SODEXO SVC INDIA PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (TDS)-2(2), MUMBAI

MA 576/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4736 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 01-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UODHALRAJ SINGH
• Keywords: Opportunity of being heard; Principle of natural justice; TDS; Set aside
• Section: 133A; 194C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) MA NO S . 576 , 577, 578 & 579 /MUM/2019 ( ITA NO S . 932 , 933, 934 & 935 /MUM/2019 ) ASSESSMENT YEAR S : 2013 - 14 , 2014 - 15, 2015 - 16 & 2016 - 17 SODEXO SVC INDIA PVT. LTD., 503 & 504, 5 TH FLOOR, B WING, HIRANANDANI FULCRUM, SAHAR ROAD, ANDHERI EAST, MUMBAI - 400099 . VS. DEPUTY COMMISSIONER OF INCOME TAX (TDS) - 2(2), ROOM NO. 717, SMT. K.G. MITTAL AYURVEDIC HOSPITAL BLDG., CHARNI ROAD (W), MUMBAI - 400002 . PAN NO. AALCS9822Q APPELLANT RESPONDENT ASSESSEE BY : MR. F.B. ANDHYARUJINA, MR. GAUTAM THACKER, MR. YAZDI P. JIJINA, ARS REVENUE BY : MR. UODHAL RAJ SINGH, DR DATE OF HEARING : 13/12/2019 DATE OF PRONOUNCEMENT : 25/02/2020 ORDER PER N.K. PRADHAN, AM BY MEANS OF TH E SE MISCELLANEOUS APPLICATION S (MA S ), THE APPLICANT SEEKS RECALL OF THE ORDER DATED 07.10.2019 PASSED BY THE ITAT G BENCH MUMBAI (ITA NO. 932 - 935/MUM/2019) FOR AYS 2013 - 14 TO 2016 - 17. 2. BEFORE US, THE LD. COUNSEL FOR THE APPLICANT SUBMITS THAT THE RELIANCE PLACED BY THE TRIBUNAL ON THE DECISION IN THE MATTER OF BOVIS LEND LEASE (I) PVT. LTD. V. ITO 127 TTJ 25 (BANG - TRIB.), WHICH WAS NOT CITED OR DISCUSSED BY EITHER THE APPLICANT OR THE RESPONDENT AT ANY STAGE NOR MENTIONED BY THE SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 2 HONBLE MEMBERS DURING THE ORIGINAL HEARING OR EVEN WHEN THE APPEAL WAS RE - FIXED FOR CLARIFICATIONS BY THE TRIBUNAL AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, SUFFERS FROM PATENT MISTAKES APPARENT FROM RECORD. FURTHER, IT IS STATED THAT NON - CONSIDERATION OF THE DECISION OF THE HONBLE S UPREME COURT VIS - A - VIS THE APPLICANTS BUSINESS OPERATION IN THE APPELLANTS OWN CASE VIZ . SODEXO SVC INDIA PVT. LTD. V. STATE OF MAHARASHTRA & ORS [2016 (331) ELT 23(SC)] IN THE OPERATIVE PART OF THE ORDER PASSED BY THE TRIBUNAL IS A MISTAKE APPARENT FROM RECORD. ALSO IT IS STATED THAT THE NON - CONSIDERATION IN THE OPERATIVE PART OF THE ORDER OF THE FRAMEWORK WITHIN WHICH THE APPLICANT OPERATED I.E. THE RBI REGULATIONS/GUIDELINES GOVERNING THE MANNER IN WHICH THE APPLICANT NECESSARILY CARRIED OUT ITS OWN BU SINESS OPERATIONS INCLUDING REQUIREMENT OF ENTERING INTO A CONTRACT WITH ITS AFFILIATES AND THE MAINTENANCE OF AN ESCROW ACCOUNT FROM WHICH REIMBURSEMENT OF CLAIMS RECEIVED FROM THE APPLICANTS AFFILIATES WERE MADE IS A MISTAKE APPARENT FROM RECORD. FURT HER, IT IS STATED THAT THE CUMULATIVE CONDITIONS REQUIRED FOR THE APPLICABILITY OF SECTION 194C OF THE INCOME TAX ACT, 1961 (THE ACT) TO THE ISSUE AT HAND WERE NOT CONSIDERED AND WHETHER THE SAID PROVISION WAS AT ALL APPLICABLE TO THE APPLICANTS TRANSACTI ONS WITH ITS AFFILIATES HAS NOT BEEN ADJUDICATED BY THE TRIBUNAL. IT IS STATED THAT THE TRIBUNAL HAS GROSSLY ERRED IN PARAGRAPHS 9.2 AND 9.3 OF THE IMPUGNED ORDER BY MAKING VAGUE STATEMENTS SUCH AS .... SOME EXAMPLES OF DOCUMENTS TO BE CONSIDERED..., .. ..THE DOCUMENTS WHICH COULD LEAD TO IT HAVE NOT BEEN FILED COMPLETELY BY THE APPELLANT... AND DIRECTING THE APPLICANT TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. THUS IT IS EXPLAINED THAT THIS IS ALSO A MISTAKE APPARENT ON RECORD SINCE ALL TH E RELEVANT DOCUMENTS, INCLUDING AGREEMENTS WITH ITS AFFILIATES AND ALL SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 3 POSSIBLE DETAILS REQUIRED TO DECIDE THE ISSUE AT HAND HAVE BEEN DULY FILED FOR THE RELEVANT ASSESSMENT YEAR AND ARE ALREADY ON RECORD. WITH THE ABOVE SUBMISSIONS, THE LD. COUNSEL SUBMI TS THAT THE TRIBUNAL MAY BE PLEASED (I) TO RECALL ITS ORDER DATED 07.10.2019, (II) TO RECTIFY THE MISTAKES APPARENT ON RECORD AS AFORESAID IN THE ORDER AND ADJUDICATE THE APPLICANTS APPEAL ON MERITS, (III) TO PASS SUCH ORDER AS THE NATURE AND CIRCUMSTANCE S OF THE CASE MAY REQUIRE. 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) EXPLAINS THAT IN PLACE OF AT PARA 9.1 APPEARING IN PARA 9.3 OF THE IMPUGNED ORDER, THE CORRECT AT PARA 9.2 MAY BE MENTIONED THROUGH RECTIFICATION. FURTHER, IT IS STATED BY HIM THAT ONCE THE ABOVE MISTAKE IS RECTIFIED, THERE IS NO MISTAKE APPARENT FROM RECORD IN THE IMPUGNED ORDER PASSED BY THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIALS ON RECORD. THE DECISION AS PER THE IMPUGNED ORDER IS RE - PRODUCED BELOW : 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. AS MENTIONED EARLIER, ON 21.01.2016, A SURVEY U/S 133A (2A) OF THE ACT WAS COND UCTED BY THE DEPARTMENT TO VERIFY THE COMPLIANCE BY THE APPELLANT TO THE PROVISIONS OF CHAPTER XVIIB OF THE ACT. A STATEMENT OF MR. PRAMUL SAXENA, CHIEF FINANCIAL OFFICER OF THE APPELLANT WAS ALSO RECORDED BY THE AO U/S 131 OF THE ACT. BECAUSE OF THE FINDI NGS IN THE SURVEY, THE ORDER IN EARLIER YEARS WILL HAVE NO BINDING EFFECT IN THE CURRENT YEAR. IN INSTALMENT SUPPLY (PVT.) LTD. V. UOI , AIR 1976 SC 53, IT IS OBSERVED BY THE HONBLE SUPREME COURT THAT IN TAX MATTERS, THERE IS NO QUESTION OF RES JUDICATA BE CAUSE EACH YEARS ASSESSMENT IS FINAL ONLY FOR THAT YEAR AND DOES NOT GOVERN LATER YEARS. SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 4 9.1 AS MENTIONED HEREINBEFORE, THE CONTENTIOUS ISSUE HERE IS WHETHER THE PAYMENTS MADE BY THE APPELLANT TO ITS AFFILIATES ARE REIMBURSEMENT OR NOT. THE APPELLANT CL AIMS IT AS REIMBURSEMENTS, WHEREAS THE REVENUE DISPUTES IT. THEREFORE, IT WOULD BE PERTINENT TO EXAMINE BELOW THE CO - ORDINATES OF REIMBURSEMENTS. IN BOVIS LEND LEASE (I) P. LTD. V. ITO 127 TTJ 25 (BANG - TRIB), IT IS OBSERVED THAT THE FOLLOWING PARAMETERS ARE ESSENTIAL FOR A PAYMENT TO BE REGARDED AS REIMBURSEMENT: THE ACTUAL LIABILITY TO PAY SHOULD BE OF THE PERSON WHO REIMBURSES THE MONEY TO THE ORIGINAL PAYER. THE LIABILITY SHOULD BE CLEARLY DETERMINED, IT SHOULD NOT BE AN APPROXIMATE OR VARYING AMOUNT . THE LIABILITY SHOULD HAVE CRYSTALLIZED. IN OTHER WORDS, THE REASON GIVEN THAT PAYMENTS THAT WERE NEVER REQUIRED BUT WERE MADE JUST AVOID A POTENTIAL PROBLEM MAY NOT QUALIFY. THERE SHOULD BE A CLEAR ASCERTAINABLE RELATIONSHIP BETWEEN THE PAYING AND REIMBU RSING PARTIES. THEREFORE, REIMBURSEMENT BY AN UNCONNECTED PERSON MAY NOT QUALIFY. THE PAYMENT SHOULD FIRST BE MADE BY SOMEBODY WHOSE LIABILITY IT NEVER WAS AND THE REPAYMENT SHOULD THEN BE MADE TO THAT PERSON TO SQUARE OFF THE ACCOUNT. THREE PARTIES SHOULD EXIST IN A CASE OF REIMBURSEMENT - A PAYER, A PAYEE AND A REIMBURSER (I.E. THE PERSON REIMBURSING THE AMOUNT OF THE PAYER). FURTHER IT IS WELL SETTLED THAT THE BASIC INGREDIENT IS THAT THERE IS NO PROFIT ELEMENT IN THE AMOUNT REIMBURSED. 9.2 WE MAY MENTIO N HERE SOME EXAMPLES OF DOCUMENTS TO BE CONSIDERED IN THE CONTEXT OF TRANSACTIONS INVOLVING REIMBURSEMENTS, WHICH ARE LISTED BELOW. WRITTEN AGREEMENT BETWEEN THE PARTIES. INVOICES OR DEBIT NOTES RAISED BY THE PARTIES. SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 5 AGREEMENT ENTERED BY LEAD COMPANY W ITH THIRD PARTIES AND INVOICES RAISED BY THE THIRD PARTIES TOWARDS REIMBURSABLE EXPENSES INCURRED BY THE LEAD COMPANY. 9.3 HAVING EXAMINED THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE PARAMETERS AS MENTIONED AT PARA 9.1 HEREINABOVE HAVE NOT BEEN EX AMINED BY THE AO OR THE LD. CIT(A). FURTHER, IT IS OBSERVED THAT THE DOCUMENTS WHICH COULD LEAD TO IT HAVE NOT BEEN FILED COMPLETELY BY THE APPELLANT BEFORE THE AO OR THE LD. CIT(A). THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATT ER TO THE FILE OF THE AO OF MAKE A DE NOVO ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. WE DIRECT THE APPELLANT TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. AS THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, WE A RE NOT ADVERTING TO THE CASE LAWS RELIED ON BY BOTH THE SIDES. 10. FACTS BEING IDENTICAL, OUR DECISION FOR THE AY 2013 - 14 APPLIES MUTATIS MUTANDIS TO AYS 2014 - 15, 2015 - 16 AND 2016 - 17. 11. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 4.1 WE HAVE SPECIFICALLY STATED THAT THE DOCUMENTS WHICH COULD LEAD TO THE PARAMETERS AS MENTIONED AT PARA 9.1 OF THE IMPUGNED ORDER HAVE NOT BEEN FILED COMPLETELY BY THE APPELLANT BEFORE THE AO OR THE LD. CIT(A). THIS HAS BEEN STATED AFTER EXAMINATION OF THE DOCUMENTS FILED BEFORE THE TRIBUNAL. AS THE SAID DOCUMENTS WERE NOT FILED COMPLETELY BY THE APPELLANT EITHER BEFORE THE AO OR THE LD. CIT(A), WE FELT IT UNNECESSARY TO DELIBERATE ON THE C ASE - LAWS RELIED ON BY BOTH SIDES AND ACCORDINGLY, WE SET ASIDE THE OR DER OF THE LD. CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. WE ALSO DIRECTED THE APPELLANT TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. SPECIFICA LLY, WE HAVE MENTIONED THAT AS SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 6 THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, WE ARE NOT ADVERTING TO THE CASE - LAWS RELIED ON BY BOTH THE SIDES. HOWEVER, THERE IS MERIT IN THE SUBMISSION OF THE LD. COUNSEL THAT THE RELIANCE PLACED BY THE TRIBUNAL ON THE DECISION IN THE MATTER OF BOVIS LEND LEASE (I) PVT. LTD. (SUPRA), WHICH WAS NOT CITED OR DISCUSSED BY EITHER THE APPLICANT OR THE RESPONDENT AT ANY STAGE NOR MENTIONED BY THE HONBLE MEMBERS DURING THE ORIGINAL HEARING BEFORE THE TRIBUNAL OR EVEN WHEN THE APPEAL WAS RE - FIXED FOR CLARIFICATIONS BY THE TRIBUNAL AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, THE IMPUGNED ORDER SUFFERS FROM PATENT MISTAKE APPARENT ON RECORD. AS PER THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COUR T IN INVENTURE GROWTH & SECURITIES LTD. V. ITAT (2010) 324 ITR 319 (BOM), THE FINDING ARRIVED AT IN THE IMPUGNED ORDER ON THE BASIS OF THE DECISION IN BOVIS LEND LEASE (I) PVT. LTD. (SUPRA) SHOULD HAVE BEEN BROUGHT TO THE NOTICE OF THE CONCERNED PARTIES. I NADVERTENTLY, THE BENCH FAILED TO BRING TO THE NOTICE OF THE PARTIES THE ABOVE DECISION. 5. IN VIEW OF THE ABOVE FACTS AND POSITION OF LAW, WE RECALL OUR ORDER DATED 07.10.2019 AND DIRECT THE REGISTRY TO FIX THE CASE FOR HEARING BEFORE A REGULAR BENCH, AFTER INFORMING BOTH THE PARTIES. 6. IN THE RESULT, THE MAS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/02/2020. SD/ - SD/ - (PAWAN SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 25/02/2020 RAHUL SHARMA SR,P.S. SODEXO SVC INDIA PVT. LTD . MA NOS. 576 & ORS /MUM/2019 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( DY./ASSISTANT REGISTRAR ) ITAT, MUMBAI