PATIDAR EXPORT PVT. LTD.,AHMEDABAD vs. ITO, WARD-3(1)(2),, AHMEDABAD

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ITA 946/AHD/2019Status: DisposedITAT Ahmedabad15 October 2026AY 2013-148 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided on the issues as follows: Regarding Ground No. 4 (Rent Expenses): The Tribunal held that the ground has no merit. While the assessee admitted non-deduction of TDS on rent expenses, they failed to produce a certificate from the payee's Chartered Accountant confirming that the rent receipts were accounted for in the payee's income computation. Therefore, the disallowance was upheld against the assessee. Regarding Ground No. 5 (Weight Shortage Expenses): The Tribunal restored this issue to the file of the Assessing Officer (AO). The assessee presented documents from foreign purchasers confirming the weight shortage. The revenue argued these documents were not submitted earlier. The Tribunal directed the AO to verify the claim and provide detailed findings in accordance with the law. Regarding Ground No. 6 (Export Freight): The Tribunal restored this issue to the file of the AO for verification. The assessee contended that the export freight was paid to government agencies, and TDS was not applicable. The revenue did not object to the restoration. The Tribunal clarified that if payments made through an agent were ultimately to government agencies, it would be treated as direct payment to government agencies, and relevant provisions would apply. The AO is to verify whether TDS was liable to be deducted. Grounds 7 & 8 were not pressed. The appeal was treated as partly allowed for statistical purposes.

What were the facts?

The assessee, Patidar Exports Private Limited, filed an appeal against the order of the CIT(A)-9, Ahmedabad, dated March 20, 2019, for Assessment Year 2013-14. This was the second hearing before the Tribunal. An earlier ex parte order by the Tribunal and dismissal of the assessee's recall application were set aside by the Gujarat High Court, which restored the matter to the Tribunal upon the assessee depositing Rs. 10,000/-. The assessee submitted proof of this deposit. The appeal concerns additions/disallowances made by the Assessing Officer (AO) and confirmed in part by the CIT(A), totaling Rs. 3,18,15,299/-. The grounds of appeal challenge the legality of the AO's order, the failure to consider explanations, violation of natural justice, and specific disallowances related to rent expenses, weight shortage expenses, export freight, payments to specified persons, and bank interest.

What were the issues?

1. Whether the disallowance of rent expenses for non-deduction of TDS, despite the payee showing the income and paying tax, is legally sustainable (Section 40(a)(iib) of the Income Tax Act, 1961)? - Assessee's contention: The payee has accounted for the rent receipts and filed their return of income, thus no loss to the government. - Revenue's contention: Not recorded. 2. Whether the disallowance of Rs. 93,95,196/- on account of weight shortage expenses is justified, considering the nature of the business and confirmations from foreign customers (Section 37 of the Income Tax Act, 1961)? - Assessee's contention: The weight loss was actual and confirmed by foreign purchasers; similar expenses were allowed in earlier years. - Revenue's contention: The documents supporting the claim were not submitted before the lower authorities and require examination by the AO. 3. Whether the disallowance of Rs. 1,34,94,654/- on account of export freight for non-deduction of TDS is correct, especially if the payment was made to government agencies through an agent (Section 40(a)(i) and Section 194C of the Income Tax Act, 1961)? - Assessee's contention: Freight was paid to government agencies, and TDS was only deducted on the agent's service fee; the issue should be restored to the AO for verification. - Revenue's contention: Not objected to the restoration for verification.

Which sections of the Income-tax Act were involved?

Section 250,Section 254,Section 37,Section 40(a)(iib),Section 40(a)(i),Section 194C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI R. GOVINDARAJAN

For Appellant: Shri S N Divatia & Shri Samir Vora, Shri Umesh Kumar Agrawal, Sr. D.R
For Respondent: Shri Umesh Kumar Agrawal, Sr. D.R
Hearing: 12/10/2026Pronounced: 15/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI R. GOVINDARAJAN, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 946/Ahd/2019 (िनधा�रण वष� / Assessment Year : 2013-14) बनाम Patidar Exports Private The Income Tax Officer / Ward-3(2)(1), Ahmedabad Limited Vs. 411, Shanti Arcade, 132 Ft. Ring Road, Naranpura, Ahmedabad, Gujarat-380013 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAGCP1577L (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri S N Divatia & Shri Samir Vora, ARs. ��यथ� क� ओर से/Respondent by : Shri Umesh Kumar Agrawal, Sr. D.R. Date of Hearing 12/10/2026 Date of Pronouncement 15/10/2026 (आदेश)/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-9, Ahmedabad (hereinafter referred to as “CIT(A)”), dated 20.03.2019 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2013-14.

2.

This is second round of hearing before the Tribunal. Earlier Tribunal had passed the order in this appeal dated 26.05.2023,

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 2 –

which was ex parte of the assessee. Thereafter, the assessee also filed an application for recalling of the order u/s 254 of the Act vide MA No.87/Ahd/2023, which also stood dismissed by the Tribunal. Thereafter, the assessee preferred appeal before thee Hon’ble Gujarat High Court. The Hon’ble Gujarat High Court vide order dated 22.04.2025 restored the matter to this Tribunal subject to deposit of Rs.10,000/- in Gujarat State Legal Services Authority. Ld. Counsel for the assessee has relied upon the receipt no2740, dated 20.05.2025 and submitted that the assessee has deposited Rs.10,000/- with the Gujarat State Legal Services Authority. Therefore, we proceed to hear the appeal on merits.

3.

The assessee, in this appeal, has taken following grounds of appeal:

“1 The order passed u/s 143(3) on 22/03/2016 for the assessment year 2013-14 by ITO ward 3(1)(2) Ahmadabad making an additions/ disallowances of Rs. 3,18,15,299/-is wholly illegal, unlawful and against the principal of natural justice. The Ld. CIT(A) has passed the order u/s 143(3) and has confirm the addition of Rs. 21645108/- 2. The Lt. A.O has grievously erred in law and or on facts in not considering fully and properly explanation furnished and evidence produced by the appellant. 3. The Lt. A.O. has grievously erred in making impugned additions/ disallowances without giving sufficient and specific opportunity to the appellant and thereby violating the principal of natural justice. The appellant should therefore be allowed to produce additional evidence during the course of appellate proceedings and should be admitted. 4. The Lt. A.O has grievously erred in law and or on facts making addition in respect of Rent expenses even if the there is no loss or escape of income to the government as the party has shown the said income in their return and paid full tax on it. So pray for disallow the addition made by A.O.

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 3 –

5.

The Lt. A.O. has disallowed, the weight shortage expenses and added Rs.93,95,196/- in gross total income. The appellant is in the business of export of raw cotton and cotton is one of the most affected commodities by atmosprific change and up to 25 to 30% of volume. The debit note raised by the foreign customer has been paid and same has been treated as weight shortage. Earlier year same expense has been allowed. More over payment made to foreign parties against their debit note. The Ld. CIT (A) has not taken into consideration the proof given to counter the arguments and confirm the partly addition. 6. The Ld A.O has made an addition because of non deduction of TDS on Export freight of Rs. 1,34,94,654/- and Ld. CIT (A) has not granted an additional documents submitted at the time of hearing u/s 46A as per page 27 of order with the remarks (submissions made vide letter dated 28.12.2018 have not been taken into consideration as the same has been filed for the first time before the undersign.) The A.O before making addition has not asked for the documents and the LD CIT (A) has not considered the documents submitted before them as an addition documents. 7. The Lt. A.O has made an addition on account of payment to specified persons. The payment made to the said company against the supply of materials. The purchase made from that party is at par with the other companies or ultimate benefit to appellant. The addition made is no base or reason. Addition made in total income on assumption basis which violating the principal of natural justice. The CIT (A) in PANELY CASE HAS DELEATE THE PENALTY AS PER ORDER. 8. The Lt. A.O has grievously erred in law and or on facts making an addition of Rs.26,328/- of bank interest which already reconcile by the books. The bank deducted the TDS on receipt basis while we keep our books in mercantile basis. So we pray to disallow the said addition. 11. Any other ground or grounds as may be urged at the time of hearing.” Ground Nos. 1 to 3

4.

Ground Nos. 1 to 3 are general grounds of appeal. The issues taken therein will be discussed in the subsequent grounds of appeal.

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 4 – Ground No.4

5.

The assessee, vide Ground No.4, has agitated against the disallowance of rent expenses for non-deduction of TDS. Ld. Counsel for the assessee, though, has admitted that the assessee had not deducted TDS on rent expenses, however, has insisted by the payee has taken into account the said receipts and duly filed the return of income. However, the assessee has not produced any certificate from the Chartered Accountant of the payee to show that the payee has taken into account the rent receipts while computing the income as per the return of income filed by the payee. Therefore, there is no merit in the ground no.4 and the same is, accordingly, decided against the assessee.

Ground No.5

6.

Vide ground no.5, the assessee is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the Assessing Officer (in short ‘the AO’) on account of disallowance of Rs.93,95,196/- on account of expenditure / loss claimed on account of weight shortage expenses. Ld. Counsel for the assessee has submitted that both the lower authorities have disallowed the aforesaid claim on considering and comparing the said loss on account of shortage of stock with the earlier and subsequent years. Ld. Counsel for the assessee has submitted that weight loss of the materials exported was actual and real, which was confirmed by the recipient. He has relied upon certain documents and submitted

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 5 –

that the recipient purchasers viz. Samsung C And T Hongkong Limited, Pakiza Spinning Mills Ltd. and H S Corporation etc. have confirmed such shortage as detailed in paper book page nos. 40 & 41 of the paper book. The relevant part of the page no. 40 & 41 relied upon by the Ld. Counsel is reproduced hereunder:

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 6 –

7.

Ld. DR, on the other hand, has submitted that these documents were not submitted before the lower authorities and, hence, the same are required to be examined by the AO.

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 7 – 8. Considering the above submissions, this issue is restored to the file of the AO with a direction to verify the claim of the assessee regarding weight shortage expenses and give detailed findings, in this respect, in accordance with law.

Ground No.6

9.

Vide Ground No.6, the assessee has agitated the disallowance made by the AO on account of non-deduction of TDS on Export freight of Rs.1,34,94,654/-. Ld. Counsel for the assessee, in this respect, has submitted that the export freight expense was paid by the assessee to Government Agencies. The assessee has appointed an agent through whom the said payments were made. He has submitted that the assessee duly deducted TDS on the consultation / service fee paid to the said agent. However, the freight payment, though, paid through the agent was, in fact, paid to the Government, whereupon, no TDS was liable to be deducted. He has submitted that the issue may be restored to the file of the AO for verification. Ld. DR has not objected to the same. This issue is, accordingly, restored to the file of the AO for verification on the limited issue as to whether the assessee was not liable to deduct TDS, in this respect. It is made clear that if the payment made through agent, but ultimately, is paid to the Government, then the same will be taken as payment made by the assessee directly to the Government agencies and relevant provisions will, accordingly, apply.

ITA No.946/Ahd/2019 [Patidar Export Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 8 –

10.

Ground Nos. 7 & 8 are not pressed. No other grounds are raised or pressed for the adjudication.

11.

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.

This Order is pronounced on 15/10/2026

Sd/- Sd/- (R. GOVINDARAJAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/10/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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