TIL Healthcare Pvt Ltd., CHENNAI V. DCIT, CHENNAI

MA 173/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7917 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS R ANITA
• Assessee Lawyers: T BANUSEKAR
• Keywords: Opportunity of being heard; Question of law
• Section: 40(a)(ia)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER M.P. NO. 173/CHNY/2018 [IN I.T.A. NO. 1808/CHNY/2014] ASSESSMENT YEAR : 2007-08 M/S. TIL HEALTHCARE PVT. LTD., [FORMERLY KNOWN AS M/S. TIL EXPORTS PVT. LTD.], JHAVER CENTRE, NO. 72, RAJA ANNAMALAI BUILDING, MARSHALLS ROAD, EGMORE, CHENNAI 600 008. [PAN: AABCT0985H] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), CHENNAI. ( APPELLANT ) (R ESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR, C.A. / RESPONDENT BY : MRS. R. ANITA, JCIT / DATE OF HEARING : 26.10.2018 /DATE OF PRONOUNCEMENT : 31.12.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: BY MEANS OF PRESENT MISCELLANEOUS PETITION, THE ASSESSEE SEEKS TO RECALL THE ORDER PASSED BY THE TRIBUNAL IN I.T.A. NO.1808/MDS/2014 DATED 07.06.2018 FOR THE ASSESSMENT YEAR 2007-08. BY REFERRING TO THE PETITION, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PETITIONER HAS RAISED A SPECIFIC GROUND IN ITS APPEAL THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF .1,14,96,392/- OUT OF REIMBURSEMENT OF SALES PROMOTION EXPENSES UNDER SECTION 40(A)(IA) OF THE ACT, AGAINST WHICH, THE TRIBUNAL MP NO. 173/CHNY/18 2 SUSTAINED THE DISALLOWANCE OF .42,45,776/- AND THE BALANCE DISALLOWANCE OF .72,50,616/- WAS NOT ADJUDICATED IS A MISTAKE APPARENT ON RECORD AND PRAYED FOR RECALLING AND ADJUDICATING THE ISSUE. 2. PER CONTRA, THE LD. DR HAS SUBMITTED THAT SINCE THE PETITIONER HAS NOT GONE THROUGH THE OBSERVATIONS AND FINDINGS OF THE TRIBUNAL AT PARA 8.1 OF THE ORDER OF THE TRIBUNAL, IN WHICH THE TRIBUNAL HAS GIVEN ITS COMPLETE FINDINGS, THERE IS NO MISTAKE APPARENT ON RECORD AND PLEADED THAT THE PETITION FILED BY THE ASSESSEE SHOULD BE DISMISSED. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ORDER PASSED BY THE TRIBUNAL. AGAINST THE SPECIFIC GROUND VIDE GROUND NO. 7 RAISED IN THE CONCISE GROUNDS OF APPEAL RELATING TO CONFIRMATION OF DISALLOWANCE OF .1,14,96,392/-, SINCE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AN AMOUNT OF .42,45,776/- PAID OUT OF .1,14,96,392/-, NO DISALLOWANCE COULD BE MADE UNDER SECTION 40(A)(IA) OF THE ACT TO THE EXTENT THAT THE ASSESSEE ALREADY PAID THE AMOUNT, THE TRIBUNAL HAS HELD THAT IN VIEW OF THE DECISION OF IN THE CASE OF PALAM GAS SERVICES V. CIT IN CIVIL APPEAL NO. 5512 OF 2017 DATED 03.05.2017, THE HONBLE SUPREME COURT HAS OBSERVED THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT HAS TO BE MADE ON THE AMOUNTS NOT ONLY PAID BUT ALSO PAYABLE IF TDS WAS NOT DEDUCTED. ACCORDINGLY, AGAINST THE DISALLOWANCE, THE AMOUNT CLAIMED TO HAVE BEEN ALREADY PAID OF .42,45,776/- WAS SUSTAINED SINCE THE ASSESSEE HAS NOT MP NO. 173/CHNY/18 3 DEDUCTED TDS. WITH REGARD TO THE BALANCE DISALLOWANCE, WE FIND THAT THE TRIBUNAL REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION AFTER VERIFICATION OF THE DEBIT NOTES, INVOICES, BANK REMITTANCE, ETC., WHICH WERE FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. THE OBSERVATIONS OF THE TRIBUNAL AT PARA 8.1 IS REPRODUCED AS UNDER: 8.1 WITH REGARD TO THE CONFIRMATION OF DISALLOWANCE OF SALES PROMOTION EXPENSES MADE UNDER SECTION 40(A)(IA) OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT AN AMOUNT OF .42,45,776/- PAID OUT OF .1,14,96,392/-, NO DISALLOWANCE COULD BE MADE UNDER SECTION 40(A)(IA) OF THE ACT TO THE EXTENT THE ASSESSEE ALREADY PAID THE AMOUNT BY BROADLY RELYING UPON THE DECISION IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P) 357 ITR 642 (ALL) ON THE PREPOSITION THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROFESSION UNDER SECTION 40(A)(IA) OF THE ACT ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOULD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. THE ABOVE HAS NOW ATTAINED ITS FINALITY, BY HOLDING THAT THE JUDGEMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P) LTD. [2013] 357 ITR 642 IN WHICH THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CIT HAS BEEN FOLLOWED, DID NOT DECIDE THE QUESTION OF LAW CORRECTLY AND OVERRULED THE SAME IN A RECENT JUDGEMENT IN THE CASE OF PALAM GAS SERVICES V. CIT IN CIVIL APPEAL NO. 5512 OF 2017 DATED 03.05.2017, THE HONBLE SUPREME COURT HAS OBSERVED THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT HAS TO BE MADE ON THE AMOUNTS NOT ONLY PAID BUT ALSO PAYABLE IF TDS WAS NOT DEDUCTED. ACCORDINGLY, THE AMOUNT CLAIMED TO HAVE BEEN ALREADY PAID OF .42,45,776/- STANDS SUSTAINED. WITH REGARD TO BALANCE DISALLOWANCE TOWARDS SALES PROMOTION EXPENSES, THE LD. COUNSEL FOR THE ASSESSEE FILED COPIES OF AGREEMENT ENTERED INTO BY THE ASSESSEE WITH VARIOUS FIRMS AS WELL AS DEBIT NOTES, INVOICES, BANK REMITTANCE RELATED TO SUBSTANTIATE THE PAYMENTS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE SAME AND DECIDE THE BALANCE DISALLOWANCE OF SALES PROMOTION EXPENSES IN ACCORDANCE WITH LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. MP NO. 173/CHNY/18 4 4. THE UNDERLINED PORTION OF THE ORDER OF THE TRIBUNAL AT PARA 8.1 CLEARLY SPELLED OUT THE DECISION OF THE TRIBUNAL WITH REGARD TO THE BALANCE DISALLOWANCE TOWARDS SALES PROMOTION EXPENSES. THUS, THE PETITIONERS CLAIM THAT THE TRIBUNAL HAS NOT ADJUDICATED THE BALANCE DISALLOWANCE OF SALES PROMOTION EXPENSES OF .72,50,616/- [.1,14,96,392 - .42,45,776] IS NOT CORRECT AND ACCORDINGLY, THE GROUND RAISED IN THE PETITION FILED BY THE ASSESSEE STANDS DISMISSED. 5. IN THE RESULT, THE M.P. FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 31 ST DECEMBER, 2018 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 31.12.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.