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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The above titled appeal by the Revenue and the cross objection by the assessee have been preferred against the 2 & CO No.151/M/2018 Shri Laxmikant Sharma order dated 02.03.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.
(Revenue’s appeal) 2. The tax effect in this appeal is not exceeding Rs.20 lakhs and therefore the same is dismissed as not maintainable in terms of Board’s Circular No.3/2018 (F.NO.279/MISC.142/2007-ITJ (PT)] dated 11.07.2018.
CO No.151/M/2018 3. In the ground Nos.1, 2 & 3 the assessee has challenged the order of Ld. CIT(A) in confirming the additions on account of warehousing charges Rs.5,50,000/-, rent paid Rs.2,40,000/- and transportation charges Rs.8,69,942/- on the ground that no TDS has been deducted as provided under the Act and therefore the said expenses were not admissible as per the provisions of section 40(a)(ia) of the Act. The AO issued a show cause notice to the assessee for the same which was replied by the assessee vide letter dated 12.12.2011 wherein it was submitted that warehousing charges have been paid to persons who arranged goods for the assessee and is in the nature of reimbursement of expenses and not liable for TDS. It was also submitted that the rent of Rs.2,40,000/- was paid to two persons namely Shri Sunil Sharma and Shri Abhishek Sharma who were co-owners of the assessee and the payment has not exceeded Rs.1,20,000/- and thus not liable for TDS. As regards transportation charges, the assessee submitted that there was no contract of the assessee with the
In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee upholding the disallowance by holding that assessee has not furnished details and break up of the warehousing expenses of Rs.5,50,000/-. As regards transporting charges, the Ld. CIT(A) observed that the transportation charges to various parties are covered under section 194C of the Act and liable to TDS. Similarly, the Ld. CIT(A) upheld the addition of Rs.2,40,000/- on the ground that the assessee has not filed any proof of fact of payment not exceeding Rs.1,20,000/- to each person.
After hearing both the parties and perusing the material on record, we find that in the case of warehousing charges the same are in the nature of reimbursement of expenses by the assessee to the third party who has incurred expenses on behalf of the assessee. It is a settled law that any reimbursement of expenses involving no profit element is not liable for TDS and therefore we are not in agreement with the conclusion of the Ld. CIT(A) on this issue and the same is ordered to be deleted.
As regards payment of rent of Rs.2,40,000/-, we find that the assessee has made payment to two persons namely Shri Sunil Sharma and Shri Abhishek Sharma who were co- owners of the property and the payment to each one of them
4 & CO No.151/M/2018 Shri Laxmikant Sharma did not exceed Rs.1,20,000/- as is apparent from the agreement of lease rent furnished before the Bench during the course of hearing. Therefore, we are of the considered view that same is also not covered by the provision of section 194I of the Act and can not be subjected to disallowance under section 40(a)(ia) and has to be deleted. Similarly, the transportation charges were paid to various parties who were truck agents for transportation for the assessee and admittedly no TDS was deducted under section 194C of the Act. The alternative plea of the assessee that where the income of the assessee is estimated by rejecting the books of accounts, the other disallowances such as the disallowances for non deduction of TDS at source can not be made. In the case of Teja Constructions vs. ACIT (2010) 036 DTR 0220 it has been held by the co-ordinate bench of the Tribunal that whereas the books of accounts are rejected by the AO and the income is estimated, then AO is precluded from invoking any other provisions of the Act to make further additions. We, therefore, respectfully following the decision of the co-ordinate bench of the Tribunal, are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the additions as made under section 40(a)(ia) of the Act.
The issue raised in ground No.4 is as regards the confirmation of addition of Rs.2,00,900/- by the Ld. CIT(A) as made by the AO by treating the investment as unexplained investment under section 69 of the Act.
5 & CO No.151/M/2018 Shri Laxmikant Sharma 8. We observe from the order of lower authorities that the amount has been sustained on account of investments in the shares on the basis of AIR information qua which the assessee has not filed any details before the authorities below. However, before us the Ld. A.R. filed the copy of D-Mat account and submitted that assessee has been allotted 170 shares @ Rs.70/- which was also appearing in the D-Mat account of the assessee. The Ld. A.R. argued that the assessee has not made any investments as has been observed by the authorities below. After perusing the records before us carefully, we are of the view that the issue is required to be examined afresh at the level of AO after appreciating the evidences as filed by the assessee as such as D-Mat account and other records. Therefore, we restore the issue back to the file of the AO with the direction that the same should be decided on the basis of evidences which the assessee may file before the AO. We would like to direct the assessee to co- operate in furnishing the necessary evidences before the AO so that issue could be decided accordingly. The issue is set aside.
In the result, cross objection of the assessee is partly allowed.
Order pronounced in the open court on 27.08.2018.