Calcutta High Court
Surendra Commercial & Exim Pvt. ... vs Income Tax Officer on 13 June, 2022
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
HEARD ON : 13.06.2022
DELIVERED ON : 13.06.2022
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR.JUSTICE HIRANMAY BHATTACHARYYA
ITA NO. 45 OF 2010
SURENDRA COMMERCIAL & EXIM PVT. LTD.
Vs.
INCOME TAX OFFICER, WARD-8 (4), KOLKATA
Appearance:
Mr. Subhas Agarwal, Advocate
...for the appellant
Mr. Prithu Dudheria, Advocate
...for the respondent
JUDGMENT
(Judgment of the Court was delivered by T.S. SIVAGNANAM, J.)
(T.S. SIVAGNANAM, J.) : - This appeal by the assessee filed under
Section 260A of the Income Tax Act, (the Act, for brevity) is directed against
the order dated 27.11.2009 passed by the Income Tax Appellate Tribunal "B"
Bench, Kolkata in I.T.A. No. 853/Kol/2009 for the assessment year 2005-06.
The assessee has raised the following substantial question of law for
consideration:-
ITAT/45/2010
"Whether on the facts and circumstances of the case and on law the
Learned Income Tax Appellate Tribunal erred in granting relief to the
assessee on account of claim of additional depreciation U/s. 31(1)(iia) of
the said Act of Rs.77,78,79,369/- disallowed by the Assessing Officer as
the Provision came into effect subsequent to the year under
consideration in respect of the business of generation and distribution
of power, in which the assessee was engaged?"
We have heard Mr. Subhas Agarwal, learned Advocate appearing for the
appellant/assessee and Mr. Prithu Dudheria, learned standing counsel for the
respondent/department.
The short issue which falls for consideration as to whether the assessee
was liable to deduct tax at source on the entire amounts paid to the agent.
The learned Advocate appearing for the appellant submitted that the
Assessing Officer, the First Appellate Authority and the Tribunal concurrently
erred in not taking note of the legal position which has since been well settled
by various decisions.
In support of the contention reliance was placed in the decision of High
Court of Gujarat in the case of CIT vs. Gujarat Narmada Valley Fertilizers
Company Limited: reported in [2013] 35 taxmann.com 638 (Gujarat), which
has been followed by the High Court of Delhi in CIT vs. DLF Commercial Project
Corporation reported in [2017] 88 taxmann.com 422 (Delhi). By referring to the
decisions, it is submitted that the Tribunal committed an error in upholding
the decision of the First Appellate Authority and thereby affirming the finding
of the Assessing Officer that tax had to be deducted at source even in respect
ITAT/45/2010
of reimbursements which had been incurred by the agent. Before we examine
as to the applicability of the decision, we should take note of the facts and
circumstances of the case, more importantly the two Authorities as well as the
Tribunal have concluded against the assessee.
Mr. Agarwal, learned Advocate submitted that a paper book was filed
before the Tribunal containing the documents which were placed before the
Assessing Officer and the First Appellate Authority which have not been
properly appreciated.
To test the correctness of this finding, we have carefully perused the
assessment order dated 28.12.2007 and in paragraph 7.3 of the said order,
the Assessing Officer has dealt with the issue on hand and by pointing out of
the fact, the Income Tax Act does not grant any exceptional clause by which
non-deduction of tax at source can be resorted to by the assessee under the
garb of reimbursement. Thus, on facts, the Assessing Officer disbelieved the
stand taken by the assessee.
Before the Appellate Authority the assessee once again reiterated the
contention stating that no tax needs to be deducted at source on the
reimbursement. This aspect of the matter was considered by the First
Appellate Authority and after taking note of the document placed before it, the
appeal filed by the assessee was rejected. Before the Tribunal once again, the
factual position was examined and the Tribunal has quoted the order passed
by the First Appellate Authority with approval. On perusal of the paragraph 9
of the impugned order we find that the Tribunal has approved the factual
finding recorded by the First Appellate Authority stating that there is no proof
ITAT/45/2010
that brokerage and freight charge by consignment agent from the assessee are
not loaded with profit and if it had been a case of true reimbursement the
consignment would have enclosed the bill drawn by its brokers and
transporters and in that case the assessee could have decided the
deductibility of TDS from such bills of brokers and transporters without
depending on the consignment agent. Further, the First Appellate Authority
has recorded that even after an opportunity was given during the appeal
proceeding, the assessee could not establish their stand and, therefore, held
that amounts of brokerage and freight can be paid by the assessee to
consignment agent are the only available criteria to decide the deductibility of
tax at source on the payment of brokerage and freight. Further, the terms and
conditions of the agreement of consignment sale was taken note of wherein it
is stated that the consignment agent is required to remit the entire sale
proceeds and depending on the maximum price realized or other such criteria
the assessee will pay commission to the consignment agent. Further noting
the facts of the case, the Tribunal held that deduction of tax at source under
Section 194C is required to be made on "any sum paid" by the assessee to
clearing and forwarding agent and it includes reimbursement of the
expenditure. In this regard, the clarification issued by the CBDL was referred
to.
The decision in DLF Commercial Project Corporation, which was
rendered following the decision in CIT vs. Gujarat Narmada Valley Fertilizers
Co. Ltd. would be wholly applicable to the facts of the case on hand, wherein
the Court had approved the concurrent finding rendered by the First Appellate
ITAT/45/2010
Authority. The facts of the case on hand has been noted by the CIT(A), who
has rendered a categorical finding that the assessee was unable to establish
their stand in spite of opportunity granted to them at the appellate stage.
Further, in CIT vs. Gujarat Narmada Valley Fertilizers Co. ltd. it has been held
that law obliges only amounts which fulfilled the character of income to be
subject to TDS. In the case before us, all the two Authorities and the Tribunal
have concurrently held that the assessee was unable to produce any
document to establish their stand.
In such circumstances, this Court while exercising jurisdiction under
Section 260A of the Income Tax Act cannot be called upon to reexamine the
facts or to re-appreciate the tenor and ambit of the document which was
placed before the Assessing Officer, CITA and more importantly the Tribunal
has noted that the assessee has failed to establish the reimbursement which
was pleaded by producing document despite opportunity being given at the
appellate stage.
Thus, we find that there is no question of law, much less substantial
question of law arising for consideration in this appeal.
Accordingly, the appeal being ITA No.45 of 2010 fails and dismissed.
(T.S. SIVAGNANAM, J.)
I agree.
(HIRANMAY BHATTACHARYYA, J.)
GH/s.pal
