIALITIES LTD. VS. CIT (2012) 207 TAXMAN 33 7 (P & H) 8. THE LD. AR SUBMITTED FURTHER THAT NO AMOUNT IS PAYA BLE AT THE END OF 31.3.2007. IN SUPPORT HE PLACED RELIANCE ON THE DEC ISION OF SPECIAL BENCH OF THE (TRIB) IN THE CASE OF MERILYN SHIPPING & TRANSP ORT CORPN. VS. ACIT (2012) 136 ITD 23 (VZK) (SB) 9. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT IN JOURNAL VOUCHER DATED 8.3.2007 THE AMOUNT RS.35,094/- HAS BEEN SHOW N DEBITED IN THE NAME OF INLAND HAULAGE/THC AS PER INVOICE NO. 1 AND IT H AS BEEN CREDITED TO ALBATROSS CFS PVT. LTD WITH REFERENCE TO RAIL FREIG HT FOR SESAME SEED CONTAINER VIDE INVOICE NO. 001 IN THE DEBIT NOTE IN THE ACCOUNT OF ALBATROSS ITA NO. 4522/DEL/2012 6 CFS PVT. LTD. DATED 7.3.2007. THE AMOUNT HAS BEEN S HOWN PAID FOR THE ASSESSEE BEING REIMBURSEMENT OF RAIL FREIGHT CHARGE S CHARGED BY CONCOR AND PAID BY THEM ON BEHALF OF TWDS MVT OF 1.20 RF E XPORTS LOADED FACTORY STUFFED CTR ON 7.3.2007 AS PER RECEIPT NO. 0703070137 ATTACHED. WE FIND NO DISPUTE IN THE SUBMISSION OF THE LD. AR THAT THE PAYMENT OF RS.35,094 WAS MADE AS REIMBURSEMENT OF RAIL FREIGHT CHARGES CHARGED BY CONCOR AND PAID BY THE PAYEE ON BEHALF OF ASSESSEE. THE RELEVANT EXTRACT OF THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN T HE CASE OF ITO VS. DR. WILLIAM SCHWABE (INDIA) P. LTD (SUPRA) RELIED UPON BY THE LD. AR IS BEING REPRODUCED HEREUNDER: IT IS OBSERVED THAT AS AGREED BY AND BETWEEN THE AS SESSEE COMPANY AND M/S INDOCHEM TECHNO CONSULTANTS LTD., A VEHICLE WAS TO BE PROVIDED BY THE ASSESSEE COMPANY TO THE S AID CONSULTANT FOR ATTENDING TO ITS WORK AND THUS, THE ASSESSEE COMPANY WAS TO BEAR THE VEHICLE EXPENSES ACTUALLY I NCURRED BY THE SAID PARTY. BILLS FOR SUCH EXPENSES INCURRED BY THE SAID CONSULTANTS WERE SEPARATELY RAISED BY THEM ON THE A SSESSEE COMPANY IN ADDITION TO BILLS FOR FEES PAYABLE ON AC COUNT OF TECHNICAL SERVICES AND SINCE THE AMOUNT OF BILLS SO RAISED WAS TOWARDS THE ACTUAL EXPENSES INCURRED BY THEM, THERE WAS NO ELEMENT OF ANY PROFIT INVOLVED IN THE SAID BILLS. I T WAS THUS A CLEAR CASE OF REIMBURSEMENT OF ACTUAL EXPENSES INCU RRED BY THE ASSESSEE AND THE SAME, THEREFORE, WAS NOT OF THE NA TURE OF PAYMENT COVERED BY SECTION 194J REQUIRING THE ASSES SEE TO DEDUCT TAX AT SOURCE THEREFROM. THE CBDT CIRCULAR N O. 715, DATED 8.8.1995 RELIED UPON BY THE ASSESSING OFFICER IN SUPPORT OF HIS CASE ON THIS ISSUE WAS APPLICABLE ONLY IN TH E CASES WHERE BILLS ARE RAISED FOR THE GROSS AMOUNT INCLUSIVE OF PROFESSIONAL FEES AS WELL AS REIMBURSEMENT OF ACTUAL EXPENSES AN D THE SAME, THEREFORE, WAS NOT APPLICABLE TO THE FACTS OF THE P RESENT CASE ITA NO. 4522/DEL/2012 7 WHERE BILLS WERE RAISED SEPARATELY BY THE CONSULTAN TS FOR REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THEM. AS SUCH, CONSIDERING ALL THE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT THE PROVISIONS OF SECTION 194J WERE NOT APPLICABLE TO T HE REIMBURSEMENT OF ACTUAL EXPENSES AND THE ASSESSEE C OMPANY WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM SUCH RE IMBURSEMENT. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE AND DISMISS THE RELEV ANT GROUNDS OF THE REVENUES APPEAL. 10. WE NOTE THAT IN THE PRESENT CASE BEFORE US, THE AMO UNT OF BILL RAISED WAS TOWARDS THE ACTUAL EXPENSES INCURRED BY THE ASS ESSEE FOR THE PAYMENT OF RAIL FREIGHT I.E. TO THE GOVERNMENT ORGANIZATION, H ENCE THERE WAS NO ELEMENT OF ANY PROFIT INVOLVED IN THE SAID BILL. IT WAS A C LEAR CASE OF REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE ASSESSEE ON RAIL FREIGHT AND THUS THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE T HERE FROM. THE DECISIONS RELIED UPON BY THE LD. DR HAVING DISTINGUISHABLE FA CTS AS THERE WAS NO INVOLVEMENT OF PAYMENT OF FREIGHT TO A GOVERNMENT O RGANIZATION AND ISSUE ARE NOT HELPFUL TO THE REVENUE IN THE PRESENT CASE. 11. SO FAR AS PAYMENT OF RS.11,325/- MADE BY THE ASSESS EE TO THE PAYEE IS CONCERNED ITSELF BELOW THE LIMIT OF RS.20,000/- PRE VALENT WHEN THE PAYMENT WAS MADE ON 8.3.2007, WE AGREE WITH THE CONTENTION OF THE LD. AR THAT THE PAYMENT WAS NOT LIABLE TO TDS UNDER THE IT ACT. THE AUTHORITIES BELOW WERE THUS NOT JUSTIFIED IN MAKING DISALLOWANCE ON THIS A MOUNT UNDER THE ITA NO. 4522/DEL/2012 8 PROVISIONS OF SECTION 40 (A) (IA) OF THE ACT. THE I SSUE RAISED IN THE GROUNDS IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS ARE THUS ALLOW. 12. IN RESULT APPEAL IS ALLOWED ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAY OF 28/01/2013. SD/- SD/- (B.R. JAIN) ( I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28/01/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR