MEHTA EXPORTS, V. ADDL CIT 20(2),

MA 326/MUM/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2703 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H N MOTIWALLA
• Keywords: Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARO RA, AM ./MA NO. 326/MUM/2014 (ARISING OUT OF ITA NO. 7321/MUM/2010) ( / ASSESSMENT YEARS: 2007-08) MEHTA EXPORTS, B-9, VIRAL APARTMENTS, OPP. SHOPPERS STOP, S. V. ROAD, ANDHERI (W), MUMBAI-400 059 / VS. ADDL. CIT, RANGE 20(2), MUMBAI ' ./$ ./PAN/GIR NO. AAAFM 1566 B ( APP LICANT ) : ( RESPONDENT ) APPLICANT BY : SHRI H. N. MOTIWALLA & SHRI PIYUSH CHHAJED RESPONDENT BY : SHRI JITENDRA KUMAR % & ' () / DATE OF HEARING : 10.10.2014 *+, ' () / DATE OF PRONOUNCEMENT : 09.01.2015 - / O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS PETITION BY THE ASSESSEE AR ISING OUT OF THE ORDER U/S. 254(1) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) BY THE TRIBUNAL DATED 28.08.2013, DECIDING THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR (A.Y.) 2007-08 IN THE CAPTIONED APPEAL. 2. IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND F ACTS AND CIRCUMSTANCES OF THE CASE. THE PRESENT APPLICATION IS QUA THE FIRST TWO GROUNDS OF THE ASSESSEES APPEAL BEFO RE THE TRIBUNAL, WHICH ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE WITHOUT APPRECIATING THAT THE SAID PAYMENTS WERE MADE TOWAR DS THE BILLS FOR 2 MA NO. 326/MUM/2014 (A.Y. 2007-08) MEHTA EXPORTS VS. ADDL. CIT REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE CL EARING AND FORWARDING AGENTS WHICH IS NOT COVERED BY SECTION 194C AND HEN CE THERE CANNOT BE ANY DISALLOWANCE U/S. 40A(IA). 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING DISALLOWANCE OF RS.15,30,1501- U/S. 40A( IA), WITHOUT APPRECIATING THAT THE SAID PAYMENTS WERE MADE TOWAR DS THE BILLS FOR REIMBURSEMENT OF ACTUAL EXPENSES INCURRED BY THE CL EARING AND FORWARDING AGENTS AND THEREFORE, WERE DIRECTLY COVERED BY THE JUDGEMENT RENDERED IN CASE OF DR. WILLMAR SCHWABE INDIA PVT. LTD. 95 TTJ 53 (DEL). THE ASSESSEE, AN EXPORTER, MADE PAYMENTS DURING TH E RELEVANT YEAR TO TWO CLEARING AND FORWARDING (C & F) AGENTS, VIZ. MONARCH SHIPPIN G SERVICES AND MAHENDRA SHIPPING AGENCY, AT RS.7,10,845/- AND RS.12,18,304/-, RESPEC TIVELY, DEDUCTING TAX AT SOURCE U/S.194C, ALBEIT ON A PART OF THE TOTAL PAYMENT. TH E BALANCE, BEING AT RS.6,33,389/- AND RS.8,96,761/-, FOR THE TWO PARTIES RESPECTIVELY, ON WHICH TAX WAS NOT DEDUCTED, WAS EXPLAINED AS ON ACCOUNT OF THE SAME BEING A REIMBUR SEMENT, FOR WHICH SEPARATE BILLS HAD IN FACT BEEN RAISED BY THE AGENTS. THE DISALLOWANCE U/S.40(A)(IA), MADE IN CONSEQUENCE OF NON-DEDUCTION OF TDS, BEING CONFIRMED BY THE FIRST APPELLATE AUTHORITY, THE ASSESSEE PREFERRED A SECOND APPEAL BEFORE THE TRIBUNAL, WHIC H STOOD DECIDED VIDE THE IMPUGNED ORDER. THE TRIBUNAL CLARIFIED THAT THE REIMBURSEMEN T OF EXPENDITURE COULD NOT ATTRACT THE CHARGE OF DEDUCTION OF TAX AT SOURCE, EXPLAINING IT S REASONS FOR THE SAME (PARA 3.1 AND 3.2 OF THE IMPUGNED ORDER). SO, HOWEVER, THE ONUS TO EX HIBIT THAT THE SAME IS IN FACT A REIMBURSEMENT WOULD ONLY BE ON THE ASSESSEE. THE MA TTER WAS, ACCORDINGLY, REMITTED BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY T O BE DECIDED IN ACCORDANCE WITH THE LAW AFTER HEARING THE PARTIES BEFORE HIM, CLARIFYING ON CE AGAIN THAT TO THE EXTENT THE ASSESSEE IS ABLE TO SHOW THE IMPUGNED PAYMENTS AS BEING BY WAY OF REIMBURSEMENT, NO CHARGE OF NON-DEDUCTION OF TAX AT SOURCE AND, THUS, DISALLOWA NCE U/S.40(A)(IA), SHALL ARISE. THIS, AS THE VERY FACT OF REIMBURSEMENT WAS DISPUTED BY THE REVENUE, AND TO WHICH FACT THE ATTENTION OF THE TRIBUNAL WAS NOT DRAWN DURING THE COURSE OF THE HEARING, AND WHICH WAS REGARDED BY IT AS UNFORTUNATE (PARA 3.3 OF THE IMPU GNED ORDER). THE ASSESSEE HAS NOW MOVED THE TRIBUNAL, DRAWING ITS ATTENTION TO THE DE CISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF EAST INDIA HOTELS LTD. VS. CENTRAL BOARD OF DIRECT TAXES [2010] 320 ITR 526 (BOM), ON WHICH RELIANCE IS STATED TO HAVE BEEN PLACED BY THE ASSESSEE DURING 3 MA NO. 326/MUM/2014 (A.Y. 2007-08) MEHTA EXPORTS VS. ADDL. CIT HEARING. PER THE SAID DECISION, THE HONBLE HIGH CO URT, IT IS SUBMITTED, READ DOWN THE WORD WORK, DEFINED INCLUSIVELY IN S. 194C, TO MEAN ONL Y THAT SPECIFIED UNDER EXPLANATION III THERETO. THE C & F SERVICES NOT FALLING UNDER THE S AID EXPLANATION , THERE COULD BE NO DISALLOWANCE U/S.40(A)(IA). THE TRIBUNAL IS, ACCORD INGLY, PRAYED FOR RECTIFYING THE MISTAKE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. FIRSTLY, THAT THE REIMBURSEMENT IS NOT ELIGIBLE FOR DEDUCTION OF TAX AT SOURCE, STANDS ABUNDANTLY CLARIFIED BY THE TRIBUNAL, SO THAT THE O NLY ISSUE THAT SURVIVED FOR ITS CONSIDERATION WAS WHETHER THE PAYMENTS UNDER REFERE NCE WERE IN FACT BY WAY OF REIMBURSEMENTS, AND TOWARD WHICH REFERENCE MAY BE M ADE TO THE GROUNDS AS RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL; THE ASSESSEE HAVI NG IN FACT ALREADY DEDUCTED THE TAX AT SOURCE ON A PART OF THE PAYMENT. THE TRIBUNAL FURTH ER HELD THE ONUS TO ESTABLISH SO, I.E., OF THE PAYMENT BEING A REIMBURSEMENT, TO BE ON THE ASS ESSEE, SO THAT WHERE AND TO THE EXTENT IT IS ABLE TO SO PROVE, THE DISALLOWANCE WAS DIRECT ED FOR DELETION. THE MATTER, THUS, STANDS PERCEIVED BY IT AS WHOLLY FACTUAL. WE ARE UNABLE TO , THEREFORE, FIND ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL, AND FOR WHICH IN FACT IT ADM ITTED THE DOCUMENTS PLACED ON FILE AS A PART OF ITS RECORD, SO AS TO ENABLE A RESOLUTION OF THE MATTER, AS IT COULD NOT OTHERWISE BE SO IN VIEW OF RULE 18(6) OF THE APPELLATE TRIBUNAL RUL ES, 1963. COMING, NEXT, TO THE DECISION BY THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF EAST INDIA HOTELS LTD. (SUPRA). THE SAME, AS CLARIFIED BY THE BENCH DURING HEARING, WITH REFERENCE TO THE LOG BOOK, WAS NOT REFERRED TO NOR A COPY OF THE SAID ORDER PLACED ON RECORD. THE ASSESSEES ONLY CASE BEFORE THE TRIBUNA L WAS TOWARD THE IMPUGNED PAYMENT/S BEING A REIMBURSEMENT, AND ON WHICH THEREFORE NO TA X WAS REQUIRED TO BE DEDUCTED, AND TOWARD WHICH ITS ARGUMENTS, MADE IN PURSUANCE TO TH E GROUNDS RAISED, WERE DIRECTED. THERE IS, ACCORDINGLY, NO QUESTION OF THE ASSESSEE RELYING ON THE SAID DECISION DURING HEARING OF ITS APPEAL, AS IS BEING NOW CONTENDED BE FORE US, AS ALSO OBSERVED DURING THE HEARING OF THE INSTANT APPLICATION. FURTHER, THE TR IBUNAL HAVING RESTORED THE MATTER BACK TO THE FILE OF THE FIRST APPELLATE AUTHORITY, BEFORE W HOM THE MATTER IS THUS SUBJUDICE, WHY WE WONDER THE ASSESSEE DOES NOT MOVE THE SAID AUTHORIT Y? THE DECISION BY THE HONBLE HIGH COURT IS BINDING, WHILE THE ISSUE SOUGHT TO BE NOW RAISED GOES TO THE ROOT OF THE MATTER. 4 MA NO. 326/MUM/2014 (A.Y. 2007-08) MEHTA EXPORTS VS. ADDL. CIT UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AN D PROPER TO, WHILE DECLINING TO RECALL THE IMPUGNED ORDER, FURTHER DIRECT THE FIRST APPELLATE AUTHORITY TO EXAMINE THE ASSESSEES CASE WITH REFERENCE TO ANY DECISIONS OR MATERIALS SOUGHT TO BE RELIED UPON BEFORE HIM BY THE ASSESSEE IN DECIDING ITS APPEAL. NEEDLESS TO ADD, THE LD. CIT(A) SHALL ADJUDICATE IN ACCORDANCE WITH LAW AFTER HEARING THE PARTIES BEFORE HIM; THE LAW IN THE MATTER BEING SUFFICIENTLY ELUCIDATED BY THE DECISIO NS BY THE APEX COURT, AS IN THE CASE OF BIRLA CEMENT WORKS VS. CENTRAL BOARD OF DIRECT TAXE S [2001] 248 ITR 216 (SC) ; ASSOCIATED CEMENT CO. LTD. V. CIT [1993] 201 ITR 435 (SC), AS WELL AS SEVERAL BY THE HONBLE JURISDICTIONAL HIGH COURT, AS IN THE CASE O F CIT VS. GLENMARK PHARMACEUTICALS LTD. [2010] 324 ITR 199 (BOM); EAST INDIA HOTELS LTD . (SUPRA); BDA LTD. VS. ITO(TDS) [2006] 281 ITR 99 (BOM), TO NOTE SOME. WE DECIDE AC CORDINGLY. 5. IN THE RESULT, THE ASSESSEES MISCELLANEOUS APPL ICATION IS ALLOWED ON THE AFORE-SAID TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 09, 2 015 SD/- SD/- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % .& MUMBAI; / DATED : 09.01.2015 . . ./ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. 0'1 / THE APPLICANT 2. 23'1 / THE RESPONDENT 3. % 4( ( 0 ) / THE CIT(A) 4. % 4( / CIT - CONCERNED 5. 7 2( , 0) , , % .& / DR, ITAT, MUMBAI 6. 9: ;& / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , % .& / ITAT, MUMBAI