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IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI
BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM)
.. , .. ,
./I.T.A. No.55/Mum/2013
( / Assessment Year :2009-10)
Asstt.Commissioner of Income / 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
( /Appellant) .. ( / Respondent)
. / . / PAN/GIRNo. :AACFC8577G
/ Appellant by : Shri Neil Philips
/Respondent by Shri Prakash Pandit
/ Date of Hearing
: 1.1.2015
/Date of Pronouncement : 16 .01.2015
/ 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
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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
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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
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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.
16 th Jan 2015
sd sd
(.. / H.L. KARWA) (.. ,/ B.R. BASKARAN)
/ PRESIDENT /Accountant Member
Mumbai:
th Jan, 2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
6. / Guard file.
/ BY ORDER,
true copy
(Asstt. Registrar)
, /ITAT, Mumbai
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