M/S. Sravani Impex Pvt.Ltd.,, ... vs Assessee

This is an assessee's appeal filed against the order of the Commissioner of Income Tax(Appeals)-IV, Hyderabad dated 29-02-2012 for the Assessment Year (AY) 2003-04. The issue in appeal is with reference to claim of Rs.34,73,668/- as demurrage charges.

2. Briefly stated, assessee is engaged in the business of manufacture and export sales and has entered into an agreement with M/s.Reliance Pharma Limited, Nairobi, Kenya for undertaking the exports. As per the :- 2 -: I.T.A. No. 600/Hyd/2012

'overseas agent's agreement', assessee was to pay commission of 12.5%. There seems to be some supplementary agreement claiming 2% of the export value towards demurrage charges and Royalty. In the original assessment completed by the Assessing Officer, claim of commission and demurrage charges totaling Rs.1,66,26,434/- was allowed. On noticing that Assessing Officer has not examined the Royalty /demurrage charges, Ld.CIT(A)-III, Hyderabad initiated proceedings u/s.263 of the Income Tax Act (Act) and vide order dt.11-01-2010, set aside the issue to the Assessing Officer for re-examination of the above claim. Assessee has not challenged the order u/s.263.

3. In the course of re-assessment proceedings, assessee was asked to submit the original copy of the so called supplementary agreement with M/s.Reliance Pharma Limited, Nairobi, Kenya and justification for payment of demurrage charges. In the order AO disallowed the amount on the reason that assessee has not justified the amounts. Before the Ld.CIT(A) also, assessee made similar submissions about claim of the additional demurrage charges at 2% on the export value and submitted that supplementary agreement in original was submitted to the Assessing Officer. Ld.CIT(A), however, did not agree with assessee's contentions and confirmed the addition by stating as under:

"I have gone through the facts of the case and the submissions of the appellant. It is seen that the appellant has not been able to establish the liability for payment of demurrages and royalty charges by way of any credible evidence. The "Overseas Agency Agreement" submitted by the appellant is only a self serving one, as the same is not supported by any contemporaneous evidence. It was in this context that the Assessing Officer appears to have emphasized the importance of a registered document, which indeed is enforceable and verifiable. Since the appellant grossly failed in establishing the claim of demurrages and royalty charges, finding no infirmity in the action of the Assessing Officer, the grounds taken in this appeal are decided against the appellant."

:- 3 -: I.T.A. No. 600/Hyd/2012

4. After considering the rival submissions, we do not see any reason to interfere with the order of Ld.CIT(A). Since assessee did not justify the demurrage charges before the authorities nor any additional evidence was furnished before us to justify the claim, we are of the opinion that order of the CIT(A) on the facts of the issue has to be approved. Accordingly, the grounds raised by assessee are dismissed.

5. In the result, appeal is dismissed.

Order pronounced in open Court on 13th February, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 13th February, 2015.

TNMM

Copy to :

1. M/s. Sravani Impex Pvt. Ltd., Flat No.B-4, President Banjara, Road No.2, Banjara Hills, Hyderabad; C/o.Shri A.V.Raghu Ram, Advocate, 610, Babukhan Estate, Basheerbagh, Hyderabad-1.

2. ITO, Ward-3(2), I.T.Towers, A.C.Guards, Hyderabad

3. CIT(A)-IV, Hyderabad

4. CIT-III, Hyderabad

5. D.R. ITAT, Hyderabad