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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The above titled appeals have been preferred by the assessee against the orders even dated 20.09.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2007-08 & 2008-09.
At the time of hearing, the assessee has not pressed ground nos.1, 2, 4 & 5 at this stage as the ground no. 3 is covered by the decision of the tribunal in assessee’s own case in A.Y. 2006-07. Accordingly these grounds are dismissed.
The ground no.3 raised by the assessee is reproduced as under:
“On the fact and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the assessing officer in disallowing a sum of Rs. 25,00,000/-
2 & 7284/M/2019 Mr. Suresh Hundia ion account of payment of made for non refundable one time premium paid by invoking the provisions of section 40(a)(ia) of the Act as per the grounds stated in the impugned order or otherwise.”
The facts in brief are that the assessee runs a proprietorship firm namely M/s. Hundia Exports which is engaged in trading of Gold Bullion. In the said business, the assessee purchases gold bullion mainly from Banks and the same is sold in the market. During the year under consideration, the assessee paid one-time premium amount to its bank namely Nova Scotia Bank amounting to Rs.25,00,000/- for AY 2007-08. According to the AO, no tax has been deducted at source u/s 194H of the Act on the impugned brokerage amount and disallowed the same u/s 40(a)(ia) of the Act, relying on the earlier order passed u/s 154 for AY 2006-07.
Aggrieved by the said disallowance, the assessee filed an appeal before CIT(A) who confirmed the disallowance relying on the CIT(A)’s order for AY 2006-07. Further, the assessee filed an appeal before the Tribunal. After considering the arguments of the assessee, the Tribunal vide order dated 31.03.2017 set aside the issue to the file of the AO to decide the issue afresh. In the set aside proceedings, AO failed to consider the directions of the Tribunal and disallowed the impugned amounts once again in the order passed u/s 254 r.w.s 143(3). In further appeal, CIT(A) confirmed the disallowance made by the AO.
Aggrieved by the above orders, the assessee has filed appeal before us.
3 & 7284/M/2019 Mr. Suresh Hundia 7. At the outset, it is submitted that the issue on merits agitated through ground no. 3 is covered by the order of co- ordinate bench of the Tribunal in the assessee’s own case for AY 2006-07 dated 21.08.2019 vide ITA No. 4858/Mum/2016 based on which the original disallowance was made by the AO. The relevant operative portion of the order is reproduced hereunder:- “5. We have heard rival submissions. We find that assessee had raised an additional ground by stating that the issue involved in the present appeal could not have been disallowed by the revenue authorities in the proceedings u/s.154 of the Act as there is no mistake apparent from the records warranting any rectification. We find that this is purely a legal issue and goes to the root of the matter and does not require any investigation of fresh facts. Accordingly, we deem it fit to admit this additional ground and consider the same for re-adjudication. We find from the submissions made by the assessee before the lower authorities, which had been completely ignored by the ld. AO and by the ld. CIT(A) that assessee has made payment of one time non-refundable premium of Rs.20 lakhs to bank of Nova Scotia for purchase of gold for the purpose of his business in order to ensure continuous and uninterrupted supply of gold by the bank to the assessee. We find from page 5 of the paper book that the bank had also confirmed the receipt of said sum of Rs.20 lakhs towards one time non-refundable premium from the assessee. Hence, this transaction of payment of one time premium would effectively go to add to the purchase cost of the gold and cannot be categorised as commission. Accordingly, there is no requirement of deduction of tax at source on the part of the assessee in terms of Section 194H of the Act and consequently, no disallowance u/s.40(a)(ia) of the Act would come into operation thereon.” (Emphasis provided by us)
On perusal of the above, it is clear that co-ordinate bench of the Tribunal has given clear cut findings that one time premium paid to bank is part of purchases and cannot be categorized as commission. Thus, the requirement of TDS is not applicable on the said amount. Similarly, in the assessment year under consideration, the assessee has paid one time premium of identical nature to the bank and the same is to be considered as part of purchase cost and therefore, no disallowance u/s 40(a)(ia) can be made. We are , therefore, inclined to set aside the order of ld CIT(A) and direct the AO to delete the
The issues raised in A.Y. 2008-09 are similar to ones as decided by us in . Therefore our decision in ITA No. 7283/Mum/2019 A.Y.2007-08 would, mutatis mutandis, apply to this appeal as well of A.Y. 2008-09. The appeal of the assessee is partly allowed.
In the result, both the appeals of the assessee are partly allowed.
Order pronounced in the open court on 02.08.2021.