ITO - 28(1)(3), NAVI MUMBAI V. CARGO CARRIERS, NAVI MUMBAI

ITA 5330/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0089 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5330 / MUM/ 201 6 ( / ASSESSMENT YEAR: 20 12 - 1 3 ) ITO - 28 (1)(3) ROOM NO. 327, VASHI RAILWAY STATION COMPLEX TOWER NO 6, 3 RD FLOOR, VASHI NAVI MUMBAI - 400703 / VS. CARGO CARRIERS A - 322, CITY MALL, VASHI NAVI MUMBAI PIN:400705 ./ ./ PAN/GIR NO. : AA CFC 8577 G ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 10 .08 .2017 / DATE OF PRONOUNCEMENT : 31 .0 8 .2017 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 22 .06.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 26 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 1 2 - 1 3 . 2 . THE REVENUE H AS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO U/S. 40(A)(IA) OF RS.1,76,42,311/ - HOLDING THAT TDS PROVISIONS ARE NOT APPLICABLE ON E XPENSES IN THE NATURE OF REIMBURSEMENT, THOUGH ACCOUNTED FOR IN THE P/L ACCOUNT BY THE ASSESSEE. REVENUE BY : SHRI RAJESH KUMAR YADAV (DR) ASSESSEE BY: SHRI PRAKASH PANDIT (AR) M/S CARGO CARRIERS. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE PROVISIONS OF SECTION 40(A)(IA ) OF THE ACT ARE NOT APPLICABLE TO ANY AMOUNT PAID OR PAYABLE WITHOUT DEDUCTING TDS, IRRESPECTIVE OF THE FACT THAT THE SAME ARE IN THE NATURE OF REIMBURSEMENT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) N THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM E - FILED ITS RETURN OF INCOME ON 30. 09.2012 FOR THE ASSESSMENT YEAR OF 2012 - 13 DECLARING TOTAL INCOME TO THE TUNE OF RS.4,17,108/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). T HE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT THROUGH CASS. THEREAFTER, N OTIC E U/S.143(2) OF THE ACT DATED 23.09 .201 3 WAS ISSUE D AND SERVED UPON THE ASSESSEE ON 24.09.2013. THE ASSESSEE WAS A PART NERSHIP FIRM ENGAGED IN THE BUSINESS OF THE CLEARING & FORWARDING AGENTS. THE ASSESSEE CLAIMED THE FREIGHT STATION CHARGES OF RS.1,53,94,807/ , SHIPPING LINE CHARGES OF RS.21,74,942/ - AND SURVEY EXPENSES OF RS.72,562/ - . SINCE THE TDS WAS NOT PAID UPON THE S AID EXPENCES, THEREFORE, THE SAID EXPENSES WERE DISALLOWED IN VIEW OF THE PROVISION U/S 40 (A) (IA) OF THE ACT AND THE TOTAL INCOME WAS TO THE TUNE OF RS.1,84,70,140/ - . THEREAFTER , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF TH E ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1: - 4 . UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DISALLOWANCE OF EXPENSES TO THE TUNE OF RS.1,76,42,311/ - ON ACCOUNT OF CONTAINER FREIGHT CHARGES TO THE TUNE OF RS.1 ,53,94,807/ - , SHIPPING LINE CHARGES TO THE TUNE OF RS.21,74,942/ - AND SURVEY EXPENSES OF RS.72,562/ - U/S 40 (A) (IA) OF THE ACT. M/S CARGO CARRIERS. 3 THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE CIT(A) HAS WRONGLY DELETED THE SAID ADDITION TO THE TUNE OF RS. 1,76 ,42,311/ - RAISED BY THE AO U/S 40 (A) (IA) R.W.S. 194C OF THE ACT. IT IS ALSO ARGUED THAT THE TDS WAS LIABLE TO BE DEDUCTED ON THE SAID EXPENSES THEREFORE, THE FINDING OF THE CIT(A) IS WRONG AND IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND, THE LD. REPRESENT ATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTION. BEFORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5.1 THE APPELLANT CONTENDED THAT SIMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 WHICH WAS DELETED BY THE LD. CIT(A) VIDE HIS ORDERS 01 - 10.2014. THE APPELLANT ALSO FURNISHED A COPY OF ORDER OF HONBLE ITAT, MUMBAI IN ITS OWN CASE FOR AY 2009 - 10 WHEREIN SIMILAR ISSUE HAS BEEN DECIDED IN ITS FAVOUR. 5.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, THE WRITTEN AND ORAL SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE ORDERS RELIED UPON. THE ISSUE IS SQUARELY COVERD BY THE ORDER OF HONBLE TRIBUNAL. THE RELEVANT EXTRACT FROM THE ORDER IS REPRODUCED AS UNDER: THE NEXT ISSUE RELATES TO THE DISA LLOWANCE MADE U/S 40(A)(IA) OF THE ACT. THE ASSESSEE HAD PAID CUSTOM CHARGES, WAREHOUSING CHARGES FREIGHT CHARGES, PROFESSIONAL FEE ETC. TO VARIOUS PARTIES ON BEHALF OF ITS CLIENTS TO THE TUNE OF RS.2,35,97,801/ - . THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THESE PAYMENTS AND HENCE THE AO ADDED THE ABOVE SAID AMOUNT BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. THE LD. CIT(A) EXAMINED THIS ISSUE IN DETAILS AND NOTICED THAT THE ASSESSEE HAS INCURRED THESE EXPENSES ON BEHALF OF ITS CLIENTS ON AC TUAL BASIS AND HAS GOT THE REIMBURSEMENT FROM ITS CLIENTS. THUS, THERE WAS NO PROFIT ELEMENT AND HENCE THE LD. CIT(A) HELD THAT THERE WAS NO PROFIT ELEMENT AND HENCE THE LD. CIT(A) HELD THAT THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE FROM THESE PAYMEN TS. ACCO R DINGLY, HE DELETED THE DISALLOWANCE. M/S CARGO CARRIERS. 4 WE NOTICE THAT THE ASSESSEE HAS INCURRED THESE EXPENSES ON BEHALF OF ITS CLIENTS, MEANING THEREBY THE ASSESSEE HAS ACTED AS AGENT OF ITS CLIENTS. IN THIS KIND OF SITUATION, THE CONTRACT DOES EXIST BETWEEN THE CLIENT OF THE ASSESSEE AND THE SERVICE PROVIDER. HENCE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT, SINCE THERE IS NO OBLIGATION ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. AT THE TIME OF HEARING BEFORE US, THE LD. AR PLACED RELIANCE ON THE DECISION RENDERED BY THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. UNIVERSAL TRAFFIC CO.(2014) (42 CCH 0055)(MUM), WHEREIN THE TRIBUNAL HAD EXPRESSED THE VIEW IDENTICAL TO THAT OF THE LD. CIT(A) IN THE INST ANT CASE. THE DELHI BENCH OF TRIBUNAL HAS ALSO EXPRESSED ON IDENTICAL VIEW IN THE CASE OF JAGUAR ENTERPRISES VS. DCIT(151ITD376). SINCE, THE VIEW TAKEN BY THE LD. CIT(A) ON THIS ISSUE IS IDENTICAL WITH THE VIEW EXPRESSED BY THE CO - ORDINATE BENCHES OF TRIBU NAL, WE DO NOT FIND ANY INFIRMITY IN HIS ORDER ON THIS ISSUE. 5.3. SINCE THE FACTS OF THE CASE ARE SIMILAR, RESPECTFULLY FOLLOWING THE ORDER OF HONBLE ITAT, THE DISALLOWANCE MADE BY THE AO IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5 . ON APPRAISAL O F THE ABOVE SAID FINDING, WE FOUND THAT THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE FINDING OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 IN WHICH THE SAID CLAIM WAS ALLOWED. THE COPY OF THE SAID ORDER PASSED BY THE ITAT IN ITA. NO. 55/MUM/2013 IS ON THE FILE IN WHICH SUCH TYPE OF CLAIM HAS BEEN ALLOWED BY THE ITAT. THEREFORE, IN VIEW OF THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIALLY AND CORRECTLY WHICH IS NOT REQUIRE D TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THEREFORE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED . M/S CARGO CARRIERS. 5 ORDER PRONOUNCED IN THE OPEN COURT ON 31 AU G U S T ,2017 . SD/ - SD/ - ( G.S.PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 31 AUGUST, 2017 MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3 . ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI