M/s. B.D.Mahajan & Sons Pvt. Ltd., Meerut V. ITO, Meerut

ITA 985/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6381 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 19-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Section: 194C

Judgement Text

1 ITA NO. 985/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIA L MEMBER I.T.A .N O.-985/DEL/2014 (ASSESSME NT YEAR-2007-08) B. D. MAHAJAN & SONS PVT. LTD. C/O J. M CHADHA & CHADHA, CHARTERED ACCOUNTANTS 299, P. L. SHARMA ROAD MEERUT AAACB5771C (APPELLANT) VS ITO TDS MEERUT (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 01/12/2013 PASSED BY CIT (A)S MEERUT 2. THE GROUNDS OF APPEAL ARE FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT (A) IS NOT JUSTIFIED IN FAILING TO CONSIDER CBD T CIRCULAR NO. 723 DATED 19/9/1995 AND IN HOLDING THAT PAYMENT MADE TO SHIP OWNER OR ITS AGENT IN INDIA TOWARDS FR EIGHT FOR CARRYING GOODS TO FOREIGN PORTS FOR EXPORT PURP OSE IS LIABLE TO TDS U/S 194C OF THE INCOME-TAX ACT. APPELLANT BY SH. N. K. CHADHA, ADV & SANJAY SUD, C.A RESPONDENT BY SH. J. JAMES SINGH SR. DR DATE OF HEARING 09.02.2016 DATE OF PRONOUNCEMENT 09.03.2016 2 ITA NO. 985/DEL/2014 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT PAYMENT TO NON- RESIDENT PLAYERS WAS IN THE NATURE OF ADVERTISEMENT AND HAS FAILED TO CONSIDER THAT THE AMOUNT PAID TO NON- RESIDENT PLAYERS WAS NOT INCOME OF THE SAID NON-RESIDENT PLA YERS UNDER THE PROVISIONS OF SECTION 5 OF THE I.T ACT SI NCE THE SAME WAS NEITHER RECEIVED NOR ACCRUED TO THE SAID N ON- RESIDENT PLAYER IN INDIA. 3. OTHER GROUNDS, IF ANY, SHALL BE RAISED AT THE TI ME OF HEARING OF THE APPEAL WITH THE LEAVE OF THE HONBLE MEMBERS. 3. THE ASSESSEE COMPANY IS A MANUFACTURER, TRADER & EXPORTER OF SPOTS GOODS. DURING THE COURSE OF SURVEY DIFFER ENT DETAILS WERE CHECKED AND VERIFIED. THE ASSESSEE WAS ASKED TO SU BMIT THE BALANCE SHEET TDS RETURNS FILED FOR F.Y 2007-08 TO 2009-10. THE DIRECTOR OF THE COMPANY INFORMED THAT THERE IS DISP UTE AMONG THE OTHER DIRECTORS OF THE COMPANY AND THE MATTER IS PE NDING WITH COMPANY LAW BOARD AND NO BALANCE SHEET COULD HAVE B EEN FINALIZED TILL DATE HENCE NO RETURN IS FILED FOR F.Y 2007-08 TO 2009-10. THE ASSESSEE SUBMITTED THE DETAILS OF BALANCE SHEET AND RELEVANT PAPERS FOR THE F.Y 2006-07 ONLY. THE DETAILS OF TD S RETURNS FILED HAVE BEEN FILED FOR THE F.Y 2007-08 TO 2009-10 AND WAS CHECKED BY ASSESSING OFFICER. THE ASSESSEE WAS REQUIRED TO S UBMIT THE DETAILS AS PER SUMMON DATED 16/12/2009 FOR VERIFICATION OF TDS DEDUCTED AND DEPOSITED IN TIME TO THE GOVT. A/C. 3 ITA NO. 985/DEL/2014 4. DURING THE DISCUSSION OF THE CASE IT WAS ASKED A S TO WHY THE GROSS AMOUNT OF RS.58,39,478/- LESS CUSTOM DUTY PAI D TO THE GOVT. RS.34,22,418/- PAID TOWARDS THE FRIGHT AND CLEARING & FORWARDING CHARGES AS SUBMITTED VIDE REPLY DATED 19/03/2010 MA Y NOT SUBJECTED TO TAX @ 2% AS PROVIDED IN CBDT CIR. NO. 715 DATED 8/8/1995. FURTHER, IT WAS ALSO ASKED TO EXPLAIN AS TO WHY THE AMOUNTS OF RS.12,76,250/- PAID TO NON-RESIDENT PLAY ERS ON WHICH NO TDS WAS DEDUCTED, BE CHARGED TO TAX. IN VIEW OF THE PROVISIONS OF SECTION 194E READ WITH SECTION 9(1) (VI) (B &C) AND SECTION 115BBA OF THE INCOME TAX ACT @ 10% AS PROVIDED. TH E ASSESSEE WAS ASKED TO SUBMIT THE JUSTIFICATION OF NON DEDUCT ION OF TDS AND ALSO THE AGREEMENTS, MADE WITH THESE PLAYERS WHICH HAVE NOT BEEN PROVIDED TILL THE DATE OF WRITING THE ORDER. 5. THE ASSESSING OFFICER ADDED RS.21,46,910/- AS A FREIGHT CHARGES AND RS.2,992/- AS AMOUNTS PAID TO THE NON- RESIDENT PLAYERS. 6. THE CIT (A) WHILE DECIDING THE FIRST GROUNDS HA S PARTLY ALLOWED THE SAME BY EXCLUDING CARRIAGE OF GOODS BY RAILWAYS U/S 194C EXPLANATION TO THE SAME. THE CIT (A) WHILE DECIDING GROUND NO. 2 HELD THAT WHETHER OR NOT THE PLAYERS HAVE PERFORMED IN INDIA DURING THE YEAR UNDER CONSIDERATION, THE SAME IS IRRELEVAN T AFTER EXAMINING THE APPLICABILITY OF CLAUSE 2 OF SUB CLAUSE 1 OF SE CTION 155BBA OF THE ACT AND UPHELD THE ORDER OF THE ASSESSING OFFIC ER. 4 ITA NO. 985/DEL/2014 7. AS RELATES TO GROUND NO. 1, THE LD. AR SUBMITTED THAT THE FREIGHT CHARGES WHICH WAS PAID, COMES UNDER THE MIS CELLANEOUS EXPENSES AND THE SAME IS COVERED BY JURISDICTIONAL DELHI HIGH COURT IN CASE OF CIT VS. M/S DLF COMMERCIAL PROJECT CORPORATION ITA NO. 627 OF 2012 PRONOUNCED ON 15.07.2015 WHEREI N IT WAS HELD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS ON REIMBURSEMENT EXPENSES PAID TO M/S DLF LAND LTD. THE LD. AR FURTHER SUBMITTED THAT IN THIS PARTICULAR CASE, THE ASSESSEE HAS SUBMITTED A CHART SHOWING THEREIN VARIOUS PAYMENTS MADE TO THE VARIOUS PARTIES AS RELATED TO RE-IMBURSEMENT CHARGE S SUCH AS AIR FREIGHT, OCEAN FREIGHT CHARGES IN LAND HAULAGE CHAR GES. 8. AS RELATES TO GROUND NO. 2, THE LD. AR SUBMITTE D THAT THE PAYMENTS WERE MADE TO A SRI LANKAN CRICKETER AND PA KISTANI CRICKETER AND THERE IS NO AGREEMENT BETWEEN THE PAR TIES SO SECTION 52 WILL BE APPLICABLE AS IT IS INCOME FROM NON-RESI DENT RECEIVED OUTSIDE INDIA. THUS, IT CANNOT BE TAXABLE. 9. THE LD. DR SUBMITTED THAT THERE SHOULD BE AN AG REEMENT BETWEEN THE PARTIES BECAUSE THE INTERNATIONAL PLAYE RS WILL NEVER PLAY WITHOUT HAVING ANY DOCUMENTARY AGREEMENT. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A)S ORDER. 5 ITA NO. 985/DEL/2014 10. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH THE PARTIES. FROM THE RECORDS, IT IS EVIDENT THAT NOWHERE IN THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER AS WELL AS CIT (A), THE ASSESSEE CLAIMED THAT THE FREIGHT CHARGES WERE THE REIMBURSEMENT CHARGES. THUS, THE APPLICABILITY OF JURISDICTIONAL DELHI HIGH COURT , IN CASE OF M/S DLF COMMERCIAL PROJECT CORPORATION IS NOT RELEVANT IN THE PRESENT CASE. AS RELATES TO GROUND NO.2, THE CIT (A) HAS CATEGORICALLY DISCUSSED ALL THE ASPECTS WHETHER OR NOT THE PLAYER HAS PERFORMED IN INDIA DURING THE YEAR UNDER CONSIDERAT ION, THE SAME IS IRRELEVANT AFTER EXAMINING THE APPLICABILITY OF CLA USE 2 OF SUB CLAUSE 1 OF SECTION 155BBA OF THE ACT AND RIGHTLY C ONFIRMED THE ASSESSMENT ORDER. 11. IN RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OF MARCH 2016. SD/- SD/- ( S. V. MEHROTRA) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/03/2016 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 985/DEL/2014 DATE 1. DRAFT DICTATED ON 09.02.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 10.02.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .02.2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. .02.2016 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 09.02.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON .02.2016 PS 7. FILE SENT TO THE BENCH CLERK 09.02.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.