DCIT 13(1), MUMBAI V. M. OCHHAVLAL & CO., MUMBAI

ITA 7821/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3584 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 THE ACIT 13(1), AAYKAR BHAVAN, ROOM NO.427, 4 TH FLOOR, MK ROAD, MUMBAI - 400 020 ! ! ! ! / VS. M/S.M.OCHHAVLAL & CO. 124, NARAYAN DHURU STREET, MUMBAI - 400 003. # ./ $% ./ PAN/GIR NO. : AAAFM3904F ( #& / APPELLANT ) .. ( '(#& / RESPONDENT ) #& ) / APPELLANT BY: SHRI MOHIT JAIN '(#& * ) / RESPONDENT BY : SHRI K.GOPAL ! * + / DATE OF HEARING : 25/06/2013 ,-' * + / DATE OF PRONOUNCEMENT : 25/06/2013 . / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-24, MUMBAI DATED 12/8/2010 FOR ASSESSMENT YEAR 2007- 08. THE GROUNDS OF APPEAL READ AS UNDER: 1. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF RS.29,74,199/- T O RS.16,76,409/- MADE U/S 40(A)(IA) OF THE I.T.ACT,1961 ON ACCOUNT OF NON-DED UCTION OF TDS U/S 194C OF THE I.T.ACT,1961 ON PAYMENT OF CLEARING AND FORWARDING (TRANSPORT) CHARGES. . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 2 (II) WHILE DOING SO , THE LD.CIT(A) FAILED TO APPRE CIATE THAT AS PER CIRCULAR NO.715 DATED 08.08.1995 ISSUED BY THE CBDT,- QUESTION NO.3 0- THE TAX HAS TO BE DEDUCTED AT SOURCE FROM ANY SUM PAID AS PER THE PRO VISIONS OF SECTION 1 94C OF THE I.T.ACT, 1961 AND REIMBURSEMENTS CANNOT BE DEDU CTED OUT OF THE BILL AMOUNT FOR THE PURPOSE OF TAX DEDUCTION AT SOURCE. 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 5,96,189/- MADE U/S 40(A)(IA) OF THE I.T.ACT,1961 ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194A OF THE I.T.ACT, ON INTEREST PAYMENT. (II) WHILE DOING SO, THE LD.CIT(A) FAILED TO APPREC IATE THAT DUE TO THE LAPSE ON THE PART OF THE ASSESSEE TO FURNISH THE FORMS NO.1 5H T O THE OFFICE OF DESIGNATED CCIT/CIT WITHIN THE PRESCRIBED TIME LIMIT, THE ASSE SSEE COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 197A OF THE I.T.ACT, 1961 R. W. RULE 29C OF THE I.T.RULES, 1962. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSMENT OFFICER BE RESTORE D. 2. APROPOS GROUND NO.1, DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE A.O NOTICED THAT THE ASSESS DID NOT DEDUCT TAX OF C LEARING AND FORWARDING (TRANSPORT) CHARGES AMOUNTING TO RS.35,72,571/-. T HE A.O REQUIRED THE ASSESSEE TO SUBMIT THE EXPLANATION. THE ASSESSEE SUBMITTED A LETTER WHICH WAS RECEIVED BY THE A.O ON 14/12/2009. IN THE SAID LETTER IT WAS SUBMITTED THAT ACCORDING TO BILLS MOST OF THE PAYMENTS RELAT E TO OCTROI CHARGES, WHICH WAS SEPARATELY PAID AND ARE NOT PART OF BILLING. T HOSE PAYMENTS WERE MADE ON BEHALF OF THE ASSESSEE BY THE TRANSPORT COMPANY AND IN TURN ASSESSEE HAS REIMBURSED THEM FOR OCTROI PAYMENT. HOWEVER, A.O REFERRING TO CBDT CIRCULAR NO.715 AND QUESTION NO.30 THEREOF HAS HELD THAT EVE N REIMBURSEMENT DEDUCTED OUT OF BILLS FORMS PART OF THE GROSS AMOUN T ON WHICH TAX IS REQUIRED TO BE DEDUCTED. THE A.O HAS FOUND THAT SUCH AMOUNT WA S SUM OF RS.29,74,199/- WHICH HAS BEEN ADDED UNDER THE PROVISIONS OF SECTI ON 40(A)(IA) OF THE INCOME TAX ACT,1961(THE ACT) FOR NON-DEDUCTION OF TAX. 3. BEFORE LD. CIT(A) IT WAS SUBMITTED THAT THESE PA YMENTS RELATE TO OCTROI PAYMENTS BEING PAID TO BMC AND REIMBURSED AMOUNTI NG TO RS.12,97,793/- . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 3 AND REFERENCE WAS MADE TO THE DECISION OF ITAT JAI PUR A BENCH IN THE CASE OF JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT, (2009) 1 23 TTJ 888, WHEREIN IT HAS BEEN HELD THAT PAYMENT OF TRANSMISSION /WHEELING/SL DC CHARGES BEING REIMBURSEMENT OF THE COST COULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT, THEREFORE, TO THE EXTENT OF PAYMENTS RELAT E TO OCTROI AMOUNTING TO RS. 12,97,793/- BEING REIMBURSEMENT, HE PROVIDED THE RE LIEF TO THE ASSESSEE SUBJECT TO VERIFICATION OF AO AND BALANCE ADDITION OF RS.16,76,409/- HAS BEEN UPHELD . THE DEPARTMENT IS AGGRIEVED, HENCE, HAS R AISED GROUND NO.1. 4. AT THE TIME OF HEARING, IT WAS SUBMITTED BY LD. A.R THAT ASSESSEE HAS ACCEPTED THE SUSTENANCE OF ADDITION OF RS.16,76,409 /- AND NO APPEAL HAS BEEN FILED AGAINST THAT. 5. IN THIS VIEW OF THE SITUATION, WE HAVE HEARD B OTH THE PARTIES ON THIS ISSUE. LD. D.R RELIED UPON THE ORDER PASSED BY LD. AO AND ON THE OTHER HAND, LD. A.R OF THE ASSESSEE RELIED UPON THE ORDER PASSE D BY LD. CIT(A). THE RELIEF GRANTED BY LD. CIT(A) IS LIMITED TO OCTROI COMPONEN T WHICH HAS BEEN PAID BY THE TRANSPORTER ON BEHALF OF THE ASSESSEE. IT IS A LSO NOT THE CASE OF REVENUE THAT SUCH AMOUNT IS NOT ACTUALLY PAID AS OCTROI. MOREO VER, LD. CIT(A) HAS DELETED SUCH ADDITION SUBJECT TO VERIFICATION BY THE AO. I F IT IS AN AMOUNT PAID AS OCTROI ON BEHALF OF THE ASSESSEE, IT CANNOT BE SAID THAT TDS WAS DEDUCTIBLE UPON THAT. THEREFORE, WE FIND NO INFIRMITY IN THE RELIEF GRANTED BY LD. CIT(A). WE DECLINE TO INTERFERE AND THIS GROUND OF THE REVE NUE IS DISMISSED. 6. APROPOS GROUND NO.2, DURING THE COURSE OF ASSESS MENT PROCEEDINGS IT CAME TO THE NOTICE OF AO THAT ASSESSEE DID NOT DEDU CT TAX ON INTEREST PAID BY IT AGGREGATING TO RS.5,96,189/-. IT WAS SUBMITTED THA T ON THE BASIS OF FORM 15G RECEIVED FROM VARIOUS PERSONS TDS WAS NOT DEDUCT ED OUT OF INTEREST PAID TO THOSE PERSONS. SINCE ASSESSEE DID NOT FURNISH COPY OF FORM 15G WITH CIT (TDS) THE A.O HELD THAT ASSESSEE IS NOT ENTITLED T O GET DEDUCTION OF THIS . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 4 AMOUNT. ACCORDING TO A.O ONLY OBTAINMENT OF FORM 1 5G FROM THE PARTIES DOES NOT ENTITLE THE ASSESSEE TO MAKE NO DEDUCTION OF TAX UNLESS THE SAME IS FILED BEFORE THE DESIGNATED AUTHORITY. SINCE ASS ESSEE DID NOT COMPLY WITH THE REQUIREMENT OF FILING FORM 15G WITH THE CONCERNED AUTHORITY, THE INTEREST PAID BY THE ASSESSEE IS LIABLE FOR DISALLOWANCE UNDER S ECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE A.O DISALLOWED THE SAID AMOUNT. 7. IN THE APPEAL FILED BEFORE LD. CIT(A), IT WAS SU BMITTED THAT ASSESSEE HAD OBTAINED FORM 15G FROM ALL THE CONCERNED PERSONS AN D SUCH INFORMATION RELATED TO FORM 15G WAS ANNEXED TO THE QUARTERLY RE TURN FILED WITH TIN FACILITATION CENTERS AUTHORIZED TAX AUTHORITY. C OPY OF SUCH ANNEXURE FILED WITH QUARTERLY RETURN IN RESPECT OF FORM 15G WAS PLACED ON RECORD. THE DISALLOWANCE HAS BEEN MADE BY THE AO SIMPLY ON THE PRETEXT THAT FORM 15G IS NOT FILED WITH COMMISSIONERS OFFICE. IT WAS S UBMITTED THAT FILING FORM 15G IS ONE OF PROCEDURAL REQUIREMENT WITH WHICH THE ASS ESSEE HAD COMPLIED. HAVING REGARD TO THE INFORMATION FILED IN THE ANN EXURE TO RETURN OF TDS FILED WITH TIN FACILITATION CENTER, AS DESIGNATED BY THE TAX AUTHORITY IN THIS BEHALF, THE ASSESSEE SHOULD NOT BE PENALIZED FOR TECHNICAL /PROCEDURAL BREACH. IT WAS ALSO SUBMITTED THAT EVEN DURING THE COURSE OF ASSES SMENT PROCEEDINGS VIDE LETTER DATED 15/10/2009 THE ASSESSEE HAD FURNISHED THE COPY OF ANNEXURE WITH ALL FORM 15G AND TAKING ABUNDANT CAUTION THE ASSE SSEE HAD ALSO FILED COPIES OF FORM 15G WITH THE RANGE TDS OFFICE. COPY OF SUC H LETTER WAS ALSO PLACED ON RECORD. 8. IN THIS VIEW OF THE SITUATION, RELYING UPON FOLL OWING DECISIONS LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT HAVING OBTAINED FORM 15G, THE ASSESSEE WAS NOT LIABLE FOR DEDUCTION OF TAX. T HE DEPARTMENT IS AGGRIEVED AND HAS RAISED GROUND NO.2. (I) SUDERSHAN AUTO & GENERAL FINANCE VS,. CIT, 60 ITD 177 (DEL) (II) ESCORTS EMPLOYEES ANCILLARIES LTD. VS. CIT, 74 ITD 1(DEL) . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 5 9. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. THE ONLY GROUND ON WHIC H THE A.O HAS DISALLOWED THE AMOUNT IS THAT FORM 15G WERE NOT FILED BEFORE CIT(TDS). THE A.O IS NOT DENYING THAT THESE FORMS HAVE BEEN GENUINELY OBTAIN ED BY THE ASSESSEE AND TDS RETURNS HAVE BEEN FILED IN DUE COURSE. IF IT I S SO, THEN ASSESSEE HAS COMPLIED WITH THE BASIC REQUIREMENT OF THE ACT I.E. OBTAINING OF FORM 15G FROM THE PERSON TO WHOM THE INTEREST HAS BEEN PAID. OB TAINMENT OF FORM 15G AUTHORIZE THE ASSESSEE FOR NON-DEDUCTION OF TAX. N O MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT ANY ADVERSE ACTION HAS BEEN TAKEN BY THE TDS AUTHORITIES FOR THE DEFAULT OF THE ASSESSEE. THERE FORE, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE FOR NON-DEDUCTION OF TAX AND I T CANNOT BE SAID THAT ASSESSEE DID NOT DEDUCT TAX ON THE INTEREST PAYMENT WITHOUT AUTHORITY OF LAW. IN VIEW OF THE SITUATION, WE FIND NO INFIRMITY IN T HE DECISION TAKEN BY LD. CIT(A) VIDE WHICH IT HAS BEEN HELD THAT SUCH ADDITION WAS LIABLE TO BE DELETED. WE DECLINE TO INTERFERE AND THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/06/201 3 . * ,-' / 0!1 25/06/2013 - * 2 3 SD/- SD/ - ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 0! DATED 25/06/2013 . / ITA NO.7821/MUM/2010 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2007-08 6 . . . . * ** * '+45 '+45 '+45 '+45 65'+ 65'+ 65'+ 65'+ / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '(#& / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 582 '+! , , / DR, ITAT, MUMBAI 6. 2 9 / GUARD FILE. .! .! .! .! / BY ORDER, (5+ '+ //TRUE COPY// : :: : / ; ; ; ; $ $ $ $ (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ! . ./ VM , SR. PS