The Principal Commissioner of Income-tax-4 v. Summit India Water Treatment And Services Ltd
[Citation -2020-LL-0203-46]

Citation 2020-LL-0203-46
Appellant Name The Principal Commissioner of Income-tax-4
Respondent Name Summit India Water Treatment And Services Ltd.
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 03/02/2020
Assessment Year 2013-14
Judgment View Judgment
Keyword Tags deduction of tax at source • shipping business • tds return • erroneous and prejudicial to interest of revenue
Bot Summary: 2 The Revenue has proposed the following questions as substantial questions of law: A Whether on facts of the case the Hon'ble ITAT is justified in partly holding that the impugned order is neither erroneous nor prejudicial to the interest of revenue B Whether on the facts of the case the Hon'ble CIT is incorrect to hold Page 1 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER that the AO failed to conduct proper and necessary enquiry before completing the assessment C Whether on facts of the case and in law, the assessment completed without initiating penalty u/s. 271B of the Act is neither erroneous nor prejudicial to the interests of revenue D Whether on facts of the case and in law, it is appropriate for Hon'ble ITAT to reject the order of CIT on ground of non TDS on freight payments and upholding the same on some other grounds raised therein 3 The respondent assessee has filed its return of income for the assessment year 2013 14 declaring total loss of Rs.1,35,18,193/. The Assessing Officer, by order dated 22nd March 2018, finalised the assessment under Section 143(3) of the Act, 1961. Accordingly, a show cause notice was issued and ultimately, after considering the submissions made by the respondent assessee, the PCIT Page 2 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER vide order dated 21st March 2018 under Section 263 of the Act, 1961 directed the Assessing Officer to pass fresh assessment order after providing an opportunity of being heard to the respondent assessee in view of the observations made in the order under Section 263 of the Act, 1961. 5 Being aggrieved by the order passed by the PCIT under Section 263 of the Act, 1961, the assessee went before the Tribunal. The Tribunal, after considering the submissions as well as the reasoning given by the PCIT came to the conclusion that the Assessing Officer has accepted the total loss declared by the assessee in return of income and passed order under Section 143(3) of the Act, 1961 dated 22 nd March 2016. The Tribunal held in the facts and circumstances of the case that the PCIT failed to consider during the course of assessment proceedings that the assessee had furnished the relevant materials in respect of export freight payment and it is also not controverted by the PCIT, and therefore, on the basis of undisputable finding brought on Page 3 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER record by the respondent assessee during the course of assessment proceedings under Section 263 of the Act, 1961, it cannot be said that the assessment order is erroneous or prejudicial to the interest of the Revenue in any manner.


C/TAXAP/830/2019 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 830 of 2019 PRINCIPAL COMMISSIONER OF INCOME TAX-4 Versus SUMMIT INDIA WATER TREATMENT AND SERVICES LTD. Appearance: MRS MAUNA M BHATT(174) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR. JUSTICE J. B. PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 03/02/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1 This Tax Appeal is filed at instance of Revenue under Section 260 of Income Tax Act, 1961 [for short, 'the Act, 1961'] and is directed against order dated 27th May 2019 passed by Income Tax Appellate Tribunal, Ahmedabad 'C' Bench, Ahmedabad in ITA No.1338/Ahd/2018 for assessment year 2013 14. 2 Revenue has proposed following questions as substantial questions of law: [A] Whether on facts of case Hon'ble ITAT is justified in partly holding that impugned order is neither erroneous nor prejudicial to interest of revenue? [B] Whether on facts of case Hon'ble CIT is incorrect to hold Page 1 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER that AO failed to conduct proper and necessary enquiry before completing assessment? [C] Whether on facts of case and in law, assessment completed without initiating penalty u/s. 271B of Act is neither erroneous nor prejudicial to interests of revenue? [D] Whether on facts of case and in law, it is appropriate for Hon'ble ITAT to reject order of CIT on ground of non TDS on freight payments and upholding same on some other grounds raised therein? 3 respondent assessee has filed its return of income for assessment year 2013 14 declaring total loss of Rs.1,35,18,193/. Assessing Officer, by order dated 22nd March 2018, finalised assessment under Section 143(3) of Act, 1961. 4 Thereafter, Principal Commissioner of Income Tax [for short, 'the PCIT'] invoked power of revision under Section 263 of Act, 1961 on ground that without deducting TDS on export freight, assessee company had paid export freight amounting to Rs.2,03,66,683/ to Inter Ocean Shipping and Logistic Services. According to PCIT, as no TDS return showing details of deduction of any tax in respect of aforesaid export freight had been filed and as Assessing Officer had not verified same, scope of provisions of TDS on export freight at rates specified of Act, 1961, entire amount was required to be disallowed under Section 40(a)(ia) of Act, 1961. PCIT also raised other issue with regard to non filing of Form 3CEB report by respondent assessee. Accordingly, show cause notice was issued and ultimately, after considering submissions made by respondent assessee, PCIT Page 2 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER vide order dated 21st March 2018 under Section 263 of Act, 1961 directed Assessing Officer to pass fresh assessment order after providing opportunity of being heard to respondent assessee in view of observations made in order under Section 263 of Act, 1961. 5 Being aggrieved by order passed by PCIT under Section 263 of Act, 1961, assessee went before Tribunal. Tribunal, after considering submissions as well as reasoning given by PCIT came to conclusion that Assessing Officer has accepted total loss declared by assessee in return of income and passed order under Section 143(3) of Act, 1961 dated 22 nd March 2016. Tribunal considered materials placed before it and found that respondent assessee had made payment for export freight to Indian Ocean Shipping and Logistics Services, which was Indian Agent acting on behalf of non resident shipping company for collecting freight demurrage and other charges and reimburse same to shipping company. Therefore, relying upon CBDT circular No.723 dated 19th September 1995, Tribunal held that where payment is made to shipping agents of non resident, ship owner or charter, agent steps into shoe of Principal i.e. shipping company and according to provisions under Section 172 of Act, 1961 which provides for shipping business in respect of non residents would be applicable and provisions of Section 194C or 195 which provides for deduction of tax at source shall not be applicable. Tribunal, therefore, held in facts and circumstances of case that PCIT failed to consider during course of assessment proceedings that assessee had furnished relevant materials in respect of export freight payment and it is also not controverted by PCIT, and therefore, on basis of undisputable finding brought on Page 3 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 C/TAXAP/830/2019 ORDER record by respondent assessee during course of assessment proceedings under Section 263 of Act, 1961, it cannot be said that assessment order is erroneous or prejudicial to interest of Revenue in any manner. 6 In view of facts emerging from record and finding of facts arrived by Tribunal, none of questions can be termed as substantial questions of law from impugned order passed by Tribunal. appeal, therefore, fails and is accordingly dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) CHANDRESH Page 4 of 4 Downloaded on : Thu Feb 20 15:21:43 IST 2020 Principal Commissioner of Income-tax-4 v. Summit India Water Treatment And Services Ltd
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