IN INCOME TAX APPELLATE TRIBUNAL BENCH : CHENNAI [BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER] . I.T.A.No. 1192 Mds 2013 Assessment year : 2009-10 M s Swamy Agencies Vs. Income Tax Officer 13, Bazar Street Business Ward XII(2) Second Floor Chennai Royapuram, Chennai 600 013 [PAN ABLFS 4391 Q] ( Appellant) ( Respondent) . I.T.A.No. 1226 Mds 2013 Assessment year : 2009-10 Income Tax Officer Vs. M s Swamy Agencies Business Ward XII(2) 13, Bazar Street Chennai Second Floor Royapuram, Chennai 600 013 ( Appellant) ( Respondent) Assessee by : None Department by : Shri Shiva Srinivas, JCIT Date of Hearing : 24-08-2016 Date of Pronouncement : 26-09-2016 O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: These appeals of assesseee and Revenue are directed against order of Commissioner of Income-tax (Appeals)-IV, Chennai, dated 25.2.2013 in I.T.A.No.1049 13-14 A-15 :- 2 -: ITA No.1192 & 1226 13 547 2011-12 for assessment year 2009-10 passed u s 143(3) and 250 of Income-tax Act, 1961(I short Act ). 2. First we take up Revenue s appeal in I.T.A.No. 1226 Mds 2013. Revenue has taken following grounds: 1. Order of Commissioner of Income-tax (Appeals) is opposed to facts and circumstances of case . 2. Ld.CIT(A) erred in holding that there is no concealment of receipt by assessee and that entire receipts have been properly accounted for. 3. Ld. CIT(A) failed to appreciate that there was difference of Rs.160.22lakh between amount of contract receipts( attracting TDS under Section 194C) as per 26 AS statement, and amount admitted by assessee in profit and loss account. 4. Ld. CIT(A) ought to have appreciated that assessee does work of clearing and forwarding, only as package and there is no bifurcation of contract, service charges etc. 3. Brief facts of case are that assessee-firm, clearing and forwarding agent, filed its return of income for impugned assessment year on 5.1.2010 declaring total income of ` 11,41,760 - and was processed u s 143(1) of Act. Subsequently, case was selected under CASS and notice u s 143(2) dated 25.8.2010 was issued. In compliance o notice, ld. AR of assessee appeared from time to time and furnished information. Assessing Officer on perusal of records found that assessee-firm has disclosed commission charges of ` 39,77,411 - and reimbursement :- 3 -: ITA No.1192 & 1226 13 of clearing loading and unloading charges of ` 7,54,35,859 -. On verification of books of account and bank account statement and also details of various expenses debited to Profit & Loss Account. Assessing Officer found that assessee has claimed expenses of ` 7,54,34,723 - towards steamer agent, storage and other clearing expenses without deduction of TDS u s 194C of Act on payments made to contractors sub-contractors who are residents in India. In response to query raised by Assessing Officer, assessee filed detailed submissions as referred by Assessing Officer in his order. assessee-firm is in business of customs house agent and providing services to importers and exporters in matter of custom clearance formalities for which payments were made towards transport charges, bonding expenses, storage charges etc. assessee incurred total expenditure on behalf of importers with whom works contracts are executed. On perusal of Profit & Loss Account, Assessing Officer is of opinion that assessee has paid CFS charges of ` 3,84,52,046 - to contractors and sub- contractors without deducting TDS. contention of assessee was that it is providing services to importers and exporters to pass through customs formalities and payment of customs duty were made by importers. assessee was playing limited role for clearing cargo from various service providers, shipping companies, :- 4 -: ITA No.1192 & 1226 13 customs house, container freight stations(CFS) and if payments were not made to these agencies assessee was not responsible and importers were liable to pay and further assessee was acting as middleman. modus operandi being assessee-firm makes payment to contractors and receives reimbursement of expenses from importers and same amount was claimed in Profit & Loss Account. All these payments were directly paid by assessee on behalf of importers. Further, it was found that CFS charges of ` 1,82,68,551 - was paid to Madras Port Trust and no TDS was deducted. With this finding and applying provisions of sec. 40(a)(ia) of Act, Assessing Officer made addition of ` 2,01,83,495 -. 4. Similarly, assessee has not deducted TDS on payment of transport charges u s 194C of ` 3,79,194 -. These payments were made to contractors and sub-contractors of transporters. Considering provisions applicable to transporters u s 194C of Act information of name and address of transporters, PAN were not filed before Assessing Officer, and was disallowed. Assessing Officer found that assessee-firm had declared income from service charges of ` 39,77,411 - as against disclosed in Form 26AS ` 2,00,00,283 -. Therefore, Assessing Officer was of opinion that assessee has not disclosed complete service charges :- 5 -: ITA No.1192 & 1226 13 received and made addition of ` 1,60,22,872 - and passed order u s 143(3) dated 30.12.2011. 5. Aggrieved assessee has filed appeal before CIT(A). In appellate proceedings, ld. AR argued grounds and explained that assessee is only facilitator and importers are liable for these expenses which were incurred on behalf of importers. CIT(A) considered submissions of assessee and finding of Assessing Officer and facts narrated in course of appellate proceedings. On issue of service charges, it was found in Form 26AS that service charges of ` 2,00,00,283 - was received by assessee. It was reiterated that assessee has carried on various activities of clearing from customs and ports on behalf of principals. These activities include customs clearance from authorities, unloading goods from ship, loading into trucks for delivery of goods and these activities are carried on behalf of principals as per instructions issued, and finally, bills are raised in name of principals consists of two portions (i) bills submitted by various parties for work done for principals and (ii) service charges commission. In respect of bills submitted by various parties, modus operandi being assessee makes payment on behalf of importers and same amount is reimbursed and commission being actual income received for :- 6 -: ITA No.1192 & 1226 13 handling and coordinating activities. Therefore, actions of assessee are in nature of services, whereas importers have also deducted TDS on reimbursement of expenditure. Therefore, assessee has disclosed service charges commission of ` 39,77,411 - and balance being reimbursement of expenditure included in total expenses claimed in Profit & Loss Account ` 7,54,35,849 - and there was no suppression of income and filed details and explanation before CIT(A) vide letter dated 5.2.2012, relevant portion of which reads as under: Since TDS has to be deducted on Gross value, same is reflected in Form 26AS which include service charges' and reimbursement of expenses. Whereas .service charges amount of Rs.39,77,411 is service charges rendered by assessee. reimbursement of expenses value of Rs.1,60,22,872 is included in total value of Rs.7,54,35,849 under head of Income of Clearing, Loading & Unloading expenses collected. Bothe service charges and reimbursement of expenses have been taken to Profit and Loss Account and presented as income. So it is clear that assessee has not omitted any income and all receipts have been presented in Profit and Loss Account as income. It is incorrect to add Rs.1,60,22,872 as difference between service charges declared as income and gross value as per Form 26AS. 6. CIT(A) considered findings of Assessing Officer and work system of assessee and importers and Form 26AS, was of opinion that TDS was deducted by importers on services charges and also on reimbursement of expenses and there is no income to assessee on reimbursement of expenditure which :- 7 -: ITA No.1192 & 1226 13 was included in total expenditure claimed by assessee under head clearing, loading and unloading charges in Profit & Loss Account. Therefore, action of Assessing Officer in making addition of ` 1,60,22,872 - towards suppression of service charges is not acceptable and directed Assessing Officer to delete addition of `1,60,22,872 -. 7. On issue of deduction of TDS on transport charges of ` 3,41,544 -, assessee s contention was that this amount was towards transport charges to contractors and sub-contractors and there is difficulty to identify truck owners and some of expenses were in respect of labour charges and crane charges etc. CIT(A) has elaborately discussed facts at page 4 to 6 of his order and is of opinion that TDS has to be deducted in respect of payment of transport charges of ` 3,41,544 -. Similarly, CFS charges paid to Madras Port Trust where no TDS was deducted and payment does not take characteristics of expenditure reimbursement and, therefore, CFS charges was subject to TDS and confirmed disallowance of ` 2,01,83,495 - and partly allowed appeal. 8. Aggrieved, Revenue has assailed appeal before Tribunal. :- 8 -: ITA No.1192 & 1226 13 9. None attended on behalf of assessee inspite of service of notice through Department. Therefore, we proceed to decide appeals after hearing ld. DR and considering documents available on record. 10. Ld. DR argued that CIT(A) has erred in not considering entire receipts as disclosed in Form 26AS and no reconciliation was provided in respect of this difference and there was no bifurcation of contract service charges. assessee has claimed total amount of ` 754.35 lakhs and out of this ` 160.22 lakhs was included in total reflected in receipts and expenditure side of Profit & Loss Account . contention of ld. DR is that assessee has not disclosed complete information and CIT(A) has also not called for any comments or remand report in respect of information submitted during appellate proceedings and prayed for setting aside order of CIT(A) and allow grounds of Revenue. 11. We have heard submissions of ld. DR and perused material on record. contention of ld. DR that CIT(A) has erred in directing Assessing Officer to delete addition of ` 1,60,22,872 - in respect of service charges. These facts were not disclosed in assessment proceedings before Assessing Officer :- 9 -: ITA No.1192 & 1226 13 and assessee has also violated provisions of sec. 40(a)(ia) of Act. Considering apparent facts and provisions of law and also principles of natural justice, we are of opinion that matter needs to be examined by Assessing Officer based on books of account and Form 26AS from income-tax website disclosing income. Further there is no clarity whether confirmation was obtained from importers that they had reimbursed expenses. We, therefore, set aside order of CIT(A) and remit issue of service charges to file of Assessing Officer to consider afresh after providing opportunity of being heard to assessee. 12. In result, Revenue s appeal is allowed for statistical purposes. 13. Now coming to assessee s appeal in I.T.A.No.1192 Mds 2013, assessee has raised three grounds - (i) disallowance of ` 3,41,544 - u s 40(a)(ia) of Act in respect of transport charges, (ii) CFS charges paid to Madras Port Trust and (iii) interest levied u s 234A, 234B and 234C of Act. 14. We heard submissions of ld. DR, facts and provisions of sec. 40(a)(ia) of Act. ld. AR s argument before CIT(A) was that TDS in respect of transport charges is not applicable as assessee was working on behalf of importers. Similarly, CFS charges paid to Madras Port Trust also takes :- 10 -: ITA No.1192 & 1226 13 character of concept of concerned parties where element of using of services are by importers and assessee is only received amount on behalf of importers for making payment to clearing agents in compliance with terms of agreement with importers. Since we have set aside order of CIT(A) to file of Assessing Officer in Revenue s appeal, we remit these disputed issues back to Assessing Officer to consider provisions and decide afresh after making enquiries and pass order on merits. 15. Charging of interest u s 234A, 234B and 234C is consequential and mandatory in nature and to be computed by Assessing Officer in accordance with law. Ordered accordingly. 16. In result, appeal of assessee is allowed for statistical purposes. 17. To summarize, appeals of Revenue and assessee are allowed for statistical purposes. Order pronounced on Monday, 26th September, 2016, at Chennai. Sd - Sd - (CHANDRA POOJARI) (G. PAVAN KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai Dated: 26th September, 2016 RD :- 11 -: ITA No.1192 & 1226 13 Copy to: 1. Appellant 4. CIT 2. Respondent 5. DR 3. ( ) CIT(A) 6. GF M/s Swamy Agencies v. Income-tax Officer, Business Ward XII(2), Chennai