M/S AIRLINK INTERNATIONAL,B-6, SHAKTESH APARTMENT, MOTI DOONGRI ROAD, JAIPUR vs. CPC, BANGALORE/ ITO, WARD-5(2), JAIPUR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 401/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2017-18. cuke M/s. Airlink International CPC Bangalore/ Vs. B-6, Shaktesh Apartment, ITO, Ward 5(2), Moti Doongri Road, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAJFA 8768 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal, C.A. jktLo dh vksj ls@ Revenue by : Shri Chandra Prakash Meena, Addl.CIT lquokbZ dh rkjh[k@ Date of Hearing : 04/01/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 07/02/2023 vkns'k@ ORDER

PER: SANDEEP GOSAIN, J.M.

This appeal by the assessee is directed against the order of ld. CIT(A),

National Faceless Appeal Centre (NFAC), Delhi dated 13.09.2022 for the assessment year 2017-18. The assessee has raised the following grounds of appeal :- 1. The ld. CIT (A), NFAC has erred on facts and in law in upholding the adjustment made by AO (CPC) in processing the return u/s 143(1)/154 of the Act. 2. The ld. CIT (A), NFAC has erred on facts and in law in confirming the adjustment of Rs. 1,26,459/- made by AO (CPC) by applying n.p. rate of 8.16% on the differential receipt of Rs. 15,48,902/- (30,33,776-14,48,874) reflected in Form 26AS. 3. The ld. CIT (A), NFAC has erred on facts and in law in confirming the adjustment of Rs. 12,95,311/- made by AO (CPC) for commission receipt reflected in Form 26AS without allowing any deduction of expenditure

2 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur.

incurred for earning such receipt and without considering that the nature of such receipt is also the same as mentioned in Ground No. 2 above.

handling services both through air and ocean to various parties. In consideration

they received the reimbursement of the freight charges paid to the shipping/airline

companies and the commission. These companies deducted tax at source under

section 194H/194C on the total amount paid to appellant. The assessee has

maintained day to day books of accounts. The freight receipt is Rs. 1,05,33,700/-

and the expenditure incurred there against is Rs. 90,52,139/- and accordingly the

net freight charges of Rs. 14,81,570/- is credited in the Profit & Loss account. After

considering the expenditure debited to Profit & Loss account, the net profit is Rs.

83,770/- but the income computed under normal provisions after disallowing the

income tax debited to Profit & Loss account is Rs. 1,21,231/-. Accordingly, assessee

filed return under section 44AD declaring total income of Rs. 1,21,231/- which is

more than the deemed profit of Rs. 1,18,790/- under section 44AD of the Act. The

AO CPC processed the return under section 143(1) on 21.03.2019 and determined

the total income at Rs. 15,43,000/- comprising of income under the head profit &

gains from business at Rs. 2,47,690/- and income from other sources at Rs.

12,95,311/-. The appellant filed rectification application under section 154 of the Act.

The same was rejected stating that the assessee has not correctly filled schedules in

the return like BP/DEP/DOA/P&L/PART A-01 of the Income tax Return-ITR-4. Being

aggrieved by the order of AO CPC, the assessee preferred appeal before NFAC Delhi

but the same was rejected stating that assessee has not submitted any documentary

3 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur.

evidence as to why the payer would deduct tax u/s 194H when the amount paid is

against the freight charges. Now the assessee has come in appeal before the

Tribunal. 3. Ground No. 1 raised by the assessee has not been pressed, therefore, the

same is dismissed as not pressed.

Ground No. 2 & 3 are inter-connected and inter-related challenging the adjustment of Rs. 12,95,311/- made by the AO CPC and confirmed by ld. CIT (A).

under :-

“ It is submitted that assessee is providing cargo handling services to

its customers. In the bills raised assessee charges the customers for air/ocean

freight, custom clearing, terminal handling charges, local transportation,

loading/unloading, etc. on case to case basis. The same is credited to freight

charges account. Against this the expenditure incurred is debited to freight

charges account and the net amount is credited to P & L A/c. Thus, the

nature of services provided to all the customers is same. However, from Form

No. 26AS it can be noted that 3 parties namely CP Worldlines Pvt. Ltd., Total

Transport System Pvt. Ltd. and Tulsidas Khemji Pvt. Ltd. who made payment

of Rs. 12,95,311/- have deducted TDS u/s194H (PB 8, 10 & 11). All other

parties have deducted TDS u/s 194C. Even Tulsidas Khemji Pvt. Ltd., has

deducted TDS u/s 194C on some amount and u/s 194H on some amount.

From the copy of ledger account of Total Transport System Pvt. Ltd.

along with sample invoice (PB 35-37, Tulsidas Khemji Pvt. Ltd. along with

sample invoice (PB 38-40) and CP Worldlines Pvt. Ltd. along with sample

4 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur.

invoice (PB 41-44) it can be noted that the invoices raised is only for freight

charges. Hence, only because these 3 parties have deducted TDS on the

amount of Rs. 12,95,311/- u/s 194H instead of U/s 194C, the same cannot be

assessed as income from other sources. From the sample copy of invoice

raised on other parties (PB 45-70), it can be noted that the services rendered

to other parties is same as provided to the above 3 parties. Therefore, simply

because these 3 parties have deducted TDS u/s 194H, the receipt from them

cannot be assessed as income from other sources. Even if the above receipts

are assessed as income from other sources, deduction of expenditure incurred

against such receipt ought to have been allowed by ld. CIT (A). Hence, the

addition of Rs. 12,95,311/- confirmed by ld. CIT (A) is apparently incorrect

and be directed to be deleted.

It may also be noted that the receipt of assessee is only Rs.

14,81,570/- and, therefore, taking such receipt on the basis of Form 26AS at

Rs. 30,33,776/- and making addition of Rs. 1,26,459/- by applying rate of

8.16% on the difference is incorrect and, therefore, the addition confirmed to

this extent by ld. CIT (A) be deleted.

In view of above, addition confirmed by ld. CIT (A) be directed to be

deleted.”

Authorities.

available on record and gone through the orders of the revenue authorities. As per

5 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur.

the facts of the present case, the assessee is engaged in the business of arranging

transportation from which it receives reimbursement of the freight charges paid to

the shipping/airline companies and the commission. As per record, the assessee has

shown gross receipt of Rs. 14,84,874/- whereas gross receipt as per Form 26AS is

Rs.43,29,087/-. Out of this amount, TDS under section 194C has been deducted by

the parties on Rs. 30,33,776/- and TDS under section 194H has also been deducted

on Rs. 12,95,311/-. Therefore, considering these circumstances, AO made addition

of Rs. 1,26,459/- being 8.16% of Rs. 15,48,902/- on the receipts on which TDS was

deducted under section 194C of the IT Act. However, an addition of entire amount

of Rs. 12,95,311/- was made in respect of this amount as TDS under section 194H

of the IT Act as per details contained in Form 26AS.

6.1 Since during the appellate proceedings, the assessee himself has suggested

before ld. CIT (A) to restrict the addition to Rs. 1,26,459/- on account of receipt of

Rs. 15,48,902/- being 8.16% of the receipts, therefore, addition was sustained by ld.

CIT (A). Even before us, the ld. A/R could not controvert the findings so recorded by

the ld. CIT (A) except submitting the arguments as mentioned in his written

submissions.

6.2 Now as far as addition of Rs. 12,95,311/- is concerned, in this regard the

facts are undisputed to the extent that the assessee has not shown the receipt of

Rs. 12,95,311/- on which TDS under section 194H has been deducted. Since

assessee himself submitted that it is engaged in the activities of transportation which

includes commission. Although the ld. A/R has stressed upon the fact that the

amount paid to the assessee is reimbursement of freight charges paid by it, but in

this regard the ld. A/R has not been able to substantiate his arguments. It is an

6 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur.

undisputed fact that the payer companies had deducted TDS under section 194H on

the payment of Rs. 12,95,311/- which has not so far been corrected by the

assessee. Since the assessee was very much aware regarding deduction of TDS

under section 194H on payment of Rs. 12,95,311/- by the parties/companies, even

then no effort was made to get the same corrected from the said companies.

Therefore, at this stage assessee cannot point out the defects in the orders passed

by the revenue authorities. The other arguments of the ld. A/R that at the most the

addition could have been restricted to Rs. 1,05,698/- being profit earned @ 8.16%

in respect of these receipts. However, this argument of the ld. A/R could not be

upheld because of the simple reason that as per the provisions of section 44AD(6) of

the IT Act, the provisions of this section are not applicable on a person earning

income in the nature of commission. Thus the said argument of the ld. A/R is not

tenable. Since the revenue authorities have rightly appreciated the facts and

considered the said receipts as income from other sources but still in these

circumstances assessee was entitled to deduction of expenditure incurred against

such receipts. Therefore, the AO is at liberty to verify the expenditure, if so claimed

by the assessee within 30 days from the date of receipt of this order. With these

observations, we partly allow the grounds raised by the assessee.

Order pronounced in the open court on 7/02/2023.

Sd/- ¼lanhi xkslkbZ½ Tk;iqj@Jaipur (SANDEEP GOSAIN) fnukad@Dated:- 07/02/2023. U;kf;d lnL;@Judicial Member

7 ITA No. 401/JP/2022 M/s. Airlink International, Jaipur. Das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant-M/s. Airlink International, Jaipur. 2. izR;FkhZ@ The Respondent- The CPC Bangalore/ITO Ward 5(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 401/JP/2022}

vkns'kkuqlkj@ By order

सहायक पंजीकार@Aेेज. त्महपेजतंत