Cargo Carriers, Navi Mumbai vs Department Of Income Tax

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM) सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य

आयकर अपील सं./I.T.A. No.55/Mum/2013 ( नधारण वष / Assessment Year :2009-10)

Asstt.Commissioner of Income बनाम/ M/s Cargo Carriers, Tax -22(3), Vs. A-322, City Mall, 3rd floor, Tower No.6, Vashi-Turbhe Road, Vashi Railway Station Plot No.4, Sector-19, Complex, Vashi, Vashi, Navi Mumbai-400703 Navi Mumbai-400705 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIRNo. :AACFC8577G

अपीलाथ ओर से / Appellant by : Shri Neil Philips यथ क ओर से/Respondent by Shri Prakash Pandit

सन ु वाई क तार ख / Date of Hearing : 1.1.2015 घोषणा क तार ख /Date of Pronouncement : 16 .01.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The revenue has filed this appeal challenging the order dated 29-10- 2012 passed by Ld CIT(A)-33, Mumbai and it relates to the assessment year 2009-10. The revenue is aggrieved by the decision of Ld CIT(A) in respect of the following issues:-

(a) Disallowance of expenses

(b) Disallowance made u/s 40(a)(ia) of the Act.

ITA No.55/M/2013 2 2. We heard the parties and perused the record. The assessee is engaged in the business of Customs House clearing and forwarding agency. The first issue relates to the disallowance of expenses. The assessee had claimed following expenses aggregating to Rs.61,97,063/-:

Bill of Entry preparation, customs dock, ex-delivery 33,50,180 Miscellaneous expenses 16,66,183 Examination 5,47,350 Customs / Docks Delivery examination charges 5,07,650 Customs Processing Expenses 1,25,700

Since the assessee did not produce supporting evidences, the assessing officer disallowed the entire claim of Rs.61,97,063/-. The Ld CIT(A), however, restricted the addition to 10% of the aggregate expenses and accordingly deleted the remaining 90%.

3. We notice that the Ld CIT(A) has considered the fact that the assessee had to necessarily incur these expenses through its employees by way of cash and hence they are supported by self made vouchers. The assessee had submitted that the expenses incurred on each consignment was less and the same has accumulated into larger amount due to high volume of work. It was further submitted that all these expenses have been incurred on strict supervision of the partners of the assessee firm. It was also further submitted that in other cases, the addition has been restricted to 10% of the expenses on identical circumstances. Considering all these factors, the Ld CIT(A) took the view that the disallowance of 100% of expenses is not tenable. Accordingly he restricted the disallowance to 10% of the expenses.

4. Thus, we notice that the Ld CIT(A) has analyzed the issue in proper perspective. It is also a fact that a custom housing agent has to necessarily incur these types of expenses. Since these expenses are ITA No.55/M/2013 3

supported by self made vouchers, we are of the view that the Ld CIT(A) was justified in restricting the addition to extent of 10% of the expenses.

5. The next issue relates to the disallowance made u/s 40(a)(ia) of the Act. The assessee had paid Custom charges, warehousing charges freight charges, professional fee etc. to various parties on behalf of its clients to the tune of Rs.2,35,97,801/-. The assessee did not deduct tax at source from these payments and hence the AO added the above said amount by invoking the provisions of sec. 40(a)(ia) of the Act. The Ld CIT(A) examined this issue in details and noticed that the assessee has incurred these expenses on behalf of its clients on actual basis and has got the reimbursement from its clients. Thus, there was not profit element and hence the Ld CIT(A) held that there was no obligation to deduct tax at source from these payments. Accordingly he deleted the disallowance.

6. We notice that the assessee has incurred these expenses on behalf of its clients, meaning thereby the assessee has acted as agent of its clients. In this kind of situation, the contract does exist between the client of the assessee and the service provider. Hence, the Ld CIT(A) was justified in deleting the disallowance made u/s 40(a)(ia) of the Act, since there is no obligation on the part of the assessee to deduct tax at source. At the time of hearing before us, the Ld A.R placed reliance on the decision rendered by the co-ordinate bench of Tribunal in the case of ITO Vs. Universal Traffic Co. (2014)(42 CCH 0055)(Mum), wherein the Tribunal had expressed the view identical to that of the Ld CIT(A) in the instant case. The Delhi bench of Tribunal has also expressed an identical view in the case of Jaguar Enterprises Vs. DCIT (151 ITD 376).

7. Since the view taken by Ld CIT(A) on this issue is identical with the view expressed by the co-ordinate benches of Tribunal, we do not find any infirmity in his order on this issue.

ITA No.55/M/2013 4 8. In the result, the appeal filed by the revenue is dismissed.

The above order was pronounced in the open court on 16 th Jan,2015.

घोषणा खुले यायालय म दनांकः 16 th Jan 2015 को क गई ।

sd sd

(एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN) अ य / PRESIDENT लेखा सद य/Accountant Member मब ुं ई Mumbai: th Jan, 2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मब ुं ई /ITAT, Mumbai