M/s. Rama Industries, Banaskantha V. The ACIT, B.K.Circle, Palanpur

ITA 783/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6126 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 783/AHD/2014 (ASSESSMENT YEAR: 2009-10) M/S. RAMA INDUSTRIES PATAN ROAD, GIDC, DEESA (B.K)-385535 V/S THE ASSTT. COMMISSIONER OF INCOME-TAX, B.K.CIRCLE, PALANPUR (APPELLANT) (RESPONDENT) PAN: AAEFR3683E APPELLANT BY : SHRI KARAN SHAH , AR RESPONDENT BY : SHRI RAJESH MEENA, SR. D.R. ( )/ ORDER DATE OF HEARING : 08 -02-201 8 DATE OF PRONOUNCEMENT : 12-02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- XX, AHMEDABAD DATED 03.01.2014 PERTAINING TO A.Y. 2 009-10. ITA NO783/AH D/2014 . A.Y. 2009-10 2 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. U/S. 40A(A)(IA) O F THE ACT AMOUNTING TO RS. 20,82,817/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GUAR GUM P OWDER. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O. CALL ED FOR THE DETAILS OF SHIPPING LINES EXPENSES AND TDS DEDUCTED THEREON. T HE ASSESSEE FILED THE NECESSARY DETAILS WITH CERTIFICATES. ON EXAMINATION OF THE DETAILS, THE A.O. FOUND THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS. 2 0,82,817/- ON ACCOUNT OF SHIPPING LINES EXPENSES ON WHICH NO TAX WAS DEDUCTE D AT SOURCE. THE ASSESSEE WAS ASKED TO EXPLAIN WHY NO TAX HAS BEEN DEDUCTED A T SOURCE. THE ASSESSEE REPLIED THAT ALL THESE PAYMENTS ARE COVERED BY CIRC ULAR NO. 723 DATED 19.09.1995 AND THEREFORE TDS PROVISIONS ARE NOT APP LICABLE. 4. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAV OUR WITH THE A.O. WHO PROCEEDED BY MAKING DISALLOWANCE OF RS. 20,82,817/- . 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE CIRCULAR NO. 723 D ATED 19.09.1995 WHICH HAS BEEN WRONGLY INTERPRETED BY THE LOWER AUTHORITIES. THE LD. COUNSEL FURTHER STATED THAT THE ASSESSEE HAS FILED ALL THE RELEVANT CERTIFICATES OF I.T. DEPARTMENT AND CONFIRMATION FROM SHIPPING COMPANIES THAT TDS P ROVISIONS ARE NOT APPLICABLE ON PAYMENTS TO NON-RESIDENT. THE LD. COU NSEL FURTHER POINTED OUT ITA NO783/AH D/2014 . A.Y. 2009-10 3 THAT EXPENSES TO THE TUNE OF RS. 16,55,350/- ARE NO THING BUT REIMBURSEMENT AND THEREFORE THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE REIMBURSEMENT OF EXPENSES. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. CO-ORDINATE BENCHES HAVE CONSISTENTLY HELD T HAT CIRCULAR NO. 723 DATED 19.09.1995 ISSUED BY CBDT SQUARELY APPLY ON THE IMP UGNED PAYMENTS. TO NAME A FEW ITAT AHMEDABAD BENCH IN THE CASE OF HASM UKH J. PATEL IN ITA NO. 2081/AHD/2009, IN ITA NOS. 901 & 1059/AHD/2012, HONBLE HIGH COURT OF BOMBAY IN THE CASE OF V.S. DEMPO & CO. (P. ) LTD. IN TAX APPEAL NO. 948 & OTHERS OF 2015 AND ITAT MUMBAI IN KULODAY TEC HNOPACK (P.) LTD. IN ITA NO. 3300/MUM/2013 & 2423/MUM/2014. 8. RESPECTFULLY FOLLOWING THE AFORE-STATED JUDGMENTS, WE HOLD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS OF RS. 4,17,467/-. 9. INSOFAR THE CLAIM OF REIMBURSEMENT TO THE TUNE OF R S. 16,55,350/-, IN OUR CONSIDERED OPINION, THIS ISSUE NEEDS TO BE EXAMINED AFRESH TO VERIFY WHETHER THERE IS NO ELEMENT OF PROFIT IN THE IMPUGNED PAYME NTS. WE ACCORDINGLY RESTORE THIS ISSUE TO FILES OF THE A.O. THE ASSESSEE IS DIR ECTED TO FURNISH THE DETAILS OF IMPUGNED REIMBURSEMENTS ALONG WITH THE DETAILS OF A CTUAL PAYMENTS MADE BY IT TO DEMONSTRATE THAT THERE IS NO ELEMENT OF PROFIT. IF THE A.O. IS SATISFIED THAT THERE IS NO ELEMENT OF PROFIT ON THE IMPUGNED REIMB URSEMENTS, NO DISALLOWANCE IS TO BE MADE. ITA NO783/AH D/2014 . A.Y. 2009-10 4 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 12 - 02- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 12/02/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD