Shree Kanha Stockbroking P Ltd., Ahmedabad V. The ITO Ward - 4(1)(3), Ahmedabad

ITA 616/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6828 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Third party statement
• Section: 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 616/AHD/2016 (ASSESSMENT YEAR: 2012-13S) SHREE KANHA STOCKBROKING P. LTD., 406, SAHIL COMPLEX, OPP: MADHUSUDAN HOUSE, OFF C.G. ROAD, NAVRANGPURA, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 4 (1)(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACCK 4088M APPELLANT BY : SHRI S. N. DIVATIA, A.R. RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 20 -12-201 8 DATE OF PRONOUNCEMENT : 31 -12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-8, AHMEDABAD DATED 21.01.2016 PERTAINING TO A.Y. 2012- 13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 616/ AHD/2016 . A.Y. 2012-1 3 2 1.1 THE ORDER PASSED U/S.250 ON 21.01.2016 FOR A.Y .2012-13 BY CIT(A)-8, ABAD UPHOLDING PARTLY THE DISALLOWANCES MADE BY AO IS WH OLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENC E PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED DISALLOWANCES. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING FOLLOWING ADDITIONS/DISALLOWANCES: (A) DISALLOWANCE U/S 40(A)(IA) RS.9,74,475 /- (B) DISALLOWANCE OF SUB-BROKERAGE RS.3,69,894/- 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ABOVE SAID D ISALLOWANCES. IT IS, THEREFORE, PRAYED THAT THE DISALLOWANCES UPH ELD BY THE CIT(A) MAY KINDLY BE DELETED. 2. THE FACTS OF THE CASE ARE THAT THE AO HAS DISALLOWE D BANK GUARANTEE CHARGES OF RS. 1,45,417/- AND BANK LIQUIDATION CHARGES OF R S.8,29,058/- U/S.40(A)(IA) AS NO TDS IS DEDUCTED BY THE APPELLANT COMPANY ON THES E PAYMENTS. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE RELIED ON THE C ONTENTION THAT PROVISION OF SECTION 194H IS APPLICABLE WHEN THERE IS RELATION O F AGENT TO PRINCIPAL. HE ALSO RELIED ON NOTIFICATION NO. 56/2012[F. NO. 275/53J/2 012-IT(B)], DATED 31-12- 2012. THE AO DID NOT ACCEPT THE CONTENTION OF THE A SSESSEE AS THIS NOTIFICATION IS EFFECTIVE FROM 01.01.2013 WHILE THE EXPENDITURE IS RELATED TO F. Y.2011-12. 3. IN APPEAL FILED BY THE ASSESSEE, LD. CIT(A) CONFIRM ED THE ACTION OF THE A.O. 4. NOW APPELLANT IS BEFORE US. ITA NO. 616/ AHD/2016 . A.Y. 2012-1 3 3 5. AS WE CAN SEE, AN AMOUNT OF RS. 9,74,475/- IS CONSI STING OF BANK GUARANTEE OF RS. 1,45,417/- AND BANK LIQUIDATION CHARGES OF RS. 8,29,057/- AND ASSESSEE HAS NOT DEDUCTED THE TDS U/S. 194H. 6. ASSESSEES CONTENTION IS THAT THERE IS NO RELATIONS HIP OF PRINCIPAL AND AGENT BETWEEN THE PAYEE AND PAYER. HENCE, SECTION 194 H I S NOT APPLICABLE TO THE ASSESSEE. 7. AND IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORDER OF ITAT, MUMBAI IN THE CASE OF LARSEN & TUBRO LTD. IN ITA NO. 5589/MUM /2014 AND WHEREIN DECISION OF KOTAK SECURITIES LTD. VS. DCIT [147 TTJ 443] (MUM) WHEREIN IT HAS BEEN HELD BANK GUARANTEE CHARGES ARE NOT LIABLE FOR DEDUCTION OF TAX U/S. 194H AND SUCH TRANSACTIONS ARE ON PRINCIPAL TO PRIN CIPAL BASIS AND THE ELEMENT OF AGENCY WHICH IS ESSENTIAL TO COVER IT AS COMMISS ION AS PER EXPLANATION TO SECTION 194H IS ABSENT. 8. RESPECTFULLY FOLLOWING THE ABOVE SAID, WE ALLOW THI S GROUND OF APPEAL. 9. NOW WE COME TO ISSUE RELATING TO BROKERAGE PAID TO FOLLOWING THREE PARTIES: (I) SHAH HANSABEN RAJNIKANT (II) SHAH CHIRAGKUMAR VASANTLAL (III) GOPWANI KANCHAN SUNI 10. WITH REGARD TO THIS AMOUNT, THE LD. A.O. HAS DISALL OWED THE COMMISSION/BROKERAGE PAYMENTS FOR WANT OF CORROBORA TIVE EVIDENCE.. 11. WE NOTICE THAT THE ASSESSEE HAS FILED SEVERAL EVIDE NCES TO SUBSTANTIATE THE COMMISSION PAYMENTS VIZ: ITA NO. 616/ AHD/2016 . A.Y. 2012-1 3 4 (A) CONTRA CONFIRMATION LETTER OF SUB-BROKER (B) COPY OF COMPUTATION OF INCOME SHOWING BROKERA GE AND TDS SEBI (C) SEBI REGISTRATION CERTIFICATE (D)TDS MADE U/S.194H FROM BROKERAGE PAID (E)MOST OF THE PAYMENTS MADE BY CHEQUE (F)LIST OF THEIR CLIENTS (G)AS PER SEBI CIRCULAR DATED 17.10.2002, THE APPEL LANT HAS TO CARRY OUT INSPECTION AT THE PLACE OF BUSINESS OF SUB-BROKER AND SUBMIT THE REPO RT. THE SAMPLE OF SUCH REPORTS IS ENCLOSED IN THE PAPER BOOK (P.27-39). THE AO HAS A LLOWED THE TRAVELLING EXPENSES IN THIS REGARD . 12. IN THE LIGHT OF EVIDENCE PLACED, WE FIND FORCE IN T HE PLEA OF THE ASSESSEE THEREFORE; WE ALLOW THE APPEAL OF THE ASSESSEE. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 31 - 12- 2018 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 31/12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD