K.N. & SONS, MUMBAI v. ITO 25(3)(4), MUMBAI

ITA 4346/MUM/2012 | 2008-2009
Pronouncement Date: 26-11-2014 | Result: Allowed

Appeal Details

RSA Number 434619914 RSA 2012
Assessee PAN AAHFK3352N
Bench Mumbai
Appeal Number ITA 4346/MUM/2012
Duration Of Justice 2 year(s) 5 month(s)
Appellant K.N. & SONS, MUMBAI
Respondent ITO 25(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-11-2014
Date Of Final Hearing 26-11-2014
Next Hearing Date 26-11-2014
Assessment Year 2008-2009
Appeal Filed On 26-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE S/SHRI R.C. SHARMA (AM) AND SANJAY GARG (JM) . . ./I.T.A. NO.4346/MUM/2012 ( / ASSESSMENT YEAR : 2008-09) K N & SONS C/O HITEN AND JITEN CAS 9-10 VASANT VIHAR 2 ND FLOOR 17 NEW NAGARDAS CROSS ROAD. ANDHERI(E) MUMBAI-400069 / VS. INCOME TAX OFFICER 25(3)-4 BANDRA KURLA COMPLEX BANDRA MUMBAI-400051 ( / APPELLANT) .. ( ! / RESPONDENT) ./ ' ./PAN/GIR NO. :AAHFK3352N # / APPELLANT BY REEPAL G TRALSHAWALA ! $ # /RESPONDENT BY RUDOLPH N DSOUZA % & $ '( / DATE OF HEARING : 26.11.2014 )* $ '( /DATE OF PRONOUNCEMENT : 26 .11.2014 / O R D E R PER R.C. SHARMA ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 2.3.2012 FOR THE ASSESSMENT YEAR 2008-09 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). 2. ONLY GRIEVANCE OF THE ASSESSEE IS RELATED TO GR ANTING OF CREDIT OF TDS AT RS.2 83 949/- AS AGAINST TDS OF RS.7 57 199/- DEDU CTED BY PAYER. 3. THE RIVAL CONTENTIONS HAVE BEEN HEAD AND PERUSED RECORD. THE EFFECTIVE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DISTRIBU TOR OF SIM PREPAID CARDS SIM REFILLS (RECHARGE VOUCHER) EASY LOAD TOP UP (E-TOP ) ETC FOR M/S BHARTI AIRTEL. THE ASSESSEE PURCHASES THESE INTANGIBLE GOODS FROM BHAR TI AIRTEL AND THEREAFTER I.T.A. NO.4346/MUM/2012 2 SELLS IT TO THE RETAIL STORES AT THE AGREED PRICE. THE PURCHASE OF SIM PRODUCTS ARE AGAINST FULL ADVANCE PAYMENT. THE INVOICE OF THE S AID PURCHASE ARE RAISED ON ASSESSEES CLIENTS BY M/S BHARTI AIRTEL. THE TRANS ACTIONS IS LIKE NORMAL PURCHASE AND SALES . THE RESPONSIBILITY OF BHARATI AIRTEL LTD CEASES ONCE THE SIM PRODUCTS ARE DELIVERED TO ASSESSEES CLIENTS. WHIL E FRAMING ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT) THE A O OBSERVED THAT BHARTI AIRTEL HAVE DEDUCTED TAX AT SOURCE AMOUNTING TO RS.7 57 1 99/- ON THE PLEA THAT THE ASSESSEES SHARE OF PROFIT ON THE AMOUNT DEDUCTED BY AIRTEL WAS LOWER THE AO GIVEN CREDIT OF TDS OF RS.2 83 949/- ONLY IN PLAC E OF TOTAL DEDUCTION OF TAX DEUCED AT SOURCE AMOUNTING TO RS.7 57 199/-. BY TH E IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AND HENCE TH E ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THE AO HAS CONSIDERED THE CONTENTIONS OF ASSESSEE AND OBSERVE D AS UNDER : THE TDS IS DEDUCTED BY M/S. BHARTI AIRTEL ON THE DIFFERENCE BETWEEN THE MAXIMUM SERVICE CHARGE (MSC) AND DEALERS PRICE WHIC H IS TREATED AS COMMISSION. IT WAS EXPLAINED THAT THE TOTAL MARGIN (COMMISSION IS 4%) OUT OF WHICH THE ASSESSEE'S MARGIN IS 1.5% AND MARGIN O F RETAILER IS 2.5%. THIS FACT CLEARLY STATES THAT THE GROSS INCOME ON A CCOUNT OF SALE BY M/S. BHARTI AIRTEL WILL RESULT IN SHARING OF PROFITS BET WEEN ASSESSEE (BEING DEALER) AND RETAILERS IN THE RATIO OF 1.5: 2.5. AS PER THE TDS CERTIFICATE OF RS.7 57 199/- THE COMMISSION CREDITED IS TO THE EX TENT OF RS.67 87 156/-. IN ITS BOOKS OF ACCOUNTS THE ASSESSEE SHOWS THE DIF FERENCE BETWEEN SALES & PURCHASE AS TRADING PROFITS INSTEAD OF COMMISSION . THE GROSS PROFIT (G.P.) SHOWN IS THIS COMMISSION. THE G.P. IS DECLAR ED AT RS.26 15 837/-. AS THE COMMISSION GIVEN BY M/S. BHARTI AIRTEL IS SH ARED IN RATIO OF 1.5 : 2.5 BETWEEN ASSESSEE & RETAILERS THE COMMISSION INCOME PERTAINING TO ASSESSEE COMES TO RS.25 45 183/- (6787156 X 1.5 4.0) AND THE REMAINING SHARE OF COMMISSION OF RS.42 41 972/- (67 87 156 - 25 45 183) IS THE PORTION PERTAINING TO THE INCOME OF RETAILERS HENC E IT IS SEEN THAT IN RESPECT OF CLAIM FOR TDS OF RS.7.57 LAKH THE INCOM E DECLARED BY THE ASSESSEE IS IN THE RATIO OF 1.5 : 2.5. 5. HOWEVER THE AO HAS GIVEN CREDIT OF RS.2 83 94 9/- ON THE PLEA THAT THE ENTIRE INCOME AS PER TDS CERTIFICATE DOES NOT PERT AINS TO THE ASSESSEE. WE DO NOT FIND ANY JUSTIFICATION FOR NOT ALLOWING THE CRE DIT FOR ENTIRE TDS DEDUCTED BY M/S BHARTI AIRTEL OUT OF PAYMENTS MADE TO ASSESSEE . IN SO FAR AS THE ASSESSEE HAS DISCLOSED THE ENTIRE TDS DEDUCTED BY M/S BHARTI AIRTEL IN THEIR RETURN OF IWO I.T.A. NO.4346/MUM/2012 3 INCOME AND ALSO THE CORRESPONDING RECEIPT FROM THE BHARTI AIRTEL PART OF WHICH WAS PERTAINING TO RETAILERS. THE AO HAS NOT DISP UTED THE PAYMENT MADE TO THE RETAILERS. ACCORDINGLY THE ASSESSEE HAD SHOWN NET PROFIT IN ITS BOOKS OF ACCOUNT WHICH IS NOT DISPUTED BY THE AO. AS PER TH E PROVISION OF SECTION 199 OF THE ACT CREDIT IS TO BE ALLOWED FOR TAX DEDUCTED AT SOURCE BY PAYER ON THE AMOUNT CREDITED BY THE PAYEE WHICH IS IN THE NATUR E OF INCOME. IF THE AMOUNT RECEIVED BY THE PAYEE IS NOT IN THE NATURE OF ANY I NCOME OR DOES NOT CONTAIN SOME ELEMENT OF INCOME THERE CANNOT BE ANY QUESTI ON OF DEDUCTION OF TAX AT SOURCE.. THUS AN AMOUNT OF TAX DEDUCTED AT SOURC E NEED TO BE ADJUSTED AGAINST SOME TAX LIABILITY BY PAYEE AND IN CASE THERE IS NO SUCH TYPE OF LIABILITY IT HAS TO BE REFUNDED TO THE PAYEE AS PER THE MANDATE OF S ECTION 199. THE ISSUE UNDER CONSIDERATION IS ALSO DECIDED BY THE MUMBAI BENC H OF THE TRIBUNAL IN THE CASE OF ARVIND MURJANI BRANDS (P) LTD V/S ITO (2012) 13 7 ITR 173 WHEREIN IT WAS HELD THAT THE AMOUNT OF TAX DEDUCTED AT SOURCE N EEDS TO BE ADJUSTED AGAINST THE TAX LIABILITY OF PAYEE AND IN CASE THERE IS NO SUCH TAX LIABILITY IT HAS TO BE REFUNDED TO THE PAYEE BECAUSE OF VERY MANDATE OF S ECTION 199. 6. IN VIEW OF THE ABOVE WE DO NOT FIND ANY MERIT I N THE ACTION OF THE AO FOR ALLOWING CREDIT OF TDS OF RS.2 83 949/- IN PLACE OF TDS OF RS.7 57 199/- DEDUCTED AT SOURCE BY BHARTI AIRTEL.. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26TH NOV 2014. )* % - . 26TH NOV 2014 * $ & / SD SD ( / SANJAY GARG) ( . . / R.C. SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % 1& MUMBAI 26TH NOV 2014. . . ./ SRL SR. PS I.T.A. NO.4346/MUM/2012 4 !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. % 2' ( ) / THE CIT(A)- CONCERNED 4. % 2' / CIT CONCERNED 5. 34 '5 ( 5 % 1& / DR ITAT MUMBAI CONCERNED 6. 6 7& / GUARD FILE. % / BY ORDER TRUE COPY 8 (ASSTT. REGISTRAR) ( 5 % 1& /ITAT MUMBAI