VANDANA DINESHKUMAR INANI,,LATUR vs. INCOME-TAX OFFICER,,

The brief facts of the case as emanating from records are: The assessee is a commission agent and general merchant. The assessee filed her return of income for the impugned assessment year on 20-10-2009 declaring total income of Rs.3,30,758/- and agriculture income of Rs.37,412/-. The case of assessee was selected for scrutiny under CASS. Accordingly, statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was issue to the assessee on 19-08- 2010 which was duly served on the assessee on 24-08-2010. During the course of scrutiny assessment proceedings, the Assessing Officer observed that the assessee has made payments to Central/State warehousing corporations to the tune of Rs.69,27,693/- without deducting tax at source. The Assessing Officer made disallowance of said amount u/s. 40(a)(ia) of the Act.

Shri M.K. Kulkarni appearing on behalf of the assessee submitted at the outset that he is not pressing ground Nos. 1(d) and 1(e) raised in the appeal. The other grounds i.e. ground Nos. 1(a), 1(b), 1(c) and 1(f) are directed against the single issue of disallowance of Rs.69,27,693/- u/s. 40(a)(ia) of the Act. The ld. Counsel for the assessee submitted that the authorities below have failed to appreciate that the assessee has not paid

On the other hand Dr. Vivek Aggarwal representing the Department vehemently defended the findings of Commissioner of Income Tax (Appeals) in confirming the addition. The ld. DR submitted that the assessee was required to deduct tax at source under the provisions of section 194I of the Act in respect of payments made to the warehousing corporations for storage of goods. The assessee has failed to show that it is a case of reimbursement of charges. In fact, the invoices furnished by the assessee clearly indicate that the assessee has charged for goods only and there is no reference of reimbursement of warehousing charges.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue raised in appeal by the assessee is with respect to disallowance u/s. 40(a)(ia) for non-deduction of tax at source on payments made to warehousing corporations for storage of goods. The contention of the assessee is that the payments to the warehousing corporations are merely reimbursement of charges collected from buyers of the goods. We do not find merit in the submissions made by the assessee. There is no document on record that would indicate that it is a case of reimbursement of charges.

The ld. Counsel for the assessee made an oral prayer that the assessee can produce necessary evidence to show that the recipient of the amount i.e. the warehousing corporations have offered the amount paid by assessee to tax if, the matter is remitted back to the Assessing Officer for verification in the light of second proviso to section 40(a)(ia) of the Act inserted by Finance Act, 2012 w.e.f. 01-04-2013. The ld. Counsel submitted that the Hon’ble Delhi High Court in the case of Commissioner of Income Tax Vs. Ansal Land Mark Township (P) Ltd. reported as 377 ITR 635 has held that the second proviso is declaratory and curative and it has retrospective effect from 01-04-2005.

We find merit in the alternate prayer made by the assessee. Accordingly, we remit this issue back to the file of Assessing Officer for verification. The assessee shall furnish necessary details before the Assessing Officer to substantiate that the recipients of the amount i.e. the warehousing corporations have offered the amount to tax. The Assessing Officer shall decide this issue de-novo after considering the necessary documents furnished by the assessee, if any and after affording opportunity of hearing to the assessee, in accordance with law.

In the result, the appeal of assessee is partly allowed for statistical purpose.