ACIT 22(3), NAVI MUMBAI V. CARGO CARRIERS, MUMBAI

ITA 55/MUM/2013

• Counselvise Citation: 5519914 RSA 2013
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPS
• Assessee Lawyers: PRAKASH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.55/MUM/2013 ( / ASSESSMENT YEAR :2009-10) ASSTT.COMMISSIONER OF INCOME TAX -22(3), 3RD FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703 / VS. M/S CARGO CARRIERS, A-322, CITY MALL, VASHI-TURBHE ROAD, PLOT NO.4, SECTOR-19, VASHI, NAVI MUMBAI-400705 ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AACFC8577G % / APPELLANT BY : SHRI NEIL PHILIPS ! & % / RESPONDENT BY SHRI PRAKASH PANDIT ' ( & ) * / DATE OF HEARING : 1.1.2015 +, & ) * /DATE OF PRONOUNCEMENT : 16 .01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 29-10- 2012 PASSED BY LD CIT(A)-33, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009-10. THE REVENUE IS AGGRIEVED BY THE DECI SION OF LD CIT(A) IN RESPECT OF THE FOLLOWING ISSUES:- (A) DISALLOWANCE OF EXPENSES (B) DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. ITA NO.55/M/2013 2 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF CUSTOMS HOUSE CLEARING A ND FORWARDING AGENCY. THE FIRST ISSUE RELATES TO THE DISALLOWANC E OF EXPENSES. THE ASSESSEE HAD CLAIMED FOLLOWING EXPENSES AGGREGATING TO RS.61,97,063/-: BILL OF ENTRY PREPARATION, CUSTOMS DOCK, E X-DELIVERY 33,50,180 MISCELLANEOUS EXPENSES 16,66,183 EXAMINATION 5,47,350 CUSTOMS / DOCKS DELIVERY EXAMINATION CHARGES 5, 07,650 CUSTOMS PROCESSING EXPENSES 1,25,700 SINCE THE ASSESSEE DID NOT PRODUCE SUPPORTING EVIDE NCES, THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM OF RS.61,97,063 /-. THE LD CIT(A), HOWEVER, RESTRICTED THE ADDITION TO 10% OF THE AGGR EGATE EXPENSES AND ACCORDINGLY DELETED THE REMAINING 90%. 3. WE NOTICE THAT THE LD CIT(A) HAS CONSIDERED TH E FACT THAT THE ASSESSEE HAD TO NECESSARILY INCUR THESE EXPENSES TH ROUGH ITS EMPLOYEES BY WAY OF CASH AND HENCE THEY ARE SUPPORTED BY SELF MA DE VOUCHERS. THE ASSESSEE HAD SUBMITTED THAT THE EXPENSES INCURRED O N EACH CONSIGNMENT WAS LESS AND THE SAME HAS ACCUMULATED INTO LARGER A MOUNT DUE TO HIGH VOLUME OF WORK. IT WAS FURTHER SUBMITTED THAT ALL THESE EXPENSES HAVE BEEN INCURRED ON STRICT SUPERVISION OF THE PARTNERS OF THE ASSESSEE FIRM. IT WAS ALSO FURTHER SUBMITTED THAT IN OTHER CASES, THE ADDITION HAS BEEN RESTRICTED TO 10% OF THE EXPENSES ON IDENTICAL CIRC UMSTANCES. CONSIDERING ALL THESE FACTORS, THE LD CIT(A) TOOK THE VIEW THAT THE DISALLOWANCE OF 100% OF EXPENSES IS NOT TENABLE. ACCORDINGLY HE RE STRICTED THE DISALLOWANCE TO 10% OF THE EXPENSES. 4. THUS, WE NOTICE THAT THE LD CIT(A) HAS ANALYZED THE ISSUE IN PROPER PERSPECTIVE. IT IS ALSO A FACT THAT A CUSTOM HOUSIN G AGENT HAS TO NECESSARILY INCUR THESE TYPES OF EXPENSES. SINCE T HESE EXPENSES ARE ITA NO.55/M/2013 3 SUPPORTED BY SELF MADE VOUCHERS, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO EXTENT OF 10% OF THE EXPENSES. 5. THE NEXT ISSUE RELATES TO THE DISALLOWANCE MA DE U/S 40(A)(IA) OF THE ACT. THE ASSESSEE HAD PAID CUSTOM CHARGES, WAREHOU SING CHARGES FREIGHT CHARGES, PROFESSIONAL FEE ETC. TO VARIOUS PARTIES O N 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 ABOV E SAID AMOUNT BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE AC T. THE LD CIT(A) EXAMINED THIS ISSUE IN DETAILS AND NOTICED THAT THE ASSESSEE HAS INCURRED THESE EXPENSES ON BEHALF OF ITS CLIENTS ON ACTUAL B ASIS AND HAS GOT THE REIMBURSEMENT FROM ITS CLIENTS. THUS, THERE WAS NO T PROFIT ELEMENT AND HENCE THE LD CIT(A) HELD THAT THERE WAS NO OBLIGATI ON TO DEDUCT TAX AT SOURCE FROM THESE PAYMENTS. ACCORDINGLY HE DELETED THE DISALLOWANCE. 6. WE NOTICE THAT THE ASSESSEE HAS INCURRED THESE EXPENSES ON BEHALF OF ITS CLIENTS, MEANING THEREBY THE ASSESSEE HAS AC TED AS AGENT OF ITS CLIENTS. IN THIS KIND OF SITUATION, THE CONTRACT D OES EXIST BETWEEN THE CLIENT OF THE ASSESSEE AND THE SERVICE PROVIDER. HENCE, TH E 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 A.R PLACED RELIANCE ON THE DECISION RENDERED BY THE CO-ORDINATE BENCH OF TRIBU NAL 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 INSTANT CASE. THE DELHI BENCH OF TRIBUNAL HAS ALSO EXPRESS ED AN IDENTICAL VIEW IN THE CASE OF JAGUAR ENTERPRISES VS. DCIT (151 ITD 37 6). 7. SINCE THE VIEW TAKEN BY LD CIT(A) ON THIS ISSU E IS IDENTICAL WITH THE VIEW EXPRESSED BY THE CO-ORDINATE BENCHES OF TRIBUN AL, WE DO NOT FIND ANY INFIRMITY IN HIS ORDER ON THIS ISSUE. ITA NO.55/M/2013 4 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16 TH JAN,2015. +, ' - ./ 0 1 16 TH JAN 2015 , & 2( 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 7) ( ) / THE CIT(A)- CONCERNED 4. ' 7) / CIT CONCERNED 5. 6. 89 2 ): , * : , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 ; < ( / GUARD FILE. = ' / BY ORDER, TRUE COPY > # (ASSTT. REGISTRAR) * : , . ' ( /ITAT, MUMBAI