ELITE GLOBLE PRODUCTS LTD, MUMBAI V. CIT 16, MUMBAI

ITA 642/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0840 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 23-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Assessee Lawyers: MUKESH PABARI
• Section: 194C

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./642/MUM/2012, /ASSESSMENT YEAR: 2007-08 M/S. ELITE GLOBAL PRODUCTS LIMITED ELITE HOUSE, BHARAT NAGAR PLOT NO.267, BKC, BANDRA(E) MUMBAI-400 051. PAN:AAACT 2727 Q VS. INCOME TAX OFFICER-8(1)-4 MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: DR. A.K. NAYAK- DR ASSESSEE BY: SHRI MUKESH PABARI / DATE OF HEARING: 16.03.2017 / DATE OF PRONOUNCEMENT: 19.04.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) / PER RAJENDRA, AM - CHALLENGING THE ORDER,DTD.13.12.2011 OF THE CIT(A)- 16,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE- COMPANY,ENGAGED IN THE BUS INESS IS WHOLESALER AND RETAILERS OF HOME AND KITCHEN APPLIANCES,FILED ITS RETURN OF INC OME ON 30/10/2007,DECLARING INCOME AT RS. NIL.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSME NT U/S.143(3) OF THE ACT, ON 01/09/ 2009,DETERMINING ITS INCOME AT RS.11.07 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT ADDITION OF RS. 11.07 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT ASSESSEE HAD NOT DET ECTED TAX AT SOURCE FOR AN AMOUNT OF RS. 11,07,856/-, THAT IT HAD DIRECTED TAX AT SOURCE OF RS.12,428/- ON THE FREIGHT CHARGES OF RS.5.6 LAKHS PAID ON DIFFERENT DATES TO EAGLE GLOBAL LOGIS TIC (I) P.LTD. HE,THEREFORE,DISALLOWED FREIGHT CHARGES OF RS.11.07 LAKHS PAID TO FIVE PART IES,INVOKING THE PROVISIONS OF SECTION 40(A)(IA)OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM, IT WAS ARGUED THAT PAYMENT OF FREIGHT CHARGES WAS MADE TO CLEARING AND FORWARDING AGENTS IN INDIA, TH AT THE PROVISIONS OF SECTION 194C WOULD APPLY TO PAYMENT FOR CARRYING OUT THE WORK SUCH AS CONSTRUCTION OF BUILDING/DAMS/LAYING OF ROADS AND AIRFIELDS OR RAILWAY LINES,THAT IN ALL SU CH CONTRACTS TAX WAS TO BE DEDUCTED BY A CONTRACT/SUB-CONTRACTOR,THAT THE CONTRACT BETWEEN T HE ASSESSEE AND THE CLEARING AND FORWARDING AGENT WAS A SERVICE CONTRACT WHICH HAD N OT BEEN SPECIFICALLY INCLUDED IN SECTION 194C,THAT THERE WAS NO OBLIGATION ON PART OF THE AS SESSEE TO DEDUCT TAX FROM THE PAYMENT 642/M/12(07-08) ELITE GLOBAL PRODUCTS LTD. 2 MADE TO THE CLEARING AND FORWARDING AGENT, THAT THE AGENTS WOULD MERELY COLLECT THE PAYMENT FROM THE ASSESSEE FOR PAYMENT TO THE CONCERNED AUTH ORITIES, THAT THE AGENTS WERE JUST DOING WORK FOR THE ASSESSEE AS WELL AS THE THIRD PARTIES, THAT PAYMENT MADE TO AN AGENT WAS A REIMBURSEMENT OF EXPENSES, THAT ON REIMBURSEMENT TH ERE WAS NO LIABILITY TO DEDUCT TAX. THE ASSESSEE RELIED UPON CERTAIN CASE LAWS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, T HE FAA CALLED FOR REMAND REPORT FROM THE AO WHEREIN HE REFERRED TO CIRCULAR NO.715 OF 08/08/ 1995 ISSUED BY THE CBDT. IN THE CIRCULAR IT WAS CLARIFIED THAT THE PAYMENT MADE TO TRAVEL AGENT OR /AND AIRLINE FOR PURPOSE OF PURCHASING TICKETS WOULD NOT BE SUBJECT TO PROVISIO NS OF TAX DEDUCTED AT SOURCE,THAT THE CONTRACT WAS BETWEEN THE INDIVIDUAL PASSENGER AND T HE TRAVEL AGENT NOTWITHSTANDING THE FACT THAT THE PAYMENT WAS MADE BY AN ENTITY MENTIONED IN SECTION 194C(1).DISMISSING THE APPEAL,THE FAA HELD THAT PAYMENT MADE BY THE ASSESS EE TO THE CLEARING AND FORWARDING AGENTS WAS NOTHING BUT CONTRACTUAL PAYMENT, THAT WA S SUBJECTED TO DEDUCTION OF TAX AS PER THE ABOVE CIRCULAR.ACCORDINGLY, HE CONFIRMED THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE CONTENDED THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX ON PAYMENTS MADE TO THE C&F AGENT,THAT THE RECIPIENTS OF THE MONEY HAD PAID TAXES ON PAYMENTS MADE TO THEM BY THE ASSESSEE.HE RELIED UPON THE CASES OF M/S. AI CHAMPDANY INDUSTRIES LTD. (ITA/1919/KOL/2013,AY.2008-09, DTD. 27/07/2016) AND THE DGM,BSNL NTR(ITA/559 & OTHRES/A SR/2013,AY.2007-08 & OTHERS DTD.12/02/2015).THE DEPARTMENTAL REPRESENTATIVE (DR ) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD MADE PAYMENT TO CERTAIN PARTIES WITHOU T DEDUCTING TAXES,THAT THE AO HAD INVOKED THE PROVISIONS OF SECTION 40(A)(IA)OF THE A CT AND MADE DISALLOWANCE OF RS.11.07 LAKHS.WE FIND THAT THE TRIBUNAL HAS,IN THE CASE OF DGM BSNL NTR(SUPRA),HELD THAT IF THE RECIPIENT OF A SUM PAYS TAX, PROVISIONS OF SECTION 40(A)(IA)WOULD NOT BE APPLICABLE. CONSIDERING THE PECULIAR FACTS OF THE CASE,WE ARE O F THE OPINION,THAT MATTER REQUIRES FURTHER VERIFICATION.SO,IN THE INTEREST OF JUSTICE,WE ARE R ESTORING THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE IS DIRECTED TO AFFORD A REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL , 2017. 642/M/12(07-08) ELITE GLOBAL PRODUCTS LTD. 3 19 , 2017 SD/- S D/- ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 19.04.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.