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Income Tax Appellate Tribunal, ‘B’ / ‘SMC’ BENCH: CHENNAI
Before: SHRI G. MANJUNATHA, HON’BLE
आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, dated 30.09.2019 and pertains to assessment year 2007-08.
The assessee has raised the following grounds of appeal:
1. The order of the Learned Commissioner of Income Tax Appeals, in so far as it is prejudicial to the interest of the appellant, is against law, principles of justice, weight of evidence, probabilities of the case of the appellant.
2. The learned CIT is erroneous has ignored the principles of natural justice in passing the order without considering the supporting evidences filed and apparently insisting on physical appearance of a closed company. The assessing officer and the Learned Commissioner of Income Tax Appeals have traversed beyond the direction given by the Honorable Bench to verify the evidences. 3. The learned CIT Appeals has erred in upholding the disallowance of Harbor expenses by the Assessing officer for reasons other than those mentioned by the Assessing officer thereby overstepping on the brief before him. No such M/s.Jyothiskar Marketing Services Pvt. Ltd. :: 2 ::
disallowance should have been and confirmed as they were all legitimate business expenditure.
The Learned Appellate Commissioner is totally wrong in stating that no documentary evidence has been produced during original and appeal proceedings especially when copies of all relevant documents were filed during assessment proceedings and also before the Appeal Commissioner and when such documents were relied upon and one of the additions made in the original assessment were deleted by the previous Commissioner of Income Tax(A) and the same should have been taken in to account for this appeal also.
The learned CIT Appeals has overlooked the submissions made and has erroneously stated that ITR. Financials, assessment order, enquiries made during the original assessment are not available on record when the same were produced before CIT Appeals in paper book thus turning a blind eye to the written submission and evidence produced in the form of paper book during the appeal.
6. The appellant craves leave to file and furnish in case of a need additional grounds 4.if any before the hearing or at the time of hearing.
7. The appellant prays the Honorable ITAT, suitable order be passed to allow the claim and justice be rendered to the assessee appellant.
The brief facts of the case are that the assessee company filed its return of income for the AY 2007-08 on 15.11.2009 declaring total income of Rs.10,01,983/-. During the financial year relevant to the AY 2007-08, the assessee company has incurred harbour expenditure of Rs.21,60,162/- . The said expenditure has been paid by M/s.Trimex Minerals (P) Ltd., to Chennai Port Trust on behalf of the assessee company for export of iron ore. The assessee has reimbursed harbour charges to Chennai Port Trust as per debit note issued by them. The AO disallowed harbour expenditure u/s.40(a)(ia) of the Act, for non-deduction of TDS under respective provisions of the Act. The assessee carried the matter in appeal before the First Appellate Authority. The Ld.CIT(A), in their order dated 28.05.2018 sustained the additions made by the AO towards harbour charges on the ground that the assessee could not file necessary evidences. The assessee
M/s.Jyothiskar Marketing Services Pvt. Ltd. :: 3 :: carried the matter in further appeal before the ITAT. The Tribunal vide order in dated 28.09.2018, set aside the issue to the file of the AO with a direction to re-examine the claim in light of evidences filed by the assessee. During the second round of litigation, the AO called upon the assessee to file necessary evidences including proof of harbour expenditure. In response, the assessee filed ledger extracts along with copies of debit note and argued that harbour expenditure has been incurred by M/s.Trimex Minerals (P) Ltd., on behalf of the assessee. The AO deputed Inspector of his Office to verify the claim of the assessee. The Inspector of Income Tax reported that no such party is available in the given address. Therefore, the AO opined that expenditure claimed under the head ‘harbour expenditure’ is not genuine and thus, made addition of Rs.21,60,162/- for total income. On appeal, the Ld.CIT(A) has confirmed the addition made towards harbour expenditure.
4. The Ld.AR for the assessee submitted that the Ld.CIT(A) erred in not appreciating the fact that harbour expenditure debited into P & L A/c is a reimbursement of expenses incurred by the third party on behalf of us and paid directly to Chennai Port Trust. Therefore, the same cannot be disallowed u/s.40(a)(ia) of the Act, for non-deduction of TDS u/s.194C of the Act.
M/s.Jyothiskar Marketing Services Pvt. Ltd. :: 4 ::
5. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the assessee could not file any evidences to justify its case of reimbursement of expenses and thus, the AO has rightly disallowed expenditure for non-furnishing of necessary evidences.
I have heard both the parties, perused the materials available on record and gone through orders of the authorities below. I find that harbour expenditure is a reimbursement of expenses to M/s.Trimex Minerals (P)
Ltd., in turn, the party has incurred expenditure on behalf of the assessee and paid harbour expenditure to Chennai Port Trust for export of iron ore.
I further noted that the assessee has filed copies of debit notes issued by M/s.Trimex Minerals (P) Ltd., along with ledger extract, and also confirmation from the parties where the party categorically confirmed a sum of Rs.21,60,162/- is paid to Chennai Port Trust, and said payment does not come under the provisions of TDS, because, Chennai Port Trust is a Government Organization and thus, TDS has not been deducted. I find that although the assessee has filed various details including confirmation from the party and copies of debit notes to prove that it is a reimbursement but not direct expenses incurred by the assessee, the AO simply ignored all the evidences filed by the assessee and made additions. Therefore, in my considered view, additions made towards harbour expenditure for non-
M/s.Jyothiskar Marketing Services Pvt. Ltd. deduction of TDS, is not sustainable and hence, I direct the AO to delete the addition made towards harbour expenditure.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on the 14th day of October, 2022, in Chennai.