ADDL CIT 17(2), MUMBAI V. MELARCODE K. NANDKUMAR, MUMBAI

ITA 6061/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1566 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMAPRIYA RAGHAVAN
• Section: 194C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAM IT KOCHAR, ACCOUNTANT MEMBER ITA NO.6061/MUM/2012 ASSESSMENT YEAR: 2008-09 ACIT-17(2), R. NO.217, 02 ND FLOOR, PIRAMAL CHAMBERS, MUMBAI / VS. SHRI MELARCODE K. NANDKUMAR, 4, BALKRISHNA NIWAS(CR), MATUNGA, MUMBAI-400019 ( / REVENUE) ( ! /ASSESSEE) PAN. NO.AADPN1251F # $ % & / DATE OF HEARING : 26/12/2016 % & / DATE OF ORDER: 27/12/2016 !' / REVENUE BY SMT. RAMA PRIYA RAGHAVAN ! !' / ASSESSEE BY NONE ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 27/07/2012 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CHALLENGING IN HOLDING THAT REIMBURSEMENT O F EXPENDITURE WAS NOT IN THE NATURE OF PAYMENT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE INCOME T AX ACT, 1961 (HEREINAFTER THE ACT) AND CONSEQUENTLY DELETIN G THE ADDITION OF RS.8,31,89,029/-, RELATING TO PAYMENT O F CLEARING AND FORWARDING CHARGES OF RS.31,91,771/- A ND FREIGHT & FORWARDING CHARGES OF RS.7,99,97,258/- MA DE BY ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT PLACING RELIANCE UPON THE DECISION IN NATHPA JHAKARI JOINT VENTURE V S ACIT 5 ITR (TRIB.) 0075. 2. DURING HEARING OF THIS APPEAL, NONE WAS PRESENT FOR THE ASSESSEE, IN SPITE OF THE FACT THAT THE REG ISTERED AD NOTICES WERE SENT TO THE ASSESSEE. UNDER THE CIRCUMSTANCES, WE HAVE NO OPTION BUT TO PROCEED EX- PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OFF THIS APPEA L ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ON THE OTHER HAND, SMT. RAMA PRIYA RAGHVAN, LD. DR, DEFENDED THE ADDIT ION MADE IN THE ASSESSING OFFICER BY ADVANCING ARGUMENT S WHICH IS IDENTICAL TO THE GROUND RAISED. IT WAS PLE ADED THAT THERE IS VIOLATION OF RULE-46A OF THE RULES AS NO O PPORTUNITY WAS PROVIDED TO THE ASSESSING OFFICER. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS, IN ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 3 BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.45,80,920/- ON 30/09/2008, WHICH WAS PROCESSED U /S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY, THEREFORE, REQUISITE NOTICES WERE ISSUED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE ATTENDED THE PROCEEDINGS AND FILED THE NECESSARY DETAILS. ON VER IFICATION OF THE DETAILS, FILED BY THE ASSESSEE, IT WAS NOTIC ED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HAD NO DEDUCTED TAX AT SOURCE ON THE PAYMENTS AMOUNTING TO RS.8,64,21,429/ -, WHICH INCLUDES CLEARING AND FORWARDING EXPENSES AMOUNTING TO RS.31,91,771/-, FREIGHT AND FORWARDING EXPENSES, AMOUNTING TO RS.7,99,97,258/-, PROJECT LA BOUR CHARGES RS.6,25,660/-, TRANSPORTATION CHARGES RS.8,52,250/-, INTEREST PAID AMOUNTING TO RS.11,33, 126/- AND LEGAL AND PROFESSIONAL FEE AMOUNTING TO RS.6,21 ,364/-. THE ASSESSEE WAS ASKED AS TO WHY DISALLOWANCE MAY N OT BE MADE U/S 40(A)(IA) OF THE ACT. THE STAND OF THE LD. ASSESSING OFFICER WAS THAT NO TDS WAS DEDUCTED ON THE PAYMENT S MADE FOR SUCH EXPENSES, THEREFORE, SUCH EXPENSES WE RE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDE RED AND FINALLY THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 4 DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT BEFORE DEL ETING THE ADDITION, THE LD. COMMISSIONER OF INCOME TAX (APPEA L) SOUGHT A REMAND REPORT FROM THE ASSESSING OFFICER A ND THEREAFTER REACHED TO A CONCLUSION, THEREFORE, THE CONTENTION OF LD. DR THAT THERE IS VIOLATION OF RUL E-46A OF THE INCOME TAX RULES IS NOT SUBSTANTIATED. EVEN OTHERWISE, NO SUCH GROUND HAS BEEN RAISED BY THE RE VENUE FOR SUCH VIOLATIONS. IT IS ALSO NOTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS SEPARATELY DEALT WITH THE PAYMENT CLAIMED TO BE MADE UNDER VARIOUS H EADS AND DISALLOWED BY THE ASSESSING OFFICER VIS--VIS APPLICATION OF THE PROVISION OF TDS WITH RESPECT TO THE IMPUGNED PAYMENTS. THE GRIEVANCE OF THE REVENUE IS THAT NO TDS WAS DEDUCTED ON THE PAYMENTS, THUS, THERE IS A FAILURE ON THE PART OF THE ASSESSEE, THEREBY, THE P ROVISION OF SECTION 40(A)(IA) OF THE ACT WAS INVOKED. IT IS ALS O NOTICED, AS MENTIONED IN PARA 1.2(PAGE-2) OF THE IMPUGNED OR DER THAT THE ASSESSMENT PROCEEDINGS WERE INITIATED AT T HE FAG AND OF THE YEAR AND SUFFICIENT TIME WAS NOT PROVIDE D TO THE ASSESSEE TO EXPLAIN THE EXPENDITURE, THEREBY, ADDIT IONAL EVIDENCE WAS FILED BEFORE THE LD. COMMISSIONER OF I NCOME TAX (APPEAL). IT IS ALSO NOTED THAT SO FAR AS, CLEA RING AND FORWARDING CHARGES ARE CONCERNED, THE ENTIRE BILLS, ISSUED BY, L. N. TRADERS, WERE PRODUCED BEFORE THE ASSESSI NG OFFICER, WHICH WERE ISSUED AGAINST EACH CONSIGNMENT GIVEN FOR EXPORTS OF GOODS. THE LD. COMMISSIONER OF INCOM E TAX ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 5 (APPEAL) FOUND THAT THERE ARE 23 CONSIGNMENT IN WHI CH THE TDS PROVISION ARE APPLICABLE, WHEREIN THE AMOUNT IS SUBJECT TO TDS WORKS OUT TO RS.2,80,707/- WHEREIN T HE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE U/S 40( A)(IA) OF THE ACT, WHICH AMOUNT WAS CONFIRMED AS DISALLOWANCE BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IN ITS IMPUGNED ORDER DATED 27/07/2012 WHILE RELIEF WAS GR ANTED FOR THE BALANCE AMOUNT OF RS.29,11,064/-. WE HAVE A LSO OBSERVED THAT ASSESSEE HAS PRODUCED BILLS FOR LESS THAN RS.10,000/- ON WHICH INCLUDED AGENCY CHARGES OF RS. 275 EACH AND THE REST OF THE AMOUNT COMPRISE THE REIMBURSEMENTS OF HANDLING THE CONSIGNMENTS IN THE NATURE OF IAAI CUSTOM DUTY, DOCUMENTATION, LOADING ETC. IN OUR CONSIDERED VIEW, APART FROM THE DISALLOWANCE CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) TO THE TUNE OF RS.2,80,707/-, THE AGENCY CHARGES ON THE SMALL BILLS PAID TO L. N. TRADER IS ALSO SUBJECT TO TDS FOR WHICH NO TDS WAS DEDUCTED BY THE ASSESSEE AND HENCE WE ARE DIRECTING THE ASSESSING OFFICER TO IDENTIFY AND COMPUTE THE AGENCY CHARGES COMPONENTS ONLY ON THE SMALL BIL LS, WHICH ARE NOT TAKEN COGNIZANCE BY LD. COMMISSIONER OF INCOME TAX (APPEAL) FOR MAKING DISALLOWANCE. WITH RESPECT TO THE SECOND GRIEVANCE OF THE REVENUE WITH RESPECT TO NON- DEDUCTION OF TAX AT SOURCE ON FREIGHT AND FORWARDIN G EXPENSES, IT HAS BEEN OBSERVED BY THE LD. COMMISSIO NER OF INCOME TAX (APPEAL) THAT THE PAYMENTS ARE MADE TOWA RDS REIMBURSEMENT OF FREIGHT CHARGES ON VARIOUS BILLS SUBMITTED BY ROYAL LOGISTICS LTD., WHICH REIMBURSEM ENT ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 6 ALSO INCLUDED RUPEES 309/- TOWARDS AGENCY CHARGES COMMISSION, IN OUR CONSIDERED VIEW, THE REIMBURSEME NT OF FREIGHT EXPENSES CANNOT BE SUBJECTED TO TDS PROVISI ONS AND ONLY THE DISALLOWANCE SHALL BE RESTRICTED TO AGENCY COMMISSION PAID TO ROYAL LOGISTICS PVT. LTD., ETC., WHICH IS INCLUDED IN THE BILLS SUBMITTED BY THE SAID CONCERN S, THUS, THE DISALLOWANCE SHALL BE RESTRICTED ONLY AGENCY COMMISSION CHARGES PAID BY THE ASSESSEE ON WHICH NO TAXES HAS BEEN DEDUCTED AT SOURCE, THE ASSESSING OF FICER IS DIRECTED TO WORK OUT THE DISALLOWANCE, KEEPING IN V IEW THE PROVISIONS OF THE ACT RELATING TO THE AGENCY COMMIS SION PAID BY THE ASSESSEE ONLY NO TDS WAS DEDUCTED AT SO URCE AFTER EXCLUDING THE REIMBURSEMENT OF FREIGHT CHARGE S. THE VALUE OF THE COMMISSION WAS PAID RS.309/-, THEREFOR E, THE PROVISION OF SECTION 194C WAS HELD TO BE NON-APPLIC ABLE. VARIOUS INVOICES WERE EXAMINED ALONG WITH AIR-WAY B ILLS AS IS OOZING OUT FROM PAGES 4 ONWARDS OF THE IMPUGNED ORDERS. THE REMAND REPORT, SOUGHT FROM THE ASSESSIN G OFFICER, WAS DULY CONSIDERED AND THERE IS FINDING T HAT EACH CONSIGNMENT WAS A SEPARATE CONTACT AND THE AGENTS COMMISSION WAS RANGING BETWEEN 300 TO 400 FOR EACH CONSIGNMENT, THUS, WE ARE IN AGREEMENT WITH THE FIN DING OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THAT TD S PROVISION ARE NOT ATTRACTED. THE RATIO LAID DOWN IN THE CASE OF ACIT VS GRANT PRICX PVT. LTD. 34 DTR (DEL. TRIB. ) 248 SUPPORTS OF VIEW. IDENTICAL RATIO WAS LAID DOWN IN MAHINDRA & MAHINDRA LTD. VS DCIT (2009) 313 ITR (AT) 263 (MUM.)(SB). ITA NO. 6061/MUM/2012 SHRI MELARCODE K. NANDKUMAR 7 CONSIDERING THE TOTALITY OF MATERIAL FACTS, WE FIN D THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS DIS POSED OFF THIS APPEAL IN A JUSTIFIABLE MANNER EXCEPT AS P OINTED OUT BY US IN THIS ORDER, RESULTING INTO PARTLY ALLOWED OF APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 26/12/2016. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) #'$ / ACCOUNTANT MEMBER %'$ /JUDICIAL MEMBER # $ MUMBAI; ' DATED : 27/12/2016 F{X~{T? P.S / /. . . &%'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT (RESPECTIVE ASSESSEE) 2. -.+, / THE RESPONDENT. 3. / / # 0 ( )* ) / THE CIT, MUMBAI. 4. / / # 0 / CIT(A)- , MUMBAI, 5. 23 - , / )*& ) 4 , # $ / DR, ITAT, MUMBAI 6. 5 6$ / GUARD FILE. ' / BY ORDER, .2* - //TRUE COPY// /' (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI