Interserve Travels (P) Ltd., New Delhi v. ITO, New Delhi

ITA 356/DEL/2012 | 2008-2009
Pronouncement Date: 31-07-2012 | Result: Allowed

Appeal Details

RSA Number 35620114 RSA 2012
Assessee PAN AAACI3423L
Bench Delhi
Appeal Number ITA 356/DEL/2012
Duration Of Justice 6 month(s) 6 day(s)
Appellant Interserve Travels (P) Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-07-2012
Date Of Final Hearing 31-07-2012
Next Hearing Date 31-07-2012
Assessment Year 2008-2009
Appeal Filed On 24-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI I.C. SUDHIR JM & SHRI A.N. PAHUJA AM ITA NO.356/DEL/2012 ASSESSMENT YEAR : 2008-09 INTERSERVE TRAVELS (P) LTD. C/O MEHROTRA & MEHROTRA CA C-561 DEFENCE COLONY NEW DELHI V/S . INCOME-TAX OFFICER WARD-11(4) ROOM NO.324 C.R. BUILDING NEW DELHI [PAN :AAACI 3423 L ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RAJESH JHULANI AR REVENUE BY SHRI SATPAL SINGH DR DATE OF HEARING 31-07-2012 DATE OF PRONOUNCEMENT 31-07-2012 O R D E R A.N. PAHUJA:- THIS APPEAL FILED ON 24.01.2012 BY THE ASSESSEE AG AINST AN ORDER DATED 09-11-2011 OF THE LD. CIT(A)-XV NEW DE LHI RAISES THE FOLLOWING GROUNDS:- [L] THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE ASSESSMENT MADE BY THE LEARNED ASSES SING OFFICER (LAO) AT AN INCOME OF ` .1 42 15 482/- AS AGAINST THE RETURNED LOSS OF ` .9 09 780/- DECLARED BY THE APPELLANT THEREBY MAK ING AN ADDITION OF ` .1 51 25 257/-. [2] THAT THE LAO HAS ERRED BOTH IN LAW AND ON FACTS IN CONSIDERING THE RETURNED INCOME OF ` .2 16 880/- INSTEAD OF LOSS OF ` .9 09 780/- SHOWN IN THE RETURN OF INCOME AND THEREBY MAKING AN ADDITION OF ` .11 26 660/-. [2.1] THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON F ACTS IN NOT ADJUDICATING THE SAID GROUND OF APPEAL. ITA NO.356/D/2012 2 [3] THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF ` .16 01 970/- MADE BY THE LAO AS ADDITIONAL INCOME BEING THE DIFFERENCE OF AMOUNT A S PER TDS CERTIFICATES ISSUED BY M/S. AMADEUS INDIA (P) LTD. M/S. INTERGLOBE TECHNOLOGY QUOTIENT (P) LTD. & M/S. UNITED AIRLINES INC. AND AMOUNT CREDITED IN THE P & L A/C AS RECEIVED/ACCRUE D ON BEHALF OF THE CONSORTIUM MEMBERS. [3.L] THAT THE LOWER AUTHORITIES IN RESPECT OF THE IMPUGNED ADDITION HAVE FAILED TO CONSIDER AND APPRECIATE THE METHOD O F ACCOUNTING EMPLOYED THAT THE AMOUNT CREDITED IN THE P & L A/C REPRESENT AMOUNTS BELONGING TO VARIOUS TRAVEL AGENTS AND RECE IVED BY THE APPELLANT AS THE LEAD AGENT FOR DISTRIBUTION TO THE VARIOUS TRAVEL AGENCIES CONSTITUTING A CONSORTIUM. [3.2] THAT THE LOWER AUTHORITIES IN RESPECT OF THE IMPUGNED ADDITION HAVE FAILED TO CONSIDER AND APPRECIATE THAT THE APP ELLANT OUT OF THE TOTAL CREDIT OF ` .1 35 49 683/- IN THE P & L A/C HAS TRANSFERRED A S UM OF ` .1 21 84 199/- TO THE ACCOUNT OF THE RESPECTIVE CON SORTIUM MEMBERS BY DEBITING UNDER THE HEAD 'DIRECT EXPENSES ' IN THE P & L A/C RETAINING A SUM OF ` .13 65 484/- TO MEET OUT THE EXPENSES. [3.3] THAT THE LOWER AUTHORITIES HAVE WRONGLY CO-RE LATED THE INCOME CREDITED IN THE P & L A/C WITH THE TDS CERTIFICATES ISSUED AND THEREBY MAKING AN ADDITION OF ` .16 01 970/-. [3.4] THAT ON IDENTICAL FACTS THE ADDITION MADE IN THE A.Y. 2006-07 STANDS DELETED BY THE LD. CIT(A). [3.5] THAT ON IDENTICAL FACTS NO ADDITION WAS MADE IN PAST ASSESSMENT YEARS AS WELL AS IN THE SUBSEQUENT ASSES SMENT YEARS EXCEPT A.Y. 2006-07. 4. THAT THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AN D ON FACTS IN CONFIRMATION THE ADDITION OF ` ` 1 21 84 199/- MADE BY THE LAO BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961 ON THE ALLEGED PLEA THAT THE SAID AMOUNT CONS TITUTE COMMISSION PAID BY THE APPELLANT TO VARIOUS TRAVEL AGENTS CONSTITUTING A CONSORTIUM. 4.1 THAT THE DISTRIBUTION BETWEEN THE CONSORTIUM ME MBERS OF RECEIPTS/AMOUNTS COLLECTED BY THE APPELLANT ON THEI R BEHALF IS NOT IN THE NATURE OF COMMISSION HENCE THE PROVISIONS OF SECTION 194H ARE NOT APPLICABLE IN THIS CASE. ITA NO.356/D/2012 3 4.2 THAT THE LOWER AUTHORITIES IN RESPECT OF THE IM PUGNED ADDITIONS HAVE WRONGLY INVOKED THE PROVISIONS OF SE CTION 40(A)(IA) OF THE ACT AND FAILED TO CONSIDER AND APPRECIATE TH AT THE SAID PROVISIONS ARE ONLY APPLICABLE IN RESPECT OF PAYMEN T OF COMMISSION FOR RENDERING SERVICES WHICH DOES NOT E XIST IN THE ARRANGEMENT BETWEEN THE APPELLANT AND THE VARIOUS T RAVEL AGENTS CONSTITUTING THE CONSORTIUM. 4.3 THAT ON IDENTICAL FACTS THE ADDITION MADE IN T HE ASSESSMENT YEAR 2006-07 STANDS DELETED BY THE CIT(A). 4.4 THAT ON IDENTICAL FACTS NO ADDITION WAS MADE I N PAST ASSESSMENT YEARS AS WELL AS IN THE SUBSEQUENT ASSES SMENT YEARS EXCEPT ASSESSMENT YEAR 2006-07. 5. THAT THE LAO ERRED IN INITIATING PROCEEDINGS U/S 271B OF THE ACT FOR NON FILING OF THE TAX AUDIT REPORT U/S 44A B BY TREATING THE TOTAL RECEIPTS OF ` `1 67 64 152/- (`1 51 52 182+`16 01 970) BEING ADDITIONS MADE AS PART OF SALES TURNOVER OR GROSS RECEIPTS OF THE APPELLANT COMPANY WITHOUT UNDERSTANDING THE METHOD OF ACCOUNTING BEING FOLLOWED AND THE FACTS AND CIRCUMS TANCES OF THE CASE. 5.1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT ADJUDICATING THE SAID GROUND OF APPEAL. 6. THAT THE APPELLANT CRAVES THE INDULGENCE OF THE HONBLE ITAT TO ADD MODIFY DELETE SUBSTITUTE WITHDRAW AND/OR AL TER ANY OF THE GROUNDS OF APPEAL IF DEEMED FIT BEFORE OR AT THE TIME OF HEARING. 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING INCOME OF ` ` 2 16 880/- [AS AGAINST CLAIM OF LOSS OF ` 9 09 780/- ) FILED ON 29.09.2008 BY THE ASSESSEE ENGAGED IN THE BUSINESS OF TRAVEL AGENTS AFTER BEING PROCESSED ON 31.03.2009 U/S 143(1) OF THE INC OME-TAX ACT 1961(HEREINAFTER REFERRED TO AS THE ACT) WAS SELEC TED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 14.09. 2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE REFLECTED DIRECT & INDIRECT INCOME IN THE P/L A/C COMPRISING DIRECT INCOME [IN ` ] SEGMENT FEES - `1 16 34 259/- ITA NO.356/D/2012 4 COMMISSION FROM AMEDEUS AND GELIELO - `8 99 872/- UNITED AIRLINE PLB INCOME - `5 23 797/- INCOME FROM GTA - `2 70 637/- TOUR PACKAGE - `1 94 091/- ISV MEMBERSHIP FEE - `20 027/- TOTAL `1 35 49 683/- INDIRECT INCOME INTEREST ON DEPOSIT ` 2 99 156/- ISV MEMBERSHIP ` 2 16 697/- OTHER INCOME `10 86 646/- `16 02 499/- WHILE TDS CERTIFICATES ANNEXED TO THE RETURN REFLEC TED FOLLOWING AMOUNT OF COMMISSION/BROKERAGE :- S.NO. NAME OF DEDUCTOR AMOUNT IN (`) . 1. UNITED AIRLINES INC 5 23 798/- 2. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 18 76 785/- 3. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 13 68 961/- 4. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 30 00 000/- 5. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 2 89 485/- 6. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 1 35 330/- 7. INTERGLOBE TECHNOLOGY QUTIENT PVT. LTD. 14 15 899/- 8. AMADEUS INDIA PVT. LTD. 14 00 000/- 9. AMADEUS INDIA PVT. LTD. 12 49 640/- 10. AMADEUS INDIA PVT. LTD. 20 00 000/- 11. AMADEUS INDIA PVT. LTD. 14 00 000/- TOTAL 1 46 59 898 2.1 TO A QUERY BY THE AO THE ASSESSEE COMPANY EXP LAINED THAT SEGMENT FEES AND COMMISSION/BROKERAGE WERE THE SAME . SINCE TDS CERTIFICATES REFLECTED COMMISSION INCOME OF ` ` 1 46 59 898/- WHILE ASSESSEE REFLECTED IN THE PROFIT AND LOSS ACCOUNT COMMISSION INCOME OF ` ` 1 30 57 928/- THE AO ASKED THE ITA NO.356/D/2012 5 ASSESSEE AS TO WHY THE DIFFERENCE BE NOT ADDED. IN THE ABSENCE OF ANY REPLY THE AO ADDED THE DIFFERENCE OF ` ` 16 01 970/-. 2.2 MOREOVER THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE FOLLOWING PAYMENTS:- [IN ` ] A) AMADEUS SEGMENT FEE PAYMENT ` 54 78 848/- B) UA PLB PAYMENT ` 5 23 797/- C) GALILEO SEGMENT FEE PAYMENT ` 61 8 1 554/- TOTAL `1 21 84 199/- SINCE M/S AMADEUS INDIA (P) LTD. INTERGLOBE TECHNO LOGY QOTIENT (P) LTD. & M/S UNITED AIRLINES INC. HAVING DEDUCTED TAX AT S OURCE FROM THE AFORESAID PAYMENTS WHILE THE ASSESSEE DID NOT DEDUCT TAX AT S OURCE FROM THE PAYMENT ON ACCOUNT OF COMMISSION THE AO DISALLOWED THE AMOUNT OF ` ` 1 21 84 199/- IN TERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . 3. ON APPEAL NONE APPEARED ON BEHALF OF THE ASSES SEE BEFORE THE LD. CIT(A) DESPITE ISSUANCE OF NOTICE DATED 28 TH JUNE 2011 27.07.2011 22.09.2011 AND 03.10.2011.IN ABSENCE OF ANY SUBMISSIONS THE L D. CIT(A) UPHELD THE DISALLOWANCES HOLDING AS UNDER:- 8. I HAVE PERUSED THE ASSESSMENT ORDER THE AGREEM ENT BETWEEN THE APPELLANT AND THE 13 TRAVEL AGENTS AND BETWEEN THE APPELLANT AND AMANDEUS INDIA' AND HAVE ALSO REFERRE D TO THE CASE LAWS QUOTED BY THE APPELLANT IN ITS STATEMENT OF FA CTS. 8.1 IN MY VIEW AS PER THE AGREEMENT BETWEEN AMADEU S AND APPELLANT THE INCOME ACCRUES TO THE APPELLANT AND T HIS IS CLEAR FROM THE TDS CERTIFICATES ISSUED BY AMADEUS AND OTHER 2 PARTIES. THE 'APPELLANT' IS FILING HIS RETURN OF INCOME ON T HE BASIS OF THESE TDS CERTIFICATES ONLY. HENCE WITHOUT ANY DOUBT IT I S THE INCOME OF THE APPELLANT AND NOT OF 13 TRAVEL AGENTS. 8.2 THE APPELLANT (AS PER AGREEMENT WITH 13 TRAVEL AGENTS) RETAINS THE AMOUNT TOWARDS MEETING ITS ADMINISTRATION AND O THER EXPENSES ITA NO.356/D/2012 6 AND DISTRIBUTE THE COMMISSION TO THE 13 TRAVEL AGEN TS. IN TERM OF AGREEMENT PAYS THE COMMISSION TO 13 TRAVEL AGENTS O N THE BASIS OF BUSIINESS PROCURED ETC. (REFER CLAUSE 1 OF THE AGRE EMENT). AS PER CLAUSE (2) OF THE AGREEMENT BETWEEN APPELLAN T AND 13 TRAVEL AGENTS IS ALSO VERY CLEAR THAT THE APPELLANT HAS FU LL RIGHT ON THE COMMISSION SO RECEIVED FROM AMEDEUS' IN ITS OWN NA ME. FURTHER AS PER CLAUSE (6) NO MEMBER OF THE 13 TRAVE L AGENT SHALL HAVE THE RIGHT OR CLAIM ON THE TDS DEDUCTION BY 'AM ADEUS INDIA (P) LTD'. THIS MAKES IT VERY CLEAR THAT THE 'COMMIS SION' ON WHICH TDS IS DEDUCTED BELONGS TO THE APPELLANT AND TO NO OTHER ENTITY AND PURSUANT TO AN AGREEMENT (REFER CLAUSE 1) THE APPEL LANT HAS TO PASS ON THIS COMMISSION TO 13 TRAVEL AGENTS. 8.3 HENCE I HOLD THAT AO'S ACTION IS TREATING THE INCOME ON THE BASIS OF TDS CERTIFICATES AND PARTING FURTHER WITH THE COMMISSION WITH 13 TRAVEL AGENTS (PURSUANCE TO ANY AGREEMENT W ITH THEM) WITHOUT DEDUCTING THE TDS THE APPELLANT HAS COMMIT TED A DEFAULT AS PER PROVISION OF CHAPTER XVII-B. 8.4 NOW COMING TO THE PROVISIONS OF SECTION 40(A)(I A) ANY INTEREST COMMISSION OR BROKERAGE RENT ROYALTY FE ES FOR PROFESSIONAL SERVICES FEES FOR TECHNICAL SERVICE ANY AMOUNT PAYABLE TO RESIDENT CONTRACTOR OR SUB CONTRACTOR SH ALL NOT BE ALLOWED AS DEDUCTION IN THE FOLLOWING SITUATIONS: I) WHERE IN RESPECT OF SUCH SUM TAX IS DEDUCTIBLE UND ER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED. OR II) WHERE IN RESPECT OF SUCH SUM} TAX HAS BEEN DEDUCTE D BUT NOT PAID DURING THE PROVISION YEAR OR WITHIN THE TIME P RESCRIBED UNDER SECTION 200(1). SINCE PURSUANCE TO ANY AGREEMENT BETWEEN THE APPEL LANT AND 13 TRAVEL AGENTS THE APPELLANT PAID THE COMMISSION TO THESE 13 TRAVEL AGENTS (AFTER RETAINING THE AMOUNT FOR MEETING PROP ORTIONATE EXPENSES) IN PROPORTION TO THE SEGMENT BOOKINGS EFF ECTED BY EACH OF THE TRAVEL AGENTS (REFER CLAUSE 1) WITHOUT DEDUC TING TOS HENCE PROVISIONS OF SECTION 40 (A)(IA) ARE CLEARLY ATTRAC TED IN APPELLANT'S CASE. THE APPELLANT HAD AN INDEPENDENT AGREEMENT JOINTLY WITH 13 TRAVEL AGENTS UNDER WHICH: . ITA NO.356/D/2012 7 I)APPELLANT WAS DUTY BOUND TO RETAIN ONLY THAT SUM WHICH WAS SUFFICIENT TO MEET THE FIXED AND VARIABLE EXPENDITU RE THE CORPORATE STRUCTURE. II)EACH OF THE 13 TRAVEL AGENTS WILL PROPORTIONALLY CONTRIBUTE TOWARD THE EXPENDITURE INCURRED BY THE APPELLANT. III) DISTRIBUTE THE MONIES TO EACH OF THE CONSORTI UM TRAVEL AGENTS IN PROPORTION TO THE SEGMENT BOOKINGS EFFECTED BY EAC H TRAVEL AGENTS. THE APPELLANT HAS RELIED ON THE CASE OF AHMEDABAD S TAMP VENDORS VS. UOI (2571TR 202) (GUJRAT) AND STATED TH AT PROVISION OF SECTION 194H ARE NOT APPLICABLE. IN MY VIEW FACTS OF THAT CASE ARE NOT SAME AS THAT OF THE APPELLANT. IN AHMEDABAD STAMP VENDOR'S CASE (SUPRA) THE ISSUE WAS THAT 'DISCOUNT MADE AVAILABLE TO THE LICENSED STAMP VEND ORS' DOESN'T FALL WITHIN THE EXPRESSION OF 'COMMISSION' AND 'BRO KERAGE' WHEREAS IN THE APPELLANT'S CASE THE FACTS ARE ENTIR ELY DIFFERENT. IN APPELLANT'S CASE THE APPELLANT HAS TO MAKE A PAY MENT PURSUANCE TO AN AGREEMENT. AND THE CLAUSE OF AGREEMENT BETWEE N THE APPELLANT AND 13 TRAVEL AGENTS CLEARLY SPECIFIES TH E MANNER IN WHICH AMOUNT IS TO BE CALCULATED AND PAID TO THE EACH MEM BER OF CONSORTIUM OF 13 TRAVEL AGENTS. 8.5 THEREFORE IN VIEW OF THE ABOVE DISCUSSION AND IN THE ABSENCE OF ANY SUBMISSIONS BY THE APPELLANT IN SPITE OF OPP ORTUNITIES GIVEN AND FURTHER RELYING ON THE DECISION IN THE CASE OF : A) PODDAR SON'S EX. L. (P) LTD VS ITO WARD-7(2) K OLKATA (ITA NO. 1418/KOL/2009) {ASSESSMENT YEAR 2005-200 6} B)SOMA- TRG JOINT VENTURE JAMMU VS ITO WARD-1(3} JAMMU (ITA NO. 477 (ASR}/2008) (ASSESSMENT YEAR 200 5- 2006) AND (ITA NO. 367(ASR)/2009) (ASSESSMENT YEAR 2006-2007) I RESPECTFULLY DISAGREE WITH THE DECISION OF MY PRE DECESSOR GIVEN FOR ASSESSMENT YEAR 2006-2007 IN APPELLANT'S CASE AND I UPHOLD THAT AO IS RIGHT IN DISALLOWING UNDER SECTION 40{A) (IA) THE COMMISSION/FEE PAID OF ` .L 21 84 199 WITHOUT DEDUCTION OF TAX AT SOURCE. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD.CIT(A). AT THE OUTSET BOTH THE PARTIES AGREED THAT THE MAIN ISSUE IS SQUARELY COVERED BY THE DECISION DATED 18. 5.2012 OF THE ITAT IN THE ITA NO.356/D/2012 8 ASSESSEES OWN CASE IN I.T.A. NO.3526/DEL./2010 IN THE AY 2006-07. TO A QUERY BY THE BENCH THE LD. AR REPLIED THAT THE ASS ESSEE COULD NOT APPEAR BEFORE THE LD. CIT(A) SINCE NOTICES ISSUED BY HIM WERE NO T SERVED ON THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. APPARENTLY THE IMPUGNED ORDER WAS PASSED EX PARTE THE ASSESSEE HAVING NOT APPEARED BEFORE THE LD. CIT(A).HOWEVER WHILE ADJUDICATING A SIMILAR ISSUE IN THE AY 2006-07 IN RELATION TO GROUND NOS. 3 & 4 IN THE APPEAL THE ITAT VIDE THEIR AFORESAID ORDER DATED 18 TH MAY 2012 CONCLUDED AS UNDER:- 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS R ELIED UPON BY BOTH THE SIDES. AT THE OUTSET THE PLEA OF THE LD. AR REGA RDING APPLICABILITY OF PRINCIPLES OF MUTUALITY IN THIS CASE IS NOT TENABLE NO SUCH PLEA HAVING BEEN TAKEN BEFORE THE LOWER AUTHORITIES. CONSEQUENT LY THE AO OR THE LD. CIT(A) DID NOT HAVE ANY OCCASION TO EXAMINE THE AP PLICABILITY OF SAID PRINCIPLES OF MUTUALITY NOR THE LD. AR DEMONSTRATED BEFORE US AS TO HOW THE SAID PRINCIPLES ARE APPLICABLE IN THIS CASE. . IN THE ABSENCE OF ANY FINDING ON THAT ASPECT EMERGING FROM THE IMPUGNED ORDER WE REFRAIN FROM EXPRESSING ANY OPINION ON THAT ASPECT OR THE APPLICABILITY OF DECISIONS RELIED UPON BY THE LD. AR ESPECIALLY WHE N THE LD. AR DID NOT DEMONSTRATE BEFORE US AS TO HOW THESE DECISIONS ARE APPLICABLE IN FACTS AND CIRCUMSTANCES BEFORE US. AT THIS STAGE WE MAY ALSO CLARIFY THAT IT IS A SETTLED POSITION THAT CREDIT FOR TDS IS TO BE GIV EN IN THE CASE OF THE PERSON IN WHOSE HANDS INCOME IS TAXABLE AND THAT TO O IN THE YEAR IN WHICH THE CORRESPONDING INCOME IS TAXED . NOW ADVER TING TO THE FACTS NARRATED BEFORE US THE ASSESSEE ENTERED INTO A CO NSORTIUM AGREEMENT WITH 12 OTHER MEMBERS WHO ARE TRAVEL AGENTS FOR BOO KING AIR TICKETS THROUGH THE PLATFORM PROVIDED BY M/S AMADEUS PVT. L TD. .IN TERMS OF THE SAID AGREEMENT DATED 01.04.2003 ALL THE MEMBER TR AVEL AGENTS EXCEPT THE ASSESSEE RENDERED SERVICES OF BOOKING AIR LIN E TICKETS & UTILIZED THE COMPUTERIZED ELECTRONIC RESERVATION SYSTEM PLATFORM PROVIDED BY AMADEUS WHO OFFERED PREFERENTIAL RATES SUBJECT TO BULK BUSINESS BEING OFFERED BY ALL THE TRAVEL AGENTS AS ONE ENTITY. THE AMADEUS MAINTAINED ONE ACCOUNT OF ALL THE BOOKINGS EFFECTED BY THE CO NSORTIUM MEMBERS AND PAID A QUARTERLY SEGMENT FEE ALONG WITH A STATE MENT GIVING DETAILS OF SEGMENTS GENERATED BY EACH CONSORTIUM MEMBER AND AM OUNT PAID TO THE ASSESSEE AS REPRESENTATIVE OF THE CONSORTIUM TR AVEL AGENT. THE CONSORTIUM MEMBERS ALSO AGREED THAT THE ASSESSEE W OULD ACT AS A LEAD MEMBER & AUTHORIZED IT TO ENTER INTO CONTRACTS WIT H AMADEUS TO MAKE COLLECTIONS AND DISTRIBUTE THE MONIES TO EACH OF TH E CONSORTIUM TRAVEL AGENTS IN PROPORTION TO THE SEGMENT BOOKINGS EFFECT ED BY EACH OF THE TRAVEL AGENTS. THE TRAVEL AGENTS AGREED TO PROPORTI ONATELY CONTRIBUTE ITA NO.356/D/2012 9 TOWARDS THE EXPENDITURE OF THE ASSESSEE WHILE THE ASSESSEE WAS AUTHORISED TO RETAIN THE MONEY OUT OF THE REVENUES OF THE CONSORTIUM TRAVEL AGENTS COLLECTED FROM AMADEUS .INTER ALIA I T WAS AGREED THAT IF THE AMADEUS INDIA PVT. LTD. DEDUCTED INCOME TAX AT SOUR CE IN RESPECT OF PAYMENTS MADE TO THE ASSESSEE IN THE REPRESENTATIVE CAPACITY OUT OF INCOME OF THE CONSORTIUM TRAVEL AGENTS THEN THE C REDIT FOR SUCH TAX DEDUCTED AT SOURCE SHALL BE CLAIMED BY THE ASSESSEE ALONE IN ITS RETURN OF INCOME AND NO OTHER MEMBER WOULD HAVE ANY RIGH T OR CLAIM ON SUCH AMOUNT. IN THE EVENT OF ANY LOSS OR DAMAGE ON ACCOU NT OF ANY BREACH IN THE STIPULATION OF THE AGREEMENT ALL THE MEMBERS WERE JOINTLY & SEVERALLY LIABLE. IN TERMS OF THE SAID AGREEMENT THE LEAD ME MBER I.E. THE ASSESSEE IS REQUIRED TO COLLECT THE COMMISSION FOR SERVICES RENDERED BY OTHER MEMBERS AND DISTRIBUTE THE SAID COMMISSION AM ONGST THE MEMBERS ON PRIORITY BASIS. THOUGH THE TDS CERTIFIC ATE ISSUED BY AMADEUS REFLECTED COMMISSION OF ` `65 71 690/- THE ASSESSEE DISTRIBUTED THE AMOUNT OF ` ` 52 22 326/- AMONGST THE MEMBERS FOR SERVICES RENDERED BY THEM IN BOOKING TICKETS ETC. A ND AMOUNT OF ` `13 49 364/- ALONE WAS REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. SINCE THE AMOUNT OF ` `52 22 326/- WAS NOT RECEIVED FOR ANY SERVICES RENDERED BY THE ASSESSEE TO AMADEUS WHILE TAX WAS ALSO DEDUCTED AT SOURCES FROM THE INCOME OF TRAVEL AGENTS TRANSMITT ED THROUGH THE ASSESSEE THE LD. CIT(A) CONCLUDED THAT THE AMOUN T COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. MOREOVER SINCE THE ASSESSEE DID NOT CLAIM THE SAID AMOUNT AS EXPENDITURE IN ITS ACCOUNT S NO TAX WAS DEDUCTED AT SOURCE BY THE ASSESSEE. CONSEQUENTLY THE LD. CIT(A) CONCLUDED THAT NO DISALLOWANCE COULD BE MADE IN TER MS OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. AS IS EVIDENT FROM THE T ERMS AND CONDITIONS OF THE CONSORTIUM AGREEMENT THE PAYMENT BY THE ASSESS EE TO OTHER CONSORTIUM MEMBERS IS NOT VOLUNTARY .THE ASSESSEE I S UNDER A LEGAL OBLIGATION IN TERMS OF THE AGREEMENT TO PAY THE AMO UNT TO OTHER CONSORTIUM MEMBERS IN ACCORDANCE WITH SETTLED TERMS . THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE RENDERED ANY SERVICE TO AMADEUS. IT IS THE SETTLED LEGAL POSITION THAT INCOME ACCRUES WHEN AN ENFORCEABLE DEBT IS CREATED IN FAVOUR OF AN ASSESSEE. IN OTHER WORDS I NCOME ACCRUES WHEN THE ASSESSEE ACQUIRES THE RIGHT TO RECEIVE THE SAME . THE TERMS OF THE CONSORTIUM AGREEMENT DO NOT REVEAL ANY SUCH RIGHT I N FAVOUR OF THE ASSESSEE . INCOME OF 52 22 326/-RIGHTFULLY BELONGED TO THE OTHER CONSORTIUM MEMBERS TO WHOM THE AMOUNT WAS DISTRIBU TED BY THE ASSESSEE. THUS THE LD. CIT(A) RIGHTLY CONCLUDED T HAT THE SAID AMOUNT CAN NOT BE TREATED AS INCOME OF THE ASSESSEE. SINCE THE ASSESSEE ONLY DISTRIBUTED THE INCOME IN TERMS OF THE AGREEMENT AN D THIS DID NOT AMOUNT TO INCURRING OF AN EXPENDITURE NOR THE ASSESSEE CL AIMED ANY WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A ) IN DELETING THE DISALLOWANCE U/S 40A(IA) OF THE ACT. IN VIEW THEREO F ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CON TROVERTING THE AFORESAID FINDINGS OF THE LD. CIT(A) SO AS TO ENABL E US TO TAKE A DIFFERENT ITA NO.356/D/2012 10 VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFER E. THEREFORE GROUND NOS.2 AND 3 IN THE APPEAL ARE DISMISSED. 5.1 SINCE THE LD. CIT(A) DID NOT HAVE THE BENEFI T OF AFORESAID DECISION WHILE THE ASSESSEE CLAIMS BEFORE US THAT THE NOTICES ISSUED B Y THE LD. CIT(A) WERE NEVER SERVED UPON IT AND THE ISSUES RAISED IN GROUND NOS. 2 & 5 IN THIS APPEAL HAVING NOT BEEN ADJUDICATED BY HIM WE CONSIDER IT FAIR AND APPROPR IATE TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH THE DIRECTIONS TO READJUDICATE THE ISSUES IN THE LIGHT OF AFORESAID DECISION OF THE ITAT ON IDEN TICAL FACTS IN THE AY 2006-07 AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTI ES. WITH THESE DIRECTIONS GROUND NOS.2 TO 5 IN THE APPEAL ARE DISPOSED OF. 6.. GROUND NO.1 IN THE APPEAL BEING GENERAL IN NA TURE NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THIS GROUND DOES NOT REQUIR E ANY SEPARATE ADJUDICATION AND IS THEREFORE DISMISSED. 7.NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 8.. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.6 IN THE APPEAL ACCORDINGLY TH IS GROUND IS DISMISSED. 9.. IN RESULT APPEAL IS ALLOWED BUT FOR STATIS TICAL PURPOSES. SD/- SD/- (I.C. SUDHIR) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. INCOME-TAX OFFICER WARD-11(4) ROOM NO.324 C.R. BUILDING NEW DELHI 3. CIT CONCERNED. ORDER PRONOUNCED IN OPEN COURT ITA NO.356/D/2012 11 4. CIT(A)-XV NEW DELHI 5. DR ITAT C BENCH NEW DELHI 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT DELHI