MARKISH EXIM (I) P. LTD, MUMBAI V. ITO WD 7(12, MUMBAI

ITA 704/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71772 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 25-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K VYAS
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE SHRI D.KARUNAKARA RAO , A M & SHRI SANJAY GARG , J M I TA NO. 704 /MUM/201 1 ( ASSESSMENT YEAR :200 7 - 200 8 ) M/S MARKISH EXIM (I) PVT. LTD., FLAT NO.C, 2 ND FLOOR, ATUR HOUSE, DR. ANNIE BESANT ROAD, WORLI, MUMBAI - 400 018 VS. ITO WD 7(1 )( 2), MUMBAI - 20 PAN/GIR NO. : A A A CP 4076 G ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. HARI S. RAHEJA /REVENUE BY : MR . K.K.VYAS DATE OF HEARING : 2 6 TH NOVEMBER , 201 3 DAT E OF PRONOUNCEMENT : 26 TH NOVEMBER,2013 O R D E R PER D.KARUNAKARA RAO ( A .M.) : TH IS APPEAL BY THE ASSESSEE HAS BEEN PREFERRED AGAINST THE ORDER DATED 22 - 10 - 2010 , PASSED BY THE LEARNED CIT(A) - 13 , MUMBAI FOR THE ASSESSMENT YEAR 200 7 - 200 8 . 2 . AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT THERE ARE COUPLE OF ISSUES THAT ARE REQUIRED TO BE ADJUD ICATED IN THE ASSESSEES APPEAL. 3 . THE FIRST ISSUE RELATES TO ADDITION MADE UNDER SECTION 2(22)(E) OF THE ACT. IN THIS REGARD, LE ARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE IS NOT A SHAREHOLDER IN M/S SPARKLING FOODS PVT. LTD. (IN ITA NO. 704 /201 1 2 SHORT SFPL), WHO GAVE LOAN TO THE ASSESSEE . T HE SHAREHOLDERS OF THE SAID COMPANY , ARE AS UNDER : - I) IB SERVICES GROUP LLC 39.98% II) POOJA K HEMNANI 60.00% III) MADHAV M DAMLE 0.01% IV) PRAKASH D PALAV 0.01% THEREFORE, THE ASSESSEE MAY BE A BENEFICIAL SHAREHOLDER BY VIRTUE OF THE FACT THAT THE IB SERVICES GROUP LLC HOLD S SHARES IN THE ASSESSEE COMPANY. OTHERWISE, THE ASSESSEE IS CE RTAINLY NOT A SHAREHOLDER OF THE SAID COMPANY . C ONSIDERING THE ABOVE FACTS AND THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. BH A UMIK COLOUR PVT. LTD. , REPORTED IN 313 ITR 146 (AT) , WHICH HAS SUBSEQUENTLY BEEN AFFIRMED BY THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S UNIVERSAL MEDICARE PRIVATE LIMITED, REPORTED IN (2010) 324 ITR 263 , THE ORDER OF THE CIT(A) ON THIS ISSUE IS NOT PROPER. UNFORTUNATELY, THE CIT(A) HAS IGNORED THE SAID BINDING JUDGMENT OF THE SPECIAL BENC H OF THE TRIBUNAL, DESPITE THE SUBMISSIONS OF THE ASSESSEE. PAGE 5 OF THE ORDER OF THE CIT(A) IS RELEVANT IN THIS REGARD. CONSIDERING THE BINDING NATURE OF THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BHAUMIK COLOUR PVT. LTD. (SUPRA) , WHICH HAS BEEN S UBSEQUENTLY AFFIRMED BY THE H O N BLE BOMBAY HIGH COURT, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) IN THIS REGARD, REQUIRES TO BE REVERSED. ACCORDINGLY , GROUND NO. 1 IN THE APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 704 /201 1 3 4 . SECOND ISSUE RELATES TO APPLICABILITY OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN RESPECT OF AMOUNT OF RS. 45,46,622/ - , BEING FREIGHT CHARGES , PAID BY THE ASSESSEE WITHOUT MAKING TDS. 5 . IN THIS REGARD, LEARNED COUNSEL OF BOTH THE PARTIES CONCURRED WITH THE PROPOSITION FOR REMITTING T HE ISSUE TO THE FILES OF THE AO FOR DECIDING THE ISSUE AFRESH CONSIDERING THE EXISTING BINDING DECISIONS , WHICH ARE RELEVANT FOR THE PROPOSITION THAT THE PAYMENTS BY WAY OF REIMBURSEMENT DO NOT ATTRACT THE TDS PROVISIONS AND, CONSEQUENTLY, THE PROVISIONS O F SECTION 40(A)(IA) OF THE ACT SHOULD BE IRRELEVANT. 6 . WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FOUND THAT THE REVENUE AUTHORITIES HAVE NOT CATEGORICALLY STATED IN THEIR ORDERS THAT THE IMPUGNED PAYMENTS AR E OF THE NATURE OF REIMBURSEMENT OR OTHERWISE. THE PAPER BOOK FILED BY THE ASSESSEE IN THIS REGARD IS REQUIRED TO BE ANALYZED FROM THIS POINT OF VIEW BY THE AO. IN CASE, THIS PAYMENT CONSTITUTES THE REIMBURSEMENT, THE TDS PROVISIONS SHOULD NOT BE APPLICABL E AND, CONSEQUENTLY, THE PROVISIONS OF SECTION 40(A)(IA) SHOULD NOT BE APPLIED. WITH THE AFORESAID DIRECTIONS, AS REQUESTED BY LEARNED COUNSEL FOR BOTH THE PARTIES, WE SET ASIDE THE ORDER OF THE CIT(A) IN THIS REGARD AND REMAND THE GROUNDS NO. 2 TO 5 RAISE D BY THE ASSESSEE IN ITS APPEAL FOR FRESH ADJUDICATION IN THE LINES MENTIONED ABOVE. THE AO SHALL PASS A SPEAKING ORDER GIVING CATEGORICAL FINDING THAT IF THE FREIGHT CHARGES PAID ARE REIMBURSEMENT OR OTHERWISE. HE SHALL DECIDE THE ISSUE AFRESH IN THE ITA NO. 704 /201 1 4 LIGH T OF THE CITED DECISIONS AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND S NO. 2 TO 5 ARE ALLOWED FOR STATISTICAL PURPOSES. 7 . RESULTANTLY , APPEAL OF THE AS S ESSEE IS ALLOWED PARTLY FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH OF NOV. 201 3 . 26 TH 201 3 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( D.KARUNAKARA RAO ) / JUDICIALMEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 26 /11/ 2013 /PKM , PS COPY OF TH E ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//