SURESH HUNDIA, MUMBAI V. DCIT CC 2(4), MUMBAI

ITA 7283/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6858 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 27-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Cost of acquisition; TDS; Set aside
• Section: 40(a)(ia); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.7283 & 7284/M/2019 ASSESSMENT YEAR: 2007-08 & 2008-09 MR. SURESH HUNDIA, BLDG NO.E2, FLAT NO.207, BHARAT NAGAR, MUMBAI 400 007 PAN: AAQPH7289E VS. DCIT-CC-2(4), R.NO.802, OLD CGO ANNEX, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANI JAIN, A.R. REVENUE BY : SHRI GURBINDER SINGH, D.R. DATE OF HEARING : 02.06.2021 DATE OF PRONOUNCEMENT : 02.08.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE ORDERS EVEN DATED 20.09.2019 O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2007-08 & 2008-09. 2. AT THE TIME OF HEARING, THE ASSESSEE HAS NOT PRE SSED GROUND NOS.1, 2, 4 & 5 AT THIS STAGE AS THE GROUND NO. 3 IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN A.Y. 2006-07. ACCORDINGLY THESE GROUNDS ARE DISMIS SED. 3. THE GROUND NO.3 RAISED BY THE ASSESSEE IS REPROD UCED AS UNDER: ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING A SUM OF RS. 25,00,000/- ITA NOS.7283 & 7284/M/2019 MR. SURESH HUNDIA 2 ION ACCOUNT OF PAYMENT OF MADE FOR NON REFUNDABLE O NE TIME PREMIUM PAID BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT AS PER THE GROUNDS STATED IN THE IMPUGNED ORDER OR OTHERWISE. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE RUNS A PROPRIETORSHIP FIRM NAMELY M/S. HUNDIA EXPORTS WHIC H IS ENGAGED IN TRADING OF GOLD BULLION. IN THE SAID BUS INESS, THE ASSESSEE PURCHASES GOLD BULLION MAINLY FROM BANKS A ND THE SAME IS SOLD IN THE MARKET. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PAID ONE-TIME PREMIUM A MOUNT TO ITS BANK NAMELY NOVA SCOTIA BANK AMOUNTING TO RS.25,00,000/- FOR AY 2007-08. ACCORDING TO THE AO, NO TAX HAS BEEN DEDUCTED AT SOURCE U/S 194H OF THE ACT ON THE IMPUGNED BROKERAGE AMOUNT AND DISALLOWED THE SAME U /S 40(A)(IA) OF THE ACT, RELYING ON THE EARLIER ORDER PASSED U/S 154 FOR AY 2006-07. 5. AGGRIEVED BY THE SAID DISALLOWANCE, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A) WHO CONFIRMED THE DISALLOWANCE RELYING ON THE CIT(A)S ORDER FOR AY 2006-07. FURTHER, THE ASS ESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. AFTER CONSIDERING THE A RGUMENTS OF THE ASSESSEE, THE TRIBUNAL VIDE ORDER DATED 31.03.2 017 SET ASIDE THE ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH. IN THE SET ASIDE PROCEEDINGS, AO FAILED TO CONSIDER THE DIRECTIONS OF THE TRIBUNAL AND DISALLOWED THE IMPUG NED AMOUNTS ONCE AGAIN IN THE ORDER PASSED U/S 254 R.W. S 143(3). IN FURTHER APPEAL, CIT(A) CONFIRMED THE DISALLOWANC E MADE BY THE AO. 6. AGGRIEVED BY THE ABOVE ORDERS, THE ASSESSEE HAS FILED APPEAL BEFORE US. ITA NOS.7283 & 7284/M/2019 MR. SURESH HUNDIA 3 7. AT THE OUTSET, IT IS SUBMITTED THAT THE ISSUE ON MERITS AGITATED THROUGH GROUND NO. 3 IS COVERED BY THE ORD ER OF CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR AY 2006-07 DATED 21.08.2019 VIDE ITA NO. 4858/MUM/2 016 BASED ON WHICH THE ORIGINAL DISALLOWANCE WAS MADE B Y THE AO. THE RELEVANT OPERATIVE PORTION OF THE ORDER IS REPR ODUCED HEREUNDER:- 5. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT A SSESSEE HAD RAISED AN ADDITIONAL GROUND BY STATING THAT THE ISSUE INVOLVED IN THE PR ESENT APPEAL COULD NOT HAVE BEEN DISALLOWED BY THE REVENUE AUTHORITIES IN THE PROCEE DINGS U/S.154 OF THE ACT AS THERE IS NO MISTAKE APPARENT FROM THE RECORDS WARRANTING ANY RECTIFICATION. WE FIND THAT THIS IS PURELY A LEGAL ISSUE AND GOES TO THE ROOT O F THE MATTER AND DOES NOT REQUIRE ANY INVESTIGATION OF FRESH FACTS. ACCORDINGLY, WE D EEM IT FIT TO ADMIT THIS ADDITIONAL GROUND AND CONSIDER THE SAME FOR RE-ADJUDICATION. W E FIND FROM THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, WHICH HAD BEEN COMPLETELY IGNORED BY THE LD. AO AND BY THE LD. CIT(A) THAT AS SESSEE HAS MADE PAYMENT OF ONE TIME NON-REFUNDABLE PREMIUM OF RS.20 LAKHS TO BANK OF NOVA SCOTIA FOR PURCHASE OF GOLD FOR THE PURPOSE OF HIS BUSINESS IN ORDER TO EN SURE CONTINUOUS AND UNINTERRUPTED SUPPLY OF GOLD BY THE BANK TO THE ASS ESSEE. WE FIND FROM PAGE 5 OF THE PAPER BOOK THAT THE BANK HAD ALSO CONFIRMED THE RECEIPT OF SAID SUM OF RS.20 LAKHS TOWARDS ONE TIME NON-REFUNDABLE PREMIUM FROM THE ASSESSEE. HENCE, THIS TRANSACTION OF PAYMENT OF ONE TIME PRE MIUM WOULD EFFECTIVELY GO TO ADD TO THE PURCHASE COST OF THE GOLD AND CANNOT BE CATE GORISED AS COMMISSION. ACCORDINGLY, THERE IS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE ON THE PART OF THE ASSESSEE IN TERMS OF SECTION 194H OF THE ACT AN D CONSEQUENTLY, NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT WOULD COME INTO OPERATI ON THEREON. (EMPHASIS PROVIDED BY US) 8. ON PERUSAL OF THE ABOVE, IT IS CLEAR THAT CO-ORD INATE BENCH OF THE TRIBUNAL HAS GIVEN CLEAR CUT FINDINGS THAT ONE TIME PREMIUM PAID TO BANK IS PART OF PURCHASES AND CANNOT BE CAT EGORIZED AS COMMISSION. THUS, THE REQUIREMENT OF TDS IS NOT APP LICABLE ON THE SAID AMOUNT. SIMILARLY, IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PAID ONE TIME PREMI UM OF IDENTICAL NATURE TO THE BANK AND THE SAME IS TO BE CONSIDERED AS PART OF PURCHASE COST AND THEREFORE, NO DISALLOWANC E U/S 40(A)(IA) CAN BE MADE. WE ARE , THEREFORE, INCLINED TO SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THE ITA NOS.7283 & 7284/M/2019 MR. SURESH HUNDIA 4 DISALLOWANCE OF RS. 25,00,000/-.GROUND NO.3 IS ALLO WED. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. THE ISSUES RAISED IN ITA NO. 7284/MUM/2019 A.Y. 2008-09 ARE SIMILAR TO ONES AS DECIDED BY US IN ITA NO. 728 3/MUM/2019 A.Y.2007-08. THEREFORE OUR DECISION IN ITA NO. 7283/MUM/2019 A.Y.2007-08 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WELL OF A.Y. 2008-09. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.08.2021. SD/- SD/- ( C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 02.08.2021. * KISHORE, SR. P.S. 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.