DCIT, CENTRAL CIRCLE-4(2), MUMBAI V. BALAJI IMPEX, MUMBAI

ITA 539/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6968 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: MAYUR KISNADWALA LD
• Keywords: Bogus purchase; Earning of tax free income; Tax effect; Reassessment proceedings; TDS; Rule 8D
• Section: 143(3); 142(1); 133A; 14A; 40(a)(ia); 133(6); 143(2); 148; 132

Judgement Text

ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.539/MUM/2019 ( / ASSESSMENT YEAR : 2010-11 ) D CIT - CE NTRAL CIRCLE 4(2) ROOM NO. 1918, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021. / VS. M/S. BALAJI IMPEX, 201, VYAPAR BHAVAN, 368/370 NARSHI NAKA STREET KATHA BAZAR (IN FRONT OF EXIM HOUSE) NEAR MASJID RAILWAY STATION MASJID BUNDER, MUMBAI 400 009. %& ./ ./PAN/GIR NO. AAHFB-8409-R ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) & ./ I.T.A. NO.553/MUM/2019 ( / ASSESSMENT YEAR : 2010-11 ) M/S. BALAJI IMPEX, 201, VYAPAR BHAVAN, 368/370 NARSHI NAKA STREET KATHA BAZAR (IN FRONT OF EXIM HOUSE) NEAR MASJID RAILWAY STATION MASJID BUNDER, MUMBAI 400 009. / VS. D CIT - CE NTRAL CIRCLE 4(2) ROOM NO. 1918, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021. %& ./ ./PAN/GIR NO. AAHFB-8409-R ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASS ESSEE BY : SHRI MAYUR KISNADWALA - LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK - LD.DR / DATE OF HEARING : 27/01/2020 / DATE OF PRONOUNCEMENT : 05/02/2020 ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 2 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 AFORESAID CROSS-APPEALS FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-52, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO. CIT(A)-52/IT-626/DCIT-CC 4(2)/2016-17 DATED 05/11/2018 ON CERTAIN GROUNDS OF APPEAL. 1.2 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE (AR), AT THE OUTSET, SUBMITTED THAT THE ASSESSEE IS PRESSING ONL Y GROUND NO. 2 OF ITS APPEAL, WHICH READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS.42,18,256/- BEING A LLEGED BOGUS PURCHASES FROM VARIOUS PARTIES. 1.3 THE GROUNDS RAISED BY REVENUE READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES OF RS.3,40,80,030 [RS. 99,00,821 FROM AADIT INTERNATIO NAL RS. 1,52,01,540 FROM EMBEE METAL DEALS (INDIA) PVT. LTD., RS.49,00,300 FROM NK B METAL DEALS (INDIA) PVT. LTD.] BOOKED BY THE ASSESSEE AFTER SETTING OFF THE GP SHO WN BY THE ASSESSEE. 2. SAME AS GROUND NO.1 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE U/S 14A OF THE IT ACT R.W.R. 8D OF RS.2,89,114 RELYING UPON THE DECISION IN THE CASE O F CHETTINAD LOGISTICS (P) LTD. (80 TAXMANN.COM 221) WHERE THE HON'BLE SUPREME COURT HA S DISMISSED THE SLP OF THE DEPARTMENT. HOWEVER, VIDE CBDT CIRCULAR NO. 5/2014 DATED 11.02.2014 IT IS CLARIFIED THAT RULE 8D READ WITH SECTION 14A OF THE ACT PROVIDES FOR DISALLOWANCE OF THE EXPENDITURE EVEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED ANY EXEMPT INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 36(1)(III) O F THE IT ACT, 1961 WHERE ASSESSEE FAILED TO PROVE THAT INTEREST PAID HAVE BEEN UTILIZ ED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 40(A)(IA) OF THE IT ACT, 1961 WHERE ASSESSEE FAILED TO DEDUCT TAX AT SOURCE ON THE REIMBURSEMENT AS PER CIRCULAR NO. 715 DATED 08.08.2015. ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 3 1.4 WE HAVE CAREFULLY HEARD THE RIVAL ARGUMENTS AND PERUSED RELEVANT MATERIAL ON RECORD. WE HAVE ALSO DELIBERATED ON VAR IOUS JUDICIAL PRONOUNCEMENTS AS CITED DURING THE COURSE OF HEARIN G. OUR ADJUDICATION TO THE SUBJECT MATTER OF CROSS-APPEALS WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 1.5 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN TRADING OF CHEMICALS AND IR ON & STEEL, WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR YEAR UNDE R CONSIDERATION AND AN ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 ON 2 5/11/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.461 .04 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURN ED INCOME OF RS.96.87 LACS E-FILED BY THE ASSESSEE ON 17/09/2010. 1.6 PURSUANT TO SEARCH ACTION U/S 132 IN THE CASE O F UHSDEV GROUP ON 11/09/2014, THE ASSESSEE WAS SUBJECTED TO SURVEY PR OCEEDINGS U/S 133A ON 11/09/2014 WHEREIN IT TRANSPIRED THAT THE A SSESSEE WAS INVOLVED IN INFLATING THE EXPENSES BY BOOKING BOGUS PURCHASES. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED ON 03/08/201 6 AS PER DUE PROCESS OF LAW WHICH WAS FOLLOWED BY STATUTORY NOTI CES U/S 143(2) AND 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO FILE RE QUISITE INFORMATION / DOCUMENTARY EVIDENCES AND EXPLANATIONS TO SUBSTANTI ATE THE RETURNED INCOME. ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASE 2.1 THE ASSESSEE HAD MADE AGGREGATE PURCHASES OF RS .340.80 LACS FROM FOUR SUSPICIOUS SUPPLIERS, THE DETAILS OF WHIC H HAS ALREADY BEEN EXTRACTED AT PARA-10 OF THE QUANTUM ASSESSMENT ORDE R. THE ASSESSEE, IN ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 4 DEFENSE OF PURCHASES, SUBMITTED THAT THERE WAS ONE- TO-ONE CORRELATION BETWEEN PURCHASE AND CORRESPONDING SALES AND ALL TH E PAYMENTS WERE THROUGH BANKING CHANNELS. HOWEVER, THE ASSESSEE FAI LED TO PROVE THE DISPATCH, TRANSPORTATION AND DELIVERY OF GOODS. NOT ICES ISSUED U/S 133(6) TO ALL THE SUPPLIERS WERE RETURNED BACK UNSERVED BY POSTAL AUTHORITIES. THE FIELD INQUIRIES REVEALED THAT NONE OF THE PARTI ES WAS EXISTING AT THE GIVEN ADDRESSES. THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. 2.2 SINCE THE ASSESSEE FAILED TO DISCHARGE THE PRIM ARY ONUS OF PROVING THE PURCHASE TRANSACTIONS, RELYING UPON VARIOUS JUD ICIAL PRONOUNCEMENTS, LD.AO TERMED THE SAID PURCHASES AS NON-GENUINE PURC HASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 2.3 THE LD. CIT(A), AT PARA-6.6 OF THE IMPUGNED ORD ER, TOOK NOTE OF THE FACT THAT DURING THE COURSE OF SURVEY ACTION, SOFT COPY OF THE BOOKS OF ACCOUNTS WERE IMPOUNDED WHICH ALSO HAD QUANTITATIVE DETAILS OF CORRESPONDING SALES BOOKED AGAINST THE PURCHASES SO MADE. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAD BOOKED BACK TO BACK SALES AGAINST THE PURCHASES MADE FROM VARIOUS SUPPLIERS I NCLUDING PURCHASES MADE FROM 4 SUSPICIOUS DEALERS. THEREFORE, SINCE TH ERE WAS ONE-TO-ONE CORRELATION BETWEEN THE PURCHASES AND SALES, THE EN TIRE TAINTED PURCHASES COULD NOT BE ADDED TO THE INCOME OF THE A SSESSEE BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTIONS CO ULD BE ADDED KEEPING IN VIEW SETTLED LEGAL PROPOSITION THAT TAX COULD BE LEVIED ONLY ON REAL INCOME. RELIANCE WAS PLACED ON THE DECISION O F HONBLE BOMBAY HIGH COURT IN HARIRAM BHAMBHANI (ITA NO. 313 OF 2013) FOR THE CONCLUSION THAT ONLY PROFIT ATTRIBUTABLE TO THE UNA CCOUNTED SALES COULD BE ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 5 BROUGHT TO TAX. SIMILAR RELIANCE WAS PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN BHOLANATH POLYFAB PVT. LTD. (355 ITR 290), SIMIT P.SHETH (38 TAXMANN.COM 385) AND SANJAY OIL CAKE IND. (316 ITR 274). APPLYING THE RATIO OF THESE DECISIONS, LD. CIT(A) E STIMATED ADDITIONS @12.5% OF THESE PURCHASES WITH SET-OFF OF GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS IN RESPE CT OF PURCHASES MADE FROM THE SAID 4 SUPPLIERS. AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE IS UNDER FURTHER APPEAL BEFORE US. 2.4 THE LD. AR PLEADED FOR REASONABLE ESTIMATION KE EPING IN VIEW THE CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE FACT T HAT THE ASSESSEE WAS DEALING IN LOW MARGIN ITEM LIKE IRON & STEEL. THE L D. DR, ON THE OTHER HAND, SUBMITTED THAT FULL DISALLOWANCE AS MADE BY L D. AO WOULD BE JUSTIFIED SINCE THE ASSESSEE MISERABLY FAILED TO SU BSTANTIATE THE PURCHASE TRANSACTIONS AND INQUIRES CONDUCTED BY THE DEPARTME NT CLEARLY POINTED OUT THAT THE SUPPLIERS WERE NON-EXISTENT ENTITIES. 3. AFTER CAREFUL APPLICATION OF MIND, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS ENGAGED IN T RADING ACTIVITIES. IT IS FACT ON RECORD THAT THERE WAS ONE-TO-ONE CORRELATIO N BETWEEN THE PURCHASES AND SALES. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIER S WERE THROUGH BANKING CHANNELS. HOWEVER, AT THE SAME TIME, THE AS SESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES AND FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS. THE FIELD EN QUIRIES REVEALED THAT NONE OF THE SUPPLIERS WAS EXISTING AT THE GIVEN ADD RESSES. NOTICES ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 6 ISSUED U/S 133(6) DID NOT ELICIT ANY SATISFACTORY R ESPONSE. THEREFORE, THE PRIMARY ONUS CASTED UPON ASSESSEE, TO PROVE THE TRA NSACTIONS, REMAINED UNDISCHARGED. 4. THE STATED FACTUAL MATRIX, IN OUR CONSIDERED OPI NION, WOULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITIONS TO ACCOUNT F OR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL I N THE GREY / UNORGANIZED MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. HOWEVER, ACCEPTING THE SUBMISSIONS THAT THE ASSESSE E WAS DEALING IN LOW MARGIN ITEM LIKE IRON & STEEL WHICH WOULD WARRA NT LOWER ESTIMATION AND KEEPING IN VIEW THE HEALTHY GROSS PROFIT RATE O F 5.43% ALREADY REFLECTED BY THE ASSESSEE, WE RESTRICT THE ESTIMATI ON TO NET 5% OF ALLEGED BOGUS PURCHASES OF RS.3,40,80,030/- WHICH COMES TO RS.17.04 LACS. THE BALANCE ADDITION STANDS DELETED. 5. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED WHEREAS GROUND NOS. 1 & 2 OF REVENUES APPEAL STAND DISMISS ED. DISALLOWANCE U/S 14A 6.1 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE HAD CLOSING INVESTMENT OF RS.435.28 LACS AS COMPARE D TO OPENING INVESTMENT OF RS.4.62 LACS. THE ASSESSEE EARNED EXE MPT DIVIDEND INCOME OF RS.51,250/- BUT DID NOT OFFER ANY SUO-MOT O DISALLOWANCE U/S 14A BY SUBMITTING THAT NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPT INCOME. HOWEVER, NOT SATISFIED, LD. AO APPLYING RUL E 8D, COMPUTED AGGREGATED DISALLOWANCE OF RS.2.89 LACS WHICH COMPR ISED-OFF OF INTEREST ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 7 DISALLOWANCE U/R 8D(2)(II) FOR RS.1.79 LACS AND EXP ENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.1.09 LACS. 6.2 BEFORE LD. CIT(A), THE ASSESSEE POINTED OUT THA T THE DIVIDEND INCOME OF RS.51,250/- WAS NOT EXEMPT INCOME BUT A T AXABLE INCOME. ACCORDINGLY, LD. CIT(A) DIRECTED LD. AO TO INCLUDE THIS INCOME AS TAXABLE INCOME BUT DIRECTED FOR DELETION OF DISALLOWANCE U/ S 14A SINCE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR, RELYING UPON THE DECISION OF HONBLE MADRAS HIGH COURT RENDERED IN CHETTINAD LOGISTICS P. LTD. (80 TAXMANN.COM 221) . IT WAS ALSO OBSERVED THAT SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAME WAS ALREADY DISMISSED BY HONBLE APEX COURT WHICH WAS REPORTED AT 95 TAXMANN.COM 250. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFO RE US. 6.3 AFTER CONSIDERING THE FACTS AS ENUMERATED HEREI NABOVE, IT TRANSPIRES THAT THE DIVIDEND INCOME OF RS.51,250/- STATED TO BE EARNED BY THE ASSESSEE HAS BEEN FOUND TO BE TAXABLE AND LD. A O HAS BEEN DIRECTED TO INCLUDE THE SAME WHILE COMPUTING TAXABL E INCOME. THEREFORE, THERE WOULD BE NO EXEMPT INCOME EARNED BY THE ASSES SEE AND HENCE, NO DISALLOWANCE U/S 14A WOULD BE WARRANTED AS HELD BY HONBLE MADRAS HIGH COURT IN THE CITED DECISION AS RELIED UPON BY LD. CIT(A). THEREFORE, FINDING NO FAULT IN THE ADJUDICATION OF LD. CIT(A), WE DISMISS THIS GROUND OF APPEAL. DISALLOWANCE U/S 36(1)(III) 7.1 IT WAS OBSERVED THAT THE ASSESSEE CLAIMED INTER EST EXPENDITURE OF RS.11.67 LACS. HOWEVER, THE ASSESSEE DID NOT REFLEC T ANY INTEREST INCOME AGAINST LOANS & ADVANCES OF RS.620.42 LACS A DVANCED BY IT DURING THE YEAR. THE ASSESSEE SUBMITTED THAT INTERE ST EXPENDITURE WAS ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 8 INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOS ES AND HENCE THE SAME WAS AN ALLOWABLE EXPENDITURE. HOWEVER, SINCE N O INTEREST WAS CHARGED ON LOANS AND ADVANCES, AN OPINION WAS FORME D BY LD. AO THAT THE ASSESSEE DIVERTED INTEREST BEARING FUNDS TOWARD S INTEREST-BEARING ADVANCES. THE ASSESSEE, IN THE OPINION OF LD. AO, A LSO COULD NOT DEMONSTRATE THE BUSINESS EXIGENCY OF GIVING INTERES T FREE ADVANCES. THEREFORE, LD. AO WORKED OUT PROPORTIONATE DISALLOW ANCE U/S 36(1)(III) FOR RS.3.03 LACS AND ADDED THE SAME TO THE INCOME O F THE ASSESSEE. 7.2 BEFORE LD. CIT(A), THE ASSESSEE PROVIDED THE BR EAK-UP OF INTEREST EXPENDITURE WHICH INCLUDED INTEREST ON LETTER OF CR EDIT, OVERDRAFT AGAINST TERM DEPOSITS, INTEREST ON OVERDRAFT ACCOUNT AND IN TEREST ON CAR LOAN FOR THE SUBMISSIONS THAT SUBSTANTIAL LOANS WERE UTILIZE D FOR SPECIFIC BUSINESS PURPOSES AND IT WAS TO BE PRESUMED THAT LOANS WERE ADVANCED OUT OF OWN FUNDS AS WELL AS INCOME EARNED DURING THE YEAR. RELIANCE WAS PLACED ON FAVORABLE DECISION OF LD. CIT(A) FOR AY 2 012-13. 7.3 THE LD. CIT(A), AFTER CONSIDERING ASSESSEES SU BMISSIONS, OBSERVED THAT FAVORABLE DECISION RENDERED BY ITS PR EDECESSOR FOR AY 2012-13 COULD NOT BE APPLIED IN THIS YEAR SINCE INT EREST FREE ADVANCES OF RS.620.42 LACS WERE MORE THAN OWN CAPITAL OF RS.609 .09 LACS. HOWEVER, LD.AO WAS DIRECTED TO EXCLUDE INTEREST ON LETTER OF CREDIT & INTEREST ON CAR LOAN AGGREGATING TO RS.6.01 LACS WH ILE COMPUTING THE DISALLOWANCE AND CONSIDER ONLY THE BALANCE INTEREST COMPONENT OF RS.5.65 LACS WHILE COMPUTING THE PROPORTIONATE DISA LLOWANCE. 7.4 UPON DUE CONSIDERATION, WE FIND THAT LD. CIT(A) HAS CLINCHED THE ISSUE IN CORRECT PERSPECTIVE AND MET THE ASSESSEES SUBMISSIONS WITH DUE APPLICATION OF MIND. NO FAULT COULD BE FOUND IN THE DIRECTIONS OF LD. ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 9 CIT(A) FOR EXCLUSION OF INTEREST ON LETTER OF CREDI T AND INTEREST ON CAR LOAN SINCE THE SAME DID NOT HAVE ANY NEXUS WITH INTEREST FREE LOANS ADVANCED BY THE ASSESSEE. RESULTANTLY, THIS GROUND STAND DIS MISSED. DISALLOWANCE U/S 40(A)(IA) 8.1 IT WAS OBSERVED THAT THE ASSESSEE DID NOT DEDUC T TAX AT SOURCE (TDS) ON CERTAIN EXPENSES AGGREGATING TO RS.17.44 L ACS STATED TO BE PAID TO VARIOUS PARTIES. THE SAME ARE TABULATED IN PARA-19 OF THE QUANTUM ASSESSMENT ORDER. THESE EXPENSES WERE STATE D TO BE INCURRED IN THE COURSE OF IMPORT OF MATERIAL. IN DEFENSE, TH E ASSESSEE SUBMITTED THAT THESE EXPENSES WERE IN THE NATURE OF REIMBURSE MENT AND HENCE, TDS WAS NOT APPLICABLE ON SUCH REIMBURSEMENTS. HOWE VER, LD.AO OBSERVED THAT THE ASSESSEE COULD NOT DEMONSTRATE TH AT SUCH PAYMENT HAD NO ELEMENT OF INCOME AND MOREOVER, SUCH REIMBUR SEMENT WOULD REQUIRE DEDUCTION OF TAX AT SOURCE AS PER CIRCULAR NO. 715 ISSUED BY CBDT. THE ASSESSEE ALSO FAILED TO PRODUCE THE NIL DEDUCTION OF TDS CERTIFICATES STATED TO BE ISSUED TO THE PAYEE. THER EFORE, LD. AO MADE DISALLOWANCE OF THE SAME IN TERMS OF SECTION 40(A)( IA). 8.2 BEFORE LD. CIT(A), THE ASSESSEE EXPLAINED THAT FOR EACH IMPORT CLEARANCE, TWO SEPARATE BILLS WERE RAISED-ONE FOR T HE SERVICE CHARGES AND OTHER ONE FOR REIMBURSEMENT OF EXPENSES ACTUALL Y INCURRED. THE ASSESSEE DULY DEDUCTED TDS ON SERVICE CHARGE PAYMEN TS BUT DID NOT DEDUCT ANY TAX ON REIMBURSEMENTS. THESE REIMBURSEME NTS WERE IN THE NATURE OF EXPENDITURE ON WHARFAGE, CMC CHARGES, CON TAINER CHARGES, STAMP DUTY SURVEY, INSURANCE, TRANSPORT CHARGES ETC . FOR WHICH AGENTS HAD ENCLOSED SUPPORTING BILLS. ALL THESE EXPENSES W ERE PURE REIMBURSEMENT AND THERE WAS NO PROFIT ELEMENT OF IN COME IN IT. THE ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 10 CBDT CIRCULAR NO. 715 WAS STATED TO BE NOT APPLICAB LE SINCE THE SAID CIRCULAR WOULD CONTEMPLATE A SCENARIO WHERE A CONSO LIDATED COMMON BILL FOR SERVICE CHARGES AND REIMBURSEMENTS IS RAISED, W HICH WAS NOT THE CASE HERE. THE ATTENTION WAS DRAWN TO THE FACT THAT ADDITIONS MADE BY LD. AO IN AY 2012-13 ON SIMILAR FACTUAL MATRIX, WAS DELETED BY LEARNED FIRST APPELLATE AUTHORITY. RELIANCE WAS PLACED, INTER-ALIA, ON THE DECISION OF MUMBAI TRIBUNAL IN UTILITY POWERTECH LTD. V/S ACIT (ITA NO. 2561/MUM/2009) WHEREIN IT WAS HELD THAT NO TDS WAS REQUIRED ON MER E REIMBURSEMENTS. 8.3 THE LEARNED CIT(A), RELYING UPON THE DECISION O F ITS PREDECESSOR IN ASSESSEES OWN CASE FOR AY 2012-13, FINDING THE FAC TUAL MATRIX TO BE QUITE SIMILAR, DELETED THE IMPUGNED DISALLOWANCE. A GGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 8.4 THE LD. AR DREW ATTENTION TO THE FACT THAT REVE NUES APPEAL FOR AY 2012-13 HAS ALREADY BEEN DISMISSED DUE TO LOW TAX E FFECT, BY THE TRIBUNAL VIDE ITA NO. 7341/MUM/2016 ORDER DATED 29/ 11/2018, A COPY OF WHICH HAS BEEN PLACED ON RECORD. THE LD. AR SUBMITT ED THAT FACTUAL MATRIX IN AY 2012-13 AS WELL AS IN THIS YEAR WAS QU ITE IDENTICAL AND THEREFORE, THE DISALLOWANCE DESERVES TO BE DELETED. THE LD. DR SUBMITTED THAT THE APPEAL HAS BEEN DISMISSED MERELY DUE TO LOW TAX EFFECT AND THEREFORE, IT COULD NOT BE SAID THAT THE MATTER HAS ATTAINED FINALITY. 8.5 UPON DUE CONSIDERATION, WE CONCUR WITH THE SUBM ISSIONS OF LD. DR THAT THE MATTER COULD NOT BE SAID TO HAVE ATTAINED FINALITY SINCE THE APPEAL WAS DISMISSED ONLY DUE TO LOW TAX EFFECT. HO WEVER, THE UNDISPUTED POSITION THAT EMERGES IS THAT THE ASSESS EE HAS DULY DEDUCTED ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 11 TAX AT SOURCE AGAINST SERVICE CHARGES WHEREAS NO TA X HAS BEEN DEDUCTED AGAINST MERE REIMBURSEMENTS. THESE REIMBUR SEMENTS WERE SUPPORTED BY THE SUPPORTING BILLS OF THE AGENTS AND THERE WAS NO PROFIT ELEMENT IN IT. ALL THESE EXPENSES WERE PURE REIMBUR SEMENT IN NATURE. THIS BEING THE CASE, NO TDS WAS REQUIRED ON SUCH RE IMBURSEMENTS. THE DECISION OF THIS TRIBUNAL IN UTILITY POWERTECH LTD. V/S ACIT (ITA NO. 2561/MUM/2009) ALSO SUPPORTS THE SAME VIEW. THIS DECISION HAS BEEN RENDERED AFTER CONSIDERING THE DECISION OF HON BLE BOMBAY HIGH COURT IN CIT V/S SIEMENS AKTIONGESELLSCHAFT (310 ITR 320). THEREFORE, WE FIND NO FAULT IN THE ACTION OF LD. CI T(A) IN DELETING THE SAME BY RELYING UPON THE ORDER FOR AY 2012-13. THIS GROUND STANDS DISMISSED. CONCLUSION 9. THE ASSESSEES APPEAL STAND PARTLY ALLOWED WHERE AS THE REVENUES APPEAL STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/02/2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ K UMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/02/2020 SR.PS. JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT ITA NOS. 539 & 553/MUM/2019 M/S BALAJI IMPEX ASSESSMENT YEAR :2010-11 12 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 3567 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.