Santhosh Kumar Gupta, Vijayawada V. The Income Tax Officer, Ward-1(2), , Vijayawada

ITA 78/VIZ/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0470 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3); 40(a)(ia); 194C; 195

Judgement Text

1 आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्ि ू रु आर एऱ रेड्डी, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.78/Viz/2020 (ननधधारण वषा / Assessment Year: 2009-10) Santhosh Kumar Gupta, Viajayawada. PAN: ADWPG 6896 M Vs. Income Tax Officer, Ward-1(2), Vijayawada. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Appellant by : Sri M. Madhusudan प्रत्यधथी की ओर से / Respondent by : Sri SPG Mudaliar, Sr. AR स ु नवधई की तधरीख / Date of Hearing : 11/05/2022 घोषणध की तधरीख/Date of Pronouncement : 10/06/2022 O R D E R PER S. BALAKRISHNAN, Accountant Member : This appeal filed by the assessee against the order of the Ld. CIT(A), Vijayawada in appeal No.10034/CIT(A)/VJA/17-18, dated 18/11/2019 arising out of the order passed U/s. 143(3) r.w.s 254 of the Act for the AY 2009-10. 2. The assessee has raised the following grounds of appeal: 2 “1. The order of the Ld. CIT(A) dated 18/11/2019 passed for the AY 2009-10 may be erroneous both in law and also on facts of the case. 2. Taking cognizance of the fact that even according to the Ld. AO that the assessee engaged in the business of importing pulses from foreign countries and sale of the same in wholesale market in the domestic country, the authorities ought to have noticed that the entire shipping charges claimed by the assessee as per ledger extract filed before them were only paid to the agents of non residents only and to none else. 3. Having held that the provisions of section 194C and section 195 are not applicable in relation to the payment of shipping charges made by the assessee to the agents of non-residents shipping companies as per circular No. 723, dated 19/9/1995 issued by the CBDT, the Ld. CIT(A) ought to have noticed that the assessee is entitled for relief in relation to shipping charges to the extent claimed by it to the fullest extent. 4. In the context of filing of detailed information with regard to the non- resident shipping companies through annexures A & B, during the course of remand proceedings / appeal proceedings which established the fact that even the remaining recipients are only agents of non-residence companies the CIT(A) ought not have denied the relief sought for to the extent recorded in the appellate order. 5. The Ld. CIT(A) ought to have noticed from the details filed in the form of Annexure A & B and the associated documents that even the remaining recipients are the agents of shipping companies functioning from different countries such as Singapore, China, Colombia, UK and in such a factual matrix confirmation of addition of Rs. 33,40,540/- (vide para 31 of the order) made u/s. 40(a)(ia) of the Act may be void in law. 6. Taking cognizance of the fact that the service charges paid to SI Paramasiva Nadar & Sons, Chennai already suffered tax in the hands of the recipient, making of addition u/s. 40(a)(ia) in the hands of the assessee to the aforesaid extent may tantamount to double taxation which is against the scheme and spirit of taxation of law. 7. Also giving due weight to the fact that the payment of Rs. 10,60,727/- represented only delivery charges, trailer hire charges, loading and hamali charges and such payments were incurred during the course of loading the containers, the Ld CIT(A) ought to have noticed that the provisions of section 40(a)(ia) may not be applicable in the instant case either under Circular 723 or 715 of the CBDT and he ought to have noticed even the provisions of section 194C are inapplicable in the instant case. 8. That in the facts and circumstances of the case established by record which would be analyzed during the course of hearing of 3 appeal, the confirmation of addition of Rs. 46,94,267/- made by the Ld. CIT(A) may be devoid of any merit and hence unsustainable in law. 9. For these reasons and other reasons which may be advanced during the course of hearing of appeal, it is humbly prayed that the aforesaid addition of Rs. 46,94,267/- confirmed by the CIT(A) U/s. 40(a)(ia) may be ordered to be deleted.” 3. Brief facts of the case are that the assessee is an individual engaged in the business of wholesale dealer in food grains, pulses, husk etc., in the name and style of M/s. Vinayaka Traders. The assessee has filed its return of income admitting total income of Rs.4,84,830/-. The original assessment U/s. 143(3) was completed assessing the total income at Rs. 69,57,210/-. The assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) deleted the disallowance of Rs. 64,72,377/-. In the first round, the Revenue filed an appeal before the ITAT, Visakhapatnam wherein the Tribunal set-aside the order passed by the Ld.CIT(A) and remitted the matter back to the file of the AO to decide the issue denovo in accordance with law after providing a reasonable opportunity to the assessee. As per the directions of the Hon’ble ITAT, the AO completed the assessment U/s. 143(3) r.w.s 254 determining total income at Rs. 69,57,210/-. Aggrieved by the order of the Ld. AO in the second round, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) considering the submissions made by the assessee’s representative allowed a sum of Rs. 9,33,282/- as per CBDT Circular 4 No.723 dated 19/9/1995. The Ld. CIT(A) also allowed a sum of Rs. 8,44,828/- as remittances made to SI Paramasiva Nadar & Sons, Chennai towards various reimbursements of statutory obligations and hence the provisions of section 40(a)(ia) are not applicable. The Ld. CIT(A) disallowed the balance of Rs. 46,94,267/- and upheld the order of the Ld. AO to that extent. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 4. The Ld. AR argued that the assessee has paid shipping charges against the import of materials by the assessee and hence the Board Circular No. 715 dt. 8-8-1995 is applicable in this case. The Ld. AR also argued that the CIT(A) has erred in relying on the Circular No. 723 for the payments made to agents of foreign shipping companies. On the contrary, the Ld. DR argued that the assessee has not provided any evidence or agreement confirming the payment of shipping charges to agents of foreign shipping companies. The Ld. AR stated that the amount paid by the assessee is with respect to loading and unloading charges, trailer charges and transport charges from the port to the assessee’s place of business. The Ld. DR supported the order of the Ld. CIT(A) and submitted that the Ld. CIT(A) has rightly considered the evidences provided by the assessee to the extent of Rs. 9,33,282/-. The Ld. DR also submitted that the Ld. CIT(A) has also considered the 5 reimbursement made to the local shipping agents and has also allowed the same. 5. We have heard the rival contentions and perused the material available on record and the orders of the Authorities below. The reliance placed by the Ld. Revenue Authorities on Circular No. 723 dated 19/9/1995 clearly states as follows: “1. Representations have been received regarding the scope of sections 172, 194C and 195 of the Income-tax Act, 1961, in connection with tax deduction at source from payments made to the foreign shipping companies or their agents. 2. Section 172 deals with shipping business of non-residents. Section 172(1) provides the mode of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non- resident, which carries passengers, livestock, mail or goods shipped at a port in India. An analysis of the provisions of section 172 would show that these provisions have to be applied to every journey a ship, belonging to or chartered by a non-resident, undertakes from any port in India. Section 172 is a self-contained code for the levy and recovery of the tax, ship-wise, and journeywise, and requires the filing of the return within a maximum time of thirty days from the date of departure of the ship. 3. The provisions of section 172 are to apply, notwithstanding anything contained in other provisions of the Act. Therefore, in such cases, the provisions of sections 194C and 195 relating to tax deduction at source are not applicable. The recovery of tax is to be regulated, for a voyage undertaken from any port in India by a ship under the provisions of section 172. 4. Section 194C deals with work contracts including carriage of goods and passengers by any mode of transport other than railways. This section applies to payments made by a person referred to in clauses (a) to (j) of sub-section (1) to any "resident" (termed as contractor). It is clear from the section that the area of operation of TDS is confined to payments made to any "resident". On the other hand, section 172 operates in the area of computation of profits from shipping 6 business of non-residents. Thus, there is no overlapping in the areas of operation of these sections. 5. There would, however, be cases where payments are made to shipping agents of non-resident ship-owners or charterers for carriage of passengers etc., shipped at a port in India. Since, the agent acts on behalf of the non-resident ship-owner or charterer, he steps into the shoes of the principal. Accordingly, provisions of section 172 shall apply and those of sections 194C and 195 will not apply.” 6. In the instant case, we are of the considered view that as per the Circular extracted above where the provisions of section 172 are applicable, the provisions of section 195 / 195C cannot be invoked is a settled principle. In the instant case, the assessee has paid loading and unloading charges, trailer charges and transport charges from port to the place of business of the assessee. It clearly attracts the provisions of section 194C and failure to deduct TDS U/s. 194C is not in accordance with law. The Ld. Revenue Authorities has rightly considered the evidence submitted and has disallowed only to the extent where the evidences were not furnished by the assessee. We therefore find no infirmity in the order of the Ld. CIT(A) and hence no interference is required. Accordingly, grounds raised by the assessee are dismissed. 7. In the result, appeal of the assessee is dismissed. 7 Pronounced in the open Court on the 10 th June , 2022. Sd/- Sd/- (द ु व्ि ू रु आर.एऱ रेड्डी) (एस बाऱाक ृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 10.06.2022 OKK - SPS आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधधाररती/ The Assessee – Santhosh Kumar Gupta, Prop. M/s. Vinayaka Traders, D.No. 75-76/6-1A, Nagarjuna Street, Bhavanipuram, Vijayawada – 520012, Andhra Pradesh, 520012. 2. रधजस्व/The Revenue – Income Tax Officer, Ward-1(2), CR Buildings, MG Road, Vijayawada. 3. The Principal Commissioner of Income Tax, Vijayawada. 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeals), Vijayawada. 5. ववभधगीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशधखधऩटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधन ु सधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam 8