M/s. Chemfilt, Anand V. The ACIT.,Cent.Circle-1, Baroda

ITSSA 110/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8287 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JOSBIR S CHOUHAN SRDR
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Additional evidence; Non-deduction of tax
• Section: 234B; 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI D.K.TYAGI, HONBLE JUDICIAL MEMBER, AND SHRI A. MOHAN. ALANKAMONY, HONBLE ACCOUNTANT MEMBE R IT(SS)A NO.110/AHD/2009 ASSESSMENT YEAR:2005-06 DATE OF HEARING:15.7.11 DRAFTED:18.7.11 M/S. CHEMFILT, 1304/A/GIDC, VITTHAL UDYOGNAGAR, ANAND, GUJARAT PAN NO.AABFC5751D V/S . ACIT, CENTRAL CIRCLE-1, BARODA (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N.SOPARKAR, SR-AR RESPONDENT BY:- SHRI JOSBIR S CHOUHAN, SR-DR O R D E R PER D.K.TYAGI, JUDICIAL MEMBER:- THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF COM MISSIONER OF INCOME-TAX(APPEALS)-IV, AHMEDABAD DATED 17-03-2009 FOR ASSESSMENT ORDER 2005-06. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS;- 1. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.13,88,490/- MADE BY AO U/S 40(A)(IA) OF THE ACT. BY CONFIRMING THIS ADDITION THE LD CIT(A) HAS FAILED T O INTERPRET PROVISIONS OF THE NEWLY INTRODUCED SECTION IN ITS P ROPER PERSPECTIVE AND FURTHER NOT TAKING INTO CONSIDERATION VARIOUS S UBMISSIONS, JUDGMENTS AND CBDT CIRCULARS RELIED UPON BY THE APP ELLANT, THIS ACTION OF LD. CIT(A) BEING WITHOUT ANY MERITS OR JU STIFICATION REQUIRES TO BE QUASHED. IT(SS)A NO.110/AHD/2009 A.Y. 2005-06 M/S. CHEMFILT V. ACIT CC-1, BRD PAGE 2 2. LEARNED CIT(A) HAS FURTHER ERRED IN NOT APPRECIA TING THE FACT THAT NO TDS IS REQUIRED TO BE MADE FROM THE PAYMENT TO A FOREIGN SHIPPING COMPANY AS PER THE PROVISIONS OF SECTION 1 72 OF THE ACT NOR TDS IS TO BE MADE FROM PAYMENTS TO AGENT OF A F OREIGN SHIPPING COMPANY IN LIGHT OF CIRCULAR NUMBER 723 AN D 786 OF CBDT. THIS ACTION OF LD. CIT(A) CONFIRMING ADDITION OF RS.9,23,733/- OF PAYMENTS TO JEBI SHIPPING AGENCIES BEING WITHOUT MERITS OR JUSTIFICATION DESERVES TO BE QUAS HED. 3. LEARNED CIT(A) HAS GROSSLY ERRED IN FACTS AND ON LAW IN CONFIRMING THE ADDITION MADE BY AO U/S.40(A)(IA) OF THE PAYMENTS OF RS.3,20,655/- (HI TECH INDUSTRY & S.K AGENCIES) ON WHICH TDS WAS NOT MADE IGNORING THE SUBMISSIONS OF THE APPELL ANT THAT THEY WERE NOT OF THE NATURE OF EXPENSES DEBITED. THIS AC TION OF CIT(A) REQUIRES TO BE QUASHED. 4. INITIATION OF LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT IS NOT JUSTIFIED. 2. THE BRIEF FACTS OF THIS CASE ARE THAT A SURVEY U /S.132 OF THE INCOME- TAX ACT, 1961 WAS CARRIED OUT AT THE OFFICE PREMISE S OF THE ASSESSEE. IN COURSE OF THIS SURVEY, IT WAS NOTICED THAT FOLLOWIN G TDS PAYMENTS WERE EITHER MADE LATE OR NOT DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT:- NAME OF PAYEE EXPENSES CLAIMED AY 2005-06 EXPENSES CLAIMED AY 2006-07 DATE OF PAYMENT/DEPO SIT OF TDS AY DATE OF PAYMENT/DE POSIT OF TDS AY 2006-07 JEBI SHIPPING AGENCIES 9,23,733 33,13,295/- 12.05.2006 12.6.2006 HI-TECH IND. DUBAI 2,24,456 NO TDS S.K. AGENCIES 96,199 NO TDS JASUBHAI MEDIA P LTD. 64,000 APRIL 2005 EXPOCON INTERNATIONAL 31,500 APRIL 2005 CYBERVOX NETWORK LTD. 48,600 APRIL 2005 TOTAL 13,88,490/- 33,13,295/- IT(SS)A NO.110/AHD/2009 A.Y. 2005-06 M/S. CHEMFILT V. ACIT CC-1, BRD PAGE 3 THE ASSESSEE WAS ASKED AS TO WHY THE ABOVE EXPENSES SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE ACT. THE ASSESSEES CONTENTION WAS THAT ALL THE PAYMENTS RELATING TO JEBI SHIPPING AGENCIES DID NOT ATTRACT TDS AS PER CIRCULAR NO.723 & 786 OF CBDT DATED 19-02-19 95 AND 07-02- 2000 RESPECTIVELY AS THE COMPANY WAS AN AGENT OF A FOREIGN SHIPPING COMPANY. FURTHER THE ASSESSEE STATED THAT PAYMENTS TO HI-TECH INDUSTRY DUBAI AND S.K. AGENCIES WERE NOT EXPENSES, HENCE NO TDS WAS REQUIRED TO BE DEDUCTED. WITH RESPECT TO OTHER PAYMENTS, THE ASSESSEE GAVE THE DATE OF PAYMENT OF TDS. 3. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTAB LE TO THE ASSESSING OFFICER FOR THE FOLLOWING REASONS:- (I) NO PROVE WAS GIVEN BY THE ASSESSEE THAT M/S. JE BI SHIPPING AGENCIES WAS AN AGENT OF FOREIGN SHIPPING COMPANY O NLY A CONFIRMATION OF PAYMENTS WAS FILED. ASSESSING OFFIC ER THEREFORE HELD THAT CIRCULAR OF CBDT RELIED BY THE ASSESSEE WERE NOT APPLICABLE TO THE FACTS OF THIS CASE. (II) NO PROOF THAT PAYMENTS MADE TO M/S. HI-TECH IN D. DUBAI AND S.K. AGENCIES WERE NOT DEBITED WAS FILED BEFORE ASS ESSING OFFICER. (III) WITH RESPECT TO OTHER PAYMENT FROM THE DATE G IVEN BY THE ASSESSEE, IT WAS FOUND THAT ALL THE PAYMENTS WERE M ADE BEYOND THE DUE DATE. THEREFORE ASSESSING OFFICER REJECTED THE EXPLANATIO N OFFERED BY THE ASSESSEE AND THE EXPENSES WERE DISALLOWED U/S.40(A) (IA) OF THE ACT AND ADDITION OF RS.13,88,490/- WAS MADE TO THE INCOME O F THE ASSESSEE. IT(SS)A NO.110/AHD/2009 A.Y. 2005-06 M/S. CHEMFILT V. ACIT CC-1, BRD PAGE 4 4. IN APPEAL THE ADDITION MADE BY ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(APPEALS). FURTHER AGGRIEVED, NOW ASSESSE E IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING LEARNED COUNSEL FOR THE A SSESSEE PLACING RELIANCE ON THE DOCUMENTS AVAILABLE FROM PAGE 1 TO 52 OF THE ASSESSEES PAPER BOOK SUBMITTED THAT M/S. JEBI SHIPPING AGENCI ES AND M/S. S.K. AGENCIES WERE THE AGENTS OF FOREIGN SHIPPING COMPAN Y AND THEREFORE AS PER THE SECTION 172 OF THE ACT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX ON THE AMOUNTS PAID TO THE PARTIES. HE ALSO PLA CED RELIANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT V. SHRI HASMUKH J PATEL IN ITA NO.2081/AHD/2009 DATED 10-03-2011 FOR ASSESSMENT ORDER 2006- 07, WHEREIN IT WAS HELD THAT IN SUCH CASES THE PROV ISIONS OF SECTION 172 OF THE ACT WOULD APPLY AND NO DEDUCTION OF TAX WAS REQUIRED AS PER SECTION 194C OF THE ACT. WITH RESPECT TO PAYMENT MA DE TO HI-TECH IND. DUBAI THE LEARNED COUNSEL FOR THE ASSESSEE CONCEDED THAT DISALLOWANCE HAS RIGHTLY BEEN MADE. WITH RESPECT TO OTHER PARTIES, IT WAS SUBMITTED THAT TAX WAS DEDUCTED AND THE SAME WAS DE POSITED BEFORE DUE DATE OF FILING OF RETURN AND THEREFORE NO DISAL LOWANCE U/S.40(A)(IA) CAN BE MADE, IN SUCH CASES IN VIEW OF DECISION OF T HIS TRIBUNAL IN THE CASE OF HETALKUMAR INDRAVAN SHAH V. ACIT IN ITA NO.227/AHD/2009 DATED 17-06-2011 FOR ASSESSMENT ORDER 2005-06. HE T HEREFORE CONCLUDING HIS ARGUMENT SUBMITTED THAT EXCEPTING TH E EXPENSES CLAIMED IN RESPECT OF HI-TECH IND. DUBAI NO OTHER DISALLOWA NCE CAN BE MADE U/S.40(A)(IA) OF THE ACT AND THE ADDITION MADE ON T HIS ACCOUNT MAY KINDLY BE DELETED. 6. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF LOWER AUTHORITIES. IT(SS)A NO.110/AHD/2009 A.Y. 2005-06 M/S. CHEMFILT V. ACIT CC-1, BRD PAGE 5 7. HEARD BOTH THE PARTIES AND PERUSED THE RECORD WE FIND THAT ASSESSING OFFICER IN THE CASE OF M/S. JEBI SHIPPING AGENCIES AND M/S S.K. AGENCIES DISALLOWED THE PAYMENT MADE TO THEM O N THE GROUND THAT ASSESSEE FAILED TO PROVE THAT THESE PARTIES WERE AG ENTS OF FOREIGN SHIPPING COMPANY AND THEREFORE CIRCULAR NO.723 & 78 6 OF THE CBDT WERE NOT APPLICABLE IN THE CASE OF THESE PARTIES. B EFORE US THE CLAIM OF THE ASSESSEE WAS THAT ALL THE DETAILS IN RESPECT OF THESE PARTIES TO SHOW THAT THEY WERE THE AGENTS OF FOREIGN SHIPPING COMPA NY WERE DULY FILED BEFORE LOWER AUTHORITIES AND THEREFORE NO DISALLOWA NCE U/S.40(A)(IA) FOR NON-DEDUCTION OF TAX SHOULD HAVE BEEN MADE IN RESPE CT OF PAYMENTS TO THESE PARTIES. WHILE GOING THROUGH THE ORDERS OF TH E LOWER AUTHORITIES WE FIND NO MENTION OF THE FACT THAT ASSESSEE FILED ANY PROOF THAT THESE PARTIES WERE AGENTS OF FOREIGN SHIPPING COMPANY. TH EREFORE WE TREAT THE DOCUMENTS FILED BY THE ASSESSEE IN ITS PAPER BOOK A S ADDITIONAL EVIDENCE BEFORE US WHICH REQUIRES TO BE CONSIDERED BY THE ASSESSING OFFICER IN THE LIGHT OF DECISION OF THIS TRIBUNAL I N THE CASE OF SHRI HASMUKH J PATEL (SUPRA). FOR THIS PURPOSE THE MATTER IS RESTORED B ACK TO THE FILE OF ASSESSING OFFICER. AS REGARDS TO PAYMEN T MADE TO M/S JASUBHAI MEDIA PVT. LTD.; EXPOCON INTERNATIONAL AND CYBERVOX NETWORK LTD., THE TDS WAS DEPOSITED IN APRIL05 I.E. BEFORE THE DUE DATE OF FILING OF RETURN, THEREFORE IN VIEW OF THIS TRIBUNALS DEC ISION IN THE CASE OF HETALKUMAR INDRAVAN SHAH (SUPRA) WHEREIN IT WAS HELD THAT IF TDS WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN N O DISALLOWANCE U/S 40(A)(IA) OF THE ACT CAN BE MADE, NO DISALLOWANCE I S REQUIRED TO BE MADE U/S.40(A)(IA) OF THE ACT AND THE SAME IS HEREBY DEL ETED. FOR THE SAKE OF CLARITY THE ASSESSEES APPEAL IS DECIDED AS UNDER:- I) IN RESPECT OF PAYMENT MADE TO M/S. JEBI SHIPPING AGENCIES AND S.K. AGENCIES THE MATTER IS RESTORED BACK TO THE FI LE OF ASSESSING OFFICER. IT(SS)A NO.110/AHD/2009 A.Y. 2005-06 M/S. CHEMFILT V. ACIT CC-1, BRD PAGE 6 II) IN RESPECT OF PAYMENT MADE TO HI-TECH IND. DUBA I THE DISALLOWANCE MADE BY ASSESSING OFFICER IS CONFIRMED . III) PAYMENT MADE IN RESPECT OF THREE PARTIES M/S J ASUBHAI MEDIA PVT. LTD. AND EXPOCON INTERNATIONAL AND CYBERVOX NE TWORK LTD. THE DISALLOWANCE U/S 40(A)(IA) IS DELETED. 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 22/07/2011 SD/- SD/- (A.MOHAN.ALANKAMONY) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 22/07/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- IV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD