ITO, Sawai Madhopur V. M/S JHALANI TRADING COMPANY, Gangapur City

ITA 576/JPR/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70122 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Recovery proceedings
• Section: 143(3); 194C; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 576/JP/2012 ASSESSMENT YEAR : 2009-10 PAN: AABFJ 1409 R THE ITO VS M/S. JHALANI TRADING COMPANY WARD- 2, SAWAI MADHOPUR NAI MANDI, GANGAPURCITY (APPELLANT) (RESPONDENT) C.O. NO.51/JP/2012 (ARISING OUT OF ITA NO. 576/JP/2012) ASSESSMENT YEAR : 2009-10 PAN: AABFJ 1409 R M/S. JHALANI TRADING COMPANY VS. THE ITO NAI MANDI, GANGAPURCITY WARD- 2, SAWAI MADHOPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI SIDDHARTH RANKA DATE OF HEARING: 19-08-2013 DATE OF PRONOUNCEMENT: 20-08-201 3 ORDER PER KUL BHARAT, JM:- THE REVENUE AND THE ASSESSEE HAVE CHALLENGED THE O RDER OF THE LD. CIT(A), KOTA DATED 3 RD MAY, 2012 FOR THE ASSESSMENT YEAR 2009-10. BOTH, THE APPEAL AND THE C.O. ARE HEARD TOGETHER AND BEING DISPOSED OF BY THIS CONSOL IDATED ORDER FOR THE SAKE OF CONVENIENCE. 2.1 FIRST WE WILL TAKE UP THE REVENUES APPEAL BEAR ING ITA NO. 576/JP/2012 WHEREIN THE REVENUE HAS RAISED THE SOLITARY GROUND AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 23.50 LACS U/S 2 40(A)(IA) DUE TO NON-DEDUCTION OF TDS U/S 194C EVEN THOUGH THE ASSESSEE COULD NOT ESTABLISH THAT M/S. NARENDRA LOG ISTICS (P) LTD. WAS A AGENT OF THE ASSESSEE. 2.2 BRIEFLY, THE FACTS STATED ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED AND THEREBY THE AO MADE DISALLOWANCES OF RS. 23.50 LACS U/S 40(IA), RS . 15,718/- TOWARDS LABOUR EXPENSES, RS. 4,109/- TOWARDS OFFICE EXPENSES AND RS. 24,811/ - TOWARDS TRAVEL EXPENSES. THE ASSESSEE BEING AGGRIEVED BY THIS ASSESSMENT ORDER F ILED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND WHILE PARTLY ALLOWING THE APPEAL OF TH E ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION OF RS. 23.50 LACS MADE U/S 40(IA) OF THE A CT. HOWEVER, OTHER DISALLOWANCES WERE PARTLY CONFIRMED. AGAINST THE ORDER OF THE LD. CIT( A), THE REVENUE FILED AN APPEAL AND THE ASSESSEE FILED THE CROSS OBJECTION BEFORE THE TRIBU NAL. 2.3 THE GRIEVANCE OF THE REVENUE IS AGAINST DELETIO N OF ADDITION OF RS. 23.50 LACS U/S 40(A) (IA) OF THE ACT DUE TO NON-DEDUCTION OF TDS U /S 194C EVEN THOUGH THE ASSESSEE COULD NOT ESTABLISH THAT M/S. NARENDRA LOGISTICS (P ) LTD. WAS AN AGENT OF THE ASSESSEE. 2.4 THE LD. DR SHRI D.C. SHARMA VEHEMENTLY SUPPORTE D THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 2.5 ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER OF THE LD. CIT(A) AND THE L D. CIT(A) RIGHTLY DELETED THE ADDITION. HE FURTHER SUBMITTED THAT THE EXPENSES WERE REIMBURSED BY THE ASSESSEE AND SO NO TAX WAS DEDUCTED. HE HAS ALSO FILED THE WRITTEN SUBMISSION WHICH HAS BEEN TAKEN ON RECORD. 2.6 WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. WE FIND TH AT LD. CIT(A) HAS DELETED THE ADDITION ON THE BASIS THAT M/S. NARENDRA LOGISTICS (P) LTD. TO WHOM THE ASSESSEE PAID RS. 3 15,68,708/- TO VARIOUS SERVICE PROVIDERS SINCE M/S. NARENDRA LOGISTICS (P) LTD. WAS ACTING AS AN AGENT OF THE ASSESSEE AND DEDUCTION OF TDS BY M/S. NARENDRA LOGISTICS (P) LTD. WAS SUFFICIENT COMPLIANCE ON BEHALF OF ITS PRI NCIPAL I.E. THE ASSESSEE. THE REST OF THE AMOUNT WAS DELETED ON THE BASIS THAT A SUM OF RS. 7 ,90,969/- WAS PAID TO UNITED ARAB SHIPPING AGENCY (BY M/S. NARENDRA LOGISTIC) TO WHOM EXEMPTION CERTIFICATE (FROM DEDUCTION OF TDS) WAS ISSUED BY THE ADIT (INTERNAT IONAL TAXATION). THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE ARE REP RODUCED AS UNDER:- GROUND NO. 1 (ITA 576/.1P/12V& (CO. NO. 2) 1. THE ID. ASSESSING OFFICER HAS MADE AN ADDITION O F RS. 2,350,000/- U/S. 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS ON CON TAINER FREIGHT PAID BY THE ASSESSEE. 1.1 DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E RESPONDENT HAS EXPORTED BAJRA THROUGH ITS FORWARDING AGENT; M/S NA RENDRA LOGISTICS PVT. LTD. THE FORWARDING AGENT HAS SENT DEBIT NOTE FOR R EIMBURSEMENT OF THE EXPENSES INCURRED BY THEM. M/S NARENDRA LOGISTICS P VT. LTD. HAS INCURRED ALL NECESSARY EXPENSES AND HAS ALSO, DEDUC TED AND DEPOSITED THE TDS ON THE PAYMENT ISSUED BY THEM ON BEHALF OF THE ASSESSEE. 1.2 THE ASSESSEE HAS REIMBURSED THE EXPENSES INCURR ED BY M/S NARENDRA LOGISTICS PVT. LTD. ON BEHALF OF THE ASSES SEE. 1.3 M/S NARENDRA LOGISTICS PVT. LTD. HAS MADE PAY MENT TO FOLLOWING PARTIES ON BEHALF OF THE ASSESSEE RESPOND ENT ON WHICH TDS STANDS DEDUCTED BY IT (PB PAGE 45-52): (I) DEMCO (MAERSK INDIA PVT. LTD.): RS. 1,198 ,652/- (II) BOX TRANS' LOGISTIC PVT. LTD. : RS. 3,29,527/- (III) PASTE CONTROL INDIA PVT. LTD. :. RS. 20,900/- (IV) QUALITY SERVICES & SOLUTIONS : RS. 16,629/- TOTAL RS. 15,65,708/- 1.4 THE ID. AO HAS HELD THAT OBTAINING OF SEPARAT E BILLS FOR REIMBURSEMENT OF PAYMENTS MADE ON ASSESSEE'S BEHALF BY CUSTOM HOUSE 4 AGENTS DOES NOT DISCHARGE ASSESSEE FROM ITS O BLIGATION TO DEDUCT TDS AND REMARKED THE SAME AS A COLOURFUL DEVISE FO R TAX PLANNING. IT IS SUBMITTED THAT IT IS ERRONEOUS ON T HE PART OF THE ID. AO TO PRESUME THAT THE BILLS HAVE BEEN 'OBTAINED WHEREAS THE BILLS ARE ISSUED NOT OBTAINED. IT IS A REGULAR AND UNIVERSALL Y ACCEPTABLE PRACTICE OF SHIPPING TRADE AND ASSESSEE CAN'T BE EXCEPTION TO T HIS SITUATION. 1.5 THE ISSUE OF NON-DEDUCTION OF TDS IN CASE OF RE-IMBURSEMENT OF EXPENSES REMAINS SETTLED AND WE WISH TO R ELY UPON FOLLOWING JUDGEMENTS: 1.1.1 IN CIT V. TATA ENGINEERING AND LOCOMOTIVE CO. LTD. 205 ITR 823, THE HON'BLE BOMBAY HIGH COURT HAS HELD: NO PART OF EXPENSES OF FOREIGN TECHNICIAN DEPUTED B Y A FOREIGN COMPANY COULD BE TREATED AS PAYMENT IN LIEU OF FEES AND WAS NOT LIABLE TO DEDUCTION OF TAX AT SOURCE. 1.1.2. IN CIT V. HARSBANSLAL MALHOTRA & SONS PVT. LTD. 20 13 (35 TAXTNANN.COM 512 (COPY ENCLOSED), THE HON'BLE CALCU TTA HIGHCOURT HAS HELD : WHERE ASSESSEE PAID AMOUNT TO ITS AGENT WITHOUT DED UCTING TAX AT SOURCE, WHO IN TURN, DEDUCTED TAX AT SOURCE WHILE MAKING PAYMENT TO ADVERTISERS ON BEHALF OF ASSESSEE, DISAL LOWANCE UNDER SECTION 40(A)(IA) WAS NOT CALLED FOR. 1.1.3 IN CIT V. INDUSTRIAL ENGINEERING PROJECTS (P) LTD. (1993) 202 ITR1014, THE HON'BLE DELHI HIGH COURT THOUGH ON DIF FERENT CONTEXT HAS HELD SECTION 37(2A) OF THE INCOME-TAX ACT, 1961 - ENTERTAINMENT EXPENDITURE - WHETHER REIMBURSEMENT O F EXPENSES CANNOT BE REGARDED AS REVENUE RECEIPT AND, THEREFORE, SAME CANNOT BE DISALLOWED - HELD, YES. 1.1.4 IN DCIT V. CHOICE SANITARYWARE INDUSTRIES (9 TAXMANN.COM 120) (RAJKOT) (COPY ENCLOSED), THE HON' BLE RAJKOT TRIBUNAL HAS HELD : WHETHER CIRCULAR IN QUESTION IS APPLICABLE ONLY IN CASES WHERE BILLS ARE RAISED FOR GROSS AMOUNT INCLUSIVE O F PROFESSIONAL FEES AS WELL AS REIMBURSEMENT OF ACTUAL EXPENSES - HELD, YES - WHETHER 5 SINCE C&F AGENT RAISED TWO SEPARATE BILLS, ONE FOR COMMISSION AND OTHER FOR REIMBURSEMENT OF EXPENDITURE CBDT CIRCULA R NO. 715 DATED 8-8-1995 WOULD NOT BE APPLICABLE IN SUCH CASE AND ASSESSEE WOULD NOT BE LIABLE TO DEDUCT TAX ON SAID PAYMENT - HELD, YES. 1.1.5 IN ACIT V. SEAWARD EXPORTS (P) LTD. (2012) 15 0 TTJ 13 (ITAT)(COPY ENCLOSED), THE HON'BLE JAIPUR TRIBUNAL HAS HELD: AFTER CONSIDERING THE ORDERS OF THE ASSESSING OFFIC ER AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), A GAIN WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED COMMISS IONER OF INCOME-TAX (APPEALS). THE PAYMENTS MADE BY THE ASSE SSEE WERE ON ACCOUNT OF REIMBURSEMENT OF EXPENSES OR PAY MENT MADE TO ON ACCOUNT OF CRANE CHARGES WHICH ARE NOT HIT BY PROVISIONS OF SECTION 40(A)(IA), NEITHER WAS THERE ANY AGREEME NT NOR WAS THERE ANY REGULAR CONTRACT. THE ASSESSEE MADE VARIOUS PAY MENTS SUCH AS FUMIGATION CHARGES, STUFFING, LASHING, PACKING A ND LOADING AND UNLOADING CHARGES. THESE PAYMENTS ARE IN THE ROUTIN E COURSE OF BUSINESS AND THEY DO NOT FALL UNDER THE PROVISIONS OF SECTION 194C. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESS ING OFFICER WITHOUT APPLYING HIS MIND PROPERLY MADE ADDITION UN DER SECTION 40(A)(IA) WHICH WERE NOT JUSTIFIED. THE LEARNED COM MISSIONER OF INCOME-TAX (APPEALS) AFTER APPRECIATING THE FACTS H AS DELETED THE DISALLOWANCE. FINDING OF THE LEARNED COMMISSIONER O F INCOME-TAX (APPEALS) REMAINED UNCONTROVERTED, THEREFORE, WE SE E NO REASON TO INTERFERE WITH THE FINDING OF THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS) 1.1.6 IN EMERSONS PROCESS MANAGEMENT INDIA (P) LTD. V. AD D. CIT (2011) 13 TAXMANN.COM 149 (MUMBAI) (COPY ENCLOSED), THE HON'BLE MUMBAI TRIBUNAL HAS HELD : SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - INTEREST, ETC., PAYABLE OUT SIDE INDIA - ASSESSMENT YEAR 2006-07 - WHETHER TDS REQUIREMENTS DO NOT COME INTO PLAY IN CASE OF REIMBURSEMENT OF EXPENSES - HELD, YES - ASSESSEE MADE A PAYMENT TO A GROUP CONCERN UNDER A COST SHARING ARRANGEMENT AND SAID PAYMENT WAS NOT FOR SERVICES B UT AS REIMBURSEMENT OF EXPENSES - SINCE ASSESSEE DID NOT DEDUCT TAX AT SOURCE WHILE MAKING SAID PAYMENTS, ASSESSING OFF ICER DISALLOWED SAME - WHETHER IN VIEW OF AFORESAID LEGA L POSITION, IMPUGNED DISALLOWANCE WAS TO BE DELETED - HELD, YES [IN FAVOUR OF ASSESSEE] 6 1.1.7 IN ACIT V. JB BODA SURVEYORS PVT. LTD. (2010) ITA 42 5 3/MUM/2009 (ITAT) (COPY ENCLOSED ), THE HON'BLE MUMBAITRIBUNAL HAS HELD IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE, WE FOR THE REASONS AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE ORDE R OF THE TRIBUNAL HOLD THAT THE 'ASSESSEE IS NOT LIABLE TO DEDUCT TDS ON THE REIMBURSEMENT OF EXPENSES AND ACCORDINGL Y WE ARE INCLINED TO UPHOLD THE FINDING OF THE ID. CI T(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE, REJ ECTED. 1.1.8 IN ITO V. DR. WILLMAR SCHWABE INDIA PVT. LTD. (200 5) 95 TTJ 53 (ITAT) (COPY ENCLOSED), THE HON'BLE DELHI TRIBUNAL HAS HELD THAT REIMBURSEMENT OF EXPENSES FOR WHICH BILL IS SEPARATELY RAISED DID NOT ATTRACT THE PROVISIONS OF SECTION 194J WHEREAS CBDT CIRCULAR NO. 715 DATED 8-8-1995 I S ATTRACTED ONLY IN CASE BILL IS RAISED INCLUSIVE OF REIMBURSEMENT OF EXPENDITURE. 2. M/S NARENDRA LOGISTICS PVT. LTD. HAS MADE FURTHE R PAYMENT TO M/S. UNITED ARAB SHIPPING CO. (I) PVT. LTD. OF RS. 7,90,868/- ON BEHALF OF THE ASSESSEE RESPONDENT TO WHOM EXEMPTION FOR NON-D EDUCTION OF TDS HAS BEEN ISSUED BY THE ASSISTANT DIRECTOR OF IN COME TAX (INTERNATIONAL TAXATION),CIRCLE(2)(2) (PB PAGE 39-4 1). AS SUCH ON THIS PAYMENT DISALLOWANCE U/S. 40(A)(IA) CANNOT BE ATTRA CTED. 2.1. FOR TAXING NON RESIDENT'S SHIPPING BUSINESS, THE PROVISIONS OF SECTION 172 APPLY. THE RECOVERY OF TAX IS TO BE REGULATED, FOR A VOYAGE UNDERTAKEN FROM ANY PORT IN INDIA BY A SHIP UNDER THE PROVISIONS OF SECTION 172. SECTION 172 EXPLICITLY STATES, NOTWITHSTANDING ANYTHING CONTAINED IN OTHER PROVISIONS OF THE ACT. THEREFORE, IN SUCH CASES, THE PROVISIONS OF SECTION 194C AND 195 RELATING TO TAX DEDUCTION AT SOURCE ARE NOT APPLICABLE. 2.2 THESE AGENTS ACT ON BEHALF OF SHIP OWNERS AND T HEY COLLECT THESE CHARGES ON BEHALF OF THE PRINCIPALS. DISALLOW ANCE U/S. 40(A)(IA) IS PERMITTED WHEN THE PAYMENT IS MADE TO A RESIDENT . WHEREAS; IN THE 7 INSTANT CASE THE PAYMENT HAS BEEN MADE TO NON-RESID ENTS; THOUGH COLLECTED BY THEIR AGENTS IN INDIA. THUS PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE IN THE INSTANT CASE. 2.3 RELIANCE IS PLACED ON CIRCULAR NO. 723, DATE D SEPTEMBER 19, 1995 PB 42. IT HAS BEEN CLARIFIED THAT: WHERE PAYMENTS ARE MADE TO ANY PERSON ON THEIR BEHA LF FOR SHIP SAILED FROM ANY PORT IN INDIA AND SINCE, SUCH ANY OTHER PERSON ACTS ON BEHALF OF THE NON-RESIDENT SHIP-OWNER; HE S TEPS INTO THE SHOES OF THE PRINCIPAL I.E. NON RESIDENT SHIP OWNER AND IN THAT CASE ALSO THE PROVISIONS OF SECTION 172 SHALL APPLY AND THOSE OF SECTIONS 194C AND 195 WILL NOT APPLY. 2.4. IN ACIT V. SEAWARD EXPORTS (P) LTD. (2012) 150 TTJ 13 (ITAT) (COPY ENCLOSED), THE HON'BLE JAIPUR TRIBUNAL HAS HELD: THEREAFTER, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE ORDER OF THE ASSESS ING OFFICER AND CONTENTION OF THE ASSESSEE OBSERVED AND HELD AS UND ER: 'A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSE SSING OFFICER HAD INDEED IGNORED THE FACT THAT PAYMENT OF RS. 4,04,041 PERTAINED TO SCI, ON WHICH NO TDS WAS REQU IRED. THE CERTIFICATES FROM FOUR SHIPPING AGENTS, COPIES OF WHICH WERE ALSO MADE AVAILABLE TO THE ASSESSING OFFICER I N THE COURSE OF ASSESSMENT PROCEEDINGS, SHOW THAT IN SUCH CERTIFICATES SAI SHIPPING SERVICES, CHINUBHAI KALID ASS & BROS, AND OTHER, HAD CATEGORICALLY STATED THAT THEY ACTED AS AGENTS OR RESPECTIVE NONRESIDENT SHIPPING COMPANIES, FROM WHO M THE COMMISSION WAS RECOVERED, IN THE ASSESSMENT ORD ER, THE ASSESSING OFFICER DID NOT GIVE ANY REASONS FOR IGNORING THIS EVIDENCE. THE LETTER DATED MARCH 10, 2010, SUBMITTED BEFORE T HE ASSESSING OFFICER ASSERTED THAT IN CASE OF HOUSE BI LL OF LADING 'SHIPPER... SIMPLY HANDOVER THIS WORK TO HIS AGENT WHO DECIDED WHICH SHIPPING LINE AT WHICH PRICE TO BE USED', AND CLAIMED THAT BECAUSE IT WAS A HOUSE BILL OF LADING, THE AGE NT WHO ISSUED THE HOUSE BILL OF LADING WAS AGENT OF THE AP PELLANT AND NOT THAT OF ANY SHIPPING COMPANY. 8 WHILE IT IS TRUE THAT HOUSE BILL OF LADING IS ISSUE D BY 'AN AGENT' AS OPPOSED TO LINER BILL OF LADING TH AT IS ISSUED BY THE SHIPPING COMPANY, THERE IS NO BASIS TO ASSUM E THAT THIS AGENT WORK ON BEHALF OF THE SHIPPER, IN .THIS CASE THE APPELLANT. TO SUM UP, THE ASSESSING OFFICER DID IGNORE THE FACT THAT ON THE PAYMENT OF RS. 4,04,041 MADE TO TH E SCI, NO TDS WAS REQUIRED. FURTHER, HE DID NOT GIVE ANY REASON FOR IGNORING THE CERTIFICATES FROM THE SHIPP ING AGENT FURNISHED BEFORE HIM, COPIES OF WHICH WERE MADE AVA ILABLE TO ME AS WELL, WHEREIN THEY HAD ACCEPTED THAT THEY ACT ED ON BEHALF OF THE NON-RESIDENT SHIPPING COMPANIES, FROM WHOM THE COMMISSION WAS RECOVERED FOR THE SERVICES RENDERED. IN THE ABSENCE OF ANY COGENT EVIDENCE THAT SAI SHIPPING SERVICES AND THREE OTHERS WERE AGENTS OF THE APPELLANT, THERE IS NO JUSTIFICATION TO INVOKE SECT ION 40(A)(IA) OF THE INCOME-TAX ACT, 1961. IT HAS ALSO BEEN EXPLAINED ABOVE THAT OUT OF RS. 13,04,132 ON PAYMEN T OF RS.4,04,041 TO THE SCI NO TDS WAS REQUIRED. IN GIVE N FACTS AND CIRCUMSTANCES, DECISION OF THE ASSESSING OFFICE R TO DISALLOW PAYMENT OF OCEAN FREIGHT OF RS. 13,04,132 BECAUSE NO TDS WAS MADE, IS NOT CONFIRMED. GROUND NO. 7 OF THE APPEAL IS ACCEPTED.' 37. THE ABOVE OBSERVATIONS AND FINDINGS OF THE LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS) REMAINED UNCON TROVERTED, THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE F INDINGS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE ALSO. ACCORDINGLY, WE CONFIRM THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) 3. THAT UNDER THESE CIRCUMSTANCES, THERE IS NO REAS ON TO DISALLOW THE REIMBURSE OF EXPENSES OF RS. 2,350,000/- U/S. 40(A) (IA) OF THE INCOME TAX ACT AND THE ORDER OF THE ID. CIT (A) DESERVES TO BE UPHELD. 2.7 WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE WRITTEN SUBMISSION OF THE ASSESSEE AND THE MATERIALS AVAILABLE ON RECORD. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE PAYMENT IS MADE AS REIMBURSEME NT TO THE EXPENSES. THEREFORE, NO 9 TDS IS LIABLE TO BE DEDUCTED. IN SUPPORT OF THIS CO NTENTION, FOLLOWING CITATIONS HAVE BEEN PLACED BY THE ASSESSEE. 1. CIT VS. TATA ENGINEERING AND LOCOMOTIVE CO. LTD. , 205 ITR 823 (BOMBAY) 2. CIT VS. HARBANSLAL MALHOTRA & SONS (P) LTD., 45 TAXMAN 512, (CAL.) 3. CIT VS. INDUSTRIAL ENGINEERING PROJECTS (P) LTD. , 202 ITR 1014 (DEL) 4. DCIT VS. CHOICE SANITARYWARE INDUSTRIES, 9 TAX MAN 120 (RAJKOT) 5. ACIT VS. SEAWARD EXPORTS (P) LTD. 120 TTJ 13 ( JAIPUR ) 6. EMERSONS PROCESS MANAGEMENT INDIA (P) LTD. VS. A DD, CIT 13 TAXMAN 149 (MUM.) 7. ACIT VS. JB BODA SURVEYORS (P) LTD. (ITA NO. 425 3/MUM/2009 ITAT MUMBAI BENCH) 8. ITO VS. DR WILLMAR SCHWABE INDIA (P) LTD. 95 T TJ 53 (ITAT DEL) 2.8 THE UNDISPUTED FACTS REMAINS THAT THE LD. CIT(A ) HAS DELETED THE ADDITION ON THE BASIS THAT M/S. NARENDRA LOGISTICS (P) LTD. WAS ACT ING AS AN AGENT OF THE ASSESSEE AND DEDUCTION OF TDS BY M/S. NARENDRA LOGISTICS (P) LTD . WAS A SUFFICIENT COMPLIANCE ON BEHALF OF ITS PRINCIPAL I.E. THE ASSESSEE. HOWEVER, THERE IS NO FINDING WHETHER SUCH PAYMENT IS PRINCIPAL TO PRINCIPAL OR THE NATURE OF PAYMENT WAS ON ACCOUNT OF SERVICES OR REIMBURSEMENT. IN THE ABSENCE OF CLEAR FINDINGS, WE ARE OF THE VIEW THAT THIS MATTER IS TO BE RESTORED BACK TO THE FILE OF THE AO TO VERIFY TH E NATURE OF PAYMENT WHETHER IT IS A REIMBURSEMENT AND ALSO TO VERIFY WHETHER THERE IS A NY AGREEMENT BETWEEN THE ASSESSEE AND M/S. NARENDRA LOGISTICS (P) LTD. TO THIS EFFECT . IN THE LIGHT OF THE DISCUSSIONS 10 HEREINABOVE, THIS SOLITARY GROUND OF THE REVENUE IS RESTORED BACK TO THE FILE OF THE AO TO DECIDE IT AFRESH AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THUS THIS GROUND OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. 3.1 NOW WE TAKE UP THE CROSS OBJECTION OF ASSESSEE BEARING NO.51/JP/12 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS UNJUSTIFIED IN DISALLOWING AN AMOUNT OF RS.12,40 6/- OUT OF TRAVELING AND CONVEYANCE EXPENSES WHEN THE TRAVELING AND CONVEYAN CE ARE MAINLY BY THE EMPLOYEES. 1.2 THAT THE LD. CIT(A) GROSSLY ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 7,859/- OUT OF LABOUR EXPENSES WHEN SUCH EXPEND ITURE IS DETAILED IN THE BOOKS OF ACCOUNT AND SUCH PETTY AMOUNT HAS TO BE PA ID TO THE LABOURERS ON ACCOUNT OF LOADING AND UNLOADING ETC. OF THE GOODS TRADED BY THE APPELLANT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) WAS RIGHT IN LAW AND FACTS IN DELETING THE DISALLOW ANCE / ADDITION OF RS. 23.50 LACS U/S 40(A)(IA) OF THE INCOME TAX ACT. 4.1 THE FIRST GROUND OF THE ASSESSEE RELATES TO DIS ALLOWANCE OF AN AMOUNT OF RS. 12,406/- OUT OF TRAVELING AND CONVEYANCE EXPENSES. 4.2 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THIS FACT THAT THE NOMINAL AMO UNT WAS INCURRED TOWARDS TRAVELING AND CONVEYANCE EXPENSES FOR THE PURPOSE OF BUSINESS. 4.3 ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THE AO DISALLOWED THE EXPENS E ON THE BASIS THAT THE AMOUNT HAS BEEN INCURRED IN CASH AND IN SUPPORT OF THIS EXPENS ES, THE ASSESSEE HAS PRODUCED THE SELF MADE VOUCHERS. THEREFORE, THE LD. CIT(A) RIGHTLY RE STRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OF TOTAL EXPENSES. 11 4.4 AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF 10%. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). HENCE, THIS GROUND OF THE C.O. OF THE ASSESSEE IS REJECTED. 5.1 THE SECOND GROUND OF THE ASSESSEE RELATES TO S USTENANCE OF AN AMOUNT OF RS. 7,859/- OUT OF LABOUR EXPENSES. 5.2 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THIS FACT THAT THE NOMINAL AMO UNT WAS INCURRED TOWARDS LABOUR EXPENSES FOR THE PURPOSE OF BUSINESS. 5.3 ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THE AO DISALLOWED THE EXPENS E ON THE BASIS THAT THE AMOUNT HAS BEEN INCURRED IN CASH AND IN SUPPORT OF THIS EXPENS ES, THE ASSESSEE HAS PRODUCED THE SELF MADE VOUCHERS. THEREFORE, THE LD. CIT(A) RIGHTLY RE STRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OF TOTAL EXPENSES. 5.4 AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF 10%. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). HENCE, THIS GROUND OF THE C.O. OF THE ASSESSEE IS REJECTED. 6.1 THE LAST GROUND OF THE C.O. OF THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A). SINCE WE HAVE REMITTED THIS ISSUE BACK TO T HE FILE OF THE AO, THEREFORE, THIS GROUND OF THE ASSESSEE DOES NOT SURVIVE AND THE SAM E HAS BECOME INFRUCTUOUS. 12 7.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES AND THE C.O. OF THE ASSESSEE IS REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 20-08-2013. SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 20 TH AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. THE ITO 2. M/S. JHALANI TRADING COMPANY, SAWAI MADHOPUR 3. THE LD. CIT(A) 4. THE LD. CIT 5. THE LD. DR 6. THE GUARD FILE (IT NO.576/JP/12 ) A.R. ITAT: JAIPUR 13 14