Appeal details
Counselvise Citation
133520514 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-05-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
29-04-2011
Assessment Year
2007-2008
Appeal Filed On
28-04-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI T.K. SHARMA, JUIDICIAL MEMBER AND A.K. GARODIA, ACCOUNTANT MEMBER) ITA NO.1335/AHD/2010 [ASSTT. YEAR : 2007-2008] M/S. OM SATYA EXIM PVT. LTD. VIDHATA SHOPPING CENTRE 1 ST FLOOR, OPP: RELIANCE PETROL PUMP BHESTAN, SURAT. PAN : AACO 7985 P VS. ITO, WARD-1(4) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA REVENUE BY : SHRI R.K. DHANESTA O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS)-I, SURAT DATED 10.03.2010 FOR ASSESSMENT YEAR 2007-2008. 2. THE SOLE EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD.CIT(A) HAS ERRED IN PARTLY C ONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF CUSTOM H OUSE AGENT EXPENSES OF RS.5,49,374/- OUT OF TOTAL RS.6,96,957/ - U/S.40(A)(IA) OF THE IT ACT FOR NON-DEDUCTION OF TAX U/S.194C FROM T HE PAYMENTS IN THE NATURE OF REIMBURSEMENT. 3. BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE-COMPANY HAS DEBI TED TO THE PROFIT AND LOSS ACCOUNT C&F CHARGES OF RS.7,41,845/-, FREIGHT AND OCTROI CHARGES AT RS.10,07,444/- WHICH INCLUDED OCEAN FREIGHT PAYMENT OF RS.4,66,299/-. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF SUCH ITA NO.1335/AHD/2010 -2- PAYMENTS MADE DURING THE YEAR. THE ASSESSING OFFIC ER ALSO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE ASSESSEE COMPANY HAS NOT DEDUCTED TDS AT ELIGIBLE RATES ON PAYMENTS MADE TO C&F AGENT, OCEAN FREIGHT, FREIGHT & INTEREST PAYMENT AND HENCE, WHY THE SAME SHOULD NOT BE DISALLOWED AS PER PROVISIONS OF SECTION 40(A)(IA) O F THE ACT. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE SAID COMPANY HAS DEDUCTED THE TDS ON CHARGES PAID TO C&F AGENTS I.E. UKINEX COMMERCIAL SERVICES. IT WAS ALSO SUBMITTED THAT REGARDING REIMBURSEMENT OF EXPENSE, THE TDS IS NOT REQUIRED T O BE DEDUCTED IN VIEW OF CBDT CIRCULAR NO.715. REGARDING THE OCEAN FREIGHT, IT WAS SUBMITTED THAT THE PAYMENT WAS PAID TO NON-RESIDENT COMPANY AND HENCE, SECTION 194C IS NOT APPLICABLE TO SUCH PAYMENTS. THE ASSESSING OFFICER HAD NOTED AT PAGE NO.3 OF THE IMPUGNED ORDER THAT T HE ASSESSEE HAS FAILED TO DEDUCT TDS UNDER SECTION 194C ON THE BALANCE PAY MENT MADE TO M/S.UKINEX COMMERCIAL SERVICES, MUMBAI OF RS.6,96,9 57/- CLAIMING THAT THE SAME WAS IN THE NATURE OF REIMBURSEMENT. THE ASSESSING OFFICER MADE ADDITION OF THE SAME BY INVOKING THE PROVISION S OF SECTION 40(A)(IA). 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), BUT WITHOUT S UCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT IS SUBMITTED BY THE LEARNED COUNSEL BEFORE US THAT THIS ISSUE IS NOW FULLY COVERED IN FAVOR OF THE ASSESSEE BY FOLLO WING TRIBUNAL DECISIONS. COPIES OF WHICH ARE ALSO GIVEN IN THE P APER BOOK OF THE ASSESSEE, I) JAIDPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT, 26 DTR 7 9 (2009); II) ACITDICON NETWORK P. LTD., 14 SOT 204 (DEL) ITA NO.1335/AHD/2010 -3- III) ITO VS. DR. WILLMAR SCHWABE INDIA P. LTD., 95 TTJ 5 3 (DEL) IV) TRANSMISSION CORPN. OF AP LTD. VS. CIT, 239 ITR 587 (SC); V) ACIT VS. GRANDPRIX FAB P. LTD., 128 TTJ 60 (DEL). 6. IT IS SUBMITTED THAT IN THE CASE OF DR. WILMAR S CHWABE INDIA P. LTD., (SUPRA), CBDT CIRCULAR NO.715 DATED 8-8-1975 WAS DULY CONSIDERED BY THE TRIBUNAL AND IT WAS HELD THAT SINCE BILL FOR REIMBURSEMENT OF EXPENSES WERE SEPARATELY RAISED, TDS WAS NOT DEDUCT IBLE FROM SUCH REIMBURSEMENT OF EXPENSES. IT WAS SUBMITTED THAT I N THE PRESENT CASE ALSO, SEPARATE BILL WAS RAISED BY THE COMMISSION AG ENT REGARDING REIMBURSEMENT OF EXPENSES AND HENCE, TDS IS NOT DED UCTIBLE IN THE PRESENT CASE ALSO. REGARDING THE JUDGMENT OF HONB LE APEX COURT RENDERED IN THE CASE OF TRANSMISSION CORPORATION OF AP LTD., (SUPRA), IT WAS SUBMITTED THAT AFTER CONSIDERING THIS JUDGMENT OF HONBLE APEX COURT, THE TRIBUNAL HAS DECIDED SIMILAR ISSUE IN FA VOUR OF THE ASSESSEE IN THE CASE OF MODICON NETWORK P. LTD.,(SUPRA). IT IS SUBMITTED THAT IN THE CASE OF GRANDPRIX FAB PVT. LTD. (SUPRA), SIMILAR IS SUE WAS BEFORE THE TRIBUNAL AND IT WAS HELD BY THE TRIBUNAL IN THAT CA SE THAT THERE WAS NO ELEMENT OF INCOME EMBEDDED IN REIMBURSEMENT OF EXPE NDITURE AND THEREFORE, IMPUGNED PAYMENT REGARDING REIMBURSEMENT OF EXPENDITURE WOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA). A S AGAINST THIS, THE LEARNED DR OF THE REVENUE STRONGLY SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND THE BOARD CIRCULAR NO.715 DAT ED 8-8-1975. OUR ATTENTION WAS DRAWN TO QUESTION NO.30 IN THE CIRCUL AR WHERE IT WAS ANSWERED THAT REIMBURSEMENT CANNOT BE DEDUCTED OUT OF THE BILL AMOUNT FOR THE PURPOSE OF TDS. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE ITA NO.1335/AHD/2010 -4- JUDGMENT CITED BY THE LEARNED COUNSEL FOR THE ASSES SEE. WE HAVE ALSO CONSIDERED BOARD CIRCULAR DATED 8-8-1975, COPY OF W HICH HAS BEEN SUBMITTED BY THE LEARNED DR OF THE REVENUE. IN THE PRESENT CASE, IT HAS BEEN SUBMITTED BEFORE US BY THE LEARNED AR THAT THE COMMISSION AGENT HAS RAISED SEPARATE BILLS FOR REIMBURSEMENT OF THE EXPENSES. WITH ALL THESE FACTS, WHEN WE CONSIDER THE BOARD CIRCULAR NO .715 DATED 8-8-1995, WE FIND THAT THIS BOARD CIRCULAR CANNOT BE MADE APP LICABLE TO THE PRESENT CASE BECAUSE IN THE PRESENT CASE, THERE IS NO COMPO SITE BILL RAISED BY THE COMMISSION AGENT AND AS PER THE LEARNED AR OF THE A SSESSEE, SEPARATE BILL WAS RAISED BY THE COMMISSION AGENT FOR REIMBURSEMEN T OF EXPENSES AND THE LEARNED DR COULD NOT CONTRADICT THIS SUBMISSION OF THE LEARNED AR OF THE ASSESSEE. WE ALSO FIND THAT THE TRIBUNAL HAS A LSO CONSIDERED THE BOARD CIRCULAR NO.715 DATED 8-8-1975 IN THE CASE OF DR. WILLMAR SCHWABE INDIA P. LTD. (SUPRA) AND IT WAS HELD THAT WHEN THE BILL FOR REIMBURSEMENT OF EXPENSES HAS BEEN SEPARATELY RAISE D BY THE CONSULTANT, SECTION 194J IS NOT APPLICABLE. HENCE, BY RESPECTF ULLY FOLLOWING THIS TRIBUNAL DECISION, WE HOLD THAT IN THE PRESENT CASE ALSO, SINCE BILLS FOR REIMBURSEMENT OF EXPENDITURE HAVE BEEN RAISED BY TH E COMMISSION AGENT SEPARATELY, TDS WAS NOT REQUIRED TO BE DEDUCTED FRO M SUCH REIMBURSEMENT OF EXPENSES AND AS A CONSEQUENCE, SEC TION 40(A)(IA) IS NOT APPLICABLE WITH REGARD TO SUCH PAYMENTS. OTHER TRI BUNAL DECISIONS CITED BY THE LEARNED AR OF THE ASSESSEE RENDERED IN THE C ASE OF MODICON NETWORK P. LTD., AND GRANDPRIX FAB P. LTD. (SUPRA) ALSO SUPPORT THE CASE OF THE ASSESSEE AND HENCE, BY RESPECTFULLY FOLLOWIN G ALL THE ABOVE TRIBUNAL DECISIONS, WE HOLD THAT NO TDS IS REQUIRED TO BE DEDUCTED IN THE PRESENT CASE FOR REIMBURSEMENT OF EXPENSES FOR WHIC H SEPARATE BILLS WERE RAISED BY THE COMMISSION AGENT AND HENCE, THE PROVI SIONS OF SECTION ITA NO.1335/AHD/2010 -5- 40(A)(IA) IS NOT APPLICABLE TO SUCH PAYMENTS. THER EFORE, DISALLOWANCE MADE BY THE ASSESSING OFFICER IS TO BE DELETED. 8. IN RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 TH MAY, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (A. K. GARODA) ACCOUNTANT MEMBER PLACE : AHMEDABAD DATE : 13-05-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD
