ITO, New Delhi V. M/s. Shree Maa Roll Wrap Pvt. Ltd., Delhi

ITA 6592/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7521 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 04-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax
• Section: 143(3); 194C

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC-3: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6592/DEL/2014 A.Y. : 2010-11 INCOME TAX OFFICER, VS. M/S SHREE MAA ROLL WR AP PVT. LTD. WARD 23(3), ROOM NO. 226, C-173, ANAND VIHAR, C.R. BUILDING, DELHI 110 092 NEW DELHI (PAN: AAKCS6594A) (APPELLANT) (RESPONDENT) DEPARTMENT BY : NONE ASSESSEE BY : SH. MANOJ GUPTA. CA DATE OF HEARING : 14-07-2016 DATE OF ORDER : 02-08-2016 O R D E R PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 24.9.2014 OF THE LD. CIT(A)-XI, NEW DELHI REL EVANT TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION OF RS. 44,03,023/- MADE BY THE AO U/S. 40(A)(I) ON ACCOUNT OF PAYMENTS MADE TO SHIPPING COMPANIES/ AGENTS WITHOUT DEDUCTING TDS. ITA NO. 6592/DEL/2014 2 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, A DD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE O R DURING THE HEARING OF THIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CO-EXTRUDED MULTILAYER PLASTIC FILM USED AS PACKAGING MATERIAL FOR PACKING DIFFERENT GOODS. THE MAIN RAW MATERIAL COMPONENT IS POLY GRANUALS AND MASTER BATCH WHICH A RE MOSTLY IMPORTED FROM OUTSIDE THE COUNTRY. THE RETURN DECLARING RS . NIL INCOME WAS FILED BY THE ASSESSEE ON 12.9.2010. THE RETURN WAS PROC ESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). LATER THE CASE WAS SELECTED FOR SCRUTINY AND THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT, AFTER MAKING DISALLOWANCE OF RS. 44,03,023/- ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE VIDE HIS ORDER DATED 28.3.2012. 3. AGGRIEVED BY THE AFORESAID ADDITION, ASSESSEE AP PEALED BEFORE THE LD. CIT(A), NEW DELHI WHO VIDE HIS IMPUGNED ORDER D ATED 24.9.2014 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE ORDER OF THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. IN THIS CASE, NOTICE OF HEARING FOR 14.7.2016 W AS SENT TO BOTH THE PARTIES AND IN RESPONSE TO THE SAME, ASSESSEES AUT HORISED REPRESENTATIVE APPEARED, BUT NONE APPEARED ON BEHAL F OF THE DEPARTMENT, NOR FILED ANY APPLICATION FOR ADJOURNM ENT FROM THE DEPARTMENT SIDE. KEEPING IN VIEW THE FACTS AND CI RCUMSTANCES OF THE ITA NO. 6592/DEL/2014 3 PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSU E NOTICE AGAIN, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPART E QUA REVENUE, AFTER HEARING THE LD. A.R. OF THE ASSESSEE AND PERUSING T HE RECORDS. 6. ON THE CONTRARY, LD. AUTHORISED REPRESENTATIVE O F THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND REQUEST ED THAT THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. 7. I HAVE HEARD LD. A.R. OF THE ASSESSEE AND PERUSE D THE RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY LD. CIT(A) HAS ELABORATELY DEALT WITH THE ISSUE IN DISPUTE VIDE HIS IMPUGNED ORDER DATED 24.9.2014 AND HELD AS UNDER: - 8.4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. ADMITTEDLY, THE PROVISIONS OF SECTION 172 OF THE AC T IS A CODE IN ITSELF WHICH GOVERNS THE SCHEME OF TAXATION OF SHIPPING COMPANIES. THE VARIOUS SUB-SECTIONS OF SECTION 172 PRESCRIBE THE PROCEDURE WHICH IS TO BE ADOPTED BY THE SHIPPING COMPANIES TAKING CARE OF PAYMENT OF TAXES, MAKING SATISFACTORY ARRANGEMENTS FOR FILING OF RETURN. IT HAS ALSO BEEN ENSURED THAT TH E CUSTOM AUTHORITIES SHALL PERMIT SHIP TO DEPART ONLY AFTER OBTAINING CLEARANCES FROM ALL OTHER AUTHORITIES INC LUDING INCOME TAX AUTHORITIES. FURTHER, THE CBDT CIRCULAR NO. ITA NO. 6592/DEL/2014 4 723 DATED 19.09.1995 CLEARLY LAYS DOWN THAT IN CASE OF PAYMENTS MADE TO FOREIGN SHIPPING COMPANIES, PROVISIONS OF SECTION 172 SHALL APPLY AND THOSE OF SECTION 194C AND 195 WILL NOT APPLY. IT APPEARS THA T THE AO HAS MISTAKEN THE NOC FOR TDS AS CONDITIONS PRESCRIBED U/S. 172(6) OF THE ACT WHEREIN THERE IS A PROVISION OF OBTAINING CLEARANCE FROM INCOME TAX AUTHORITIES BEFORE PERMISSION FOR DEPARTURE IS GRAN TED BY THE CUSTOM AUTHORITIES. IT APPEARS THAT SUCH OBTAINING OF CLEARANCE WAS MIS-INTERPRETED BY THE A O AS OBTAINING OF NOC. INCIDENTALLY, SINCE THE APPELLANT WAS ALREADY HAVING NOCS IN RESPECT OF THREE COMPANIES NAMELY M/S NYK LINE (INDIA) LTD., M/S HAPAG LLOYD INDIA (PVT.) LTD. AND M/S OOCL INDIA (PVT.) LTD., T HE AO GOT ENCOURAGED IN ASKING THE APPELLANT TO FURNISH N OC IN RESPECT OF NON-DEDUCTION OF TAX AT SOURCE FROM T HE APPELLANT IN RESPECT OF REMAINING COMPANIES/AGENTS. THIS, IN FACT, WAS NOT REQUIREMENT UNDER THE LAW AN D AO'S REQUIREMENT WAS COMPLETELY MISPLACED AND HENCE NOT JUSTIFIED. THE FACTS BEING SO, THE AO'S ACTION IN MAKING DISALLOWANCE ON THE BASIS OF WRONG NOTION/PREMISE CANNOT BE SUSTAINED UNDER THE LAW. T HE DISALLOWANCE OF RS. 44,03,023/- MADE BY THE AO ON ACCOUNT OF NON-DEDUCTION OF TAX IS, THEREFORE, NOT ITA NO. 6592/DEL/2014 5 JUSTIFIED AND THE SAME IS DIRECTED TO BE DELETED. S INCE THE APPELLANT GETS RELIEF ON ITS MAIN GROUND, THE ALTERNATIVE ARGUMENT FORWARDED BY IT NEED NOT TO BE CONSIDERED. GROUND NO.2 OF APPEAL IS ALLOWED. 7.1 AFTER GOING THROUGH THE AFORESAID FINDING OF TH E LD. CIT(A), I AM OF THE VIEW THAT CBDTS CIRCULAR NO. 723 DATED 19.09 .1995 CLEARLY STIPULATES THAT IN CASE OF PAYMENTS MADE TO FOREIG N SHIPPING COMPANIES, PROVISIONS OF SECTION 172 SHALL APPLY AND THOSE OF SECTION 194C AND 195 WILL NOT APPLY. HOWEVER, IN THE INSTANT CASE AO HAS MISTAKEN THE NOC FOR TDS AS CONDITIONS PRESCRIBED U/S. 172(6) OF THE ACT WHEREIN, THERE IS A PROVISION OF OBTAINING CLEARANCE FROM INCOME TAX AU THORITIES BEFORE PERMISSION FOR DEPARTURE IS GRANTED BY THE CUSTOM A UTHORITIES. IT REVEALS THAT SUCH OBTAINING OF CLEARANCE WAS MIS-INTERPRETE D BY THE AO AS OBTAINING OF NOC. HOWEVER, AS PER RECORDS THE ASSE SSEE WAS ALREADY HAVING NOCS IN RESPECT OF THREE COMPANIES NAMELY M/ S NYK LINE (INDIA) LTD., M/S HAPAG LLOYD INDIA (PVT.) LTD. AND M/S OOC L INDIA (PVT.) LTD., THE AO GOT ENCOURAGED IN ASKING THE ASESSEE TO FURN ISH NOC IN RESPECT OF NON-DEDUCTION OF TAX AT SOURCE FROM THE ASSESSEE IN RESPECT OF REMAINING COMPANIES/AGENTS. I AM OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY OBSERVED THAT THIS WAS NOT THE REQUIREMENT UNDER TH E LAW AND AO'S REQUIREMENT WAS COMPLETELY MISPLACED AND HENCE WAS NOT JUSTIFIED AND NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, THE DISALLOWANCE OF RS. 44,03,023/- MADE BY THE AO ON ACCOUNT OF NON-DEDUCT ION OF TAX WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT N EED ANY INTERFERENCE ITA NO. 6592/DEL/2014 6 ON MY PART, HENCE, I UPHOLD THE ORDER OF THE LD. C IT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE APPEAL FILED BY THE REVENUE . 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02-08-2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 02/08/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES