ACIT 17(3), MUMBAI vs. SKY SHIPPING, MUMBAI

ORDER PER G.S.PANNU,A.M:

The captioned appeal filed by the Revenue pertaining to assessment year 2011-12 is directed against the order passed by the CIT(A) -28, Mumbai dated 30/03/2016, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act,1961 ( in short “the Act) dated 18/03/2014.

1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the disallowance made under section 40a(ia) in respect of reimbursement expenses by following the decision of Hon'ble ITAT in assessee's own case for A.Y. 2007-08 & 2008-09. However, the said decision of Hon'ble ITAT has not been accepted by the department and appeals in both the years are still pending before the Bombay High Court for final disposal?" 3. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of Custom house clearing and forwarding. The assessee filed its return of income on 29/09/2011 declaring total income at Rs.43,21,698/- and the assessment was completed under section 143(3) of the Act on 18/03/2014 and the total income was determined at Rs.2,02,01,640/-. During the course of assessment proceedings, the Assessing Officer made a disallowance under section 40(a)(ia) of the Act of Rs.1,50,34,132/- being 5% of expenses incurred of Rs.30,06,82,658/- on account of transporters charges, Crane/Forklift/Labour charges and Warehousing charges comprised in the ‘reimbursable expenditure’. On appeal, CIT(A) deleted the disallowance following the decision of the Mumbai bench of the Tribunal in assessee’s own case for assessment years 2007-08 & 2008- 09 in and 7503/M/2011 respectively. The findings of the CIT(A) read as under:-

“ I have carefully considered the matter and find that the facts and issue in the present appeal is identical to the case of the appellant in A.Ys 2007-08 & 2008-09 before the Hon’ble ITAT Mumbai. Respectfully following the decision of the ITAT in the appellant’s own case for the A.Ys 2007-08 & 2008- 09, the disallowance made by the AO under section 40(a)(ia) in respect of reimbursement expenses is hereby deleted. Ground No.2 is allowed.”