ROHINI SILKS, MUMBAI V. ITO 17(1)(4), MUMBAI

ITA 779/MUM/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4072 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2016
• Court: TRIBUNAL
• Department Lawyers: ARAVIND KUMAR
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 779/M/2016 (AY:2010 - 2011 ) M/S. ROHINI SILKS, GALA NO.87, 3 RD FLOOR, MUNICIPAL INDUSTRIAL ESTATE, DAINIK SHIVNER MARG, GANDHINAGAR, WORLI, MUMBAI - 18. / VS. ITO - 17(1)(4), 1 ST FLOOR, R.NO.112, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. ./ PAN : AAKFR 0224 K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI NISHIT GANDHI / RESPONDENT BY : SHRI ARAVIND KUMAR, CIT - DR / DATE OF HEARING : 12.04.2016 / DATE OF PRONOUNCEMENT : 22 .04.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 15.2.2016 IS AGAINST THE ORDER OF THE CIT (A) - 32, MUMBAI DATED 8.1.2016 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE DISALLOWANCE OF RS. 4,93,300/ - U/S 40 (A)(IA) OF THE ACT ON TH E GROUND OF ASSESSEES FAILURE TO MAKE TDS ON THE HANDLING CHARGED. 3. AT THE OUTSET, LD COUNS EL FOR THE ASSESSEE, BROUGHT MY NOTICE THE DECISION OF THE COORDINATE BENCH IN THE CASE OF RAMU S. DEORA VS. DCIT IN ITA NO.1704/M/2012 (AY 2008 - 2009), DATED 17.4.2014, WHICH IS RELEVANT FOR THE PROPOSITION THAT NO ADDITION CAN BE MADE U/S 40(A)(IA) OF THE ACT WHEN THE RELATIONSHIP BETW EEN THE PAYEE AND THE PAYER IS PRINCIPAL TO PRINCIPAL AND NOT THE PRINCIPAL TO AGENT. HE ALSO SUBMITTED THAT IN CASE OF APPLICATION OF PROVISIONS OF SECTION 172 OF THE ACT, THE PROVISIONS OF SECTION 194C AND 195 WILL NOT APPLY. HE ALSO BROUGHT MY NOT ICE THE CBDT CIRCULAR NO.723 DATED 19.9.2995 AND READ OUT THE CONTENTS OF PARA 5 OF THE SAID CIRCULAR. BRINGING MY ATTENTION TO PARA 4 OF THE SAID TRIBUNALS ORDER (SUPRA), LD 2 COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ISSUE UNDER CONSIDERATION IS SQUARE LY COVERED BY THE SAID ORDER OF THE TRIBUNAL. 4. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 17.4.2014, I FIND, PARA 4 OF THE TRIBUNALS ORDER IS RELEVANT IN THIS REGARD AND THE SAME IS EXTRACTED, FOR THE S AKE OF CONVENIENCE AND COMPLETENESS OF THIS ORDER, AS FOLLOWS: - 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE CIRCULAR OF THE BOARD NO.723 DATED 19.9.1995. THE CIRCULAR RELATES TO TAX DEDUCTION AT SOURCE FOR PAYMENT MADE TO FOR EIGN SHIPPING COMPANIES AND AT POINT NO.5 THE CBDT HAS CLARIFIED THAT SINCE THE AGENT ACTS ON BEHALF OF THE NON - RESIDENT SHOP - OWNER OR CHAR ACT ER, HE STEPS INTO THE SHOES OF THE PRINCIPAL. ACCORDINGLY, PROVISIONS OF SECTION 172 SHALL APPLY AND THOSE OF SEC TION 194C AND 195 WILL NOT APPLY. A SIMILAR ADDITION WAS DELETED BY THE TRIBUNAL IN ITA NO.105/M/2013 DATED 28.3.2014 WHEREIN THE TRIBUNAL HAS FOLLOWED THE CBDT CIRCULAR NO.723 DATED 19.9.1995. AS THE PAYMENT IS COVERED BY THE CBDT CIRCULAR, WE THEREFORE , SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 10,78,418/ - . 5. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE LEGAL ISSUE RAISED IN GROUND NO.1 IS REQUIRED TO BE DISMISSED AS ACADEMIC AND THE ADDITION MADE BY THE AO U/S 40(A)(IA) OF THE ACT STANDS DELETED IN VIEW OF THE COVERED NATURE OF THE ISSUE BY THE ABOVE REFERRED DECISION OF THE TRIBUNAL (SUPRA) DATED 17.4.2014. ACCORDINGLY I ORDER. 6. THE OTHER GROUNDS RAISED BY THE ASSESSEE ARE ALSO DISMISSED CONSIDERING T HEIR ARGUMENTATIVE NATURE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 N D APRIL, 2016. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 2 2 .4.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI