DCIT 1(2), MUMBAI V. ITL TOURS & TRAVELS P. LTD, MUMBAI

ITA 4983/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3978 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO. 4983/MUM/2014 : (A.Y : 20 10 - 11 ) DCIT - 1(2), MUMBAI (APPELLANT) VS. M/S. ITL TOURS & TRAVELS PVT. LTD., 10, NAZMI BUILDING, RAGHUNATH DADAJI STREET (D.N. ROAD), FORT, MUMBAI 400 001. PAN : AABCI2337L (RESPONDENT) APPELLANT BY : SHRI NEIL PHILIP (DR) RESPONDENT BY : SHRI KIRIT SHETH DATE OF HEARING : 1 6 /02/2016 DATE OF PRONOUNCEMENT : 16 /02/2016 O R D E R PER G.S. PANNU , A M : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 2, MUMBAI DATED 30.05.2014, PERTAINING TO THE ASSESSMENT YEAR 2010 - 11, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30.03.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL THE SOLITARY DISPUTE RAISED BY THE REVENUE IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWA NCE OF RS. 1,02,80,213/ - MADE BY THE ASSESSING OFFICER BY INVOKING SEC. 40(A)(IA) OF THE ACT. 2 M/S. ITL TOURS & TRAVELS PVT. LTD. ITA NO. 4983/MUM/2014 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE RESPONDENT - ASSESSEE IS ENGAGED IN THE BUSINESS OF AIR TICKETING AGENT AND MONEY CHANGER. IN THE COURSE OF THE ASSES SMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD DEBITED CERTAIN EXPENDITURE IN THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF DISCOUNT AND HANDLING CHARGES ON WHICH THE REQUISITE TAX REQUIRED TO BE DEDUCTED AT SOURCE IN TERMS OF SEC. 194H OF T HE ACT WAS NOT DEDUCTED. AS PER THE ASSESSING OFFICER, SUCH EXPENDITURE WAS IN THE NATURE OF COMMISSION EXPENDITURE LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S. 194H OF THE ACT. ON FAILURE OF THE ASSESSEE TO DEDUCT THE REQUISITE TAX AT SOURCE, THE CORRESPO NDING EXPENDITURE OF RS.1,02,80,213/ - WAS DISALLOWED. 4. BEFORE THE CIT(A), THE ASSESSEE POINTED OUT THAT SIMILAR DISALLOWANCE MADE IN THE EARLIER ASSESSMENT YEARS 2006 - 07, 2008 - 09 AND 2009 - 10 WAS A SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL , WHEREIN THE STAND OF THE ASSESSEE WAS UPHELD. THE CIT(A) NOTICED THAT THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006 - 07 WAS FOLLOWED BY HIS PREDECESSOR IN THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 , AND SIMILAR ACTION OF THE ASSES SING OFFICER WAS SET ASIDE AND THE ADDITION WAS DELETED. IN LINE WITH THE PRECEDENT S IN THE ASSESSEES OWN CASE, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 1,02,80,213/ - MADE U/S. 40(A)(IA) OF THE ACT. 5. IN THIS BACKGROUND , REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE SUBJECT MATTER OF DISPUTE IS COVERED BY THE ORDERS OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2006 - 07, 2008 - 09 AND 2009 - 10. T HE 3 M/S. ITL TOURS & TRAVELS PVT. LTD. ITA NO. 4983/MUM/2014 LEARNED REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT THE DISPUTE AROSE , FOR THE FIRST TIME , IN ASSESSMENT YEAR 2006 - 07 IN ITA NO. 5746/MUM/2009 WHEREIN THE TRIBUNAL VIDE ITS ORDER DT. 9.9.2010 SET ASIDE THE DISALLOWANCE IN THE FOLLOWING WORDS : 9. F ROM THE ABOVE FINDINGS OF THE AO IT IS CLEAR THAT THE INTERMEDIARIES ARE BOOKING THE TICKETS FROM THE ASSESSEE. THEREFORE, THE INTERMEDIARIES ARE NOT WORKING AS AGENT OF THE ASSESSEE FOR DOING ASSESSEE'S BUSINESS RATHER THE INTERMEDIARIES ARE BRINGING THE BUSINESS TO THE ASSESSEE AS RECORDED BY THE AO AND THE ASSESSEE IS PASSING OUT SOME HANDLING CHARGES. THUS, THE ASSESSEE, IN FACT, GIVING SOME DISCOUNT TO THE INTERMEDIARIES FOR GETTING BUSINESS. IT IS NOT A TRANSACTION BETWEEN THE PRINCIPAL AND THE AGENT BUT IT IS A TRANSACTION BETWEEN THE PRINCIPAL AND PRINCIPAL. IN ORDER TO BRING THE SERVICES OR TRANSACTION WITHIN THE EXPRESSION COMMISSION AND BROKERAGE UNDER SECTION 194 - H, THE ELEMENT OF AGENCY MUST BE PRESENT. WHEN THERE IS NO CONTRACT OF AGENCY AT AN Y POINT OF TIME BETWEEN THE ASSESSEE AND THE INTERMEDIARIES AND THE DISCOUNT MADE AVAILABLE TO THE INTERMEDIARIES DOES NOT FALL WITHIN THE TERM COMMISSION OR BROKERAGE, THEN, SUCH DISCOUNT ALLOWED BY THE ASSESSEE IS NOT LIABLE FOR DEDUCTION UNDER SECTION 1 94 - H. THOUGH THE ASSESSEE HAS DEDUCTED THE TDS, BUT MERE DEDUCTION OF TDS DOES NOT ALTER THE NATURE OF TRANSACTION AND RELATION BETWEEN THE ASSESSEE AND THE INTERMEDIARIES WHICH IS OTHERWISE APPARENT AND NOT DISPUTED. IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION V/S UNION OF INDIA REPORTED IN 257 ITR 202 (GUJ), THE HON.GUJARAT HIGH COURT AT PAGE 215 OF THE REPORT HAS HELD AS UNDER : APPLYING THE AFORESAID DEFINITIONS AND THE JUDICIAL PRONOUNCEMENTS TO THE FACT OF THE PRESENT CASE AND IN BACKDROP OF THE AFORESAID RULES, IT IS CLEAR THAT ALTHOUGH THE GOVERNMENT HAS IMPOSED A NUMBER OF RESTRICTIONS ON THE LICENSED STAMP VENDORS REGARDING THE MANNER OF CARRYING ON THE BUSINESS, THE STAMP VENDORS ARE REQUIRE TO PURCHASE THE STAMP PAPERS ON PAYMENT OF PRIC ELESS THE DISCOUNT ON THE PRINCIPAL TO PRINCIPAL BASIS AND THERE IS NO CONTRACT OF AGENCY AT ANY POINT OF TIME. 4 M/S. ITL TOURS & TRAVELS PVT. LTD. ITA NO. 4983/MUM/2014 IT IS ALSO NOT POSSIBLE TO ACCEPT THE CONTENTION OF MR. NAIK FOR THE REVENUE THAT THE DEFINITION OF 'COMMISSION OR BROKERAGE' AS CONTAINED IN THE EXPLANATION TO SECTION 194H IS SO WIDE THAT IT WOULD INCLUDE ANY PAYMENT RECEIVABLE, DIRECTLY OR INDIRECTLY, FOR SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS AND THAT, THEREFORE, THE DISCOUNT AVAILED OF BY THE STAMP VENDORS CONSTITUTES COMMISSI ON OR BROKERAGE WITHIN THE MEANING OF SECTION 194H. IF THIS CONTENTION WERE TO BE ACCEPTED, ALL TRANSACTIONS OF SALE FROM A MANUFACTURER TO A WHOLESALER OR FROM A WHOLESALER TO A SEMI WHOLESALER OR FROM A SEMI - WHOLESALER TO A RETAILER WOULD BE COVERED BY S ECTION 194H. TO FALL WITHIN THE AFORESAID EXPLANATION, THE PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, IS BY A PERSON ACTING ON BEHALF OF ANOTHER PERSONS (I) FOR SERVICES RENDERED (NOT BEING PROFESSIONAL SERVICES), OR (II) FOR ANY SERVICES IN T HE COURSE OF BUYING OR SELLING OF GOODS, OR (III) IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSETS, VALUABLE ARTICLE OR THING. THE ELEMENT OF AGENCY IS TO BE THERE IN CASE OF ALL SERVICES OR TRANSACTIONS CONTEMPLATED BY EXPLANATION (I) TO SECTION 194H . IF A CAR DEALER PURCHASE CARS FROM THE MANUFACTURER BY PAYING PRICES LESS DISCOUNT, HE WOULD BE THE PURCHASER AND NOT THE AGENT OF THE COMPANY, BUT IN THE COURSE OF SELLING CARS, HE MAY ENTER INTO A CONTRACT OF MAINTENANCE DURING THE WARRANTY PERIOD, WIT H THE CUSTOMERS (PURCHASER OF THE CAR) ON BEHALF OF THE COMPANY. HOWEVER, SUCH SERVICES RENDERED BY THE DEALER IN THE COURSE OF SELLING CARS DOES NOT MAKE THE ACTIVITY OF SELLING CARS ITSELF AN ACT OF AGENT OF THE MANUFACTURER WHEN THE DEALINGS BETWEEN THE COMPANY AND THE DEALER IN THE MATTER OF SALE OF CARS ARE ON 'PRINCIPAL TO PRINCIPAL' BASIS. THIS IS JUST AN ILLUSTRATION TO CLARIFY THAT A SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS HAS TO BE SOMETHING MORE THAN THE ACT OF BUYING OR SELLING OF G OODS. WHEN THE LICENSED STAMP VENDORS TAKE DELIVERY OF STAMP PAPERS ON PAYMENT OF FULL PRICES LESS DISCOUNT AND THEY SELL SUCH STAMP PAPERS TO RETAIL CUSTOMERS, NEITHER OF THE TWO ACTIVITIES OF BUYING FROM THE GOVERNMENT AND SELLING TO THE CUSTOMERS) CAN B E TERMED AS THE SERVICE IN THE COURSE OF BUYING OR SELLING OF GOODS' 10. EVEN OTHERWISE AS PER THE EXPLANATION TO SECTION 194H THE COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE 5 M/S. ITL TOURS & TRAVELS PVT. LTD. ITA NO. 4983/MUM/2014 DIRECTLY OR INDIRECTLY FOR ACTING ON BEHALF OF THE ANOTH ER PERSON FOR SERVICES RENDERED. WHEN THE INTERMEDIARIES ARE NOT ACTING ON BEHALF OF THE ASSESSEE BUT ONLY ACTING TO BOOK THE TICKERS FROM THE ASSESSEE ON BEHALF OF THE PASSENGERS THEN THE TRANSACTIONS BETWEEN THE ASSESSEE AND INTERMEDIARIES ARE NOT AS PRI NCIPAL TO AGENT TRANSACTIONS. MOREOVER WHEN THE DISCOUNT ALLOWED/GIVEN BY THE ASSESSEE TO THE INTERMEDIARIES IS ALSO ALLOWED TO THE PASSENGER DIRECTLY TO BOOK THE TICKETS TO THE ASSESSEE AND THE ASSESSEE IS RECORDING THE TRANSACTION IN ITS BOOKS OF ACCOUNT ON NET AMOUNT OF THE INVOICE THEN IT IS NOT A CASE OF COMMISSION OR BROKERAGE PAID OR PAYABLE BY THE ASSESSEE TO THE INTERMEDIARIES. ACCORDINGLY, THE PROVISIONS OF SECTION 194H ARE NOT APPLICABLE TO THE TRANSACTION IN THE PRESENT CASE. THIS ISSUE IS DECID ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) IS DELETED. 6. IT WAS ALSO A COMMON POINT BETWEEN THE PARTIES THAT THE AFORESAID DECISION OF THE TRIBUNAL CONTINUES TO HOLD THE FIELD AS IT HAS NOT BEEN A LTERED BY ANY HIGHER AUTHORITY. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEEN RELIED UPON BY THE CIT(A), WE FIND NO REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT(A), WHICH IS HEREBY AF FIRMED. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 16 TH FEBRUARY, 2016. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 16 TH FEBRUARY, 2016 6 M/S. ITL TOURS & TRAVELS PVT. LTD. ITA NO. 4983/MUM/2014 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, I BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR *SSL* I.T.A.T, MUMBAI