The ITO, Ward-5(2)(5), Ahmedabad V. Shri Pritesh D. Shah(HUF), Ahmedabad

ITA 906/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8369 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: BHADRESH BHAI
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 5(2)(5), AHMEDABAD (APPELLANT) VS SHRI PRITESH D. SHAH (HUF), PROP. M/S KASHYAM SHIPPING AGENCY, 11, KALINDI COMPLEX, OPP: OLD HIGH COURT, AHMEDABAD - 380009 PAN: AANHS6430F (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: S H RI BHADRESH BHAI , A.R. DATE OF HEARING : 20 - 03 - 2 018 DATE OF PRONOUNCEMENT : 26 - 04 - 2 018 / ORDER P ER : AMARJ IT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2013 - 14 , ARIS ES FROM ORDER OF THE CIT(A) - 5 , AHM EDABAD DATED 03 - 01 - 2017 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOW ING GROUNDS OF APPEAL: - (1) THE LD. CIT (A) HAS ERRED IN LAW AND ON F ACTS IN DELETING THE ADDITION OF RS. 1,59,78,690/ - FREIGHT CHARGES MADE U/S 40(A)(AI) OF T HE ACT, WITHOUT CONSIDERING THE FACT THAT THE PROVISI ON OF SECTION 40(A)(IA) R.W.S. 194C OF T HE ACT ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE. I T A NO . 906 / A HD/20 1 7 A SSESSMENT YEAR 2013 - 14 I.T.A NO. 906 /AHD/20 2017 A.Y. 2013 - 14 PAGE NO ITO VS. SHRI PRITESH D. SHAH (HUF) 2 (2) THE LD. CI T (A) FAILED TO APPRECIATE THE FACT THAT SECTION 194C REFERS T O 'A SUM PAID' AND OBVIOUSLY REIMBURSEMENT CANNOT BE DEDUCTED OUT OF THE BILL AMOUNT FOR THE PURPOSE OF TAX DEDUCTION AT SOURCE. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CU (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (4) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CI T (A) MAY BE SET ASIDE AND THE ORDER OF THE ASSESSI NG OFFICER BE RESTORED TO THE ABOVE EXTENT. 3. ALL THE GROUNDS OF APPEAL ARE INTER - CONNECTED, THEREFORE, THEY ARE ADJUDICATED TOGETHER FOR THE SAKE OF CONVENIENCE. 4. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 9 , 02 ,010/ - WAS FILED ON 28 TH SEP, 2013. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 14 TH SEP, 2014. T HE ASSESSEE IS A CLEARING AND FORWARDING AGENT. ON SCRUTINY T HE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS MADE VARIOUS PAY MENTS ON BEHALF OF ITS CLIENTS ON WHICH IT HAS NOT DEDUCTED TDS AS PER THE PROVISION OF SECTION 194C OF THE ACT. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS. 1 , 59 , 78 , 689/ - OUT OF TOTAL EXPENSES OF RS. 2 , 20 , 96 , 682/ - CLAIMED UNDER THE HEAD FREIGHT CHARGES U/S. 40(A)(IA) OF THE ACT. 5. AGGRIEVED ASSESSEE FILED APPEAL BEFORE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY STATING THAT IN THE ASSESSMENT YEAR 2010 - 11 IN THE CASE OF THE ASSESSEE ITSELF THE APPEAL WAS ALLOWED ON IDENTICAL ADDITION MADE U/S. 40(A)(IA) OF THE ACT. THE LD. CIT(A) THAT ASSESSEE HAS RECEIVED RAILWAY FREIGHT , SHIPPING FREIGHT , ICD CHARGES ETC. FROM ITS CLIEN T S BY WAY OF REIMBURSEMENT O F EXPENSES TO WHICH PROVISION OF SECTION 194C, 194I , ARE NOT APPLICABLE AS THE RELATIONSHIP OF CONTRACTOR AND PAYEE PURSUANT TO CONTRACT IN THE CASE OF THE ASSESSEE HAS NOT BEEN ESTABLISHED. DURING THE COURSE OF A PE LLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT CO - ORDINATE BENCH OF THE ITAT FOR ASSESSMENT YEAR 2006 - 07 AND 2011 - 12 VIDE ITA NO. 3403 & 3404/AHD/2015 DATED 10/01/2018 HAS DECIDED THE IDENTICAL ISSUE IN FAVO U R OF I.T.A NO. 906 /AHD/20 2017 A.Y. 2013 - 14 PAGE NO ITO VS. SHRI PRITESH D. SHAH (HUF) 3 THE ASSESSEE IN THE CASE OF THE ASSESSEE ITSELF . THE RELEVANT PART OF THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IS REPRODUCED AS UNDER: - IT IS EVIDENT AT THE OUTSET THAT THE REVENUE SEEKS TO REVIVE ASSESSING OFFICER'S IDENTICAL ACTION DISALLOWING ASSESSEE'S ABOVE NARRATED EXPENDITURE ON ACCOUNT OF ITS FAILURE IN DEDUCTING TDS BY INVOKING SECTION 40(A)(IA) R.W.S. 194C OF THE ACT. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ABOVE IDENTICAL DISALLOWANCES. WE NOTICE THAT THIS IS NOT THE FIRST INSTANCE WHEREIN THE VERY THE ISSUE(S ) HAVE COME UP BEFORE THE TRIBUNAL. A CO - ORDINATE BENCH IN ASSESSMENT YEAR 2010 - 11 HAS DECLINED REVENUE'S IDENTICAL ARGUMENTS RAISED IN ITA NO. 625AHD/2014 DECIDED ON 03.01.2017 AS UNDER: '1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED COR RECTNESS OF THE ORDER DATED 16TH DECEMBER, 2013 PASSED BY THE ID. CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 {'THE ACT' HEREINAFTER) FOR THE ASSESSMENT YEAR 2010 - 11, ON THE FOLLOWING GROUNDS : - '(1) THE LD. CIT(A) H AS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,27,35,109/ - , RS.1,91,44,649/ - AND RS.9.08,767/ - MADE U/S. 40(A)(IA) OF THE ACT WITHOUT CONSIDERING THE FACT THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WITHOUT CONSIDERING THE FACT THAT THE PROVISIONS OF SECTION 40(A)(IA) R.W.S. 194C & 1941 OF THE ACT ARE SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE AND THE DISALLOWANCE HAVE CORRECTLY BEEN MADE, BY THE AO. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) OUGH T TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (3) IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF (HE ORDER OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT.' 2. LEARNED REPRESENTATIVES FAIRLY AGREE T HAT THE ISSUE IN APPEAL IS ROW COVERED, IN FAVOUR OF THE ASSESSEE, BY A CO - ORDINATE BENCH'S DECISION IN ASSESSEE'S. OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. VIDE THIS DECISION DATED (14. 10,2013, THE TRIBUNAL HAS, INTER ALIA, OBSERVED AS FOL LOWS : - '5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDER OF A.O. AND CIT(A) AND COPIES OF VARIOUS DOCUMENTS AND DETAILS FILED IN THE CO MPILATION BEFORE US. WE FIND THAT T HE ASSESSES IS ONLY A CLEARING & FORWARDING AGENT AND HAS CHARGED ITS SERVICE CHARGES KNOWN AS AGENCY CHARGES FROM ITS CLIENTS WHOSE GOODS ARE EXPORTED THROUGH VARIOUS PORTS~.. MAINLY IN GUJARAT & MAHARASHTRA. THE ASSESSEE HAS RECEIVED THE RAILWAY OF FREIGHT, SHIPPING FREIGHT, /CD CHARGES ETC. FROM ITS CLIEN TS BY WAY OF REIMBURSEMENT OF EXPENSES. ACCORDINGLY, THE ASSESSEE IS MERELY A FACILITATOR IN THE EXPORT BUSINESS OF ITS CLIENTS AND HAS RECEIVED THE REIMBURSEMENT OF, EXPENSES INCURRED AND SERVICE CHARGES IN THE NAME OF AGENCY CHARGES FROM ITS CLIENTS'. T HESE FACTS COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE BEFORE US. WE FIND THAT THE RECEIPTS WERE ISSUED BY THE VARIOUS PARTIES IN THE NAME OF CLIENTS OF THE ASSESSEE AND NOT IN THE NAME OF THE ASSESSEE. ON THE PERUSAL OF THE COPY OF THE AUDITED ACCO UNTS, IT SHOWS THAT THE ASSESSEE HAS RECEIVED AND CREDITED TO ITS P&L ACCOUNT AGENCY CHARGES APART FROM THE REIMBURSEMENT OF' EXPENSES INCURRED ON BEHALF OF ITS CLIENTS. WE FIND THAT THE ASSESSEE FACILITATES TO AND FRO MOVEMENT OF CLIENT'S GOODS BOTH IN L AND AND OVERSEAS, USING ROAD, RAIL, AIR AND SEA ROUTE S INCLUDING TEMPORARY STORAGE OF THE GOODS IN CUSTOM BOUNDING WAREHOUSES FOR LEGAL AND PROCEDU RAL PURPOSES ETC. FOR THE APPLICABILITY OF PROVISION OF SECTION 194C & 1941, THE RELATIONSHIP O F CONTRACTOR AND PAYEE PURSUANT TO CONTRACT BETWEEN THE PARTIES IS ESSENTIAL. IN THE CASE BEFORE US, NO SUCH RELATIONSHIP HAS BEEN FOUND. THE CIT(A) HAS GIVEN THE FINDING THAT THE CLIENTS OF THE ASSESSEE ARE REIMBURSING AMOUNT OF MONIES PAID BY THE ASSESSE E TO SUCH AGENCIES ALONG WITH THE ASSESSEE'S COMMISSION & HANDLING CHARGES. THE CIT(A) HAS REFERRED TO NUMBER OF DECISIONS WHEREIN THE HON ON 'BLE COURTS HELD THAT TDS PROVISIONS ARE NOT ATTRACTED IN I.T.A NO. 906 /AHD/20 2017 A.Y. 2013 - 14 PAGE NO ITO VS. SHRI PRITESH D. SHAH (HUF) 4 CASES INVOLVING REIMBURSEMENT OF EXPENSES. IN THESE FACTS OF THE CASE, WE FIND THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN HOLDING THAT THE ADDITION ON ACCOUNT O F PAYMENTS, MADE TO VARIOUS PARTIES ON BEHALF OF ITS CLIENTS BY THE ASSESSEE NOT BE SUSTAINED AND DESERVES TO BE DELETED . ACCORDINGLY, THE OR DER OF CIT( A) IS CONFIRMED AND GROUND OF THE REVENUE'S APPEAL IS DISMISSED,' 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW TAKEN BY THE CO - ORDINATE BENCH. . 4. RESPECTFULLY FOLLOWING THE. TRIBUNAL'S DECISION DATED 04.10.20 13, IN ASSESSEE'S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WE CONFIRM THE ORDER OF THE ID. CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE.' 3. LEARNED DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH IN NOT POINTING OUT ANY DISTINCTION ON FACTS AS WELL AS THE ISSUES INVOLVED HER EIN. WE THUS ADOPT JUDICIAL CONSISTENCY TO AFFIRM LEARNED CIT(A) S IDENTICAL FINDINGS IN BOTH THE IMPUGNED ASSESSMENT YEARS. 6. LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH IN NOT POINTING ANY DISTINCTION ON FACTS AS WELL AS THE ISSUE INVOLVED HEREIN. THEREFORE, FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH AS SUPRA, WE UPHOLD THE DECISION OF LD. CIT(A) AND DISMISSED THE APPEAL RAISED BY REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 04 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 26 /04 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,