ACIT, Circle-10(2), Kolkata, Kolkata V. M/s Diach Chemicals & Pigments Pvt. Ltd., Kolkata

ITA 546/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2116 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 21-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Fair market value; TDS
• Section: 143(3); 56(2); 40(a)(ia); 194C; 56

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA BEFORE SH. P.M.JAGTAP, VICE PRESIDENT & SH.S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 17.01.2017 PASSED BY CIT(A)-4, KOLKATA FOR AY 2013-14 U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. GROUND NO.1 IS RELATING TO THE DELETION OF ADDITION MADE BY INVOKING THE PROVISION U/S 56(2)(VII B) OF THE ACT. 3. HEARD BOTH PARTIES AND PERUSED MATERIAL AVAILABLE ON RECORD. ACCORDING TO AO, THE ASSESSEE ISSUED AND ALLOTTED 10,60,000/- EQUITY SHARES OF RS.10/- FACE VALUE AND A PREMIUM OF RS.90/- DURING THE RELEVANT PREVIOUS YEAR I.E. F.Y. 2012-13. THE ASSESSEE FURNISHED FAIR MARKET VALUE(IN SHORT FMV) REPORT DATED 17.08.2015 ISSUED BY CHARTERED ACCOUNTANT, THE AO FOUND FMV AT RS.41.38. THE AO ASKED THE ASSESSEE WHY THE PROVISION U/S 56(2)(VIIB) SHOULD NOT BE INVOKED. IN ACIT, CIRCLE-10(2), KOLKATA-700069. VS M/S. DIACH CHEMICALS & PIGMENTS PVT.LTD., 1/17, PRINCE GULAM MOHAMMED ROAD, KOLKATA-700026. PAN- AACCD1101A (APPELLANT) (RESPONDENT) APPELLANT BY SH.C.J.SINGH, JCIT, SR.DR RESPONDENT BY SH. MANISH TIWARI, FCA DATE OF HEARING 26.03.2019 DATE OF PRONOUNCEMENT 19.06.2019 ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 2 EXPLANATION, IT WAS STATED, THAT THE ASSESSEE ISSUED SHARES IN FY 2011-12 (AY 2012-13) AND RECEIVED THE CONSIDERATION FOR SUCH SHARES IN FY 2011- 12 (AY 2012-13). FURTHER, IT WAS CONTENDED THE SHARES WERE ACTUALLY ALLOTTED IN FY 2012-13 (AY 2013-14 PRESENT YEAR) AND APPLICABILITY OF PROVISION U/S 56(2)(VIIB) DOES NOT ARISE AS IT WAS CAME INTO FORCE IN AY 2013-14 ONLY FOR THE REASON THAT THE ASSESSEE RECEIVED CONSIDERATION FOR SUCH SHARES IN AY 2012-13 BUT NOT IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. THE AO DID NOT ACCEPT THE SUBMISSIONS AS MADE BY THE ASSESSEE AND HELD THE CONSIDERATION FOR SHARES IS TO BE TREATED AS IT IS RECEIVED IN THE YEAR OF ALLOTMENT OF SHARES I.E. PRESENT AY AND ADDED AN AMOUNT OF RS.61,69,200/- [(100-41.38) X 10,60,000] TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE IN THE ASSESSMENT PROCEEDINGS. THE CIT(A) CONSIDERING THE SAME HELD THAT PROVISION U/S 56(2)(VIIB) IS NOT APPLICABLE TO THE PRESENT AY UNDER CONSIDERATION AND DELETED THE ADDITION MADE BY THE AO BY GIVING REASONS AS UNDER:- 4.2. I HAVE CONSIDERED THE ISSUE WITH REFERENCE TO THE ASSESSMENT ORDER AS WELL AS THE WRITTEN SUBMISSIONS MADE BY THE AR OF THE APPELLANT. I FIND THAT THE MOOT QUESTION TO BE DECIDED HERE IS WHETHER PROVISIONS OF SECTION 56(2)(VIIB) ARE APPLICABLE IN THE INSTANT CASE OR NOT. FROM THE PLAIN READING OF SECTION 56(2)(VIIB), I FIND THAT CLAUSE (VIIB) OF SUB SECTION (2) OF SECTION 56 WAS INSERTED VIDE FINANCE ACT, 2013 W.E.F 01.04.2013 I.E. FROM AY 2014-15 TO THE EFFECT THAT WHERE A CLOSELY HELD COMPANY ISSUES ITS SHARES AT A PRICE WHICH IS MORE THAN THE FMV, THEN THE AMOUNT RECEIVED IN EXCESS OF THE FMV WOULD BE CHARGEABLE TO TAX IN THE HANDS OF THE RECIPIENT COMPANY AS ITS INCOME FROM OTHER SOURCES. I FIND FROM THE FACTS OF THE CASE THAT THE SHARES WERE INDEED ALLOTTED IN FY 2013-14 BUT THE SHARE APPLICATION MONIES WERE RECEIVED IN THE FY 2012-13 PERTAINING TO AY 2013-14. ACCORDING TO MY CONSIDERED OPINION, THE CONNOTATION OF THE MEANING 'RECEIVED IN ANY PREVIOUS YEAR USED IN SECTION 56(VIIB) OF THE ACT WOULD BE IN RESPECT OF THE YEAR OF RECEIPT AND NOT THE YEAR OF ALLOTMENT. IN THE INSTANT CASE AS RIGHTLY POINTED OUT BY THE AR BASED ON MATERIALS ON RECORD, SHARE APPLICATION MONIES WERE RECEIVED DURING THE YEAR UNDER CONSIDERATION. THUS, I FIND THAT THE PROVISIONS OF SECTION 56(2)(VIIB) ARE TO BE CONSTRUED WITH RESPECT TO THE YEAR IN WHICH CONSIDERATIONS WERE ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 3 RECEIVED AND NOT THE YEAR IN WHICH THE ALLOTMENT OF SHARES WERE MADE. IN VIEW OF THE FOREGOING DISCUSSIONS MADE ON THE PERTINENT MATTER, I DO NOT FIND ANY MERIT ON THE PART OF THE AO IN MAKING THE IMPUGNED ADDITION OF RS.62,13,720/- U/S 56(2)(VIIB) OF THE ACT, WHICH I FIND IS MISPLACED, BASED ON AVAILABLE MATERIAL EVIDENCES ON RECORD AS WELL AS ON POINTS OF LAW, WHICH IS NOW DIRECTED TO BE DELETED. THESE GROUNDS ARE ALLOWED ACCORDINGLY ON BOTH POINTS OF FACTS AND LAW. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE APPELLANT-REVENUE IS BEFORE US BY QUESTIONING THE ACTION OF CIT(A) IN DELETING THE ADDITION MADE BY THE AO IGNORING THE CERTIFICATE FILED UNDER RULE 11UA(2)(A) OF INCOME TAX RULES, 1962. THE LD.DR, SH. C.J.SINGH FILED WRITTEN SUBMISSIONS AND SUBMITS THAT THE SECTION TALKS OF A COMPANY HAVING RECEIVED ANY CONSIDERATION FOR ISSUE OF SHARES. AS THE TRANSACTION GOT COMPLETED IN THE YEAR OF ALLOTMENT OF SHARES, ONLY THEN THE ISSUE OF TAXABILITY OR NOT OF THE SAME GETS ATTRACTED. VALUATION OF SHARES OF ANY COMPANY IS UNDERSTOOD ONLY WHEN THE TRANSACTION IS COMPLETE AND APPORTIONMENT BETWEEN SHARE CAPITAL AND SHARE PREMIUM IS CRYSTALLISED AND FULLY UNDERSTOOD. THIS HAPPENS ONLY WHEN THE SHARES ARE FULLY ALLOTTED. 6. THE LD.DR CREATED A SITUATION THAT WHAT OF THE SITUATION WHERE SHARE APPLICATION MONEY IS RETURNED INSTEAD OF SHARES BEING ALLOTTED? HE ANSWERED, IN SUCH A CASE, SINCE SUCH PROBABILITY EXISTS, THEN NO AO WILL APPLY THIS SECTION AND MAKE ANY ADDITION AND THE TIME OF RECEIPT OF SHARE APPLICATION MONEY, BUT WILL WAIT FOR THE TRANSACTION TO BE COMPLETED BY WAY OF ALLOTMENT OF SAID SHARES, I.E. THE IMPOSSIBLE SITUATION. 7. FURTHER, HE CONTENDED THE FINAL ACCOUNT AS SEEN FROM THE ASSESSEES PAPER BOOK AT PAGE 7 TOGETHER WITH PAGE NO.37, IT IS SEEN IN THE PRECEDING FY 2011-12 (AY 20112-13), THE ASSESSEE ALREADY ISSUED RS.70 LACS WORTH OF SHARE CAPITAL OUT OF ITS AUTHORIZED SHARE CAPITAL OF RS.1 CRORE. IN ADDITION TO THIS, IT HAD RECEIVED ANOTHER RS.70 LACS AS SHARE APPLICATION MONEY. IN FY UNDER QUESTION I.E. AY 2013-14, FRESH SHARE CAPITAL ISSUED ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 4 DURING THE YEAR WAS RS.10,60,000/- [1,06,000 SHARES @ RS.10 PER SHARE]. IN ADDITION TO THIS, RS.95,40,000/- WAS CHARGED AS SHARE PREMIUM AND ADDED TO THE EXISTING RESERVES. THE TOTAL CONSIDERATION RECEIVED AGAINST ISSUE OF SHARES WAS ACTUALLY (10,60,000 + 95,40,000 =1,06,00,000). IT IS APPARENT THAT IN ADDITION TO SHARE APPLICATION MONEY OF RS.70 LACS RECEIVED IN THE PRECEDING F.Y. 2011-12 (AY 2012-13), ANOTHER RS.36 LACS WORTH OF CONSIDERATION MONEY WAS RECEIVED BY THE ASSESSEE IN FY 2012-13 I.E. THE YEAR UNDER CONSIDERATION. THIS MEANS THAT THE ARGUMENT TAKEN BY THE ASSESSEE THAT SECTION 56(2)(VII B) IS NOT APPLICABLE ON THE GROUND THAT THE CONSIDERATION WAS RECEIVED IN THE PRECEDING FY 2011-12 BEFORE THE SAID SECTION CAME INTO FORCE IS NOT CORRECT. IT WAS ARGUED THAT THE ADVANCE CONSIDERATION WAS RECEIVED IN THE FORM OF SHARE APPLICATION MONEY OF RS.70 LACS IN THE PRECEDING AY 2011-12 (AY 20112-13) AND THE BALANCE CONSIDERATION OF RS.36 LACS WAS RECEIVED IN FY 2012-13 (AY 2013- 14) WHERE THE ASSESSEE FINALLY ALLOTTED THE SHARES, THUS, COMPLETING THE TRANSACTION IN QUESTION. BUT THE CIT(A) IN PARA 4.2 OF ITS ORDER HAS MADE HIS DECISION BASED ON SHARE APPLICATION MONEY OF RS.70 LACS BEING RECEIVED IN THE PRECEDING FY 2011-12 (AY 2012-13) WHICH MAKES ITS FINDING INCORRECT AND THE ORDER IS PERVERSE. THE AO IN PARA 3.4 OF ITS ORDER HAS CORRECTLY TAKEN INTO ACCOUNT THE ENTIRE TRANSACTION IN RESPECT OF ISSUE OF 1,06,000 SHARES. 8. THE ASSESSEE HAS TRIED TO JUSTIFY THE ISSUE PRICE OF RS.100 PER SHARE ON THE BASIS OF POST DATED REPORT UNDER THE DCF METHOD ON THE GROUND THAT THE COMMENTS OF THE CHARTERED ACCOUNTANT PUTS A QUESTION MARK OVER THE AUTHENTICITY OF THE REPORT OF THE VALUATION OF THE SHARES. THE AO ULTIMATELY REJECTED THE REPORT AS NO EVIDENCE WITH REGARD TO PROJECTION WAS MADE IN THE REPORT AND MOREOVER, ACCOUNTANT HAS CLEARLY MENTIONED THAT THE PROJECTION HAD BEEN MADE ON ASSUMPTIONS AND REFERRED TO ORDER OF ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 5 ITAT, DELHI BENCH IN THE CASE OF AGRO PORTFOLIO PVT. LTD. REPORTED IN 94 TAXMANN.COM 112 (DEL. TRIB.). 9. FURTHER, HE CONTENDED DURING THE INSTANT AY, THE ASSESSEE HAS MERELY ALLOTTED SHARES AND DECIDED UPON THE PREMIUM. IT IS IMMATERIAL WHETHER THE MONEY WAS RECEIVED IN FY 2012-13 (AY 2013-14) OR LATER, AS HERE THE MATTER IS NOT THAT OF REGARDING THE GENUINENESS OF RECEIPT BUT THE CORRECTNESS OF VALUATION OF SHARES. SECTION 56(2)(VIIB) OF THE ACT IS INVARIABLY COME TO THE STATUTE FROM AY 2013-14 TO PLUG THIS MISCHIEF. THE FMV FILED BY THE ASSESSEE WAS RS.41.38 PER SHARE AND THIS RESULTED IN ADDITION MADE BY THE AO AND IT IS JUSTIFIED. 10. FURTHER, THE LD.DR, SH.C.J.SINGH SUBMITS THAT IN PAGE NO.2 OF PAPER BOOK, ASSESSEE AGREED THE SHARE APPLICATION MONEY OF RS.70 LACS WAS RECEIVED IN THE PRECEDING FY 2011-12 (AY 2012-13) AND ANOTHER RS.36 LACS BOTH OF CONSIDERATION MONEY WAS RECEIVED BY THE ASSESSEE IN FY 2012-13 (AY 2013-14). NEXT, IN ITS PAPER BOOK AT PAGE NO.5, THE ASSESSEE ARGUED THAT SECTION 56(2)(VIIB) IS IN REFERENCE TO YEAR OF RECEIPT WHICH IN THIS CASE OF FY 2011-12 [AY-2012-13] PRIOR TO THE SAID SECTION COME INTO EFFECT. 11. FURTHER, HE DREW OUR ATTENTION TO THE PROVISION OF SECTION 56(2)(VIIB) OF THE ACT WHICH IS REPRODUCED HEREIN BELOW:- [SEC. 56(2) (VIIB) WHERE A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE THE CONSIDERATION FOR ISSUE OF SHARES IS RECEIVED- (I) BY A VENTURE CAPITAL UNDERTAKING FROM A VENTURE CAPITAL COMPANY OR A VENTURE CAPITAL FUND; OR ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 6 (II) BY A COMPANY FROM A CLASS OR CLASSES OF PERSONS AS MAY BE NOTIFIED' BY THE CENTRAL GOVERNMENT IN THIS BEHALF. EXPLANATION.-FOR THE PURPOSES OF THIS CLAUSE,- (A) THE FAIR MARKET VALUE OF THE SHARES SHALL BE THE VALUE- (I) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED'; OR (II) AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE SATISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON THE DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSETS BEING GOODWILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE, WHICHEVER IS HIGHER. 12. THE LD. DR, SH. C.J.SINGH ARGUED FROM THE ABOVE SAID PROVISION THAT IT IS CLEAR THAT THE ASSESSEE RECEIVED RS.36 LACS IN FY 2012-13 I.E. RELEVANT TO AY 2013-14, THEN THE SECTION 56(2)(VIIB) WILL BE APPLICABLE TO THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES WHICH IN THIS CASE AMOUNTS (RS.70 + 36 LACS = 108 LACS) OR 1.08 CRORES. TO SUM UP, SH. C.J.SINGH SUBMITTED THAT THE VALUATION AS PER DCF WAS ARRIVED AT RS.183.64 PER SHARE AGAINST ASSESSEES ISSUE PRICE OF RS.100 PER SHARE. NO COGNIZANCE CAN BE GIVEN TO THE VALUATION CERTIFICATE SUBMITTED BY THE ASSESSEE BASED ON DCF METHOD AND AOS ACTION IN ADOPTING THE NAV METHOD THAT ARRIVED AT A RELIABLE FMV OF ASSESSEES SHARES MAY BE UPHELD. THE LD.AR REITERATED THE SUBMISSIONS AS MADE BEFORE THE AO AND THE CIT(A) AND VEHEMENTLY ARGUED THAT NON-APPLICABILITY OF SECTION 56(2)(VIIB) OF THE ACT AS THE ASSESSEE ISSUED AND RECEIVED THE CONSIDERATION IN SUBSEQUENT FY 2011-12 (AY 2012-13) I.E. AND ALLOTTED THE SHARES IN FY 2012-13 (AY 2013-14) IN THE YEAR UNDER CONSIDERATION. AS THERE WAS NO RECEIPT OF CONSIDERATION IN THE PRESENT AY AND THE PROVISION UNDER SECTION 56(2)(VIIB) IS NOT APPLICABLE. 13. KEEPING IN VIEW THE SUBMISSIONS OF BOTH THE SIDES, WE FIND SINCE SHARES WERE APPLIED IN AY 2012-13 AS PER THE TERMS AND CONDITIONS SETTLED IN AY 2012-13, THE PROVISION U/S 56(2)(VIIB) OF THE ACT INTRODUCED FROM AY 2013-14 WHICH IS YEAR UNDER CONSIDERATION IN THE PRESENT CASE AND, THEREFORE, CANNOT BE APPLIED MERELY ON THE BASIS THAT SHARES WERE ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 7 ALLOTTED IN AY 2013-14. THUS, WE FIND THE REASONS RECORDED BY THE CIT(A) IN THE IMPUGNED ORDER SPECIFICALLY AT PARA 4.2 IS JUSTIFIED IN TERMS OF APPLICABILITY OF PROVISION U/S 56(2)(VIIB) OF THE ACT. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. THUS, GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 14. GROUND NO.2 IS RELATING TO QUESTION THE ACTION OF CIT(A) IN DELETING THE ADDITION MADE BY INVOKING SECTION 40(A)(IA) OF THE ACT FOR THE VIOLATION OF PROVISION U/S 194C OF THE ACT. 15. HEARD BOTH PARTIES AND PERUSED MATERIAL AVAILABLE ON RECORD. ACCORDING TO AO, THE ASSESSEE DEBITED AN AMOUNT OF RS.36,97,339/- ON ACCOUNT OF SHIPPING AND CLEARING EXPENSES IN THE P&L A/C. HE OBSERVED ON AN EXAMINATION OF DETAILS FILED BY THE ASSESSEE, THE TDS U/S 194C OF THE ACT IS REQUIRED TO BE DEDUCTED ON THE SAID EXPENSES. THE AO ASKED THE ASSESSEE WHY DISALLOWANCE U/S 40(A)(IA) SHOULD NOT BE MADE. IN RESPONSE TO SAID OBJECTION, THE ASSESSEE SUBMITTED THE ABOVE SAID EXPENSES WERE PAID TO VARIOUS CLEARING AND FORWARDING AGENTS, KUNDU MOVER AGENCY, U.P.GOLDEN CARRIER, D.K.SHIPPING AGENCY, SHREE BALAJI SHIPPING & CLEARING AGENCY, LOKNATH SHIPPING & CLEARING AGENCY, BHOMICK AGENCY/INC AND KHANNA & CO. CLEARING AGENCY PVT.LTD. ETC. ON ACCOUNT OF CUSTOMS DUTY, CPT CHARGES, OCTRI CHARGES, FREIGHT CHARGES, INSURANCE CHARGES, SURVEY CHARGES, LOADING & UNLOADING CHARGES, TRANSPORT CHARGES, STAMP PAPER CHARGES, CUSTOM ENTRY CHARGES, DOC DELIVERY CHARGES, REGISTRATION CHARGES EXPENSES ETC. AND CONTENDED THE SAID EXPENSES ARE IN THE NATURE OF REIMBURSEMENT AND NOT LIABLE TO DEDUCTION IN TDS AS ALLEGED BY THE AO. THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS.36,97,339/- TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 8 16. BEFORE CIT(A), THE SAME SUBMISSIONS WERE MADE BY THE ASSESSEE. IT IS NOTED THE CIT(A) WHILE EXAMINING THE LIST OF DETAILS OF CLEARING AND FORWARDING CHARGES INDICATING THE NAME AND ADDRESSES OF SUCH SHIPPING AND CLEARING AGENCIES FOUND SATISFIED THAT NO TDS REQUIRED TO BE DEDUCTED BY GIVING REASONS HEREUNDER:- 5.2. I HAVE CONSIDERED THE ISSUE WITH REFERENCE TO THE ASSESSMENT ORDER AS WELL AS THE WRITTEN SUBMISSION FILED BY THE AR OF THE APPELLANT. I FIND THAT THE APPELLANT HAS FURNISHED COMPLETE DETAILS OF EXPENSES INCURRED UNDER THE HEAD 'SHIPPING & CLEARING CHARGES' BEFORE THE AO. AT THE APPELLATE STAGE AS WELL, THE AR REITERATED THE SAME ARGUMENTS THAT THESE PAYMENTS WERE MADE TO VARIOUS CLEARING & FORWARDING AGENTS AND WERE BASICALLY REIMBURSEMENT OF EXPENSES. IT WAS CONTENDED BY THE AR THAT SINCE THESE EXPENSES WERE REIMBURSEMENTS IN NATURE THEY WERE BEYOND THE SCOPE OF SECTION 194C OF THE ACT. THE AR HAS ALSO RELIED UPON CASE LAWS IN SUPPORT OF HIS CONTENTIONS. AFTER CONSIDERING THE FACTS OF THE CASE AS WELL AS THE DETAILS FILED BY THE AR OF THE APPELLANT AS WELL AS THE CASE LAWS REFERRED TO IN THIS REGARD, I FIND THAT INDEED THE PAYMENTS WERE MOSTLY IN THE NATURE OF RE-IMBURSEMENTS OF EXPENDITURE AND, THEREFORE, THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE U/S 194C OF THE ACT AS PER THE SCHEME OF THE ACT IN THIS REGARD. I ALSO FIND THAT THE AO HAS SIMPLY REJECTED THE CONTENTIONS OF THE APPELLANT, WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD TO COUNTER THE CLAIM OF THE APPELLANT IN ANY MANNER THAT THE EXPENSES WERE IN THE NATURE OF RE-IMBURSEMENT OF EXPENSES. CONSIDERING THE ENTIRE GAMUT OF THE MATTER, I DO NOT FIND ANY MERIT IN THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 40(1)(IA) OF THE ACT FOR THE PURPOSE OF MAKING THE IMPUGNED DISALLOWANCE. RESULTANTLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE VIS--VIS THE IMPUGNED DISALLOWANCE. THESE GROUNDS ARE ALLOWED ACCORDINGLY. 17. ON PERUSAL OF THE ASSESSMENT ORDER AND IMPUGNED ORDER, IT IS NOTED THAT ALL THE DETAILS REGARDING THE LIST OF PAYMENTS INDICATING THE ADDRESS, NAMES OF THE SHIPPING CLEARING AGENCIES WERE BEFORE THE TWO LOWER AUTHORITIES FOR THEIR CONSIDERATION. WE FIND THAT THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE THAT NO EVIDENCE BROUGHT ON RECORD TO SHOW THE SHIPPING AND EXPORT EXPENSES WERE REIMBURSED. HOWEVER, IT IS SEEN IN THE ASSESSMENT ORDER ITSELF THAT THE AO MENTIONED THAT ON PERUSAL OF THE DETAILS FIELD BY THE ASSESSEE AND WRITTEN SUBMISSIONS DATED 28.01.2016, THE AO MENTIONED ONLY THAT THE ASSESSEE FAILED TO GIVE BIFURCATION EXPENSES RELATING TO THE IMPUGNED AMOUNT. THE CIT(A) IN HIS IMPUGNED ITA NO.546/KOL/2017 (ASSESSMENT YEAR-2013-14) PAGE | 9 ORDER CLEARLY SAID THAT ALL THE DETAILS AS SUBMITTED BY THE ASSESSEE BEFORE HIM AS WELL AS IN THE ASSESSMENT PROCEEDINGS CLEARLY SHOWS THAT THE PAYMENTS WERE MADE TO CLEARING & SHIPPING AGENCIES AND ARE IN THE NATURE OF REIMBURSEMENT. ON SUCH PAYMENTS, WE FIND WHICH WERE PAID ON BEHALF OF THE ASSESSEE TO DIFFERENT PARTIES INCLUDING THE GOVERNMENT AUTHORITIES. THEREFORE, THE FINDING OF THE AO IS NOT SUBSTANTIATED. THUS, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND IT IS JUSTIFIED. THEREFORE, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.06.2019. SD/- SD/- (P.M.JAGTAP) (S.S.VISWANETHRA RAVI) VICE PRESIDENT JUDICIAL MEMBER DATE:- 19.06.2019 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT- ACIT, CIRCLE-10(2), KOLKATA-700069. 2. RESPONDENT- M/S. DIACH CHEMICALS & PIGMENTS PVT.LTD., 1/17, PRINCE GULAM MOHAMMED ROAD, KOLKATA-700026. 3. CIT-KOLKATA 4. CIT(APPEALS)-KOLKATA 5. DR: ITAT -KOLKATA BENCHES BY ORDER AR/H.O.O ITAT, KOLKATA