ITO 17(3)(1), MUMBAI V. ALTAF I. MOTORWALA, MUMBAI

ITA 4755/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70856 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS BHAVANA YASHROY
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . ! , '# ' $ BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 4755/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2009-10 THE ITO 17(3)(1), ROOM NO.621, 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400012 % % % % / VS. SHRI ALTAF I. MOTORWALA, PROP. M/S. A.M. TEX FAB IMPEX, 107, SUGTAR MANZIL, 195, SHERIF DEVJI STREET, CHAKALA, MUMBAI 400003 ' '# ./ ( ./ PAN/GIR NO. : AIAPM8118K ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , ' / APPELLANT BY: MRS. BHAVANA YASHROY *+') - , ' / RESPONDENT BY : SHRI REEPAL G. TRALSHAWALA % - .# / DATE OF HEARING : 26/08/2013 / & - .# / DATE OF PRONOUNCEMENT : 26/08/2013 '0 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST ORDER PASSED BY LD. CIT(A)-29, MUMBAI DATED 10/04/2012 FOR ASSES SMENT YEAR 2009-10. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A)(IA)OF RS. 61,72,427/- ON ACCOUNT OF FREIGHT CHARGES AND RS. 29,700/- ON ACCOUNT OF CLEARING & F ORWARDING CHARGES WITHOUT APPRECIATING THE FACT THAT THE SAID EXPENSES ARE NO T REIMBURSEMENT IN NATURE AND ATTRACTS THE PROVISIONS OF SEC. 194C. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E ARID IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THERE CANNOT BE DOUBLE DEDUCT ION OF TAX ON SAME AMOUNT, AS WHENEVER TDS IS TO BE DEDUCTED, THE SAME HAS BEEN D EDUCTED BY THE AGENT, WITHOUT ./ I.T.A. NO. 4755/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2009-10 2 APPRECIATING THE FACT THAT THE BILLS RAISED BY THE AGENT HAVE NOT MENTIONED ANY AMOUNT OF TAX DEDUCTED AT SOURCE WHILE KING PAYMENT TO SHIPPING COMPANIES OR AIRLINES. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT CIRCULAR NO. 715 DATED 08.O8. 1995CFTHE CBDT IS NOT APPLICABLE IN ASSESSEES CASE WITHOUT CONSIDERING T HE FACT THAT THE PROVISIONS OF SECTION 194 C & 194 J WOULD APPLY TO ANY SUM PAID I NCLUDING REIMBURSEMENT ALSO 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPOR T TRADE IN FABRICS AND GARMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE AO NOTICED THAT ASSESSEE DID NOT DEDUCT TAX ON FREIGHT AND CLEARI NG & FORWARDING CHARGES OF RS.63,48,415/- (RS.61,72,427/- ON ACCOUNT OF FREIGH T AND RS.1,75,988/- ON ACCOUNT OF CLEARING AND FORWARDING CHARGES). ACCOR DING TO AO THE ASSESSEE WAS REQUIRED TO DEDUCT TAX ON THESE AMOUNTS UNDER THE P ROVISIONS OF SECTION 194C OF THE ACT. THE AO NOTICED THAT THE RECIPIENT HAS MA DE TWO SEPARATE BILLS (I) FOR AGENCY CHARGES SERVICE TAX AND (II) FREIGHT AND OTH ER CHARGES IN RESPECT OF RESPECTIVE SHIPMENTS. ACCORDING TO AO MERELY SHOWI NG TWO SEPARATE BILLS, CANNOT SUBSTANTIATE ASSESSEES CONTENTION THAT FREIGHT CHA RGES AND OTHER RELATED EXPENSES PAID TO THE RECIPIENTS ARE ONLY REIMBURSE MENT AS SUCH THE AFOREMENTIONED AMOUNT WAS DISALLOWED AND ADDED TO T HE INCOME OF THE ASSESSEE. LD. CIT(A) HAS DELETED THE DISALLOWANCE OF RS.61,72 ,427/- AS PER FOLLOWING REASONS: (1) THE FREIGHT CHARGES OF RS.61,72,27/- PAID TO C LEARING AND FORWARDING AGENT IS A REIMBURSEMENT EXPENDITURE. THE AGENT HAS RAISED A SEPARATE BILL FOR THESE, EXPENSES. IT IS ALSO STATED CLAIMED SO I N THE ASSESSMENT PROCEEDINGS. (2) WHENEVER TDS IS TO BE DEDUCTED THAT HAS BEEN DE DUCTED BY THE AGENT AND PAID TO GOVERNMENT ACCOUNT ON BEHALF OF THE APPELLA NT. HENCE THERE CANNOT BE AGAIN DEDUCTION OF TAX ON THE SAME AMOUNT. COPY OF FORM NO.16A, REFLECTING DEDUCTION OF AX BY AGENT, CHA MERCHANT AIR FREIGHT SERVICES (P0 LTD. HAS BEEN FILED. (3) THE SAMPLE AIRWAY BILLS OF THE AIRLINES SHOW TH E NAME OF THE APPELLANT. THE SAME AMOUNT HAS BEEN REIMBURSED TO THE AGENT. T HE HANDLING CHARGES OF THE AGENT HAS BEEN SEPARATELY BILLED. (4) THE ITAT IN ITS DECISION IN P.P. OVERSEAS ITA N O.733/MUM/201 AY.2006- 07 DATED 18.2.2011 DECIDED SIMILAR ISSUE AND HELD T HAT WHEN THE C&F ./ I.T.A. NO. 4755/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2009-10 3 AGENTS COLLECTED PAYMENTS TOWARDS VARIOUS LIABILITI ES AND DUTIES FOR THE ASSESSEE THESE ARE NOT FOR ANY WORK DONE AND CANNOT B COVERED U/S.194C. (5) THE CIRCULAR NO.715 DATED 8.8.1995 OF CBDT IS NOT APPLICABLE TO THE CASE OF APPELLANT SINCE THERE ARE SEPARATE INVOICES ISSU ED IN RESPECT REIMBURSEMENT CHARGES AND SERVICE CHARGES OF THE AG ENT RESPECTIVELY. (6) THE BILL WISE DETAILS OF REIMBURSEMENT OF EXPEN SES AND SERVICE CHARGES WERE SUBMITTED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. OUT OF THE REST OF ADDITION OF RS.1,75,988/-, LD. C IT(A) HAS DELETED THE ADDITION OF RS.29,700/- AND HAS SUSTAINED AN ADDITION OF RS.1,4 6,288/- THE DEPARTMENT IS AGGRIEVED, HENCE, FILED AFOREMENTIONED APPEAL. 3. AFTER NARRATING THE FACTS LD. DR RELIED UPON CI RCULAR NO.715 ISSUED BY CBDT DATED 8/8/1995. SHE PLEADED THAT ADDITION HAS WRONGLY BEEN DELETED BY LD. CIT(A), HIS ORDER SHOULD BE SET ASIDE AND THA T OF AO BE RESTORED. 4. ON THE OTHER HAND, LD. AR SUBMITTED THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. HE SUBMITTED THAT SIMILAR ISSUE WAS CONS IDERED IN THE FOLLOWING DECISIONS BY ITAT AND IT WAS HELD THAT PROVISION S OF SECTION 194C WERE NOT APPLICABLE. 1. M/S.OM SATYA EXIM PVT. LTD. VS. ITO, ITA NO.133 5/AHD/2010 , A.Y 2007-08 ORDER DATED 13 TH MAY 2011. 2. SATENDRA JHUNJHUNWALLA VS. ITO, ITA NO.1988/KOL /2009, A.Y. 2005-06 ORDER DATED 11/11/2011. LD. AR SUBMITTED THAT THE TRIBUNAL IN THE CASE OF M /S. OM SATYA EXIM PVT. LTD. VS. ITO (SUPRA) HAS ALSO CONSIDERED THE CBDT CIRCU LAR, WHICH IS RELIED UPON BY LD.DR. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. LD. CIT(A) HAS GIVEN A CATEGORICAL FIN DING THAT AMOUNT OF RS.61,72,427/- PAID BY THE ASSESSEE TO CLEARING AND FORWARDING AGENT IS MERELY REIMBURSEMENT EXPENDITURE FOR WHICH THE AGENT HAS RAISED A SEPARATE BILL FOR THESE EXPENDITURE. WHEREVER TDS WAS TO BE DEDUCT ED HAS BEEN DEDUCTED BY ./ I.T.A. NO. 4755/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2009-10 4 THE AGENT AND PAID TO GOVERNMENT ACCOUNT ON BEHALF OF THE ASSESSEE. THEREFORE, ASSESSEE CANNOT BE ASKED TO DEDUCT TAX OUT OF THE SAME AMOUNT. FOR THIS PURPOSE LD. CIT(A) HAS ALSO CONSIDERED COPY OF FORM NO.16A, WHICH REFLECTED THE DEDUCTION OF TAX BY THE AGENT. LD. CIT(A) HAS A LSO FOUND THAT FROM THE SAMPLE OF AIR WAYBILL THAT AIRLINES HAD SHOWN, THE NAME O F THE ASSESSEE WHICH HAD BEEN REIMBURSED TO THE ASSESSEE BY THE AGENT AND HANDLI NG CHARGES HAVE BEEN SEPARATELY BILLED BY THE AGENT. LD. CIT(A) HAS AL SO FOUND THAT CIRCULAR IN THE PRESENT CASE WAS NOT APPLICABLE AS THERE ARE TWO SE PARATE INVOICES, ONE ISSUED IN RESPECT OF REIMBURSEMENT OF CHARGES AND OTHER FOR SERVICE CHARGES OF THE AGENT. NO CONTRARY MATERIAL HAS BEEN BROUGHT ON RECORD TO DISLOCATE AFOREMENTIONED FINDINGS RECORDED BY LD. CIT(A). THE DECISIONS REL IED UPON BY LD. AR SUPPORT THE CASE OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM THE CASE OF M/S. OM SATYA EXIM PVT. LTD. VS. ITO (SUPRA) ARE RE PRODUCED BELOW: 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D THE JUDGMENT CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE HAVE ALSO CONS IDERED BOARD CIRCULAR DATED 8- 8-1975, COPY OF WHICH HAS BEEN SUBMITTED BY THE LEA RNED DR OF THE REVENUE. IN THE PRESENT CASE, IT HAS BEEN SUBMITTED BEFORE US BY TH E LEARNED AR THAT THE COMMISSION AGENT HAS RAISED SEPARATE BILLS FOR REIM BURSEMENT OF THE EXPENSES. WITH ALL THESE FACTS, WHEN WE CONSIDER THE BOARD CIRCULA R NO.7 15 DATED 8-8-1995, WE FIND THAT THIS BOARD CIRCULAR CANNOT BE MADE APPLIC ABLE TO THE PRESENT CASE BECAUSE IN THE PRESENT CASE, THERE IS NO COMPOSITE BILL RAI SED BY THE COMMISSION AGENT AND AS PER THE LEARNED AR OF THE ASSESSEE, SEPARATE BIL L WAS RAISED BY THE COMMISSION AGENT FOR REIMBURSEMENT OF EXPENSES AND THE LEARNED DR COULD NOT CONTRADICT THIS SUBMISSION OF THE LEARNED AR OF THE ASSESSEE. WE AL SO FIND THAT THE TRIBUNAL HAS ALSO CONSIDERED THE BOARD CIRCULAR NO.7 15 DATED 8- 8-1975 IN THE CASE OF DR. WILLMAR SCHWABE INDIA P. LTD. (SUPRA)AND IT WAS HEL D THAT WHEN THE BILL FOR REIMBURSEMENT OF EXPENSES HAS BEEN SEPARATELY RAISE D BY THE CONSULTANT, SECTION 1941 IS NOT APPLICABLE. HENCE, BY RESPECTFULLY FOLL OWING THIS TRIBUNAL DECISION, WE HOLD THAT IN THE PRESENT CASE ALSO, SINCE BILLS FOR REIMBURSEMENT OF EXPENDITURE HAVE BEEN RAISED BY THE COMMISSION AGENT SEPARATELY, TDS WAS NOT REQUIRED TO BE DEDUCTED FROM SUCH REIMBURSEMENT OF EXPENSES AND AS A CONSEQUENCE, SECTION 40(A)(IA) IS NOT APPLICABLE WITH REGARD TO SUCH PAY MENTS. OTHER TRIBUNAL DECISIONS CITED BY THE LEARNED AR OF THE ASSESSEE RENDERED IN THE CASE OF MODICON NETWORK P. LTD., AND GRANDPRIX FAB P. LTD. (SUPRA) ALSO SUPPOR T THE CASE OF THE ASSESSEE AND HENCE, BY RESPECTFULLY FOLLOWING ALL THE ABOVE TRIB UNAL DECISIONS, WE HOLD THAT NO TDS IS REQUIRED TO BE DEDUCTED IN THE PRESENT CASE FOR REIMBURSEMENT OF EXPENSES FOR WHICH SEPARATE BILLS WERE RAISED BY THE COMMISS ION AGENT AND HENCE, THE PROVISIONS OF SECTION 40(A)(IA) IS NOT APPLICABLE T O SUCH PAYMENTS. THEREFORE, DISALLOWANCE MADE BY THE ASSESSING OFFICER IS TO BE DELETED. ./ I.T.A. NO. 4755/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2009-10 5 5.1 IN VIEW OF THE ABOVE DISCUSSIONS WE FIND NO INF IRMITY IN THE RELIEF GRANTED BY LD. CIT(A). WE DECLINE TO INTERFERE AND THE APP EAL FILED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2013 . '0 - & #' 1 2%3 26/08/2013 - 4 SD/- SD/- ( SANJAY ARORA) (I.P.BANSAL) /ACCOUNTANT MEMBER '# /JUDICIAL MEMBER MUMBAI; 2% DATED 26/08/2013 '0 '0 '0 '0 - -- - *.56 *.56 *.56 *.56 7'6&. 7'6&. 7'6&. 7'6&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 *.% , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. '0% '0% '0% '0% / BY ORDER, +6. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . .VM , SR. PS