M/s ITT Shipping pvt. ltd., Kolkata v. ACIT, Range-9/Kolkata, Kolkata

ITA 1951/KOL/2013 | 2008-2009
Pronouncement Date: 06-10-2016

Appeal Details

RSA Number 195123514 RSA 2013
Assessee PAN AAACI5499Q
Bench Kolkata
Appeal Number ITA 1951/KOL/2013
Duration Of Justice 3 year(s) 3 month(s) 18 day(s)
Appellant M/s ITT Shipping pvt. ltd., Kolkata
Respondent ACIT, Range-9/Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 06-10-2016
Date Of Final Hearing 06-10-2016
Next Hearing Date 06-10-2016
Assessment Year 2008-2009
Appeal Filed On 18-06-2013
Judgment Text
1 ITA NO. 1951 & 1908/KOL/2013 ITT SHIPPING PVT. LTD. AY 2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH AM & SHRI S.S. VISWANE THRA RAVI JM] I.T.A NO. 1951/KOL/2013 ASSESSMENT YEAR: 2008-09 M/S. ITT SHIPPING PVT. LTD. VS. ASSISTANT CO MMISSIONER OF INCOME-TAX (PAN: AAACI5499Q) RANGE-9 KOLKATA. ( APPELLANT ) ( RESPONDENT ) & I.T.A NO. 1908/KOL/2013 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. IT T SHIPPING PVT. LTD. CIRCLE-9 KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 06.10.2016 DATE OF PRONOUNCEMENT: 06.10.2016 FOR THE ASSESSEE: SHRI ANIKESH BANERJEE ADVOCATE FOR THE REVENUE: SHRI DINABANDHU NASKAR ADDL. CIT DR ORDER PER SHRI M. BALAGANESH AM: BOTH THESE APPEALS BY ASSESSEE AND REVENUE ARE ARIS ING OUT OF COMMON ORDER OF CIT(A)-VIII KOLKATA VIDE APPEAL NO. 211/CIT(A)-VII I/ KOL/10-11 DATED 26.03.2013. ASSESSMENT WAS FRAMED BY ADDL.CIT RANGE-9 KOLKATA U/S. 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2008-09 VIDE HIS ORDER DATED 28.12.2010. FOR THE SAKE OF BREVITY WE DISPOSE OF BOTH THE APP EALS BY THIS CONSOLIDATED ORDER. 2. FIRST WE TAKE UP ASSESSEES APPEAL. THE ONLY ISSUE INVOLVED IN THIS APPEAL OF ASSESSEE IS WITH REGARD TO THE DISALLOWANCE OF RS.14 93 044/ - TOWARDS FREIGHT EXPENSES BY THE AO U/S. 40(A)(IA) OF THE ACT. 2.1. THE AO OBSERVED THAT THE ASSESSEE HAS PAID FRE IGHT EXPENSES OF RS.14 93 044/- WITHOUT DEDUCTION OF TAX AT SOURCE AND ACCORDINGLY DISALLOWED THE SAME U/S. 40(A)(IA) OF THE ACT. BEFORE THE LD. CIT(A) THE ASSESSEE PRODUCED ALL THE DETAILS AND THE SAME WERE 2 ITA NO. 1951 & 1908/KOL/2013 ITT SHIPPING PVT. LTD. AY 2008-09 SUBJECTED TO REMAND PROCEEDINGS AND THE LD AO GAVE A GENERAL COMMENT IN HIS REMAND REPORT WITHOUT ADJUDICATING THE DETAILS FILED BY TH E ASSESSEE. LD. CIT(A) HOWEVER DELETED THE DISALLOWANCE ON THE GROUND THAT THE SAME WERE P AID BEFORE THE END OF THE PREVIOUS YEAR BY RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT VISAKHAPATNA BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD. VS. ACIT ITA NO. 477/VIZAG/2008. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GR OUNDS: 1. FOR THAT THE ASSESSMENT ORDER U/S. 143(3) OF T HE I. T. ACT 1961 IS ILLEGAL AND VOID. 2. FOR THAT THE FREIGHT EXPENSES OF RS.14 93 044/- ON WHICH THE ASSESSEE RECEIVED THE 15I FROM DIFFERENT PARTIES. IN THIS CASE THE TDS IS N OT APPLICABLE. THEREFORE AS THE ASSESSEE COLLECTED FORM 15I FROM THE DIFFERENT PARTIES IT I S NOT IN DEFAULT U/S. 201 OF THE ACT. IN CASE OF OTHER PARTIES THE AMOUNT WAS PAID BELOW THE TAXABLE LIMIT. SO SEC. 40(A)(IA) IS NOT APPLICABLE HERE. 3. FOR THAT DURING THE TIME OF REMAND PROCEEDINGS N O REASONABLE OPPORTUNITY WAS GIVEN AND WITHOUT GIVING ANY REASONABLE OPPORTUNITY FOR HEARI NG THE REMAND REPORT WAS PASSED WHICH IS UNJUSTIFIED & BAD IN LAW. 2.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE NEED NOT BE AGGRIE VED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE SUBJECT MENTIONED DISALLOWANCE HAS BEEN DELETED BY THE LD. CIT(A). HENCE WE DISMISS THE APPEAL OF THE ASSESSEE AS INFRUCTUOUS. 3. IN REVENUES APPEAL THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S. 40 (A)(IA) OF THE ACT IN RESPECT OF (A) PAYMENTS MADE TO PORT MANAGEMENT BOARD - RS.1 7 29 970/- (B) STEVEDORING CHARGES - RS. 5 08 277/- (C) FREIGHT CHARGES - RS.14 93 044/- (D) PAYMENT MADE TO INDIAN REGISTRAR OF SHIPPING - RS. 3 52 726/- THE AO OBSERVED THAT THE AFORESAID PAYMENTS WERE MA DE WITHOUT DEDUCTION OF TAX AT SOURCE AND ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT. THE LD. CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THAT THE PAY MENTS WERE MADE BEFORE THE END OF THE PREVIOUS YEAR AND ACCORDINGLY BY PLACING RELIANCE O N THE SPECIAL BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORT LTD. SUPRA HELD TH AT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT COULD NOT BE INVOKED IN THE FACTS AND CIRCU MSTANCES OF THE CASE. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UNDS: 1. LD. CIT(A)'S DIRECTION TO ALLOW DEDUCTION FOR THE FOLLOWING PAYMENT IS SO FAR AS MADE BEFORE THE CLOSE OF THE ACCOUNTING: 3 ITA NO. 1951 & 1908/KOL/2013 ITT SHIPPING PVT. LTD. AY 2008-09 (I) DISALLOWANCE U/S. 40(A)(IA) OF RS. 17 29 970/- ON ACCOUNT OF PAYMENT MADE TO PMB. (II) DISALLOWANCE U/S. 40(A)(IA) OF STEVEDORING CHA RGES OF RS. 50 82 771/ - MADE TO TWO PARTIES (III) DISALLOWANCE OF FREIGHT CHARGES OF RS. 14 93 044/- (IV) DISALLOWANCE OF RS. 3 52 729/- ON ACCOUNT OF P AYMENT MADE TO INDIAN REGISTER OF SHIPPING. 2. LD. CIT(A)'S DIRECTION TO ALLOW THE FOLLOWING PA YMENTS IN SO FAR AS MADE BEFORE THE CLOSE OF THE ACCOUNTING YEAR WITHOUT MAKING ANY TDS THERE ON AS REQUIRED BY THE RELEVANT TDS PROVISIONS IS NOT FOLLOWING ANY GOOD LAW IN INTERPR ETING THE WORD 'PAYABLE' APPEARING IN THE PROVISION OF SECTION 40(A)(IA) UNDER WHICH THE DISA LLOWANCES WERE MADE IN THE ASSESSMENT BY THE ASSESSING OFFICER. 3.1. AT THE TIME OF HEARING LD. DR VEHEMENTLY RELIE D ON THE ORDER OF THE LD AO. IN RESPONSE TO THIS THE LD. AR ARGUED THAT IN RESPECT OF RS.17 29 970/- BEING PAYMENT MADE TO PORT MANAGEMENT BOARD THE SAME REPRESENTS SUPPLY O F FRESH WATER TO THE SHIP FOR WHICH PAYMENTS WERE MADE WHICH DOES NOT WARRANT DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. HENCE PROVISIONS OF SECTION 40(A )(IA) OF THE ACT COULD NOT BE INVOKED IN THE SAME IN SUPPORT OF WHICH HE PLACED COPIES OF I NVOICES FOR THE SAME ISSUED BY PORT MANAGEMENT BOARD ANADAMAN & NICOBAR ISLANDS PORT BLAIR. HE ARGUED THAT IN RESPECT OF PAYMENTS MADE TOWARDS STEVEDORING CHARGES NO FINDI NG HAS BEEN GIVEN BY THE LD AO IN HIS ASSESSMENT ORDER AS TO HOW THE SUBJECT MENTIONED EX PENDITURE WOULD FALL UNDER THE PURVIEW OF DEDUCTION OF TAX AT SOURCE. HE ALSO SUBMITTED T HE DETAILS OF STEVEDORING CHARGES PAID TO VARIOUS PARTIES THROUGHOUT THE YEAR INCLUDING THE R ELEVANT LEDGER ACCOUNT WHICH HE FAIRLY STATED THAT THE SAME MAY KINDLY BE DIRECTED TO BE V ERIFIED BY THE LD AO AND DECIDE THE MATTER ACCORDINGLY. THE LD. DR ALSO FAIRLY CONCEDE D FOR SETTING ASIDE OF THIS ISSUE TO THE FILE OF THE LD. AO. IN RESPECT OF PAYMENTS MADE TO INDIAN REGISTER OF SHIPPING IN THE SUM OF RS.3 52 726/- THE LD. AR STATED THAT THE SAID P ARTY HAD FURNISHED A CERTIFICATE U/S. 197(1) OF THE ACT DATED 30.11.2007 WHICH IS VALID UPTO 31. 03.2008 WHEREIN PAYMENTS TO THEM WOULD HAVE TO BE MADE WITHOUT DEDUCTION OF ANY TAX AT SOURCE. ACCORDINGLY HE ARGUED THAT THERE IS NO NEED FOR THE ASSESSEE TO DEDUCT ANY TAX AT SOURCE IN RESPECT OF THE SAID PAYMENTS. 3.2. IN RESPECT OF FREIGHT EXPENSES PAID BY THE ASS ESSEE IN THE SUM OF RS.14 93 044/- HE ARGUED THAT ALL THE PAYMENTS WERE MADE TO VARIOUS P ARTIES BELOW RS.50 000/- AND HENCE PROVISION OF SECTION 194C OF THE ACT WOULD NOT BE A PPLICABLE IN THE FACTS AND CIRCUMSTANCES 4 ITA NO. 1951 & 1908/KOL/2013 ITT SHIPPING PVT. LTD. AY 2008-09 OF THE CASE AND IN SUPPORT OF THIS HE FILED DETAILS OF THE SAME. HOWEVER HE FAIRLY CONCEDED THAT THE SAME REQUIRES EXAMINATION BY THE LD AO. 3.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LD. CIT(A) HAD DELETED ALL THE DISALLOWANCES U/S. 40(A)(IA) OF THE ACT ONLY ON THE GROUND THAT THE EXPENSES WERE PAID BY T HE ASSESSEE BEFORE THE END OF THE PREVIOUS YEAR. IN THIS REGARD HE HAD PLACED RELIAN CE ON THE SPECIAL BENCH DECISION OF VIZAG TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR T LTD. SUPRA. HOWEVER WE FIND THAT THE ISSUE HAS BEEN HELD IN FAVOUR OF THE REVENUE BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORTS SYNDI CATE (2013) 33 TAXMAN.COM 250 (CAL) WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT WOULD BE APPLICABLE EVEN IF AMOUNTS WERE PAID BEFORE THE END OF THE PREVIOUS YEAR. 3.4. IN RESPECT OF PAYMENTS MADE TO PORT MANAGEMENT BOARD IN THE SUM OF RS.17 29 970/- WE ARE CONVINCED ON VERIFICATION OF THE INVOICES GI VEN BY PORT MANAGEMENT BOARD THAT THE SAID PAYMENT IS MADE TOWARDS SUPPLY OF FRESH WATER TO THE SHIPS. HENCE THE SAME DOES NOT FALL UNDER THE AMBIT OF DEDUCTION OF TAX AT SOURCE UNDER ANY OF THE PROVISIONS OF THE ACT. HENCE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT TO THAT EFFECT IS DELETED. 3.5. IN RESPECT OF PAYMENTS MADE IN THE SUM OF RS.5 0 82 771/- TOWARDS STEVEDORING CHARGES WE FIND THAT THE LD AO HAD NOT GIVEN ANY F INDING IN HIS ORDER AS TO HOW THE SUBJECT MENTIONED EXPENDITURE WOULD FALL UNDER THE AMBIT OF PROVISIONS OF DEDUCTION OF TAX AT SOURCE. ACCORDINGLY WE DEEM IT FIT AND PROPER TO SET ASIDE THIS ISSUE TO THE FILE OF THE LD AO TO GIVE A CLEAR FINDING IN THIS REGARD IN THE LIGHT OF THE EVIDENCE SUBMITTED BY THE ASSESSEE WITH REGARD TO THE SUBJECTION MENTIONED EXPENDITURE . 3.6. IN RESPECT OF PAYMENTS MADE TO INDIAN REGISTER OF SHIPPING IN THE SUM OF RS.3 52 726/- WE ARE CONVINCED FROM PAGE 32 OF THE PAPER BOOK THAT THE SAID PARTY HAD GIVEN A CERTIFICATE U/S. 197(1) ISSUED BY THE I. T. DEPARTMENT WHEREIN PAYMENTS MADE TO THEM HAS TO BE MADE WITHOUT DEDUCTION OF TAX AT SOU RCE WHICH HAS BEEN CLEARLY MENTIONED. HENCE THERE IS NO VIOLATION OF PROVISION OF SECTIO N 194C OF THE ACT WARRANTING ANY DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. 5 ITA NO. 1951 & 1908/KOL/2013 ITT SHIPPING PVT. LTD. AY 2008-09 3.7. IN RESPECT OF PAYMENT OF FREIGHT CHARGES IN TH E SUM OF RS.14 93 044/- WE ARE IN AGREEMENT WITH THE ARGUMENT OF THE LD. AR WHICH WAS ALSO CONSIDERED BY THE LD. DR THAT THE ISSUE REQUIRES FRESH EXAMINATION BY THE AO AS T O WHETHER THE PAYMENT EXCEEDED IN THE AGGREGATE OF RS.50 000/- IN RESPECT OF EACH PARTY T HEREBY WARRANTING ANY DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 194C OF THE ACT. IT IS TRUE THAT NO SUCH FINDING WAS GIVEN IN THE ASSESSMENT ORDER IN THIS REGARD. ACCORDINGLY WE D EEM IT FIT AND PROPER TO SET ASIDE THIS ISSUE TO THE FILE OF AO TO DECIDE THIS ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE ASSESSEE IS ALSO AT LIBERTY TO ADDUCE FRESH EVIDENCE IN SUPPORT OF HIS CONTENTION TO JUSTIFY THE CLAIM OF EXPENDITURE. ACCORDINGLY THIS ASPECT OF THE ISSUE IS SET ASIDE TO THE FILE OF THE AO. 4. IN THE RESULT APPEAL OF ASSESSEE IS DISMISSED A ND THAT OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 6 TH OCTOBER 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. ITT SHIPPING PVT. LTD. 6 TH FLOOR 4 FAIRLIE PLACE KOLKATA-01 2 RESPONDENT ACIT RANGE-9 KOLKATA. 3 . THE CIT(A) KOLKATA 4. 5. CIT KOLKATA DR KOLKATA BENCHES KOLKATA / TRUE COPY BY ORDER ASSTT. REGISTRAR .