FEDERAL EXPRESS CORPORATION, V. DDIT (IT) 3(2),

MA 343/MUM/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1681 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Assessment Year: 2005-2006
• Appeal Filed On: 16-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rectification of order; Assessment record

Judgement Text

FEDERAL EXPRESS 1 VK;DJ VIHYH; VF/KDJ.K ,Y U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI JH JH JH JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL ; DS LE{K FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL ; DS LE{K FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL ; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER FOFO/K VKOSNU LA[;K /MA NO.343/MUM/2013 ARISING OUT OF ITA NO. 7813/MUM/2010 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2005-06 FEDERAL EXPRESS CORPORATION, BOOMERANG, 801, A-WING, CHANDIVALI FARM ROAD, NEAR-CHANDIVALI STUDIO, ANDHERI (E) MUMBAI 400 072 VS. DDIT (INTL. TAX.) - 3(2), 01 ST FLOOR, SCINDIA HOUSE, BALLARD PIER, MUMBAI 400 038. PAN: - AAA CF4135E APPELLANT RESPONDENT ASSESSEE BY/ FU/KKZFJRH DH VKSJ LS SHRI PORASH KAKA, MANISH KANTH REVENUE BY/ JKTLP DH VKSJ LS SHRI R.S. SRIVASTAVA ORDER PER VIJAY PAL RAO, JM BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSES SEE IS SEEKING RECTIFICATION OF MISTAKE IN THE ORDER DATED 31 ST JULY 2013 OF THIS TRIBUNAL, WHEREBY THE APPEAL OF THE ASSESSEE FOR THE A.Y. 200 5-06 WAS DISPOSED OFF. DATE OF HEARING 21.03.2014 DATE OF PRONOUNCEMENT 21.03.2014 FEDERAL EXPRESS 2 2. WE HAVE HEARD MR. PORASH KAKA, LD. SENIOR COUNSE L FOR THE ASSESSEE AS WELL AS THE LD. DR AND CAREFULLY PERUSED THE RELEVA NT MATERIAL ON RECORD. THE FIRST GRIEVANCE OF ASSESSEE IS REGARDING THE FINDIN G OF THIS TRIBUNAL IN RESPECT OF GROUND NO. 4 IN PARA 8 AS UNDER:- 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL PRODUCED BEFORE US WE FIND THAT THE PAYMENT MADE TO PRAKASH AIR FREIGHT PVT. LTD. IS UNDISPUTEDLY UNDER AN AGREEMENT AND THEREFORE, SUBJ ECT TO DEDUCTION OF TAX U/S 194C. THE ASSESSEE DID NOT FILE ANY RECORD BEFORE T HE AO TO SHOW THAT TDS WAS DEDUCTED IN RESPECT OF THE PAYMENT MADE TO PRAKASH AIR FREIGHT PVT. LTD. HOWEVER, BEFORE THE CIT(A) THE ASSESSEE FILED A COPY OF COMP LAINT LODGE WITH THE POLICE AUTHORITIES REGARDING DESTROY OF RECORD IN FLOOD AS WELL AS A LETTER FROM PRAKASH AIR FREIGHT PVT. LTD. CONFIRMING DEDUCTION OF TDS. THE CIT(A) DID NOT ADMIT THE SAID EVIDENCE FILED BY THE ASSESSEE. BEFORE US THE ASSES SEE HAS ALSO FILED A COPY OF RETURN OF INCOME AND COMMUNICATION OF INCOME TAX CO MPUTATION WHEREIN CREDIT OF TDS OF ` 100,37,910/- AS PER 143(1) WAS SHOWN TO BE GIVEN. HOWEVER, IT IS NOT POSSIBLE TO ASCERTAIN FROM THE SAID FIGURE OF TDS W HETHER ANY PART OF THE SAID AMOUNT PERTAINS TO THE PAYMENTS MADE BY THE ASSESSE E TO M/S PRAKASH AIR FREIGHT PVT. LTD. THUS, FROM THE RECORD PRODUCED BE FORE US IT CANNOT BE ASCERTAIN CONCLUSIVELY THAT THE ASSESSEE HAS ACTUALLY DEDUCTE D THE TDS ON THE PAYMENT MADE TO THE PRAKASH AIR FREIGHT PVT. LTD. FURTHER T HE AMOUNT OF TDS ON THE PAYMENT IN QUESTION IS ALSO NOT KNOWN. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE SET ASIDE THIS IS SUE TO THE RECORD OF THE ASSESSING OFFICER TO VERIFY THE RELEVANT RECORD INCLUDING THE ASSESSMENT RECORD OF PRAKASH AIR FREIGHT PVT. LTD. AS WELL AS RELEVANT RECORD OF THE DEPARTMENT. THE ASSESSEE IS ALSO DIRECTED TO FILE THE LEDGER ACCOUNT OF THE RESPECTI VE PARTIES IN THE BOOKS OF ACCOUNT OF EACH OTHER SHOWING THE PAYMENT AND RECEIPTS OF T HE AMOUNT AFTER TDS. AFTER EXAMINING THE RELEVANT RECORD THE AO SHALL DECIDE T HIS ISSUE AS PER LAW. 3. THE LD. SENIOR COUNSEL HAS POINTED OUT THAT AUTH ORITIES BELOW HAS DISALLOWED THE ENTIRE PAYMENT MADE TO PRAKASH AIR FREIGHT PVT. LTD. BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) ON WHI CH THE TRIBUNAL AFTER CONSIDERING THE FACT THAT THE ASSESSEE CLAIMED TO H AVE DEDUCTED TAX ON THE PAYMENTS, HOWEVER, DUE TO THE RELEVANT RECORD DESTR OYED IN FLOOD, THE ASSESSEE COULD NOT PRODUCED THE SAME. THE LD. SENIOR COUNSEL HAS POINTED OUT THAT THE TRIBUNAL CONSIDERED THE FACT THAT THE ASSESSEE PROD UCED THE COPY OF COMPLAINT LODGED TO POLICE AUTHORITIES REGARDING DESTROY/LOSS OF RECORDS IN FLOOD, CONFIRMATION OF DEDUCTION OF TDS FROM PRAKASH AIR FREIGHT PVT. LTD., AND ALSO THE ACKNOWLEDGEMENT OF INCOME TAX COMPUTATION WHERE IN CREDIT OF TDS WAS FEDERAL EXPRESS 3 CLAIMED BY THE PRAKASH AIR FREIGHT PVT. LTD. SINCE THESE RECORDS REQUIRES PROPER VERIFICATION, THE ISSUE WAS SET ASIDE TO THE RECOR D OF THE AO TO VERIFY THE RELEVANT RECORD FROM THE DEPARTMENT INCLUDING THE ASSESSMENT RECORD OF PRAKASH AIR FREIGHT PVT. LTD. THE TRIBUNAL HAD ALSO DIRECTED TH E ASSESSEE TO FILE THE LEDGER ACCOUNT OF THE RESPECTIVE PARTIES IN THE BOOKS OF A CCOUNTS WHICH IS NOT POSSIBLE FOR THE ASSESSEE BECAUSE THE ENTIRE RECORD WAS DEST ROYED IN THE FLOOD AND EVEN OTHERWISE THE ASSESSEE WAS NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNTS IN INDIA BEING A TAX RESIDENT OF USA AND ENGAGED IN TH E BUSINESS ACTIVITIES OF SCHEDULED AIR CARGO OPERATIONS. THUS THE LD. SENIOR COUNSEL HAS PRAYED THAT THE DIRECTIONS OF THE TRIBUNAL TO THE ASSESSEE TO F ILE THE LEDGER ACCOUNT OF THE RESPECTIVE PARTIES MAY BE MODIFIED AND EXPUNGE WITH . 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT RECORD. WE FIND THAT WHILE DECIDING THE ISSUE IN PA RA 8, THE TRIBUNAL APART FROM DIRECTING THE AO TO VERIFY THE ASSESSMENT RECORDS O F PRAKASH AIR FREIGHT PVT. LTD., AS WELL AS THE DEPARTMENTS RECORD HAD ALSO D IRECTED THE ASSESSEE TO PRODUCE LEDGER ACCOUNTS OF THE RESPECTIVE PARTIES. SINCE THE ASSESSEE HAS SHOWN ITS INABILITY TO PRODUCE SUCH RECORDS DUE TO DAMAG E OF RECORD IN FLOOD WHICH WAS ACCEPTED BY US WHILE DECIDING THE ISSUE, THEREFORE, WE MODIFY PARA 8 AS UNDER:- HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL PRODUCED BEFORE US WE FIND THAT THE PAYMENT MADE TO PRAKASH AIR FREIGHT PVT. LTD. IS UNDISPUTEDLY UNDER AN AGREEMENT AND THEREFORE, SUBJ ECT TO DEDUCTION OF TAX U/S 194C. THE ASSESSEE DID NOT FILE ANY RECORD BEFORE T HE AO TO SHOW THAT TDS WAS DEDUCTED IN RESPECT OF THE PAYMENT MADE TO PRAKASH AIR FREIGHT PVT. LTD. HOWEVER, BEFORE THE CIT(A) THE ASSESSEE FILED A COPY OF COMP LAINT LODGE WITH THE POLICE AUTHORITIES REGARDING DESTROY OF RECORD IN FLOOD AS WELL AS A LETTER FROM PRAKASH AIR FREIGHT PVT. LTD. CONFIRMING DEDUCTION OF TDS. THE CIT(A) DID NOT ADMIT THE SAID EVIDENCE FILED BY THE ASSESSEE. BEFORE US THE ASSES SEE HAS ALSO FILED A COPY OF RETURN OF INCOME AND COMMUNICATION OF INCOME TAX CO MPUTATION WHEREIN CREDIT OF TDS OF ` 100,37,910/- AS PER 143(1) WAS SHOWN TO BE GIVEN. HOWEVER, IT IS NOT POSSIBLE TO ASCERTAIN FROM THE SAID FIGURE OF TDS W HETHER ANY PART OF THE SAID AMOUNT PERTAINS TO THE PAYMENTS MADE BY THE ASSESSE E TO M/S PRAKASH AIR FREIGHT PVT. LTD. THUS, FROM THE RECORD PRODUCED BE FORE US IT CANNOT BE ASCERTAIN CONCLUSIVELY THAT THE ASSESSEE HAS ACTUALLY DEDUCTE D THE TDS ON THE PAYMENT MADE TO THE PRAKASH AIR FREIGHT PVT. LTD. FURTHER T HE AMOUNT OF TDS ON THE PAYMENT IN QUESTION IS ALSO NOT KNOWN. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE SET ASIDE THIS IS SUE TO THE RECORD OF THE ASSESSING FEDERAL EXPRESS 4 OFFICER TO VERIFY THE RELEVANT RECORD INCLUDING THE ASSESSMENT RECORD OF PRAKASH AIR FREIGHT PVT. LTD. AS WELL AS RELEVANT RECORD OF THE DEPARTMENT. 5. NEXT GRIEVANCE OF THE ASSESSEE IS REGARDING NON ADJ UDICATION OF GROUND NO. 5. 6. WE HAVE HEARD THE LD. SENIOR COUNSEL AS WELL AS LD. DR AND CAREFULLY PERUSED THE IMPUGNED ORDER. WE FIND THAT GROUND NO. 4 AND 5 WERE TAKEN TOGETHER BUT WHILE GIVING FINDING IN PARA 8 THE GRO UND NO. 5 REMAINED UN- ADJUDICATED, THEREFORE, WE FIND THAT THERE IS AN AP PARENT MISTAKE IN THE IMPUGNED ORDER WHICH REQUIRES TO BE RECTIFIED. 7. BOTH THE PARTIES HAVE FAIRLY CONCEDED THAT SINCE GROUNDS NO. 4 AND 5 HAVE CONNECTED ISSUES AND GROUND NO. 4 HAS BEEN SET ASID E TO THE RECORD OF THE AO, THEREFORE, THE GROUND NO. 5 MAY ALSO BE SET ASIDE T O THE RECORD OF THE AO. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT WHEN GROUND NO. 4 AND 5 ARE INTERCONNECTED AND GROUND NO. 4 HAS BEEN SET ASIDE TO AO THEN GROUND NO. 5 IS ALSO SET ASIDE TO AO TO RECONSIDER THE ASSESSEES CLAIM THAT THE DISALLOWAN CE IF ANY MADE U/S 40(A)(IA), THE SAME SHALL BE ONLY WITH RESPECT TO THE PAYMENTS FOR USING THIRD PARTY AIR CRAFT ON WHICH THE BENEFIT OF ARTICLE 8 OF THE TREA TY HAS BEEN DENIED. ACCORDINGLY THE GROUND NO. 5 STANDS DISPOSED OFF. 9. THE THIRD MISTAKE POINTED OUT BY THE LD. SENIOR COU NSEL IS REGARDING THE GROUND NO. 6 MENTIONED AS GROUND NO. B IN THE GROUNDS OF APPEAL WHICH WAS ALSO NOT ADJUDICATED BY THE TRIBUNAL. 10. WE HAVE HEARD THE LD. SENIOR COUNSEL AS WELL A S LD. DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE GROUND NO. B IS REGARDING LEVY OF INTEREST U/S 234(B) OF THE ACT. WE NOTE THAT THIS I SSUE IS SETTLED IN FAVOUR OF THE FEDERAL EXPRESS 5 ASSESSEE IN VIEW OF THE VARIOUS DECISIONS OF HONBL E JURISDICTIONAL HIGH COURT AND EVEN IN THE CASE OF THE ASSESSEE THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT A GAINST WHICH THE REVENUE PREFERRED THE SLP BEFORE THE HONBLE SUPREME COURT WHICH HAS BEEN DISMISSED VIDE ORDER DATED 7.02.2011. THE HONBLE HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION). VS. NGC NETWOR K ASIA LLC ( 313 ITR 187) (BOM) HELD THAT WHEN A DUTY IS CAST ON THE PAYER TO PAY THE TAX AT SOURCE, ON FAILURE, NO INTEREST CAN BE IMPOSED ON THE PAYEE ASSESSEE. THUS IT WAS H ELD THAT THE PAYMENT TO NON RESIDENT IS SUBJECTED TO TDS, THEREFORE, FAILUR E ON DEDUCTION OF TDS AT SOURCE WOULD NOT LEAD TO LEVY OF INTEREST U/S 234(B ) ON A NON RESIDENT ASSESSEE. SINCE THE ISSUE OF LEVY OF TAX U/S 234(B) IS COVERE D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, ACCORDINGLY WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 11. IN THE RESULT MISCELLANEOUS APPLICATION FILED B Y THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 21-03- 2014 SD/- SD/- ( RAJENDRA ) ( VIJAY PAL RAO ) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; MUMBAI DATED 21-03-2014 SKS SR. P.S,