SEASHELL LOGISTICS P. LTD, V. ITO 10(3)(4),

MA 393/MUM/2013

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3770 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S BISTDR
• Assessee Lawyers: S C TIWARI
• Section: 194C

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI I BENCH , , BEFORE S/SH. JOGINDER SINGH,JUDICIA L MEMBER & RAJENDRA,ACCOUNTANT MEMBER / MA NO.393/MUM/2013 (ARISING OUT OF / ITA NO.2264/MUM/2013) /ASSESSMENT YEAR-2009-10 M/S. SEASHELL LOGISTICS PVT. LTD. 211/212, MONARCH PLAZA, 2/33, SECTOR-11, CBD BELAPUR NAVI MUMBAI-400 614 PAN: AALCS 1893 B VS INCOME TAX OFFICER WARD 10(3)(4) MUMBAI. ( / APPLICANT) ( !' / RESPONDENT) /ASSESSEE BY :SHRI S.C. TIWARI # / REVENUE BY :SHRI B.S. BIST-DR / DATE OF HEARING : 16/10/2015 / DATE OF PRONOUNCEMENT : 11/12/2015 / ORDER ! '# PER RAJENDRA, AM - VIDE ITS APPLICATION,DATED 22.10.13,THE ASSESSEE CO MPANY HAS STATED THAT THERE WERE MISTAKES APPARENT IN THE ORDER PASSED BY THE TRIBUNAL ON 05. 07.13,THAT SAME HAVE TO BE RECTIFIED AS PER THE PROVISIONS OF SECTION 254(2) OF THE ACT. IN ITS APPLICATION,THE ASSESSEE HAS STATED THAT IT HAD DISPUTED THE DISALLOWANCE U/S.40(A)(IA) OF THE ACT,AMOUNTING TO RS.19.76 LACS BEING FREIGHT CHARGE S PAID TO NON-RESIDENT SHIPPING COMPANIES, THAT THE DISPUTED AMOUNT COMPRISED OF RS.16.01 LACS PAID TO TWO UAE SHIPPING COMPANIES AND RS.3.74 LACS PAID THROUGH 12 INDIAN PARTIES BY WAY OF FREIGHT CHARGES TO NON-RESIDENT SHIPPING COMPANIES, THAT THE TRIBUNAL HAD UPHELD THE DISALLO WANCE OF RS.3.74 LACS, ON THE GORUND THAT PAYMENT WAS MADE TO INDIAN PARTIES, THAT PAYMENT OF FREIGHT CHARGES DID NOT REPRESENT THE INCOME OF INTERMEDIARIES, THAT THE ERROR IN THE ORD ER OF THE TRIBUNAL WAS PATENT ON THE FACTS.IT WAS FURTHER STATED THAT THE TRIBUNAL HAD UPHELD THE DIS ALLOWANCE U/S. 194C R.W.S.40(A)(IA) FOR ALLEGED NON DEDUCTION OF TAX AT SOURCE FROM RS.73.99 LACS B EING CFS CHARGES PAID BY THE ASSESSEE ON BEHALF OF ITS CLIENTS, THAT THE TRIBUNAL HAD HELD T HAT THE ASSESSEE HAD MADE PAYMENT AS CONTRACTOR FOR AVAILING CFS FACILITIES, THAT THE CFS CHARGES P AID BY IT WAS WORK EXECUTED BY THE ASSESSEE IN THE NATURE OF CONTRACT, THAT IT WAS LIABLE TO DEDUC T TDS, THAT THE DISALLOWANCE HAD NOT BEEN MADE FOR NON DEDUCTION OF TAX FROM PAYMENTS MADE TO THE ASSESSEE BY ITS CLIENTS, A DISALLOWANCE HAD BEEN MADE FOR NON DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE TO THE CFS OPERATORS, THAT CFS OPERATORS WERE UNDER THE CONTROL AND SUPERVISION OF CUSTOMS AUTHORITIES, THEY WERE NOT UNDER CONTRACTUAL OBLIGATION WITH THE ASSESSEE OR ITS CLI ENTS.THE APPLICATION IS ACCOMPANIED BY AN AFFIDAVIT DATED 22.10.13 OF MR. RAMESH BABU, MANAGI NG DIRECTOR OF THE COMPANY. 2. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPESENTATIVE (AR) MADE ARGUMENTS REGARDING CFS CHARGES AMOUNTING TO RS.73,99,872/-. HE DID NOT ADVANCE ANY ARGUMENTS ABOUT THE DISALLOWANCE OF RS.3.74 LACS.WE FIND WHILE DEAL ING WITH GROUND NO.2-3, THE TRIBUNAL HAD GIVEN ITS FINDING AT PARA NO.13 AS UNDER :- MA NO.393/MUM/2013,AY.09-10 2 13.AT THE OUTSET, WE MAY STATE THAT THE CASES CITE D BY THE LD. AR (SUPRA) ARE NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US.IN THE CASE OF M/S RANK SHIPPING AGENCY PVT. LTD (SUPRA), WE OBSERVE THAT THE ASSESSEE MADE VARIOUS PAYMENTS ON BEHALF O F THE CLIENTS WHICH WERE SEPARATELY COLLECTED AND WERE NOT RECORDED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNTS AS INCOME BUT GOT ADJUSTED IN THE CLIENTS ACCOUNT.BEING THE PAYMENTS MADE ON THEI R BEHALF TO VARIOUS PERSONS/ AGENCIES, INCLUDING THE GOVERNMENT FOR CUSTOM DUTY AND IN THA T CONTEXT THE ISSUE BEFORE THE TRIBUNAL WAS WHETHER THE ASSESSEE SHOULD HAVE CONSIDERED THE SAI D AMOUNT AS ASSESSEES EXPENDITURE OR NOT. SINCE THE ASSESSEE HADNOT CLAIMED THE SAID EXPENDIT URES IN ITS PROFIT AND LOSS ACCOUNT, THE TRIBUNAL HELD THAT INVOCATION OF THE PROVISIONS OF SECTION 4 0(A)(IA) DOES NOT ARISE. HOWEVER, IN THE CASE OF FREIGHT SYSTEMS (INDIA) (P) LTD (SUPRA), THE ISSUE WAS REGARDING THE PAYMENT OF OCEAN FREIGHT AND INLAND HAULAGE CHARGES WHICH WERE PAID TO THE RESP ECTIVE SHIPPING LINES WITHOUT DEDUCTING TDS. IT WAS HELD THAT NO TDS WAS REQUIRED TO BE DEDUCTE D U/S 194C OF THE ACT. THE AGENTS OF THE FOREIGN SHIPPING LINES CONFIRMED VIDE THEIR LETTE R THAT THEY WERE FILING RETURN U/S 172 OF THE ACT AND INCLUDED THE INLAND HAULAGE CHARGES IN SUCH RET URN TO COMPUTE THEIR TAX LIABILITY PAYABLE U/S 172 OF THE ACT. IN THAT CONTEXT IT WAS HELD THAT A S PER SECTION 172 (8) OF THE ACT AND THE SUBMISSION S MADE BY THE AGENTS OF THE FOREIGN SHIPPING LINES, T HERE IS NO DOUBT OR AMBIGUITY THAT INLAND HAULAGE IS ALSO COVERED U/S 172 AND THEREFORE THE PROVISIO NS OF SECTION 194C IS NOT APPLICABLE. WE FIND THAT THE ISSUE AND THE FACTS IN THE CASE BEFORE US ARE DIFFERENT AND HENCE THE SAID DECISION OF THE DELHI BENCH OF THE TRIBUNAL IS NOT APPLICABLE TO T HE FACTS OF THE PRESENT CASE AS WELL AS THE ISSUE BEFORE US. SIMILARLY, THE DECISION OF THE KOLKOT A BENCH OF THE TRIBUNAL IN THE CASE OF MITRA LOGISTIC (P) LTD. (SUPRA) IS NOT RELEVANT BECAUSE I N THAT CASE THE AMOUNT WAS NOT CLAIMED AS EXPENDITURE IN PROFIT AND LOSS ACCOUNT AND IN THAT CONTEST IT WAS HELD THAT THERE WAS NO QUESTION OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT. WE ALSO OB SERVE THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CARGO LINKERS (SUPRA) IS NOT APPLICABLE OF THE FACTS OF THE CASE BEFORE US. IN THAT CASE THE ASSESSEE WAS BOOKING CARGO FOR TRANS PORTATION ABROAD FOR VARIOUS AIRLINES OPERATING IN INDIA. IT COLLECTED FREIGHT CHARGES FROM EXPOR TERS WHO INTENDED TO SEND GOODS THROUGH A PARTICULAR AIRLINES AND PAID AMOUNT TO AIRLINE OR I TS GENERAL SALES AGENT AND FOR SERVICES RENDERED, ASSESSEE CHARGED COMMISSION FROM AIRLINES. IN THA T CASE, IT WAS ONLY COMMISSION WHICH WAS RECEIVED BY THE ASSESSEE FROM THE AIRLINES ON THE C ARGO IT BOOKED ON BEHALF OF THE TRANSPORTERS, THUS, IT WAS HELD THAT THE ASSESSEE WAS NOT PERSONALLY RE SPONSIBLE FOR MAKING ANY PAYMENT IN TERMS OF SECTION 194C OF THE ACT AND THE DISALLOWANCE MADE B Y THE AO WAS HELD NOT JUSTIFIED, BY UPHOLDING THE ORDER OF THE TRIBUNAL. IN THE CASE BEFORE US , IT IS NOT THE CASE THAT IT IS ONLY COMMISSION WHI CH THE ASSESSEE HAS RECEIVED FOR CARRYING OUT THE JOB BUT THE ASSESSEE HAS EXECUTED THE CONTRACT ON BEHALF OF ITS CLIENTS BY MAKING THE SAID PAYMENTS AND THEREFORE, THE ASSESSEE IS THE PERSON WHO IS LIABLE TO DEDUCT TDS ON THE PAYMENTS MADE TO THE P AYEES. THEREFORE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT GROUND NO.3 TAKEN BY THE ASSESSEE . 3. THE TRIBUNAL HAD GIVEN A FINDING OF FACT THAT THE A SSESSEE HAD EXECUTED THE CONTRACT ON BEHALF OF ITS CLIENTS BY MAKING THE SAID PAYMENTS, THAT TH E ASSESSEE WAS THE PERSON WHO WAS LIABLE TO DEDUCT THE TDS ON PAYMENT MADE TO THE PAYEES. IN OU R OPINION, THERE IS NO MISTAKE APPARENT ON RECORD IN THE IMPUGNED ORDER OF THE TRIBUNAL. 4. NOW, WE WOULD TAKE THE ISSUE OF CFS CHARGES.BEFORE US, THE AUTHORISED REPRESENTATIVE (AR) ARGUED THAT THE FINDINGS GIVEN BY THE TRIBUNAL IN P ARA -17 WERE CONTRARY TO THE FACTS,THAT THE ASSESSEE WAS NOT A CONTRACTOR,THAT THE PROVISIONS O F SECTION 194C WERE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER APPEAL,THAT THE TRIBUNAL HAD NOT GIVEN ANY FINDING ABOUT EXISTENCE OF WORK CONTRACT,THAT NATURE OF THE JOB CARRIED OUT BY THE ASSESSEE WAS NOT IMPORTANT THAT NATURE OF JOB OF THE PAYEE WAS NOT IGNORED.HE RELIED UPON THE CASES OF DHIRAJ GIRDHARLAL(26ITR36) AND DAULATRAO 87ITR349.) MA NO.393/MUM/2013,AY.09-10 3 DEPARTMENTAL REPRESENTATIVE DR ARGUED THAT THE FAA HAD ANALYSED THE CONTRACTS,THAT THERE WAS NO MISTAKE IN THE ORDER OF THE TRIBUNAL,THAT THE AS SESSEE WANTED REVIEW OF THE ORDER PASSED BY THE TRIBUNAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEAL THE TRIBUNAL HAD DELIBERATED UP ON ALL THE ARGUMENTS TAKEN BY THE ASSESSEE AND DECIDED THE ISSUE,THAT THE ASSESSEE HAD FILED A N APPEAL BEFORE THE HONBLE COURT AND HAS CHALLENGED THE ORDER OF THE TRIBUNAL. BEFORE PROCEEDING FURTHER WE WANT TO DISCUSS THE CA SES RELIED UPON BY THE AR.IN OUR OPINION BOTH THE CASES LAY DOWN CERTAIN GENERAL PRINCIPLES AND DO NOT DEAL DIRECTLY WITH THE PROVISIONS OF SECTION 194C OF THE ACT.THE ISSUE DECIDED BY THE TR IBUNAL WAS FAILURE OF THE ASSESSEE TO DEDUCT TAX FOR CERTAIN PAYMENTS MADE BY IT.THE AO AND THE FAA CONSIDERING ALL THE FACTS HAD GIVEN FINDING OF FACT IN THAT REGARD AND THE TRIBUNAL HAD ENDORSED THE SAME AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES.AS THE CASES RELIED UPO N DO NOT DEAL WITH THE PECULIAR FACTS OF THE CASE BEFORE US,SO,WE ARE OF THE OPINION THAT SAME A RE OF NO HELP TO THE ASSESSEE. HERE,WE WOULD ALSO LIKE TO MENTION THAT THE SCOPE O F SECTION 254(2) OF THE ACT IS VERY LIMITED AND SPECIFIC.IF A MISTAKE IS SO GLARING THAT ON THE FACE OF IT SAME HAS TO BE AMENDED,THEN ONLY THE PROVISIONS OF SECTION 254(2)CAN BE INVOKED.IT IS SA ID THAT THE SECTION IS LIMITED TO MISTAKE APPARENT FROM RECORD LIKE ARITHMETICAL ERRORS,TYPOG RAPHICAL MISTAKES,NON-ADJUDICATION OF GROUND OF APPEAL OR NON-CONSIDERATION OF A JUDGMENT OF HON BLE SUPREME COURT OR JURISDICTIONAL HIGH COURT HAVING DIRECT BEARING ON THE CASE.HONBLE DEL HI HIGH COURT HAS,IN THE MATTER OF GEOFIN INVESTMENT (P.) LTD.,DESCRIBED THE CONCEPT OF MISTA KE APPARENT FROM RECORD AS UNDER: THE POWER IS CIRCUMSCRIBED AND LIMITED. THERE SHOUL D BE A MISTAKE WHICH IS APPARENT BEFORE THE POWER CAN BE EXERCISED. THIS IS A MANDATORY PRE-CON DITION. THE TRIBUNAL IN ITS ORDER REFERRED TO THE CONTROVERSY IN QUESTION RELATING TO THE DISALLO WANCE MADE ON ACCOUNT OF SHORT-TERM CAPITAL LOSS AND LONG-TERM CAPITAL LOSS. THE ENTIRE ISSUE W AS EXAMINED ON THE MERITS INCLUDING THE JUDGMENTS RELIED UPON BY THE ASSESSEE. AFTER EXAMIN ING THE MATTER IN DETAIL, IT ALLOWED THE APPEAL FILED BY THE REVENUE. (348ITR118). FOLLOWING IS THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT HAS IN THE CASE OF RAMESH ELECTRICALS (203ITR497): UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 1961, THE APPELLATE TRIBUNAL MAY, 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD', A MEND ANY ORDER PASSED BY IT UNDER SUB- SECTION (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIEW ITS OWN ORDERS UNDER THE PROVISIONS OF THE ACT. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES IS TO RECTI FY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPARENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. FAI LURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSI ON IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUN AL CANNOT, IN THE EXERCISE OF ITS POWER OF RECTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCES W HICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION. FROM THE ABOVE,IT IS CLEAR THAT TRIBUNAL HAS GOT LI MITED POWER TO RECTIFY MISTAKE U/S.254(2) OF THE ACT.IT HAS NO POWER TO REVIEW THE MATTERS DECIDED B Y IT .IN THE CASE BEFORE US,THE ASSESSEE HAS NOT MA NO.393/MUM/2013,AY.09-10 4 POINTED OUT ANY ARITHMETICAL MISTAKE IN THE ORDER O F THE TRIBUNAL NOR HAS HE PROVED THAT LEGAL POSITION TAKEN BY THE TRIBUNAL HAS ALTERED BECAUSE OF SUBSEQUENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT OR THE HONBLE APEX COURT .THE TRIBUNAL HAS DECIDED THE ISSUE AFTER CONSIDERING ALL THE FACTS AND PROVISIONS OF LAW.EVE N IF THERE IS MISTAKE OF JUDGMENT,AS POINTED OUT IN THE MATTER OF RAMESH ELECTRICALS(SUPRA),SAME CANNOT BE RECTIFIED U/S.254(2)OF THE ACT.WE ARE OF THE OPINION THAT ,THE ASSESSEE WANTS US TO R EVIEW THE MATTER,BUT,AS STATED EARLIER SAME IS NOT POSSIBLE.THE REMEDY IN SUCH SITUATION IS TO APP ROACH THE HONBLE HIGH COURT.IN SHORT,THERE IS NO MISTAKE IS APPARENT IN THE IMPUGNED ORDER OF THE TRIBUNAL.THEREFORE, WE ARE OF THE OPINION THAT APPLICATION FILED BY THE ASSESSEE DESERVES TO BE REJECTED. AS A RESU LT,MA FILED BY THE ASSESSEE STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 TH DECEMBER,2015. 11 TH , 2015 SD/- SD/- ( /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER /MUMBAI, /DATE: 11.12.2015 . . . JV.SR.PS. 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , I , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.