TOSHBRO MEDICALS P.LTD, MUMBAI V. ITO 1(3)(3), MUMBAI

ITA 5143/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0450 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 40A(3); 143(3)

Judgement Text

ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5143/MUM/2015 (ASSESSMENT YEAR- 2010-11) TOSHBRO MEDICALS PRIVATE LIMITED, 8,MOHATTA BHAWAN, OFF DR. E. MOSS ROAD, WORLI, MUMBAI-400018 PAN: AABCT4483C VS. INCOME TAX OFFICER 1(3)(3), AAYAKAR BHAVAN, 5 TH FLOOR, M.K.ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO. 5171/MUM/2015 (ASSESSMENT YEAR- 2010-1 1) INCOME TAX OFFICER 1(3)(3), AAYAKAR BHAVAN, 5 TH FLOOR, M.K.ROAD, MUMBAI- 400020 VS. TOSHBRO MEDICALS PRIVATE LIMITED, 8,MOHATTA BHAWAN, OFF DR. E. MOSS ROAD, WORLI, MUMBAI-400018 PAN: AABCT4483C (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY : SH. RUTURAJ H GURJAR-ADVOCATE REVENUE REPRESENTED BY : SH.RAM TIWARI SR -DR DATE OF HEARING : 02.08.2017 DATE OF ORDER : 07.08.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THESE CROSS APPEALS UNDER SECTION 253 OF INCOME-TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS )- 3, MUMBAI DATED 12.08.2015 FOR ASSESSMENT YEAR 2010-11. ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 2 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY E NGAGED IN SUPPLY OF SPARES AND ACCESSORY OF MEDICAL EQUIPMENT, PROVIDI NG SERVICES AND ALSO ACTING COMMISSION AGENT, FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 12 TH OCTOBER 2010 DECLARING TOTAL INCOME OF RS.19,36,513/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 28 MARCH 2013 ASSESSING TOTAL INCOME OF RS. 78,45,942/ -. THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT ORDER MADE THE ADD ITION/DISALLOWANCES CONSISTING OF DISALLOWANCE OF RS. 1,08,981/-ON ACCO UNT OF CAR HIRE CHARGES UNDER SECTION 40(A)(IA), ADDITION OF RS.33,000/-ON ACCOUNT OF CONTRACT CHARGES OF CHRISTIAN MEDICAL COLLEGE, NOT ALLOWED T HE PROPORTIONATE CREDIT OF TDS IN RESPECT OF ADVANCE SERVICE CHARGES, DISAL LOWED A SUM OF RS.1,78,545/- ON ACCOUNT OF EXCESS INTEREST PAID TO DIRECTOR-SHAREHOLDER, DISALLOWED RS.6,60,000/- UNDER SECTION 40A(3) ON AC COUNT OF CASH EXPENSES, DISALLOWED A GUARANTEE COMMISSION OF RS. 6,00,000/-ON PRO RATA BASIS AND FURTHER AN ADDITION ON ACCOUNT OF COMMISS ION PAYMENT OF RS.43,28,903/- PAID TO VARIOUS DEALERS AGAINST SALE S MADE ON BEHALF OF ASSESSEE COMPANY. ON APPEAL BEFORE COMMISSIONER (AP PEALS) THE ADDITION ON ACCOUNT OF COMMISSION PAYMENT TO VARIOUS DEALERS FOR RS.43,28,903/- WAS DELETED. HOWEVER, IN RESPECT OF OTHER GROUNDS O F APPEAL WITH REGARDS TO ADDITIONS AND DISALLOWANCE THE LEARNED COMMISSIO NER (APPEALS) HELD THAT GROUND NO. 1 TO 8 WERE NOT PRESSED AND DISMIS SED THOSE GROUNDS. ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 3 HENCE, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPE ALS) THE ASSESSEE HAS FILED APPEAL FOR NOT DECIDING THE GROUND NO. 1 TO 8 BY HOLDING AS NOT PRESSED. SIMILARLY, THE REVENUE HAS FILED APPEAL AG AINST THE DELETING THE COMMISSION PAYMENT OF RS 43,28,903/- TO VARIOUS PA RTIES. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : (I) THE LEARNED COMMISSIONER (APPEALS) ERRED IN DISMISS ING THE GROUND NO.1 TO 8 AS NOT PRESSED. (II) THE LOWER AUTHORITIES ERRED IN DISALLOWING AMOUNT O F RS. 1,08,981/- ON ACCOUNT OF CAR HIRE CHARGES UNDER SECTION 40(A). (III) THE LOWER AUTHORITIES ERRED IN ADDING CONTRACT CHAR GES OF RS.33,000/- PAID TO CHRISTIAN MEDICAL COLLEGE. (IV) THE LOWER AUTHORITIES ERRED IN DISALLOWING PROPORTI ONATE CREDIT OF TDS IN RESPECT OF ADVANCE SERVICE CHARGES. (V) THE LOWER AUTHORITIES ERRED IN MAKING DISALLOWANCE OF ALLEGED EXCESS PAYMENT OF INTEREST OF RS. 1,78,545/-PAID TO SH, AR UN TOSHNIWAL AND ANURAG TOSHNIWAL. (VI) WITHOUT PREJUDICE TO THE GROUND NO.5, THE LOWER AUT HORITIES FAILED TO APPRECIATE THAT RECIPIENT OF INTEREST WERE PAYING T AX ON THE SAME AND HAD OFFERED FULL AMOUNT TO TAX, THUS THERE WAS NO LOSS TO THE REVENUE. (VII) THE LOWER AUTHORITIES ERRED IN MAKING DISALLOWANCE OF RS.6,60,000/- UNDER SECTION 40A(3) WITHOUT APPRECIATING THAT ASSESSEE H AD NOT MADE EXPENSES ABOVE RS. 20,000/- TO SAME PERSON ON THE SAME DAY. (VIII) THE LOWER AUTHORITIES ERRED IN DISALLOWING GUARANTE E COMMISSION OF RS.6,00,000/- ON PRO RATA BASIS, WITHOUT APPRECIAT ING THE FACT THAT THE SAME WAS PAID FOR BUSINESS PURPOSE . 4. THE REVENUE IN ITS CROSS APPEAL HAS RAISED FOLLOWIN G GROUNDS OF APPEAL: (1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOLDING THAT PAYMENTS MADE TO THE PARTIES WERE GENUINE TRANSACTION AND WHOLLY AND EXC LUSIVELY FOR BUSINESS PURPOSE. (2) THE LEARNED COMMISSIONER (APPEALS) ERRED IN DELETI NG THE DISALLOWANCE OF RS. 24,28,359/- OUT OF RS.432,8,903/- IN RESPECT OF COM MISSION PAYMENT TO SHRI KHETAN C NAYAK, M/S SURGITECK SYSTEM AND SUGITECK S ERVICES BECAUSE JOINT DIRECTOR (OPHTHALMIC), HEALTH, MEDICAL SERVICES AND MEDICAL EDUCATION GANDHINAGAR DID NOT CONFIRM THE RECEIVING OF ANY S UPPLY SERVICES FROM THESE PARTIES. ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 4 (3) THE LEARNED COMMISSIONER (APPEALS) ERRED IN DELETIN G THE DISALLOWANCE OF RS. 19,00,544/- PAID AS COMMISSION TO CAREWELL MEDICAL SYSTEM BY OVERLOOKING THE FACT THAT THE ASSESSEE HAD RECEIVED THE CONTRACT TH ROUGH BIDS FROM UNOPS UNDER PUNJAB & HARYANA GOVERNMENT AND NOT THROUGH COMMISS ION AGENT AS CLAIMED BY ASSESSEE. 5. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AND TH E LEARNED DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. FIRST, WE ARE TAKING THE APPEAL FILED BY ASSESSEE VIDE ITA NO.5143/M/201 5. THE LEARNED AR OF THE ASSESSEE ARGUED THAT ALL THE GROUNDS OF APPEAL RAISED BY ASSESSEE WERE NOT ADJUDICATED BY LEARNED COMMISSIONER (APPEALS) H OLDING THAT THE GROUNDS WERE NOT PRESSED. THE LEARNED AR OF THE ASS ESSEE INVITED OUR ATTENTION TO THE WRITTEN SUBMISSION FILED BEFORE CO MMISSIONER (APPEALS) (PAGE NO. 35 TO 38 OF PB). IT WAS ARGUED THAT ASSES SEE HAD FILED WRITTEN SUBMISSION AND EXPLAINED THE FACTS RELATING TO VARI OUS CLAIMS TO SUBSTANTIATE HIS CLAIMS. THE WRITTEN SUBMISSIONS WA S FILED BEFORE THE LEARNED COMMISSIONER (APPEALS) ON 26 FEBRUARY 2015 . THE REPRESENTATIVE OF ASSESSEE HAS NO OCCASION TO MAKE ANY SUBMISSION ABOUT NOT PRESSING THE SAID GROUNDS. IN ALL GROUNDS THE ASSESSEE HAS CHALL ENGED SUBSTANTIAL ADDITIONS AND DISALLOWANCE MADE BY ASSESSING OFFICE R WHILE PASSING THE ASSESSMENT ORDER. IT WAS PRAYED THAT ALL THESE GRO UNDS OF APPEAL MAY BE RESTORED BACK TO THE FILE OF LEARNED COMMISSIONER ( APPEALS) FOR DISPOSAL AFRESH WITH THE DIRECTIONS TO DECIDE THE GROUNDS AF TER GIVING THE OPPORTUNITY TO THE ASSESSEE. ON THE OTHER HAND THE LEARNED DR APPEARING FOR REVENUE SUPPORTED THE ORDER OF COMMISSIONER (AP PEALS). THE LEARNED ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 5 DR ARGUED THAT THE OBSERVATION OF LEARNED COMMISSIO NER (APPEALS) MAY BE BASED ON THE SUBMISSION OF ASSESSEE, OTHERWISE O THER GROUNDS OF APPEAL WAS DECIDED ON MERIT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE SEEN THAT SUBS TANTIAL AMOUNT OF ADDITIONS AND DISALLOWANCES ARE INVOLVED IN GROUND NO. 1 TO 8 RAISED BEFORE COMMISSIONER (APPEALS). WE HAVE FURTHER PERU SED THE WRITTEN SUBMISSION FILED BEFORE THE LEARNED COMMISSIONER (A PPEALS) BY THE REPRESENTATIVE OF ASSESSEE ON 26 FEBRUARY 2015. THE ASSESSEE HAD SUBMITTED THE EXPLANATION REGARDING THE VARIOUS DIS ALLOWANCES IN THE SAID WRITTEN SUBMISSION. THE COPY OF WRITTEN SUBMISSIONS PLACED BEFORE US, CONTAINED THE SIGNATURE OF RECIPIENT ALONG WITH DAT E OF RECEIPT THEREON. THE SUBSTANTIAL RIGHTS IN THE FORMS OF VARIOUS CLAIMS A RE INVOLVED IN THE GROUNDS OF APPEAL. CONSIDERING, THE NATURE OF DISAL LOWANCE AND THE QUANTUM OF ADDITIONS AND VARIOUS DISALLOWANCES, WE DEEM IT APPROPRIATE TO RESTORE ALL THE GROUNDS OF APPEAL RAISED BY ASSESSE E BEFORE US, TO THE FILE OF COMMISSIONER (APPEALS) TO DECIDE THE SAME AFRESH. N EEDLESS TO SAY THAT LEARNED COMMISSIONER (APPEALS) SHALL GRANT ADEQUATE AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE ORDE R IN ACCORDANCE WITH LAW. HENCE, ALL THE GROUNDS OF APPEAL RAISED BY ASS ESSEE IN ITS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 6 7. IN ITA NO.5171/M/2015 THE REVENUE HAS RAISED THREE GROUNDS OF APPEAL. GROUND NO.1 IS GENERAL IN NATURE AND THUS NEEDS NO SPECIFIC ADJUDICATION. GROUND NO.2 AND 3 RELATES TO DELETING THE DISALLOWA NCE OF RS.24,28,359/- PAID TO SH. KHETAN C NAYAK AND RS. 19,00,544/-PAID TO M/S CAREWELL MEDICAL SYSTEM ON ACCOUNT OF COMMISSION PAYMENT. TH E LEARNED DR FOR THE REVENUE ARGUED THAT DURING THE YEAR UNDER CONSI DERATION, THE ASSESSEE HAS SHOWN TO HAVE SUPPLIED THE VARIOUS MEDICAL EQUI PMENTS TO THE GOVERNMENT OF GUJARAT AND PUNJAB. THE STATE GOVERNM ENTS PROCURE THE MEDICAL INSTRUMENT ONLY THROUGH THE PROCESS OF BIDD ING AND THERE IS NO ROLE OF COMMISSION AGENT IN THE BIDDING SYSTEM. ON VERIFICATION DURING THE ASSESSMENT PROCEEDINGS, THE CONCERNED OFFICIAL DENI ED THE INVOLVEMENT OF THE AGENT. THE LD COMMISSIONER (APPEALS) DELETED TH E ENTIRE ADDITIONS WITHOUT ANY COGENT REASONING. THE LEARNED DR PRAYED FOR SETTING ASIDE THE ORDER OF COMMISSIONER (APPEALS) AND TO RESTORE THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND THE LEARNED AR OF THE AS SESSEE SUPPORTED THE ORDER OF COMMISSIONER (APPEALS). IT WAS ARGUED THAT ASSESSEE FILED SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE COMMISSIONER (APPEALS) TO SUBSTANTIATE THE CLAIM OF COMMISSION PAYMENT MADE TO VARIOUS PARTIES FOR PROCURING ORDER AND INS TALLATION OF MEDICAL EQUIPMENTS. THE ASSESSEE FILED THE SUFFICIENT EVIDE NCE REGARDING TO SUPPLY OF MEDICAL EQUIPMENT THROUGH LAB MEDICA SYSTEM. M/S LAB MEDICA ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 7 SYSTEM IS THE SISTER CONCERN OF M/S SURGITECH SERVI CES AND M/S SURGITECK SYSTEM. THE LEARNED COMMISSIONER (APPEALS) AFTER CO NSIDERING THE BUSINESS EXPEDIENCY ALLOWED THE COMMISSION PAYMENT AND DELETED THE ADDITIONS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6 ) TO PUNJAB GOVERNMENT AS WELL AS TO THE JOINT DIRECTOR (OPHTHA), HEALTH A ND MEDICAL SERVICES MEDICAL EDUCATION GANDHINAGAR GUJRAT. THE JOINT DIR ECTOR (OPHTHA), HEALTH AND MEDICAL SERVICES VIDE ITS LETTER DATED 1 9 MARCH 2013, DENIED THE INVOLVEMENT OF THE PARTIES TO WHOM THE ASSESSEE ALLEGEDLY PAID THE COMMISSION. THE COPY OF THE REPLY OF JOINT DIRECTOR DATED 22.03.2013 WHICH IS PLACED ON RECORD REVEALS THAT THE MEDICAL EQUIPMENTS WAS PROCURED THROUGH M/S LAB MEDICA SYSTEM. FOR THE CO MMISSION PAID TO M/S CAREWELL MEDICAL SERVICES THE ASSESSEE ON 12.03 .2013 CONTENDED THAT THE COMMISSION WAS NOT PAID FOR SALE OF EQUIPMENT T O PUNJAB GOVERNMENT, BUT WAS PAID ON SALE TO UNOPS. THE ASSESSING OFFICE R SENT NOTICE TO UNOPS ON THE ADDRESS PROVIDED BY ASSESSEE AT KOLKAT A. THE NOTICE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. W HEN THE ASSESSEE WAS CONFRONTED WITH THE REPLY OF JOINT DIRECTOR MEDICAL HEALTH SERVICES GOVERNMENT OF GUJARAT THE ASSESSEE CONTENDED THAT T HEY HAVE PAID ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 8 COMMISSION TO M/S SERGITECK SERVICES ON ACCOUNT OF INSTALLATION AND COMMISSIONING CHARGES. M/S SERGITECK SERVICES AND M /S SERGITECK SYSTEM ARE SISTER CONCERN OF M/S LAB MEDICA SYSTEM. FOR TH E ADMINISTRATIVE PURPOSE THEIR GROUP COMPANY HAVE ACTUALLY DONE THE WORK, THEREFORE, COMMISSION AND INSTALLATION COMMISSION CHARGES ARE CLAIMED BY THESE CONCERNED. THE AMOUNT OF COMMISSION WAS PAID TO THE M THROUGH ACCOUNT PAYEE CHEQUES. FOR THE COMMISSION PAID TO M/S CAREW ELL SYSTEM FOR SUPPLY OF EQUIPMENTS TO UNOPS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE RECEIVED CONTRACT THROUGH BIDDERS AND NOT THROUGH COMMISSION AGENT. THEREFORE, THE COMMISSION PAID TO M/S CAREWE LL MEDICAL SYSTEM IS ALSO NOT FOR THE PURPOSE OF BUSINESS AND DISALLOWED THE SAME. WE HAVE NOTICED THAT THE ASSESSEE HAS TAKEN INCONSISTENT ST AND ABOUT THE COMMISSION PAID TO VARIOUS PARTIES FOR SUPPLY OF MEDICAL EQUIP MENTS. THE LEARNED COMMISSIONER (APPEALS) ALLOWED BOTH THE GROUNDS OF APPEAL FOR COMMISSION PAYMENT WITHOUT DISCUSSING THE FACTS OF THE CASE. THE LEARNED COMMISSIONER (APPEALS) CONCLUDED THE ORDER ALMOST I N ONE LINE SENTENCE THAT TRANSACTION ARE THOROUGHLY GENUINE AND WHOLLY AND E XCLUSIVE FOR BUSINESS PURPOSE . THE ORDER OF LEARNED COMMISSIONER (APPEALS) IS N OT IN CONSONANCE WITH THE PROVISION OF SUB-SECTION (6) OF SECTION 251 OF INCOME- TAX ACT. THE PROVISION OF SUB-SECTION (6) OF SECTIO N 251 OF INCOME-TAX MANDATES THE LEARNED COMMISSIONER (APPEALS) THAT IT S ORDER MUST STATE THE ITA NO.5143&5171/M/2015 TOSHBRO MEDICAL PVT LTD 9 POINT FOR DETERMINATION, DECISION THEREON AND REASO NS FOR THE DECISIONS. THE ORDER IS NON-SPEAKING ORDER. THE ORDER OF LEARN ED COMMISSIONER (APPEALS) IS NOT SUSTAINABLE IN THE EYES OF LAW. TH US, WE SET ASIDE THE ORDER OF COMMISSIONER (APPEALS) AND RESTORE BOTH THE GROU NDS OF APPEAL TO THE FILE OF COMMISSIONER (APPEALS) TO DECIDE THE ISSUE AFRESH. NEEDLESS TO SAY THAT BEFORE DECIDING THE ISSUES THE LEARNED COMMISS IONER (APPEALS) SHALL GRANT ADEQUATE AND SUFFICIENT OPPORTUNITY TO THE AS SESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL NECESSARY DOCUMENTS TO MA KE THE FACTS MORE CLEAR AND UNAMBIGUOUS AND TO ALL PROVIDE INFORMATION TO C OMMISSIONER (APPEALS). WITH THESE DIRECTIONS THE APPEAL OF REVE NUE IS ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DAY OF AUGUST 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 07/8/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/