MEHTA EXPORTS, MUMBAI V. ADDL CIT RG 20(2), MUMBAI

ITA 7394/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6986 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

1 ITAS 7394 & 7395/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NOS.7394 & 7395/MUM/2016 (ASSESSMENT YEARS: 2007-08 & 2008-09) M/S MEHTA EXPORTS B-9, VIRAL APARTMENTS OPP SHOPPERS STOP, S.V. ROAD, ANDHERI (W), MUMBAI- 58 PAN : AAAFM1566B VS ADDL.CIT, RG.20(2), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI PIYUSH CHHAJED RESPONDENT BY SHRI SAURABHKUMAR RAI DATE OF HEARING 04-06-2018 DATE OF PRONOUNCEMENT 13-06-2018 O R D E R PER G MANJUNATHA, AM : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE ORDER OF THE CIT(A)-36, MUMBAI DATED 02-09-2016 FOR THE ASSESSMENT YEAR 2007-08 & 2008-09. SINCE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THESE APPEALS WERE HEARD TOGETHER AND ARE D ISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. THE ASS ESSEE HAS RAISED COMMON GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YE ARS. FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL FOR AY 2007-08 ARE EX TRACTED BELOW:- 2 ITAS 7394 & 7395/MUM/2016 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WITHOUT APPRECIATING THAT THE SAID PAYMENTS WERE MADE TOWARDS THE BILLS FOR REIMB URSEMENT OF ACTUAL J M EXPENSES INCURRED BY THE CLEARING AND FORWARDING AG ENTS WHICH IS NOT COVERED ' BY SECTION 194C AND HENCE THERE CANNOT BE ANY DISALLOWANCE U/S 40A(IA). 2. THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN CONFIRMING DISALLOWANCE OF RS. 12,29,7477- U/S. 40A (IA), WITHOUT APPRECIATING THAT THE SAID PAYMENTS WERE MADE TOWARDS THE BILLS FOR REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE CLEARING AND FORWAR DING AGENTS AND THEREFORE, WERE DIRECTLY COVERED BY THE JUDGEMENT R ENDERED IN CASE OF DR. WILLMAR SCHWABE INDIA PVT. LTD. 95 TTJ 53 (DEL). 3. THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ERRED IN DISALLOWING TOTAL AMOUNT WHEN THE BILLS WERE ALREAD Y PAID DURING THE FINANCIAL YEAR AND HENCE THE MAXIMUM DISALLOWANCE IF ANY SHOU LD BE RESTRICTED TO THE EXTENT OF AMOUNTS OUTSTANDING AS AT 31-3-2007 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EXPORT OF TRADING G OODS, FILED ITS RETURN OF INCOME FOR AY 2007-08 ON 30-10-2007 DECLARING TOTAL INCOME OF RS.1,87,37,321. THE ASSESSMENT WAS COMPLETED U/S 1 43(3) ON 10-12- 2009 DETERMINING TOTAL INCOME AT RS.2,15,40,120 MAK ING ADDITION TOWARDS DISALLOWANCE OF REIMBURSEMENT OF CLEARING & FORWARDING CHARGES U/S 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE U /S 194C OF THE INCOME- TAX ACT, 1961. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A), VIDE ITS ORDER DATED 04-08-201 0 PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN FURTHER APPEAL BEFORE ITAT. THE ITAT, VIDE ORDER IN ITA NO .7321/MUM/2010 DATED 28-08-2013 SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO RE-EXAMINE THE CLAIM OF THE ASSESSEE I N THE LIGHT OF SAMPLE INVOICE FURNISHED TO PROVE THAT THE AMOUNT PAID IS REIMBURSEMENT OF 3 ITAS 7394 & 7395/MUM/2016 ACTUAL EXPENSES INCURRED ON WHICH THE PROVISIONS OF TDS HAS NO APPLICATION. 3. CONSEQUENT TO THE DIRECTIONS OF ITAT, THE LD.CIT (A) HAS TAKEN UP FRESH PROCEEDINGS. THE ASSESSEE HAS SUBMITTED SAMP LE COPIES OF INVOICES RAISED TO REIMBURSE THE CLEARING & FORWARD ING CHARGES TO ARGUE THAT THE PAYMENTS MADE TO CLEARING & FORWARDING AGE NTS DOES NOT FALL WITHIN THE AMBIT OF SECTION 194C, THEREBY DISALLOWA NCE U/S 40(A)(IA) IS NOT APPLICABLE. THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF ACIT VS PP OVERSEAS IN ITA NO .733/MUM/2010. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE AND ALSO RELYING UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF PP OVERSEAS (SUPRA) OBSERVED THAT WHEN SEPARATE BILLS ARE RAISED BY CLEARING & FORWARDING AGENTS FOR ITS CHARGES AND RE IMBURSEMENT OF ACTUAL EXPENSES INCURRED, THEN TDS PROVISIONS ARE NOT APPL ICABLE. BUT, THE CIT(A) HAS ALLOWED PARTIAL RELIEF TO THE ASSESSEE O N THE BASIS OF SAMPLE COPIES OF INVOICES SUBMITTED, AS PER WHICH HE HAS D ETERMINED AN AMOUNT OF RS, 3,00,403, OUT OF TOTAL DISALLOWANCE O F RS.15,30,150 AND ACCORDINGLY ALLOWED RELIEF TO THE EXTENT OF RS.3,00 ,403 AND BALANCE AMOUNT OF RS.12,29,747 WAS CONFIRMED. THE CIT(A) H AS ALLOWED PARTIAL RELIEF ON THE BASIS OF SAMPLE COPIES OF INVOICES SU BMITTED BY THE ASSESSEE AND CONFIRMED BALANCE AMOUNT. THE RELEVAN T PORTION OF THE 4 ITAS 7394 & 7395/MUM/2016 ORDER OF CIT(A) IS EXTRACTED BELOW:- 13. THE ISSUE IS IDENTICAL AND SIMILAR TO THE ISSU E INVOLVED IN THE APPELLANT'S CASE FOR A.Y. 2007-08. THE GROUNDS OF APPEAL RAISED BEFO RE THE TRIBUNAL ARE ALSO IDENTICAL EXCEPT FOR THE AMOUNT INVOLVED. SINCE, AL L THE CONDITIONS, THE GROUNDS OF APPEAL AND THE COMMENTS OF THE HON'BLE TRIBUNAL ARE ALSO IDENTICAL THE ISSUE IS BEING DECIDED AS PER THE COMMENTS AND ARGUMENTS PLA CED IN THE PARA NO. 7 ABOVE. ACCORDINGLY, RESPECTFULLY RELYING ON THE JUD ICIAL PRONOUNCEMENTS IN THE MATTER THE APPEAL IS BEING DECIDED BY EXCLUDING THE REIMBURSEMENT OF EXPENSES PAID BY THE APPELLANT TO THE C&F AGENT. 13.1. THE APPELLANT IN HIS PAPER BOOK HAS SUBMITTED INVOICES WHERE SEPARATE BILLS ARE RAISED FOR REIMBURSEMENT OF THE EXPENSES AS DIRECTED BY THE HON'BLE TRIBUNAL WHICH WORKS OUT TO BE RS.3,67, 104/- PAID TO MONARCH SHIPPING, HOWEVER, IN THE CASE OF M/S MAHENDRA SHIP PING AGENCY NO SEPARATE BILLS FOR REIMBURSEMENT OF EXPENSES HAS BE EN SUBMITTED BY THE APPELLANT. ACCORDINGLY, THE AO IS DIRECTED TO GIVE RELIEF TO THE APPELLANT FOR RS.3,67,104/- OUT OF TOTAL DISALLOWANCE OF RS.8,01, 154/-. THEREBY, THE ADDITION OF RS.4,34,050/- IS CONFIRMED. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT IS PARTLY ALLOWED. 4. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN CONFIRMING BALANCE AMOUNT WITHOUT APPRECIATING T HE FACT THAT THE SAID PAYMENTS WERE MADE TOWARDS REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE CLEARING & FORWARDING AGENTS WHICH IS NOT COVERED BY SECTION 194C AND HENCE, THERE CANNOT BE ANY DISALLO WANCE. THE LD.AR FURTHER SUBMITTED THAT BEFORE THE CIT(A), THE ASSES SEE HAS FILED SAMPLE COPIES OF INVOICES TO PROVE THAT THE SAID PAYMENTS ARE IN FACT REIMBURSEMENT OF EXPENSES; HOWEVER, THE TOTAL PAYME NT DISALLOWED BY THE AO IS TOWARDS REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY CLEARING & FORWARDING AGENTS AND ACCORDINGLY OUTSID E THE PURVIEW OF SECTION 194C AND SECTION 40(A)(IA). THEREFORE, THE ISSUE MAY BE SET 5 ITAS 7394 & 7395/MUM/2016 ASIDE TO THE AO TO VERIFY THE FACTS AND ALLOW RELIE F ACCORDINGLY. 6. ON THE OTHER HAND, THE LD.DR FAIRLY ACCEPTED THA T THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO TO VERIFY THE FACTS WITH REFERENCE TO THE BILLS SUBMITTED BY THE ASSESSEE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS GIVEN A FINDING THAT THE AMOUNTS PAID BY THE ASSESSEE TO CLEARING & FORWARDING AGENTS ARE RE IMBURSEMENTS OF ACTUAL EXPENSES INCURRED BY THEM WHICH ARE OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 194C AND HENCE, NO DISALLOWAN CE CAN BE MADE U/S 40(A)(IA); HOWEVER, THE LD.CIT(A) HAS ALLOWED PARTI AL RELIEF TO THE ASSESSEE ONLY ON THE BASIS OF COPIES OF INVOICES SU BMITTED BY THE ASSESSEE AND QUANTIFIED THE AMOUNT AND ALLOWED RELI EF ACCORDINGLY. IT IS THE CLAIM OF THE ASSESSEE THAT IT HAS FURNISHED ONL Y SAMPLE COPIES OF INVOICES BEFORE THE LD.CIT(A) TO PROVE THAT THESE A RE ALL REIMBURSEMENTS OF ACTUAL EXPENSES. HOWEVER, TOTAL EXPENSES DISALL OWED BY THE AO IS TOWARDS REIMBURSEMENT OF EXPENSES FOR WHICH IT HAS NECESSARY PROOF IN THE FORM OF BILLS AND VOUCHERS. WE FIND THAT THE A SSESSEE HAS FILED A PAPER BOOK CONTAINING DETAILS OF BILLS AND VOUCHERS IN RESPECT OF AMOUNT PAID TO CLEARING & FORWARDING AGENTS. THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMI NED BY THE AO IN THE LIGHT OF EVIDENCE FILED BY THE ASSESSEE TO PROVE TH AT THE AMOUNTS PAID TO 6 ITAS 7394 & 7395/MUM/2016 CLEARING & FORWARDING AGENTS ARE RE-IMBURSEMENT OF ACTUAL EXPENSES. IF THE AO FOUND THAT THE AMOUNT PAID TO CLEARING & FOR WARDING AGENTS ARE RE-IMBURSEMENT OF ACTUAL EXPENSES, THEN THE AO IS D IRECTED TO DELETE ADDITION MADE U/S 40(A)(IA) OF THE ACT. 8. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : JUNE, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI