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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri JOGINDER SINGH, & Shri G. MANJUNATHA
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 01/03/2016 of the Ld. First Appellate Authority, Mumbai, in not allowing the addition made as service fee on reimbursement of expenses on actual cost basis despite the fact that the assessee could not produce any supporting evidence on such expense that there was no income element while claiming reimbursement of such expenses and further in violating the Rule 46A of the I.T.
Rules in not providing opportunity to the Ld. Assessing Officer while admitting additional evidence during appellate proceedings.
During hearing, the Ld. DR, Ms. N. Hemlatha advanced arguments, which is identical to the ground raised, by asserting that the assessee did not record the expenses in profit & loss account for which our attention was invited to the finding recorded in the assessment order and further the assessee kept on debiting expenses incurred on client’s ship without adjusting advance received from client/ship owners. It was also pleaded, while
M/s Bernhard Schulte Shipping (India) Pvt Ltd. admitting the additional evidence, the Ld. Commissioner of Income Tax (Appeal) did not provide any opportunity to the Ld. Assessing Officer, therefore, it is violation of Rule-46A of the I.T. Rules. However, the ld. counsel for the assessee, Shri PRV Raghavan, defended the impugned order by contending that the Ld. Commissioner of Income Tax (Appeal), after considering the factual matrix came to a justifiable conclusion.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company is engaged in the business of Vessel Management and Marine Consultancy, declared total income of Rs.1,68,84,140/- on 08/10/2010. Notices u/s 143(2) and 142(1) along with questionnaire calling for various details were served upon the assessee to which the assessee attended the proceedings and made submissions.
The Ld. Assessing Officer asked the assessee to furnish the trial balance of the company wherein opening balance tot debit, tot credit and closing balances are provided. On perusal of the trial balance, the Ld. Assessing Officer observed that the expenses mentioned at page-2 onwards
M/s Bernhard Schulte Shipping (India) Pvt Ltd. were not accounted for in the profit & loss account and recorded as current asset, loans and advances in the balance sheet. It was further observed that the assessee kept on debiting expenses incurred on client’s ship without adjusting advances received from ship owners. As per the Revenue, the assessee, in spite of providing opportunities did not provide any evidence that the expenses are reimbursed on actual cost to cost basis. Considering the facts, the Ld. Assessing Officer framed assessment u/s 143(3) of the Act as detailed in the assessment order. The assessment was carried in appeal before the Ld. Commissioner of Income Tax (Appeal), where the assessee furnished additional evidences and relief was granted to the assessee without providing opportunity to the Assessing Officer nor any remand report was sought from him. Thus, without going into much deliberation, we note that it is clear cut case of violation of Rule-46A of the Rules. Even otherwise, mandate of Article 265 of Constitution of India only due tax has to be levied/collected, therefore, we remand to this appeal to the file of Ld. Assessing Officer to examine the claim of the assessee afresh, in accordance
M/s Bernhard Schulte Shipping (India) Pvt Ltd. with law. The assessee is directed to furnish the necessary details before the Ld. Assessing Officer to substantiate its claim. The assessee be given opportunity, thus, the appeal of the Revenue is allowed for statistical purpose.
Finally, the appeal of the Revenue is allowed for statistical purpose.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 02/05/2018.