9911796707
TMI Blog2020 (5) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the addition of Rs. 26,69,502/- on account of unpaid liabilities uls 41(1). 4. The Ld. CIT(A)-IV, Rajkot has erred in law and on facts in partly deleting the addition on account of car & motor bike expenses Rs. 83452/-, telephone & postage expenses Rs. 1,15,2671- & travel & conveyance expenses Rs. 58,9201-. 5. Any other ground that the revenue may raise before or during hearing proceedings before the Hon'ble ITA T. 6. It is therefore, prayed that the order of the CIT-IV, Rajkot may kindly be set-aside and that of Assessing Officer be restored., 2. The 1st issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO for Rs. 1,98,07,861/- towards the processing charges on account of non-deduction of TDS. 3. The facts in brief are that the assessee in the present case is a partnership firm and engaged in the business of processing/export of marine food. The assessee during the year has incurred processing charges amounting to Rs. 1,98,07,861/- without deducting the TDS under section 194C of the Act. The assessee paid the charges to Shri Ramjibhai Kanjibhai Cham whereas the bills for the processing charges were raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. There was no doubt by the AO for the purchases and the quantities procured from the said party which was subsequently sold in the export market. iv. The authorized representative of M/s Cham trading organization has accepted to have received the payment towards the plant higher charges as per the agreement. Thus, the statement suggests that there was the agreement between the assessee and M/s Cham trading organization. Furthermore, there was the clear direction by M/s Cham trading organization to make the payment to its partner as discussed above. Thus the finding of the AO is contradictory. The AO on one hand is denying the genuineness of the expenses but on the other hand admitting the fact that the assessee has paid plant higher charges. v. There was no finding in the certificate issued under section 197 of the Act for Rs. 1.50 crores suggesting that the earlier certificate issued for Rs. 50 lakhs has been substituted/cancelled/withdrawn/. In view of the above, the learned CIT (A) deleted the addition made by the AO and allowed the ground of appeal in favour of the assessee. Being aggrieved by the order of the learned CIT (A) the revenue is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instruction of the main party cannot be ground to make the disallowance of the expenses. Furthermore, the Shri Ramjibhai Kanji bhai is representing the partnership firm in the capacity of the partner. Thus, payment to the partner cannot be a ground for making the disallowance. 8.3 We also note that there was no documentary evidence brought on record suggesting that earlier TDS certificate issued by the AO for Rs. 50 lakhs was substituted by Rs. 1.50 crores. Thus it is transpired that the TDS certificate issued by the AO up to Rs. 2 crores whereas the payment was made less than Rs. 2 crores. Accordingly we hold that the payment in the given case does not exceeds the limit as specified in the TDS certificate. Hence the ground of appeal of the revenue is dismissed. 9. The 2nd issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO for Rs. 1,29,22,949/- towards the terminal handling charges on account of non-deduction of TDS, under section 194C r.w.s 40 (a)(ia) of the Act. 10. The assessee during the year has incurred terminal handling charges amounting to Rs. 1,29,22,949/- without deducting the TDS. As per the assessee the amount of te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits from operation of ships in international traffic in various double tax agreements and are also not subject to TDS by virtue of Sec. 172. In the case of the appellant it is seen that there is no distinction anywhere or separate contracts for transport of cargo inland and overseas, unlike what is sought to be made out by the Assessing Officer. I find force in the submissions that there is a single and composite contract for transportation of export containers by the appellant with the non-resident shipping companies for which a single debit note is raised for the total work. Further, as explained in the case law cited, amount of handling charges are small percentage of total freight. I also agree with the contention that without loading and transporting the container to the ports, the same container cannot be shipped outside India and thus there is a direct connection between handling charges and freight. As the payments of both bave been made to Indian agents of foreiqn shipping companies, no TDS is required both by virtue of the explicit provisions of Sec. 172(8) read with Circular no. 723 as also the decisions of various tribunals as cited. In view of above, the disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: Sr.No. Name of the party Opening CR balance Closing CR balalnce 1. Maersk India Pvt. Ltd. Ahmedabad Rs. 24,76,700/- Rs. 24,76,700/- 2. Rafique Mahmad Malek, Veraval Rs. 1,92,802/- Rs. 1,92,802/- Total Rs. 26,69,502/- Rs. 26,69,502/- 15.1 As per the assessee, the aforesaid parties have supplied the goods of inferior quality, therefore the payment was not made to them. As such the matter is under the litigation. 15.2 However the AO found that these are very old creditors appearing in the books of accounts of the assessee. Furthermore the assessee has not filed any confirmation to the fact that these liabilities are still appearing in the books of accounts. Thus the AO held that these liabilities have ceased to exist in the books of accounts as per the provisions of section 41(1) of the Act. Accordingly he disallowed the same and added to the total income of the assessee. 16. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing as under: 5.1. I have carefully considered the finding given by the Assessing Officer and the submission of the AR of the appellant. It is seen in this re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "4. We have heard the rival contentions and gone through facts and circumstances of the case. We find that assessee has disclosed sundry creditors to the extent of Rs. 15,34,818/- as on 31.03.2002. The AO required assessee to file complete name and addresses and on the given address notice issued by AO u/s 133(6) of the Act returned unserved. According to AO, as assessee is unable to prove the liability he added a sum of Rs. 2,78,261/- as bogus liability on account of cessation of liability without mentioning provision of section 41(1) of the Act. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO. Aggrieved, now assessee is in appeal before us. We find that it is not the case of revenue that it is a case of existing liability and assessee has not made any write off of all liabilities in its books of accounts and it is a fact that the sundry creditors are carried forward from earlier years and not arising or accrued during the relevant assessment year. In such circumstances whether AO can make addition on account of cessation of liability whether the same exists or not as per the books of accounts of accounts the liability exists and he has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and guidance from the judgment of Hon'ble Gujarat High Court in the case of PCIT Vs. Matruprasad C. Pandey reported in 377 ITR 363 wherein it was held as under: "However, it is required to be noted that as such those sundry creditors mentioned in the balance sheet of the assessee were shown as sundry creditors since past several years from the relevant assessment year and at no point of time earlier the Assessing Officer doubted the creditworthiness and/or identity. In any case the addition on the aforesaid ground under Section 41(1) of the Act cannot be made unless and until it is found that there was remission and/or cessation of the liability that too during the previous year, relevant to the assessment year in question, there cannot be any addition invoking the provision of Section 41(1) of the Act." In view of above, we hold that there cannot be any income on account of cession of liability which has not been written back by the assessee in its books of accounts. Hence we do not find any infirmity in the order of the learned CIT (A). Hence the ground of appeal of the revenue is dismissed. 19. The last issue raised by the revenue is that the learned CIT (A) erred in part ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
