Appeal details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 4411 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-02-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Assessment Year
2013-2014
Appeal Filed On
12-12-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.7160/M/2018 ASSESSMENT YEAR: 2013-14 M/S. EASYLINK INSURANCE SERVICES PVT. LTD., A-607, MAHAAVIR ICON, PLOT 89/90, SECTOR 15, CBD BELAPUR, NAVI MUMBAI PAN: AABCE4170H VS. DCIT 1(1)(2), ROOM NO.533, 5 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI GAURAV KABRA, A.R. REVENUE BY : SHRI AMIT PRATAP SINGH, D.R. DATE OF HEARING : 15.01.2020 DATE OF PRONOUNCEMENT : 18.02.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.06.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.1) THE LD CIT-(A) ERRED IN UPHOLDING THE ORDER O F THE LD ASSESSING OFFICER BY CONFIRMING THE ACTION OF DENYING THE CREDIT FOR TAX DEDUCTED AT SOURCE AMOUNTING TO OF DENYING THE CREDIT FOR TAX DEDUCTED AT SOURCE AM OUNTING TO RS.36,85,776/-. 1.2) THE LD CIT(A) ERRED IN NOT DIRECTING THE LD. A SSESSING OFFICER TO GRANT CREDIT FOR TAX DEDUCTED AT SOURCE WHICH WAS ATTRIBUTABLE T O THE INCOME ACCOUNTED BY THE APPELLANT IN ITS PROFIT & LOSS ACCOUNT AND DULY OFF ERED FOR TAX BY THE APPELLANT. THE LD CIT-(A) HAS ERRED IN HOLDING THAT THE NON GR ANTING OF TDS CREDIT WHICH WAS ALREADY CLAIMED BY THE APPELLANT IN ITS RETURN OF I NCOME IS NOT A MISTAKE APPARENT FROM RECORD WHICH CAN BE RECTIFIED. ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 2 1.3) THE APPELLANT SUBMITS THAT ON PASSING THE ORDE R U/S 154 OF THE INCOME-TAX ACT, THE INTIMATION U/S 143(1)(A) STANDS MERGED WITH THE ORDER U/S 154. 1.4) THE LD CIT(A) HAS ERRED IN LAW IN NOT FOLLOWIN G AN ORDER OF THE HON'BLE CO- ORDINATE BENCH OF THE TRIBUNAL HAVING SIMILAR FACTS WHICH WAS SUBSEQUENTLY UPHELD BY THE HON'BLE HIGH COURT. 2) ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO E ACH OTHER. 3) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER AND/ OR AMEND THE GROUNDS OF APPEAL AS AND WHEN GIVEN. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VAR IOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A ) UPHOLDING THE ORDER OF AO WHEREIN THE AO HAS DENIED THE CREDI T FOR TAX DEDUCTED AT SOURCE AMOUNTING TO RS.36,85,776/-. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF INSURANCE AS CORPORATE AGENT OF M/S IFF CO TOKYO GENERAL INSURANCE CO. LTD. (HEREINAFTER REFERRED AS ITGICL) AND ISSUING PRAVASI BHARATI BIMA YOJANA 2006 POLICIES F ROM THE WEB PORTAL OF ITGICL. THE OVERSEAS MANPOWER RECRUITING AGENTS (OMRA) GENERATE PBBY POLICIES FROM THE WEB PORTAL O F ITGICL AT THEIR END AS PER REQUIREMENTS ON BEHALF OF THE EMIG RANTS THROUGH THE ASSESSEE. THIS POLICY IS A MANDATORY RE QUIREMENT BY THE GOVERNMENT OF INDIA TO GET THE EMIGRATION CLEAR ANCE FOR THE ECR PASSPORT HOLDERS. THE PASSENGERS AND OMRA ISSUE THE PBBY POLICIES AND REMIT THE AMOUNT OF PREMIUM AFTER DEDUCTION OF DISCOUNTS OFFERED BY THE ASSESSEE. THE ASSESSEE DAILY REPORT THE PBBY POLICIES ISSUED BY IT TO THE ITGICL AND RE MITS FULL AMOUNT OF INSURANCE PREMIUM. ITGICL GIVES TO THE A SSESSEE COMMISSION AND ADDITIONAL INCENTIVES. THE ADDITIONA L INCENTIVE RECEIVED IS CREDITED TO THE BANK ACCOUNT HELD IN TH E NAME OF ONE OF THE DIRECTOR OF THE ASSESSEE WHEREAS, THE SAME H AS BEEN INCLUDED IN ITS PROFIT AND LOSS ACCOUNT AND OFFERED TO TAX IN ITS RETURN OF INCOME. AS THE INCOME IS CREDITED TO THE BANK ACCOUNT ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 3 HELD IN THE NAME OF ONE OF THE DIRECTOR, CREDIT FOR TDS IN RESPECT OF THE ADDITIONAL INCENTIVE IS REFLECTED IN THE FOR M 26AS OF THE DIRECTOR. THE DIRECTOR IN HIS INDIVIDUAL RETURN OF INCOME HAS NOT CONSIDERED THE AFORESAID INCOME NOR TDS THEREON AS THE INCOME BELONGS TO THE ASSESSEE COMPANY. FOR THE ASSESSMENT YEAR 2013-2014 ,A REGULAR ASSESSMENT HAS BEEN COMPLETED IN THE CASE OF THE DIRECTOR SHRI PRAMOD KUMAR AGGARWAL WHE REIN AFORESAID INCOME IS NOT BROUGHT TO TAX AND NO CREDI T FOR TDS HAS BEEN GRANTED AS REFLECTED IN FROM NO. 26AS OF THE S AID DIRECTOR. THE ASSESSING OFFICER WHILE PASSING THE RECTIFICATI ON ORDER HAS DENIED THE CREDIT FOR THE SAID TDS ON THE GROUND TH AT AS PER RULE 37BA OF THE INCOME-TAX RULES, 1962 ( HEREINAFT ER REFERRED TO AS THE RULES) THE DIRECTOR HAS NOT FILED THE DEC LARATION WITH THE DEDUCTOR. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS FILED ITS RETUR N OF INCOME DECLARING NET TAXABLE INCOME AMOUNTING TO RS.L,55,8 7,3607- AND TAX DUE THEREON WORKS OUT TO BE RS.50,94,523/-(INCL UDING INTEREST UNDER SECTION 234 AMOUNTING TO RS.37,204/- ). ASSESSEE HAD PAID TAXES BY WAY OF TAX DEDUCTED AT SOURCE (TD S) OF RS.47,20,605/- AND SELF-ASSESSMENT TAX OF RS.3,73,9 18/-. THE ASSESSEE RECEIVED A DEMAND NOTICE FROM THE ASSESSIN G OFFICER ON 04TH AUGUST, 2016 DETERMINING RS.46,96,407/- PAYAB LE BY THE ASSESSEE. THE SAID DEMAND WAS RAISED BY THE AO BECA USE THE ASSESSEE HAS NOT BEEN GRANTED CREDIT FOR TAX DEDUCT ED AT SOURCE OF RS36,85,776/-. THE ASSESSEE FILED A RECTIFICATIO N LETTER U/S 154 OF THE ACT ON 13TH OCTOBER, 2016 EXPLAINING THE ASSESSING OFFICER ABOUT THE INCOME AND TDS REFLECTING IN FORM 26AS OF ONE OF THE DIRECTOR SHRI PRAMOD KUMAR AGGARWAL. THE ASS ESSING ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 4 OFFICER PASSED RECTIFICATION ORDER UNDER SECTION 15 4 OF THE ACT ON 26 TH OCTOBER, 2016 DENYING THE CREDIT OF TDS TO THE ASS ESSEE. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERA TION THE ARGUMENTS OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 4.4.1. I HAVE CONSIDERED THE RIVAL CONTENTIONS. IN THIS CASE THE TWO INSURANCE COMPANIES PAID COMMISSION TO SHRI PRAMOD KUMAR AGRA WAL, DIRECTOR OF THE APPELLANT COMPANY AND DEDUCTED TAX AT SOURCE AS REQ UIRED UNDER THE ACT. IN ITS RETURN THE APPELLANT DECLARED THE COMMISSION INCOME IN ITS RETURN AND ALSO CLAIMED THE CREDIT FOR THE TAX DEDUCTED AT SOURCE BY THE TW O INSURANCE COMPANIES. SHRI PRAMOD KUMAR AGRAWAL WHO WAS THE ACTUAL RECIPIENT O F THE COMMISSION NEITHER DECLARED THE COMMISSION NOR CLAIMED THE CREDIT FOR THE TDS. THE TDS WAS NOT REFLECTED IN THE 26AS STATEMENT OF THE APPELLANT AN D THEREFORE NO CREDIT FOR TDS WAS GIVEN IN THE ORDER PASSED U/S 143(1) OF THE ACT OR IN THE ORDER PASSED U/S 154. 4.4.2. .. . 4.4.3. I FIND THAT THE DECISION OF THE HONBLE DELH I HIGH COURT IS NOT APPLICABLE TO THE APPELLANTS CASE. IN THAT CASE THE PAYMENT WAS MADE BY THE DEDUCTOR THE ASSESSEE (REPL) THOUGH THE TDS CREDIT WAS REFLECTED IN THE CREDIT OF SISTER CONCERN OF THE ASSESSEE (DUE TO QUOTING OF A WRONG PAN). B UT IN THIS CASE, NEITHER THE COMMISSION WAS PAID TO THE APPELLANT NOR WAS THE TD S REFLECTED IN THE CREDIT OF THE APPELLANT IN 26AS. 4.4.4 U/S 143(1) OF THE ACT, THERE IS NO SCOPE FOR EXAMINING WHETHER AN ASSESSEE IS ELIGIBLE FOR ANY TDS CREDIT OTHER THAN THOSE REFLEC TED IN THE 26AS STATEMENT PERTAINING TO HIM. THEREFORE, THERE WAS NO MISTAKE IN THE ORDER U/S 143(1) OF THE ACT WHICH WAS APPARENT FROM RECORD. THEREFORE, THE AO WAS JUSTIFIED IN REJECTING THE APPELLANT'S CLAIM FOR RECTIFICATION U/S 154 SIN CE, AS MENTIONED ABOVE, THERE IS NO MISTAKE IN THE ORDER UNDER SECTION 143(1) OF THE A CT WHICH WAS APPARENT FROM THE RECORDS. THE APPELLANT HAS SOUGHT TO RELY ON NEW MA TERIAL IN THE FORM OF AFFIDAVIT, LETTER FROM THE AO OF THE DIRECTOR ETC TO ESTABLISH THAT THERE IS A MISTAKE IN THE ORDER U/S 143(1). BUT UNDER THE PROVISIONS OF SE CTION 154, NO MATERIAL WHICH DO NOT FORM PART OF THE RECORD AT THE TIME OF PASSING THE ORDER WHICH IS THE SUBJECT MATTER OF THE ORDER U/S 154 CAN BE RELIED UPON. THE REFORE, IN MY VIEW, THE AO WAS JUSTIFIED IN REJECTING THE APPELLANT'S CLAIM FOR TD S CREDIT. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE SHRI PRAMOD KU MAR AGRAWAL WHO IS DIRECTOR OF THE ASSESSEE COMPANY HAS RECEIVE D ADDITIONAL COMMISSION FROM THE IFFCO TOKYO GENERAL INSURANCE C O. LTD. ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 5 ON BEHALF OF THE ASSESSEE AND TDS WAS ALSO DEDUCTED BY THE SAID COMPANY . BOTH THESE AMOUNT ADDITIONAL INCENTIVES A ND TDS WAS REFLECTED IN FORM NO.26AS OF SHRI PRAMOD KUMAR AGRAWAL. HOWEVER, THE COMMISSION BELONGED TO THE ASSESSEE CO MPANY AND ACCORDINGLY THE SAME WAS INCLUDED IN THE RETURN OF INCOME OF THE ASSESSEE AND CORRESPONDING TDS WAS ALSO CLAI MED. THE AO WHILE PROCESSING THE RETURN UNDER SECTION 143(1) DENIED THE CREDIT OF TDS WHEREAS THE INCOME WAS DULY INCLUDED AND ASSESSED IN THE HANDS OF THE ASSESSEE. THEREFORE, THE ONLY ISSUE FOR ADJUDICATION BEFORE US WHETHER THE TDS CLAIM IS TO BE ALLOWED TO THE ASSESSEE WHICH WAS APPEARING IN FORM NO.26AS IN THE NAME OF SHRI PRAMOD KUMAR AGRAWAL A DIRECTOR OF THE ASSESSEE COMPANY. IN THIS CASE, WE FIND THAT THE ASSESSMENT OF SHRI PRAMOD KUMAR AGRAWAL WAS COMPLETED BY THE AO V IDE ORDER DATED 03.03.2016 PASSED UNDER SECTION 143(3) WHEREIN BOTH THE INCOME AS WELL AS TDS WERE NOT CONSIDERED AND SO MUCH SO THAT THE AO OF SHRI PRAMOD KUMAR AGRAWAL VI DE LETTER DATED 02.05.2017 INFORMED THE AO OF THE ASSESSEE CO MPANY THAT THE CREDIT OF TDS OF RS.36,85,776/- MAY KINDLY BE G IVEN TO THE ASSESSEE SUBJECT TO VERIFICATION OF DETAILS. THE C ONTENTS OF THE LETTER ARE REPRODUCED BELOW: SUB: INTIMATION IN THE CASE OF SHRI PRAMOD KUMAR AGARWAL, PAN- AAJPA4843Q 6S TDS CREDIT FOR THE A.Y. 2013-14 OF RS, 36,85,776/- IN THE CASE OF M/S EASYLINK INSURANCE SERVICES PVT. LTD; PAN: AABCE4170H. *************************************************** ************** PLEASE REFER TO THE ABOVE. IN THIS CASE, ASSESSMENT ORDER WAS PASSED U/S.143(3 ) DATED DETERMINED TOTAL INCOME OF RS. 1 0,04,480/- WITHOUT CREDIT OF TDS OF RS.36,85,776/- AS SHOWN IN 26AS. IN THIS RESPECT THE ASSESSEE VIDE LETTER DATED 01.0 5,2017 HAS STATED THAT ' THE TDS AS PER THE 26-AS FOR THE A.Y. 2013-14, UNDER THE AB OVE PAN, OF RS. 36,85,776/- AGAINST THE REVENUE RECEIPTS FROM THE INSURANCE COM PANIES IS NEITHER CLAIMED NOR ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF PRAMOD KU MAR AGRAWAL BECAUSE THESE ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 6 REVENUE RECEIPTS ARE PERTAINING TO THE INITIAL TRAN SACTION OF M/S EASYLINK INSURANCE SERVICES PVT. LTD. AND THEREFORE THESE REVENUE RECE IPTS ARE ACCOUNTED FOR IN THE BOOKS OF M/S EASYLINK INSURANCE SERVICES PVT. LTD. AND TDS ON THAT IS ALSO CLAIMED IN THE SAME BOOKS OF ACCOUNT. THESE REVENUE RECEIPTS OF THE A.Y. 2013-14 AS PER T HE 26-AS IS NOT ASSESSED UNDER THE PAN OF PRAMOD KUMAR AGRAWAL AND THE SAME CAN BE VERIFIED FROM THE ASSESSMENT ORDER'. THE SUBMISSION OF THE ASSESSEE IS DULY CONSIDERED W ITH FACTS OF THE CASE AND ASSESSMENT ORDER. THE COMMENTS OF THE A.O. IN THE A SSESSMENT ORDER FOR THE A.Y. 2013-14 IS AS UNDER: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE STATED THAT THE RECEIPTS AS REFLECTED IN HIS PAN NO. IS ACTUALLY THE RECEIPTS O F COMPANY I.E. EASYLINK INSURANCE SERVICES PVT. LTD, AND THE COMPANY HAS OFFERED THE RECEIPTS FOR TAXATION AND FILED AN AFFIDAVIT ON INDIA NON JUDICIAL STAMP PAPER ON 2 9.02.2016, THE PART OF THE AFFIDAVIT IS REPRODUCED AS UNDER: 'THAT I WILL NOT CLAIM ANY REFUND OF TDS FOR AMOUNT OF RS.36,85.7767- FOR THE ASSESSMENT YEAR 2013-14 AS SHOWN IN 26AS. SINCE THE REVENUE RECEIPT RELATED TO ABOVE TDS IS THE INCOME OF EASY LINK INS URANCE SERVICES PVT. LTD, AND HAS BEEN CREDIT TO THE COMPANY AND HAS BEEN OFF ERED FOR TAXATION IN THAT COMPANY ONLY AND HENCE THE TDS THEREON IS ALSO CLAIMED IN THE INCOME TAX RETURN OF EASYLINK INSURANCE SERVICES PVT. LTD, HAVING PAN AABCE4170H'. CONSIDERING THE ABOVE FACTS, YOU ARE REQUESTED TO G IVE THE CLAIM OF TDS CREDIT OF RS.36,85,776/- BY M/S EASYLINK INSURANCE CO. LTD SUBJECT TO VERIFICATION OF DETAILS UNDER INTIMATION TO THIS OFFICE. 7. THUS, IT IS QUITE CLEAR THAT THE TDS WAS NEITHER ALLOWED CREDIT IN THE HANDS OF SHRI PRAMOD KUMAR AGRAWAL NO R THE ASSESSEE WHEREAS THE INCOME IS ASSESSED IN THE HAND S OF THE ASSESSEE. THE ONLY TECHNICAL OBJECTION RAISED BY T HE AUTHORITIES BELOW ARE THAT THE SCOPE OF 143(1) OF THE ACT IS V ERY LIMITED AND ONLY THOSE ADJUSTMENTS ARE MADE WHICH ARE PRIMA-FAC IE NOT ALLOWABLE TO THE ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE BEFORE THE AO. THE LD. CIT(A) UPHELD THE ORDER OF A O BY REASONING THAT AO IS CORRECT IN DENYING THE CREDIT OF TDS TO THE ASSESSEE AS THE ASSESSEE SOUGHT TO RELY ON THE NEW MATERIAL IN THE FORM OF AFFIDAVIT, LETTER OF AO OF SHRI PRAMOD KUMAR AGRAWAL TO ESTABLISH THAT THERE IS A MISTAKE IN THE ORDER U NDER SECTION ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 7 143(1) OF THE ACT, HOWEVER, UNDER SECTION 154 OF TH E ACT THE SCOPE IS VERY LIMITED AS THE MATERIAL SOUGHT TO BE RELIED BY THE ASSESSEE WAS NOT PART OF THE RECORD AT THE TIME OF PASSING THE ORDER UNDER SECTION 143(1) OF THE ACT. 8. AFTER CONSIDERING THE FACTS ON RECORD, WE ARE NO T IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. CIT( A) ON THIS ISSUE AS IT WOULD BE GROSSLY UNFAIR AND UNJUST TO D ENY THE ASSESSEE THE CREDIT OF TDS WHERE THE CORRESPONDING INCOME HAS BEEN ASSESSED IN ITS HAND AND THIS HAS BEEN DONE D ESPITE THE FACT THAT THE AO OF SHRI PRAMOD KUMAR AGRAWAL HAS COMMUNICATED TO THE AO OF THE ASSESSEE THAT THE CRE DIT OF TDS OF RS.36,85,776/- HAS NOT BEEN ALLOWED TO SHRI PRAM OD KUMAR AGRAWAL AND MAY BE ALLOWED TO THE ASSESSEE COMPANY AFTER VERIFICATION OF FACTS. HOWEVER, THE AUTHORITIES BE LOW HAVE GONE BY THE TECHNICALITIES OF THE ISSUE INSTEAD OF CORRE CTING THE WRONGS. IN OUR OPINION, IT WOULD BE GROSS INJUSTIC E, IF THE ASSESSEE IS DENIED CREDIT OF TDS IN VIEW OF THE FAC T THAT THE INCOME IS ALREADY ASSESSED IN THE HANDS OF THE ASSE SSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO GRANT THE CREDIT OF TDS OF RS. 36,85,776/-TO THE ASSESSEE. 9. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.02.2020. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 18.02.2020. * KISHORE, SR. P.S. ITA NO.7160/M/2018 M/S. EASYLINK INSURANCE SERVICES PVT. LTD. 8 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.
