TMI Blog2013 (7) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... is reflected in P&L account it has also been stated on behalf of the assessee that this method of accounting is being followed by the GSA and their agents in India without any exception. On a consideration of the same, since the findings arrived at has neither been rebutted on facts and no evidence has been led to show that either the modus operandi followed by the assessee was not followed by GSA and their agents in India or that on account of following this system some amounts not included in the total income stood adjusted with the TDS considered no good reason to interfere with the finding arrived at in the impugned order - Decided against the revenue. - I.T.A.No.3623/Del/2011 - - - Dated:- 30-4-2013 - Shri G. D. Agrawal And Smt. Diva Singh,JJ. For the Appellant : Shri D. K. Mishra, DR. For the Respondent : Shri Arvind Sonde, Advocate. ORDER Per Diva Singh, Judicial Member This is an appeal filed by the Revenue against the order dated 18.05.2011 of the Commissioner of Income-tax (Appeals)-VII, New Delhi, pertaining to the Assessment Year 2005-06 on the following grounds:- "01. The order of the Learned CIT(A) is erroneous contrary to facts and Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n various case laws. The AO considering the submissions passed the rectification order under sec. 154 dated 31.01.2011 withdrawing the credit of TDS of the stated amount. 3. This order was challenged before the learned CIT(A). In the rectification order the AO observed that the assessee company had been allowed credit for TDS amounting to Rs.8,05,45,370/- at the time of assessment. The analysis of the statement of TDS reconciliation and income relating to these certificates showed that the credit was allowed on TDS amounting to Rs.2,75,78,008/- which was deducted on income which did not form part of total income of the current year as such it was not allowable as per the provisions of Income-tax Act, 1961. Referring to the fact that the notice under sec. 154/155 had been issued requiring the assessee to explain as to why TDS amounting to Rs.2,75,78,008/- should not be withdrawn. In response to the same the assessee company relied upon various case laws and submitted that the credit for TDS was allowable. The explanation was considered not acceptable and withdrawal of credit of TDS amounting to Rs.2,75,78,008/- was made. Aggrieved by this the assessee came in appeal before the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deducted in order to comply with the provisions of section 194C of the I T. Act. It is emphasized that the entire cargo sales of the Airlines are routed through the appellant's bank accounts (i.e. the funds collected from cargo sale is received by the appellant from various agents and then the appellant remits this amount collected to the Airlines). Since the entire amount 'is remitted to the Airlines, the same does not get reflected in the appellant's Profit Loss ale. Only the GSA commission earned and received from the Airline on the cargo sales is reflected in the Profit Loss ale. The above-mentioned accounting treatment is being followed by all the GSAs and their agents in India without any exception and the appellant being one of them. Thus, as explained above, the crux of the matter is: a. The above-mentioned accounting treatment is being followed by all the GSAs and their agents in India without any exception and the appellant being one of them. b. The entire cargo sales of Airline are routed through the appellant's bank accounts. c. The agents deal with GSA and not the Airline and therefore agents deducts the TDS u/s 194C on the remittance made to GSA and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed the credit of TDS in a consistent manner over the years (i.e. both in the previous, relevant subsequent assessment year), the same has also been duly accepted by the Assessing Officer of the rank of Additional Commissioner of Income Tax. This accounting treatment followed by the appellant, is also followed by all the GSAs their agents in India without any exception. It may please be appreciated that the Agents have no choice but to deduct TDS as per the provisions of section 194C, otherwise he would be violating the law and would face serious consequences even though there is a mis match between the income and gross receipt. It is a peculiar circumstance in this line of business. If a holistic view is taken of the entire facts, it can be seen that there is no loss of revenue. It is not a case wherein any income has escaped assessment. The entire transaction is getting accounted for in the books of accounts and the corresponding income being fully reflected and declared in the Return of Income. Moreover, even if the Profit Loss account of the appellant is recasted in order to show the gross receipt from the customer as income, there would be a corresponding expense e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Return of Income. Hence, the TDS money gets locked up till such time the appellant gets its refund. From the above, it is clear that the sales are made by the agent on behalf of the Airline but since the agent is dealing with the appellant and not with the Airline, the agent deducts TDS u/s 194C of the Act on the remittance made to the appellant and issues TDS certificates in the name of the appellant. Hence, the appellant's tax gets deducted at source in order to comply with the provisions of section 194C of the Act. 5.5 It is also observed that the entire cargo sales of the Airlines are routed through the appellant's bank accounts (Le the funds collected from cargo sale is received by the appellant from various agents and then the appellant remits this amount collected to the Airlines). Since the entire amount is remitted to the Airlines, the same does not get reflected in the appellant's Profit Loss account. Only the GSA commission earned and received from the Airline on the cargo sales is reflected in the Profit Loss account. It has been stated that the above- mentioned accounting treatment is being followed by all the GSAs and their agents in India without any except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be tax neutral does not address the issue. It was also submitted that it was not sufficient compliance of the duty imposed by the statute on the authority while adjudicating on the issue. The issue, it was his submission, should be set aside to the AO so as to examine specifically that if at all it is tax neutral then to what extent it is tax neutral. It was his submission that complete facts and the actual position of the airline, agents of the assessee and the assessee has not been looked into and going on general arguments and hypothesis relief has been granted. Accordingly, looking at the clear mandate of law as per the relevant provision of the law the issue needs to be restored back. 6.1. Ld. AR on the other hand heavily relied upon the impugned order. It was his submission that no effort has been made by the department to show what is the error in the impugned order whether on fact or law. The modus operandi in the case of the GSA business is identical. All such General Sales Agent where their agents deal with the GSA who makes the payment to the airlines follow this practice and the reconciliation shown by the assessee has not been faulted with. No contrary view or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ravel Services (Firm) in 2004-05 assessment year. The assessee has also stated to have filed reconciliation of TDS certificates for 2004- 05 to 2006-07 assessment years wherein the assessment orders passed u/s 143(3) of the Act were relied upon in support of the assertion that the amounts stand reconciled. It is seen that these submissions have been accepted by the CIT(A). We have already reproduced the relevant findings in the earlier part of this order. On a consideration of the same, we are of the view that since the findings arrived at has neither been rebutted on facts and no evidence has been led to show that either the modus operandi followed by the assessee was not followed by GSA and their agents in India or that on account of following this system some amounts not included in the total income stood adjusted with the TDS considered. In the absence of any rebuttal on facts or law, we find no good reason to interfere with the finding arrived at in the impugned order. Being satisfied with the reasoning and finding, the departmental ground is dismissed. 8. In the result, the appeal of the department is dismissed. The order is pronounced in the open court on 30th of April 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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